What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-11-05 · 297 added, 285 removed, 382 unchanged (60% of the section changed)

3 unchanged sentences

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current assets:

Cash and cash equivalents $ 164.6 $ 158.6

Cash, cash equivalents and restricted cash $ 111.7 $ 134.4

Investments 6.1 8.6

Trade receivables and contract assets, net of allowance for credit losses of $ 2.5 and $ 2.3 , respectively

Other receivables 3.7 4.7

Other receivables, net of allowance for credit losses of $ 0.7 , respectively

Inventories 352.9 298.7

29 unchanged sentences

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

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

issued and outstanding – 22,837,047 as of March 31, 2022 and 22,767,052 as of December 31, 2021

Additional paid-in capital 131.1 130.6

Accumulated other comprehensive loss ( 28.3 ) ( 32.4 )

Company stock held by SERP, at cost ( 1.2 ) ( 1.5 )

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

Retained earnings 550.6 549.3

7 unchanged sentences

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Net sales $ 291.2 $ 284.4

4 unchanged sentences

Restructuring, impairment and other asset charges, net 1.0 0.7

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

Income from operations 5.4 9.5

Other income:

1 unchanged sentence

Interest income 0.2 0.1

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

Other expenses, net ( 0.2 ) ( 0.1 )

Income from operations before income taxes 5.0 9.3

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

Income tax provision 0.9 0.8

Net income 4.1 8.5

Net loss attributable to noncontrolling interest — — — 0.1

Net (income) loss attributable to non-controlling interest — —

Net income attributable to controlling interest $ 4.1 $ 8.5

8 unchanged sentences

(In millions, unaudited)

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

2021 2020 2021 2020

Three Months Ended March 31,

Net income $ 4.1 $ 8.5

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments 4.2 ( 0.8 )

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

Other comprehensive income (loss) 4.2 ( 0.8 )

Comprehensive income 8.3 7.7

Comprehensive loss attributable to noncontrolling interest 0.1 — 0.1 0.2

Comprehensive (income) loss attributable to noncontrolling interest ( 0.1 ) 0.1

Comprehensive income attributable to controlling interest $ 8.2 $ 7.8

3 unchanged sentences

(In millions, unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income $ 4.1 $ 8.5

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

Depreciation 15.0 15.5

Amortization 7.6 3.9

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

Depreciation and amortization 6.7 7.6

Provision for credit losses 0.6 0.3

2 unchanged sentences

Share-based compensation 1.8 1.4

Deferred tax provision 0.3 14.0

Deferred tax (benefit) provision ( 4.0 ) 0.8

Gain on disposition of property and equipment — ( 0.1 )

Gain on disposition of subsidiary — ( 1.1 )

Asset impairment charges 0.2 4.1

Distributions to SERP participants ( 2.4 ) ( 1.2 )

Distributions to deferred compensation programs' participants ( 0.1 ) ( 0.3 )

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

Purchase of trading securities, net ( 2.4 ) ( 0.5 )

Sale (purchase) of trading securities, net 0.6 ( 1.4 )

Receivables and other contract assets 5.3 ( 26.4 )

9 unchanged sentences

Income taxes payable/prepaid 4.4 0.8

Other — ( 2.6 )

Net cash provided by operating activities 27.3 102.1

Net cash (used in) provided by operating activities ( 9.6 ) 14.6

Cash flows from investing activities:

Acquisitions, net of cash acquired — 0.1

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

Price adjustment on prior sale of subsidiary — ( 1.1 )

Expenditures for property and equipment ( 11.6 ) ( 3.3 )

2 unchanged sentences

Sale of investments — 0.1

Net cash used by investing activities ( 9.2 ) ( 31.8 )

Net cash used in investing activities ( 11.7 ) ( 3.0 )

ASTEC INDUSTRIES, INC.

1 unchanged sentence

(In millions, unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from financing activities:

2 unchanged sentences

Repayment of bank loans ( 3.6 ) ( 2.3 )

Sale of Company stock by SERP, net 0.6 0.2

Sale of Company stock by deferred compensation programs, net — 0.2

Withholding tax paid upon vesting of share-based compensation awards ( 1.3 ) ( 3.0 )

Net cash used by financing activities ( 11.4 ) ( 8.3 )

Net cash used in financing activities ( 2.3 ) ( 5.6 )

Effect of exchange rates on cash 0.9 —

Increase in cash and cash equivalents 6.0 59.6

Cash and cash equivalents, beginning of period 158.6 48.9

Cash and cash equivalents, end of period $ 164.6 $ 108.5

(Decrease) increase in cash and cash equivalents and restricted cash ( 22.7 ) 6.0

Cash and cash equivalents and restricted cash, beginning of period 134.4 158.6

Cash and cash equivalents and restricted cash, end of period $ 111.7 $ 164.6

Supplemental cash flow information:

1 unchanged sentence

Interest, net of capitalized interest $ 0.1 $ 0.1

Income taxes paid (refunded) $ 6.7 $ ( 21.3 )

Income taxes paid $ 0.4 $ 0.2

Supplemental disclosures of non-cash items:

3 unchanged sentences

Additions to right-of-use assets and lease liabilities $ 0.4 $ 0.5

Liability award converted to equity $ — $ 0.8

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

5 unchanged sentences

Net income — — — — — 4.1 — 4.1

Other comprehensive loss — — — ( 0.7 ) — — ( 0.1 ) ( 0.8 )

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

Share-based compensation — — 1.4 — — — — 1.4

Issuance of common stock under incentive plan 103,541 — — — — — — —

Withholding tax paid upon equity award vesting — — ( 3.0 ) — — — — ( 3.0 )

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

Balance, March 31, 2021 22,715,517 $ 4.5 $ 126.3 $ ( 34.2 ) $ ( 1.4 ) $ 551.4 $ 0.4 $ 647.0

Net income — — — — — 9.0 — 9.0

Other comprehensive income — — — 4.1 — — 0.1 4.2

4 unchanged sentences

Withholding tax paid upon equity award vesting — — ( 1.3 ) — — — — ( 1.3 )

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

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

Net income — — — — — 9.3 — 9.3

Other comprehensive loss — — — ( 4.4 ) — — ( 0.1 ) ( 4.5 )

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

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

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

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

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

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

ASTEC INDUSTRIES, INC.

Consolidated Statements of Equity (Continued)

(In millions, unaudited)

Amount Additional

Capital Accumulated Other Comprehensive Loss Company Shares Held by SERP Retained

Earnings Non-controlling

Interest Total

Balance, March 31, 2022 22,837,047 $ 4.6 $ 131.1 $ ( 28.3 ) $ ( 1.2 ) $ 550.6 $ 0.6 $ 657.4

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

Balance, December 31, 2020 22,611,976 $ 4.5 $ 127.8 $ ( 33.5 ) $ ( 1.5 ) $ 543.7 $ 0.5 $ 641.5

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

Net income — — — — — 8.5 — 8.5

Other comprehensive loss — — — ( 0.7 ) — — ( 0.1 ) ( 0.8 )

4 unchanged sentences

Withholding tax paid upon equity award vesting — — ( 3.0 ) — — — — ( 3.0 )

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

Deferred compensation programs' transactions, net — — 0.1 — 0.1 — — 0.2

Balance, March 31, 2021 22,715,517 $ 4.5 $ 126.3 $ ( 34.2 ) $ ( 1.4 ) $ 549.7 $ 0.4 $ 645.3

Net income — — — — — 9.3 0.1 9.4

Other comprehensive income (loss) — — — 0.5 — — ( 0.1 ) 0.4

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

Share-based compensation — — 1.9 — — — — 1.9

Issuance of common stock under incentive plan 19,136 — — — — — — —

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

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

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

Net income — — — — — 1.6 — 1.6

Other comprehensive income — — — 0.5 — — — 0.5

Dividends ($ 0.11 per share)

— — — — — ( 2.5 ) — ( 2.5 )

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

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

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

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

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

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

18 unchanged sentences

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

Management evaluates performance and allocates resources to the operating segments based on profit or loss from operations before United States ("U.S.") federal income taxes, state deferred taxes and corporate overhead and, thus, these costs are included in the Corporate category.

Basis of Presentation

7 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 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 non-controlling 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.

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

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.

The COVID-19 pandemic has resulted in uncertainties in the Company's business, which may result in actual results differing from those estimates.

As a result, the Company's accounting estimates and assumptions may change over time in response to COVID-19.

The COVID-19 pandemic and its contributory impacts on the economy have resulted in uncertainties in the Company's business, which may result in actual results differing from those estimates.

As a result, the Company's accounting estimates and assumptions may change over time in response to COVID-19 and its contributory impacts.

Such changes could result in future impairments of goodwill, intangibles, long-lived assets and investment securities and incremental credit losses on receivables, among other issues.

1 unchanged sentence

Actual results may differ from these estimates.

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

As discussed in Note 2.

Immaterial Error Correction, the Company identified certain immaterial errors during the first quarter of 2022 for which the prior period and all relevant footnotes to the consolidated financial statements in this Form 10-Q have been revised to reflect the corrected balances.

position as of March 31, 2022 and December 31, 2021 and the cash flows for the three months ended March 31, 2022 and 2021, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature.

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

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

Reclassifications and Adjustments

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

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

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

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

Recently Adopted Accounting Pronouncements

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 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.

In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 was effective for the Company on January 1, 2022.

Availability of government assistance has typically been limited.

The Company did not receive any government assistance in 2022.

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.

This was in response to stakeholders raising certain operational challenges likely to arise in accounting for contract modifications and hedge accounting because of reference rate reform.

Some of those challenges relate to the significant volume of contracts and other arrangements, such as debt agreements, lease agreements and derivative instruments, which will be modified to replace references to discontinued rates with references to replacement rates.

For accounting purposes, such contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts.

Stakeholders indicated that due to the significant volume of affected contracts and other arrangements, together with a compressed time frame for making contract modifications, the application of existing accounting standards on assessing modifications versus extinguishments could be costly and burdensome.

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.

The amendments are elective and are effective upon issuance through December 31, 2022.

The Company intends to apply this guidance if modifications of its contracts that include LIBOR occur, which is not expected to have a material impact on the Company's consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers", which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606).

The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value.

The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company is evaluating the impact of adopting this guidance on future acquisitions and may elect to early adopt, but has not yet finalized that election.

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

CON-E-CO Acquisition - The Company entered into a Stock Purchase Agreement, dated as of July 20, 2020, by and between Oshkosh Corporation for the purchase of the CON-E-CO concrete equipment company in Nebraska.

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

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 ( 8 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 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.

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

Accounts receivable $ 2.3

Immaterial Error Correction

During the first quarter of 2022, the Company identified errors in its previously issued financial statements related to an overstatement of work-in-process inventory that mainly accumulated over the periods from 2018 through 2021 thereby understating "Cost of sales" in those periods and an overstatement of "Net sales" and "Cost of sales" as well as impacts to certain consolidated balance sheet financial statement line items as a result of over-time revenue recognition calculation errors at one of the Company's sites which impacted the second, third and fourth quarters of 2021.

The Company assessed the materiality of these misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to the prior period consolidated financial statements taken as a whole.

To reflect the correction of the above errors, the Company is revising the previously issued consolidated financial statements for the three months ended March 31, 2021 in this Form 10-Q.

The Company is also disclosing the impact of the revisions on the previously filed unaudited consolidated financial statements for the three and six months ended June 30, 2021 and the three and nine months ended September 30, 2021 as well as the previously filed audited year ended periods as of December 31, 2021 and 2020 and the opening balance sheet equity impact for December 31, 2019.

As a result, the Company has corrected the misstatements as disclosed in the following tables for all impacted financial statement line items in prior periods.

Balance Sheet

December 31, 2021

(in millions) As Previously Reported Adjustment As Revised

Trade receivables and contract assets, net $ 144.1 $ ( 2.4 ) $ 141.7

Inventories 303.0 ( 4.3 ) 298.7

Other assets 6.3

Intangible assets 4.3

Total assets acquired $ 21.0

Accounts payable and other ( 4.4 )

Advance customer deposits ( 2.8 )

Total liabilities assumed ( 7.2 )

Total purchase price $ 13.8

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 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 ( 9 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.

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

Accounts receivable and contract assets 6.4

Prepaid and refundable income taxes 19.5 1.0 20.5

Total current assets 641.7 ( 5.7 ) 636.0

Deferred income tax assets 16.0 0.2 16.2

Total assets 911.3 ( 5.5 ) 905.8

Accounts payable 83.5 ( 1.3 ) 82.2

Other current liabilities 42.9 ( 0.7 ) 42.2

Total current liabilities 225.3 ( 2.0 ) 223.3

Total liabilities 256.5 ( 2.0 ) 254.5

Retained earnings 552.8 ( 3.5 ) 549.3

Shareholders' equity 654.3 ( 3.5 ) 650.8

Total equity 654.8 ( 3.5 ) 651.3

Total liabilities and equity 911.3 ( 5.5 ) 905.8

Statement of Operations

Three Months Ended March 31, 2021

(in millions) As Previously Reported Adjustment As Revised

Cost of sales $ 215.9 $ 0.3 $ 216.2

Gross profit 68.5 ( 0.3 ) 68.2

Income from operations 9.8 ( 0.3 ) 9.5

Income from operations before income taxes 9.6 ( 0.3 ) 9.3

Income tax provision 0.9 ( 0.1 ) 0.8

Net income 8.7 ( 0.2 ) 8.5

Net income attributable to controlling interest 8.7 ( 0.2 ) 8.5

Per share data:

Earnings per common share - Basic 0.38 — 0.38

Earnings per common share - Diluted 0.38 0.01 0.37

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

(in millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net sales $ 278.0 $ ( 0.4 ) $ 277.6 $ 562.4 $ ( 0.4 ) $ 562.0

Cost of sales 211.0 0.5 211.5 426.9 0.8 427.7

Gross profit 67.0 ( 0.9 ) 66.1 135.5 ( 1.2 ) 134.3

Income from operations 11.2 ( 0.9 ) 10.3 21.0 ( 1.2 ) 19.8

Income from operations before income taxes 11.3 ( 0.9 ) 10.4 20.9 ( 1.2 ) 19.7

Income tax provision 2.3 ( 0.2 ) 2.1 3.2 ( 0.3 ) 2.9

Net income 9.0 ( 0.7 ) 8.3 17.7 ( 0.9 ) 16.8

Net income attributable to controlling interest 9.0 ( 0.7 ) 8.3 17.7 ( 0.9 ) 16.8

Per share data:

Earnings per common share - Basic 0.40 0.04 0.36 0.78 0.04 0.74

Earnings per common share - Diluted 0.39 0.03 0.36 0.77 0.04 0.73

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

(in millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net sales $ 267.0 $ ( 0.1 ) $ 266.9 $ 829.4 $ ( 0.5 ) $ 828.9

Cost of sales 204.7 0.3 205.0 631.6 1.1 632.7

Gross profit 62.3 ( 0.4 ) 61.9 197.8 ( 1.6 ) 196.2

Income from operations 6.7 ( 0.4 ) 6.3 27.7 ( 1.6 ) 26.1

Income from operations before income taxes 6.5 ( 0.4 ) 6.1 27.4 ( 1.6 ) 25.8

Income tax provision ( 2.8 ) ( 0.1 ) ( 2.9 ) 0.4 ( 0.4 ) —

Net income 9.3 ( 0.3 ) 9.0 27.0 ( 1.2 ) 25.8

Net income attributable to controlling interest 9.3 ( 0.3 ) 9.0 27.0 ( 1.2 ) 25.8

Per share data:

Earnings per common share - Basic 0.41 0.01 0.40 1.19 0.05 1.14

Earnings per common share - Diluted 0.41 0.02 0.39 1.18 0.05 1.13

Year Ended December 31, 2021 Year Ended December 31, 2020

(in millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net sales $ 1,097.2 $ ( 1.7 ) $ 1,095.5 $ 1,024.4 $ — $ 1,024.4

Cost of sales 845.5 1.0 846.5 784.3 1.2 785.5

Gross profit 251.7 ( 2.7 ) 249.0 240.1 ( 1.2 ) 238.9

Income from operations 22.1 ( 2.7 ) 19.4 43.0 ( 1.2 ) 41.8

Income from operations before income taxes 16.5 ( 2.7 ) 13.8 45.7 ( 1.2 ) 44.5

Income tax provision ( 1.4 ) ( 0.7 ) ( 2.1 ) ( 1.2 ) ( 0.3 ) ( 1.5 )

Net income 17.9 ( 2.0 ) 15.9 46.9 ( 0.9 ) 46.0

Net income attributable to controlling interest 17.8 ( 2.0 ) 15.8 46.9 ( 0.9 ) 46.0

Per share data:

Earnings per common share - Basic 0.78 0.08 0.70 2.08 0.04 2.04

Earnings per common share - Diluted 0.78 0.09 0.69 2.05 0.04 2.01

Statements of Comprehensive Income

Three Months Ended March 31, 2021

(in millions) As Previously Reported Adjustment As Revised

Net income $ 8.7 $ ( 0.2 ) $ 8.5

Comprehensive income 7.9 ( 0.2 ) 7.7

Comprehensive income attributable to controlling interest 8.0 ( 0.2 ) 7.8

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

(in millions) As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net income $ 9.0 $ ( 0.7 ) $ 8.3 $ 17.7 $ ( 0.9 ) $ 16.8

Comprehensive income 13.1 ( 0.7 ) 12.4 21.0 ( 0.9 ) 20.1

Comprehensive income attributable to controlling interest 13.2 ( 0.7 ) 12.5 21.0 ( 0.9 ) 20.1

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net income $ 9.3 $ ( 0.3 ) $ 9.0 $ 27.0 $ ( 1.2 ) $ 25.8

Comprehensive income 4.8 ( 0.3 ) 4.5 25.8 ( 1.2 ) 24.6

Comprehensive income attributable to controlling interest 4.9 ( 0.3 ) 4.6 25.9 ( 1.2 ) 24.7

Year Ended December 31, 2021 Year Ended December 31, 2020

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net income $ 17.9 $ ( 2.0 ) $ 15.9 $ 46.9 $ ( 0.9 ) $ 46.0

Comprehensive income 18.9 ( 2.0 ) 16.9 45.2 ( 0.9 ) 44.3

Comprehensive income attributable to controlling interest 18.9 ( 2.0 ) 16.9 45.2 ( 0.9 ) 44.3

Statement of Cash Flow

Three Months Ended March 31, 2021

(in millions) As Previously Reported Adjustment As Revised

Net income $ 8.7 $ ( 0.2 ) $ 8.5

Inventories 5.0 0.3 5.3

Other assets 3.8

Intangible assets 5.7

Total assets acquired $ 25.4

Total liabilities assumed ( 9.8 )

Total purchase price $ 15.6

Proforma financial information is not included since not significant.

Income taxes payable/prepaid 0.9 ( 0.1 ) 0.8

Six Months Ended June 30, 2021

(in millions) As Previously Reported Adjustment As Revised

Net income $ 17.7 $ ( 0.9 ) $ 16.8

Receivables and other contract assets ( 32.9 ) 0.4 ( 32.5 )

Inventories ( 7.4 ) 0.8 ( 6.6 )

Income taxes payable/prepaid ( 7.0 ) ( 0.3 ) ( 7.3 )

Nine Months Ended September 30, 2021

(in millions) As Previously Reported Adjustment As Revised

Net income $ 27.0 $ ( 1.2 ) $ 25.8

Receivables and other contract assets ( 31.3 ) 1.1 ( 30.2 )

Inventories ( 33.4 ) 1.1 ( 32.3 )

Other accrued liabilities 10.3 ( 0.6 ) 9.7

Income taxes payable/prepaid ( 5.7 ) ( 0.4 ) ( 6.1 )

Year Ended December 31, 2021 Year Ended December 31, 2020

As Previously Reported Adjustment As Revised As Previously Reported Adjustment As Revised

Net income $ 17.9 $ ( 2.0 ) $ 15.9 $ 46.9 $ ( 0.9 ) $ 46.0

Receivables and other contract assets ( 30.8 ) 2.4 ( 28.4 ) 12.2 — 12.2

Inventories ( 53.8 ) 2.3 ( 51.5 ) 44.7 1.2 45.9

Accounts payable 30.8 ( 1.3 ) 29.5 ( 8.6 ) — ( 8.6 )

Other accrued liabilities ( 0.7 ) ( 0.7 ) ( 1.4 ) 9.8 — 9.8

Income taxes payable/prepaid ( 13.6 ) ( 0.7 ) ( 14.3 ) 16.0 ( 0.3 ) 15.7

Statement of Equity

As Previously Reported Adjustment As Revised

Balance, December 31, 2019

Retained Earnings $ 508.3 $ ( 0.6 ) $ 507.7

Total Equity 602.4 ( 0.6 ) 601.8

Balance, December 31, 2020

Retained Earnings 545.2 ( 1.5 ) 543.7

Total Equity 643.0 ( 1.5 ) 641.5

Balance, March 31, 2021

Retained Earnings 551.4 ( 1.7 ) 549.7

Total Equity 647.0 ( 1.7 ) 645.3

Balance, June 30, 2021

Retained Earnings 557.9 ( 2.4 ) 555.5

Total Equity 659.3 ( 2.4 ) 656.9

Balance, September 30, 2021

Retained Earnings 564.7 ( 2.7 ) 562.0

Total Equity 663.1 ( 2.7 ) 660.4

Balance, December 31, 2021

Retained Earnings 552.8 ( 3.5 ) 549.3

Total Equity 654.8 ( 3.5 ) 651.3

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, which requires the Company to make specific estimates, assumptions and judgments in determining the amount, if any, of reductions in the valuation of inventories to their net realizable values.

Inventories consist of the following:

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

(in millions) March 31, 2022 December 31, 2021

Raw materials and parts $ 246.9 $ 216.1

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

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

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.

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

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

September 30, 2021

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of March 31, 2022 and December 31, 2021 are Level 1 and Level 2 in the fair value hierarchy as defined above:

March 31, 2022

(in millions) Level 1 Level 2 Total

11 unchanged sentences

Other 1.7 0.9 2.6

Derivative financial instruments — 0.3 0.3

Total financial assets $ 13.9 $ 6.0 $ 19.9

Financial liabilities:

Derivative financial instruments $ — $ 0.3 $ 0.3

Deferred compensation programs' liabilities — 6.3 6.3

4 unchanged sentences

Trading equity securities:

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

Deferred compensation programs' mutual funds $ 4.9 $ — $ 4.9

11 unchanged sentences

Financial liabilities:

Derivative financial instruments $ — $ 0.5 $ 0.5

Deferred compensation programs' liabilities $ — $ 7.2 $ 7.2

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

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

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

Changes in the Company's product warranty liability for the three month periods ended March 31, 2022 and 2021 are as follows:

Three Months Ended March 31,

(in millions) 2022 2021

2 unchanged sentences

Warranty liabilities settled ( 2.4 ) ( 2.1 )

Other — 0.7 — 0.5

Reserve balance, end of the period $ 11.3 $ 10.9

3 unchanged sentences

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

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

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

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

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

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

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

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

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

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

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

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

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

Total accrued loss reserves were $ 5.7 million and $ 5.8 million at March 31, 2022 and December 31, 2021 respectively, of which $ 3.5 million and $ 3.9 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022, the Company recorded an income tax expense of $ 0.9 million, reflecting a 18.0 % effective tax rate, compared to a $ 0.8 million income tax expense for the three months ended March 31, 2021, reflecting a 8.6 % effective tax rate.

The income tax expense for three months ended March 31, 2022 was higher compared to the same period in 2021 primarily due to lower net discrete benefits from the vesting of employee shared-based compensation awards offset by an increased net benefit for foreign-derived income.

The Company's recorded liability for uncertain tax positions was $ 11.1 million and $ 10.8 million as of March 31, 2022 and December 31, 2021, respectively.

The increase is the result of $ 0.3 million of incremental reserves associated with a higher research and development credit for 2022.

The Company does not anticipate a significant change in unrecognized tax benefits

due to the expiration of relevant statutes of limitations and federal, state, and foreign tax audit resolutions over the next twelve months.

The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves.

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

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

As of March 31, 2022, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position, results of operations and cash flows.

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

1 unchanged sentence

Commitments and Contingencies

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

These arrangements expire at various dates through December 2023.

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 $ 2.5 million and $ 2.4 million at March 31, 2022 and December 31, 2021, respectively.

These arrangements expire at various dates through June 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 $ 0.2 million for 2022), 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 $ 1.1 million and $ 2.0 million related to these guarantees as of September 30, 2021 and December 31, 2020, respectively.

The Company has recorded a liability of $ 1.0 million and $ 1.1 million related to these guarantees which were included in "Other current liabilities" in the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

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

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

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

In addition, the Company is contingently liable under letters of credit issued under its $ 150.0 million revolving credit facility (the "Credit Facility") totaling $ 2.5 million as of March 31, 2022.

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

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

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

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

The maximum potential amount of future payments under letters of credit issued under the Credit Facility for which the Company could be liable is $ 30.0 million as of March 31, 2022.

As of March 31, 2022, the Company's foreign subsidiaries are contingently liable for a total of $ 2.5 million in letters of credit and bank guarantees securing performance and advance payments.

The maximum potential amount of future payments under these letters of credit and bank guarantees for which the Company could be liable is $ 7.9 million as of March 31, 2022.

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

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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.

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

On March 31, 2022, the United States Court of Appeals for the Sixth Circuit issued its opinion reversing the dismissal of the Company and one former executive officer, affirming the dismissal of certain other former executive officers and remanding the action to the United States District Court for the Eastern District of Tennessee for proceedings consistent with the opinion.

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.

4 unchanged sentences

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

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

consequential damages.

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

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

5 unchanged sentences

The Company is unable to determine whether or not a future loss will be incurred due to this litigation or estimate the possible loss or range of loss, if any, at this time.

The Company is currently a party to various claims and legal proceedings that have arisen in the ordinary course of business.

The Company is subject to various claims and legal proceedings in the ordinary course of its business.

If management believes that a loss arising from such claims and legal proceedings is probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated legal fees) or the minimum estimated liability when the loss is estimated using a range and no point within the range is more probable than another.

5 unchanged sentences

If an unfavorable ruling were to occur, there exists the possibility of a material adverse effect on the Company's financial position, cash flows or results of operations.

Share-Based Compensation

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.

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 and 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.

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

Revenue Recognition

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

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

(in millions) Infrastructure

Solutions Materials

Solutions Total Infrastructure

Solutions Materials

Solutions Total

Net Sales-Domestic:

Equipment sales $ 94.4 $ 37.6 $ 132.0 $ 73.5 $ 32.7 $ 106.2

Parts and component sales 40.3 20.0 60.3 39.6 18.6 58.2

Service and equipment installation revenue 3.2 0.1 3.3 5.0 0.3 5.3

Used equipment sales 0.9 0.1 1.0 3.4 0.3 3.7

Freight revenue 4.8 1.4 6.2 5.2 1.3 6.5

Other ( 0.4 ) ( 0.6 ) ( 1.0 ) 1.6 ( 0.4 ) 1.2

Total domestic revenue 143.2 58.6 201.8 128.3 52.8 181.1

Net Sales-International:

Equipment sales 22.0 20.5 42.5 13.6 17.3 30.9

Parts and component sales 9.1 9.7 18.8 7.2 8.8 16.0

Service and equipment installation revenue 0.8 0.6 1.4 0.6 0.2 0.8

Used equipment sales 0.8 0.8 1.6 0.9 0.7 1.6

Freight revenue 0.4 0.4 0.8 0.4 0.4 0.8

Other — 0.1 0.1 0.1 0.1 0.2

Total international revenue 33.1 32.1 65.2 22.8 27.5 50.3

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

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

The following tables disaggregate the Company's revenue by major source for the three month periods ended March 31, 2022 and 2021 (excluding intercompany sales):

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

(in millions) Infrastructure

21 unchanged sentences

Sales into major geographic regions were as follows:

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

Three Months Ended March 31,

(in millions) 2022 2021

2 unchanged sentences

Australia 10.2 8.8

Europe 7.4 7.6 31.8 21.8

Africa 9.1 8.3

Europe 5.4 10.5

South America 5.2 4.5

Brazil 3.8 4.2

Central America 2.6 1.2

Mexico 0.7 2.4

South America 2.5 7.2 11.5 16.3

Asia 5.5 2.5 9.2 8.1

Other 1.5 0.3

1 unchanged sentence

Total net sales $ 291.2 $ 284.4

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

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

As of March 31, 2022, the Company had contract assets of $ 3.9 million and contract liabilities, excluding customer deposits, of $ 3.8 million, including $ 2.5 million of deferred revenue related to extended warranties.

As of December 31, 2021, the Company had contract assets of $ 3.2 million and contract liabilities, excluding customer deposits, of $ 5.6 million, including $ 2.7 million of deferred revenue related to extended warranties.

Segment Information

The Company has two reportable segments, each of which 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.

Based on a review of these factors, the Company's India and Thailand sites have changed reportable segments beginning January 1, 2022.

The India site was previously incorporated into the Materials Solutions segment and has moved to the Infrastructure Solutions segment while the Thailand site, which was previously included in the Infrastructure Solutions segment has moved to the Materials Solutions segment.

Beginning January 1, 2022, the measure of segment profit or loss used by the Company's Chief Executive Officer, whom is determined to be the chief operating decision maker ("CODM"), to evaluate performance and allocate resources to the operating segments changed to Segment Operating Adjusted EBITDA.

Segment Operating Adjusted EBITDA, a non-GAAP financial measure, is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance.

The Company's presentation of Segment Operating Adjusted EBITDA may not be comparable to similar measures used by other companies and are not necessarily indicative of the results of operations that would have occurred had each reportable segment been an independent, stand-alone entity during the periods presented.

Prior periods have been revised to reflect both the segment composition change and the segment profit or loss metric noted above for comparability.

During the first quarter of 2022, the Company revised the allocation of certain of its functional expenses between the Corporate category and the reportable segments primarily related to the Company's annual incentive compensation.

Prior periods have not been revised for this change.

A brief description of each segment is as follows:

Infrastructure Solutions – The Infrastructure Solutions segment comprises 11 active 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 9 active 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.

Materials Solutions – The Materials Solutions segment comprises nine active 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 Thailand 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.

Additionally, the Materials Solutions segment offers consulting and engineering services to provide complete "turnkey" processing systems.

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

The Company evaluates performance and allocates resources to its operating segments based on profit or loss from operations before U.S.

federal income taxes, state deferred taxes and corporate overhead and thus these costs are included in the Corporate category.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.

1 unchanged sentence

Segment Information:

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

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

Revenues from external customers $ 176.3 $ 90.7 $ — $ 267.0 $ 151.1 $ 80.3 $ — $ 231.4

Intersegment sales 10.0 16.1 — 26.1 6.7 11.7 — 18.4

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

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

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

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

1 unchanged sentence

Intersegment sales 1.1 9.7 — 10.8 0.7 5.7 — 6.4

Segment profit (loss) 46.6 27.3 ( 47.5 ) 26.4 37.7 21.7 ( 28.2 ) 31.2

Segment Operating Adjusted EBITDA 16.4 12.2 ( 9.8 ) 18.8 26.2 9.7 ( 15.0 ) 20.9

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

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

Three Months Ended March 31,

(in millions) 2022 2021

Net income attributable to controlling interest

Total profit for reportable segments $ 21.8 $ 13.5 $ 73.9 $ 59.4

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

Net loss attributable to noncontrolling interest — — — 0.1

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

Reconciliation to total consolidated net income attributable to controlling interest

Segment Operating Adjusted EBITDA $ 18.8 $ 20.9

Transformation program ( 5.3 ) ( 3.2 )

Facility closures and reduction in force ( 1.0 ) ( 0.8 )

Gain on sale of property, equipment and business, net — 0.1

Transaction costs ( 0.6 ) —

Interest expense, net ( 0.2 ) ( 0.1 )

Depreciation and amortization ( 6.7 ) ( 7.6 )

Income tax provision ( 0.9 ) ( 0.8 )

Total consolidated net income attributable to controlling interest $ 4.1 $ 8.5

Strategic Transformation and Restructuring and Other Asset Charges

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

The Company's Simplify, Focus and Grow Strategic Transformation ("SFG") initiative, which began in 2019, generally includes facility rationalization, asset impairment, workforce reduction, the associated costs of organizational integration activities and strategic transformational initiatives.

As part the SFG initiative several strategic decisions have been made 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 $ 2.4 million and $ 7.7 million in incremental costs for the SFG initiative in the three and nine months ended September 30, 2021, which are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

and sell certain assets, which are included in "Restructuring, impairment and other asset charges, net" on the Company's Consolidated Statements of Operations.

In addition, the Company also has a multi-year phased implementation of a standardized enterprise resource planning ("ERP") system across the global organization underway, which will replace much of the existing disparate core financial systems.

The upgraded ERP will initially convert internal operations, manufacturing, finance, human capital resources management and

customer relationship systems to cloud-based platforms.

This new ERP system will provide for standardized processes and integrated technology solutions that enable us to better leverage automation and process efficiency.

An implementation of this scale is a major financial undertaking and will require substantial time and attention of management and key employees.

In addition, beginning in the first quarter of 2022, a lean manufacturing initiative at one of the Company's largest sites was initiated and is expected to drive improvement in gross margin at that site.

This improvement is intended to serve as the optimal blueprint for the Company's other manufacturing facilities.

Costs incurred of $ 5.3 million and $ 3.2 million related to these strategic transformational initiatives in the three months ended March 31, 2022 and March 31, 2021, respectively, 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.

Certain of the costs associated with these decisions are separately identified as restructuring.

The Company reports asset impairment charges and gains or losses on the sales of property and equipment collectively, with restructuring charges in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

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

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

Restructuring and the net gain on sale of property and equipment are presented below:

Three Months Ended March 31,

(in millions) 2022 2021

1 unchanged sentence

Costs associated with closing Tacoma $ 0.8 $ 0.4

Costs associated with closing Mequon — 0.7 0.6 2.1

Costs associated with closing Enid 0.2 —

Costs associated with closing Albuquerque — 0.3 — 1.3

Costs associated with closing AMM — — — 0.3

Workforce reductions at multiple sites — — — 1.3

Other restructuring charges — 0.2 — 0.2

Costs associated with closing Mequon — 0.4

Total restructuring related charges 1.0 0.8

Asset impairment charges:

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

Goodwill impairment charges — — — 1.6

Other impairment charges — — 0.2 0.2

Total asset impairment charges — ( 0.3 ) 0.2 4.1

Gain on sale of property and equipment, net:

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Restructuring charges by segment are as follows:

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

Three Months Ended March 31,

(in millions) 2022 2021

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Materials Solutions — 0.4

Corporate — — — 0.1

Total restructuring related charges $ 1.0 $ 0.8

Impairment charges by segment are as follows:

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

(in millions) 2021 2020 2021 2020

Infrastructure Solutions $ — $ — $ — $ 1.6

Materials Solutions — — 0.2 0.1

Corporate — ( 0.3 ) — 2.4

Total impairment charges $ — $ ( 0.3 ) $ 0.2 $ 4.1

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

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

Three Months Ended March 31,

(in millions) 2022 2021

Infrastructure Solutions $ — $ ( 0.1 )

Materials Solutions — — ( 0.1 ) —

Total gain on sale of property and equipment, net $ — $ ( 0.1 )

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

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

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

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

The site was closed as of March 31, 2020.

Restructuring charges accrued, but not paid, were $ 0.4 million and $ 1.2 million as of March 31, 2022 and December 31, 2021, respectively.

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

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

The transfer of the manufacturing and marketing of Tacoma product lines to other facilities within the Infrastructure Solutions segment was completed during the first quarter of 2022.

In conjunction with this action, the Company recorded $ 0.8 million and $ 0.4 million of restructuring related charges during the three month periods ended March 31, 2022 and 2021, respectively, in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

The Company recorded the Tacoma facility's land, building and certain equipment

assets of $ 15.4 million, which are currently being marketed for sale, as held for sale at March 31, 2022 in its Consolidated Balance Sheets.

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

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

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

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

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

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

Additional restructuring costs of $ 0.2 million were incurred during the three months ended March 31, 2022.

Enid's land and building assets totaling $ 5.1 million are included in "Assets held for sale" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021.

In October 2020, the Company closed a transaction for the sale of water well assets of the Company's Enid, Oklahoma 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 had an obligation to pay the buyer $ 1.1 million.

This obligation was settled in the first quarter of 2021.

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

The Mequon facility ceased production operations in August 2020.

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

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

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

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

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

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

The Tacoma facility is currently expected to cease operations at the end of 2021.

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

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

Charges primarily related to inventory relocation and integration activities of $ 0.4 million were incurred during the three months ended March 31, 2021.

Earnings Per Common Share

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Denominator for basic earnings per common share 22,782,476 22,633,457

2 unchanged sentences

Subsequent Event

Pension Plan Termination

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

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

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

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

In April 2022, the Company acquired Canada-headquartered MINDS Automation Group, Inc., a leader in plant automation control systems and cloud-based data management in the asphalt industry.

The total cash consideration payable to the selling shareholders was $ 18.2 million, subject to a customary purchase price adjustment for cash, indebtedness and net working capital and was funded from cash on hand.

The acquisition is not expected to be material to the Company's Consolidated Statements of Operations.

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

What changed 10-Q

Item 1. Financial Statements