Alto Ingredients, Inc. Goodwill & Intangibles Disclosure
7. INTANGIBLE ASSETS.
Intangible assets, including goodwill, consisted of the following (in thousands):
| Useful | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||
| Life (Years) | Gross | Accumulated Amortization | Net Book Value | Gross | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||
| Non-Amortizing: | ||||||||||||||||||||||||||||
| Goodwill | $ | 5,970 | $ | $ | 5,970 | $ | $ | $ | ||||||||||||||||||||
| Kinergy tradename | 2,678 | 2,678 | 2,678 | 2,678 | ||||||||||||||||||||||||
| Amortizing: | ||||||||||||||||||||||||||||
| Customer relationships | 12 | 6,556 | (527 | ) | 6,029 | |||||||||||||||||||||||
| Eagle tradename | 10 | 420 | (40 | ) | 380 | |||||||||||||||||||||||
| Total goodwill and intangible assets | $ | 15,624 | $ | (567 | ) | $ | 15,057 | $ | 2,678 | $ | $ | 2,678 | ||||||||||||||||
Goodwill – The Company’s recorded goodwill of $5,970,000 in its Corporate and other segment resulted from the Company’s acquisition of Eagle Alcohol. See Note 2.
Kinergy Tradename – The Company recorded tradename of $2,678,000 as part of the Company’s merger with Kinergy in 2006. The Company determined that the tradename has an indefinite life and therefore, rather than being amortized, will be tested annually for impairment. The Company did not record any impairment on its tradename for the years ended December 31, 2022, 2021 and 2020.
Customer Relationships – The Company recorded customer relationships of $6,556,000 from the Company’s acquisition of Eagle Alcohol. See Note 2. The Company has established a useful life of twelve years for these customer relationships.
Eagle Tradename – The Company recorded tradename of $420,000 from the Company’s acquisition of Eagle Alcohol. See Note 2. The Company has established a useful life of ten years for the tradename.
Amortization expense associated with intangible assets totaled $567,000 for the year ended December 31, 2022. The weighted-average unamortized life of the customer relationships and tradename is 10.9 years.
The expected amortization expense relating to amortizable intangible assets in each of the five years after December 31, 2022 are (in thousands):
| Years Ended December 31, | Amount | |||
| 2023 | $ | 588 | ||
| 2024 | 588 | |||
| 2025 | 588 | |||
| 2026 | 588 | |||
| 2027 | 588 | |||
| Thereafter | 3,469 | |||
| Total | $ | 6,409 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 14, 2023 | Showing above |
| 2020 | Mar 26, 2021 | |
| 2019 | Mar 30, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 15, 2017 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.