Karman Holdings Inc. Goodwill & Intangibles Disclosure
The Company completed the annual goodwill impairment testing in the fourth quarter of 2025 and 2024 and determined that no adjustments to the carrying value of goodwill were necessary. The Company performs its goodwill impairment test at the reporting unit level, which is the same as or one level below the operating segment level. The Company has one operating and reportable segment, and for the years ended December 31, 2025, 2024 and 2023, the Company had one reporting unit for goodwill impairment testing purposes. For the impairment testing in the fourth quarter of 2025, the Company assessed the reporting unit using qualitative factors to determine whether it was more likely than not that the reporting unit’s fair value is less than its carrying value (step 0) and
determined that no further testing was required. For the impairment testing in the fourth quarter of 2024, the Company elected to bypass the qualitative assessment and performed a quantitative goodwill impairment test (Step 1), as permitted under ASC 350, which also indicated that the fair value of the reporting unit exceeded its carrying amount, and no impairment charge was recognized.
The Company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact our significant assumptions used in testing goodwill, including changes to U.S. treasury rates and equity risk premiums, tax rates, recent market valuations from transactions by comparable companies, volatility in the Company’s market capitalization, and general industry, market, and macro-economic conditions. It is possible that future changes in such circumstances, or in the inputs and assumptions used in estimating the fair value of our reporting units, could require the Company to record a non-cash impairment charge. The Company recorded no impairment losses during the years ended December 31, 2025, 2024 and 2023.
The table below summarizes the changes in the Company’s goodwill balances:
|
|
Total Goodwill |
|
|
|
|
(in thousands) |
|
|
Balance at January 1, 2024 |
|
$ |
217,274 |
|
Acquisitions |
|
|
7,872 |
|
Impairments |
|
|
— |
|
Balance at December 31, 2024 |
|
|
225,146 |
|
Acquisitions |
|
|
127,367 |
|
Impairments |
|
|
— |
|
Balance at December 31, 2025 |
|
$ |
352,513 |
|
The table below summarizes the carrying amounts of the Company’s identifiable intangible assets:
|
|
|
|
As of December 31, |
|
||||||||||||||||||||||
|
|
|
|
2025 |
|
|
2024 |
|
|||||||||||||||||||
|
Weighted Average Amortization Period |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|||||||
|
(in years) |
|
|
(in thousands) |
|
|
(in thousands) |
|
|||||||||||||||||||
Patents (9 years) |
|
9.0 |
|
|
$ |
2,722 |
|
|
$ |
(1,076 |
) |
|
$ |
1,646 |
|
|
$ |
2,722 |
|
|
$ |
(774 |
) |
|
$ |
1,948 |
|
Know-How (7.0 - 15.0 years) |
|
10.5 |
|
|
|
15,686 |
|
|
|
(1,841 |
) |
|
|
13,845 |
|
|
|
2,286 |
|
|
|
(585 |
) |
|
|
1,701 |
|
Customer Backlogs (0.8 - 7.5 years) |
|
2.3 |
|
|
|
47,750 |
|
|
|
(39,782 |
) |
|
|
7,968 |
|
|
|
38,750 |
|
|
|
(35,302 |
) |
|
|
3,448 |
|
Customer Relationships (10 - 19 years) |
|
16.6 |
|
|
|
333,300 |
|
|
|
(70,871 |
) |
|
|
262,429 |
|
|
|
255,600 |
|
|
|
(53,745 |
) |
|
|
201,855 |
|
Total Intangible Assets |
|
|
|
$ |
399,458 |
|
|
$ |
(113,570 |
) |
|
$ |
285,888 |
|
|
$ |
299,358 |
|
|
$ |
(90,406 |
) |
|
$ |
208,952 |
|
|
Amortization expense amounted to $23.2 million, $16.9 million, and $14.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. In total, the intangible assets acquired subject to amortization have a weighted average useful life of 14.6 years. The table below summarizes the annual amortization expense of the Company for the next five years:
2026 |
$ |
29,303 |
|
2027 |
|
23,896 |
|
2028 |
|
22,618 |
|
2029 |
|
22,609 |
|
2030 |
|
22,609 |
|
Thereafter |
|
164,853 |
|
Total |
$ |
285,888 |
|
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.