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Goodwill and Intangible Assets | 3 Months Ended
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Dec. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets The Company accounts for goodwill at acquisition-date fair value and other finite intangibles at acquisition-date fair value less accumulated amortization. See Note 1 for a summary of the Company’s policies relating to goodwill and intangible assets. Intangible Assets The Company’s intangible assets, net consists of the following, in thousands:
|  |  |  | December 31, |  |  | September 30, |
|  | Amortization Period |  | 2024 |  |  | 2024 |
Backlog |  | 1 year |  | $ | 2,100 |  |  | $ | 2,100 |
Customer relationships |  | 6-10 years |  |  | 4,409 |  |  |  | 4,409 |
Developed technology |  | 1.75 years |  |  | 6,700 |  |  |  | 6,700 |
Noncompetition agreements |  | 5 years |  |  | 200 |  |  |  | 200 |
Trade names |  | 3-15 years |  |  | 2,679 |  |  |  | 2,679 |
|  |  |  |  | 16,088 |  |  |  | 16,088 |
Accumulated amortization |  |  |  |  | (5,744 | ) |  |  | (5,616 | )
Less asset impairments: |  |  |  |  |  |  |  |
Backlog |  |  |  |  | (425 | ) |  |  | (425 | )
Customer relationships |  |  |  |  | (339 | ) |  |  | (339 | )
Developed technology |  |  |  |  | (5,494 | ) |  |  | (5,494 | )
Noncompetition agreements |  |  |  |  | (160 | ) |  |  | (160 | )
Trade names |  |  |  |  | (50 | ) |  |  | (50 | )
Intangible assets, net |  |  |  | $ | 3,876 |  |  | $ | 4,004 |
The estimated aggregate amortization expense for each of the five succeeding fiscal years as of December 31, 2024 is as follows, in thousands:
Year ending September 30: |  | Amount |
2025 |  | $ | 383 |
2026 |  |  | 511 |
2027 |  |  | 511 |
2028 |  |  | 511 |
2029 |  |  | 511 |
Thereafter |  |  | 1,449 |
Total |  | $ | 3,876 |
The aggregate amortization expense during the three months ended December 31, 2024 and 2023 was $0.1 mi llion and $0.3 million, respectively. We review our intangible assets for impairment when events or circumstances indicate the carrying value may not be recoverable. At the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value. As discussed in the Goodwill section below, this resulted in a triggering event for impairment of goodwill. The results of the goodwill impairment test indicated that the book value of our Semiconductor Fabrication Solutions reporting unit was in excess of the fair value, and, thus, was impaired. Prior to recognizing any impairment of goodwill, we tested the related long-lived assets for impairment in our Semiconductor Fabrication Solutions segment. We tested each identified asset group within our Semiconductor Fabrication Solutions segment by first performing a recoverability test, comparing projected undiscounted cash flows from the use and eventual disposition of each asset group to its carrying value. This test indicated that the undiscounted cash flows were not sufficient to recover the carrying value of certain asset groups. We then compared the carrying value of the individual long-lived assets within those asset groups against their fair value in order to determine if impairment existed. Determining the fair value of those asset groups involves the use of significant estimates and assumptions, including projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends, and estimated discount rates based on the asset group's weighted average return on assets, as derived from various methods. The fair value of the intangible assets were estimated using various valuation methodologies, including the multi-period excess earnings method, the relief from royalty method and the distributor method. These fair value measurements fall under Level 3 of the fair value hierarchy. As a result, we recorded a total impairment charge for intangible assets in our Semiconductor Fabrication Solutions segment of $1.3 million during the quarter ended December 31, 2023. This impairment charge relates to developed technology, trade name, customer relationships and non-competition agreements at Entrepix. Goodwill The Company evaluates goodwill at the reporting unit level, which, for the Company, is at the level of the reportable segments, Thermal Processing Solutions and Semiconductor Fabrication Solutions. The changes in carrying amount of goodwill allocated to each of the reporting units for the three months ended December 31, 2024 is as follows, in thousands:
|  | Thermal Processing Solutions |  |  | Semiconductor Fabrication Solutions |  |  | Total Goodwill |
Goodwill |  | $ | 5,905 |  |  | $ | 21,726 |  |  | $ | 27,631 |
Accumulated impairment losses |  |  | — |  |  |  | (6,370 | ) |  |  | (6,370 | )
Balance at September 30, 2024 |  |  | 5,905 |  |  |  | 15,356 |  |  |  | 21,261 |
Goodwill acquired |  |  | — |  |  |  | — |  |  |  | — |
Impairment of goodwill |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, 2024 |  | $ | 5,905 |  |  | $ | 15,356 |  |  | $ | 21,261 |
Goodwill |  | $ | 5,905 |  |  | $ | 15,356 |  |  | $ | 21,261 |
Accumulated impairment losses |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, 2024 |  | $ | 5,905 |  |  | $ | 15,356 |  |  | $ | 21,261 |
On January 17, 2023, we acquired Entrepix, which has been integrated into our Semiconductor Fabrication Solutions segment. Under the purchase method of accounting, the purchase price for the acquisition was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired of approximately $16.5 million was recorded as goodwill in the Semiconductor Fabrication Solutions segment. The primary driver for this acquisition was to add CMP and wafer cleaning equipment to our existing substrate polishing and wet process chemical offerings. We review goodwill for impairment when events or circumstances indicate the carrying value may not be recoverable. We performed our annual test of goodwill impairment as of September 30, 2024. The results of the goodwill impairment test indicated that the fair value of both our Thermal Processing and Semiconductor Fabrication Solutions reporting units were in excess of the carrying value, and, thus, were not impaired. At the end of December 2023, we identified a triggering event. As a result of the decline in our stock price as of December 31, 2023, our book value materially exceeded our market value leading to a $6.4 million impairment charge in fiscal 2024. This triggering event indicated a need to test goodwill for impairment. The goodwill impairment test indicated the book value of our Semiconductor Fabrication Solutions (formerly Material and Substrate) reporting unit was in excess of fair value. As a result, we recorded a $6.4 million impairment charge in the period ended December 31, 2023. There was no goodwill impairment identified in our Thermal Processing Solutions (formerly Semiconductor) reporting unit. Determining the fair value of a reporting unit involves the use of significant estimates and assumptions. Our goodwill impairment test uses a weighting of the income approach and the market approach to estimate a reporting unit’s fair value. The income approach is based on a discounted future cash flow analysis that uses certain assumptions including: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments and working capital requirements to sustain and grow the business; and estimated discount rates based on the reporting unit’s weighted average cost of capital as derived by the Capital Asset Pricing Model and other methods, which includes observable market inputs and other data from identified comparable companies. The same estimates are also used internally for our capital budgeting process, and for long-term and short-term business planning and forecasting. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available comparable market data, and we also perform a reconciliation of our total market capitalization to the estimated fair value of all of our reporting units. The market approach is based on the application of appropriate market-derived multiples selected from (i) comparable publicly-traded companies and/or (ii) the implied transaction multiples derived from identified merger and acquisition activity in the market. Multiples are then selected based on a comparison of the reviewed data to that of the reporting unit and applied to relevant historical and forecasted financial parameters such as levels of revenues, EBITDA, EBIT or other metrics. The calculation of fair value falls under Level 3 of the fair value hierarchy. If the future performance of these reporting units fall short of our expectations, if there are significant changes in operations due to changes in market conditions or if our stock price continues to decline, we could be required to recognize additional material impairment charges in future periods.

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