Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

v3.20.4
Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
15. Goodwill and Other Intangible Assets:
The changes in the carrying amount of goodwill for the years ended December 31, 2020 and 2019 is summarized as follows:
Refining Services Catalysts Performance
Chemicals		 Total
Balance as of December 31, 2018 $ 311,892  $ 77,759  $ 580,023  $ 969,674 
Foreign exchange impact —  852  3,052  3,904 
Balance as of December 31, 2019 311,892  78,611  583,075  973,578 
Goodwill impairment —  —  (260,000) (260,000)
Foreign exchange impact —  1,062  3,098  4,160 
Balance as of December 31, 2020 $ 311,892  $ 79,673  $ 326,173  $ 717,738 

The carrying amounts of goodwill at December 31, 2020, 2019 and 2018 are net of the following accumulated impairment losses:
Refining Services Catalysts Performance
Chemicals		 Total
Accumulated impairment losses as of December 31, 2018 —  —  —  — 
Accumulated impairment losses as of December 31, 2019 —  —  —  — 
Accumulated impairment losses as of December 31, 2020 —  —  (260,000) (260,000)

The Company completed its annual goodwill impairment assessments as of October 1, 2020 and 2019. For the annual assessments, the Company bypassed the option to perform the qualitative assessment and proceeded directly to performing the quantitative goodwill impairment test for each of its reporting units. The quantitative test identifies both the potential existence of impairment and the amount of impairment loss. For each of the October 1, 2020 and 2019 assessments, the Company identified three reporting units, which align with the Company’s operating segments.
The Company determined the fair value of its reporting units using a split between a market approach and an income, or discounted cash flow, approach. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Company estimates reporting unit market approach fair value using publicly traded comparable company values and applies the selected market multiples to each reporting unit’s trailing twelve months adjusted EBITDA. The Company estimates reporting unit income-based fair value using the discounted cash flow approach. This approach requires use of significant assumptions about future cash flows and based on management’s assessment of a number of factors. Such factors include reporting unit revenue growth rates from implementation of strategic plans, operating margin growth rates, the perpetual growth rate, and the weighted average cost of capital, as well as the reporting unit’s recent performance and management’s ability to execute on planned future strategic initiatives. Discount rate assumptions are based on an assessment of the risk inherent in those future cash flows.
Based on the Company’s announced strategic review of the Performance Chemicals reporting unit in the fourth quarter, the Company concluded the market approach was more appropriate to estimate the fair value of the reporting unit for the annual impairment test. The Company reviewed the recent reporting unit performance and peer company performance under current market conditions. As a result, the Company recorded a goodwill impairment charge of $260,000 in the fourth quarter of 2020, included in goodwill impairment charge in the consolidated statements of income related to the Performance Chemicals reporting unit. The carrying value of the Performance Chemicals reporting unit's goodwill was $326,173 at December 31, 2020. No other goodwill impairments were identified as a result of the 2020 testing.
As of October 1, 2019, the fair values of each of the Company’s reporting units exceeded their respective carrying values and therefore, no goodwill impairment exists for the year ended December 31, 2019.
In addition to the annual goodwill impairment assessment, the Company also performed the annual impairment test over its other indefinite-lived intangible assets as of October 1, 2020 and 2019. The fair values of the Company’s indefinite-lived trade names and trademarks were in excess of their carrying amounts as of the respective testing dates, and as such, there was no further impairment of the Company’s indefinite-lived intangible assets for the years ended December 31, 2020 and 2019.
Gross carrying amounts and accumulated amortization for intangible assets other than goodwill are as follows:
December 31, 2020 December 31, 2019
Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Balance		 Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Balance
Technical know-how $ 180,768  $ (47,207) $ 133,561  $ 177,873  $ (37,102) $ 140,771 
Customer relationships 325,773  (134,842) 190,931  321,434  (106,627) 214,807 
Contracts —  —  —  16,200  (15,258) 942 
Trademarks 7,709  (2,399) 5,310  7,600  (1,858) 5,742 
Permits 9,100  (9,100) —  9,100  (9,100) — 
In-process research and development 500  (25) 475  —  —  — 
Total definite-lived intangible assets 523,850  (193,573) 330,277  532,207  (169,945) 362,262 
Indefinite-lived trade names 108,713  —  108,713  106,811  —  106,811 
Indefinite-lived trademarks 82,613  —  82,613  80,999  —  80,999 
In-process research and development 4,700  —  4,700  5,200  —  5,200 
Total intangible assets $ 719,876  $ (193,573) $ 526,303  $ 725,217  $ (169,945) $ 555,272 
The Company amortizes technical know-how over periods that range from eleven years to twenty years, customer relationships over periods that range from seven years to fifteen years, trademarks over periods that range from eleven years to fifteen years, contracts over periods that range from two years to sixteen years, and permits over five years. In-process research and development intangible assets are considered indefinite-lived until such time as the associated projects are completed, at which time amortization commences on the assets, or abandoned, which results in the impairment of the assets.
Amortization expense related to technical know-how, contracts and permits is included in cost of goods sold in the consolidated statements of income and was $9,369, $13,877 and $13,579 for the years ended December 31, 2020, 2019 and 2018, respectively. Amortization expense related to customer relationships and trademarks is included in other operating expense, net in the consolidated statements of income and was $26,923, $26,888 and $27,258 for the years ended December 31, 2020, 2019 and 2018, respectively.
Estimated future aggregate amortization expense of intangible assets is as follows:
Year 
Amount 
2021 $ 36,292 
2022 36,292 
2023 36,292 
2024 36,292 
2025 36,292 
Thereafter 148,817 
Total estimated future aggregate amortization expense $ 330,277