GOODWILL AND OTHER INTANGIBLES
The Company’s changes in goodwill at March 31, 2026 and 2025 consisted of the following:
| | | | | | | | | | | | | | |
| | Fiscal Year Ended March 31, |
| | 2026 | | 2025 |
| Balance at beginning of year | | $ | 213,840 | | | $ | 213,869 | |
| | | | |
Goodwill impairment (1) | | (41,061) | | | — | |
Foreign currency translation adjustment | | (84) | | | (29) | |
| | | | |
| Balance at end of year | | $ | 172,695 | | | $ | 213,840 | |
(1) A $41.1 million non-cash goodwill impairment charge for Universal Ingredients–Shank’s was recognized for the fiscal year ended March 31, 2026. There is no remaining goodwill related to Universal Ingredients–Shank’s at March 31, 2026. See Note 1 for additional information.
The Company’s intangible assets primarily consist of capitalized customer-related intangibles, trade names, proprietary developed technology and noncompetition agreements. The Company’s intangible assets subject to amortization consisted of the following at March 31, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 31, 2026 |
| (in thousands, except useful life) | Useful Life (Years) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value |
| Customer relationships | 11 | - | 13 | | $ | 86,500 | | | $ | (40,885) | | | $ | 45,615 | |
| Trade names | | 5 | | | 11,100 | | | (11,100) | | | — | |
| Developed technology | | 13 | | | 9,300 | | | (6,358) | | | 2,942 | |
| Noncompetition agreements | 4 | - | 5 | | 4,000 | | | (4,000) | | | — | |
| Other | | 5 | | | 694 | | | (647) | | | 47 | |
| Total intangible assets | | | | | $ | 111,594 | | | $ | (62,990) | | | $ | 48,604 | |
| | | | | | | | | |
| | | | | March 31, 2025 |
| Useful Life (Years) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value |
| Customer relationships | 11 | - | 13 | | $ | 86,500 | | | $ | (33,155) | | | $ | 53,345 | |
| Trade names | | 5 | | | 11,100 | | | (10,320) | | | 780 | |
| Developed technology | | 13 | | | 9,300 | | | (6,012) | | | 3,288 | |
| Noncompetition agreements | 4 | - | 5 | | 4,000 | | | (3,625) | | | 375 | |
| Other | | 5 | | | 802 | | | (754) | | | 48 | |
| Total intangible assets | | | | | $ | 111,702 | | | $ | (53,866) | | | $ | 57,836 | |
Intangible assets are amortized on a straight-line basis over the asset’s estimated useful economic life as noted above.
The Company’s amortization expense for intangible assets for the fiscal years ended March 31, 2026, 2025, and 2024:
| | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended March 31, |
| | 2026 | | 2025 | | 2024 |
| Amortization Expense | | $ | 9,124 | | | $ | 11,067 | | | $ | 11,279 | |
Amortization expense for the developed technology intangible asset is recorded in cost of goods sold in the consolidated income statements of income. The amortization expense for the other intangible assets is recorded in selling, general, and administrative expenses in the consolidated income statements of income.
As of March 31, 2026, the expected future amortization expense for intangible assets is as follows:
| | | | | |
| Fiscal Year | |
| 2027 | $ | 8,101 | |
| 2028 | 8,101 | |
| 2029 | 8,077 | |
| 2030 | 8,077 | |
| 2031 and thereafter | 16,248 | |
| Total expected future amortization expense | $ | 48,604 | |
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.