Annual report pursuant to Section 13 and 15(d)

Goodwill

Goodwill

12 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Note 8: Goodwill

The following table details the Company's goodwill as of September 30, 2024 and 2023 (in 000’s):


	Retail - Entertainment		Retail - Flooring		Flooring Manufacturing		Steel Manufacturing		Corporate		Total
September 30, 2022	$	36,947	$	—	$	807	$	3,339	$	—	$	41,093
Flooring Liquidators acquisition	—		30,419		—		—		—		30,419
PMW acquisition	—		—		—		4,666		—		4,666
Goodwill adjustments	—		—		—		(312)		—		(312)
September 30, 2023	36,947		30,419		807		7,693		—		75,866
CRO acquisition	—		89		—		—		—		89
Central Steel acquisition	—		—		—		2,906		—		2,906
Goodwill adjustments	—		999		—		(652)		—		347


Goodwill impairment	—		(18,056)		—		—		—		(18,056)
September 30, 2024	$	36,947	$	13,451	$	807	$	9,947	$	—	$	61,152

The Company accounts for purchased goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other (see Note 2). Goodwill recognized during the year ended September 30, 2024 was approximately $3.0 million, and was due to the acquisitions of CRO and Central Steel (see Note 4). Goodwill recognized during the year ended September 30, 2023 was approximately $35.1 million, due to the acquisitions of Flooring Liquidators and PMW (see Note 4).

Flooring Liquidators Impairment

The Company tests goodwill for impairment on an annual basis on July 1 of each year, and monitors throughout the year for impairment triggering events that indicate that the carrying value of one or more of its reporting units exceeds its fair value. In connection with its annual goodwill testing, the Company observed that Flooring Liquidators had negative cash flows due to negative impacts of general economic conditions hampering the floor covering industry as a whole. Consequently, based on a quantitative assessment, the Company concluded that the carrying value of Flooring Liquidator’s goodwill exceeded its estimated fair value, and, as a result, recorded an $18.1 million impairment charge during the year ended September 30, 2024.

The quantitative goodwill impairment assessment consisted of a fair value calculation that combines an income approach, using a discounted cash flow method, and a market approach. The quantitative goodwill impairment assessment requires the application of a number of significant assumptions, including estimates of future revenue growth rates, EBITDA margins, discount rates and market multiples. The projected future revenue growth rates and EBITDA margins, and the resulting projected cash flows are based on historical experience and internal annual operating plans reviewed by management, extrapolated over the forecast period. Discount rates are determined using a weighted average cost of capital

adjusted for risk factors specific to the reporting units. Market multiples are based on the guideline public company method using comparable publicly traded company multiples of revenue and EBITDA for a group of benchmark companies.

The Company also reviews long-lived assets, including intangible assets, for impairment when events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying value of an asset group to future undiscounted net cash flows expected to be generated by the asset group. The undiscounted cash flows for Flooring Liquidator’s long-lived asset group were above the carrying value and the Company determined that the long-lived asset group was recoverable, and, as such, no impairment existed as of September 30, 2024.