Goodwill & Asset Impairment

Staff comment: In the Results of Operations section, when you describe two or more factors that contributed to a material change in a financial statement line item between periods, please quantify in future filings, where possible, the extent to which each factor contributed to the overall change in that line item. This disclosure should be provided for each significant income statement line item as well as for the segment discussion. As an example, your discussion on page 26 of the $221.8 million decrease in Operating income only quantifies asset impairment charges of $53.6 million and higher restructuring and restructuring-related charges of $67.8 million, without similar quantification provided for the… letter →

Staff comment: We note your disclosure on page 36 that the significant assumptions that are used to determine the estimated fair value of reporting units for impairment testing are forecasted revenue growth rates, operating income margins, market-participant discount rates and EBITDA multiples. You also disclose the actual assumptions used to estimate the fair values of the goodwill related to continuing operations tested quantitatively during the year ended December 27, 2025. Please explain to us, and revise your disclosure to clarify, the reporting units that were tested quantitatively versus qualitatively and explain why a quantitative analysis was performed. If any reporting units have a fair value… letter →

Staff comment: We note that you assess impairment of your equity investment without a readily determinable fair value using an other-than-temporary model. We also note that ASU 2016-01 removed this model for these equity security investments to apply a one-step approach as explained further in paragraphs BC85 to BC89 of that ASU. As a result, please address the following: • Tell us whether your $618,630 impairment recorded in fiscal 2025 would have been larger or whether you would have recorded any impairment in fiscal 2024 if, instead of apply an other-than-temporary model, you employed a direct assessment of fair value to carrying value if indicators of impairment existed. If so, demonstrate to us… letter →

Staff comment: We understand from the disclosures on page 10 of your recent interim report that in conjunction with your acquisition of Breeze Autocare, you immediately sold 45 of the 207 stores acquired pursuant to a Federal Trade Commission Decision and Order. You state that the fair value was $90 million including an allocation of goodwill, although the sale generated a $57.9 million pre-tax loss, indicating sale proceeds of $32.1 million. Given the disparity between these amounts and considering the timeframe, tell us how you determined that the fair value was not the amount that you agreed to receive in exchange. Please also describe your approach in establishing reporting units and allocating the… letter →

Staff comment: We note your response to prior comment 2, including your proposed reconciliation of segment assets to consolidated assets. Please tell us how you determined the line currently titled “Corporate Assets” contains no significant items that should be separately identified and described. For example, it appears almost half of “Corporate Assets” may consist of goodwill not allocated to segments, and other acquired intangible assets not allocated to segments may represent a significant portion of the remainder. See ASC 280-10-50-31 and 280-10-55-49 for guidance. letter →

Staff comment: We note your disclosure that in conducting an annual impairment test, you first review qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit or indefinite-lived intangible asset is less than its carrying amount, and if factors indicate that is the case, or if you choose to bypass the qualitative assessment, you perform a quantitative impairment test. We further note that no goodwill impairments were recorded during Fiscal 2025, Fiscal 2024 or Fiscal 2023. Please revise your disclosures to ensure that you include an accounting policy addressing how you assess goodwill and intangible assets for impairment. Your disclosures should… letter →

Staff comment: We note your disclosure that in fiscal 2025 you performed a quantitative impairment assessment for goodwill for your six reporting units. You recorded a goodwill impairment on the Mechanical reporting unit of $18.9 million as a result of this annual impairment test. You also indicated that the fair values of the Conduit & Fittings and EMEA reporting units exceed their respective carrying value, but changes in your valuation assumptions could have resulted in an impairment. However, you do not discuss the results of the remaining three reporting units. Please expand your critical accounting estimates disclosure to indicate whether the fair value substantially exceeds book value for all… letter →

Staff comment: You disclose, “there have been no material changes to the items disclosed as critical accounting policies and estimates,” including goodwill, since the disclosure in the Form 10-K. Please expand your disclosure to address the subsequent substantial decrease in market capitalization and the impact on your assessment of the likelihood of future material goodwill impairment charges. Tell us and disclose your consideration of ASC 350-20-35-30 and the need to perform a more recent impairment test. letter →

Staff comment: We note the disclosure in your financial statement footnotes that you performed a quantitative impairment analysis related to certain reporting units and a qualitative impairment analysis related to other reporting units and concluded no goodwill was impaired. Given the significance of your goodwill balance, please revise your Critical Accounting Estimates in future filings to clarify whether any of your reporting units are at risk of failing the goodwill impairment test. A reporting unit is at risk of failing the impairment test if it has a fair value that is not substantially in excess of carrying value. If no reporting units are at risk based on your most recent impairment test, please… letter →

Staff comment: Please address the following regarding your response to prior comment two with a view toward ascertaining the extent to which Biopharmaceuticals and Exemplar continue to constitute two separate operating segments as defined in ASC 280-10-50-1: • Regarding the second bullet, you have told us that you have two separate components or reporting units that were not aggregated under ASC 350-20-35-33 through 35-36. You also appear to indicate that your chief operating decision maker (CODM) continues to receive at least some level of separate discrete financial information for these reporting units. Please tell us what financial information is received by the CODM, and how it changed in the first… letter →

Staff comment: Please revise to specify the fiscal periods that you have performed an impairment assessment. In addition, clarify if the assessment at the lowest levels for which there are identifiable cash flows that are independent of other groups of assets, is the individual store level. letter →

Staff comment: Please provide information for investors to assess the probability of future goodwill impairment charges. For example, please disclose whether your reporting units are at risk of failing the quantitative impairment test or that the fair value is substantially in excess of carrying value and is not at risk of failing. If a reporting unit is at risk of failing, you should disclose: • the percentage by which fair value exceeded carrying value at the date of the most recent test; • a more detailed description of the methods and key assumptions used and how the key assumptions were determined; • a discussion of the degree of uncertainty associated with the assumptions; and • a description of… letter →

Staff comment: Please address the following related to your disclosure regarding the realignment of your former two operating segments, Biopharmaceuticals and Exemplar, into one operating segment during the first quarter of 2025: • Tell us and revise your future filings to clarify whether Biopharmaceuticals and Exemplar remain separate reporting units. • Please provide us with your analysis for the aggregation of these components into one operating segment, noting they appear to possess dissimilar economic and other characteristics. Refer to ASC 350-20-35-33 through 35-36. • Tell us how you determined that your presentation of a single operating segment is appropriate under the guidance of ASC 280-10-50. letter →

Staff comment: We note that you recorded material goodwill and intangible asset impairment charges in prior periods. We also note that the assessment of goodwill for impairment is identified by your auditor as a critical audit matter in their audit report. Based on the continued materiality of goodwill and intangible assets to your financial statements, underlying negative operating trends, and the fact that your net book value exceeds your market capitalization, please more fully explain to us how you determined the estimated fair values of your reporting units exceed their carrying values. In addition, to the extent you conclude an impairment charge that could materially impact your financial statements… letter →