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Impairment Goodwill Impairment (Notes)
3 Months Ended
Mar. 31, 2020
Goodwill Impairment Disclosure [Abstract]  
Goodwill Disclosure [Text Block]
The Company assesses its long-lived assets for impairment when events and circumstances indicate that the carrying amount of the assets may not be recoverable. Long-lived assets consist primarily of buildings, machinery and equipment. In light of the economic impacts from COVID-19, the Company evaluated whether an impairment trigger existed for its asset groups and determined that triggering events existed for two asset groups in Aluminum Extrusions resulting from acquisitions in 2012 (“AACOA”) and in 2017 (“Futura”). The Company performed a recoverability test on the AACOA and Futura asset groups and determined that the sum of the related undiscounted cash flows exceeded their respective carrying values, thus the asset groups were not determined to be impaired as of March 31, 2020.
The Company assesses goodwill for impairment on an annual basis at a minimum (December 1st of each year) or when events or circumstances indicate that the carrying amount of a reporting unit that includes goodwill exceeds its fair value. In light of the economic impacts from COVID-19, the Company evaluated whether triggering events occurred for all reporting units that include goodwill and determined that triggering events occurred for the AACOA and Futura reporting units. The Company performed a goodwill impairment analysis for the AACOA and Futura reporting units using a combination of income and market approaches and determined that the fair value of the Futura reporting unit exceeded its carrying value.
The operations of the AACOA reporting unit, which includes the Niles, Michigan and Elkhart, Indiana facilities, have been severely impacted by the COVID-19 pandemic, with over 80% of the aluminum extrusions manufactured at these facilities sold to customers that make consumer durable products, such as recreational boating and power sports vehicles, as well as to customers serving building and construction and automotive markets.  In the first quarter of 2020, a goodwill impairment charge of $13.7 million ($10.5 million after taxes) was recognized in Aluminum Extrusions, which represented the entire amount of goodwill associated with the acquisition of AACOA. The original 2020 plan for EBITDA from ongoing operations associated with AACOA before the pandemic was $9.7 million. The latest EBITDA from ongoing operations projection for 2020, which accounts for a significant downturn expected with reduced demand created by the pandemic, is less than $1 million. Based on this projection and further recession and recovery scenarios, the Company concluded that goodwill assigned to the AACOA reporting unit was fully impaired as of March 31, 2020.
Recent disruptions to the global economy from the COVID-19 pandemic make it at least reasonably possible that future interim tests for long-lived assets and goodwill may be required during 2020. As this is an evolving crisis, we expect to continue to monitor developments and perform updated analyses as necessary.