What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-05 · 114 added, 74 removed, 553 unchanged (25% of the section changed)

3 unchanged sentences

(In millions, except share and per share data, unaudited)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

34 unchanged sentences

Common stock – authorized 40,000,000 shares of $ 0.20 par value;

issued and outstanding – 22,757,326 as of June 30, 2021 and 22,611,976 as of December 31, 2020

issued and outstanding – 22,762,989 as of September 30, 2021 and 22,611,976 as of December 31, 2020

Additional paid-in capital 129.2 127.8

10 unchanged sentences

(In millions, except share and per share data, unaudited)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

Restructuring, impairment and other asset charges, net 0.3 2.2 1.8 10.3

Income from operations 11.2 10.9 21.0 26.0

Income (loss) from operations 6.7 ( 0.9 ) 27.7 25.1

Other income:

1 unchanged sentence

Interest income 0.1 0.2 0.4 0.6

Other income, net 0.1 0.3 — 0.3

Other (expenses) income, net ( 0.1 ) 1.1 ( 0.1 ) 1.4

Income from operations before income taxes 6.5 0.4 27.4 26.9

Income tax provision (benefit) 2.3 1.8 3.2 ( 3.3 )

Income tax (benefit) provision ( 2.8 ) ( 1.2 ) 0.4 ( 4.5 )

Net income 9.3 1.6 27.0 31.4

Net (income) loss attributable to noncontrolling interest — ( 0.1 ) — 0.1

Net loss attributable to noncontrolling interest — — — 0.1

Net income attributable to controlling interest $ 9.3 $ 1.6 $ 27.0 $ 31.5

8 unchanged sentences

(In millions, unaudited)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net income $ 9.3 $ 1.6 $ 27.0 $ 31.4

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustments ( 4.5 ) 0.5 ( 1.2 ) ( 8.3 )

Other comprehensive income (loss) 4.1 0.4 3.3 ( 8.8 )

Other comprehensive (loss) income ( 4.5 ) 0.5 ( 1.2 ) ( 8.3 )

Comprehensive income 4.8 2.1 25.8 23.1

5 unchanged sentences

(In millions, unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

5 unchanged sentences

Provision for warranties 8.5 7.1

Deferred compensation expense 0.3 0.2

Deferred compensation (benefit) expense — 0.5

Share-based compensation 4.6 4.8

1 unchanged sentence

Gain on disposition of property and equipment ( 0.5 ) ( 0.8 )

Gain on disposition of subsidiary — ( 1.1 )

Asset impairment charges 0.2 4.1

17 unchanged sentences

Acquisitions, net of cash acquired 0.1 ( 28.3 )

Price adjustment on prior sale of subsidiary ( 1.1 ) —

Proceeds from (price adjustment on prior) sale of subsidiary ( 1.1 ) 1.1

Expenditures for property and equipment ( 10.9 ) ( 10.9 )

6 unchanged sentences

(In millions, unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

43 unchanged sentences

Balance, June 30, 2021 22,757,326 $ 4.6 $ 127.8 $ ( 30.2 ) $ ( 1.3 ) $ 557.9 $ 0.5 $ 659.3

Common Stock Common Stock Amount Additional Paid-in-Capital Accumulated Other Comprehensive Loss Company Shares Held by SERP Retained Earnings Non-controlling Interest Total Equity

Balance, December 31, 2019 22,551,183 $ 4.5 $ 122.6 $ ( 31.8 ) $ ( 1.7 ) $ 508.3 $ 0.5 $ 602.4

Net income — — — — — 9.3 — 9.3

3 unchanged sentences

Share-based compensation — — 1.7 — — — — 1.7

Conversion of liability awards to equity — — 0.8 — — — — 0.8

Issuance of common stock under incentive plan 5,663 — ( 0.1 ) — — — — ( 0.1 )

Withholding tax paid upon equity award vesting — — ( 0.2 ) — — — — ( 0.2 )

SERP transactions, net — — — — 0.1 — — 0.1

Balance, September 30, 2021 22,762,989 $ 4.6 $ 129.2 $ ( 34.6 ) $ ( 1.2 ) $ 564.7 $ 0.4 $ 663.1

ASTEC INDUSTRIES, INC.

Consolidated Statements of Equity (Continued)

(In millions, unaudited)

Amount Additional

Capital Accumulated Other Comprehensive Loss Company Shares Held by SERP Retained

Earnings Non-controlling

Interest Total

Balance, December 31, 2019 22,551,183 $ 4.5 $ 122.6 $ ( 31.8 ) $ ( 1.7 ) $ 508.3 $ 0.5 $ 602.4

Net income (loss) — — — — — 20.6 ( 0.2 ) 20.4

Other comprehensive loss — — — ( 9.2 ) — — — ( 9.2 )

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

Share-based compensation — — 1.1 — — — — 1.1

Issuance of common stock under incentive plan — — 0.8 — — — — 0.8

Withholding tax paid upon equity award vesting 32,663 — — — — — — —

Change in ownership percentage of subsidiary — — ( 0.5 ) — — — — ( 0.5 )

Balance, March 31, 2020 22,583,846 4.5 124.0 ( 41.0 ) ( 1.7 ) 526.4 0.3 612.5

8 unchanged sentences

Balance, June 30, 2020 22,602,982 $ 4.5 $ 125.8 $ ( 40.5 ) $ ( 1.6 ) $ 533.2 $ 0.3 $ 621.7

Net income — — — — — 1.6 — 1.6

Other comprehensive income — — — 0.5 — — — 0.5

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

Share-based compensation — — 1.8 — — — — 1.8

Issuance of common stock under incentive plan 5,882 — — — — — — —

Withholding tax paid upon equity award vesting — — ( 0.1 ) — — — — ( 0.1 )

SERP transactions, net — — — — 0.1 — — 0.1

Balance, September 30, 2020 22,608,864 $ 4.5 $ 127.5 $ ( 40.0 ) $ ( 1.5 ) $ 532.3 $ 0.3 $ 623.1

The accompanying notes are an integral part of these unaudited consolidated financial statements.

37 unchanged sentences

Actual results may differ from these estimates.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, the financial position as of June 30, 2021 and December 31, 2020 and the cash flows for the six months ended June 30, 2021 and 2020, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020, the financial position as of September 30, 2021 and December 31, 2020 and the cash flows for the nine months ended September 30, 2021 and 2020, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature.

The interim results are not necessarily indicative of results that may be achieved in a full reporting year.

1 unchanged sentence

Reclassifications and Adjustments

Certain reclassifications in amounts previously reported have been made to conform to current presentation including the reclassification of $ 0.6 million net gain on sale of fixed assets from "Cost of sales" to "Restructuring, impairment and other asset charges, net" for the six months ended June 30, 2020.

Certain reclassifications in amounts previously reported have been made to conform to the current presentation including:

• Reclassification of $ 0.2 million and $ 0.8 million net gain on sale of fixed assets from "Cost of sales" to "Restructuring, impairment and other asset charges, net" for the three and nine months ended September 30, 2020, respectively.

• Reclassification of $ 1.1 million for proceeds from the sale of the Company's Enid location was made from "Net cash provided by operating activities" to "Net cash used by investing activities" for the nine months ended September 30, 2020.

In addition, the Company recorded a $ 1.5 million out-of-period expense during the first quarter of 2021 in "Selling, general and administrative expenses" for certain vendor hosted software licensing fees for contract costs incurred in the fourth quarter of 2020.

45 unchanged sentences

Inventories consist of the following:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Raw materials and parts $ 202.1 $ 154.6

7 unchanged sentences

Although the deferred compensation programs' investments are allocated to individual participants and investment decisions are made solely by those participants, they are non-qualified plans.

Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time as a participant makes a qualifying withdrawal, which is recorded in "Other long-term liabilities" in the Consolidated Balance Sheets.

Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time as a participant makes a qualifying withdrawal.

The SERP assets and related offsetting liability are recorded in non-current "Investments" and "Other long-term liabilities", respectively, in the Consolidated Balance Sheets.

The Company's subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.

2 unchanged sentences

The fair values of foreign currency exchange contracts are based on quotations from various banks for similar instruments using models with market based inputs.

Financial assets and liabilities are categorized based upon the level of judgment associated with the inputs used to measure their fair

Financial assets and liabilities are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

The inputs used to measure the fair value are identified in the following hierarchy:

5 unchanged sentences

Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of June 30, 2021 and December 31, 2020 are Level 1 and Level 2 in the fair value hierarchy as defined above:

June 30, 2021

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of September 30, 2021 and December 31, 2020 are Level 1 and Level 2 in the fair value hierarchy as defined above:

September 30, 2021

(in millions) Level 1 Level 2 Total

1 unchanged sentence

Trading equity securities:

Deferred compensation programs money market fund $ 0.2 $ — $ 0.2

Deferred compensation programs mutual funds $ 4.5 $ — $ 4.5

39 unchanged sentences

The product warranty liability is primarily based on historical claim rates, nature of claims and the associated cost.

Changes in the Company's product warranty liability for the three and six month periods ended June 30, 2021 and 2020 are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Changes in the Company's product warranty liability for the three and nine month periods ended September 30, 2021 and 2020 are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

8 unchanged sentences

Changes in assumptions, as well as changes in actual experience, could cause these estimates to change in the future.

Total accrued loss reserves were $ 6.8 million and $ 7.2 million as of June 30, 2021 and December 31, 2020, respectively, of which $ 5.0 million and $ 4.2 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at June 30, 2021 and December 31, 2020, respectively.

For the three months ended June 30, 2021, the Company recorded an income tax provision of $ 2.3 million, reflecting a 20.4 % effective tax rate, compared to a $ 1.8 million income tax provision for the three months ended June 30, 2020, reflecting a 16.1 % effective tax rate.

The change in the effective tax rate for the three months ended June 30, 2021 compared to the same period of the prior year is primarily due to changes in the relative weighting of jurisdictional income and loss and the limitation on executive compensation deduction partially offset by net discrete tax benefits related to the release of reserves for uncertain tax positions associated with Astec Mobile Machinery GmbH ("AMM") whose dissolution was completed during the second quarter of 2021.

For the six months ended June 30, 2021, the Company recorded an income tax provision of $ 3.2 million, reflecting a 15.3 % effective tax rate, compared to a $ 3.3 million income tax benefit for the six months ended June 30, 2020, reflecting a ( 12.5 )% effective tax rate.

The change in the effective tax rate for the six months ended June 30, 2021 compared to the same period of the prior year is primarily due a net discrete tax benefit of $ 9.5 million resulting from provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in the prior year provision and changes in the relative weighting of jurisdictional income and loss partially offset by the limitation on executive compensation deduction and a net discrete tax benefit related to the release of reserves for uncertain tax positions associated with AMM.

Total accrued loss reserves were $ 7.2 million at both September 30, 2021 and December 31, 2020, of which $ 5.4 million and $ 4.2 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at September 30, 2021 and December 31, 2020, respectively.

For the three months ended September 30, 2021, the Company recorded an income tax benefit of $ 2.8 million, reflecting a ( 43.1 )% effective tax rate, compared to a $ 1.2 million income tax benefit for the three months ended September 30, 2020, reflecting a ( 300.0 )% effective tax rate.

The change in the effective tax rate for the three months ended September 30, 2021 compared to the same period of the prior year is primarily due to a current year discrete benefit of $ 3.5 million from the release of a valuation allowance associated with the Company's Brazilian subsidiary, partially offset by a reduced net benefit of $ 1.2 million from the research and development ("R&D") credit for 2021 and the recently filed 2020 R&D credit as part of the prior year consolidated corporate income tax return.

For the nine months ended September 30, 2021, the Company recorded an income tax provision of $ 0.4 million, reflecting a 1.5 % effective tax rate, compared to a $ 4.5 million income tax benefit for the nine months ended September 30, 2020, reflecting a ( 16.7 )% effective tax rate.

The change in the effective tax rate for the nine months ended September 30, 2021 compared to the same period of the prior year is primarily due to a net discrete tax benefit of $ 9.5 million resulting from provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") in the prior year.

Among other provisions, the CARES Act modified the net operating loss ("NOL") carryback provisions, which allowed the Company to carryback its 2018 NOL to prior tax years.

This change not only favorably impacted the timing of the NOL benefit, but also increased the tax benefit amount as the federal tax rates in the prior years (35%) were higher than the current federal tax rate (21%).

The Company's recorded liability for uncertain tax positions was $ 9.3 million and $ 9.7 million as of June 30, 2021 and December 31, 2020, respectively.

The net reduction in 2021 of $ 0.4 million is related to AMM.

The income tax provision increase was partially offset by the $ 3.5 million release of a valuation allowance associated with the Company's Brazilian subsidiary and a $ 1.4 million higher equity compensation deduction.

The Company's recorded liability for uncertain tax positions was $ 10.7 million and $ 9.7 million as of September 30, 2021 and December 31, 2020, respectively.

The increase in 2021 is the result of $ 1.7 million of incremental reserves associated with the increased R&D credit for 2021 and the recently filed 2020 R&D credit as part of the prior year consolidated tax return filing.

This increase was offset by a $ 0.7 million reduction from a sustained position from a foreign subsidiary whose liquidation was completed during the second quarter of 2021.

The Company does not anticipate a significant change in unrecognized tax benefits due to the expiration of relevant statutes of limitations and federal, state, and foreign tax audit resolutions over the next twelve months.

2 unchanged sentences

Internal Revenue Service for the federal income tax return from the 2018 tax year as well as various other state income tax and jurisdictional audits.

As of June 30, 2021, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position, results of operations and cash flows.

As of September 30, 2021, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position, results of operations and cash flows.

However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company's estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cash flows in the periods for which that determination is made.

1 unchanged sentence

Commitments and Contingencies

Certain customers have financed purchases of Company products through arrangements with third-party financing institutions in which the Company is contingently liable for customer debt of $ 2.0 million and $ 2.9 million at June 30, 2021 and December 31, 2020, respectively.

Certain customers have financed purchases of Company products through arrangements with third-party financing institutions in which the Company is contingently liable for customer debt of $ 2.7 million and $ 2.9 million at September 30, 2021 and December 31, 2020, respectively.

These arrangements expire at various dates through December 2023.

1 unchanged sentence

The agreements provide that the Company will receive the lender's full security interest in the equipment financed if the Company is required to fulfill its contingent liability under these arrangements.

The Company has recorded a liability of $ 1.1 million and $ 2.0 million related to these guarantees as of June 30, 2021 and December 31, 2020, respectively.

The Company has recorded a liability of $ 1.1 million and $ 2.0 million related to these guarantees as of September 30, 2021 and December 31, 2020, respectively.

The Company reviews off-balance sheet guarantees individually and at the loss pool level based on one agreement.

Prior history is considered in regard to the Company having to perform on any off-balance sheet guarantees, as well as future projections of individual customer credit worthiness including consideration of the implications of COVID-19 in regard to assessing credit losses related to off-balance sheet guarantees.

In addition, the Company is contingently liable under letters of credit issued under its $ 150.0 million revolving credit facility (the "Credit Facility") totaling $ 8.8 million as of June 30, 2021, including $ 5.1 million of letters of credit guaranteeing certain credit facilities of the Company's Brazilian subsidiary.

In addition, the Company is contingently liable under letters of credit issued under its $ 150.0 million revolving credit facility (the "Credit Facility") totaling $ 5.3 million as of September 30, 2021, including $ 1.6 million of letters of credit guaranteeing certain credit facilities of the Company's Brazilian subsidiary.

The outstanding letters of credit expire at various dates through June 2023.

The maximum potential amount of future payments under letters of credit issued under the Credit Facility for which the Company could be liable is $ 30.0 million as of June 30, 2021.

As of June 30, 2021, the Company's foreign subsidiaries are contingently liable for a total of $ 4.2 million in letters of credit and bank guarantees securing performance and advance payments.

The maximum potential amount of future payments under these letters of credit and bank guarantees for which the Company could be liable is $ 9.0 million as of June 30, 2021.

The maximum potential amount of future payments under letters of credit issued under the Credit Facility for which the Company could be liable is $ 30.0 million as of September 30, 2021.

As of September 30, 2021, the Company's foreign subsidiaries are contingently liable for a total of $ 1.2 million in letters of credit and bank guarantees securing performance and advance payments.

The maximum potential amount of future payments under these letters of credit and bank guarantees for which the Company could be liable is $ 6.7 million as of September 30, 2021.

The Company and certain of its former executive officers were named as defendants in a putative shareholder class action lawsuit filed on February 1, 2019, as amended on August 26, 2019, in the United States District Court for the Eastern District of Tennessee.

14 unchanged sentences

The complaint alleges breaches of warranty and other similar claims regarding equipment sold by GEFCO in 2013.

In addition to seeking a rescission of the purchase contract, the plaintiff is seeking special and consequential damages.

In addition to seeking a rescission of the purchase contract, the plaintiff is seeking special and

consequential damages.

The original purchase price of the equipment was approximately $ 8.5 million.

GEFCO disputes the plaintiff's allegations and intends to defend this lawsuit vigorously.

On July 7, 2020, the plaintiffs filed a separate lawsuit directly against Astec

Industries, Inc.

On July 7, 2020, the plaintiffs filed a separate lawsuit directly against Astec Industries, Inc.

Besides a new claim based on fraudulent transfer, the allegations essentially mirror the GEFCO suit.

22 unchanged sentences

Each of the above incentive plans are administered by the Company's Compensation Committee of the Board of Directors.

S hare-based compensation expense was $ 1.5 million and $ 2.9 million for the three and six months periods ended June 30, 2021, respectively, and $ 1.9 million and $ 3.0 million for the three and six month periods ended June 30, 2020, respectively.

S hare-based compensation expense was $ 1.7 million and $ 4.6 million for the three and nine months periods ended September 30, 2021, respectively, and $ 1.8 million and $ 4.8 million for the three and nine month periods ended September 30, 2020, respectively.

Revenue Recognition

The following tables disaggregate the Company's revenue by major source for the three and six month periods ended June 30, 2021 and 2020 (excluding intercompany sales):

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020

The following tables disaggregate the Company's revenue by major source for the three and nine month periods ended September 30, 2021 and 2020 (excluding intercompany sales):

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

(in millions) Infrastructure

20 unchanged sentences

Total net sales $ 176.3 $ 90.7 $ 267.0 $ 151.1 $ 80.3 $ 231.4

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

(in millions) Infrastructure

21 unchanged sentences

Sales into major geographic regions were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

1 unchanged sentence

Canada 16.8 12.2 54.7 39.8

Europe 13.9 4.8 24.4 14.2

Australia 10.7 6.8 31.9 18.1

Europe 7.4 7.6 31.8 21.8

Africa 9.9 7.1 26.0 17.9

Mexico 8.0 0.5 10.4 1.4

Brazil 8.0 4.3 17.1 15.2

Mexico 1.3 0.2 11.7 1.6

South America 2.5 7.2 11.5 16.3

Asia 5.5 2.5 9.2 8.1

Other 3.1 2.4 6.7 10.1

1 unchanged sentence

Total net sales $ 267.0 $ 231.4 $ 829.4 $ 785.5

As of June 30, 2021, the Company had contract assets of $ 10.8 million and contract liabilities of $ 12.7 million, including $ 2.6 million of deferred revenue related to extended warranties.

As of September 30, 2021, the Company had contract assets of $ 12.0 million and contract liabilities of $ 30.0 million, including $ 2.8 million of deferred revenue related to extended warranties.

As of December 31, 2020, the Company had contract assets of $ 4.3 million and contract liabilities of $ 8.9 million, including $ 2.9 million of deferred revenue related to extended warranties.

16 unchanged sentences

Segment Information:

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 Three Months Ended September 30, 2020

(in millions) Infrastructure Solutions Materials Solutions Corporate Total Infrastructure Solutions Materials Solutions Corporate Total

2 unchanged sentences

Segment profit (loss) 13.8 8.0 ( 12.8 ) 9.0 6.3 7.2 ( 11.7 ) 1.8

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

(in millions) Infrastructure Solutions Materials Solutions Corporate Total Infrastructure Solutions Materials Solutions Corporate Total

3 unchanged sentences

A reconciliation of total segment profit to the Company's consolidated totals is as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

2 unchanged sentences

Corporate expenses, net ( 12.8 ) ( 11.7 ) ( 47.5 ) ( 28.2 )

Net loss (income) attributable to noncontrolling interest — ( 0.1 ) — 0.1

Recapture of intersegment profit 0.3 0.3 0.3 0.4

Net loss attributable to noncontrolling interest — — — 0.1

Recapture (elimination) of intersegment profit 0.3 ( 0.2 ) 0.6 0.2

Total consolidated net income attributable to controlling interest $ 9.3 $ 1.6 $ 27.0 $ 31.5

Restructuring, Impairment and Other Asset Charges, Net

Strategic Transformation and Restructuring and Other Asset Charges

In 2018, the Company made several strategic decisions to divest of underperforming manufacturing sites or product lines, including to close certain of its subsidiaries, close and sell its manufacturing sites and relocate the product lines manufactured at each of these sites to other Company locations;

2 unchanged sentences

These actions, which have subsequently been incorporated into the Company's Simplify, Focus and Grow Strategic Transformation ("SFG") initiative beginning in 2019, generally include facility rationalization, asset impairment, workforce reduction and the associated costs of organizational integration activities.

The Company has incurred $ 2.4 million and $ 7.7 million in incremental costs for the SFG initiative in the three and nine months ended September 30, 2021, which are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

In addition, the Company periodically sells or disposes of its assets in the normal course of its business operations as they are no longer needed or used and may incur gains or losses on these disposals.

2 unchanged sentences

Restructuring, asset impairment charges and the net gain on sale of property and equipment are presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

Restructuring charges:

Costs associated with closing AMM $ — $ 0.3 $ — $ 0.3

Costs associated with closing Albuquerque — 0.7 — 1.0

Costs associated with closing Tacoma $ 0.1 $ — $ 1.1 $ —

Costs associated with closing Mequon — 0.7 0.6 2.1

Costs associated with closing Enid 0.4 1.9 0.4 2.2

Costs associated with closing Tacoma 0.6 — 1.0 —

Costs associated with closing Albuquerque — 0.3 — 1.3

Costs associated with closing AMM — — — 0.3

Workforce reductions at multiple sites — — — 1.3

Other restructuring charges — 0.2 — 0.2

Total restructuring related charges 0.5 3.1 2.1 7.4

Asset impairment charges:

Airplane impairment charges (recovery) — ( 0.3 ) — 2.3

Goodwill impairment charges — — — 1.6

Airplane impairment charges — 2.6 — 2.6

Other impairment charges — — 0.2 0.2

5 unchanged sentences

Restructuring charges by segment are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

4 unchanged sentences

Impairment charges by segment are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

4 unchanged sentences

The net gain on sale of property and equipment by segment are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

2 unchanged sentences

Total gain on sale of property and equipment, net $ ( 0.2 ) $ ( 0.6 ) $ ( 0.5 ) $ ( 1.2 )

Restructuring charges accrued, but not paid, were $ 1.6 million and $ 1.1 million as of June 30, 2021 and December 31, 2020, respectively.

Restructuring charges accrued, but not paid, were $ 1.2 million and $ 1.1 million as of September 30, 2021 and December 31, 2020, respectively.

On October 21, 2019, the Company announced the closing of its Albuquerque, New Mexico location.

3 unchanged sentences

In late 2019, the oil and gas drilling product lines produced at the Enid, Oklahoma location were impaired and discontinued.

The Company incurred $ 0.3 million in severance related costs during the three months ended March 31, 2020 associated with exiting the oil and gas line of business at Enid.

Enid's land and building assets totaling $ 5.1 million are included in "Assets held for sale" in the Consolidated Balance Sheets at June 30, 2021 and December 31, 2020.

The Company incurred $ 0.8 million and $ 1.3 million of severance pay associated with workforce reductions at other of the Company's locations in the three and six month periods ended June 30, 2020, respectively.

The Company incurred $ 1.9 million and $ 2.2 million in severance related costs during the three and nine month periods ended September 30, 2020 associated with exiting the oil and gas line of business at Enid.

Additional restructuring costs of $ 0.4 million were incurred during the three months ended September 30, 2021.

Enid's land and building assets totaling $ 5.1 million are included in "Assets held for sale" in the Consolidated Balance Sheets at September 30, 2021 and December 31, 2020.

The Company incurred $ 1.3 million of severance pay associated with workforce reductions at other of the Company's locations in the nine months ended September 30, 2020, none of which were incurred during the three months ended September 30, 2020.

During the three months ended March 31, 2020, the Company incurred $ 1.6 million of goodwill impairment charges due to a full impairment of goodwill associated with its mobile asphalt equipment operations included in the Infrastructure Solutions segment.

1 unchanged sentence

The Mequon facility ceased production operations in August 2020.

Charges primarily related to inventory relocation and integration activities of $ 0.2 million and $ 1.4 million were incurred during the three month periods ended June 30, 2021 and 2020, respectively.

Charges totaling $ 0.6 million and $ 1.4 million were recognized in the six month periods ended June 30, 2021 and 2020, respectively.

Charges primarily related to inventory relocation and integration activities of $ 0.7 million were incurred during the three months ended September 30, 2020.

Charges totaling $ 0.6 million and $ 2.1 million were recognized in the nine month periods ended September 30, 2021 and 2020, respectively.

In October 2020, the Company closed a transaction for the sale of water well assets of the Company's Enid location, which included equipment, inventories and intangible assets.

1 unchanged sentence

This obligation is included in "Other current liabilities" in the Consolidated Balance Sheets at December 31, 2020 and was settled in the first quarter of 2021.

The Company recorded a $ 1.1 million gain on the sale of this business in the third quarter of 2020 in "Other (expenses) income, net" in the Consolidated Statements of Operations.

In January 2021, the Company announced plans to close the Tacoma facility in order to simplify and consolidate operations.

1 unchanged sentence

Manufacturing and marketing of Tacoma product lines are expected to be fully transferred to other facilities within the Infrastructure Solutions segment by early 2022.

In conjunction with this action, the Company recorded $ 1.0 million of restructuring related charges primarily associated with severance and retention costs during 2021, $ 0.6 million of which was recorded in the three months ended June 30, 2021.

In conjunction with this action, the Company recorded $ 1.1 million of restructuring related charges primarily associated with severance and retention costs during 2021, $ 0.1 million of which was recorded in the three months ended September 30, 2021.

Earnings Per Common Share

3 unchanged sentences

The following table sets forth a reconciliation of the number of shares used in the computation of basic and diluted earnings per common share:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

2 unchanged sentences

Denominator for diluted earnings per common share 22,913,563 22,945,893 22,922,930 22,837,725

Subsequent Event

Pension Plan Termination

During the third quarter of 2021, the Company was in the process of terminating its defined benefit pension plan, which was fully funded as of September 30, 2021.

In October 2021, the Company settled its obligations under the plan by providing $ 5.5 million in lump sum payments to eligible participants who elected to receive them and through the purchase of annuity contracts from a highly rated insurance company for $ 12.2 million.

The settlement of the plan resulted in excess plan assets of approximately $ 1.5 million, which is subject to a 50 % excise tax.

Management estimates that the Company will record a total non-cash pre-tax, both income and excise, charge of between $ 4.5 million and $ 5.5 million in the fourth quarter of 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements