Company: PRMB
Filing Date: 2025-01-24
Form Type: S-1
Source: 0001193125-25-012325
Chunk: 119

Company: Primo Brands Corp
Filing Date: 2025-01-24
Form: S-1
Chunk 119
---
 a result, impairment tests must
be performed at least annually, or more frequently if events or circumstances indicate that an asset may be impaired. Goodwill is tested for impairment at the reporting unit level and indefinite-lived intangible assets are tested for impairment at
the asset level.

Reporting units are determined based on one level below the operating segment level. In performing the goodwill
impairment test, BlueTriton may first perform a qualitative assessment or bypass the qualitative assessment and proceed directly to performing the quantitative impairment test. Factors considered include macroeconomic, industry and market
conditions, cost factors that would have a negative effect on earnings and cash flows, legal and regulatory environment, historical financial performance, and significant changes in BlueTriton’s operations or brand. If the qualitative
assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. In the quantitative assessment for goodwill and indefinite-lived intangible assets, an assessment is performed to determine
the fair value of the reporting unit and indefinite-lived intangible asset, respectively.

BlueTriton uses either the income approach or
in some cases a combination of income and market-based approaches, to determine the fair value of its assets, as well as an overall consideration of market capitalization and enterprise value. If the carrying value of the reporting unit or
intangible asset exceeds the estimated fair

77

value, an impairment charge is recognized in an amount equal to that excess. Goodwill is tested for impairment at the reporting unit level annually, in the fourth quarter, or when events or
changes in circumstances indicate that goodwill might be impaired. BlueTriton performed a quantitative assessment during 2023 using a combination of an income and market-based approach and determined that the fair values of its reporting units were
not less than recorded carrying values, and therefore no impairment exists.

BlueTriton uses an income approach, the relief from royalty
method, to determine the fair value of its indefinite lived intangible assets. BlueTriton used specific royalty rates for each trade name based on consideration of comparable third-party licensing transactions and the profit margins earned. Based on
BlueTriton’s analysis, the company determined that the fair value of each of its trade names was adequately in excess of their carrying amount, and therefore no impairment exists.

There are inherent uncertainties related to each of the qualitative assumptions, and BlueTriton’s judgment in applying them. Changes in
the assumptions used in BlueTriton’s qualitative assessment of goodwill and intangible assets could