COMMERCIAL METALS CoCMC
COMMERCIAL METALS Co Goodwill & Intangibles Disclosure
NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill by reportable segment is detailed in the following table:
| (in thousands) | North America Steel Group | Emerging Businesses Group | Europe Steel Group | Consolidated | ||||||||||||||||||||||
| Goodwill, gross: | ||||||||||||||||||||||||||
| Balance, September 1, 2023 | $ | 126,915 | $ | 265,012 | $ | 4,075 | $ | 396,002 | ||||||||||||||||||
Acquisition adjustments(1) | — | (1,808) | — | (1,808) | ||||||||||||||||||||||
| Foreign currency translation | — | 1,364 | 262 | 1,626 | ||||||||||||||||||||||
| Balance at August 31, 2024 | 126,915 | 264,568 | 4,337 | 395,820 | ||||||||||||||||||||||
| Foreign currency translation | — | 955 | 271 | 1,226 | ||||||||||||||||||||||
| Balance at August 31, 2025 | 126,915 | 265,523 | 4,608 | 397,046 | ||||||||||||||||||||||
| Accumulated impairment: | ||||||||||||||||||||||||||
| Balance, September 1, 2023 | (9,542) | (493) | (146) | (10,181) | ||||||||||||||||||||||
| Foreign currency translation | — | — | (9) | (9) | ||||||||||||||||||||||
| Balance at August 31, 2024 | (9,542) | (493) | (155) | (10,190) | ||||||||||||||||||||||
| Foreign currency translation | — | — | (10) | (10) | ||||||||||||||||||||||
| Balance at August 31, 2025 | (9,542) | (493) | (165) | (10,200) | ||||||||||||||||||||||
| Goodwill, net: | ||||||||||||||||||||||||||
| Balance, September 1, 2023 | 117,373 | 264,519 | 3,929 | 385,821 | ||||||||||||||||||||||
Acquisition adjustments(1) | — | (1,808) | — | (1,808) | ||||||||||||||||||||||
| Foreign currency translation | — | 1,364 | 253 | 1,617 | ||||||||||||||||||||||
| Balance at August 31, 2024 | 117,373 | 264,075 | 4,182 | 385,630 | ||||||||||||||||||||||
| Foreign currency translation | — | 955 | 261 | 1,216 | ||||||||||||||||||||||
| Balance at August 31, 2025 | $ | 117,373 | $ | 265,030 | $ | 4,443 | $ | 386,846 | ||||||||||||||||||
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(1) Measurement period adjustments related to the 2023 Acquisitions which impacted the amount of goodwill originally reported.
During 2025, 2024 and 2023, the annual goodwill impairment assessments, which were performed as of the first day of the Company's fourth quarter (the "annual impairment test date"), did not result in any impairment charges. For the year ended August 31, 2025, the Company performed qualitative assessments for seven reporting units consisting of $120.3 million of goodwill as of the 2025 annual impairment test date and quantitative tests for two reporting units consisting of $194.5 million and $71.7 million of goodwill as of the 2025 annual impairment test date. The results of the qualitative assessments and quantitative tests indicated that it was more likely than not that the fair value of all reporting units exceeded their carrying values. The difference in the value of goodwill between the 2025 annual impairment test date and August 31, 2025 was due to foreign currency translation adjustments.
Other indefinite-lived intangible assets consisted of the following:
| (in thousands) | August 31, 2025 | August 31, 2024 | ||||||||||||
| Trade names | $ | 54,813 | $ | 54,531 | ||||||||||
| In-process research and development | 2,400 | 2,400 | ||||||||||||
| Non-compete agreements | 750 | 750 | ||||||||||||
| Total | $ | 57,963 | $ | 57,681 | ||||||||||
During 2025, 2024 and 2023, the Company did not record any indefinite-lived intangible asset impairment charges. As of the 2025 annual impairment test date, the Company had $57.9 million of indefinite-lived intangible assets, of which $54.7 million were tested for impairment using a quantitative approach. Based on the quantitative tests performed, the Company concluded it was more likely than not that the estimated fair values of the indefinite-lived intangible assets were greater than their respective carrying values. The changes in the balance of intangible assets with indefinite lives from August 31, 2024 to August 31, 2025 and from the 2025 annual impairment test date to August 31, 2025 were due to foreign currency translation adjustments.
Other intangible assets subject to amortization are detailed in the following table:
| August 31, 2025 | August 31, 2024 | |||||||||||||||||||||||||||||||||||||
| (in thousands) | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||||
| Developed technologies | $ | 153,844 | $ | 60,882 | $ | 92,962 | $ | 152,659 | $ | 43,540 | $ | 109,119 | ||||||||||||||||||||||||||
| Customer relationships | 75,304 | 24,663 | 50,641 | 75,000 | 16,118 | 58,882 | ||||||||||||||||||||||||||||||||
| Patents | 9,111 | 7,338 | 1,773 | 7,970 | 6,595 | 1,375 | ||||||||||||||||||||||||||||||||
| Lease rights | 6,804 | 1,200 | 5,604 | 6,404 | 1,049 | 5,355 | ||||||||||||||||||||||||||||||||
| Other | 6,084 | 4,212 | 1,872 | 5,937 | 3,480 | 2,457 | ||||||||||||||||||||||||||||||||
| Total | $ | 251,147 | $ | 98,295 | $ | 152,852 | $ | 247,970 | $ | 70,782 | $ | 177,188 | ||||||||||||||||||||||||||
The foreign currency translation adjustments for intangible assets subject to amortization were immaterial for all periods presented above.
Amortization expense for intangible assets was $27.1 million, $28.3 million and $25.9 million in 2025, 2024 and 2023, respectively, including $17.2 million, $18.2 million and $18.7 million, respectively, recorded in cost of goods sold, with the remainder recognized in SG&A expenses in the consolidated statements of earnings. Estimated amortization expense for the next five years is as follows:
| Year Ended August 31, | (in thousands) | |||||||
| 2026 | $ | 26,097 | ||||||
| 2027 | 25,971 | |||||||
| 2028 | 24,121 | |||||||
| 2029 | 19,535 | |||||||
| 2030 | 18,010 | |||||||
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.