Worthington Steel, Inc. Goodwill & Intangibles Disclosure
Note 4 – Goodwill and Other Assets
Goodwill
The following table summarizes the changes in the carrying amount of goodwill during fiscal 2025 and fiscal 2024:
(In millions) |
|
Total |
|
|
Balance at May 31, 2023 |
|
$ |
78.6 |
|
Acquisitions and purchase accounting adjustments (1) |
|
|
1.1 |
|
Translation adjustments |
|
|
(0.1 |
) |
Balance at May 31, 2024 |
|
|
79.6 |
|
Translation adjustments |
|
|
- |
|
Balance at May 31, 2025 |
|
$ |
79.6 |
|
|
Other Intangible Assets
Intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from 7 to 20 years. The following table summarizes other intangible assets by class as of the end of the prior two fiscal years:
|
|
2025 |
|
|
2024 |
|
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|
|
|
|
Accumulated |
|
|
|
|
|
Accumulated |
|
||||
(In millions) |
|
Cost |
|
|
Amortization |
|
|
Cost |
|
|
Amortization |
|
||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trademarks |
|
$ |
5.2 |
|
|
$ |
- |
|
|
$ |
5.2 |
|
|
$ |
- |
|
In-process research & development |
|
|
- |
|
|
|
- |
|
|
|
1.3 |
|
|
|
- |
|
Total indefinite-lived intangible assets |
|
|
5.2 |
|
|
|
- |
|
|
|
6.5 |
|
|
|
- |
|
Definite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer relationships |
|
$ |
100.0 |
|
|
$ |
43.5 |
|
|
$ |
102.8 |
|
|
$ |
39.8 |
|
Non-compete agreements |
|
|
2.0 |
|
|
|
2.0 |
|
|
|
2.0 |
|
|
|
2.0 |
|
Technology/know-how |
|
|
11.0 |
|
|
|
4.8 |
|
|
|
11.0 |
|
|
|
3.5 |
|
Total definite-lived intangible assets |
|
|
113.0 |
|
|
|
50.3 |
|
|
|
115.8 |
|
|
|
45.3 |
|
Total intangible assets |
|
$ |
118.2 |
|
|
$ |
50.3 |
|
|
$ |
122.3 |
|
|
$ |
45.3 |
|
Amortization expense totaled $6.0 million, $6.3 million, and $6.3 million in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.
Amortization expense for each of the next five fiscal years is estimated to be:
(In millions) |
|
|
|
|
2026 |
|
$ |
5.6 |
|
2027 |
|
$ |
5.6 |
|
2028 |
|
$ |
5.6 |
|
2029 |
|
$ |
5.3 |
|
2030 |
|
$ |
4.9 |
|
Impairment of Assets
Fiscal 2025
During fiscal 2025, the Company identified an impairment indicator for the in-process research and development intangible asset of TWB. The indefinite-lived in-process research & development intangible asset with a net book value of $1.3 million was deemed to be fully impaired as the technology was unable to be commercialized, resulting in a pre-tax impairment charge of $1.3 million recognized in the third quarter of fiscal 2025.
During fiscal 2025, the Company announced plans to combine WSCP’s Cleveland, Ohio toll processing manufacturing facility into its existing manufacturing facility in Twinsburg, Ohio. Operations at the Cleveland, Ohio toll processing manufacturing facility ceased by the end of fiscal 2025, while incremental closure activities are expected to be completed in fiscal 2026. As a result, the Company tested the long-lived assets of the combined asset group for impairment at the lowest level for which there were largely independent cash flows when identifiable, and grouped at a higher level when largely independent cash flows do not exist at a lower level. Other assets were evaluated with applicable accounting guidance outside of long-lived asset guidance.
During the impairment test, the Company determined that the undiscounted cash flows of the finance lease assets along with certain other fixed assets encumbered to the land and building of the finance lease assets were greater than the current carrying value of the asset group. As a result, no impairment was recognized for the finance lease assets along with building and improvements, net assets.
The book value of the remaining machinery and equipment and other long-lived assets were determined to be in excess of fair value, resulting in an impairment charge of $3.8 million. Additionally, the customer list intangible asset, which was recorded on the balance sheet in other intangible assets, net, was deemed to be fully impaired and written off.
Due to the closure of the WSCP toll processing manufacturing facility in Cleveland, Ohio, the Company evaluated the impact on goodwill of the Flat Rolled Steel Processing reporting unit, in which the entity was included. As a result of the Company’s evaluation, no meaningful amount of goodwill was attributed to the disposal group, and thus, no goodwill impairment was recognized.
The disposal group consisted of the following:
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|
|
|
|
Pre-Tax |
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|
|
Net Book |
|
|
Impairment |
|
||
(In millions) |
|
Value |
|
|
Recognized |
|
||
Disposal Group: |
|
|
|
|
|
|
||
Long-lived assets: |
|
|
|
|
|
|
||
Finance lease assets and buildings and improvements, net |
|
$ |
10.1 |
|
|
$ |
- |
|
Machinery and equipment and other long-lived assets(1) |
|
|
5.1 |
|
|
|
3.8 |
|
Other intangible assets, net |
|
|
1.8 |
|
|
|
1.8 |
|
Total long-lived assets |
|
|
17.0 |
|
|
|
5.6 |
|
Other assets: |
|
|
|
|
|
|
||
Prepaid expenses and other current assets(2) |
|
|
0.6 |
|
|
|
0.5 |
|
Total other assets |
|
|
0.6 |
|
|
|
0.5 |
|
Total |
|
$ |
17.6 |
|
|
$ |
6.1 |
|
|
Due to fourth quarter of fiscal 2025 depreciation and amortization, and transfers to the remaining WSCP toll processing facility, the remaining assets, equal to $10.4 million, were classified as assets held for sale on the consolidated balance sheet as of May 31, 2025.
Fiscal 2024
During fiscal 2024, the Company committed to plans to liquidate certain fixed assets at a WSCP toll processing facility in Cleveland, Ohio. During the first quarter of fiscal 2024, in accordance with the applicable accounting guidance, the Company lowered the estimate of fair value less costs to sell to reflect the expected scrap value of the WSCP toll processing equipment to $0.2 million, resulting in a pre-tax impairment charge of $1.4 million.
Fiscal 2023
During fiscal 2023, the Company committed to two separate plans to liquidate certain fixed assets: (1) idled equipment at the manufacturing facility in Taylor, Michigan; and (2) the net assets at a WSCP toll processing facility in Cleveland, Ohio. As both asset groups have met the criteria for classification as assets held for sale, net assets in the amount of $2.6 million have been presented separately as assets held for sale on the Company’s combined balance sheet at May 31, 2023. In accordance with the applicable accounting guidance, the net assets were measured at fair market value less costs to sell, resulting in an overall impairment charge of $2.1 million during fiscal 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 29, 2025 | Showing above |
| 2024 | Aug 2, 2024 | |
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.