GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

The Company’s intangible assets consist of the following (in thousands):


	Year Ended December 31,
	2022				2021
	Gross		Accumulated Amortization		Net		Gross		Impairment		Accumulated Amortization		Net
Goodwill(1)	$	33,237	$	—	$	33,237	$	30,271	$	—	$	—	$	30,271
Indefinite -lived intangible assets:
Trade names(1)	49,600		—		49,600		49,600		—		—		49,600
Finite -lived intangible assets:
Licenses	15,847		(11,654)		4,193		15,847		—		(11,198)		4,649
Trade names (2)	54,785		(20,030)		34,755		51,856		(2,546)		(23,829)		25,481
Customer relationships (2)	143,157		(53,586)		89,571		177,245		(11,766)		(65,863)		99,616
Other (2)	5,856		(3,325)		2,531		6,566		(448)		(3,057)		3,061
Total	$	302,482	$	(88,595)	$	213,887	$	331,385	$	(14,760)	$	(103,947)	$	212,678

(1) The gross and net value at December 31, 2022 and 2021 reflect a reduction of $91.7 million impairment charges on goodwill and $1.0 million charges on indefinite-lived intangible assets.

(2)The gross value and accumulated amortization at December 31, 2022 reflect a reduction of $44.1 million and $(29.3) million, respectively, for the net $14.8 million impairment charge on finite-lived intangible assets within the international segment during the period ended December 31, 2021 and a $6.5 million reduction in gross value for previous impairment charges on finite-lived intangible assets within the U.S. segment.

A summary of the activities related to the Company’s intangible assets for the years ended December 31, 2022, 2021 and 2020 consists of the following (in thousands):


	Intangible Assets		Goodwill		Total Intangible Assets and Goodwill
Goodwill and Intangible Assets, December 31, 2019	$	231,100	$	49,371	$	280,471





Foreign currency translation adjustment	607		—		607
Amortization	(16,953)		—		(16,953)
Impairment of indefinite - lived intangible assets	(1,000)		—		(1,000)
Impairment of goodwill	—		(19,100)		(19,100)
Goodwill and Intangible Assets, December 31, 2020	213,754		30,271		244,025





Foreign currency translation adjustment	(364)		—		(364)
Amortization	(16,223)		—		(16,223)
Impairment of finite - lived intangible assets	(14,760)		—		(14,760)

Goodwill and Intangible Assets, December 31, 2021	182,407		30,271		212,678

Acquisition of goodwill	—		2,966		2,966
Acquisition of trade name	13,000		—		13,000


Foreign currency translation adjustment	(227)		—		(227)
Amortization	(14,530)		—		(14,530)


Goodwill and Intangible Assets, December 31, 2022	$	180,650	$	33,237	$	213,887

The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31, 2022 are as follows:


			Years
Trade names			14
Licenses			33
Customer relationships			14
Other			10

Estimated amortization expense for each of the five succeeding fiscal years is as follows (in thousands):


	Year ending December 31,
2023	$	14,701
2024	14,367
2025	14,116
2026	13,767
2027	13,057

Goodwill impairment test

The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually as of October 1st or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. For goodwill, impairment testing is based upon the best information available using a combination of the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

The significant assumptions used under the income approach, or discounted cash flow method, are projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), terminal growth rates, and the cost of capital. Projected net sales, projected EBITDA and terminal growth rates were determined to be significant assumptions because they are three primary drivers of the projected cash flows in the discounted cash flow fair value model. Cost of capital was also determined to be a significant assumption as it is the discount rate used to calculate the current fair value of those projected cash flows. For the guideline public company method, significant assumptions relate to the selection of appropriate guideline companies and related valuation multiples used in the market analysis.

Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results. In addition, sustained declines in the Company's stock price and related market capitalization could impact key assumptions in the overall estimated fair values of its reporting units and could result in non-cash impairment charges that could be material to the Company's consolidated balance sheet or results of operations. Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge will be recorded to reduce the reporting unit to fair value. The Company also evaluates qualitative factors to determine whether or not its indefinite lived intangibles have been impaired and then performs quantitative tests if required. These tests can include the relief from royalty model or other valuation models. The significant assumptions used in the relief from royalty model are future net sales for the related brands, royalty rates and the cost of capital to determine the fair value of the indefinite lived intangibles.

International Reporting Unit

The carrying value of the goodwill for the International reporting unit was zero as of December 31, 2022 and 2021.

U.S. Reporting Unit

The Company performed its annual impairment assessment of its U.S. reporting unit as of October 1, 2022 by comparing the fair value of the reporting unit with its carrying value. The Company performed the analysis using a discounted cash flow and market multiple method. As of October 1, 2022, the fair value of the U.S. reporting unit exceeded the carrying value of goodwill by 10%.

Management’s projections used to estimate the cash flows included organic net sales growth and net sales growth through new customer channels as well as continued operating efficiencies in future periods. Changes in any of the significant assumptions used in the valuation of the reporting unit could materially affect the expected cash flows, and such impacts could potentially result in a material non-cash impairment charge.

As of December 31, 2022, the Company assessed the carrying value of goodwill and determined, based on qualitative factors, that no impairment indicators existed for goodwill.

In the first quarter of 2020, as a result of the economic downturn caused by the COVID-19 pandemic, the Company performed an interim assessment of the goodwill for the U.S. reporting unit as of March 31, 2020, by comparing the fair value of the reporting unit with its carrying value. The Company performed the analysis using a discounted cash flow and market multiple method. Based upon the analysis performed, the Company recognized a non-cash goodwill impairment charge of $19.1 million during the first quarter of 2020. The goodwill impairment charge resulted from, among other factors, the uncertain market conditions arising from the COVID-19 pandemic, which impacted the Company's market capitalization, as well as a reduction of forecasted future cash flows associated with the effects of the COVID-19 pandemic. The fair value of the U.S. reporting unit was approximately 3.9% below its carrying value as of March 31, 2020.

Annual indefinite-lived trade name impairment test

The Company values its indefinite-lived trade names using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company.

The Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade name assets annual October 1, 2022 impairment test. The Company completed the quantitative impairment analysis by comparing the fair value of the indefinite-lived trade names to their respective carrying value using a relief from royalty method. As of October 1, 2022, the fair value of the Company’s indefinite-lived trade names exceeded their respective carrying values by 12%. While the indefinite-lived trade names were not determined to be impaired, the indefinite-lived trade names are at risk of future impairment in the event the trade names do not perform as projected or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in long-term growth rates or the weighted average cost of capital.

As of December 31, 2022, the Company assessed the carrying value of its indefinite-lived trade names and determined based on qualitative factors that no impairment existed.

In the first quarter of 2020, as a result of the economic decline caused by the COVID-19 pandemic, the Company determined its indefinite-lived trade names had indicators for impairment. As a result, the Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade names and performed an interim quantitative impairment analysis as of March 31, 2020, by comparing the fair value of the indefinite-lived trade names to their respective carrying values. As a result of the impairment testing

performed in connection with the COVID-19 pandemic triggering event, the Company determined that certain of its indefinite-lived intangible assets in the U.S. segment were impaired. As a result, the Company recorded a $1.0 million non-cash impairment charge during the first quarter of 2020.

Long-lived assets impairment test

Due to the current operating results for the International segment as a result of low consumer confidence in the region, impairment indicators were identified for the International asset group. The Company tested the recoverability of the asset group, concluding it was not recoverable and performed an analysis of the fair value of the international long-lived assets. The Company tested the International segment's long-lived assets for impairment and concluded that the fair value exceeded the carrying value of the long-lived assets, concluding no impairment as of December 31, 2022.

In the fourth quarter of 2021, due to lower than expected operating results for the International segment caused by continuing impacts of COVID-19 and the exit of the U.K. from the European Union, impairment indicators were identified for the International asset group. The Company tested the recoverability of the asset group, concluding it was not recoverable and performed an analysis of the fair value of the international long-lived assets. For the finite-lived intangible assets, the Company performed discounted cash flow analysis and recorded an impairment of $14.8 million within the International segment.