Quest Resource Holding Corp Goodwill & Intangibles Disclosure
5. Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows (in thousands):
December 31, 2024 |
|
Estimated |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
|||
Finite lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|||
Customer relationships |
|
5 years |
|
$ |
25,805 |
|
|
$ |
17,188 |
|
|
$ |
8,617 |
|
Software |
|
7 years |
|
|
5,518 |
|
|
|
2,271 |
|
|
|
3,247 |
|
Trademarks |
|
7 years |
|
|
2,026 |
|
|
|
947 |
|
|
|
1,079 |
|
Non-compete agreements |
|
3 years |
|
|
2,250 |
|
|
|
2,247 |
|
|
|
3 |
|
Total finite lived intangible assets |
|
|
|
$ |
35,599 |
|
|
$ |
22,653 |
|
|
$ |
12,946 |
|
December 31, 2023 |
|
Estimated |
|
Gross Carrying |
|
|
Accumulated |
|
|
Net |
|
|||
Finite lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|||
Customer relationships |
|
5 years |
|
$ |
39,250 |
|
|
$ |
17,636 |
|
|
$ |
21,614 |
|
Software |
|
7 years |
|
|
4,230 |
|
|
|
1,819 |
|
|
|
2,411 |
|
Trademarks |
|
7 years |
|
|
2,026 |
|
|
|
657 |
|
|
|
1,369 |
|
Non-compete agreements |
|
3 years |
|
|
2,250 |
|
|
|
1,592 |
|
|
|
658 |
|
Total finite lived intangible assets |
|
|
|
$ |
47,756 |
|
|
$ |
21,704 |
|
|
$ |
26,052 |
|
|
|
|
|
Carrying |
|
|
Changes in goodwill: |
|
|
|
|
|
|
Balance at December 31, 2022 |
|
|
|
$ |
84,258 |
|
RWS pre-acquisition adjustment |
|
|
|
|
1,570 |
|
Balance at December 31, 2023 |
|
|
|
|
85,828 |
|
RWS pre-acquisition adjustment |
|
|
|
|
459 |
|
Reclassification to assets held for sale |
|
|
|
|
(5,222 |
) |
Balance at December 31, 2024 |
|
|
|
$ |
81,065 |
|
We compute amortization using the straight-line method over the estimated useful lives of the finite lived intangible assets. The amortization expense related to finite lived intangible assets was approximately $9.2 million and $9.1 million for the years ended December 31, 2024 and 2023, respectively. We reclassified $5.2 million of customer relationships related to a disposal group to assets held for sale at December 31, 2024.
We estimate future amortization expense as of December 31, 2024 to be approximately as follows (in thousands):
Year Ending December 31, |
|
|
|
Amount |
|
|
2025 |
|
|
|
$ |
6,011 |
|
2026 |
|
|
|
|
4,415 |
|
2027 |
|
|
|
|
643 |
|
2028 |
|
|
|
|
743 |
|
2029 |
|
|
|
|
537 |
|
Thereafter |
|
|
|
|
597 |
|
Total |
|
|
|
$ |
12,946 |
|
We have no indefinite-lived intangible assets other than goodwill. Approximately $66.1 million of the goodwill is not deductible for tax purposes, while $15.0 million of goodwill added in the prior years is deductible over its tax-basis life. We performed our annual goodwill impairment analysis in the third quarter of 2024 and 2023 with no impairment recorded in either period. In addition, we reevaluated goodwill in the fourth quarter of 2024, when management identified a disposal group designated as held for sale and assigned $5.2 million of goodwill to the disposal group (see Note 3, Assets and Liabilities Held for Sale). The remaining goodwill of $81.1 million was assessed for impairment with no impairment recorded.
In 2024 and 2023, we recorded corrections to the goodwill from an acquisition completed in 2021. These adjustments resulted in a net increase of $0.5 million each to goodwill and accounts payable in 2024. In 2023, these adjustments resulted in a net increase of $1.6 million and $2.7 million to goodwill and accounts payable, respectively, and a charge to cost of revenue of $1.2 million in the fourth quarter of 2023. We concluded that the effect of these corrections were not material, quantitatively or qualitatively, to the consolidated financial statements taken as a whole, or for any of the subsequent reporting periods.Want the next Quest Resource Holding Corp goodwill & intangibles disclosure the moment it drops?
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 12, 2025 | Showing above |
| 2018 | Mar 14, 2019 | |
| 2016 | Mar 31, 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.