Annual report pursuant to Section 13 and 15(d)

GOODWILL AND INTANGIBLE ASSETS

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GOODWILL AND INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
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