What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-02-28 · 567 added, 425 removed, 1020 unchanged (49% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Cash Flows

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All schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

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Report of Independent Registered Public Accounting Firm

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Astec Industries, Inc.:

Opinion on the Consolidated Financial Statements

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

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

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

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

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, cash flows and equity for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

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

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

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

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

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

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

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or

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disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the sufficiency of audit evidence over inventories and net sales

As disclosed in Notes 4 and 18 to the Company's consolidated financial statements, and disclosed in the consolidated balance sheet and consolidated statement of operations, the Company recorded $393.4 million in inventories and $1,274.5 million in net sales as of December 31, 2022 and for the year then ended, respectively.

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

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

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

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Evaluating the sufficiency of the audit evidence obtained required especially subjective auditor judgment because of the decentralized structure and geographic dispersion of the Company's manufacturing locations.

This included determining the sites at which procedures were performed.

This included determining the sites for which procedures were performed.

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

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

Goodwill impairment analysis for the Material Solutions reporting unit

As discussed in Notes 2 and 7 to the consolidated financial statements, the Company tests goodwill for impairment annually, or more frequently if circumstances change or events occur that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value.

During the year ended December 31, 2022, the Company performed a quantitative impairment analysis and determined fair values of each of its reporting units using an equally weighted combination of the discounted cash flow method and the guideline public company method.

The Company did not record any impairment of goodwill as the fair value of each reporting unit exceeded its carrying amount.

As of December 31, 2022, goodwill allocated to the Materials Solutions reportable segment was $ 19.4 million.

We identified the evaluation of the goodwill impairment analysis for the Materials Solutions reporting unit as a critical audit matter.

Evaluating the estimated fair value of the reporting unit involved a high degree of subjective auditor judgment.

Specifically, the revenue growth rates, gross margins, and discount rate assumptions used in estimating the fair value of the reporting unit were challenging to evaluate as changes to those assumptions could have had a significant effect on the Company’s assessment of the impairment of goodwill of that reporting unit.

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

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill impairment assessment process.

This included controls related to the determination of the revenue growth rates, gross margins, and discount rate assumptions.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the discount rate by comparing it to a discount rate range that was independently developed using publicly available market data for comparable entities

• evaluating the revenue growth rates and gross margins by comparing them to the reporting unit’s historical performance, to publicly available data for comparable companies, and to the Company’s analyst reports

• assessing the estimated fair value using the reporting unit’s cash flow assumptions and an independently developed discount rate and comparing the result to the Company’s fair value estimate.

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

Atlanta, Georgia

February 28, 2022

March 1, 2023

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ASTEC INDUSTRIES, INC.

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Accrued product warranty 11.9 10.5

Accrued payroll and related liabilities 23.6 20.8

Accrued employee related liabilities 35.3 30.6

Accrued loss reserves 1.9 1.9

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

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ASTEC INDUSTRIES, INC.

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Income from operations 7.5 19.9 40.5

Other income:

Other (expenses) income, net:

Interest expense ( 2.5 ) ( 1.1 ) ( 0.7 )

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Other (expenses) income, net ( 1.6 ) ( 5.5 ) 3.9

Income from operations before income taxes 16.5 45.7 25.2

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

Net income 17.9 46.9 22.2

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

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

Income before income taxes 4.4 13.8 44.5

Income tax provision (benefit) 5.0 ( 2.1 ) ( 1.5 )

Net (loss) income ( 0.6 ) 15.9 46.0

Net loss (income) attributable to noncontrolling interest 0.5 ( 0.1 ) —

Net (loss) income attributable to controlling interest $ ( 0.1 ) $ 15.8 $ 46.0

Per share data:

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

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ASTEC INDUSTRIES, INC.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

(In millions)

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2022 2021 2020

Net income $ 17.9 $ 46.9 $ 22.2

Other comprehensive income (loss):

Change in unrecognized pension and postretirement benefit costs 3.1 0.1 1.0

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

Net (loss) income $ ( 0.6 ) $ 15.9 $ 46.0

Other comprehensive (loss) income:

Foreign currency translation adjustments ( 7.7 ) ( 2.1 ) ( 1.8 )

Other comprehensive income (loss) 1.0 ( 1.7 ) 2.8

Change in unrecognized pension and postretirement benefit costs — 3.1 0.1

Other comprehensive (loss) income ( 7.7 ) 1.0 ( 1.7 )

Comprehensive loss attributable to noncontrolling interest 0.5 — —

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

Comprehensive (loss) income attributable to controlling interest $ ( 7.8 ) $ 16.9 $ 44.3

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

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ASTEC INDUSTRIES, INC.

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Cash flows from operating activities

Net income $ 17.9 $ 46.9 $ 22.2

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

Depreciation 20.1 20.8 21.4

Amortization 10.1 6.1 4.8

Net (loss) income $ ( 0.6 ) $ 15.9 $ 46.0

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

Depreciation and amortization 27.9 30.2 26.9

Provision for credit losses 1.2 1.4 0.9

Provision for warranties 12.6 10.9 9.8

Deferred compensation expense 0.5 0.7 0.6

Deferred compensation (benefit) expense ( 0.9 ) 0.5 0.7

Share-based compensation 6.8 6.0 5.1

Deferred tax (benefit) provision ( 17.1 ) ( 1.3 ) 8.6

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

Gain on disposition of property and equipment ( 0.7 ) ( 0.6 ) ( 6.2 )

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

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

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

Sale (purchase) of trading securities, net 0.7 ( 3.1 ) 0.2

Receivables and other contract assets ( 28.0 ) ( 28.4 ) 12.2

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Accrued loss reserves ( 0.1 ) ( 1.3 ) 0.3

Accrued payroll and related expenses 3.0 ( 5.1 ) 0.7

Accrued employee related liabilities 4.3 10.0 1.6

Other accrued liabilities 2.6 ( 8.4 ) 3.1

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Income taxes payable/prepaid 6.0 ( 14.3 ) 15.7

Other — — 1.1

Net cash provided by operating activities 7.4 141.5 112.6

Net cash (used in) provided by operating activities ( 73.9 ) 7.4 141.5

Cash flows from investing activities:

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Net cash used in investing activities ( 53.2 ) ( 18.4 ) ( 20.9 )

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ASTEC INDUSTRIES, INC.

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Payment of dividends ( 11.2 ) ( 10.2 ) ( 10.0 )

Borrowings under bank loans 7.2 6.0 166.0

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

Proceeds from borrowings on credit facilities and bank loans 223.0 7.2 6.0

Repayments of borrowings on credit facilities and bank loans ( 138.5 ) ( 6.2 ) ( 5.9 )

Payment of debt issuance costs ( 1.5 ) — —

Sale of Company stock by deferred compensation programs, net 0.2 0.6 0.3

Withholding tax paid upon vesting of share-based compensation awards ( 1.8 ) ( 3.5 ) ( 0.8 )

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

Repurchase of Company stock ( 10.1 ) — —

Net cash provided by (used in) financing activities 60.1 ( 12.1 ) ( 10.4 )

Effect of exchange rates on cash ( 1.4 ) ( 1.1 ) ( 0.5 )

(Decrease) increase in cash and cash equivalents and restricted cash ( 68.4 ) ( 24.2 ) 109.7

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

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

Cash, cash equivalents and restricted cash, beginning of period 134.4 158.6 48.9

Cash, cash equivalents and restricted cash, end of period $ 66.0 $ 134.4 $ 158.6

Supplemental Cash Flow Information

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

Table of Conten t s

ASTEC INDUSTRIES, INC.

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22,551,183 $ 4.5 $ 122.6 $ ( 31.8 ) $ ( 1.7 ) $ 507.7 $ 0.5 $ 601.8

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

Other comprehensive income — — — 2.8 — — — 2.8

Net income — — — — — 46.0 — 46.0

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

Dividends ($ 0.44 per share)

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

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

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

Withholding tax paid upon equity award vesting — — ( 0.8 ) — — — — ( 0.8 )

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

Cumulative impact of ASU No.

2018-02 — — — ( 0.7 ) — 0.7 — —

Deferred compensation programs' transactions, net — — 0.1 — 0.2 — — 0.3

Balance, December 31, 2020

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Net income — — — — — 15.8 0.1 15.9

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

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

Dividends ($ 0.45 per share)

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

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

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

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

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

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

Balance, December 31, 2021

22,767,052 $ 4.5 $ 130.6 $ ( 32.4 ) $ ( 1.2 ) $ 549.3 $ 0.5 $ 651.3

Net income — — — — — 17.8 0.1 17.9

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

Net loss — — — — — ( 0.1 ) ( 0.5 ) ( 0.6 )

Other comprehensive loss — — — ( 7.7 ) — — — ( 7.7 )

Dividends ($ 0.49 per share)

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

Share repurchases ( 251,087 ) ( 0.1 ) — — — ( 10.0 ) — ( 10.1 )

Balance, December 31, 2022

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

Table of Conten t s

ASTEC INDUSTRIES, INC.

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The Company designs, engineers, manufactures and markets equipment and components used primarily in road building and related construction activities, as well as other products discussed below.

The Company's products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface.

The Company also manufactures certain equipment and components unrelated to road construction, including equipment for the mining, quarrying, construction and demolition industries and port and rail yard operators;

The Company's products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface for both asphalt and concrete.

The Company also manufactures certain equipment and components unrelated to road construction, including equipment for the mining, quarrying, construction, demolition, land clearing and recycling industries and port and rail yard operators;

industrial heat transfer equipment;

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construction, demolition, recycle and crushing contractors;

forestry and environmental recycling contractors;

mine and quarry operators;

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

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

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

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

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

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.

Amounts previously reported under the previous segment structure have been restated to conform to the new segment structure.

COVID-19 Pandemic

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

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

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

The Company operates in two reportable segments (plus Corporate and Other) - Infrastructure Solutions and Materials Solutions.

The Company's two reportable business segments comprise sites based upon the nature of the products produced or services provided, 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.

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

Basis of Presentation and Significant Accounting Policies

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The accompanying consolidated financial statements include the accounts of Astec Industries, Inc.

and its subsidiaries and have been prepared by the Company, pursuant to the rules and regulations of the U.S Securities and Exchange Commission ("SEC").

and its subsidiaries and have been prepared by the Company, pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission ("SEC").

The Company prepares its consolidated financial statements in accordance with U.S.

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

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

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 loss (income) attributable to noncontrolling interest" in the Consolidated Statements of Operations.

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

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

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

Significant items subject to such estimates and assumptions include excess and obsolete inventory, inventory net realizable value, product warranty obligations, self-insurance loss reserves, capitalization of internal use software, goodwill impairment 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.

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

Table of Conten t s

Significant Accounting Policies

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

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

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

The Company had $ 25.9 million and $ 117.0 million in a government money market fund at December 31, 2022 and 2021, respectively, which is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets.

The Company had cash of $ 3.2 million and $ 0.3 million at December 31, 2022 and 2021, respectively, that is restricted as to withdrawal or use, which is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets.

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

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

All investments held at December 31, 2022 are classified as trading securities and are carried at fair value, with unrealized holding gains and losses included in "Other (expenses) income, net" in the Consolidated Statements of Operations.

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

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

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

2016-13, "Financial Instruments – Credit Losses (Topic 326)" on January 1, 2020 and, accordingly, measures its credit losses on receivables using an expected loss model.

See additional disclosure of this adoption below in Recently Adopted Accounting Pronouncements.

Allowance for Credit Losses - The Company measures its credit losses on receivables using an expected loss model.

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

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

After considering historical trends for uncollectible accounts, current economic conditions and specific customer recent payment history and financial stability.

An allowance for credit losses is maintained in "Trade receivables and contract assets, net" in the Consolidated Balance Sheets at a level which management believes is sufficient to cover all probable future credit losses as of the balance sheet date based on a rolling twelve-month "look-back", specific reserves and an expectation of future economic conditions that might impact customers.

The corresponding provision for credit losses is recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

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

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Write offs ( 1.2 ) ( 0.4 ) ( 0.6 )

Recoveries and other — 0.3 —

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

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

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

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Work-in-process inventory consists of the value of materials, labor and overhead incurred to date in the manufacturing of incomplete equipment or incomplete equipment sub-assemblies being produced.

Table of Conten t s

Finished goods inventory consists of completed equipment manufactured for sale to customers.

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

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

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

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

Assets Held for Sale – Assets are classified as held for sale when any ongoing operations have ceased, and the Company has committed to a plan to sell the assets in their current condition at a price that is reasonable in relation to the current fair value of the assets.

Assets held for sale are generally expected to be sold within one year of meeting the designation criteria.

Upon designation as held for sale, the assets are recorded at the lower of their carrying value or fair value, less costs to sale and related depreciation and amortization is ceased.

The held for sale designation and carrying value of assets held for sale is periodically reviewed and adjusted as facts and circumstances indicate that a change may be necessary.

As of December 31, 2022, the Company recorded assets held for sale of $ 15.4 million related to land and building assets of its former site in Tacoma, which are being marketed for sale.

The Company accounted for certain Enid land and building assets as assets held for sale as of December 31, 2021.

The sale of the Enid land and building was completed in the fourth quarter of 2022.

See Note 22, Strategic Transformation and Restructuring, Impairment and Other Asset Charges for additional discussion of the transactions related to these assets.

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

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If there are changes in the planned use of property or equipment or if technological changes were to occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of accelerated depreciation expense in future periods.

Table of Conten t s

Property and equipment are primarily depreciated over the following useful lives:

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

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

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

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

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ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

As of December 31, 2022 and 2021, the Company did not have any finance leases.

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

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

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

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

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

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

Impairment is limited to the carrying amount of goodwill allocated to the reporting unit.

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test.

The more likely than not threshold is defined as having a likelihood of more than 50 percent.

If, after assessing the totality of events or circumstances, management determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary and the goodwill is considered to be unimpaired.

However, if based on the qualitative assessment management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed with performing the quantitative evaluation process.

The quantitative evaluation compares the carrying value of each reporting unit that has goodwill with the estimated fair value of the respective reporting unit.

Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, a goodwill impairment charge will be recognized in the amount by which the reporting unit's carrying amount exceeds its fair value, but not to exceed the total goodwill assigned to the reporting unit.

The determination of the fair value of the Company's reporting units is based on a combination of a market approach, that considers benchmark company market multiples, and an income approach, that utilizes discounted cash flows for each reporting unit.

The cash flows used to determine fair value are dependent on a number of significant management assumptions such as expectations of future performance and the expected future economic environment, which are partly based upon historical experience.

Goodwill is not amortized but is tested at the reporting unit level for impairment annually on October 1, or more frequently, as events dictate.

A reporting unit is an operating segment or, under certain circumstances, a component of an operating segment that constitutes a business, has available discrete financial information, and whose operating results are regularly reviewed by management.

Components of an operating segment are combined and aggregated as a single reporting unit if the components have similar economic characteristics.

Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test.

The qualitative evaluation is an assessment of factors that includes, but is not limited to, the macroeconomic conditions, industry and competitive environment conditions, overall financial performance, business specific events and market considerations to determine whether it is more likely than not that a reporting unit's fair value is less than its carrying amount.

The Company may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test.

The quantitative goodwill impairment test requires the comparison the carrying value of the reporting unit's net assets to the fair value of the reporting unit.

The Company determines fair values of each reporting unit using an equally weighted combination of the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

This analysis requires significant assumptions, including projected net sales, projected earnings before interest, tax, depreciation and amortization, terminal growth rates, the cost of capital, the selection of appropriate guideline companies and related valuation multiples.

Management's estimates are subject to change given the inherent uncertainty in predicting future results.

Additionally, the discount rate and the terminal growth rate are based on management's judgment of the rates that would be utilized by a hypothetical market participant.

As part of the goodwill impairment testing, management also considers the Company's market capitalization in assessing the reasonableness of the combined fair values estimated for its reporting units.

While management believes such assumptions and estimates are reasonable, the actual results may differ materially from the projected amounts.

Table of Conten t s

The Company's intangible assets have definite lives and are subject to amortization.

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Trade names 3

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

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

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

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

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

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

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

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

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The Company utilizes a large national insurance company as third-party administrator for workers' compensation claims and carries insurance coverage for claims liabilities in excess of amounts covered by the captive.

The financial statements of the captive are consolidated into the consolidated financial statements of the Company.

The financial statements of the captive are included in the consolidated financial statements of the Company.

The short-term and long-term reserves for claims and potential claims related to general liability and workers' compensation under the captive are included in "Accrued loss reserves" or "Other long-term liabilities" in the Consolidated Balance Sheets depending on the expected timing of future payments.

The undiscounted reserves are actuarially determined to cover the ultimate cost of each claim based on the Company's evaluation of the type and severity of individual claims and historical information, primarily its own claims experience, along with assumptions about future events.

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

Changes in assumptions, as well as changes in actual

Table of Conten t s

experience, could cause these estimates to change in the future.

However, the Company does not believe it is reasonably likely that the reserve level will materially change in the foreseeable future.

The Company is self-insured for health and prescription claims under its Group Health Insurance Plan at all of the Company's domestic manufacturing subsidiaries.

The Company is self-insured for health and prescription claims under its Group Health Insurance Plan for all of the Company's domestic employees.

The Company carries reinsurance coverage to limit its exposure for individual health claims above certain limits.

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

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

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

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

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

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

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

and the goods must have been segregated from the Company's inventory prior to revenue recognition.

The Company had orders totaling $ 20.7 million and $ 29.3 million in 2022 and 2021 respectively, and nominal orders in 2020 on which revenue was recorded over time based upon the ratio of costs incurred to estimated total costs.

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

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Other Revenues – Miscellaneous revenues and offsets not associated with one of the above classifications include rental revenues, extended warranty revenues, early pay discounts and floor plan interest reimbursements.

Table of Conten t s

Advertising Expense - The cost of advertising is expensed as incurred.

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

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

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

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

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dollar equivalent notional amount of outstanding foreign currency exchange contracts was $ 10.3 million during 2022.

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

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

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

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

The Company reported nominal derivative assets at December 31, 2022 and $ 0.1 million of derivative assets in "Prepaid expenses and other assets" at December 31, 2021.

The Company held nominal derivative liabilities at December 31, 2022 or 2021.

The Company recognized, as a component of "Other (expenses) income, net", a net loss on the change in fair value of derivative instruments of $ 0.5 million for the year ended December 31, 2022 and a net gain of $ 0.8 million and $ 0.2 million for the years ended December 31, 2021 and 2020, respectively.

There were no derivatives that were designated as hedges at December 31, 2022 or 2021.

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

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

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

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

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

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

Foreign currency transaction gains and losses, net are included in "Other (expenses) income, net" and amounted to losses of $ 0.4 million and $ 1.3 million in 2022 and 2021, respectively, and a gain of $ 1.1 million in and 2020.

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

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

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

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

Potential common shares that have an antidilutive effect (i.e.

those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share.

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

Table of Conten t s

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

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Denominator for diluted earnings per share 22,790,717 22,948,632 22,877,743

Reclassifications and Adjustments

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

Antidilutive securities excluded from the calculation of diluted earnings per share 255,738 75,451 6,184

Adjustments and Reclassifications

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 years ended and as of December 31, 2021 and 2020 in this Form 10-K.

The Company is also disclosing the impact of the revisions on the previously filed audited Consolidated Balance Sheet as of December 31, 2021 and the opening balance sheet equity impact for December 31, 2020.

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.

In addition, certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the year ended December 31, 2022.

• The Company reclassified certain accrued liability balances from "Other current liabilities" to "Accrued employee related liabilities" to more appropriately reflect the nature of such accrued balances.

• The Company elected to present gains and losses recognized on the change in fair value of derivative instruments and foreign currency transaction gains and losses, net in "Other (expenses) income, net".

These amounts were previously included in "Cost of sales".

There was no change to previously reported "Total current liabilities" or "Net (loss) income attributable to controlling interest" related to these reclassifications.

Table of Conten t s

Balance Sheet

December 31, 2021

(in millions) As Previously Reported Adjustment Reclassification As Revised / Reclassified

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

Inventories 303.0 ( 4.3 ) — 298.7

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

Accrued employee related liabilities 23.6 — 7.0 30.6

Other current liabilities 42.9 ( 0.7 ) ( 7.0 ) 35.2

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

Year Ended December 31, 2021

(in millions, except per share data) As Previously Reported Adjustment Reclassification As Revised / Reclassified

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

Cost of sales 845.5 1.0 ( 0.5 ) 846.0

Gross profit 251.7 ( 2.7 ) 0.5 249.5

Income (loss) from operations 22.1 ( 2.7 ) 0.5 19.9

Other income (expenses), net ( 5.0 ) — ( 0.5 ) ( 5.5 )

Income (loss) before income taxes 16.5 ( 2.7 ) — 13.8

Income tax provision (benefit) ( 1.4 ) ( 0.7 ) — ( 2.1 )

Net (loss) income 17.9 ( 2.0 ) — 15.9

Net (loss) income attributable to controlling interest 17.8 ( 2.0 ) — 15.8

Per share data:

(Loss) earnings per common share - Basic 0.78 ( 0.08 ) — 0.70

(Loss) earnings per common share - Diluted 0.78 ( 0.09 ) — 0.69

Year Ended December 31, 2020

As Previously Reported Adjustment Reclassification As Revised / Reclassified

Cost of sales $ 784.3 $ 1.2 $ 1.3 $ 786.8

Gross profit 240.1 ( 1.2 ) ( 1.3 ) 237.6

Income (loss) from operations 43.0 ( 1.2 ) ( 1.3 ) 40.5

Other income (expenses), net 2.6 — 1.3 3.9

Income (loss) before income taxes 45.7 ( 1.2 ) — 44.5

Income tax provision (benefit) ( 1.2 ) ( 0.3 ) — ( 1.5 )

Net (loss) income 46.9 ( 0.9 ) — 46.0

Net (loss) income attributable to controlling interest 46.9 ( 0.9 ) — 46.0

Per share data:

(Loss) earnings per common share - Basic 2.08 ( 0.04 ) — 2.04

(Loss) earnings per common share - Diluted 2.05 ( 0.04 ) — 2.01

Table of Conten t s

Statements of Comprehensive Income

Year Ended December 31, 2021

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

Net (loss) income $ 17.9 $ ( 2.0 ) $ 15.9

Comprehensive income (loss) attributable to controlling interest 18.9 ( 2.0 ) 16.9

Year Ended December 31, 2020

As Previously Reported Adjustment As Revised / Reclassified

Net (loss) income $ 46.9 $ ( 0.9 ) $ 46.0

Comprehensive income (loss) attributable to controlling interest 45.2 ( 0.9 ) 44.3

Statement of Cash Flows

Year Ended December 31, 2021

(in millions) As Previously Reported Adjustment Reclassification As Revised / Reclassified

Net (loss) income $ 17.9 $ ( 2.0 ) $ — $ 15.9

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

Inventories ( 53.8 ) 2.3 — ( 51.5 )

Accounts payable 30.8 ( 1.3 ) — 29.5

Accrued employee related liabilities 3.0 — 7.0 10.0

Other accrued liabilities ( 0.7 ) ( 0.7 ) ( 7.0 ) ( 8.4 )

Income taxes payable/prepaid ( 13.6 ) ( 0.7 ) — ( 14.3 )

Year Ended December 31, 2020

As Previously Reported Adjustment Reclassification As Revised / Reclassified

Net (loss) income $ 46.9 $ ( 0.9 ) $ — $ 46.0

Inventories 44.7 1.2 — 45.9

Accrued employee related liabilities ( 5.1 ) — 6.7 1.6

Other accrued liabilities 9.8 — ( 6.7 ) 3.1

Income taxes payable/prepaid 16.0 ( 0.3 ) — 15.7

Statement of Equity

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

Balance, December 31, 2020

Retained Earnings $ 545.2 $ ( 1.5 ) $ 543.7

Total Equity 643.0 ( 1.5 ) 641.5

Balance, December 31, 2021

Retained Earnings 552.8 ( 3.5 ) 549.3

Total Equity 654.8 ( 3.5 ) 651.3

Recently Adopted Accounting Pronouncements

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

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

The standard changes how credit losses are measured for most financial assets and certain other instruments that currently are not measured through net income (loss).

The standard requires an expected loss model for instruments measured at amortized cost as opposed to the current incurred loss approach.

In valuing available for sale debt securities, allowances will be required to be recorded, rather than the current approach of reducing the carrying amount, for other than temporary impairments.

A cumulative adjustment to retained earnings was to be recorded as of the beginning of the period of adoption to reflect the impact of applying the provisions of the standard.

The standard was effective for public companies for periods beginning after December 15, 2019, and the Company adopted the new standard as of January 1, 2020.

As the Company's credit losses are typically minimal, the adoption of the new standard did not have a significant impact on the Company's financial position, results of operations or cash flows and no cumulative adjustment to retained earnings was recorded.

In February 2018, the FASB issued ASU No.

2018-2, "Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", which permits companies to reclassify tax effects stranded in accumulated other comprehensive income ("OCI") as a result of U.S.

tax reform impacting tax rates or other items, such as changing from a worldwide tax system to a territorial system, from OCI to retained earnings.

Other tax effects stranded in OCI due to other reasons, such as prior changes in tax laws or changes in valuation allowances, may not be reclassified.

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

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

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

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement.

This ASU is effective for fiscal years, and interim periods, beginning after December 15, 2019.

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

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

In August 2018, the FASB issued ASU No.

2018-13, "Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" which aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing fair value measurement disclosures.

The standard is effective for annual and interim periods beginning after December 15, 2019 with early adoption permitted.

The Company adopted this new standard effective January 1, 2020.

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

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.

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

Recently Issued Accounting Pronouncements Not Yet Adopted

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

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.

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

The Company has limited contracts or other arrangements impacted by

the use of LIBOR.

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

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

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

Table of Conten t s

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 elected to early adopt this guidance on April 1, 2022.

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

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

This new standard was effective for the Company on January 1, 2022.

Availability of government assistance has typically been limited.

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

The Company did not receive government assistance in 2022.

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 ( eight year life) and trade name ( three year life).

MINDS Acquisition - The Company entered into a Share Purchase Agreement, dated as of March 22, 2022, by and between MINDS Automation Group, Inc., a leader in plant automation control systems and cloud-based data management in the asphalt industry in Canada.

The acquisition was completed on April 1, 2022 at a purchase price of $ 19.3 million, which was paid in cash.

The Company's allocation of the purchase price resulted in the recognition of $ 9.3 million of goodwill and $ 9.3 million of intangible assets primarily consisting of customer relationships ( 9 year life) and developed technology ( 7 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.

Goodwill acquired is attributable to future growth opportunities provided by the acquired intellectual capital and the ability to generate cross-selling synergies.

The acquisition provides the Company with a broader line of controls and automation products designed to deliver enhanced productivity through improved equipment performance.

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:

The goodwill is not deductible for income tax purposes.

Proforma financial information is not included since not significant.

Acquisition and integration costs of $ 1.2 million were expensed as incurred during the year ended December 31, 2022 for this acquisition.

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

Table of Conten t s

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

(in millions) Amount

Accounts receivable $ 2.3

Trade receivables 2.7

Inventories 0.7

Other assets 6.3

Prepaid expenses and other assets 0.4

Property and equipment 0.2

Intangible assets 9.3

Other long-term assets 0.5

Total assets acquired $ 24.6

Accounts payable and other ( 4.4 )

Advance customer deposits ( 2.8 )

Accounts payable ( 0.7 )

Accrued payroll and related liabilities ( 0.8 )

Other current liabilities ( 1.1 )

Deferred income tax liabilities ( 2.4 )

Other long-term liabilities ( 0.3 )

Total liabilities assumed ( 5.3 )

Total purchase price $ 19.3

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

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.

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 ( nine year life) and of trade name ( 15 year life).

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

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

The goodwill is not 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

Inventories 2.0

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.

On November 2, 2020, t he Company closed a transaction pursuant to which it purchased certain assets of Grathwol Automation, LLC ("Grathwol").

Grathwol Asset Acquisition - On November 2, 2020, t he Company closed a transaction pursuant to which it purchased certain assets of Grathwol Automation, LLC ("Grathwol").

Grathwol is engaged in the business of developing and providing advanced telematics and remote diagnostics for construction equipment and related products and services.

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

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

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

Table of Conten t s

Fair Value Measurements

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

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

The Company has various financial instruments that must be measured at fair value on a recurring basis, including marketable debt and equity securities held by Astec Insurance and marketable equity securities held in the Company's deferred compensation programs.

The Company's deferred compensation programs include a non-qualified Supplemental Executive Retirement Plan ("SERP") and a separate non-qualified Deferred Compensation Plan.

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

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

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

The deferred compensation programs' 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.

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Other 1.3 0.7 2.0

Derivative financial instruments — 0.1 0.1

Total financial assets $ 12.6 $ 6.4 $ 19.0

2 unchanged sentences

Total financial liabilities $ — $ 5.7 $ 5.7

Table of Conten t s

December 31, 2021

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Trading equity securities:

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

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

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Financial liabilities:

Derivative financial instruments $ — $ 0.5 $ 0.5

Deferred compensation programs' liabilities $ — $ 7.2 $ 7.2

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

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

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

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

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

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

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

reporting units.

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

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

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

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

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

The Company tests goodwill for impairment annually on October 1, 2022, or more frequently should circumstances change or events occur that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value between annual impairment tests.

The goodwill impairment test is performed for each of the Company's four reporting units which have goodwill recorded.

Management elected to perform a quantitative assessment for the October 1, 2022 annual impairment analysis based on its decline in operating performance, declines in the Company's stock price and the overall macroeconomic environment.

Table of Conten t s

Company determined fair values of each reporting unit using an equally weighted combination of the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

The significant assumptions used under the discounted cash flow method are projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), terminal growth rates, and the cost of capital.

Projected net sales, projected EBITDA and terminal growth rates were determined to be significant assumptions because they are primary drivers of the projected cash flows in the discounted cash flow fair value model.

Cost of capital was also determined to be a significant assumption as it is the discount rate used to calculate the current fair value of those projected cash flows.

For the guideline public company method, significant assumptions relate to the selection of appropriate guideline companies and related valuation multiples used in the market analysis.

Based on the Company's quantitative impairment test, no impairment at any of its reporting units was identified.

Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

In addition, sustained declines in operating performance in certain reporting units or the Company's stock price and related market capitalization could impact key assumptions in the overall estimated fair values of its reporting units and could result in non-cash impairment charges that could be material to the Company's Consolidated Balance Sheets or Statements of Operations.

Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge would be recorded to reduce the reporting unit to fair value.

Management performed a qualitative assessment for the annual tests of goodwill impairment performed on October 1, 2021 and October 31, 2020, the Company's prior annual goodwill impairment testing date, and concluded that there was no impairment of goodwill.

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

These events and circumstances include, but were not limited to, macroeconomic conditions, industry and competitive environment conditions, overall financial performance, business specific events and market considerations.

The Company completed the acquisition of MINDS Automation Group, Inc.

during the year ended December 31, 2022, which increased goodwill $ 9.3 million.

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

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

Table of Conten t s

The changes in the carrying amount of goodwill and accumulated impairment losses by reporting segment during the years ended December 31, 2022 and 2021 are as follows:

(in millions) Infrastructure Solutions Materials Solutions Total

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

Balance, December 31, 2020:

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Acquisitions ( 0.1 ) — — ( 0.1 )

Impairment ( 1.6 ) — ( 1.6 )

Total 2021 activity

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2028 and thereafter 5.1

Table of Conten t s

Property and Equipment

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The Company records its operating lease ROU assets in "Other long-term assets" and its operating lease liabilities in "Other current liabilities" and "Other long-term liabilities".

As of December 31, 2021, none of the Company's leases were deemed to be finance leases.

As of December 31, 2022 and 2021, the Company did not have any finance leases.

Additional information related to the Company’s operating leases is reflected in the tables below:

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

(the "Credit Facility") whereby the lender increased the Company's unsecured line of credit to $ 150.0 million, including a sub-limit for letters of credit of up to $ 30.0 million, and extended the maturity date to December 29, 2023.

Other significant terms were left unchanged.

Borrowings under the agreement are subject to an interest rate equal to the daily one-month LIBOR rate plus a 0.75 % margin.

The unused facility fee is 0.125 %.

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

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

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

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

(the "Previous Credit Facility") whereby the lender increased the Company's unsecured line of credit to $ 150.0 million, including a sub-limit for letters of credit of up to $ 30.0 million, and extended the maturity date to December 29, 2023.

Borrowings under the agreement were subject to an interest rate equal to the daily one-month LIBOR rate plus a 0.75 %

Table of Conten t s

The unused facility fee was 0.125 %.

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

On December 19, 2022, the Company and certain of its subsidiaries entered into a new credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto.

The Credit Agreement provides for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $ 250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $ 125.0 million (the “ Credit Facilities ”) and (iii) a maturity date of December 19, 2027.

Loans under the incremental credit facility shall have a maturity date as specified in the relevant incremental credit facility documentation.

In connection with the entry into the Credit Facilities, the Company repaid all outstanding borrowings under the Previous Credit Facility.

The Company recorded total debt issuance costs for the Credit Facilities of $ 1.5 million of which $ 0.3 million are included in "Prepaid expenses and other assets" and $ 1.2 million are included in "Other long-term assets" in the Company's Consolidated Balance Sheets at December 31, 2022.

Debt issuance costs are amortized on a straight-line basis to "Interest expense" over the term of the Credit Facilities.

At the Company’s election, revolving credit loans and incremental term loans advanced under the Credit Agreement shall bear interest at (i) adjusted term Secured Overnight Financing Rate ("SOFR") for one-, three- or six-month periods, as selected by the Company, plus an applicable margin ranging between 1.175 % and 2.175 % per annum, or (ii) the highest of the Wells Fargo Bank, National Association prime rate, the Federal Funds rate plus 0.50 %, and an adjusted term SOFR for a one month tenor in effect on such day plus 1.00 %, plus an applicable margin ranging between 0.175 % and 1.175 % per annum.

Swingline loans shall bear interest at the highest of the Wells Fargo Bank, National Association prime rate, the Federal Funds rate plus 0.50 %, and an adjusted term SOFR for a one-month tenor in effect on such day plus 1.00 %, plus an applicable margin ranging between 0.175 % and 1.175 % per annum.

The Company also pays a commitment fee ranging from 0.150 % to 0.250 % per annum to the lenders under the revolving credit facility on the average amount by which the aggregate commitments of the lenders exceed utilization of the revolving credit facility.

The applicable margins and the commitment fee are determined based on the Company's Consolidated Total Net Leverage Ratio, as defined by the Credit Agreement, at the relevant time.

The obligations of the Company in respect of the Credit Facilities are secured and guaranteed by the U.S.

domestic subsidiaries of the Company, subject to customary exceptions.

The Credit Agreement includes certain affirmative and negative covenants that impose restrictions on the Company's financial and business operations, including limitations on liens, indebtedness, investments, dispositions of assets, dividends, distributions and other restricted payments, fundamental changes or changes in the nature of the Company's business.

These limitations are subject to customary exceptions.

The Company is also required to maintain a (i) Consolidated Total Net Leverage Ratio of not more than 3.50 to 1.00 as of the last day of any fiscal quarter which may be increased to 4.00 to 1.00 in connection with a permitted acquisition and subject to the terms of the Credit Agreement and (ii) Consolidated Interest Coverage Ratio of at least 2.50 to 1.00 as of the last day of any fiscal quarter.

The Company was in compliance with all covenants as of December 31, 2022.

The Credit Agreement contains events of default customary for this type of financing, including a cross default and cross acceleration provision to certain other material indebtedness of the Company and its subsidiaries.

Upon the occurrence of an event of default, the outstanding obligations under the Credit Agreement may be accelerated and become due and payable immediately.

In addition, if certain change of control events occur with respect to the Company, the Company is required to repay the loans outstanding under the Credit Facilities.

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

Certain of the Company's international subsidiaries in Australia, Brazil, Canada, South Africa 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 the Company's Consolidated Balance Sheets.

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

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

Table of Conten t s

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

(in millions, except maturity dates and interest rates) December 31, 2022 December 31, 2021

Credit Facility

Unsecured line of credit - maximum $ 150.0 $ 150.0

Credit Facilities and Previous Credit Facility, respectively

Line of credit - maximum $ 250.0 $ 150.0

Letters of credit - maximum 30.0 30.0

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Short-term debt 9.4 2.6

Interest rate range 1.77 % - 6.75 %

2.40 % - 6.75 %

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

Weighted average interest rate 10.51 %

Debt maturities for the Company's short-term and long-term debt are expected to be as follows (in millions):

Product Warranty Reserves

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The Company accrues reserves for losses related to known workers' compensation and general liability claims that have been incurred but not yet paid or are estimated to have been incurred but not yet reported to the Company.

The undiscounted reserves are actuarially determined based on the Company's evaluation of the type and severity of individual claims and historical information, primarily its own claims experience, along with assumptions about future events.

The undiscounted reserves are actuarially determined based on the Company's evaluation of the type and severity of individual claims and historical

Table of Conten t s

information, primarily its own claims experience, along with assumptions about future events.

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

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

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

Employee Benefit Plans

Deferred Compensation Programs

The Company's deferred compensation programs include a non-qualified SERP and a separate non-qualified Deferred Compensation Plan.

Supplemental Executive Retirement Plan

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

The SERP has been closed to new entrants since December 2020.

This plan is a non-qualified deferred compensation plan administered by the Board of Directors of the Company, pursuant to which the Company makes quarterly cash contributions of a certain percentage of executive officers' compensation.

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

Upon retirement or termination, participants receive their apportioned share of the plan assets in the form of cash based on a pre-determined schedule of distributions.

Deferred Compensation Plan

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

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

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

Upon retirement or termination, participants receive their apportioned share of the plan assets in the form of cash based on a pre-determined schedule of distributions.

Assets of the Deferred Compensation Programs consist of the following:

December 31, 2022 December 31, 2021

(in millions) Cost Market Cost Market

Money market fund $ 0.1 $ 0.1 $ 0.1 $ 0.1

Company stock 1.1 1.2 1.2 2.2

Equity securities 5.0 4.4 4.5 4.9

Total $ 6.2 $ 5.7 $ 5.8 $ 7.2

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

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

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

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

See Note 6, Investments, for additional information.

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

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

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

The Company recognized income of $ 0.9 million in 2022 and expense of $ 0.5 million and $ 0.6 million in 2021 and 2020, respectively, related to the change in the fair value of the Company stock held in the Deferred Compensation Programs.

Other Employee Benefit Plan

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

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

The Company's contributions totaled $ 7.7 million, $ 7.2 million and $ 6.9 million in 2022, 2021 and 2020, respectively.

Table of Conten t s

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

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

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

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

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

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

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

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

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

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

Details related to the Pension Plan through its termination date are presented herein.

Those assumptions included, among others, the discount rate, expected return on plan assets and the expected mortality rates.

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

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

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

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

Table of Conten t s

The following provides information regarding benefit obligations, plan assets and the funded status of the plan as of December 31, 2021:

Pension Benefits

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Amounts recognized in accumulated other comprehensive loss consist of:

Net loss $ — $ 4.9

Net amount recognized $ —

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Discount rate N/A

Rate of compensation increase N/A N/A

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

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

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

Asset Category Actual Allocation Target Allocation Ranges

Equity Securities 48.4 % 40 % - 65 %

Debt Securities 41.0 % 30 % - 50 %

Cash and Cash Equivalents 10.6 % 0 % - 15 %

Total 100.0 %

Rate of compensation increase N/A

Table of Conten t s

Net periodic benefit cost for 2021 and 2020 included the following components:

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

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

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

Net actuarial loss (gain) for the year $ — $ 0.4

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Pension settlement ( 4.5 ) —

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

Total recognized in net periodic benefit cost and other comprehensive income (loss) $ ( 0.6 ) $ ( 0.1 ) $ ( 0.5 )

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

Total recognized in net periodic benefit cost and other comprehensive (loss) income $ ( 0.6 ) $ ( 0.1 )

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

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Expected return on plan assets N/A 6.00 %

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

Rate of compensation increase N/A N/A

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

Deferred Compensation Programs

Supplemental Executive Retirement Plan

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

The plan is a non-qualified deferred compensation plan administered by the Board of Directors of the Company, pursuant to which the Company makes quarterly cash contributions of a certain percentage of executive officers' compensation.

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

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

Deferred Compensation Plan

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

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

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

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

Assets of the Deferred Compensation Programs consist of the following:

December 31, 2021 December 31, 2020

(in millions) Cost Market Cost Market

Money market fund $ 0.1 $ 0.1 $ — $ —

Company stock 1.2 2.2 1.5 2.3

Equity securities 4.5 4.9 4.5 5.0

Total $ 5.8 $ 7.2 $ 6.0 $ 7.3

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

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

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

See Note 6, Investments, for additional information.

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

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

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

Other Employee Benefit Plan

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

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

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

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

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Income before income taxes $ 4.4 $ 13.8 $ 44.5

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

Table of Conten t s

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

Years Ended December 31,

(in millions) 2022 2021 2020

Current (benefit) provision:

Current provision (benefit):

Federal $ 17.4 $ ( 0.4 ) $ ( 14.2 )

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Foreign 2.3 0.3 1.8

Total current (benefit) provision

Total current provision (benefit)

22.1 ( 0.8 ) ( 10.1 )

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( 17.1 ) ( 1.3 ) 8.6

Total (benefit) provision:

Total provision (benefit):

Federal ( 0.9 ) ( 0.5 ) ( 1.9 )

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Foreign 4.5 ( 2.0 ) ( 0.5 )

Total income tax (benefit) provision

Total income tax provision (benefit)

$ 5.0 $ ( 2.1 ) $ ( 1.5 )

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

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

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

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

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

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

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

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

Years Ended December 31,

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FIN 48 impact 1.2 1.8 4.0

Liquidation of subsidiary ( 0.8 ) — ( 0.9 )

FIN 48 impact - liquidation of subsidiary — ( 0.7 ) —

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

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Share-based compensation 0.4 0.4 0.3

Foreign-derived intangible income deduction ( 0.9 ) — —

Other items ( 0.1 ) ( 0.7 ) ( 0.6 )

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

Total income tax provision (benefit) $ 5.0 $ ( 2.1 ) $ ( 1.5 )

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

Table of Conten t s

Significant components of the Company's deferred tax assets and liabilities are as follows:

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Deferred tax assets:

Amortization of research and experimental expenditures $ 18.4 $ —

Inventory reserves 4.7 3.7

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Goodwill 1.8 2.0

Outside basis difference — 4.7

Foreign net operating loss 7.2 4.4

Lease obligation 1.8 0.4

Employee & Iinsurance accruals 0.8 0.7

Employee & insurance accruals 1.0 0.8

Domestic credit carryforwards 1.5 1.5

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Deferred payroll tax - CARES Act — 1.1

Pension and post-employment benefits — 1.0

Valuation allowances ( 11.9 ) ( 5.9 )

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Right-of-use assets 1.8 0.5

Pension 0.6 1.3

Post-retirement benefits 0.5 0.6

Total deferred tax liabilities 18.6 15.2

Total net deferred assets $ 30.0 $ 14.8

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

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and experimental ("R&E") expenditures immediately in the year incurred and requires taxpayers to instead capitalize and amortize such expenditures over a period of five years for U.S.

activity and 15 years for foreign activity.

Taxpayers cannot recover R&E costs before the end of the amortization period even if sold or abandoned.

The Company has a deferred tax asset of $ 18.4 million for R&E expenditures as of December 31, 2022.

As of December 31, 2022, the Company had gross state NOL carryforwards of $ 227.8 million and gross foreign NOL carryforwards of approximately $ 23.8 million, which are available to offset future taxable income.

If not used, these carryforwards will expire between 2023 and 2034.

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

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

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

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

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

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

In 2022, the valuation allowance on these carryforwards increased by $ 6.0 million, of which $ 5.5 million relates to a valuation allowance on the deferred tax assets of the Company's Brazilian subsidiary as the NOLs are not expected to be fully utilized.

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

Table of Conten t s

The following table represents a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2022, 2021 and 2020:

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federal jurisdiction, and in various state and foreign jurisdictions.

The Company is currently under examination for 2018 with taxing authorities in the United States.

The Company is no longer subject to U.S.

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

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

The Company did not recognize any tax benefits for interest and penalties related to amounts that were settled for less than previously accrued in 2022 or 2021.

The net total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $ 13.7 million and $ 11.9 million at December 31, 2022 and 2021, respectively.

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

These arrangements expire at various dates through July 2025.

These arrangements expire at various dates through September 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.

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

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 December 31, 2021.

As of December 31, 2021, the Company's foreign subsidiaries are contingently liable for a total of $ 1.6 million in performance letters of credit, advance payments and retention guarantees.

Prior history is considered with respect to the Company having to perform on any off-balance sheet guarantees, as well as future projections of individual customer credit worthiness with respect to assessing credit losses related to off-balance sheet guarantees.

In addition, the Company is contingently liable under letters of credit issued under its Credit Facilities totaling $ 2.8 million as of December 31, 2022.

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

The maximum potential

Table of Conten t s

amount of future payments under letters of credit issued under the Credit Facilities for which the Company could be liable is $ 30.0 million as of December 31, 2022.

As of December 31, 2022, the Company's foreign subsidiaries are contingently liable for a total of $ 3.2 million in performance letters of credit, advance payments and retention guarantees, of which $ 0.7 million is secured by separate credit facilities with local financial institutions.

The maximum potential amount of future payments under these letters of credit and guarantees for which the Company could be liable is $ 9.5 million as of December 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.

The action was styled City of Taylor General Employees Retirement System v.

The action is styled City of Taylor General Employees Retirement System v.

Astec Industries, Inc., et al., Case No.

1:19-cv-24-CEA-CHS.

The complaint generally alleged that the defendants violated the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and that the individual defendants were control persons under Section 20(a) of the Exchange Act.

The complaint was filed on behalf of shareholders who purchased stock of the Company between July 26, 2016 and October 22, 2018 and sought monetary damages on behalf of the purported class.

The Company disputed these allegations and filed a motion to dismiss the lawsuit on October 25, 2019.

The complaint generally alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and that the individual defendants were control persons under Section 20(a) of the Exchange Act.

The complaint is filed on behalf of shareholders who purchased stock of the Company between July 26, 2016 and October 22, 2018 and seeks monetary damages on behalf of the purported class.

On October 25, 2019, the defendants filed a Motion to Dismiss.

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

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

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

Plaintiff appealed the Motion to Dismiss and denial of its Motion to Alter or Amend the Judgment and For Leave to File the Proposed Amended Complaint 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 an 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.

On July 11, 2022 Defendants filed an answer to the complaint, and the action is now in discovery.

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

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

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

Astec Industries, Inc.

is vigorously defending this suit as well.

that generally mirrored the allegations in the GEFCO suit.

In January 2023, the court allowed Astec Industries, Inc.

to be added as a defendant to the GEFCO suit and, as a result, the separate suit against Astec Industries, Inc.

was dismissed.

The Company disputes the plaintiffs' allegations and is vigorously defending the GEFCO suit.

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.

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.

In addition to the two matters noted above, the Company is currently a party to various other claims and legal proceedings that have arisen in the ordinary course of business.

If management believes that a loss arising from any 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.

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

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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.

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 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.

On April 27, 2021 ("Plan Effective Date"), the Company's shareholders approved the 2021 Equity Incentive Plan ("2021 Plan"), which is administered by the Company's Compensation Committee of the Board of Directors (the "Compensation Committee").

The 2021 Plan 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.

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 will be added back to the 2021 Plan share reserve and again be available for issuance pursuant to awards granted under the 2021

Table of Conten t s

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, 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.

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

Share-based compensation expense of $ 6.8 million, $ 6.0 million and $ 5.1 million was recorded in the years ended December 31, 2022, 2021 and 2020, respectively, and recognized in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

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

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

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

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

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

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

Restricted stock unit awards generally vest ratably, at the end of each 12-month period, over a three-year service period.

A participant generally must be employed by the Company on the vesting date of each award, however, awards will vest if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65 .

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

Changes in restricted stock units during the year ended December 31, 2022 are as follows:

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Weighted average grant date fair value per award $ 47.11 $ 77.38 $ 34.99

Fair value of awards vested $ 9.3 $ 3.8 $ 1.6

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

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

Fair value of awards vested and issued $ 4.7 $ 9.3 $ 3.8

Tax (expense) benefit for restricted stock compensation expense $ ( 0.1 ) $ 3.8 $ ( 0.4 )

As of December 31, 2022, the Company had $ 6.3 million of unrecognized compensation expense before tax related to restricted stock units, which is expected to be recognized over a weighted average period of 1.8 years.

Performance Stock Units ("PSUs")

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

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

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

A participant generally must be employed by the Company on the vesting date of each award, however, a portion of a participant's awards will vest if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65 .

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

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

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

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

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The PSUs are settled in common stock of the Company, with holders receiving one common share for each PSU that vests.

Table of Conten t s

Changes in PSUs during the year ended December 31, 2022 are as follows:

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Unvested as of December 31, 2022 151 $ 61.24

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

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

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

In accordance with the terms of the underlying award agreements, the actual shares earned and distributed for the two-year performance period ended during 2022 was 121 % of the target shares granted, rounded up the nearest whole share.

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

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Weighted average grant date fair value per award $ 51.56 $ 92.98 $ 34.66

Fair value of awards vested $ 4.5 $ —

Fair value of awards vested and issued $ 1.7 $ 4.5 $ —

Tax benefit for performance stock compensation expense $ 0.2 $ 2.3 $ —

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Deferred Stock Units ("DSUs")

The 2011 Plan and the Non-Employee Directors Compensation Plan each allow for deferred delivery of shares as received including at vesting.

The Non-Employee Directors Compensation Plan allows for deferred delivery of shares granted as payment of directors' annual retainer.

As of December 31, 2022, there were 28,427 fully vested deferred stock units, which were excluded from the tables above.

The aggregate fair value of these units at December 31, 2022 was $ 1.2 million.

The 2021 Plan and the 2011 Equity Incentive Plan allow for certain participants to elect to receive vested units on a deferred basis.

As of December 31, 2022, there were 10,383 fully vested deferred stock units, which are excluded from the unvested balances as of December 31, 2022 in the tables above.

The aggregate fair value of these units at December 31, 2022 was $ 0.4 million.

Table of Conten t s

Revenue Recognition

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For the Year Ended December 31, 2022

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Net Sales-Domestic:

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For the Year Ended December 31, 2021

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Net Sales-Domestic:

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Total net sales $ 743.4 $ 352.1 $ — $ 1,095.5

Table of Conten t s

For the Year Ended December 31, 2020

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Net Sales-Domestic:

Equipment sales $ 354.1 $ 152.0 $ — $ 506.1

Pellet plant sales 20.0 — — 20.0

Parts and component sales 172.8 69.2 — 242.0

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

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

Total extended warranty sales were $ 1.1 million, $ 1.5 million and $ 1.7 million in 2022, 2021 and 2020, respectively.

Operations by Industry Segment and Geographic Area

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.

The Company has two reportable segments, each of which comprise sites based upon the nature of the products produced or services provided, 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 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 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.

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 and Other category and the reportable segments primarily related to the Company's annual incentive compensation.

Prior periods have not been revised for this change.

Table of Conten t s

A brief description of each segment is as follows:

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

Infrastructure Solutions – Sites within the Infrastructure Solutions segment design, engineer, manufacture and market a complete line of asphalt plants, concrete plants and their related components and ancillary equipment as well as supplying asphalt road construction equipment, industrial thermal systems and other heavy equipment.

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

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

The primary purchasers of the products produced by this segment are asphalt and concrete producers, highway and heavy equipment contractors, utility contractors, forestry and environmental recycling contractors and domestic and foreign governmental agencies.

Materials Solutions – Sites within the Materials Solutions segment design and manufacture 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 site 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.

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

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

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

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

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

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

The controls and automation business manufactures hardware and software products that are marketed independently as well as included in certain products of the Company's other segments.

The accounting policies of the reportable segments are the same as those described in Note 2, Basis of Presentation and Significant Accounting Policies.

Intersegment sales and transfers are valued at prices comparable to those for unrelated parties.

Intersegment sales and transfers between foreign subsidiaries are valued at prices comparable to those for unrelated parties.

Segment information for 2022:

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Revenues from external customers $ 847.4 $ 422.7 $ 4.4 $ 1,274.5

Intersegment revenues 8.9 47.2 — 56.1

Restructuring and asset impairment charges 1.9 0.6 — 2.5

Interest expense 0.1 0.5 0.5 1.1

Interest income — 0.2 0.3 0.5

Depreciation and amortization 20.8 8.0 1.4 30.2

Income taxes 1.4 ( 4.3 ) 1.5 ( 1.4 )

Profit (loss) 53.0 29.3 ( 64.8 ) 17.5

Segment Operating Adjusted EBITDA 73.0 44.5 ( 46.5 ) 71.0

Assets 1,016.3 719.5 676.8 2,412.6

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Segment information for 2021:

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Revenues from external customers $ 743.4 $ 352.1 $ — $ 1,095.5

Intersegment revenues 4.2 30.4 — 34.6

Restructuring and asset impairment charges 6.6 ( 1.3 ) 2.8 8.1

Interest expense — 0.2 0.5 0.7

Interest income 0.1 0.3 0.4 0.8

Depreciation and amortization 17.8 7.9 1.2 26.9

Income taxes 0.4 1.2 ( 2.8 ) ( 1.2 )

Profit (loss) 53.8 32.1 ( 40.1 ) 45.8

Segment Operating Adjusted EBITDA 73.9 39.1 ( 48.2 ) 64.8

Assets 989.6 668.8 649.7 2,308.1

Capital expenditures 12.2 5.6 2.3 20.1

Table of Conten t s

Segment information for 2020:

(in millions) Infrastructure Solutions Materials Solutions Corporate Total

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

Revenues from external customers $ 703.1 $ 321.3 $ — $ 1,024.4

Intersegment revenues 33.5 40.7 — 74.2

Restructuring and asset impairment charges 2.9 0.3 — 3.2

Interest expense — 0.3 1.1 1.4

Interest income — 0.6 0.6 1.2

Depreciation and amortization 16.9 8.2 1.1 26.2

Income taxes 0.8 0.6 1.6 3.0

Profit (loss) 33.8 22.8 ( 35.6 ) 21.0

Segment Operating Adjusted EBITDA 79.9 39.6 ( 38.9 ) 80.6

Assets 937.4 638.7 535.8 2,111.9

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(in millions) 2022 2021 2020

Net income (loss) attributable to controlling interest

Total profit for reportable segments $ 82.3 $ 85.9 $ 56.6

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

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

Recapture of intersegment profit 0.4 1.1 1.2

Total consolidated net income attributable to controlling interest

$ 17.8 $ 46.9 $ 22.3

Total assets for reportable segments $ 1,664.7 $ 1,578.1 $ 1,474.2

Corporate assets 648.9 535.3 420.9

Net (loss) income attributable to controlling interest

Segment Operating Adjusted EBITDA $ 71.0 $ 64.8 $ 80.6

Transformation program ( 25.5 ) ( 13.4 ) —

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

Restructuring and other related charges ( 6.2 ) ( 2.9 ) ( 14.3 )

Asset impairment ( 3.5 ) ( 0.2 ) ( 4.4 )

Gain on sale of property, equipment and business, net 0.7 0.6 7.8

Transaction costs ( 2.0 ) — —

Interest expense, net ( 1.5 ) ( 0.6 ) 0.1

Depreciation and amortization ( 27.9 ) ( 30.2 ) ( 26.9 )

Income tax provision (benefit) ( 5.0 ) 2.1 1.5

Net loss (income) attributable to noncontrolling interest 0.5 ( 0.1 ) —

(Elimination) recapture of intersegment profit ( 0.7 ) 0.4 1.1

Net (loss) income attributable to controlling interest $ ( 0.1 ) $ 15.8 $ 46.0

Total segment assets $ 2,412.6 $ 2,308.1 $ 2,111.9

Elimination of intercompany profit in inventory ( 3.0 ) ( 2.4 ) ( 2.8 )

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Total consolidated assets $ 1,014.4 $ 905.8 $ 846.7

Table of Conten t s

Sales into major geographic regions were as follows:

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Mexico 10.7 13.5 2.9

Other Asian Countries 5.0 2.7 6.5

Central America (excluding Mexico) 10.7 3.9 1.3

Post-Soviet States (excluding Russia) 3.6 3.1 7.3

Other Asian Countries 10.2 5.0 2.7

Middle East 3.1 2.9 3.2

Japan and Korea 2.7 8.1 3.6

India 2.9 2.7 0.5

Russia 2.6 4.0 5.1

Post-Soviet States (excluding Russia) 2.7 3.6 3.1

Japan and Korea 0.4 2.7 8.1

West Indies 0.4 1.3 6.1

Russia 0.3 2.6 4.0

China 0.1 0.4 1.2

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Total consolidated sales $ 1,274.5 $ 1,095.5 $ 1,024.4

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

"Property and equipment, net" by major geographic region is as follows:

(in millions) 2022 2021

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Total foreign 31.2 31.4

Total consolidated assets $ 171.7 $ 172.8

Accumulated Other Comprehensive Loss

The after-tax components comprising "Accumulated other comprehensive loss" are summarized below:

(in millions) 2021 2020

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

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

Total property and equipment, net $ 173.6 $ 171.7

Accumulated Other Comprehensive Loss

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

"Accumulated other comprehensive loss" is comprised of foreign currency translation adjustments of $ 40.1 million and $ 32.4 million as of December 31, 2022 and 2021, respectively.

Table of Conten t s

Other Expenses and Income

Other income consists of the following:

Other (expenses) income, net, consists of the following:

Years Ended December 31,

(in millions) 2022 2021 2020

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

Gain on disposal of subsidiary — 1.6 —

Foreign exchange (losses) gains, net $ ( 0.9 ) $ ( 0.5 ) $ 1.3

Investment loss, net ( 0.9 ) ( 0.3 ) —

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

Other — 0.5 0.1

Gain on disposal of subsidiary — — 1.6

Other, net 0.2 — 0.5

Total $ ( 1.6 ) $ ( 5.5 ) $ 3.9

Strategic Transformation and Restructuring, Impairment and Other Asset Charges

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

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

exit the oil, gas and water well product lines;

and sell certain assets.

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

The Company has incurred $ 13.4 million of incremental costs for the SFG initiative in 2021, which are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

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

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 the Company to better leverage automation and process efficiency.

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

In addition, 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 related to these strategic transformational initiatives were $ 25.5 million and $ 13.4 million in 2022 and 2021, respectively, and are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Deferred implementation costs associated with the ERP implementation total $ 17.8 million, of which $ 1.2 million and $ 16.6 million were included in "Prepaid expenses and other assets" and "Other long-term assets" in the Consolidated Balance Sheets as of December 31, 2022, respectively.

Deferred implementation costs totaled $ 1.3 million and were included in "Other long-term assets" in the Consolidated Balance Sheets as of December 31, 2021.

These deferred implementation costs will be amortized ratably over the remaining contract term once the ERP is ready for use.

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.

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

Table of Conten t s

The restructuring, asset impairment charges and net gain on sale of property and equipment incurred in 2022, 2021 and 2020 are as follows:

2 unchanged sentences

Restructuring related charges:

Costs associated with closing Tacoma $ 1.6 $ 0.9 $ —

Costs associated with leadership change $ 4.4 $ — $ —

Costs associated with closing Enid 1.0 0.7 2.5

Costs associated with closing Tacoma 0.8 1.6 0.9

Costs associated with closing Mequon — 0.6 3.3

1 unchanged sentence

Costs associated with closing AMM — — 0.3

Costs associated with exiting the wood pellet business — — 0.5

Workforce reductions at multiple sites — — 1.3

15 unchanged sentences

Materials Solutions — 0.5 3.6

Corporate — 0.1 —

Corporate and Other 4.4 — 0.1

Total restructuring related charges $ 6.2 $ 2.9 $ 9.9

4 unchanged sentences

Materials Solutions — 0.2 ( 0.2 )

Corporate — 2.7 —

Corporate and Other 1.0 — 2.7

Total impairment charges $ 3.5 $ 0.2 $ 4.4

6 unchanged sentences

Restructuring charges accrued, but not paid, were $ 4.7 million and $ 1.2 million as of December 31, 2022 and December 31, 2021, respectively.

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

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

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

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

The sale of AMM's land and building was completed in January 2020 and the resulting gain on sale of fixed assets of $ 0.7 million was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the first quarter of 2020.

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 facility 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.

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

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

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

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

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

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

Table of Conten t s

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

Additional restructuring costs of $ 1.0 million, $ 0.7 million and $ 2.5 million were incurred during 2022, 2021 and 2020, respectively.

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

An impairment charge of $ 0.4 million was incurred during 2022 to record these assets at fair value less costs to sell.

The property sold in the fourth quarter of 2022 for approximately $ 4.7 million.

In October 2020, the Company closed a transaction for the sale of Enid's water well assets, 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.

2 unchanged sentences

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

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

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

The Company recorded a $ 0.5 million gain on the sale of this business in the fourth quarter of 2020 in "Other (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 ceased manufacturing operations at the end of 2021.

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

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

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

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, $ 1.6 million and $ 0.9 million of restructuring related charges during 2022, 2021 and 2020, respectively, in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

The Tacoma facility's land, building and certain equipment assets of $ 15.4 million, which are currently being actively marketed for sale, are recorded as held for sale in its Consolidated Balance Sheets at December 31, 2022.

During the second quarter of 2022, the Company determined that certain manufacturing equipment contracted to be constructed by a third-party vendor, which had been prepaid, would not be recovered.

Impairment charges of $ 2.1 million were recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the three months ended June 30, 2022.

An additional $ 0.9 million of impairment charges were incurred related to abandoned in-process internally developed software that was determined to be impaired during the second quarter of 2022.

Effective as of January 6, 2023, Mr.

Ruffalo's employment as President and Chief Executive Officer was terminated.

In connection with his separation, the Company entered into an agreement with Mr.

Ruffalo (the "Separation Agreement") pursuant to which, Mr.

Ruffalo is entitled to certain severance payments and benefits.

For the year ended December 31, 2022, there were $ 4.4 million of restructuring costs incurred related to Mr.

Ruffalo's separation in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

The Separation Agreement also includes a release and waiver by Mr.

Ruffalo and other customary provisions.

Additional costs are anticipated to be incurred in the first quarter of 2023 for this separation related to the modification of Mr.

Ruffalo's equity awards as well as third-party transition support costs.

Management continually reviews the Company's organizational structure and operations to ensure they are optimized and aligned with achieving near-term and long-term operational and profitability targets.

In connection with this review, in February 2023, the Company implemented a limited restructuring plan to right-size and reduce the fixed cost structure of certain overhead departments.

Charges of $ 3.0 million to $ 4.0 million for employee termination costs, excluding equity award modifications, are anticipated to be incurred primarily in the first quarter of 2023.

Table of Conten t s

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data