FRANCHISE RIGHTS AND OTHER INTANGIBLE ASSETS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FRANCHISE RIGHTS AND OTHER INTANGIBLE ASSETS | FRANCHISE RIGHTS AND OTHER INTANGIBLE ASSETS The carrying amount of franchise rights and other intangible assets was as follows:
(1) Attributed to the Company's powersports reporting unit and powersports reportable segment. Gross amount of $343.0 million was net of accumulated impairment of $216.0 million as of September 30, 2025 and $182.0 million as of December 31, 2024. (2) Balance was attributed to the Company's vehicle transportation services reporting unit. Goodwill of $241.7 million attributed to the powersports reporting unit was fully impaired as of December 31, 2023. Franchise rights and other intangible assets are tested for impairment annually as of October 1, or whenever events or changes in circumstances indicate that an impairment may exist. For the quarter ended June 30, 2025, management determined that a triggering event had occurred resulting from the prolonged economic uncertainty and our sustained depressed stock price through the last day of the second quarter of 2025. We elected to bypass the qualitative test at that time, and we performed a quantitative interim impairment test for our franchise rights and goodwill. The fair value of franchise rights was determined using an excess earnings method. This analysis incorporates estimates and forward-looking projections, such as future revenue growth rates, corresponding gross margin, return on debt-free working capital, contributory asset returns, and the discount rate. Based on the interim impairment test, the carrying value of the franchise rights exceeded their fair value, and an impairment charge of $34.0 million was recorded to impairment of franchise rights on the consolidated statement of operations in the second quarter of 2025. The Company also tested its goodwill for impairment and determined that the fair value of its vehicle transportation reporting unit exceeded its carrying value as of June 30, 2025, and no impairment of goodwill was recorded. The fair value measurements associated with the quantitative franchise rights and goodwill tests are based on significant inputs that are not observable in the market and are thus considered Level 3 inputs. Significant changes in the underlying assumptions used to value franchise rights and goodwill could significantly increase or decrease the fair value estimates used for impairment assessments. For the quarter ended September 30, 2025, management determined that there were no triggering events that would require the intangible assets be tested for impairment.
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