| GOODWILL AND INTANGIBLE ASSETS |
GOODWILL AND INTANGIBLE ASSETS The Company performs its goodwill impairment testing annually during the fourth quarter, or more frequently if events or if circumstances were to occur that would more likely than not reduce the fair value of our reporting units below its carrying amount. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill. The adjusted carrying amount of goodwill shall be its new accounting basis.
During the second quarter of 2022, the Company’s market capitalization fell below total net assets. In addition, financial performance continued to weaken during the quarter, which was contrary to prior experience. Management reassessed business performance expectations, following persistent adverse developments in equity markets, deterioration in the environment in which we operate, inflation, lower than expected sales, and an increase in operating expenses. These indicators, in the aggregate, required impairment testing for finite-lived intangible assets at the asset group level and goodwill at the reporting unit level.
Under ASC 360, we performed a cash recoverability test on the following intangible assets: customer relationships, trade name, and non-compete. The carrying amounts of any assets that are not within the scope of ASC 360-10, other than goodwill, were adjusted for impairment, as necessary, prior to testing long-lived assets and goodwill. The Company recognized impairment losses as disclosed in the table below.
For goodwill impairment testing purposes, the Company determined four reporting units, three of which were subject to a quantitative assessment. We determined fair value using the income approach, where estimated future cash flows are discounted to present value at an appropriate rate of return. The Company completed its interim goodwill impairment test as of June 30, 2022 and recognized impairment losses as disclosed in the table below.
The changes in goodwill are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2022 |
|
December 31,
2021 |
| Balance, beginning of period |
$ |
125,401 |
|
|
$ |
62,951 |
|
| Goodwill additions and measurement period adjustments |
7,234 |
|
|
62,450 |
|
| Impairment |
(116,657) |
|
|
— |
|
| Balance, end of period |
$ |
15,978 |
|
|
$ |
125,401 |
|
The goodwill balance and impairment by segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
E-commerce |
Distribution and other |
Total |
| Gross carrying value December 31, 2020 |
$ |
55,181 |
|
$ |
2,911 |
|
$ |
4,859 |
|
$ |
62,951 |
|
| Acquisitions & measurement period adjustments |
46,630 |
|
8,748 |
|
7,072 |
|
62,450 |
|
| Gross carrying value December 31, 2021 |
101,811 |
|
11,659 |
|
11,931 |
|
125,401 |
|
| Acquisitions & measurement period adjustments |
1,418 |
|
(341) |
|
6,157 |
|
7,234 |
|
| Gross carrying value, December 31, 2022 |
$ |
103,229 |
|
$ |
11,318 |
|
$ |
18,088 |
|
$ |
132,635 |
|
|
|
|
|
|
| Accumulated impairment losses December 31, 2020 |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
| Impairment |
— |
|
— |
|
— |
|
— |
|
| Accumulated impairment losses December 31, 2021 |
— |
|
— |
|
— |
|
— |
|
| Impairment |
(103,094) |
|
(9,848) |
|
(3,715) |
|
(116,657) |
|
| Accumulated impairment losses December 31, 2022 |
$ |
(103,094) |
|
$ |
(9,848) |
|
$ |
(3,715) |
|
$ |
(116,657) |
|
|
|
|
|
|
| Net carrying value at December 31, 2021 |
$ |
101,811 |
|
$ |
11,659 |
|
$ |
11,931 |
|
$ |
125,401 |
|
| Net carrying value at December 31, 2022 |
$ |
135 |
|
$ |
1,470 |
|
$ |
14,373 |
|
$ |
15,978 |
|
A summary of intangible assets as of follows:
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average |
|
|
Amortization Period |
|
|
of Intangible Assets |
|
|
as of December 31, 2022 |
|
|
(in years) |
| Tradenames |
|
3.18 years |
| Patents, trademarks |
|
3.09 years |
| Customer relationships |
|
4.50 years |
| Non-competes |
|
1.90 years |
| Intellectual property |
|
3.16 years |
| Total |
|
3.37 years |
Intangible assets on the Company’s consolidated balance sheets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2022 |
|
December 31, 2021 |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net
Carrying
Amount |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net
Carrying
Amount |
| Tradenames |
$ |
28,774 |
|
|
$ |
(10,693) |
|
|
$ |
18,081 |
|
|
$ |
28,300 |
|
|
$ |
(4,948) |
|
|
$ |
23,352 |
|
| Patents, trademarks |
389 |
|
|
(56) |
|
|
333 |
|
|
100 |
|
|
(42) |
|
|
58 |
|
| Customer relationships |
17,102 |
|
|
(6,501) |
|
|
10,601 |
|
|
25,175 |
|
|
(3,055) |
|
|
22,120 |
|
| Non-competes |
932 |
|
|
(551) |
|
|
381 |
|
|
1,384 |
|
|
(233) |
|
|
1,151 |
|
| Intellectual property |
2,065 |
|
|
(758) |
|
|
1,307 |
|
|
2,065 |
|
|
(344) |
|
|
1,721 |
|
| Total |
$ |
49,262 |
|
|
$ |
(18,559) |
|
|
$ |
30,703 |
|
|
$ |
57,024 |
|
|
$ |
(8,622) |
|
|
$ |
48,402 |
|
Intangibles and impairment by segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
E-commerce |
Distribution and other |
Total |
| Gross carrying value December 31, 2020 |
$ |
17,635 |
|
$ |
— |
|
$ |
3,481 |
|
$ |
21,116 |
|
| Acquisitions & measurement period adjustments |
20,190 |
|
2,501 |
|
13,217 |
|
35,908 |
|
| Gross carrying value December 31, 2021 |
37,825 |
|
2,501 |
|
16,698 |
|
57,024 |
|
| Acquisitions & measurement period adjustments |
230 |
|
— |
|
3,182 |
|
3,412 |
|
| Gross carrying value, December 31, 2022 |
$ |
38,055 |
|
$ |
2,501 |
|
$ |
19,880 |
|
$ |
60,436 |
|
|
|
|
|
|
| Accumulated amortization December 31, 2020 |
$ |
(540) |
|
$ |
— |
|
$ |
(27) |
|
$ |
(567) |
|
| Amortization |
(5,745) |
|
(354) |
|
(1,956) |
|
(8,055) |
|
| Accumulated amortization December 31, 2021 |
(6,285) |
|
(354) |
|
(1,983) |
|
(8,622) |
|
| Amortization |
(5,897) |
|
(460) |
|
(3,580) |
|
(9,937) |
|
| Accumulated amortization December 31, 2022 |
$ |
(12,182) |
|
$ |
(814) |
|
$ |
(5,563) |
|
$ |
(18,559) |
|
|
|
|
|
|
| Accumulated impairment losses December 31, 2020 |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
| Impairments |
— |
|
— |
|
— |
|
— |
|
| Accumulated impairment losses December 31, 2021 |
— |
|
— |
|
— |
|
— |
|
| Impairments |
(11,079) |
|
(95) |
|
— |
|
(11,174) |
|
| Accumulated impairment losses December 31, 2022 |
$ |
(11,079) |
|
$ |
(95) |
|
$ |
— |
|
$ |
(11,174) |
|
|
|
|
|
|
| Net carrying value at December 31, 2021 |
$ |
31,540 |
|
$ |
2,147 |
|
$ |
14,715 |
|
$ |
48,402 |
|
| Net carrying value at December 31, 2022 |
$ |
14,794 |
|
$ |
1,592 |
|
$ |
14,317 |
|
$ |
30,703 |
|
Amortization expense for the years ended December 31, 2022, 2021, and 2020 was $9.9 million, $8.9 million, and $789 thousand respectively.
|
|
|
|
|
|
|
|
|
| Future amortization expense is as follows: |
|
|
| 2023 |
|
$ |
8,929 |
|
| 2024 |
|
8,813 |
|
| 2025 |
|
8,295 |
|
| 2026 |
|
3,532 |
|
| 2027 |
|
1,101 |
|
| Thereafter |
|
33 |
|
| Total |
|
$ |
30,703 |
|
|