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Goodwill and Other Intangible Assets | 9 Months Ended
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Jan. 27, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Note 6. Goodwill and Other Intangible Assets Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. A summary of the changes in the carrying amount of goodwill, by segment, is shown below:
(in millions) |  | Automotive |  |  | Industrial |  |  | Total |
Balance as of April 29, 2023 |  | $ | 106.2 |  |  | $ | 195.7 |  |  | $ | 301.9 |
Acquisition (Note 3) |  |  | — |  |  |  | (24.3 | ) |  |  | (24.3 | )
Impairment |  |  | (56.5 | ) |  |  | — |  |  |  | (56.5 | )
Foreign currency translation |  |  | (0.3 | ) |  |  | (0.4 | ) |  |  | (0.7 | )
Balance as of January 27, 2024 |  | $ | 49.4 |  |  | $ | 171.0 |  |  | $ | 220.4 |
The Company tests goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the beginning of the fourth quarter each fiscal year. In addition, the Company continuously monitors for events and circumstances that could negatively impact the key assumptions used in determining fair value and therefore require interim goodwill impairment testing, including long-term revenue growth projections, profitability, discount rates, volatility in the Company's market capitalization, and general industry, market and macroeconomic conditions. October 28, 2023 Interim Assessment During the three months ended October 28, 2023, the Company identified an impairment triggering event associated with a sustained decrease in the Company’s publicly quoted share price, market capitalization and lower than expected operating results. These factors suggested that the fair value of one or more of the Company's reporting units may have fallen below their carrying amounts. The Company quantitatively assessed its reporting units which have performed substantially below the forecast used in its last quantitative impairment test. The reporting units that were quantitatively assessed were North American Automotive ("NAA") and European Automotive ("EA"). Based upon the results of the quantitative impairment test, the Company determined the carrying value of the NAA and EA reporting units exceeded their fair value at October 28, 2023. As a result, the Company recognized a non-cash goodwill impairment charge of $56.5 million ($50.4 million for NAA and $6.1 million for EA) in the three months ended October 28, 2023, which was determined as the excess carrying value over fair value of the respective reporting unit up to the carrying value of the goodwill immediately prior to the impairment. January 27, 2024 Interim Assessment During the three months ended January 27, 2024, there was a further decline in the Company's publicly quoted share price and market capitalization. In addition, operating results for NAA were lower than expected. As a result, the Company determined that a triggering event occurred requiring a quantitative impairment test for NAA. The quantitative impairment test utilized the Company’s most recent cash flow projections for NAA which reflected current market conditions as well as timing for new product launches. Based upon the results of the quantitative impairment test, the Company determined that the fair value of NAA exceeded its carrying value by less than 10% and thus there was no impairment to goodwill. If all other assumptions are held constant, a hypothetical increase of more than 100 basis points in the discount rate could have resulted in goodwill impairment for the NAA reporting unit. Due to the limited headroom, the Company will continue to monitor NAA for any significant changes to its assumptions regarding future performance, or for any adverse changes to macroeconomic conditions, or for a further reduction in the Company's market capitalization, or any changes to other assumptions that could result in impairment losses in the future, which could be significant. The Company engaged a third-party valuation specialist to assist management in performing the interim goodwill impairment assessments. The fair value of the NAA and EA reporting units were estimated using a combination of the income approach and market approach, weighted accordingly for the specific circumstances of the reporting unit. The income approach uses a discounted cash flow method and the market approach uses appropriate valuation multiples observed for the reporting unit’s guideline public companies. The determination of discounted cash flows are based on management’s estimates of revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, taking into consideration business and market conditions for the countries and markets in which the reporting unit operates. The Company calculates the discount rate based on a market-participant, risk-adjusted weighted average cost of capital, which considers industry specific rates of return on debt and equity capital for a target industry capital structure, adjusted for risks associated with business size, geography and other factors specific to the reporting unit. Long-range forecasting involves uncertainty which increases with each successive period. Revenue growth rates and profitability assumptions, especially in the outer years, involve a greater degree of uncertainty. A summary of goodwill by reporting unit is as follows:
(in millions) |  | January 27, 2024 |  |  | April 29, 2023 |
Grakon Industrial |  | $ | 124.8 |  |  | $ | 124.5 |
North American Automotive |  |  | 49.4 |  |  |  | 99.8 |
Nordic Lights |  |  | 44.6 |  |  |  | 69.6 |
European Automotive |  |  | — |  |  |  | 6.4 |
Other |  |  | 1.6 |  |  |  | 1.6 |
Total |  | $ | 220.4 |  |  | $ | 301.9 |
Other intangible assets, net Details of identifiable intangible assets are shown below:
|  | As of January 27, 2024 |
(in millions) |  | Gross |  |  | Accumulated amortization |  |  | Net |  |  | Weighted average remaining useful life (years) |
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships and agreements |  | $ | 308.2 |  |  | $ | (80.7 | ) |  | $ | 227.5 |  |  |  | 15.1 |
Trade names, patents and technology licenses |  |  | 75.7 |  |  |  | (40.7 | ) |  |  | 35.0 |  |  |  | 7.0 |
Total amortized intangible assets |  |  | 383.9 |  |  |  | (121.4 | ) |  |  | 262.5 |  |  |  |
Unamortized trade name |  |  | 1.8 |  |  |  | — |  |  |  | 1.8 |  |  |  |
Total other intangible assets |  | $ | 385.7 |  |  | $ | (121.4 | ) |  | $ | 264.3 |  |  |  |
|  | As of April 29, 2023 |
(in millions) |  | Gross |  |  | Accumulated amortization |  |  | Net |  |  | Weighted average remaining useful life (years) |
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships and agreements |  | $ | 286.7 |  |  | $ | (68.2 | ) |  | $ | 218.5 |  |  |  | 14.8 |
Trade names, patents and technology licenses |  |  | 71.6 |  |  |  | (35.2 | ) |  |  | 36.4 |  |  |  | 6.0 |
Total amortized intangible assets |  |  | 358.3 |  |  |  | (103.4 | ) |  |  | 254.9 |  |  |  |
Unamortized trade name |  |  | 1.8 |  |  |  | — |  |  |  | 1.8 |  |  |  |
Total other intangible assets |  | $ | 360.1 |  |  | $ | (103.4 | ) |  | $ | 256.7 |  |  |  |
Based on the current amount of intangible assets subject to amortization, the estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows:
(in millions) |  |  |
Fiscal Year: |  |  |
Remainder of 2024 |  | $ | 6.0 |
2025 |  |  | 23.5 |
2026 |  |  | 22.6 |
2027 |  |  | 22.0 |
2028 |  |  | 19.7 |
Thereafter |  |  | 168.7 |
Total |  | $ | 262.5 |

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