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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-03-01 · 399 added, 427 removed, 1046 unchanged (44% of the section changed)

1 unchanged sentence

Index to Consolidated Financial Statements and Supplementary Data:

Repo rt s of Independ ent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Con solidated Statements of O perations

Consolidated Statements of Comprehensive Income (Loss)

Consol idated Statements of Cash Flows

Consolidated Statement s of Equity

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Cash Flows

Consolidated Statements of Equity

Notes to Consolidated Financial Statements

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Astec Industries, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

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As disclosed in Notes 4 and 18 to the Company's consolidated financial statements, and disclosed in the consolidated balance sheet and consolidated statement of operations, the Company recorded $303.0 million in inventories and $1,097.2 million in net sales as of December 31, 2021 and for the year then ended, respectively.

Inventories are comprised of raw materials, work-in-process, finished goods, and used equipment that are physically located at each of the Company's sites.

Inventories are comprised of raw materials, work-in-process, and finished goods that are physically located at each of the Company's sites.

Net sales are recognized primarily from the sale of equipment and replacement parts from each of the Company's sites.

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The following are the primary procedures we performed to address this critical audit matter.

We used our judgment to determine the nature and extent of procedures to be performed over inventories and net sales, including the determination of the sites at which those procedures were performed.

At certain sites where procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company's inventories and net sales processes, including controls over the amounts recorded in inventories and the amounts recorded in net sales.

We assessed the recorded inventories at each site where procedures were performed by participating in a physical inventory count and observed a sample of inventories on hand and compared the cost recorded for a sample of inventories on hand to underlying documentation.

We evaluated the method and assumptions used to estimate the net realizable value of inventories.

We assessed recorded net sales at each site where procedures were performed by selecting a sample of net sales transactions and comparing the amount recognized to underlying documentation, such as contracts with customers and shipping documentation.

For those sites where controls related to the critical audit matter were not designed and operating effectively during the year, we increased the number of inventories and net sales

transactions sampled for certain procedures compared to those we would have selected if those sites' internal controls were designed and operating effectively.

We used our judgment to determine the nature and extent of procedures to be performed over inventories and net sales, including the determination of the sites for which those procedures were performed.

For certain sites where procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company's inventories and net sales processes, including controls over the amounts recorded in inventories and the amounts recorded in net sales.

We assessed the recorded inventories for each site where procedures were performed by participating in a physical inventory count and observed a sample of inventories on hand and compared the cost recorded for a sample of inventories on hand to underlying documentation.

We assessed recorded net sales for each site where procedures were performed by selecting a sample of net sales transactions and comparing the amount recognized to underlying documentation, such as contracts with customers and shipping documentation.

We evaluated the overall sufficiency of audit evidence obtained by assessing the results of procedures performed over inventories and net sales.

We have served as the Company's auditor since 2015.

Knoxville, Tennessee

March 1, 2021

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Astec Industries, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Astec Industries, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated March 1, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired BMH Systems Corporation and CON-E-CO during 2020, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, BMH Systems Corporation's and CON-E-CO's internal control over financial reporting associated with 5.5% of total assets and 2.3% of net sales included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of BMH Systems Corporation and CON-E-CO.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Knoxville, Tennessee

March 1, 2021

Atlanta, Georgia

February 28, 2022

ASTEC INDUSTRIES, INC.

2 unchanged sentences

Current assets:

Cash and cash equivalents $ 158.6 $ 48.9

Cash, cash equivalents and restricted cash $ 134.4 $ 158.6

Investments 8.6 4.3

Trade receivables and contract assets, net 144.1 115.9

Other receivables 4.7 4.6

Other receivables, net 3.5 4.7

Inventories 303.0 249.7

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Accumulated other comprehensive loss ( 32.4 ) ( 33.5 )

Company stock held by SERP, at cost ( 1.5 ) ( 1.7 )

Company stock held by deferred compensation programs, at cost ( 1.2 ) ( 1.5 )

Retained earnings 552.8 545.2

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Restructuring, impairment and other asset charges, net 2.5 8.1 3.2

Income (loss) from operations 43.0 25.1 ( 86.4 )

Income from operations 22.1 43.0 25.1

Other income:

1 unchanged sentence

Interest income 0.5 0.8 1.2

Other income 2.6 0.3 0.5

Income (loss) from operations before income taxes 45.7 25.2 ( 85.9 )

Other (expenses) income, net ( 5.0 ) 2.6 0.3

Income from operations before income taxes 16.5 45.7 25.2

Income tax (benefit) provision ( 1.4 ) ( 1.2 ) 3.0

Net income (loss) 46.9 22.2 ( 60.7 )

Net loss attributable to noncontrolling interest — 0.1 0.3

Net income (loss) attributable to controlling interest $ 46.9 $ 22.3 $ ( 60.4 )

Net income 17.9 46.9 22.2

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

Net income attributable to controlling interest $ 17.8 $ 46.9 $ 22.3

Per share data:

Earnings (loss) per common share - Basic $ 2.08 $ 0.99 $ ( 2.64 )

Earnings (loss) per common share - Diluted $ 2.05 $ 0.98 $ ( 2.64 )

Earnings per common share - Basic $ 0.78 $ 2.08 $ 0.99

Earnings per common share - Diluted $ 0.78 $ 2.05 $ 0.98

Weighted average shares outstanding - Basic 22,726,767 22,585,515 22,515,161

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ASTEC INDUSTRIES, INC.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(In millions)

1 unchanged sentence

2021 2020 2019

Net income (loss) $ 46.9 $ 22.2 $ ( 60.7 )

Other comprehensive (loss) income:

Net income $ 17.9 $ 46.9 $ 22.2

Other comprehensive income (loss):

Change in unrecognized pension and postretirement benefit costs 3.1 0.1 1.0

Tax (expense) benefit on change in unrecognized pension and postretirement benefit costs — ( 0.2 ) —

Tax expense on change in unrecognized pension and postretirement benefit costs — — ( 0.2 )

Foreign currency translation adjustments ( 2.1 ) ( 1.8 ) 2.0

Other comprehensive (loss) income ( 1.7 ) 2.8 ( 9.7 )

Other comprehensive income (loss) 1.0 ( 1.7 ) 2.8

Comprehensive loss attributable to noncontrolling interest — — 0.1

Comprehensive income (loss) attributable to controlling interest $ 45.2 $ 25.1 $ ( 70.1 )

Comprehensive income attributable to controlling interest $ 18.9 $ 45.2 $ 25.1

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

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Cash flows from operating activities

Net income (loss) $ 46.9 $ 22.2 $ ( 60.7 )

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

Net income $ 17.9 $ 46.9 $ 22.2

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 20.1 20.8 21.4

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Provision for warranties 10.9 9.8 9.8

Deferred compensation expense (benefit) 0.7 0.6 ( 1.6 )

Deferred compensation expense 0.5 0.7 0.6

Share-based compensation 6.0 5.1 2.6

Deferred tax provision (benefit) 8.6 1.7 ( 25.4 )

Deferred tax (benefit) provision ( 1.3 ) 8.6 1.7

(Gain) loss on disposition of property and equipment ( 0.6 ) ( 6.2 ) 0.3

Curtailment gain on postretirement benefits ( 0.5 ) — —

Non-cash curtailment and settlement loss (gain) on pension and postretirement benefits, net 3.2 ( 0.5 ) —

Gain on disposition of subsidiary — ( 1.6 ) —

Asset impairment charges 4.4 0.3 13.1

Distributions to SERP participants ( 1.4 ) ( 2.2 ) ( 0.8 )

Asset impairment charges, net 0.2 4.4 0.3

Distributions to deferred compensation programs participants ( 2.5 ) ( 1.4 ) ( 2.2 )

Change in operating assets and liabilities, excluding the effects of acquisitions:

Sale (purchase) of trading securities, net 0.2 ( 0.9 ) ( 0.8 )

(Purchase) sale of trading securities, net ( 3.1 ) 0.2 ( 0.9 )

Receivables and other contract assets ( 30.8 ) 12.2 7.5

5 unchanged sentences

Accrued loss reserves ( 1.3 ) 0.3 ( 1.1 )

Accrued payroll and related expenses 3.0 ( 5.1 ) 0.7

Other accrued liabilities ( 0.7 ) 9.8 1.3

3 unchanged sentences

Other — — 1.1

Net cash provided (used) by operating activities 141.5 112.6 ( 30.0 )

Net cash provided by operating activities 7.4 141.5 112.6

Cash flows from investing activities:

Acquisitions, net of cash acquired 0.1 ( 32.5 ) —

Proceeds from the sale of subsidiary 9.1 — —

(Price adjustment on prior) proceeds from sale of subsidiary ( 1.1 ) 9.1 —

Expenditures for property and equipment ( 20.1 ) ( 15.4 ) ( 23.4 )

Proceeds from sale of property and equipment 1.9 17.7 0.5

Sale (purchase) of investments 0.2 1.3 ( 0.4 )

Net cash used by investing activities $ ( 20.9 ) $ ( 21.6 ) $ ( 27.4 )

Purchase of investments ( 1.0 ) ( 1.1 ) ( 0.6 )

Sale of investments 1.8 1.3 1.9

Net cash used in investing activities $ ( 18.4 ) $ ( 20.9 ) $ ( 21.6 )

ASTEC INDUSTRIES, INC.

6 unchanged sentences

Borrowings under bank loans 7.2 6.0 166.0

Repayment of bank loans ( 5.9 ) ( 224.0 ) ( 92.0 )

Sale of Company stock by SERP, net 0.3 0.3 0.4

Withholding tax paid upon vesting of restricted stock units ( 0.8 ) ( 0.4 ) ( 0.4 )

Repurchase of Company stock — — ( 24.1 )

Net cash (used) provided by financing activities ( 10.4 ) ( 68.1 ) 22.8

Repayments of bank loans ( 6.2 ) ( 5.9 ) ( 224.0 )

Sale of Company stock by deferred compensation programs, net 0.6 0.3 0.3

Withholding tax paid upon vesting of share-based compensation awards ( 3.5 ) ( 0.8 ) ( 0.4 )

Net cash used in financing activities ( 12.1 ) ( 10.4 ) ( 68.1 )

Effect of exchange rates on cash ( 1.1 ) ( 0.5 ) 0.2

Increase (decrease) in cash and cash equivalents 109.7 23.1 ( 36.5 )

Cash and cash equivalents, beginning of year 48.9 25.8 62.3

Cash and cash equivalents, end of year $ 158.6 $ 48.9 $ 25.8

(Decrease) increase in cash and cash equivalents and restricted cash ( 24.2 ) 109.7 23.1

Cash and cash equivalents and restricted cash, beginning of period 158.6 48.9 25.8

Cash and cash equivalents and restricted cash, end of period $ 134.4 $ 158.6 $ 48.9

Supplemental Cash Flow Information

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Interest, net of capitalized interest $ 0.3 $ 0.3 $ 1.8

Income taxes (refunded) paid, net $ ( 20.2 ) $ ( 11.3 ) $ 8.5

Income taxes paid (refunded), net $ 10.0 $ ( 20.2 ) $ ( 11.3 )

Supplemental disclosures of non-cash items

7 unchanged sentences

Consolidated Statements of Equity

(In millions, except share data)

Common Stock Common

Amount Additional

Capital Accumulated Other Comprehensive Loss Company

by SERP Retained

Earnings Non-

Interest Total Equity

(In millions, except share and per share data)

Common Stock Shares Common Stock Amount Additional Paid-in-

Capital Accumulated Other Comprehensive Loss Company Shares Held by Deferred Compensation Programs, at Cost Retained Earnings Non-controlling Interest Total Equity

Balance, December 31, 2018

22,513,015 $ 4.5 $ 120.6 $ ( 33.9 ) $ ( 1.9 ) $ 495.3 $ 0.6 $ 585.2

Net loss — — — — — ( 60.4 ) ( 0.3 ) ( 60.7 )

Other comprehensive loss — — — ( 9.7 ) — — — ( 9.7 )

Net income (loss) — — — — — 22.3 ( 0.1 ) 22.2

Other comprehensive income — — — 2.8 — — — 2.8

Dividends ($ 0.44 per share)

3 unchanged sentences

Withholding tax paid upon equity award vesting — — ( 0.4 ) — — — — ( 0.4 )

Change in ownership percentage of subsidiary — — — — — — ( 0.2 ) ( 0.2 )

SERP transactions, net — — 0.1 — 0.2 — — 0.3

Repurchase of Company stock ( 582,222 ) ( 0.1 ) ( 24.0 ) — — — — ( 24.1 )

Other — — — — — — 0.1 0.1

Cumulative impact of ASU No.

2018-02 — — — ( 0.7 ) — 0.7 — —

Balance, December 31, 2019

22,551,183 $ 4.5 $ 122.6 $ ( 31.8 ) $ ( 1.7 ) $ 508.3 $ 0.5 $ 602.4

Net income (loss) — — — — — 22.3 ( 0.1 ) 22.2

Other comprehensive income — — — 2.8 — — — 2.8

Net income — — — — — 46.9 — 46.9

Other comprehensive loss — — — ( 1.7 ) — — — ( 1.7 )

Dividends ($ 0.44 per share)

1 unchanged sentence

Share-based compensation — — 5.1 — — — — 5.1

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

Issuance of common stock under incentive plan 60,793 — — — — — — —

1 unchanged sentence

SERP transactions, net — — 0.1 — 0.2 — — 0.3

Cumulative impact of ASU No.

2018-02 — — — ( 0.7 ) — 0.7 — —

Balance, December 31, 2020

1 unchanged sentence

Net income — — — — — 17.8 0.1 17.9

Other comprehensive loss — — — ( 1.7 ) — — — ( 1.7 )

Other comprehensive income (loss) — — — 1.1 — — ( 0.1 ) 1.0

Dividends ($ 0.45 per share)

1 unchanged sentence

Share-based compensation — — 6.0 — — — — 6.0

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

Issuance of common stock under incentive plan 155,076 — — — — — — —

Withholding tax paid upon equity award vesting — — ( 3.5 ) — — — — ( 3.5 )

SERP transactions, net — — 0.1 — 0.2 — — 0.3

Deferred compensation programs transactions, net — — 0.3 — 0.3 — — 0.6

Balance, December 31, 2021

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In addition to equipment sales, the Company manufactures and sells replacement parts for equipment in each of its product lines and replacement parts for some competitors' equipment.

The distribution and sale of replacement parts is an integral part of our business.

The Company consists of a total of 33 compani es that are consolidated in the Company's consolidated financial statements, of which 25 represent manufacturing sites and sites that operate as sales offices for the Company's manufacturing locations.

The distribution and sale of replacement parts is an integral part of the Company's business.

The Company operates manufacturing sites and sites that operate as sales offices for the Company's manufacturing locations.

During the first quarter of 2020, management completed an internal reorganization focused on transitioning from a decentralized management structure to a more centralized structure with major directives and decisions being made at the segment and/or parent company level.

As a result of this reorganization, we realigned the Company's reportable segments moving from three to two reportable segments (plus Corporate) - Infrastructure Solutions and Materials Solutions.

As a result of this reorganization, the Company's reportable segments were realigned moving from three to two reportable segments (plus Corporate) - Infrastructure Solutions and Materials Solutions.

The Company's two reportable business segments comprise sites based upon the nature of the products or services produced, the type of customer for the products, the similarity of economic characteristics, the manner in which management reviews results and the nature of the production process, among other considerations.

4 unchanged sentences

The COVID-19 pandemic has caused significant disruptions to national and global economies.

During 2020, the Company's sales and profits were negatively impacted by the COVID-19 pandemic, and it may continue to negatively disrupt the Company's business and results of operations in the future.

The full extent of the COVID-19 pandemic on the Company's operations and the markets it serves remains highly uncertain and will depend largely on future developments related to the COVID-19 pandemic, including infection rates increasing or returning in various geographic areas, the ultimate duration of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as re-imposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things.

These developments are constantly evolving and cannot be accurately predicted.

Since its identification in March 2020, the COVID-19 pandemic has negatively disrupted the Company's business and results of operations and may continue to do so in the future.

The full extent of the COVID-19 pandemic on the Company's operations and the markets it serves remains uncertain due to constantly evolving developments including, but not limited to, government directives, treatment availability and acceptance, vaccine mandates and the spread of new variants, such as the Delta and Omicron variants, and cannot be accurately predicted.

Basis of Presentation and Significant Accounting Policies

5 unchanged sentences

All intercompany balances and transactions between the Company and its affiliates have been eliminated in consolidation.

Noncontrolling interest in the Company's consolidated financial statements represents the 7% interest not owned by the Company in a consolidated subsidiary.

Since the Company controls this subsidiary, its consolidated financial statements are consolidated with those of the Company, and the noncontrolling owner's 7% share of the subsidiary's net assets and results of operations is deducted and reported as "Noncontrolling interest" on the Consolidated Balance Sheets and as "Net loss attributable to noncontrolling interest" in the Consolidated Statements of Operations.

Noncontrolling interest in the Company's consolidated financial statements represents the 7 % interest in a consolidated subsidiary which is not owned by the Company.

Since the Company controls this subsidiary, the subsidiary's financial statements are consolidated with those of the Company, and the noncontrolling owner's 7 % share of the subsidiary's net assets and results of operations is deducted and reported as "Noncontrolling interest" in the Consolidated Balance Sheets and as "Net (income) loss attributable to noncontrolling interest" in the Consolidated Statements of Operations.

The Company executed an agreement in February 2022 with the noncontrolling interest holder, which is undergoing a judicial reorganization in Brazil, to acquire their outstanding interest in full for R$ 10.0 M (approximately $ 2.0 million, subject to the effect of exchange rates).

Completion of the transaction is subject to obtaining certain judicial approval in Brazil.

Use of Estimates

1 unchanged sentence

GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Significant items subject to such estimates and assumptions include inventory obsolescence costs, warranty costs, inventory net realizable value, self-insurance loss reserves, employee benefit programs and the measurement of income tax assets and liabilities.

Significant items subject to such estimates and assumptions include inventory obsolescence costs, warranty costs, inventory net realizable value, self-insurance loss reserves, share-based compensation and the measurement of income tax assets and liabilities.

The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances.

1 unchanged sentence

Actual results could differ from those 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 years ended December 31, 2020, 2019 and 2018.

All dollar amounts, except share and per share amounts, are in millions of dollars unless otherwise indicated.

Significant Accounting Policies

Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents.

The Company's maintains cash balances with high credit quality institutions, the balances of which may exceed federally insured limits.

The Company had $ 137.0 million in a government money market fund at December 31, 2020 and $ 30.2 million in an interest-bearing account at December 31, 2019, each of which is included in "Cash and cash equivalents" in the Consolidated Balance Sheets.

Cash, Cash Equivalents and Restricted Cash - All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents.

The Company maintains cash balances with high credit quality institutions, the balances of which may exceed federally insured limits.

The Company had $ 117.0 million and $ 137.0 million in a government money market fund at December 31, 2021 and December 31, 2020, respectively, which is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets.

The Company had cash of $ 0.3 million at December 31, 2021 that is restricted as to withdrawal or use by the captive, which is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets.

Investments - Investments consist primarily of investment-grade marketable securities.

Trading securities are carried at fair value, with unrealized holding gains and losses included in "Net income (loss)" in the Consolidated Statements of Operations.

Trading securities are carried at fair value, with unrealized holding gains and losses included in "Other (expenses) income, net" in the Consolidated Statements of Operations.

Realized gains and losses are accounted for on the specific identification method.

4 unchanged sentences

The Company extends credit to its customers based on an evaluation of the customers' financial condition generally without requiring collateral, although the Company normally requires advance payments or letters of credit on large equipment orders.

Credit risk is driven by conditions within the economy and the industry and is principally dependent on each customer's financial condition.

To minimize credit risk, the Company monitors credit levels and financial conditions of customers on a continuing basis.

After considering historical trends for uncollectible accounts, current and projected economic conditions and specific customer recent payment history and financial stability, the Company records an allowance for credit losses at a level which management believes is sufficient to cover probable credit losses.

Amounts are deemed past due when they exceed the payment terms agreed to by the customer in the sales contract.

Past due amounts are charged off when reasonable collection efforts have been exhausted and the amounts are deemed uncollectible by management.

As of December 31, 2020, concentrations of credit risk with respect to receivables are limited due to the wide variety of customers.

Allowance for Credit Losses - The Company adopted the provisions of Accounting Standards Update ("ASU") No.

2 unchanged sentences

The Company currently monitors credit levels and financial conditions of customers on a continuing basis.

After considering historical trends for uncollectible accounts, current economic conditions and specific customer recent payment history and financial stability, each site records an allowance for credit losses at a level which management believes is sufficient to cover all probable future credit losses as of the balance sheet date based on a rolling twelve-month "look-back", specific reserves and an expectation of future economic conditions that might impact customers, which would currently include the impact of COVID-19.

After considering historical trends for uncollectible accounts, current economic conditions and specific customer recent payment history and financial stability, an allowance for credit losses is recorded in "Trade receivables and contract assets, net" in the Consolidated Balance Sheets at a level which management believes is sufficient to cover all probable future credit losses as of the balance sheet date based on a rolling twelve-month "look-back", specific reserves and an expectation of future economic conditions that might impact customers, which would currently include the impact of COVID-19.

Amounts are deemed past due when they exceed the payment terms agreed to by the customer in the sales contract.

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Allowance balance, end of year $ 2.3 $ 1.7 $ 1.4

In addition, an allowance for credit losses related to an outstanding note receivable of $ 0.7 million is included in "Other receivables, net" in the Consolidated Balance Sheets for the year ended December 31, 2021.

Inventories - The Company's inventory is comprised of raw materials and parts, work-in-process, finished goods and used equipment.

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Abnormal amounts of idle facility expense, freight, handling cost and wasted materials are recognized as current period charges.

Assets Held for Sale – As of December 31, 2020, the Company recorded assets held for sale of $ 6.3 million related to land and building assets of its former Enid business and one of the Company's planes, which are being marketed for sale.

In connection with the closing of the Company's AMM site in Germany and its Albuquerque site, the Company accounted for their land and building as assets held for sale as of December 31, 2019.

The AMM land and building sale was completed in early 2020.

The Albuquerque site was closed as of March 31, 2020, and its land and building were sold in the third quarter of 2020.

Assets Held for Sale – As of December 31, 2021, the Company recorded assets held for sale of $ 5.1 million related to land and building assets of its former Enid business, which are being marketed for sale.

The Company accounted for the Enid land and building and one of the Company's planes as assets held for sale as of December 31, 2020.

The sale of the plane was completed in the first quarter of 2021.

Property and Equipment - Property and equipment is stated at cost.

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Computer hardware and software 3 - 5

Leases - The Company leases certain real estate, computer systems, material handling equipment, offices, automobiles and other equipment.

Impairment of Long-Lived Assets - In the event that facts and circumstances indicate the carrying amounts of long-lived assets may be impaired, an evaluation of recoverability is performed.

If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the carrying amount for each asset (or group of assets) to determine if a write-down is required.

If this review indicates that the assets will not be recoverable, the carrying values of the impaired assets are reduced to their estimated fair value.

Fair value is estimated using discounted cash flows, prices for similar assets or other valuation techniques.

Leases - The Company leases certain real estate, material handling equipment, offices, automobiles and other equipment.

The Company determines if a contract is a lease (or contains an embedded lease) at the inception of the agreement.

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The Company uses its incremental borrowing rate to determine the present value of the lease payments.

The Company's incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company's incremental borrowing rate is the rate of interest that it would incur to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company determines the incremental borrowing rates based upon secured borrowing rates quoted by the Company's banks for loans of a corresponding length to the lease.

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Goodwill and Other Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of businesses acquired.

Goodwill is not amortized but is tested for impairment annually on October 31, or more frequently, as events dictate.

The Company uses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.

Goodwill is not amortized but is tested for impairment annually in the fourth quarter, or more frequently, as events dictate.

Beginning in 2021, the Company changed its annual goodwill impairment testing date from October 31 to October 1 to better align the testing date with its financial planning process and alleviate resource constraints.

The Company would not expect a materially different outcome in any given year as a result of testing on October 1 as compared to October 31.

Goodwill impairment is the excess of the carrying amount of a reporting unit (that includes goodwill) over its fair value.

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Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations.

An impairment charge is recorded when the carrying value of the definite lived intangible asset is not recoverable by the future undiscounted cash flows expected to be generated from the use of the asset.

Intangible assets with definite lives are amortized on a straight-line basis over the following estimated useful lives:

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Trade names 2 - 4

Impairment of Long-Lived Assets - In the event that facts and circumstances indicate the carrying amounts of long-lived assets may be impaired, an evaluation of recoverability is performed.

If this review indicates that the assets will not be recoverable, the carrying values of the impaired assets are reduced to their estimated fair value.

Fair value is estimated using discounted cash flows, prices for similar assets or other valuation techniques.

Pension and Retirement Plans - The determination of obligations and expenses under the Company's pension plan is dependent on the Company's selection of certain assumptions used by independent actuaries in calculating such amounts.

Those assumptions are described in Note 14, Pension and Retirement Plans and include among others, the discount rate, expected return on plan assets and the expected mortality rates.

Actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense in such periods.

Significant differences in actual experience or significant changes in the assumptions used may materially affect the pension obligations and future expenses.

The Company recognizes the overfunded or underfunded status of its pension plan as an asset or liability.

Actuarial gains and losses, amortization of prior service cost (credit) and amortization of transition obligations are recognized through other comprehensive income (loss) in the year in which the changes occur.

The Company measures the funded status of its pension plan as of the date of the Company's fiscal year-end.

Pension and Retirement Plans - In October 2021, the Company settled its obligations under its defined benefit pension plan.

Historically, the determination of obligations and expenses under the Company's pension plan was dependent on the Company's selection of certain assumptions used by independent actuaries in calculating such amounts.

Those assumptions are described in Note 14, Employee Benefit Plans and include among others, the discount rate, expected return on plan assets and the expected mortality rates.

Actual results that differ from assumptions were accumulated and amortized over future periods and, therefore, generally affected the recognized expense in such periods.

The Company recognized the overfunded or underfunded status of its pension plan as an asset or liability.

Actuarial gains and losses were recognized through "Other comprehensive income (loss) " in the year in which the changes occurred.

The Company measured the funded status of its pension plan as of the date of the Company's fiscal year-end.

Product Warranty Reserve - The Company accrues for the estimated cost of product warranties at the time revenue is recognized.

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Estimated warranty obligations are based upon warranty terms, product failure rates, repair costs and current period machine shipments.

If actual product failure rates, repair costs, service delivery costs or post-sales support costs differ from our estimates, revisions to the estimated warranty liability may be required.

If actual product failure rates, repair costs, service delivery costs or post-sales support costs differ from the Company's estimates, revisions to the estimated warranty liability may be required.

Income Taxes - Income taxes are based on pre-tax financial accounting income.

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federal and state as well as foreign tax authorities.

While it is often difficult to predict final outcome or timing of resolution of any particular tax matter, the Company believes its reserve for uncertain tax positions is adequate to reduce the uncertain positions to the greatest amount of benefit that is more likely than not realizable.

While it is often difficult to predict a final outcome or timing of resolution of any particular tax matter, the Company believes its reserve for uncertain tax positions is adequate to reduce the uncertain positions to the greatest amount of benefit that is more likely than not realizable.

Self-Insurance Reserves - The Company retains the risk for a portion of its workers' compensation claims and general liability claims by way of a captive insurance company, Astec Insurance.

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Third parties administer health claims and prescription medication claims.

The Company maintains a reserve for the self-insured health plan which is included in "Accrued loss reserves" on the Company's Consolidated Balance Sheets.

The Company maintains a reserve for the self-insured health plan which is included in "Accrued loss reserves" in the Company's Consolidated Balance Sheets.

This reserve includes both unpaid claims and an estimate of claims incurred but not reported, based on historical claims and payment experience.

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Costs of obtaining sales contracts with an expected duration of one year or less are expensed as incurred.

As contracts are typically fulfilled within one year from the date of the contract, revenue adjustments for a potential financing component or the costs to obtain the contract are not made.

Depending on the terms of the arrangement with the customer, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if we have to satisfy a future obligation, such as to provide installation assistance, service work to be performed in the future without charge, floor plan interest to be reimbursed to the Company's dealer customers, payments for extended warranties, for annual rebates given to certain high volume customers or for obligations for future estimated returns to be allowed based upon historical trends.

As contracts are typically paid within one year from the date of the contract fulfillment, revenue adjustments for a potential financing component or the costs to obtain the contract are not made.

Depending on the terms of the arrangement with the customer, recognition of a portion of the consideration received may be deferred and recorded as a contract liability if the Company has to satisfy a future obligation, such as to provide installation assistance, service work to be performed in the future without charge, floor plan interest to be reimbursed to the Company's dealer customers, payments for extended warranties, for annual rebates given to certain high volume customers or for obligations for future estimated returns to be allowed based upon historical trends.

Certain contracts include terms and conditions pursuant to which the Company recognizes revenues upon the completion of production, and the equipment is subsequently stored at the Company's plant at the customer's request.

Revenue is recorded on such contracts upon the customer's assumption of title and risk of ownership, which transfers control of the equipment, and when collectability is reasonably assured.

Revenue is recorded on such contracts upon the customer's assumption of title and risk of ownership, which transfers control of the equipment, and when collectibility is probable.

In addition, there must be a fixed schedule of delivery of the goods consistent with the customer's business practices, the Company must not have retained any specific performance obligations such that the earnings process is not complete and the goods must have been segregated from the Company's inventory prior to revenue recognition.

The Company had one large wood pellet plant sale through 2018 and other smaller non-wood pellet plant orders in 2019 and 2020 on which revenue was recorded over time based upon the ratio of costs incurred to estimated total costs.

Penalties were accounted for as a reduction in sales.

The Company had orders totaling $ 29.3 million in 2021 and nominal orders in 2020 and 2019 on which revenue was recorded over time based upon the ratio of costs incurred to estimated total costs.

Service and Equipment Installation Revenue – Purchasers of certain of the Company's equipment often contract with the Company to provide installation services.

Installation is typically separately priced in the contract based upon observable market prices for stand-alone

performance obligations or a cost plus margin approach when one is not available.

Installation is typically separately priced in the contract based upon observable market prices for stand-alone performance obligations or a cost plus margin approach when one is not available.

The Company may also provide future services on equipment sold at the customer's request, which may be for equipment repairs after the warranty period expires.

Service is billed on a cost plus margin approach or at a standard rate per hour.

Used Equipment Sales - Used equipment is obtained by trade-in on new equipment sales, as a separate purchase in the open market or from the Company's equipment rental business.

Used Equipment Sales – Used equipment is typically obtained by trade-in on new equipment sales or as a separate purchase in the open market.

Revenues from the sale of used equipment are recognized upon transfer of control to the customer at agreed upon pricing.

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The Company incurred $ 1.5 million, $ 2.6 million and $ 3.7 million in advertising costs during 2021, 2020 and 2019, respectively, which are included in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Share-based Compensation - The grant date fair value of share-based compensation awards is based upon the closing market price of the Company's common stock on the day prior to the grant date, except for performance stock awards with a total shareholder return ("TSR") market performance metric for which the Company estimates fair value using a Monte-Carlo simulation model.

Share-based Compensation - The grant date fair value of share-based compensation awards is based upon the closing market price of the Company's common stock on the day prior to the grant date, except for performance stock awards with a total shareholder return ("TSR") market metric for which the Company estimates fair value using a Monte-Carlo simulation model.

The Company recognizes compensation expense for all awards over the requisite service period.

Forfeitures are recognized as they occur.

Compensation expense is based on the grant date fair value as described above, except for performance stock awards with a non-market return on invested capital ("ROIC") performance metric.

Compensation expense is based on the grant date fair value as described above, except for performance stock awards with a return on invested capital ("ROIC") performance metric.

For these awards, compensation expense is based on the probable outcome of achieving the specified performance conditions.

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Accordingly, intangible assets are recorded apart from goodwill if they arise from contractual or legal rights or if they are separable from goodwill.

Third-party acquisition costs are expensed as incurred and contingent consideration is booked at its fair value as part of the purchase price.

Acquisition costs are expensed as incurred and contingent consideration is booked at its fair value as part of the purchase price.

See Note 3, Acquisitions for additional information on the Company's acquisitions.

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The primary risk managed by using derivative instruments is foreign currency risk.

The fair value of the derivative financial instrument is recorded on the Consolidated Balance Sheets and is adjusted to fair value at each measurement date.

The fair value of the derivative financial instrument is recorded in the Consolidated Balance Sheets and is adjusted to fair value at each measurement date.

The changes in fair value are recognized in the Consolidated Statements of Operations in the current period.

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dollar equivalent notional amount of outstanding foreign currency exchange contracts was $ 7.8 million during 2021.

The Company reported $ 0.1 million of derivative assets in "Prepaid expenses and other assets" and $ 0.5 million of derivative liabilities in "Other current liabilities" at December 31, 2020.

Nominal derivative assets and liabilities were reported in 2019.

The Company recognized, as a component of "Cost of sales", a net gain on the change in fair value of derivative instruments of $ 0.2 million for the year ended December 31, 2020.

The Company recognized a net loss on the change in fair value of derivative instruments of $ 0.1 million and a net gain of $ 1.1 million for the years ended December 31, 2019 and 2018, respectively.

The Company reported $ 0.1 million of derivative assets in "Prepaid expenses and other assets" at both December 31, 2021 and December 31, 2020.

The Company held no derivative liabilities at December 31, 2021 and $ 0.5 million of derivative liabilities reported in "Other current liabilities" at December 31, 2020.

The Company recognized, as a component of "Cost of sales", a net gain on the change in fair value of derivative instruments of $ 0.8 million and $ 0.2 million for the years ended December 31, 2021 and 2020, respectively.

The Company recognized a net loss of $ 0.1 million for the year ended December 31, 2019.

There were no derivatives that were designated as hedges at December 31, 2021 or 2020.

Foreign Currency Translation - Subsidiaries located in Australia, Brazil, Canada, Chile, India, Northern Ireland, South Africa and Thailand operate primarily using local functional currencies.

Foreign Currency - Subsidiaries located in Australia, Brazil, Canada, Chile, India, the United Kingdom, South Africa and Thailand operate primarily using local functional currencies.

Accordingly, assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period.

The resulting adjustments are presented as a separate component of "Accumulated other comprehensive loss".

Foreign currency transaction gains and losses, net are included in "Cost of sales" and amounted to losses of $ 1.1 million and $ 0.6 million in 2020 and 2019, respectively, and a gain of $ 0.5 million in 2018.

Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by dividing "Net income (loss)" by the weighted average number of shares outstanding during the reported period.

Deferred stock units are fully vested and, as such, are included in basic earnings (loss) per share.

Diluted earnings (loss) per share includes the dilutive effect of common stock equivalents consisting of restricted stock units, performance stock units and stock held in the Company's supplemental executive retirement plan, using the treasury stock method.

Foreign currency transaction gains and losses, net are included in "Cost of sales" and amounted to a loss of $ 1.3 million in 2021, a gain of $ 1.1 million in 2020 and a loss of $ 0.6 million in 2019.

Earnings Per Share - Basic earnings per share is computed by dividing "Net income attributable to controlling interest" by the weighted average number of shares outstanding during the reported period.

Deferred stock units are fully vested and, as such, are included in basic earnings per share.

Diluted earnings per share includes the dilutive effect of common stock equivalents consisting of restricted stock units, performance stock units and stock held in the Company's deferred compensation programs, using the treasury stock method.

Performance stock units, which are considered contingently issuable, are considered dilutive when the related performance criterion has been met.

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

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

Years Ended December 31,

2021 2020 2019

Denominator for basic earnings (loss) per share 22,585,515 22,515,161 22,901,511

Denominator for basic earnings per share 22,726,767 22,585,515 22,515,161

Effect of dilutive securities:

Unvested restricted stock units 185,965 110,974 —

Unvested performance stock units 65,404 — —

Supplemental executive retirement plan 40,859 48,047 —

Denominator for diluted earnings (loss) per share 22,877,743 22,674,182 22,901,511

Restricted stock units 150,754 185,965 110,974

Unvested performance share units 35,747 65,404 —

Deferred compensation programs 35,364 40,859 48,047

Denominator for diluted earnings per share 22,948,632 22,877,743 22,674,182

Reclassifications and Adjustments

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.

Recently Adopted Accounting Pronouncements

Effective January 1, 2019, the Company adopted the provisions of ASU 2016-02, "Leases (Topic 842)" including subsequent amendments issued thereafter (collectively, "ASC Topic 842"), which requires lessees to recognize a right-of-use asset and corresponding lease liability on the balance sheet for operating leases while the accounting for finance leases remains substantially unchanged.

Upon adoption, right-of-use assets totaling $ 5.0 million were recorded on the Consolidated Balance Sheets.

Incremental borrowing rates used in the calculation of the ROU asset were estimated based upon secured borrowing rates quoted by the Company’s banks for loans of various lengths ranging from one year to 20 years.

Operating leases with original maturities less than one year in duration were excluded.

The calculation of the ROU asset considered lease agreement provisions concerning termination, extensions, end of lease purchase and whether or not those provisions were reasonably certain of being exercised.

Certain agreements contain lease and non-lease components, which are accounted for separately.

The financial results for periods prior to January 1, 2019 are unchanged from results previously reported.

No cumulative effect adjustment was necessary at the time of adoption.

Based upon a contract review and related calculations, none of the Company’s leases were deemed to be finance leases.

Lease expense recorded for the year ended December 31, 2019 under ASC Topic 842 was not materially different from lease expense that would have been recorded under the previous lease accounting standard.

Other transitional practical expedients allowed under ASU No.

2016-02 were adopted.

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No.

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016-13, "Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments" including subsequent amendments issued thereafter (collectively "Topic 326").

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The new standard was effective for fiscal years beginning after December 15, 2018, and the Company adopted its provisions as of January 1, 2019.

As a result of adopting this new standard, the Company reclassified $ 0.7 million of previously stranded tax effects from "Accumulated other comprehensive loss" to "Retained earnings" as shown on the Consolidated Statements of Equity for the year ended December 31, 2019.

As a result of adopting this new standard, the Company reclassified $ 0.7 million of previously stranded tax effects from "Accumulated other comprehensive loss" to "Retained earnings" as shown in the Consolidated Statements of Equity for the year ended December 31, 2019.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use-Software (Subtopic 350-40):

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The Company adopted the provisions of this standard as of January 1, 2020, and it has been applied prospectively for applicable implementation costs incurred subsequent to the effective date.

The adoption of this new standard did not have a material impact on its financial position, results of operations, cash flows or disclosures.

In August 2018, the FASB issued ASU No.

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The adoption of this new standard did not have a material impact on its financial position, results of operations, cash flows or disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes", which eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, "Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes", which eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The new standard is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years with early adoption permitted in interim or annual periods if the Company has not yet issued financial statements.

If the Company elects to early adopt the amendments in an interim period, it should reflect any adjustments as of the beginning of the annual period that includes the interim period and must adopt all amendments in the same period applying all guidance prospectively, except for certain amendments.

The Company expects the impact of the statement's provision on its financial position, results of operations or cash flows to be nominal.

The Company adopted this new standard effective January 1, 2021.

The adoption of this standard had an immaterial impact on the Company's financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", which provides optional guidance for a limited period of time to ease the potential burden in accounting (or recognizing the effects of) reference rate reform on financial reporting.

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In addition, stakeholders indicated that financial reporting results should reflect the intended continuation of such contracts and arrangements during the period of the market-wide transition to alternative reference rates.

This new standard is effective for annual and interim periods beginning after December 31, 2022.

The Company has yet to determine what effects, if any, this will have on its debt instrument.

This new standard is optional and may be elected effective through December 31, 2022.

The Company has limited contracts or other arrangements impacted by

the use of LIBOR.

The most significant of these is the $ 150.0 million revolving credit facility discussed in Note 11, Debt, for which no amounts have been drawn in 2021 or 2020.

As such, this standard, if adopted, is not expected to have a material impact on the Company's financial position or disclosures.

In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832)", which aims to increase the transparency of government assistance including the disclosure of the types of assistance, an entity’s accounting for the assistance and the effect of the assistance on an entity’s financial statements.

The new guidance requires expanded disclosure about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

This new standard is effective for annual periods beginning after December 15, 2021.

Availability of government assistance has typically been limited.

The Company will continue to evaluate the impact on its disclosures based on government assistance received in future periods.

Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material impact on the Company.

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The purchase price was $ 13.8 million, after adjustments, and was paid in cash.

The Company's preliminary allocation of the purchase price resulted in the recognition of $ 3.9 million of intangible assets primarily consisting of customer relationships ( 8 year life) and trade name ( 3 year life).

The Company's allocation of the purchase price, net of the adjustments in the first and second quarters of 2021 discussed below, resulted in the recognition of $ 4.3 million of intangible assets primarily consisting of customer relationships ( eight year life) and trade name ( three year life).

Significant inputs and assumptions used in determining the fair values of these intangible assets include management's forecasts of future revenues, earnings and cash flows, a discount rate based on the median weighted average cost of capital of the Company and select market competitors, and proportion of intangible assets acquired in relation to tangible assets.

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Results of operations have been consolidated from the date of acquisition.

The following table summarizes the preliminary allocations of the total purchase price:

In the first quarter of 2021, the Company recorded a $ 0.4 million adjustment related to a refined valuation of deferred tax liabilities, which was offset in intangible assets.

In the second quarter of 2021, the Company recorded a $ 0.3 million adjustment related to right-of-use lease assets, which was offset in accounts payable and other.

The following table summarizes the final allocations of the total purchase price:

(in millions) Amount

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Total purchase price $ 13.8

Proforma financial information is not included since not significant.

BMH Systems Acquisition - The Company entered into a Share Purchase Agreement, dated as of August 3, 2020, by and between BMH Systems Corporation ("St.

Bruno") for the purchase of a concrete equipment company in Quebec, Canada.

BMH Systems Acquisition - The Company entered into a Share Purchase Agreement, dated as of August 3, 2020, by and between BMH Systems Corporation ("St-Bruno") for the purchase of the concrete equipment company in Quebec, Canada.

The purchase price was $ 15.6 million, after adjustments, and was paid in cash.

The Company's preliminary allocation of the purchase price resulted in the recognition of $ 6.4 million of goodwill and $ 5.7 million of other intangible assets primarily consisting of customer relationships ( 9 year life) and trade name ( 3 year life).

Significant inputs and assumptions used in determining the fair values of these intangible assets include management's

forecasts of future revenues, earnings and cash flows, a discount rate based on the median weighted average cost of capital of the Company and select market competitors, and proportion of intangible assets acquired in relation to tangible assets.

The Company's allocation of the purchase price resulted in the recognition of $ 6.3 million of goodwill and $ 5.7 million of other intangible assets primarily consisting of customer relationships ( nine year life) and of trade name ( 15 year life).

The acquisition provides the Company with a broader line of concrete batch plant manufacturing, which will strengthen the Infrastructure Solutions segment.

Results of operations have been consolidated from the date of acquisition.

The goodwill is not expected to be deductible for income tax purposes.

The following table summarizes the preliminary allocations of the total purchase price:

The goodwill is not deductible for income tax purposes.

In the first quarter of 2021, a working capital adjustment was made that resulted in the decrease of goodwill of $ 0.1 million.

The following table summarizes the final allocations of the total purchase price:

(in millions) Amount

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Assets purchased primarily comprise technology assets.

The total purchase price was $ 6.0 million, of which $ 1.8 million is deferred and will be recognized as expense and be paid out in two equal annual installments on the anniversary date of the acquisition.

The total purchase price was $ 6.0 million, of which $ 1.8 million was deferred and will be recognized as expense and be paid out in two equal annual installments on the anniversary date of the acquisition.

Inventories consist of the following:

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During the year ended December 31, 2020, in conjunction with exiting the oil and gas drilling product lines, Enid's inventories were written down by $ 4.4 million, which was reported within "Cost of sales" in the Company's Consolidated Statements of Operations.

In the fourth quarter of 2019, through the Company’s assessment of the age, quantities on hand, market acceptance of the equipment, the Company’s exit of the Enid oil and gas drilling product lines and other related factors, it was determined that various specific equipment models at each of the Company’s sites and certain other inventories required increases to their net realizable value reserves.

As such, during the fourth quarter of 2019, the Company recorded an inventory write-down of $ 32.6 million within "Cost of sales" in the Consolidated Statements of Operations.

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The Company has various financial instruments that must be measured at fair value on a recurring basis, including marketable debt and equity securities held by Astec Insurance;

marketable equity securities held in a non-qualified Supplemental Executive Retirement Plan ("SERP");

and a money market fund held by a foreign subsidiary.

Although the SERP investments are allocated to individual participants and investment decisions are made solely by those participants, the SERP is a non-qualified plan.

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.

marketable equity securities held in a non-qualified Supplemental Executive Retirement Plan ("SERP") and a separate non-qualified Deferred Compensation Plan (collectively, the "Deferred Compensation Programs").

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.

The Deferred Compensation Programs' assets and related offsetting liabilities 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.

The carrying amount of cash and cash equivalents, trade receivables and contract assets, other receivables, accounts payable, short-term debt and long-term debt approximates their fair value because of their short-term nature and/or interest rates associated with the instruments.

Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted prices

exist, other observable inputs for the asset.

The carrying amount of cash, cash equivalents and restricted cash, trade receivables and contract assets, other receivables, accounts payable, short-term debt and long-term debt approximates their fair value because of their short-term nature and/or interest rates associated with the instruments.

Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted prices exist, other observable inputs for the asset.

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

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Trading equity securities:

SERP money market fund $ 0.2 $ — $ 0.2

SERP mutual funds 4.8 — 4.8

Deferred compensation programs mutual funds $ 4.9 $ — $ 4.9

Preferred stocks 0.3 — 0.3

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Financial liabilities:

Derivative financial instruments $ — $ 0.5 $ 0.5

SERP liabilities — 7.3 7.3

Deferred compensation programs liabilities $ — $ 7.2 $ 7.2

Total financial liabilities $ — $ 7.2 $ 7.2

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Trading equity securities:

SERP money market fund $ 0.2 $ — $ 0.2

SERP mutual funds 4.4 — 4.4

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

Deferred compensation programs mutual funds 4.8 — 4.8

Preferred stocks 0.3 — 0.3

Equity funds 1.7 — 1.7

Trading debt securities:

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Other — 1.0 1.0

Derivative financial instruments — 0.1 0.1

Total financial assets $ 14.0 $ 4.1 $ 18.1

Financial liabilities:

SERP liabilities $ — $ 6.6 $ 6.6

Derivative financial instruments $ — $ 0.5 $ 0.5

Deferred compensation programs liabilities — 7.3 7.3

Total financial liabilities $ — $ 7.8 $ 7.8

The Company's trading securities consist of the following:

(in millions) Amortized

Losses Fair Value

(Net Carrying

(in millions) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount)

December 31, 2021

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Trading equity investments are valued at their estimated fair value based on their quoted market prices, and trading debt securities are valued based upon a mix of observable market prices and model driven prices derived from a matrix of observable market prices for assets with similar characteristics obtained from a nationally recognized third-party pricing service.

Additionally, a significant portion of the trading equity securities are in equity money market and mutual funds and also comprise a portion of the Company's liability under its SERP.

See Note 14, Pension and Retirement Plans, for additional information on these investments and the SERP.

Additionally, a significant portion of the trading equity securities are in mutual funds and also comprise a portion of the Company's liability under its deferred compensation programs.

See Note 14, Employee Benefit Plans, for additional information on these investments and the deferred compensation programs.

Trading debt securities are comprised mainly of marketable debt securities held by Astec Insurance.

Astec Insurance has an investment strategy that focuses on providing regular and predictable interest income from a diversified portfolio of high-quality fixed income securities.

The Company completed the acquisitions of CON-E-CO and BMH Systems during the year ended December 31, 2020, which increased goodwill $ 6.4 million.

The Company tests goodwill for impairment annually, as of October 31, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

In the first quarter of 2020, as part of the Company's ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value, the Company performed an interim goodwill impairment test as of March 31, 2020 over the mobile asphalt equipment reporting unit.

Based on the results of this testing, the Company recorded a $ 1.6 million pre-tax non-cash impairment charge in the Infrastructure Solutions segment to fully impair the mobile asphalt

equipment reporting unit’s goodwill in the first quarter of 2020.

This impairment charge was reflected as a component of "Restructuring, impairment and other asset charges, net" for the year ended December 31, 2020.

For the annual test of goodwill performed as of October 31, 2020, management performed a qualitative assessment as described above and concluded that there was no additional impairment of goodwill.

This review included the Company's evaluation of relevant events and circumstances in totality that affect the fair value of the reporting units.

The Company tests goodwill for impairment annually in the fourth quarter, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

Management performed a qualitative assessment for the October 1, 2021 annual impairment analysis, which indicated no impairment.

This review included the Company's evaluation of relevant events and circumstances in totality that affect the fair value of the

reporting units.

These events and circumstances include, but are not limited to, macroeconomic conditions (including the impact of the COVID-19 pandemic), industry and competitive environment conditions, overall financial performance, business specific events and market considerations.

The majority of the Company's goodwill were generated on a legacy basis and as a result have fair values that sufficiently exceed their underlying carrying values.

For the annual test of goodwill performed as of October 31, 2020, management performed a qualitative assessment as described above and concluded that there was no impairment of goodwill.

Management performed a quantitative valuation for the October 31, 2019 annual impairment analysis, which indicated no impairment.

The valuation performed in 2018 indicated $ 11.2 million of impairment in the Infrastructure Solutions reporting segment.

In addition, as part of a restructuring action, additional goodwill of $ 1.0 million was written off in 2018.

These charges were reflected as a component of "Restructuring, impairment and other asset charges, net" for the year ended December 31, 2018.

The Company completed the acquisitions of CON-E-CO and BMH Systems during the year ended December 31, 2020, which increased goodwill $ 6.3 million.

Based on the results of this testing, the Company recorded a $ 1.6 million pre-tax non-cash impairment charge in the Infrastructure Solutions segment to fully impair the mobile asphalt equipment reporting unit’s goodwill in the first quarter of 2020.

This impairment charge was reflected as a component of "Restructuring, impairment and other asset charges, net" for the year ended December 31, 2020.

The changes in the carrying amount of goodwill and accumulated impairment losses by reporting segment during the years ended December 31, 2021 and 2020 are as follows:

(in millions) Infrastructure

Solutions Materials

Solutions Total

(in millions) Infrastructure Solutions Materials Solutions Total

Balance, December 31, 2019:

Goodwill $ 32.7 $ 32.8 $ 65.5

Accumulated impairment ( 20.2 ) ( 12.2 ) ( 32.4 )

Accumulated impairment losses ( 20.2 ) ( 12.2 ) ( 32.4 )

Net $ 12.5 $ 20.6 $ 33.1

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Foreign currency translation $ 0.3 $ 0.5 $ 0.8

Acquisitions 6.4 — 6.4

Impairment ( 1.6 ) — ( 1.6 )

Total 2020 activity

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Goodwill $ 39.4 $ 33.3 $ 72.7

Accumulated impairment losses ( 20.2 ) ( 12.2 ) ( 32.4 )

Accumulated impairment ( 21.8 ) ( 12.2 ) ( 34.0 )

Net $ 17.6 $ 21.1 $ 38.7

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Acquisitions ( 0.1 ) — ( 0.1 )

Impairment ( 1.6 ) — ( 1.6 )

Total 2021 activity

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Intangible assets consisted of the following at December 31, 2021 and 2020:

(in millions) Gross

Value Accumulated

Amortization Net

Value Accumulated

Amortization Net

(in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value

Dealer network and customer relationships $ 37.1 $ 22.9 $ 14.2 $ 39.2 $ 20.9 $ 18.3

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Operating lease expense $ 2.3 $ 2.6 $ 2.6

Short-term lease expense 1.5 1.0 1.3

Cash paid for operating leases included in operating cash flows 2.5 2.7 2.7

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Operating lease liabilities $ 5.8

Operating lease expense under prior guidance for 2018 was $ 3.6 million.

In February 2019, the Company and certain of its subsidiaries amended the 2012 amended and restated credit agreement with Wells Fargo Bank, N.A.

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The Company's Brazilian subsidiary maintains a separate term loan for working capital purposes with a bank in Brazil, which is secured by its manufacturing facility.

Prior to 2020, equipment financing loans were also outstanding.

Certain of the Company's international subsidiaries in Africa, Australia, Brazil, Canada and Northern Ireland each have separate credit facilities with local financial institutions to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees.

In addition, the Brazilian subsidiary also enters into order anticipation agreements with a local bank on a periodic basis.

Both the outstanding borrowings under the credit facilities of the international subsidiaries and the order anticipation agreements are recorded in "Short-term debt" on the Company's Consolidated Balance Sheets.

Certain of the Company's international subsidiaries in South Africa, Australia, Brazil and the United Kingdom each have separate credit facilities with local financial institutions to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees.

The Brazilian subsidiary maintains an independent credit facility at a separate financial institution and also enters into order anticipation agreements on a periodic basis.

Both the outstanding borrowings under the credit facilities of the international subsidiaries and the order anticipation agreements are recorded in "Short-term debt" in the Company's Consolidated Balance Sheets.

Each of the credit facilities are generally guaranteed by Astec Industries, Inc.

and/or secured with certain assets of the local subsidiary except in Brazil where the credit facilities are supported by letters of credit issued under the Credit Facility.

and/or secured with certain assets of the local subsidiary.

Additional details for the Company's Credit Facility, term loan and credit facilities are summarized in total below:

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Long-term maturities 0.2 0.4

Interest rate range 10.37 % 9.50 % - 16.33 %

Maturity date or date range April 15, 2024 April 9, 2020 - April 15, 2024

Interest rate 10.37 % 10.37 %

Maturity date April 15, 2024 April 15, 2024

International Credit Facilities and Short-Term Debt

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Interest rate range 1.77 % - 6.75 %

Debt maturities for the Company's short-term and long-term debt are expected to be $ 1.6 million, $ 0.2 million, $ 0.1 million and $ 0.1 million in the years ending December 31, 2021, 2022, 2023 and 2024, respectively.

2.40 % - 6.75 %

Debt maturities for the Company's short-term and long-term debt are expected to be $ 2.7 million, $ 0.1 million and $ 0.1 million in the years ending December 31, 2022, 2023 and 2024, respectively.

Product Warranty Reserves

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Total accrued loss reserves were $ 5.8 million and $ 7.2 million at December 31, 2021 and 2020, respectively, of which $ 3.9 million and $ 4.2 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at December 31, 2021 and 2020, respectively.

Pension and Retirement Plans

Employee Benefit Plans

Prior to December 31, 2003, all employees of the Company's Kolberg-Pioneer, Inc.

subsidiary were covered by a defined benefit pension plan ("the Pension Plan").

subsidiary, which is included in the Company's Materials Solutions reportable segment, were covered by a defined pension plan (the "Pension Plan").

After December 31, 2003, all benefit accruals under the plan ceased and no new employees could become participants in the plan.

Benefits paid under this plan are based on years of service multiplied by a monthly amount.

The Company's funding policy for the plan is to make at least the minimum annual contributions required by applicable regulations.

The Company's investment strategy for the plan is to earn a rate of return sufficient to match or exceed the long-term growth of pension liabilities.

The investment policy states that the Plan Committee in its sole discretion shall determine the allocation of plan assets among the following four asset classes:

Benefits paid under this plan were based on years of service multiplied by a monthly amount.

The Company's funding policy for the plan was to make at least the minimum annual contributions required by applicable regulations.

The Company's investment strategy for the plan was to earn a rate of return sufficient to match or exceed the long-term growth of pension liabilities.

The investment policy stated that the Plan Committee in its sole discretion shall determine the allocation of plan assets among the following four asset classes:

cash equivalents, fixed-income securities, domestic equities and international equities.

The Plan Committee attempts to ensure adequate diversification of the invested assets through investment in an exchange traded mutual fund that invests in a diversified portfolio of stocks, bonds and money market securities.

The Plan Committee attempted to ensure adequate diversification of the invested assets through investment in an exchange traded mutual fund that invests in a diversified portfolio of stocks, bonds and money market securities.

In October 2021, the Company settled its obligations under the Pension 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.

A charge of $ 5.2 million, including excise tax, was recognized in the fourth quarter of 2021 in "Other (expenses) income, net" in the Consolidated Statements of Operations.

The following provides information regarding benefit obligations, plan assets and the funded status of the plan:

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Interest cost 0.4 0.5

Actuarial loss 1.6 1.6

Actuarial (gain) loss ( 0.3 ) 1.6

Benefits paid ( 0.8 ) ( 0.8 )

Pension settlement ( 17.7 ) —

Benefit obligation, end of year — 18.4

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Actual gain on plan assets 0.6 2.2

Employer contribution — 1.6

Excess plan assets returned ( 1.5 ) —

Benefits paid ( 0.8 ) ( 0.8 )

Pension settlement ( 17.7 ) —

Fair value of plan assets, end of year — 19.4

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Amounts recognized in the consolidated balance sheets:

Noncurrent asset $ 1.0 $ 0.9

Long-term asset $ — $ 1.0

Net amount recognized $ — $ 1.0

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Weighted average assumptions used to determine the benefit obligation:

Discount rate 2.30 % 3.10 %

Discount rate N/A 2.30 %

Rate of compensation increase N/A N/A

The primary driver of the actuarial loss in the Company's Pension Plan in 2020 and 2019 within the change in benefit obligation is a result of a decrease in the discount rate assumption.

All assets in the plan are invested in an exchange-traded mutual fund (Level 1 in the fair value hierarchy).

The allocation of assets within the mutual fund as of December 31 and the target asset allocation ranges by asset category are as follows:

Actual Allocation

Asset Category 2020 2019 Target Allocation Ranges

The primary driver of the actuarial loss in the Company's Pension Plan in 2020 within the change in benefit obligation is a result of a decrease in the discount rate assumption.

All assets in the plan were invested in an exchange-traded mutual fund (Level 1 in the fair value hierarchy) at December 31, 2020 and through the date of settlement.

The allocation of assets within the mutual fund as of December 31, 2020 and the target asset allocation ranges by asset category were as follows:

Asset Category Actual Allocation Target Allocation Ranges

Equity Securities 48.4 % 40 % - 65 %

Debt Securities 41.0 % 30 % - 50 %

Cash and equivalents 10.6 % 11.9 % 0 % - 15 %

Cash and Cash Equivalents 10.6 % 0 % - 15 %

Total 100.0 %

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(in millions) 2021 2020 2019

Components of net periodic benefit (income) cost:

Components of net periodic benefit cost (income):

Interest cost $ 0.4 $ 0.5 $ 0.6

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Amortization of actuarial loss 0.4 0.4 0.5

Net periodic benefit (income) cost $ ( 0.1 ) $ 0.3 $ 0.3

Pension settlement 4.5 — —

Net periodic benefit cost (income) $ 4.3 $ ( 0.1 ) $ 0.3

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

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Amortization of net loss ( 0.4 ) ( 0.4 ) ( 0.5 )

Pension settlement ( 4.5 ) — —

Total recognized in other comprehensive income (loss) ( 4.9 ) — ( 0.8 )

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Weighted average assumptions used to determine net periodic benefit cost for years ended December 31:

Discount rate 3.10 % 4.10 % 3.50 %

Expected return on plan assets 6.00 % 6.00 % 6.25 %

Discount rate N/A 3.10 % 4.10 %

Expected return on plan assets N/A 6.00 % 6.00 %

Rate of compensation increase N/A N/A N/A

To develop the expected long-term rate of return on assets assumptions, the Company considers the historical returns and future expectations for returns in each asset class, as well as targeted asset allocation percentages within the asset portfolios.

No contributions are expected to be funded by the Company during 2021.

Amounts in "Accumulated other comprehensive loss" expected to be recognized in net periodic benefit cost in 2021 for the amortization of a net loss is $ 0.4 million.

The following estimated future benefit payments are expected in the years indicated:

(in millions) Pension Benefits

2026 and thereafter

Other Retirement Plans

The Company sponsors a 401(k) defined contribution plan to provide eligible employees with additional income upon retirement.

The Company's contributions to the plan are based on employee contributions.

The Company's contributions totaled $ 6.9 million, $ 7.0 million and $ 7.5 million in 2020, 2019 and 2018, respectively.

To develop the expected long-term rate of return on assets assumptions, the Company considered the historical returns and future expectations for returns in each asset class, as well as targeted asset allocation percentages within the asset portfolios.

Deferred Compensation Programs

Supplemental Executive Retirement Plan

The Company maintains a SERP for certain of its executive officers.

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Investments are self-directed by participants and can include Company stock.

Upon retirement, participants receive their apportioned stock of the plan assets in the form of cash.

Assets of the SERP consist of the following:

Upon retirement, participants receive their apportioned share of the plan assets in the form of cash.

Deferred Compensation Plan

The Company implemented a Deferred Compensation Plan for certain of its executive officers during 2021.

The plan is a non-qualified deferred compensation plan administered by the Board of Directors of the Company, pursuant to which eligible employees can defer the receipt of base and bonus compensation to a future date.

Investments are self-directed by participants and can include Company stock.

Upon distribution, participants receive their apportioned share of the plan assets in the form of cash.

Assets of the Deferred Compensation Programs consist of the following:

December 31, 2021 December 31, 2020

(in millions) Cost Market Cost Market

Money market fund $ 0.1 $ 0.1 $ — $ —

Company stock 1.2 2.2 1.5 2.3

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Total $ 5.8 $ 7.2 $ 6.0 $ 7.3

The Company periodically adjusts the deferred compensation liability such that the balance of the liability equals the total fair market value of all assets held by the trust established under the SERP.

The Company periodically adjusts the deferred compensation liability related to the Deferred Compensation Programs such that the balance of the liability equals the total fair market value of all assets held by the trusts established under the programs.

Such liabilities are included in "Other long-term liabilities" in the Consolidated Balance Sheets.

The money market fund is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets.

The equity securities are included in "Investments" in the Consolidated Balance Sheets and classified as trading equity securities.

See Note 6, Investments, for additional information.

The cost of the Company stock held by the plan is included as a reduction in "Shareholders' equity" in the Consolidated Balance Sheets.

The change in the fair market value of Company stock held in the SERP results in a charge or credit to "Selling, general and administrative expenses" in the Consolidated Statements of Operations because the acquisition cost of the Company stock in the SERP is recorded as a reduction of "Shareholders' equity" and is not adjusted to fair market value;

The cost of the Company stock held by the plan is included in "Company stock held by deferred compensation programs, at cost" in the Consolidated Balance Sheets.

The change in the fair market value of Company stock held in the programs results in a charge or credit to "Selling, general and administrative expenses" in the Consolidated Statements of Operations because the acquisition cost of the Company stock in the programs is recorded in "Company stock held by deferred compensation programs, at cost" and is not adjusted to fair market value;

however, the related liability is adjusted to the fair market value of the stock as of each period end.

The Company recognized income of $ 0.6 million, $ 0.6 million and $ 1.6 million in 2020, 2019 and 2018, respectively, related to the change in the fair value of the Company stock held in the SERP.

For financial reporting purposes, income (loss) before income taxes includes the following components:

The Company recognized expense of $ 0.5 million, $ 0.6 million and $ 0.6 million in 2021, 2020 and 2019, respectively, related to the change in the fair value of the Company stock held in the Deferred Compensation Programs.

Other Employee Benefit Plan

The Company sponsors a 401(k) defined contribution plan to provide eligible employees with additional income upon retirement.

The Company's contributions to the plan are based on employee contributions.

The Company's contributions totaled $ 7.2 million, $ 6.9 million and $ 7.0 million in 2021, 2020 and 2019, respectively.

For financial reporting purposes, income before income taxes includes the following components:

Years Ended December 31,

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Foreign 2.4 3.6 ( 1.5 )

Income (loss) before income taxes $ 45.7 $ 25.2 $ ( 85.9 )

Income before income taxes $ 16.5 $ 45.7 $ 25.2

The (benefit) provision for income taxes consists of the following:

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( 0.1 ) ( 9.8 ) 1.3

Deferred provision (benefit):

Deferred (benefit) provision:

Federal ( 0.1 ) 12.3 2.8

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Foreign ( 2.3 ) ( 2.3 ) ( 0.1 )

Total deferred provision (benefit)

Total deferred (benefit) provision

( 1.3 ) 8.6 1.7

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The Company's "Income tax (benefit) provision" is computed based on the domestic and foreign federal statutory rates and the average state statutory rates, net of related federal benefit.

The (benefit) provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes.

The (benefit) provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes.

A reconciliation of the (benefit) provision for income taxes at the statutory federal income tax rate to the amount provided is as follows:

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(in millions) 2021 2020 2019

Tax expense (benefit) at the statutory federal income tax rate

$ 9.6 $ 5.3 $ ( 18.1 )

Tax expense at the statutory federal income tax rate $ 3.5 $ 9.6 $ 5.3

State income tax, net of federal income tax 1.4 0.3 ( 2.3 )

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Liquidation of subsidiary ( 0.8 ) — ( 0.9 )

True-up of foreign subsidiary net operation loss carryforward ( 0.3 ) ( 1.4 ) —

Change in foreign subsidiary net operating loss carryforward 4.4 ( 0.3 ) ( 1.4 )

Valuation allowance impact ( 8.1 ) ( 1.0 ) 5.8

1 unchanged sentence

Effects of Cares Act - 2018 NOL carryback — ( 9.5 ) —

Share-based compensation 0.4 0.3 1.2

Other items ( 0.6 ) ( 0.6 ) ( 1.3 )

Total income tax (benefit) provision $ ( 1.4 ) $ ( 1.2 ) $ 3.0

$ ( 1.2 ) $ 3.0 $ ( 25.2 )

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Outside basis difference — 4.7

Federal net operating loss — 12.1

Foreign net operating loss 4.3 9.5

Lease obligation 0.4 0.9

Other 1.5 0.9

Employee & Iinsurance accruals 0.8 0.7

Domestic credit carryforwards 1.4 1.6

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Valuation allowances ( 6.0 ) ( 14.1 )

Other 1.6 0.8

Total deferred tax assets 29.8 32.3

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Total net deferred assets $ 14.6 $ 14.5

As of December 31, 2020, the Company does not have a federal net operating loss carryforward.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was passed which modified the net operating loss ("NOL") carryback provisions allowing the Company to carryback its 2018 NOL to prior years.

The tax provision for the year ended December 31, 2020 includes a $ 9.5 million tax benefit related to the NOL carryback which occurred due to a change in rates from 35% to 21%.

As of December 31, 2020, the Company has state net operating loss carryforwards of $ 193.0 million and foreign net operating loss carryforwards of approximately $ 31.5 million, which will be available to offset future taxable income.

As of December 31, 2021, the Company has gross state NOL carryforwards of $ 235.4 million and has gross foreign NOL carryforwards of approximately $ 13.0 million, which will be available to offset future taxable income.

If not used, these carryforwards will expire between 2022 and 2033.

The Company does no t have a federal net operating loss carryforward.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was passed which modified the NOL carryback provisions allowing the Company to carryback its 2018 NOL to prior years.

The tax provision for the year ended December 31, 2020 includes a $ 9.5 million tax benefit related to the NOL carryback which occurred due to a change in rates from 35% to 21%.

A significant portion of the valuation allowance for deferred tax assets relates to the future utilization of state and foreign net operating loss and state tax credit carryforwards.

Future utilization of these net operating loss and state tax credit carryforwards is evaluated by the Company on a periodic basis, and the valuation allowance is adjusted accordingly.

In 2020, the valuation allowance on these carryforwards was a $ 1.0 million net decrease due to the unrealizable portion of certain entities’ state and foreign net operating loss carryforwards and certain other deferred tax assets in foreign jurisdictions.

In 2020, the valuation allowance for the Company's subsidiary in Australia ("Astec Australia") was released in full as this entity became profitable in 2019 and 2020 and is no longer in a cumulative three-year loss position.

The tax provision for the year ended December 31, 2020 includes a benefit of $ 1.5 million for the release of Astec Australia’s valuation allowance.

The following table represents a roll forward of the deferred tax asset valuation allowance for the years ended December 31, 2020, 2019 and 2018:

In 2021, the valuation allowance on these carryforwards decreased by $ 8.1 million mainly due to the release of the $ 3.4 million valuation allowance as the NOLs are expected to be fully utilized by the Company's Brazilian subsidiary and the release of the $ 3.8 million valuation allowance associated with AMM whose dissolution was completed during 2021.

The remaining change in valuation allowances is due to the unrealizable portion of certain entities’ state and foreign net operating loss carryforwards and certain other deferred tax assets in foreign jurisdictions.

The following table represents a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2021, 2020 and 2019:

Years Ended December 31,

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The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.

The Company did not recognize any tax benefits for penalties and interest related to amounts that were settled for less than previously accrued in 2020 and recognized $ 0.1 million in 2019.

The Company did not recognize any tax benefits for penalties and interest related to amounts that were settled for less than previously accrued in 2021 or 2020.

The net total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $ 11.9 million and $ 10.5 million at December 31, 2021 and 2020, respectively.

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Additions for tax positions taken in prior period 0.8 3.5 0.7

Decreases related to settlements with tax authorities — ( 0.1 ) —

Decreases related to sustained tax positions ( 0.7 ) — ( 0.1 )

Balance, end of year $ 10.8 $ 9.7 $ 5.7

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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 $ 2.4 million and $ 2.9 million at December 31, 2021 and 2020, respectively.

These arrangements expire at various dates through December 2023.

Additionally, the Company is also potentially liable for 1.75 % of the unpaid balance, determined as of December 31 of the prior year (or approximately $ 0.6 million for 2020), on certain past customer equipment purchases that were financed by an outside finance company.

These arrangements expire at various dates through July 2025.

Additionally, the Company is also contingently liable for 1.75 % of the unpaid balance, determined as of December 31 of the prior year (or approximately $ 0.4 million for 2021), on certain past customer equipment purchases that were financed by an outside finance company.

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 $ 2.0 million and $ 1.7 million related to these guarantees as of December 31, 2020 and 2019, respectively.

The Company has recorded a liability of $ 1.1 million and $ 2.0 million related to these guarantees, which were included in "Other current liabilities" in the Consolidated Balance Sheets as of December 31, 2021 and 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

During the year ended December 31, 2020, the Company considered 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 Credit Facility totaling $ 7.6 million as of December 31, 2020, including $ 3.2 million of letters of credit guaranteeing certain bank credit facilities of the Company's Brazilian subsidiary.

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 Credit Facility totaling $ 2.5 million as of December 31, 2021.

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

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On February 19, 2021, the motion to dismiss was granted with prejudice and judgment was entered for the defendants.

On March 19, 2021, plaintiff filed a Motion to Alter or Amend the Judgment and For Leave to File the Proposed Amended Complaint, which was denied on May 5, 2021.

On June 4, 2021, plaintiff filed a notice of appeal to the United States Court of Appeals for the Sixth Circuit, which is pending.

The Company's GEFCO subsidiary has been named a defendant in a lawsuit originally filed on August 16, 2018 with an amended complaint filed on January 25, 2019, in the United States District Court for the Western District of Oklahoma.

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As management becomes aware of additional information concerning such contingencies, any potential liability related to these matters is assessed and the estimates are revised, if necessary.

If management believes that a loss arising from such claims and legal proceedings is either (i) probable but cannot be reasonably estimated or (ii) reasonably estimable but not probable, the Company does not record the amount of the loss, but does make specific disclosure of such matter.

If management believes that a loss arising from such claims and legal proceedings is either:

(i) probable but cannot be reasonably estimated or (ii) reasonably estimable but not probable, the Company does not record the amount of the loss, but does make specific disclosure of such matter.

Based upon currently available information and with the advice of counsel, management believes that the ultimate outcome of its current claims and legal proceedings, individually and in the aggregate, will not have a material adverse effect on the Company's financial position, cash flows or results of operations.

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Share-Based Compensation

The Company's 2011 Incentive Plan ("2011 Plan") was established to provide for the grant of share-based awards to its employees, officers, directors and consultants.

Prior to its expiration on February 25, 2021, the Company's 2011 Incentive Plan ("2011 Plan") provided for the grant of share-based awards to its employees, officers, directors and consultants.

The 2011 Plan authorized the grant of options, share appreciation rights, restricted stock, restricted stock units, deferred stock units, performance awards, dividend equivalents and other share-based and cash awards.

Under the 2011 Plan, the Company has outstanding restricted stock units, performance stock units and deferred stock units none of which participate in Company-paid dividends.

On April 27, 2021 ("Plan Effective Date"), the Company's shareholders approved the 2021 Equity Incentive Plan ("2021 Plan"), which provides for a total of 1,280,000 shares to be reserved and available for issuance pursuant to the grant of new awards under the 2021 Plan, less one share for every one share subject to an award granted under the 2011 Plan after December 31, 2020 and prior to the Plan Effective Date.

No new awards were granted between December 31, 2020 and the Plan Effective Date.

To the extent that all or a portion of an award (or, after December 31, 2020, an award granted under the 2011 Plan) is canceled, terminates, expires, is forfeited or lapses for any reason (including by reason of failure to meet time-based and/or performance-based vesting requirements), any unissued or forfeited shares originally subject to the award (or, after December 31, 2020, an award granted under the 2011 Plan) will be added back to the 2021 Plan share reserve and again be available for issuance pursuant to awards granted under the 2021 Plan.

The 2021 Plan authorizes the grant of options, share appreciation rights, restricted stock, restricted stock units, deferred stock units, performance awards, dividend equivalents and other share-based and cash awards.

The 2011 Plan is administered by the Company's Compensation Committee of the Board of Directors ("Compensation Committee").

Up to 0.7 million shares of newly-issued Company stock are reserved for issuance under the 2011 Plan of which approximately 0.2 million awards were available for issuance at December 31, 2020.

The Company has outstanding restricted stock units, performance stock units and deferred stock units none of which participate in Company-paid dividends.

The Company also has an Amended and Restated Non-Employee Directors Compensation Plan, which provides that annual retainers payable to the Company's non-employee directors will be paid in the form of cash, unless the director elects to receive the annual retainer in the form of common stock, which may, at the director’s option, be received on a deferred basis.

If the director elects to receive common stock, whether on a current or deferred basis, the number of shares to be received is determined by dividing the dollar value of the annual retainer by the fair market value of the Company's common stock on the date the retainer is payable.

Deferred stock units under this plan are entitled to dividends in the form of shares.

In addition, the 2021 Plan allows for participants to elect to receive vested units on a deferred basis.

Awards granted under the 2021 Plan are entitled to dividend equivalents, which are subject to the same forfeiture, transfer restrictions and deferral terms as apply to the award to which they relate.

The Company's annual grants of restricted stock units and performance stock units typically awarded in the first quarter of the year were delayed until April 2021 following the shareholder approval of the 2021 Plan.

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

Share-based compensation expense of $ 6.0 million, $ 5.1 million and $ 2.6 million was recorded in the years ended December 31, 2021, 2020 and 2019, respectively, and recognized in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

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Beginning in 2020, awards were determined based on a predetermined award value of the base salary of eligible employees aligned to a total compensation program.

Restricted stock unit awards granted in 2016 and prior vest at the end of five years from the date of grant, or at the time a recipient retires after reaching age 65 , if earlier, while awards granted in 2017 and 2018 vest three years from the date of grant.

Restricted stock unit awards granted in 2016 and prior vest at the end of five years from the date of grant, while awards granted in 2017 and 2018 vest three years from the date of grant.

RSUs granted in 2019, 2020 and 2021 vest ratably, at the end of each 12-month period, over a three-year period.

A participant generally must be employed by the Company on the vesting date of each award.

However, awards will vest if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65 .

Additional RSUs are granted on an annual basis to the Company's outside directors under the Company's Non-Employee Directors Compensation Plan with a one-year vesting period.

Certain awards granted in 2019 were established as liability-based awards but have subsequently converted to equity awards in 2020.

Changes in restricted stock units during the year ended December 31, 2021 are as follows:

(in thousands, except weighted average grant date fair value) Restricted Stock Units Weighted Average

(in thousands, except weighted average grant date fair value) Restricted Stock Units Weighted Average Grant Date Fair Value

Unvested as of January 1, 2021 279 $ 37.72

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Fair value of awards vested $ 9.3 $ 3.8 $ 1.6

Tax (expense) benefit for restricted stock compensation expense $ ( 0.4 ) $ 0.7 $ 0.5

Tax benefit (expense) for restricted stock compensation expense $ 3.8 $ ( 0.4 ) $ 0.7

As of December 31, 2021, the Company had $ 4.9 million of unrecognized compensation expense before tax related to restricted stock, which is expected to be recognized over a weighted average period of 1.8 years.

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Beginning in 2020, PSUs were granted to officers and other key employees.

Vesting is subject to both the continued employment of the participant with the Company and the achievement of certain performance goals established by the Compensation Committee.

Vesting is subject to both the continued employment of the participant with the Company and the achievement of certain performance metrics established by the Compensation Committee.

A participant generally must be employed by the Company on the vesting date of each award.

However, adjusted awards will be paid if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65 .

However, adjusted awards will vest if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65 .

PSUs granted in 2020 were divided into three equal tranches with cliff vesting periods of one year , two years and three years .

Awards granted in 2021 cliff vest three years from the date of grant.

The number of PSUs that vest may range from zero to 200 % of the target shares granted and is determined for each tranche based on the achievement of two equally weighted performance criteria:

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Changes in PSUs during the year ended December 31, 2021 are as follows:

(in thousands, except weighted average grant date fair value) Performance Stock Units Weighted Average

(in thousands, except weighted average grant date fair value) Performance Stock Units Weighted Average Grant Date Fair Value

Unvested as of January 1, 2021 87 $ 35.41

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Unvested as of December 31, 2021 99 $ 63.16

Tax benefits for the year ended December 31, 2020 were nominal.

* The vested PSUs presented are based on the target amount of the award for the first tranche of the 2020 awards.

In accordance with the terms of the underlying award agreements, the actual shares earned and distributed for the one-year performance period ended during 2021 was 200% of the target shares granted, rounded up the nearest whole share.

The following additional activity occurred for the Company's performance stock units:

Years Ended December 31,

(in millions, except weighted average grant date fair value per award granted) 2021 2020

Weighted average grant date fair value per award $ 92.98 $ 34.66

Fair value of awards vested $ 4.5 $ —

Tax benefit for performance stock compensation expense $ 2.3 $ —

As of December 31, 2021, the Company had $ 3.9 million of unrecognized compensation expense before tax related to PSUs, which is expected to be recognized over a weighted average period of 2.2 years.

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Revenue Recognition

The following tables disaggregates the Company's revenue by major source for the period ended December 31, 2020 and 2019 (excluding intercompany sales):

The following tables disaggregates the Company's revenue by major source for the periods ended December 31, 2021, 2020 and 2019 (excluding intercompany sales):

For the Year Ended December 31, 2021

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Equipment sales $ 354.1 $ 152.0 $ — $ 506.1

Pellet plant revenue 20.0 — — 20.0

Parts and component sales 172.8 69.2 — 242.0

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Total net sales $ 702.8 $ 321.6 $ — $ 1,024.4

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.

As of December 31, 2019, the Company had contract assets of $ 4.7 million and contract liabilities of $ 6.5 million, including $ 3.5 million of deferred revenue related to extended warranties.

For the Year Ended December 31, 2019

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

Net Sales-Domestic:

Equipment sales $ 413.6 $ 166.9 $ — $ 580.5

Pellet plant sales 20.0 — — 20.0

Parts and component sales 169.0 74.5 — 243.5

Service and equipment installation revenue 19.2 8.0 — 27.2

Used equipment sales 11.4 1.2 — 12.6

Freight revenue 18.0 6.3 — 24.3

Other 3.3 ( 2.9 ) — 0.4

Total domestic revenue 654.5 254.0 — 908.5

Net Sales-International:

Equipment sales 70.4 95.5 — 165.9

Parts and component sales 28.6 47.0 — 75.6

Service and equipment installation revenue 6.2 2.0 — 8.2

Used equipment sales 2.2 3.3 — 5.5

Freight revenue 2.5 3.0 — 5.5

Other 0.2 0.2 — 0.4

Total international revenue 110.1 151.0 — 261.1

Total net sales $ 764.6 $ 405.0 $ — $ 1,169.6

As of December 31, 2021, the Company had contract assets of $ 5.5 million and contract liabilities, excluding customer deposits, of $ 6.3 million, of which $ 2.7 million was deferred revenue related to extended warranties.

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

Total extended warranty sales were $ 1.5 million and $ 1.7 million in 2021 and 2020, respectively.

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Infrastructure Solutions – The Infrastructure Solutions segment comprises 12 sites and designs, engineers, manufactures and markets a complete line of asphalt plants, concrete plants and their related components and ancillary equipment as well as supplying other heavy equipment.

based sites within the Infrastructure Solutions segment are primarily manufacturing operations while those located internationally market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites.

The sites based in North America within the Infrastructure Solutions segment are primarily manufacturing operations while those located outside of North America, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites.

The primary purchasers of the products produced by this segment are asphalt producers, highway and heavy equipment contractors, ready mix concrete producers, contractors in the construction and demolition recycling markets and domestic and foreign governmental agencies.

Materials Solutions – The Materials Solutions segment comprises 10 sites and designs and manufactures heavy processing equipment, in addition to servicing and supplying parts for the aggregate, metallic mining, recycling, ports and bulk handling markets.

Materials Solutions – The Materials Solutions segment comprises nine sites and designs and manufactures heavy processing equipment, in addition to servicing and supplying parts for the aggregate, metallic mining, recycling, ports and bulk handling markets.

The sites within the Materials Solutions segment are primarily manufacturing operations with the AME and India sites functioning to market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites.

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The principal purchasers of aggregate processing equipment include distributors, highway and heavy equipment contractors, sand and gravel producers, recycle and crushing contractors, open mine operators, quarry operators, port and inland terminal authorities, power stations and foreign and domestic governmental agencies.

Corporate – The Corporate category consists primarily of our parent company and our captive insurance company, Astec Insurance, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments.

Corporate – The Corporate category consists primarily of the parent company and the captive insurance company, Astec Insurance, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments.

The parent company and the captive insurance company provide support and corporate oversight for all of the sites.

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Intersegment revenues 47.5 58.0 — 105.5

Restructuring, impairment and other asset charges, net 6.6 ( 1.3 ) 2.8 8.1

Restructuring and asset impairment charges 1.9 0.6 — 2.5

Interest expense 0.1 0.5 0.5 1.1

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Intersegment revenues 33.5 40.7 — 74.2

Restructuring, impairment and other asset charges, net 2.9 0.3 — 3.2

Restructuring and asset impairment charges 6.6 ( 1.3 ) 2.8 8.1

Interest expense — 0.2 0.5 0.7

9 unchanged sentences

Intersegment revenues 29.2 22.2 — 51.4

Restructuring, impairment and other asset charges, net 13.1 — — 13.1

Restructuring and asset impairment charges 2.9 0.3 — 3.2

Interest expense — 0.3 1.1 1.4

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Net income (loss) attributable to controlling interest

Total profit (loss) for reportable segments $ 85.9 $ 56.6 $ ( 64.4 )

Corporate (expenses) income, net ( 40.1 ) ( 35.6 ) 1.6

Net loss attributable to non-controlling interest — 0.1 0.3

Total profit for reportable segments $ 82.3 $ 85.9 $ 56.6

Corporate expenses, net ( 64.8 ) ( 40.1 ) ( 35.6 )

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

Recapture of intersegment profit 0.4 1.1 1.2

Total consolidated net income (loss) attributable to controlling interest

Total consolidated net income attributable to controlling interest

$ 17.8 $ 46.9 $ 22.3

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Australia and Oceania 43.4 28.5 42.3

Other European Countries 23.2 32.2 26.0

Africa 33.9 22.4 44.7

South America (excluding Brazil) 21.9 17.9 30.1

Other European Countries 32.7 23.2 32.2

Brazil 21.5 20.4 11.6

Japan and Korea 8.1 3.6 3.6

West Indies 6.1 6.4 1.5

Russia 4.0 5.1 9.6

Middle East 3.2 2.6 7.9

Post-Soviet States (excluding Russia) 3.1 7.3 2.7

South America (excluding Brazil) 15.2 21.9 17.9

Mexico 13.5 2.9 5.3

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Central America (excluding Mexico) 3.9 1.3 4.9

China 1.2 2.2 2.8

Post-Soviet States (excluding Russia) 3.6 3.1 7.3

Middle East 2.9 3.2 2.6

Japan and Korea 2.7 8.1 3.6

India 2.7 0.5 1.0

Russia 2.6 4.0 5.1

West Indies 1.3 6.1 6.4

China 0.4 1.2 2.2

Other — — 0.7

Total foreign 255.1 207.4 261.1

Total net sales $ 1,024.4 $ 1,169.6 $ 1,171.6

Total consolidated sales $ 1,097.2 $ 1,024.4 $ 1,169.6

Long-lived assets by major geographic region are as follows:

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United States $ 140.3 $ 140.3

Northern Ireland 11.9 10.8

United Kingdom 11.7 11.9

Brazil 5.6 6.3

Australia 5.1 4.6

Canada 5.3 4.8

Australia 4.6 5.1

South Africa 3.9 4.0

1 unchanged sentence

Total foreign 31.4 32.5

Total $ 172.8 $ 190.4

Total consolidated assets $ 171.7 $ 172.8

Accumulated Other Comprehensive Loss

2 unchanged sentences

Foreign currency translation adjustment $ ( 32.4 ) $ ( 30.4 )

Unrecognized pension and postretirement benefits cost, net of tax of $ 1.3 and $ 1.3 , respectively

( 3.1 ) ( 3.2 )

Unrecognized pension and postretirement benefits cost, net of tax of $ 1.3 in 2020

Accumulated other comprehensive loss $ ( 32.4 ) $ ( 33.5 )

See Note 14, Pension and Retirement Plans, for discussion of the amounts recognized in "Accumulated other comprehensive loss" related to the Company's defined pension plan.

See Note 14, Employee Benefit Plans, for discussion of the amounts recognized in "Accumulated other comprehensive loss" related to the Company's defined pension plan.

Other Expenses and Income

Other income consists of the following:

1 unchanged sentence

(in millions) 2021 2020 2019

Investment income (loss) $ — $ 0.2 $ ( 0.2 )

Investment (loss) income $ ( 0.3 ) $ — $ 0.2

Gain on disposal of subsidiary — 1.6 —

Curtailment gain on postretirement benefits 0.5 — —

Curtailment and settlement (loss) gain on pension and postretirement benefits, net ( 4.7 ) 0.5 —

Other — 0.5 0.1

Total $ ( 5.0 ) $ 2.6 $ 0.3

Restructuring, Impairment and Other Charges, Net

Beginning in 2018, the Company made several strategic decisions to divest of underperforming manufacturing sites or product lines, including its plan to exit from the wood pellet plant line of business;

the closing of its subsidiary in Germany (Astec Mobile Machinery ("AMM"));

its plan to close and sell its manufacturing sites in Albuquerque, New Mexico, Mequon, Wisconsin and Tacoma, Washington (the product lines manufactured at each of these sites will continue to be produced and marketed at other Company locations);

its plan to exit the oil, gas and water well product lines;

and its plan to sell certain Company-owned airplanes.

These actions generally include facility rationalization, workforce reduction and the associated costs of organizational integration activities.

Strategic Transformation and Restructuring, Impairment 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;

exit the oil, gas and water well product lines;

and sell certain assets.

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 $ 13.4 million of incremental costs for the SFG initiative in 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.

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The Company incurred costs for these activities of $ 2.5 million, $ 8.1 million and $ 3.2 million in 2021, 2020 and 2019, respectively.

The restructuring and asset impairment charges incurred in 2020, 2019 and 2018 are as follows:

The restructuring, asset impairment charges and net gain on sale of property and equipment incurred in 2021, 2020 and 2019 are as follows:

Years Ended December 31,

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Restructuring related charges:

Costs associated with exiting the wood pellet business $ — $ 0.5 $ —

Costs associated with closing AMM 0.3 1.3 1.9

Costs associated with closing Albuquerque 1.3 — —

Costs associated with closing Mequon 3.3 — —

Costs associated with closing Enid 2.5 — —

Costs associated with closing Tacoma $ 1.6 $ 0.9 $ —

Costs associated with closing Enid 0.7 2.5 —

Costs associated with closing Mequon 0.6 3.3 —

Costs associated with closing Albuquerque — 1.3 —

Costs associated with closing AMM — 0.3 1.3

Costs associated with exiting the wood pellet business — — 0.5

Workforce reductions at multiple sites — 1.3 1.1

2 unchanged sentences

Asset impairment charges:

Goodwill impairment charges 1.6 — 11.2

Airplane impairment charges — 2.3 0.3

Goodwill impairment charges — 1.6 —

Other impairment charges 0.2 0.5 —

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Materials Solutions ( 0.1 ) ( 4.7 ) —

Corporate — — —

Total gain on sale of property and equipment, net $ ( 0.6 ) $ ( 6.2 ) $ —

Restructuring charges accrued, but not paid, as of December 31, 2020 were $ 1.1 million and were not significant as of December 31, 2019.

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

In late 2018, it was determined that AMM did not meet the desired performance metrics, and the decision was made to close this site.

Documents were filed by the Company in the German court system in December 2018 to begin the process of liquidating AMM.

all of the assets were liquidated prior to December 31, 2019, with the exception of the sale of its land and building, which were included in assets held for sale and valued at $ 0.3 million in the Consolidated Balance Sheets at December 31, 2019 and sold in January 2020.

Essentially all of the assets were liquidated prior to December 31, 2019, with the exception of the sale of its land and building, which were included in assets held for sale and valued at $ 0.3 million in the Consolidated Balance Sheets at December 31, 2019 and sold in January 2020.

Losses on the liquidation are included in "Restructuring, impairment and other asset charges, net" in the Consolidated Statement of Operations for the year ended December 31, 2020.

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

The decision to close the site was based in part on market conditions and manufacturing facilities underutilization.

The decision to close the site was based in part on market conditions and manufacturing facility underutilization.

The marketing and manufacturing of products previously produced by the site were transferred to other Company facilities.

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The site's land, building and leasehold improvements, which were included in assets held for sale and valued at $ 2.8 million in the Consolidated Balance Sheets as of December 31, 2019, were sold in the third quarter of 2020 for $ 3.2 million.

The resulting $ 0.4 million gain recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the third quarter of 2020.

The resulting $ 0.4 million gain was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the third quarter of 2020.

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

The remaining assets were sold in the third quarter of 2020 for $ 1.1 million, which is reported in "Other income" in the Consolidated Statements of Operations.

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

The remaining assets were sold in the third quarter of 2020 for $ 1.1 million, which is reported in "Other (expenses) income, net" in the Consolidated Statements of Operations.

Additional restructuring costs of $ 0.7 million were incurred during 2021.

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

In June 2020, the Company announced the closing of the Mequon site in order to simplify and consolidate operations.

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The Company recorded a gain on the sale of $ 4.7 million, which was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the fourth quarter of 2020.

Charges primarily related to production facility transition activities of $ 0.6 million were incurred during 2021.

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.

The purchase price for this transaction was approximately $ 6.9 million, net of purchase price adjustments completed in January 2021 whereby the Company has an obligation to pay the buyer $ 1.1 million.

The purchase price for this transaction was approximately $ 6.9 million, net of purchase price adjustments completed in January 2021 whereby the Company had an obligation to pay the buyer $ 1.1 million.

This obligation is included in "Other current liabilities" in the Consolidated Balance Sheets at December 31, 2020.

The Company recorded a $ 0.5 million gain on the sale of this business in the fourth quarter of 2020 in "Other income" in the Consolidated Statements of Operations.

The Company recorded a $ 0.5 million gain on the sale of this business in the fourth 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.

The Tacoma facility is expected to cease operations in the second quarter of 2021.

Manufacturing and marketing of Tacoma product lines are expected be transferred to other facilities.

The Tacoma facility ceased manufacturing operations at the end of 2021.

The transfer of the manufacturing and marketing of the Tacoma product lines to other facilities within the Infrastructure Solutions segment is expected to be completed during early 2022.

In conjunction with this action, the Company recorded $ 0.9 million of restructuring related charges during the fourth quarter of 2020 in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)

(in millions, except for per share data) First

Quarter Second

Quarter Third

Quarter Fourth

2020 Net sales $ 288.8 $ 265.3 $ 231.4 $ 238.9

Gross profit (1)

73.4 59.6 50.2 56.9

Net income 20.4 9.3 1.7 15.5

Net income attributable to controlling interest 20.6 9.3 1.6 15.4

Earnings per common share

Net income attributable to controlling interest:

Basic 0.92 0.41 0.07 0.68

Diluted 0.91 0.41 0.07 0.67

Dividends paid per share 0.11 0.11 0.11 0.11

2019 Net sales $ 325.8 $ 304.8 $ 255.8 $ 283.2

76.8 83.3 51.9 27.4

Net income (loss) 14.2 23.4 3.0 ( 18.4 )

Net income (loss) attributable to controlling interest 14.3 23.4 3.0 ( 18.4 )

Earnings (loss) per common share

Net income (loss) attributable to controlling interest:

Basic 0.63 1.04 0.13 ( 0.81 )

Diluted 0.63 1.03 0.13 ( 0.81 )

Dividends paid per share 0.11 0.11 0.11 0.11

(1) Gross profit has been revised from amounts previously reported in the respective Quarterly Reports on Form 10-Q to reflect a reclassification of gain on property and equipment, net from "Cost of sales" to "Restructuring, impairment and other asset charges, net" of $ 0.6 million and $ 0.2 million for the first and third quarters of 2020, respectively.

Additional restructuring charges of $ 1.6 million were incurred during 2021 primarily associated with severance and retention costs.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data