10-Q 1 wts-20220327x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 27, 2022

or

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number 001-11499

WATTS WATER TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

04-2916536

(State or Other Jurisdiction of Incorporation or
Organization)

(I.R.S. Employer Identification No.)

815 Chestnut Street, North Andover, MA

01845

(Address of Principal Executive Offices)

(Zip Code)

(978) 688-1811

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.10 per share

WTS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  

Accelerated filer  

Non-accelerated filer  

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

Outstanding at April 24, 2022

Class A Common Stock, $0.10 par value

27,427,974

Class B Common Stock, $0.10 par value

6,024,290

1

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX

Part I. Financial Information

    

3

Item 1.

Financial Statements

3

Consolidated Balance Sheets at March 27, 2022 and December 31, 2021 (unaudited)

3

Consolidated Statements of Operations for the First Quarters ended March 27, 2022 and March 28, 2021 (unaudited)

4

Consolidated Statements of Comprehensive Income for the First Quarters ended March 27, 2022 and March 28, 2021 (unaudited)

5

Consolidated Statements of Stockholders’ Equity for the First Quarters ended March 27, 2022 and March 28, 2021 (unaudited)

6

Consolidated Statements of Cash Flows for the First Quarters ended March 27, 2022 and March 28, 2021 (unaudited)

7

Notes to Consolidated Financial Statements (unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

Part II. Other Information

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 6.

Exhibits

32

Signatures

33

2

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share information)

(Unaudited)

March 27,

December 31,

    

2022

    

2021

ASSETS

    

CURRENT ASSETS:

Cash and cash equivalents

$

226.8

$

242.0

Trade accounts receivable, less reserve allowances of $11.8 million at March 27, 2022 and $10.3 million at December 31, 2021

 

261.7

 

220.9

Raw materials

148.1

119.4

Work in process

24.5

20.4

Finished goods

229.5

230.9

Total Inventories

402.1

370.7

Prepaid expenses and other current assets

 

29.3

 

27.9

Total Current Assets

 

919.9

 

861.5

PROPERTY, PLANT AND EQUIPMENT

 

 

Property, plant and equipment, at cost

603.2

608.8

Accumulated depreciation

(406.6)

(408.1)

Property, plant and equipment, net

196.6

200.7

OTHER ASSETS:

Goodwill

 

597.7

 

600.7

Intangible assets, net

 

123.8

 

128.6

Deferred income taxes

 

3.6

 

3.5

Other, net

 

61.7

 

60.6

TOTAL ASSETS

$

1,903.3

$

1,855.6

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

156.8

$

143.4

Accrued expenses and other liabilities

 

184.5

 

186.9

Accrued compensation and benefits

 

63.5

 

78.2

Total Current Liabilities

 

404.8

 

408.5

LONG-TERM DEBT

 

202.0

 

141.9

DEFERRED INCOME TAXES

 

46.9

 

40.5

OTHER NONCURRENT LIABILITIES

 

87.1

 

91.5

STOCKHOLDERS’ EQUITY:

Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding

 

 

Class A common stock, $0.10 par value; 120,000,000 shares authorized; 1 vote per share; issued and outstanding, 27,437,126 shares at March 27, 2022 and 27,584,525 shares at December 31, 2021

 

2.7

 

2.8

Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 6,024,290 shares at March 27, 2022 and at December 31, 2021

 

0.6

 

0.6

Additional paid-in capital

 

636.5

 

631.2

Retained earnings

 

655.9

 

665.9

Accumulated other comprehensive loss

 

(133.2)

 

(127.3)

Total Stockholders’ Equity

 

1,162.5

 

1,173.2

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

1,903.3

$

1,855.6

See accompanying notes to consolidated financial statements.

3

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in millions, except per share information)

(Unaudited)

First Quarter Ended

March 27,

March 28,

    

2022

    

2021

Net sales

$

463.2

$

413.3

Cost of goods sold

 

264.6

 

239.6

GROSS PROFIT

 

198.6

 

173.7

Selling, general and administrative expenses

 

126.1

 

113.8

Restructuring

 

1.0

 

0.3

OPERATING INCOME

 

71.5

 

59.6

Other (income) expense:

Interest income

 

(0.1)

 

Interest expense

 

1.4

 

2.0

Other expense (income), net

 

0.3

 

(0.3)

Total other expense

 

1.6

 

1.7

INCOME BEFORE INCOME TAXES

 

69.9

 

57.9

Provision for income taxes

 

15.4

 

16.2

NET INCOME

$

54.5

$

41.7

Basic EPS

NET INCOME PER SHARE

$

1.62

$

1.23

Weighted average number of shares

 

33.7

 

33.8

Diluted EPS

NET INCOME PER SHARE

$

1.61

$

1.23

Weighted average number of shares

 

33.8

 

33.9

Dividends declared per share

$

0.26

$

0.23

See accompanying notes to consolidated financial statements.

4

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)

    

First Quarter Ended

March 27,

March 28,

    

2022

    

2021

Net income

$

54.5

$

41.7

Other comprehensive (loss) gain net of tax:

Foreign currency translation adjustments

 

(9.4)

 

(14.1)

Cash flow hedges

3.5

(0.1)

Other comprehensive loss

 

(5.9)

 

(14.2)

Comprehensive income

$

48.6

$

27.5

See accompanying notes to consolidated financial statements.

5

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in millions)

(Unaudited)

Accumulated

Class A

Class B

Additional

Other

Total

(For the first quarter ended

Common Stock

Common Stock

Paid-In

Retained

Comprehensive

Stockholders’

March 27, 2022)

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss  

    

Equity

Balance at December 31, 2021

 

27,584,525

$

2.8

 

6,024,290

$

0.6

$

631.2

$

665.9

$

(127.3)

$

1,173.2

Net income

54.5

54.5

Other comprehensive loss

(5.9)

(5.9)

Comprehensive income

48.6

Shares of Class A common stock issued upon the exercise of stock options

 

2,325

Stock-based compensation

 

3.3

3.3

Stock repurchase

 

(293,390)

(0.1)

(42.9)

(43.0)

Net change in restricted and performance stock units

143,666

2.0

(12.6)

(10.6)

Common stock dividends

(9.0)

(9.0)

Balance at March 27, 2022

 

27,437,126

$

2.7

 

6,024,290

$

0.6

$

636.5

$

655.9

$

(133.2)

$

1,162.5

Accumulated

Class A

Class B

Additional

Other

Total

(For the first quarter ended

Common Stock

Common Stock

Paid-In

Retained

Comprehensive

Stockholders’

March 28, 2021)

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Earnings

    

Loss  

    

Equity

Balance at December 31, 2020

 

27,478,512

$

2.8

 

6,144,290

$

0.6

$

606.3

$

560.1

$

(100.0)

$

1,069.8

Net income

41.7

41.7

Other comprehensive loss

(14.2)

(14.2)

Comprehensive income

27.5

Shares of Class B common stock converted to Class A common stock

20,000

(20,000)

Stock-based compensation

2.9

2.9

Stock repurchase

(31,153)

(3.8)

(3.8)

Net change in restricted and performance stock units

117,723

1.8

(9.2)

(7.4)

Common stock dividends

(7.8)

(7.8)

Balance at March 28, 2021

27,585,082

$

2.8

6,124,290

$

0.6

$

611.0

$

581.0

$

(114.2)

1,081.2

See accompanying notes to consolidated financial statements.

6

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

First Quarter Ended

March 27,

March 28,

    

2022

    

2021

OPERATING ACTIVITIES

Net income

$

54.5

$

41.7

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation

 

7.2

 

8.0

Amortization of intangibles

 

3.1

 

3.8

Loss on disposal and impairment of property, plant and equipment and other

 

1.3

 

0.6

Stock-based compensation

 

3.3

 

2.9

Deferred income tax

 

5.8

 

4.3

Changes in operating assets and liabilities:

Accounts receivable

 

(43.2)

 

(44.0)

Inventories

 

(34.7)

 

(18.8)

Prepaid expenses and other assets

 

 

(4.6)

Accounts payable, accrued expenses and other liabilities

 

0.7

 

40.0

Net cash (used in) provided by operating activities

 

(2.0)

 

33.9

INVESTING ACTIVITIES

Additions to property, plant and equipment

 

(5.6)

 

(4.9)

Proceeds from the sale of property, plant and equipment

 

 

2.9

Net cash used in investing activities

 

(5.6)

 

(2.0)

FINANCING ACTIVITIES

Proceeds from long-term borrowings

60.0

20.0

Payments of long-term debt

 

 

(20.0)

Payments for withholding taxes on vested awards

 

(12.6)

 

(9.2)

Payments for finance leases and other

(0.2)

(0.4)

Payments to repurchase common stock

 

(42.9)

 

(3.8)

Dividends

 

(9.0)

 

(7.8)

Net cash used in financing activities

 

(4.7)

 

(21.2)

Effect of exchange rate changes on cash and cash equivalents

 

(2.9)

 

(4.2)

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

(15.2)

 

6.5

Cash and cash equivalents at beginning of year

 

242.0

 

218.9

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

226.8

$

225.4

SUPPLEMENTAL CASH FLOW DISCLOSURE:

Issuance of stock under management stock purchase plan

$

0.3

$

0.5

CASH PAID FOR:

Interest

$

0.7

$

2.3

Income taxes

$

6.0

$

5.0

See accompanying notes to consolidated financial statements.

7

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the Watts Water Technologies, Inc. (the “Company”) Consolidated Balance Sheet as of March 27, 2022, the Consolidated Statements of Operations for the first quarters ended March 27, 2022 and March 28, 2021, the Consolidated Statements of Comprehensive Income for the first quarters ended March 27, 2022 and March 28, 2021, the Consolidated Statements of Stockholders’ Equity for the first quarters ended March 27, 2022 and March 28, 2021, and the Consolidated Statements of Cash Flows for the first quarters ended March 27, 2022 and March 28, 2021.

The consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date. The accounting policies followed by the Company are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The financial statements included in this report should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2022.

The Company operates on a 52-week fiscal year ending on December 31, with each quarter, except the fourth quarter, ending on a Sunday. Any quarterly data contained in this Quarterly Report on Form 10-Q generally reflect the results of operations for a 13-week period.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We are not aware of any specific event or circumstance that would require updates to the Company’s estimates or judgments or require the Company to revise the carrying value of the Company’s assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ from those estimates.

2. Accounting Policies

The significant accounting policies used in preparation of these consolidated financial statements for the first quarter ended March 27, 2022, are consistent with those discussed in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Shipping and Handling

Shipping and handling costs included in selling, general and administrative expenses amounted to $17.7 million and $15.4 million for the first quarters of 2022 and 2021, respectively.

Research and Development

Research and development costs included in selling, general and administrative expenses amounted to $11.9 million and $10.9 million for the first quarters of 2022 and 2021, respectively.

8

3. Revenue Recognition

The Company is a leading supplier of products that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial and residential markets of the Americas, Europe, and Asia-Pacific, Middle East, and Africa (“APMEA”). For over 140 years, the Company has designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water.

The Company distributes products through four primary distribution channels: wholesale, original equipment manufacturers (OEMs), specialty, and do-it-yourself (DIY). The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products, which are comprised of the following principal product lines:

Residential & commercial flow control products—includes products typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, thermostatic mixing valves and leak detection products.
HVAC & gas products—includes commercial high-efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under-floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. HVAC is an acronym for heating, ventilation and air conditioning.
Drainage & water re-use products—includes drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications.
Water quality products—includes point-of-use and point-of-entry water filtration, conditioning and scale prevention systems for commercial, marine and residential applications.

The following table disaggregates revenue, which is presented as net sales in the financial statements, for each reportable segment, by distribution channel and principal product line:

For the first quarter ended March 27, 2022

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Wholesale

$

174.8

$

84.0

$

18.0

$

276.8

OEM

25.6

 

45.4

 

1.4

 

72.4

Specialty

93.8

 

 

 

93.8

DIY

 

19.7

 

0.5

 

 

20.2

Total

$

313.9

$

129.9

$

19.4

$

463.2

For the first quarter ended March 27, 2022

(in millions)

Principal Product Line

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

$

178.1

$

46.1

$

15.8

$

240.0

HVAC and Gas Products

84.3

 

60.0

 

2.5

 

146.8

Drainage and Water Re-use Products

22.8

 

22.8

 

0.8

 

46.4

Water Quality Products

 

28.7

 

1.0

 

0.3

 

30.0

Total

$

313.9

$

129.9

$

19.4

$

463.2

9

For the first quarter ended March 28, 2021

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Wholesale

$

157.4

$

80.9

$

16.6

$

254.9

OEM

20.4

 

41.1

 

1.0

 

62.5

Specialty

74.2

 

 

 

74.2

DIY

 

20.8

 

0.9

 

 

21.7

Total

$

272.8

$

122.9

$

17.6

$

413.3

For the first quarter ended March 28, 2021

(in millions)

Principal Product Line

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

$

162.3

$

47.2

$

14.7

$

224.2

HVAC and Gas Products

65.9

 

54.2

 

2.3

 

122.4

Drainage and Water Re-use Products

18.6

 

20.3

 

0.4

 

39.3

Water Quality Products

 

26.0

 

1.2

 

0.2

 

27.4

Total

$

272.8

$

122.9

$

17.6

$

413.3

The Company generally considers customer purchase orders, which in some cases are governed by master sales agreements, to represent the contract with a customer. The Company’s contracts with customers are generally for products only and typically do not include other performance obligations such as professional services, extended warranties, or other material rights. In situations where sales are to a distributor, the Company has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors, including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has elected not to assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or distribution center, or delivery to the customer’s named location. In certain circumstances, revenue from shipments to retail customers is recognized only when the product is consumed by the customer, as based on the terms of the arrangement, transfer of control is not satisfied until that point in time. In determining whether control has transferred, the Company considers if there is a present right to payment, physical possession and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized product without alternative use for its customers. However, as these arrangements do not entitle the Company to a right to payment of cost plus a profit for work completed, the Company has concluded that revenue recognition at the point in time control transfers is appropriate and not over time recognition.

At times, the Company receives orders for products to be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year, under the optional exemption provided by the guidance, revenues allocated to future shipments of partially completed contracts are not disclosed.

The Company generally provides an assurance warranty that its products will substantially conform to the published specification. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. The Company does not consider activities related to such warranty, if any, to be a separate performance obligation. For certain of its products, the Company will separately sell extended warranty and service policies to its customers. The Company considers the sale of these as separate performance obligations. These policies typically are for periods ranging from one to three years. Payments received are deferred and recognized over the policy period. For all periods presented, the revenue recognized and the revenue deferred under these policies are not material to the consolidated financial statements.

10

The timing of revenue recognition, billings and cash collections from the Company’s contracts with customers can vary based on the payment terms and conditions in the customer contracts. In limited cases, customers will partially prepay for their goods. In addition, there are constraints which cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, cooperative advertising, and market development funds. The Company includes these constraints in the estimated transaction price when there is a basis to reasonably estimate the amount of variable consideration. These estimates are based on historical experience, anticipated future performance and the Company’s best judgment at the time. The Company did not recognize any material revenue from obligations satisfied in prior periods. When the timing of the Company’s recognition of revenue is different from the timing of payments made by the customer, the Company recognizes a contract liability (customer payment precedes performance). For all periods presented, the recognized contract liabilities and the associated revenue deferred are not material to the consolidated financial statements.

The Company incurs costs to obtain and fulfill a contract; however, the Company has elected to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. The Company has elected to treat shipping and handling activities performed after the customer has obtained control of the related goods as a fulfillment cost and the related cost is accrued for in conjunction with the recording of revenue for the goods.

4. Goodwill & Intangibles

The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amount of goodwill by geographic segment are as follows:

March 27, 2022

Gross Balance

Accumulated Impairment Losses

Net Goodwill

Acquired

Foreign

Balance

During

Currency

Balance

Balance

Impairment

Balance

January 1,

the

Translation

March 27,

January 1,

Loss During

March 27,

March 27,

    

2022

      

Period

     

and Other

      

2022

      

2022

      

the Period

     

2022

      

2022

(in millions)

Americas

$

490.9

$

0.1

$

491.0

$

(24.5)

$

(24.5)

$

466.5

Europe

 

242.9

 

 

(3.5)

 

239.4

 

(129.7)

 

 

(129.7)

 

109.7

APMEA

 

34.0

 

 

0.4

 

34.4

 

(12.9)

 

 

(12.9)

 

21.5

Total

$

767.8

$

(3.0)

$

764.8

$

(167.1)

$

(167.1)

$

597.7

December 31, 2021

Gross Balance

Accumulated Impairment Losses

Net Goodwill

Acquired

Foreign

Balance

During

Currency

Balance

Balance

Impairment

Balance

January 1,

the

Translation

December 31,

January 1,

Loss During

December 31,

December 31,

    

2021

    

Period

    

and Other

    

2021

    

2021

    

the Period

    

2021

    

2021

(in millions)

Americas

$

482.5

$

8.4

$

$

490.9

$

(24.5)

$

$

(24.5)

$

466.4

Europe

 

252.1

 

 

(9.2)

 

242.9

 

(129.7)

 

 

(129.7)

 

113.2

APMEA

 

34.9

 

 

(0.9)

 

34.0

 

(12.9)

 

 

(12.9)

 

21.1

Total

$

769.5

$

8.4

$

(10.1)

$

767.8

$

(167.1)

$

$

(167.1)

$

600.7

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year. At the most recent annual impairment test which occurred in the fourth quarter of 2021, the Company performed qualitative fair value assessments, including an evaluation of certain key assumptions for all seven of its reporting units. The Company concluded that the fair value of all seven reporting units exceeded their carrying values at that time.

11

Intangible assets include the following:

March 27, 2022

December 31, 2021

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

    

Amount

    

Amortization

    

Amount

    

Amount

    

Amortization

    

Amount

(in millions)

Patents

$

16.1

$

(