What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-03 · 143 added, 134 removed, 217 unchanged (56% of the section changed)

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Executive Summary

Highlights of our financial results for the three months ended June 30, 2022 as compared to the same period of the prior year include the following:

Highlights of our financial results for the three months ended September 30, 2022 as compared to the same period of the prior year include the following:

• Net sales were $315.2 million, an increase of 18.1%

• Gross profit was $60.6 million, a decrease of 8.3%

• Income from operations decreased $14.3 million to a loss of $4.0 million

• Net income attributable to Astec decreased 147.0% to a loss of $3.9 million

• Gross profit was $65.4 million, an increase of 5.7%

• Income from operations decreased $4.5 million to $1.8 million

• Net income attributable to Astec decreased 92.2% to $0.7 million

• Diluted earnings per share were $0.03, a decrease of 92.3%

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We have revised the previously issued consolidated financial statements and prior period information included in Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q to reflect the correction of these errors.

Immaterial Error Correction of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details of the revision impact on the corresponding prior year three and six months ended June 30, 2021.

Significant Items Impacting Operations in 2022

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This improvement is intended to serve as the optimal blueprint for our other manufacturing facilities.

Costs incurred during the three and six months ended June 30, 2022 were $6.4 million and $11.7 million, respectively, which represent costs directly associated with the SFG initiatives and which cannot be capitalized in accordance with U.S.

Costs incurred during the three and nine months ended September 30, 2022 were $7.0 million and $18.7 million, respectively, which represent costs directly associated with the SFG initiatives and which cannot be capitalized in accordance with U.S.

These costs are included in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Additionally, at June 30, 2022, we have capitalized $6.8 million in deferred implementation costs associated with the ERP implementation that will be amortized ratably over the remaining contract term once the ERP is ready for use, which are recorded in "Other long-term assets" in the Consolidated Balance Sheets.

Additionally, at September 30, 2022, we have capitalized $12.1 million in deferred implementation costs associated with the ERP implementation that will be amortized ratably over the remaining contract term once the ERP is ready for use, which are recorded in "Other long-term assets" in the Consolidated Balance Sheets.

MINDS Acquisition – We entered into a Share Purchase Agreement, dated as of March 22, 2022, by and between MINDS Automation Group, Inc.

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This acquisition provides us with a broader line of controls and automation products designed to deliver enhanced productivity through improved equipment performance for our customers.

Share Repurchases – We completed a series of repurchases under our approved share repurchase program during the three months ended September 30, 2022, acquiring 160,445 shares at an aggregate repurchase price of approximately $6.1 million.

As of September 30, 2022, $119.7 million remains available for repurchase under the approved share repurchase program.

COVID-19 Pandemic – Our business has been significantly affected by the contributory effects of the COVID-19 pandemic such as fluctuations in demand for our products, material price increases, increased shipping costs and lead times from production materials, supplies and parts, labor shortages and increased labor costs.

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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.

The Tacoma facility's land, building and certain equipment assets of $15.4 million, which are currently being marketed for sale, are included in "Assets held for sale" in the Consolidated Balance Sheets at June 30, 2022.

The Tacoma facility's land, building and certain equipment assets of $15.4 million, which are currently being actively marketed for sale, are included in "Assets held for sale" in the Consolidated Balance Sheets at September 30, 2022.

Industry and Business Condition

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Demand in these markets fluctuates in response to overall economic conditions and is particularly sensitive to the amount of public sector spending on infrastructure development, privately funded infrastructure development and changes in the prices of liquid asphalt, oil, natural gas and steel.

In addition, many of our markets are highly competitive, and our products compete worldwide with a number of other manufacturers and dealers that produce and sell similar products.

We experienced continual strengthening of our backlog of orders throughout 2021, which has continued to grow during the first half of 2022 across our global organization.

The backlog of orders as of June 30, 2022 was $837.4 million compared to $436.1 million as of June 30, 2021, an increase of $401.3 million or 92.0%.

In addition, many of our markets are highly competitive, and our products compete worldwide with similar products produced and sold by a number of other manufacturers and dealers.

We experienced continual strengthening of our backlog of orders throughout 2021, which has continued to grow during the first nine months of 2022 across our global organization.

The backlog of orders as of September 30, 2022 was $969.0 million compared to $620.5 million as of September 30, 2021, an increase of $348.5 million or 56.2%.

Increased orders are driven by (i) the continuation of the pent-up demand experienced in 2021 influenced by both customer retail and dealer inventory replenishment, (ii) ongoing economic uncertainty and longer lead times related to higher demand and (iii) the infrastructure investment by the United States' government under the Infrastructure Investment and Jobs Act ("IIJA") enacted in November 2021.

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We continue to develop products and initiatives to reduce the amount of oil and related products required to produce asphalt.

While oil prices have increased throughout the prior year and the first half of 2022, its price volatility makes it difficult to predict the costs of oil-based products used in road construction such as liquid asphalt and gasoline.

Oil prices increased throughout the prior year and entering 2022.

Although stabilizing in 2022, oil prices continue to remain at relatively high levels with price volatility making it difficult to predict the costs of oil-based products used in road construction such as liquid asphalt and gasoline.

Oil prices have routinely fluctuated in recent years and are expected to continue to fluctuate in the future.

We have experienced a slowing of the rate of inflation on oil prices at the end of the second quarter and leading into July 2022.

Based on the current macroeconomic environment, including the ongoing impact of the conflict in Ukraine, we anticipate that the rate of price inflation will plateau during the third quarter and that oil prices will remain at relatively high levels throughout the remainder of 2022.

Based on the current macroeconomic environment, including the ongoing impact of the conflict in Ukraine, we anticipate that oil prices will remain at relatively high levels throughout the remainder of 2022.

Steel is a major component of our equipment.

With a drop in supply, similar to oil, steel prices increased throughout the prior year.

As a result, we have experienced a rising cost of steel.

We anticipate that steel demand will remain strong throughout 2022, bolstered by the IIJA domestically and impacted by international production capacity being restricted by the conflict in Ukraine.

However, we have observed a decline in market demand as buyers are reducing on hand inventory by restricting purchases to immediate needs.

As such, we have experienced a slowing of the pace of recent price inflation.

Driven by supply constraints, steel prices increased throughout the prior year.

We anticipate that steel demand will remain relatively steady through the end of 2022, driven by the IIJA domestically and impacted by international production capacity being restricted by the conflict in Ukraine.

However, we have observed a recent slowing in market demand and reduced lead times as buyers are continuing to restrict purchases to immediate needs.

As a result, while steel prices have stabilized, they continue to remain at historically high levels.

We anticipate that trend will remain consistent through the balance of 2022 and heading into 2023.

We continue to employ flexible strategies to ensure supply and minimize the impact of price volatility.

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Backlog fulfillment times from the initial order to completing the contracted sale vary and can extend past twelve months with the growth we have experienced in the backlog.

For this reason, we have limitations on our ability to pass on cost increases to our customers on a short-term basis.

In addition, the markets we serve are competitive in nature, and competition limits our ability to pass through

cost increases in many cases.

For this reason, we have limitations on our ability to pass on cost increases to our customers on a

short-term basis.

In addition, the markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases.

Through our operational excellence initiatives, we also strive to minimize the effect of inflation through cost reductions and improved manufacturing efficiencies.

Results of Operations

Net sales for the second quarter of 2022 were $318.2 million compared to $277.6 million for the second quarter of 2021, an increase of $40.6 million or 14.6%.

The increase in net sales was primarily driven by changes in the volume, pricing and mix of sales that generated increases in (i) equipment sales of $33.7 million, (ii) parts and component sales of $7.2 million, (iii) service and equipment installation revenue of $2.2 million and (iv) freight revenue of $1.6 million partially offset by decreased used equipment sales of $3.5 million.

Included in these increases is $1.2 million of incremental net sales from an acquired business.

Net sales for the third quarter of 2022 were $315.2 million compared to $266.9 million for the third quarter of 2021, an increase of $48.3 million or 18.1%.

The increase in net sales was primarily driven by changes in the volume, pricing and mix of sales that generated increases in (i) equipment sales of $34.7 million, (ii) parts and component sales of $8.8 million, (iii) service and equipment installation revenue of $2.8 million, (iv) used equipment sales of $1.9 million and (v) freight revenue of $1.3 million partially offset by decreased other revenue of $1.2 million primarily driven by increased utilization of our interest subsidy programs offered to certain of our dealer customers.

Included in these net increases is $1.5 million of incremental net sales from an acquired business.

Sales reported by our foreign subsidiaries in U.S.

dollars for the second quarter of 2022 would have been $4.9 million higher had second quarter 2022 foreign exchange rates been the same as second quarter 2021 rates.

Net sales for the first six months of 2022 were $609.4 million compared to $562.0 million for the first six months of 2021, an increase of $47.4 million or 8.4%.

dollars for the third quarter of 2022 would have been $6.7 million higher had third quarter 2022 foreign exchange rates been the same as third quarter 2021 rates.

Net sales for the first nine months of 2022 were $924.6 million compared to $828.9 million for the first nine months of 2021, an increase of $95.7 million or 11.5%.

The increase in net sales was primarily driven by changes in the volume, pricing and mix of sales that generated increases in (i) equipment sales of $65.4 million, (ii) parts and component sales of $24.8 million, (iii) service and equipment installation revenue of $6.4 million and (iv) freight revenue of $3.7 million partially offset by decreased used equipment sales of $3.0 million.

Included in these increases is $1.2 million of incremental net sales from an acquired business.

Included in these net increases is $2.7 million of incremental net sales from an acquired business.

Sales reported by our foreign subsidiaries in U.S.

dollars for the first six months of 2022 would have been $6.8 million higher had the first six months of 2022 foreign exchange rates been the same as the first six months of 2021 rates.

Domestic sales for the second quarter of 2022 were $248.4 million or 78.1% of consolidated net sales compared to $201.4 million or 72.6% of consolidated net sales for the second quarter of 2021, an increase of $47.0 million or 23.3%.

dollars for the first nine months of 2022 would have been $13.5 million higher had the first nine months of 2022 foreign exchange rates been the same as the first nine months of 2021 rates.

Domestic sales for the third quarter of 2022 were $249.4 million or 79.1% of consolidated net sales compared to $201.8 million or 75.6% of consolidated net sales for the third quarter of 2021, an increase of $47.6 million or 23.6%.

Domestic sales increased primarily due to:

(i) $44.0 million higher equipment sales (ii) $2.9 million higher parts and component sales, (iii) $2.0 million higher service and equipment installation revenue and (iv) $2.0 million higher freight revenue.

These increases were partially offset by lower used equipment sales of $3.2 million.

Domestic sales for the first six months of 2022 were $482.9 million or 79.2% of consolidated net sales compared to $427.0 million or 76.0% of consolidated net sales for the first six months of 2021, an increase of $55.9 million or 13.1%.

(i) $35.3 million higher equipment sales (ii) $7.9 million higher parts and component sales, (iii) $2.2 million higher service and equipment installation revenue, (iv) $2.2 million higher used equipment sales and (v) $1.2 million higher freight revenue.

These increases were partially offset by decreased other revenue of $1.2 million primarily driven by higher utilization of our interest subsidy programs offered to certain of our dealer customers.

Included in these increases is $1.0 million of incremental net sales from an acquired business.

Domestic sales for the first nine months of 2022 were $732.3 million or 79.2% of consolidated net sales compared to $628.8 million or 75.9% of consolidated net sales for the first nine months of 2021, an increase of $103.5 million or 16.5%.

Domestic sales increased primarily due to:

(i) $43.8 million higher equipment sales (ii) $10.5 million higher parts and component sales, (iii) $3.1 million higher freight revenue and (iv) $3.0 million higher service and equipment installation revenue.

(i) $79.1 million higher equipment sales (ii) $18.4 million higher parts and component sales, (iii) $5.2 million higher service and equipment installation revenue and (iv) $4.3 million higher freight revenue.

These increases were partially offset by lower used equipment sales of $2.2 million.

International sales for the second quarter of 2022 were $69.8 million or 21.9% of consolidated net sales compared to $76.2 million or 27.4% of consolidated net sales for the second quarter of 2021, a decrease of $6.4 million or 8.4%.

International sales decreased primarily due to $10.3 million lower equipment sales partially offset by $4.3 million increased parts and component sales.

Included in these increases is $1.1 million of incremental net sales from an acquired business.

International sales for the first six months of 2022 were $126.5 million or 20.8% of consolidated net sales compared to $135.0 million or 24.0% of consolidated net sales for the first six months of 2021, a decrease of $8.5 million or 6.3%.

International sales decreased primarily due to $13.1 million lower equipment sales partially offset by $5.5 million increased parts and component sales.

Included in these net increases is $1.1 million of incremental net sales from an acquired business.

International sales for the third quarter of 2022 were $65.8 million or 20.9% of consolidated net sales compared to $65.1 million or 24.4% of consolidated net sales for the third quarter of 2021, an increase of $0.7 million or 1.1%.

International sales increased primarily due to higher parts and components sales and service and equipment installation revenue of $0.9 million and $0.6 million, respectively.

These increases were partially offset by lower new equipment sales of $0.6 million.

Included in these increases is $0.5 million of incremental net sales from an acquired business.

Gross profit for the second quarter of 2022 was $60.6 million or 19.0% of net sales as compared to $66.1 million or 23.8% of net sales for the second quarter of 2021, a decrease of $5.5 million or 8.3%.

The decrease was primarily driven by the impact of inflation on materials, labor and overhead of $34.3 million and manufacturing inefficiencies of $0.8 million largely due to supply chain and logistics disruptions.

These decreases were partially offset by the impact of net favorable volume, pricing and mix that generated $29.1 million higher gross profit.

Gross profit for the first six months of 2022 was $126.7 million or 20.8% of net sales as compared to $134.3 million or 23.9% of net sales for the first six months of 2021, a decrease of $7.6 million or 5.7%.

The decrease was primarily driven by the impact of inflation on materials, labor and overhead of $59.8 million and manufacturing inefficiencies of $1.0 million largely due to supply chain and logistics disruptions.

International sales for the first nine months of 2022 were $192.3 million or 20.8% of consolidated net sales compared to $200.1 million or 24.1% of consolidated net sales for the first nine months of 2021, a decrease of $7.8 million or 3.9%.

International sales decreased primarily due to $13.7 million lower equipment sales partially offset by $6.4 million higher parts and component sales.

Included in these net increases is $1.6 million of incremental net sales from an acquired business.

Gross profit for the third quarter of 2022 was $65.4 million or 20.7% of net sales as compared to $61.9 million or 23.2% of net sales for the third quarter of 2021, an increase of $3.5 million or 5.7%.

The increase was primarily driven by net favorable volume, pricing and mix that generated $38.7 million higher gross profit.

These increases were partially offset by the impact of inflation on materials, labor and overhead of $29.0 million and manufacturing inefficiencies of $6.8 million largely due to logistics and manufacturing throughput disruptions.

Gross profit for the first nine months of 2022 was $192.1 million or 20.8% of net sales as compared to $196.2 million or 23.7% of net sales for the first nine months of 2021, a decrease of $4.1 million or 2.1%.

The decrease was primarily driven by the impact of inflation on materials, labor and overhead of $88.8 million and manufacturing inefficiencies of $7.8 million largely due to logistics and manufacturing throughput disruptions.

These decreases were partially offset by the impact of net favorable volume, pricing and mix that generated $91.5 million higher gross profit.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $5.7 million, or 11.9%, to $53.7 million or 16.9% of net sales for the second quarter of 2022, compared to $48.0 million or 17.3% of net sales for the second quarter of 2021 primarily due to:

(i) $4.3 million increased costs related to our SFG transformation program, (ii) increased net payroll and employee benefit costs of $1.7 million associated with increased headcount throughout our organization partially offset by $1.8 million of lower health insurance

claims experience, (iii) incremental expenses associated with the acquisition of MINDS that was completed in April 2022 of $0.9 million and (iv) $0.8 million of acquisition and integration related costs.

Selling, general and administrative expenses increased $6.4 million, or 13.2%, to $55.0 million or 17.4% of net sales for the third quarter of 2022, compared to $48.6 million or 18.2% of net sales for the third quarter of 2021 primarily due to:

(i) $4.6 million increased costs related to our SFG transformation program, (ii) increased consulting fees of $1.1 million, (iii) incremental expenses associated with the acquisition of MINDS that was completed in April 2022 of $0.8 million, (iv) increased travel costs due to the return of in-person business activities of $0.6 million and (v) $0.5 million of acquisition and integration related costs.

These increases were partially offset by lower depreciation and amortization expense of $0.9 million and reduced expenses related to closing a site location of $0.7 million.

Selling, general and administrative expenses increased $6.7 million, or 6.7%, to $106.4 million or 17.5% of net sales for the first six months of 2022, compared to $99.7 million or 17.7% of net sales for the first six months of 2021 primarily due to:

Selling, general and administrative expenses increased $13.1 million, or 8.8%, to $161.4 million or 17.5% of net sales for the first nine months of 2022, compared to $148.3 million or 17.9% of net sales for the first nine months of 2021 primarily due to:

(i) $11.0 million increased costs related to our SFG transformation program, (ii) $3.4 million of exhibit, promotional and travel costs due to the return of in-person industry conferences and business activities, (iii) $1.9 million of acquisition and integration related costs primarily associated with the acquisition of MINDS and (iv) incremental expenses associated with MINDS of $1.7 million.

These increases were partially offset by:

(i) lower net payroll and employee benefit costs of $1.9 million driven by lower health insurance claims experience of $5.7 million and reduced deferred compensation program costs associated with our stock price changes of $1.3 million which were offset by increased headcount throughout our organization, (ii) lower depreciation and amortization expense of $1.8 million and (iii) reduced expenses related to closing a site location of $0.8 million.

(i) lower depreciation and amortization expense of $2.7 million, (ii) reduced expenses related to closing a site location of $1.5 million and (iii) lower net payroll and employee benefit costs of $2.0 million driven by lower health insurance claims experience of $7.7 million and reduced deferred compensation program costs associated with our stock price changes of $1.3 million which were offset by increased headcount throughout our organization.

Research and Development Expenses

Research and development expenses increased $1.8 million or 26.9% to $8.5 million in the third quarter of 2022 from $6.7 million in the third quarter of 2021.

Research and development expenses increased $3.0 million or 15.0% to $23.0 million for the first nine months of 2022 from $20.0 million for the first nine months of 2021.

Increased research and development costs were primarily driven by higher prototype materials costs and increased personnel-related expenses.

Restructuring, Impairment and Other Asset Charges, Net

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In addition, we have incurred certain asset impairment costs.

Restructuring, asset impairment charges and the net gain on sale of property and equipment for the three and six month periods ended June 30, 2022 and 2021 are presented below:

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

Restructuring, asset impairment charges and the net gain on sale of property and equipment for the three and nine month periods ended September 30, 2022 and 2021 are presented below:

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

(in millions) 2022 2021 2022 2021

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Income Tax Provision

Our income tax benefit for the second quarter of 2022 was $0.8 million compared to an income tax expense of $2.1 million for the second quarter of 2021.

Our effective income tax rate was 17.0% for the second quarter of 2022 compared to 20.2% for the second quarter of 2021.

The income tax benefit for the three months ended June 30, 2022 as compared to expense in the same period in 2021 was primarily driven by lower income from operations and changes in the relative weighting of jurisdictional income and loss reduced by the effect of a net discrete tax benefit in the prior year that did not recur in the current year related to the release of reserves for uncertain tax positions associated with Astec Mobile Machinery GmbH ("AMM") whose dissolution was completed during the second quarter of 2021.

Our income tax expense for the first six months of 2022 was $0.1 million compared to $2.9 million for the first six months of 2021.

Our effective income tax rate was 33.3% for the first six months of 2022 compared to 14.7% for the first six months of 2021.

The income tax expense for the six months ended June 30, 2022 was lower compared to the same period of 2021 primarily driven by lower earnings from operations and changes in the relative weighting of jurisdictional income and loss reduced by the effect of a release of reserves for uncertain tax positions associated with AMM in 2021 that did not recur in the current year and lower net discrete benefits from the vesting of employee shared-based compensation awards.

The backlog of orders as of June 30, 2022 was $837.4 million compared to $436.1 million as of June 30, 2021, an increase of $401.3 million or 92.0%.

Our income tax expense for the third quarter of 2022 was $0.7 million compared to an income tax benefit of $2.9 million for the third quarter of 2021.

Our effective income tax rate was 58.3% for the third quarter of 2022 compared to (47.5)% for the third quarter of 2021.

The income tax expense for the three months ended September 30, 2022 as compared to benefit in the same period in 2021 was primarily driven by prior year net discrete tax benefits that did not reoccur in the current year related to the release of a valuation allowance associated with our Brazilian subsidiary and a research and development ("R&D") credit partially offset by the tax effect of lower pre-tax earnings.

Our income tax expense for the first nine months of 2022 was $0.8 million, reflecting a 53.3% effective tax rate, compared to nominal expense for the first nine months of 2021.

The income tax expense for the nine months ended September 30, 2022 was higher compared to the same period of 2021 primarily driven by prior year net discrete tax benefits that did not reoccur in the current year related to the release of a valuation allowance associated with our Brazilian subsidiary, a favorable net benefit from the R&D credit and the release of reserves for uncertain tax positions associated with Astec Mobile Machinery GmbH partially offset by the tax effect of lower pre-tax earnings.

The backlog of orders as of September 30, 2022 was $969.0 million compared to $620.5 million as of September 30, 2021, an increase of $348.5 million or 56.2%.

Domestic backlog increased $304.1 million or 59.8% to $812.7 million and international backlog increased $44.4 million or 39.7% to $156.3 million.

The backlog increased $258.8 million to $600.2 million in the Infrastructure Solutions segment and increased $87.2 million to $366.3 million in the Materials Solutions segment.

Backlog generated by Corporate and Other during 2022 totaled $1.6 million.

The Corporate and Other backlog represents our controls and automation business and totaled $2.5 million as of September 30, 2022.

Increased orders were driven by (i) the continuation of the pent-up demand experienced in 2021 influenced by both customer retail and dealer inventory replenishment, (ii) ongoing economic uncertainty and longer lead times related to higher demand and (iii) the infrastructure investment by the United States' government under the IIJA enacted in November 2021.

Segment Net Sales - Three Months Ended :

Three Months Ended June 30, $ Change % Change

Three Months Ended September 30, $ Change % Change

(in millions) 2022 2021

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Infrastructure Solutions

Sales in this segment were $209.6 million for the second quarter of 2022 compared to $179.8 million for the same period in 2021, an increase of $29.8 million or 16.6%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased (i) new equipment sales of $23.5 million, (ii) parts and component sales of $5.4 million, (iii) service and equipment installation revenue of $1.8 million and (iv) freight revenue of $1.6 million.

These increases were partially offset by lower used equipment sales of $2.5 million.

Domestic sales for the Infrastructure Solutions segment increased $36.0 million or 26.8% for the second quarter of 2022 compared to the same period in 2021 primarily due to (i) increased new equipment sales of $31.7 million, (ii) increased parts and component sales of $3.1 million, (ii) increased service and equipment installation sales of $2.0 million and (iii) increased freight revenue of $1.6 million.

Sales in this segment were $201.9 million for the third quarter of 2022 compared to $174.5 million for the same period in 2021, an increase of $27.4 million or 15.7%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased (i) new equipment sales of $14.7 million, (ii) parts and component sales of $7.4 million, (iii) service and equipment installation revenue of $2.2 million, (iv) used equipment sales of $1.8 million, (v) freight revenue of $0.7 million and (vi) other revenue of $0.6 million.

Domestic sales for the Infrastructure Solutions segment increased $22.9 million or 16.0% for the third quarter of 2022 compared to the same period in 2021 primarily due to (i) increased new equipment sales of $11.5 million, (ii) increased parts and component sales of $6.0 million, (iii) increased used equipment sales of $2.3 million, (iv) increased service and equipment installation sales of $2.0 million, (v) increased other revenue of $0.6 million and (vi) increased freight revenue of $0.5 million.

International sales for the Infrastructure Solutions segment increased $4.5 million or 14.4% for the third quarter of 2022 compared to the same period in 2021 primarily due to increased new equipment and parts and component sales of $3.2 million and $1.4 million, respectively.

These increases were partially offset by lower used equipment sales of $0.5 million.

International sales for the Infrastructure Solutions segment decreased $6.2 million or 13.6% for the second quarter of 2022 compared to the same period in 2021 primarily due to lower equipment sales of $8.2 million partially offset by increased parts and component sales of $2.3 million.

Materials Solutions

Sales in this segment were $107.4 million for the second quarter of 2022 compared to $97.8 million for the same period in 2021, an increase of $9.6 million or 9.8%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased new equipment and parts and component sales of $9.3 million and $1.7 million, respectively.

These increases were partially offset by lower used equipment sales of $1.0 million.

Domestic sales for the Materials Solutions segment increased by $10.9 million or 16.2% for the second quarter of 2022 compared to the same period in 2021 driven by increased equipment sales of $12.2 million partially offset by decreased used equipment sales $0.7 million.

International sales for the Materials Solutions segment decreased $1.3 million or 4.2% for the second quarter of 2022 compared to the same period in 2021 primarily due to lower equipment sales of $2.9 million partially offset by increased parts and component sales of $1.9 million.

Segment Net Sales-Six Months Ended :

Six Months Ended June 30, $ Change % Change

Sales in this segment were $111.8 million for the third quarter of 2022 compared to $92.4 million for the same period in 2021, an increase of $19.4 million or 21.0%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased (i) new equipment sales of $18.9 million, (ii) parts and component sales of $1.3 million, (iii) freight revenue of $0.6 million and (iv) service and equipment installation revenue of $0.5 million.

These increases were partially offset by decreased other revenue of $2.0 million primarily driven by increased utilization of our interest subsidy programs offered to certain of our dealer customers.

Domestic sales for the Materials Solutions segment increased by $23.7 million or 40.4% for the third quarter of 2022 compared to the same period in 2021 driven by increased (i) equipment sales of $23.0 million, (ii) parts and component sales of $1.8 million

and (iii) freight revenue of $0.7 million.

These increases were partially offset by decreased other revenue of $1.9 million primarily driven by increased utilization of our interest subsidy programs offered to certain of our dealer customers.

International sales for the Materials Solutions segment decreased $4.3 million or 12.7% for the third quarter of 2022 compared to the same period in 2021 primarily due to decreased new equipment sales of $4.1 million.

Segment Net Sales - Nine Months Ended :

Nine Months Ended September 30, $ Change % Change

(in millions) 2022 2021

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Infrastructure Solutions

Sales in this segment were $407.1 million for the first six months of 2022 compared to $381.3 million for the same period in 2021, an increase of $25.8 million or 6.8%.

Sales in this segment were $609.0 million for the first nine months of 2022 compared to $555.8 million for the same period in 2021, an increase of $53.2 million or 9.6%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased (i) new equipment sales of $29.5 million, (ii) parts and component sales of $16.5 million, (iii) service and equipment installation revenue of $5.1 million and (iv) freight revenue of $3.0 million.

These increases were partially offset by lower used equipment sales of $1.8 million.

Domestic sales for the Infrastructure Solutions segment increased $37.7 million or 12.6% for the first six months of 2022 compared to the same period in 2021 primarily due to (i) increased new equipment sales of $27.7 million, (ii) increased parts and component sales of $7.6 million, (ii) increased service and equipment installation sales of $2.9 million and (iii) increased freight revenue of $2.6 million.

Domestic sales for the Infrastructure Solutions segment increased $60.6 million or 13.7% for the first nine months of 2022 compared to the same period in 2021 primarily due to (i) increased new equipment sales of $39.2 million, (ii) increased parts and component sales of $13.6 million, (iii) increased service and equipment installation sales of $4.9 million and (iv) increased freight revenue of $3.1 million.

These increases were partially offset by lower used equipment sales of $1.4 million.

International sales for the Infrastructure Solutions segment decreased $11.9 million or 14.5% for the first six months of 2022 compared to the same period in 2021 primarily due to lower equipment sales of $12.9 million partially offset by increased parts and component sales of $1.5 million.

International sales for the Infrastructure Solutions segment decreased $7.4 million or 6.5% for the first nine months of 2022 compared to the same period in 2021 primarily due to lower equipment sales of $9.7 million partially offset by increased parts and component sales of $2.9 million.

Materials Solutions

Sales in this segment were $201.1 million for the first six months of 2022 compared to $180.7 million for the same period in 2021, an increase of $20.4 million or 11.3%.

Sales in this segment were $312.9 million for the first nine months of 2022 compared to $273.1 million for the same period in 2021, an increase of $39.8 million or 14.6%.

The increase was primarily driven by favorable net volume, pricing and the mix of sales that generated increased new equipment and parts and component sales of $33.9 million and $8.1 million, respectively.

These increases were partially offset by lower used equipment sales of $1.3 million.

Domestic sales for the Materials Solutions segment increased by $18.1 million or 14.2% for the first six months of 2022 compared to the same period in 2021, driven by (i) increased equipment sales of $16.0 million, (ii) increased parts and component sales of $2.9 million and (iii) increased freight revenue of $0.5 million.

These increases were partially offset by decreased used equipment sales $0.7 million.

International sales for the Materials Solutions segment increased $2.3 million or 4.3% for the first six months of 2022 compared to the same period in 2021 primarily due to increased parts and component sales of $3.9 million partially offset by reduced equipment sales of $1.0 million.

These increases were partially offset by decreased other revenue of $2.7 million primarily driven by increased utilization of our interest subsidy programs offered to some of our dealer customers.

Domestic sales for the Materials Solutions segment increased by $41.8 million or 22.4% for the first nine months of 2022 compared to the same period in 2021, driven by increased new equipment and parts and component sales of $39.0 million and $4.7 million, respectively.

These increases were partially offset by decreased other revenue of $2.6 million primarily driven by increased utilization of our interest subsidy programs offered to certain of our dealer customers and decreased used equipment sales $0.8 million.

International sales for the Materials Solutions segment decreased $2.0 million or 2.3% for the first nine months of 2022 compared to the same period in 2021 primarily due to lower new equipment sales and freight revenue of $5.1 million and $0.5 million, respectively, partially offset by increased parts and component sales of $3.4 million.

Segment Operating Adjusted EBITDA

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This non-GAAP financial measure can be useful to investors in understanding operating results and the performance of our core business from management's perspective.

Our 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.

Our presentation of Segment Operating Adjusted EBITDA may not be comparable to similar measures used by other companies and is 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.

"Segment Information," of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated net income attributable to controlling interest.

Segment Operating Adjusted EBITDA-Three Months Ended:

Three Months Ended June 30, $ Change % Change

Three Months Ended September 30, $ Change % Change

(in millions) 2022 2021

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Infrastructure Solutions segment:

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $15.9 million for the second quarter of 2022 compared to $16.5 million for the same period in 2021, a decrease of $0.6 million or 3.6%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $19.3 million and increased general and administrative costs of $1.1 million.

Incorporated in these increased costs is a $1.8 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Infrastructure Solutions segment in the current year, as well as the benefit from improved health insurance claims experience allocated from Corporate of $3.1 million.

These increased costs were partially

offset by the impact of favorable net volume, pricing and mix that generated $18.0 million higher gross profit, manufacturing efficiencies of $1.0 million and reduced expenses related to a closed site location of $0.8 million.

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $17.6 million for the third quarter of 2022 compared to $18.3 million for the same period in 2021, a decrease of $0.7 million or 3.8%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $18.5 million, manufacturing inefficiencies of $4.1 million largely due to logistics and manufacturing throughput disruptions, increased general and administrative costs of $2.3 million and higher research and development costs of $1.0 million.

These increased costs were partially offset by the impact of favorable net volume, pricing and mix that generated $24.4 million higher gross profit and reduced expenses related to closed site locations of $0.7 million.

Materials Solutions segment:

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $9.5 million for the second quarter of 2022 compared to $15.9 million for the same period in 2021, a decrease of $6.4 million or 40.3%.

The decrease in Segment Operating Adjusted EBITDA between periods resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $15.0 million, increased general and administrative costs of $0.9 million and manufacturing inefficiencies of $1.6 million due to supply chain and logistics disruptions.

Incorporated in these increased costs is a $1.0 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Materials Solutions segment in the current year, as well as the benefit from improved health insurance claims experience allocated from Corporate of $0.9 million.

These increased costs were partially offset by the impact of favorable volume, pricing and mix that generated $11.1 million higher gross profit.

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $13.1 million for the third quarter of 2022 compared to $10.7 million for the same period in 2021, an increase of $2.4 million or 22.4%.

The increase in Segment Operating Adjusted EBITDA between periods resulted primarily from the impact of favorable net volume, pricing and mix that generated $14.2 million higher gross profit and lower general and administrative costs of $1.2 million.

These increases were partially offset by the impact of higher inflation on materials, labor and overhead costs of $10.5 million and manufacturing inefficiencies of $2.4 million largely due to logistics and manufacturing throughput disruptions.

Corporate and Other:

Corporate and Other operations had net expenses of $12.3 million for the second quarter of 2022 compared to $11.9 million for the second quarter of 2021, an increase of $0.4 million or 3.4%.

The increase in expenses was primarily driven by $1.8 million of increased health insurance costs net of $4.0 million that was allocated to Infrastructure Solutions and Materials Solutions and increased deferred compensation program cost driven by our stock price changes of $0.4 million.

These increases were partially offset by lower professional services fees of $1.3 million and lower net annual incentive compensation of $0.8 million including $2.8 million that was recorded within Infrastructure Solutions and Materials Solutions in the current year as compared to at Corporate in the prior year period.

Segment Operating Adjusted EBITDA-Six Months Ended :

Six Months Ended June 30, $ Change % Change

Corporate and Other operations had net expenses of $14.2 million for the third quarter of 2022 compared to $12.9 million for the third quarter of 2021, an increase of $1.3 million or 10.1%.

The increase in expenses was primarily driven by personnel costs including employee benefit and travel costs.

Segment Operating Adjusted EBITDA-Nine Months Ended :

Nine Months Ended September 30, $ Change % Change

(in millions) 2022 2021

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Infrastructure Solutions segment:

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $32.3 million for the first six months of 2022 compared to $42.7 million for the same period in 2021, a decrease of $10.4 million or 24.4%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $36.6 million, increased general and administrative costs of $4.6 million.

Incorporated in these increased costs is a $3.3 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Infrastructure Solutions segment in the current year, as well as the benefit from improved health insurance claims experience allocated from Corporate of $3.1 million.

These increased costs were partially offset by the impact of favorable volume, pricing and mix that generated $29.7 million higher gross profit, reduced expenses related to closed site locations of $0.8 million and manufacturing efficiencies of $0.3 million.

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $49.9 million for the first nine months of 2022 compared to $61.0 million for the same period in 2021, a decrease of $11.1 million or 18.2%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $55.1 million, increased general and administrative costs of $6.3 million and manufacturing inefficiencies of $3.8 million largely due to logistics and manufacturing throughput disruptions.

Incorporated in these increased costs is a $3.5 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Infrastructure Solutions segment in the current year.

These increased costs were partially offset by the impact of favorable net volume, pricing and mix that generated $54.1 million higher gross profit and reduced expenses related to closed site locations of $1.5 million.

Materials Solutions segment:

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $21.7 million for the first six months of 2022 compared to $25.6 million for the same period in 2021, a decrease of $3.9 million or 15.2%.

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $34.8 million for the first nine months of 2022 compared to $36.3 million for the same period in 2021, a decrease of $1.5 million or 4.1%.

The decrease in Segment Operating Adjusted EBITDA resulted primarily from the impact of higher inflation on materials, labor and overhead costs of $33.7 million, increased general and administrative costs of $1.2 million and manufacturing inefficiencies of $3.8 million due to supply chain and logistics disruptions.

Incorporated in these increased costs is a $1.7 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Materials Solutions segment in the current year, as well as the benefit from improved health insurance claims experience allocated from Corporate of $0.9 million.

These increased costs were partially offset by the impact of favorable volume, pricing and mix that generated $23.1 million higher gross profit.

Incorporated in these increased costs is a $1.5 million impact of annual incentive compensation, which was recorded in Corporate and Other in the prior year period and has been reflected in the Materials Solutions segment in the current year.

These increased costs were partially offset by the impact of favorable net volume, pricing and mix that generated $37.3 million higher gross profit.

Corporate and Other:

Corporate and Other operations had net expenses of $22.1 million for the first six months of 2022 compared to $26.9 million for the first six months of 2021, a decrease of $4.8 million or 17.8%.

The decrease in expenses was driven by lower net annual incentive compensation of $2.8 million including $5.0 million that was recorded within Infrastructure Solutions and Materials Solutions in the current year as compared to at Corporate in the prior year period, reduced professional fees of $1.6 million and reduced deferred compensation program cost driven by our stock price changes of $1.3 million.

These decreases were partially offset by increases in payroll expenses related to increased headcount of $0.9 million and share-based compensation expenses of $0.5 million.

Corporate and Other operations had net expenses of $36.3 million for the first nine months of 2022 compared to $39.8 million for the first nine months of 2021, a decrease of $3.5 million or 8.8%.

The decrease in expenses was driven by:

(i) lower net annual incentive compensation of $3.5 million due to $5.0 million that was recorded within Infrastructure Solutions and Materials Solutions in the current year as compared to at Corporate in the prior year period, (ii) reduced deferred compensation program cost driven by our stock price changes of $1.3 million and (iii) reduced consulting fees of $1.2 million.

These decreases were partially offset by increases in payroll and share-based compensation expenses of $2.3 million.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under a $150.0 million revolving credit facility (the "Credit Facility") and cash flows from operations.

At June 30, 2022, we had total cash, cash equivalents and restricted cash of $50.6 million.

Cash and cash equivalents available for operating purposes was $48.0 million, of which $27.4 million was held by our foreign subsidiaries and is considered to be indefinitely invested in those

jurisdictions.

At September 30, 2022, we had total cash, cash equivalents and restricted cash of $20.8 million.

Cash and cash equivalents available for operating purposes was $18.4 million, which was predominantly held by our foreign subsidiaries and is considered to be indefinitely invested in those jurisdictions.

In April 2022, we acquired MINDS with a total cash consideration paid to the selling shareholders of $19.3 million funded from cash on hand.

Our future cash requirements include working capital needs, capital expenditures, vendor hosted software arrangements including the related implementation costs, unrecognized tax benefits and operating lease payments.

In addition, our variable cash uses may include the payment of our quarterly cash dividend, financing other strategic initiatives of our business, including the SFG transformation and strategic acquisitions and share repurchases under our share repurchase authorization.

In addition, our variable cash uses may include the payment of our quarterly cash dividend, financing other strategic initiatives of our business, including, but not limited to, the SFG transformation, strategic acquisitions and share repurchases under our share repurchase authorization.

We believe that our current working capital, cash flows generated from future operations and available capacity under our credit facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.

We did not have any outstanding borrowings on the Credit Facility at June 30, 2022 or December 31, 2021.

Our outstanding letters of credit totaling $2.6 million decreased borrowing availability to $147.4 million under the revolving credit facility as of June 30, 2022.

We anticipate utilizing the Credit Facility with more frequency in the near-term to support our domestic working capital needs in response to supply chain disruptions.

We had $1.2 million in outstanding borrowings on the Credit Facility at September 30, 2022 and no outstanding borrowings at December 31, 2021.

Our outstanding letters of credit totaling $2.5 million decreased borrowing availability to $146.3 million under the revolving credit facility as of September 30, 2022.

We anticipate continuing to utilize the Credit Facility with more frequency in the near-term to support our domestic working capital needs in response to supply chain disruptions.

The Credit Facility agreement contains certain financial covenants, including provisions concerning required levels of annual net income and minimum tangible net worth.

We were in compliance with the financial covenants of the Credit Facility at June 30, 2022.

Failure to satisfy these covenants could result in the accelerated repayment of our indebtedness.

We were in compliance with the financial covenants of the Credit Facility at September 30, 2022.

The Credit Facility expires on December 29, 2023.

Certain of our international subsidiaries in South Africa, Australia, Brazil, Canada 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.

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

Certain of our international subsidiaries in South Africa, Australia, Brazil, Canada and the United Kingdom each have separate credit facilities with local financial institutions primarily 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 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 our Consolidated Balance Sheets.

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We regularly enter into agreements primarily to purchase inventory in the ordinary course of business.

As of June 30, 2022, open purchase obligations totaled $405.3 million, of which $351.3 million are expected to be fulfilled within the remainder of 2022.

As of September 30, 2022, open purchase obligations totaled $326.7 million, of which $215.4 million are expected to be fulfilled within the remainder of 2022.

We estimate that our capital expenditures will be between $35 and $45 million for the year ending December 31, 2022, which may be impacted by general economic, financial or operational changes, including the impact of COVID-19 on our operating results, and competitive, legislative and regulatory factors, among other considerations.

Cash Flows from Operating Activities :

Six Months Ended June 30, Increase / Decrease

Nine Months Ended September 30, Increase / Decrease

(in millions) 2022 2021

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Asset impairment charges, net 3.4 0.2 3.2

Purchase of trading securities, net (0.5) (3.1) 2.6

Receivables and other contract assets (25.0) (30.2) 5.2

Increase in inventories (98.9) (32.3) (66.6)

Increase in prepaid expenses (3.8) (0.1) (3.7)

Increase in other assets (10.3) (3.0) (7.3)

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Increase in other accrued liabilities 0.5 9.7 (9.2)

Increase in accrued payroll and related expenses 11.2 9.3 1.9

Increase in customer deposits 21.1 4.0 17.1

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Net cash (used in) provided by operating activities $ (56.8) $ 27.3 $ (84.1)

Net cash (used in) provided by operating activities decreased $72.4 million for the first six months of 2022 as compared to the first six months of 2021.

The decrease was primarily driven by (i) the increase of inventories on hand of $64.9 million due to higher backlog and supply chain disruptions, (ii) lower net income and changes in the deferred tax position of $13.4 million and (iii) the timing of payments on accounts payable and accrued liabilities of $7.4 million.

These incremental cash uses were partially offset by (i) the timing of receivables and other contract assets of $11.0 million, (ii) increased customer deposits of $13.3 million associated with increased backlog and (iii) the timing of income tax payments of $9.1 million.

During the nine months ended September 30, 2022, we used $56.8 million of cash in our operating activities as compared to generating $27.3 million of cash from operating activities in the corresponding prior period representing a change of $84.1

Changes in the cash from operations was primarily driven by the following net usages:

(i) the increase of inventories on hand of $66.6 million due to higher backlog and supply chain disruptions, (ii) lower net income of $25.1 million, (iii) changes in the deferred tax position of $12.9 million, (iv) the timing of payments on accounts payable and accrued liabilities of $10.5 million and (v) increases in other assets of $7.3 million.

These net cash usages were partially offset by changes in cash generated by:

(i) increased customer deposits of $17.1 million associated with increased backlog, (ii) the timing of income tax payments of $7.9 million and (iii) the timing of receivables and other contract assets of $5.2 million.

Cash Flows from Investing Activities:

Six Months Ended June 30, Increase / Decrease

Nine Months Ended September 30, Increase / Decrease

(in millions) 2022 2021

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Net cash used in investing activities $ (45.0) $ (9.2) $ (35.8)

Net cash used in investing activities increased by $30.1 million for the first six months of 2022 as compared to the same period in 2021 primarily due to the acquisition of MINDS in the second quarter of 2022 and increased purchases of property and equipment in part due to our manufacturing facility transformation initiative.

Net cash used in investing activities increased by $35.8 million for the first nine months of 2022 as compared to the same period in 2021 primarily due to the acquisition of MINDS in the second quarter of 2022 and increased purchases of property and equipment in part due to our manufacturing facility transformation initiative.

Cash Flows from Financing Activities:

Six Months Ended June 30, Increase / Decrease

Nine Months Ended September 30, Increase / Decrease

(in millions) 2022 2021

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Withholding tax paid upon vesting of share-based compensation awards (1.8) (3.4) 1.6

Repurchase of Company stock (6.1) — (6.1)

Other, net 0.2 0.6 (0.4)

Net cash used in financing activities $ (8.4) $ (11.4) $ 3.0

Net cash used in financing activities decreased by $4.4 million for the first six months of 2022 compared to the same period in 2021 primarily due to increased net proceeds from borrowings under bank loans at our Brazilian site and lower withholding tax payments on the vesting of share-based compensation awards.

We paid quarterly dividends of $0.12 and $0.11 per common share to shareholders in the second quarter of 2022 and 2021, respectively.

Net cash used in financing activities decreased by $3.0 million for the first nine months of 2022 compared to the same period in 2021 primarily due to increased net proceeds from borrowings and lower withholding tax payments on the vesting of share-based compensation awards partially offset by repurchases of stock under our share repurchase program.

We paid quarterly dividends of $0.12 and $0.11 per common share to shareholders in the third quarter of 2022 and 2021, respectively.

Share Repurchases

As announced in a Form 8-K filing on July 30, 2018, we approved a share repurchase program, which authorizes us to repurchase up to $150.0 million of our common stock.

As of June 30, 2022, the maximum dollar value of shares available for repurchase under the plan is approximately $126.0 million.

No shares were repurchased under the plan during the six months ended June 30, 2022, however, we may conduct opportunistic share repurchases under this authorization in future periods, subject to market conditions utilizing cash on hand or borrowings under our Credit Facility.

During the three months ended September 30, 2022, 160,445 shares were repurchased under the plan, totaling approximately $6.1 million.

As of September 30, 2022, $119.7 million remains available for repurchase under the approved share repurchase program.

We may continue to conduct opportunistic share repurchases under this authorization in future periods, subject to market conditions, utilizing cash on hand or borrowings under our Credit Facility.

The timing, manner and number of shares repurchased will depend on a variety of factors, including, but not limited to, the level of cash balances, credit availability, financial performance, general business conditions, regulatory requirements, the market price of the Company’s stock and the availability of alternative investment opportunities.

Financial Condition

Our total current assets increased to $661.5 million as of June 30, 2022 from $636.0 million as of December 31, 2021, an increase of $25.5 million or 4.0%, due primarily to an increase in inventories of $72.4 million, an increase in trade receivables and contract assets of $18.4 million and the recording of $15.4 million assets at our Tacoma site as held for sale partially offset by a decrease in cash, cash equivalents and restricted cash of $83.8 million during the first six months of 2022.

Our total current liabilities increased to $273.4 million as of June 30, 2022 from $223.3 million as of December 31, 2021, an increase of $50.1 million, or 22.4%, due primarily to increased accounts payable, customer deposits and accrued payroll and related liabilities of $22.1 million, $13.2 million and $7.2 million, respectively, during the first six months of 2022.

Our total current assets increased to $649.6 million as of September 30, 2022 from $636.0 million as of December 31, 2021, an increase of $13.6 million or 2.1%, due primarily to an increase in inventories of $97.7 million, an increase in trade receivables and contract assets of $18.9 million and the recording of $15.4 million assets at our Tacoma site as held for sale partially offset by a decrease in cash, cash equivalents and restricted cash of $113.6 million during the first nine months of 2022.

Our total current liabilities increased to $283.9 million as of September 30, 2022 from $223.3 million as of December 31, 2021, an increase of $60.6 million, or 27.1%, due primarily to increased accounts payable, customer deposits and accrued payroll and related liabilities of $23.1 million, $19.1 million and $11.3 million, respectively, during the first nine months of 2022.

Current liabilities also increased due to additional net borrowings of $6.2 million on short-term debt facilities in order to meet working capital needs at certain of our international sites.

Contingencies

We have reviewed all claims and lawsuits and have made adequate provision for any losses that are probable and can be reasonably estimated.

Based upon currently available information and with the advice of counsel, we believe that the ultimate

outcome of our current claims and legal proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

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

However, claims and legal proceedings are subject to inherent uncertainties and rulings unfavorable to us could occur.

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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 2. Management’s Discussion and Analysis