What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 162 added, 99 removed, 455 unchanged (36% of the section changed)

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

34 unchanged sentences

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

issued and outstanding – 22,690,567 as of March 31, 2023 and 22,624,031 as of December 31, 2022

issued and outstanding – 22,736,570 as of June 30, 2023 and 22,624,031 as of December 31, 2022

Additional paid-in capital 136.4 135.8

10 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Net sales $ 350.0 $ 318.2 $ 697.9 $ 609.4

2 unchanged sentences

Selling, general and administrative expenses 64.5 61.2 132.4 120.9

Restructuring and other asset charges, net 3.7 1.0

Income from operations 17.6 4.0

Other (expenses) income, net:

Restructuring, impairment and other asset charges, net 1.1 3.4 4.8 4.4

Income (loss) from operations 17.3 ( 1.7 ) 34.9 2.3

Other expenses, net:

Interest expense ( 2.0 ) ( 0.6 ) ( 4.0 ) ( 1.0 )

Interest income 0.5 0.2 1.0 0.4

Other income, net 0.4 1.2

Income before income taxes 16.5 5.0

Income tax provision 4.4 0.9

Net income 12.1 4.1

Net loss attributable to noncontrolling interest — —

Net income attributable to controlling interest $ 12.1 $ 4.1

Other income (expenses), net 0.1 ( 2.6 ) 0.5 ( 1.4 )

Income (loss) before income taxes 15.9 ( 4.7 ) 32.4 0.3

Income tax provision (benefit) 2.7 ( 0.8 ) 7.1 0.1

Net income (loss) 13.2 ( 3.9 ) 25.3 0.2

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

Net income (loss) attributable to controlling interest $ 13.1 $ ( 3.9 ) $ 25.2 $ 0.2

Per share data:

Earnings per common share - Basic $ 0.53 $ 0.18

Earnings per common share - Diluted $ 0.53 $ 0.18

Earnings (loss) per common share - Basic $ 0.58 $ ( 0.17 ) $ 1.11 $ 0.01

Earnings (loss) per common share - Diluted $ 0.58 $ ( 0.17 ) $ 1.11 $ 0.01

Weighted average shares outstanding - Basic 22,723,748 22,850,515 22,689,990 22,816,684

2 unchanged sentences

ASTEC INDUSTRIES, INC.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(In millions, unaudited)

Three Months Ended March 31,

Net income $ 12.1 $ 4.1

Other comprehensive income:

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

2023 2022 2023 2022

Net income (loss) $ 13.2 $ ( 3.9 ) $ 25.3 $ 0.2

Other comprehensive income (loss):

Foreign currency translation adjustments 0.5 ( 8.5 ) 0.6 ( 4.3 )

Other comprehensive income 0.1 4.2

Comprehensive income 12.2 8.3

Other comprehensive income (loss) 0.5 ( 8.5 ) 0.6 ( 4.3 )

Comprehensive income (loss) 13.7 ( 12.4 ) 25.9 ( 4.1 )

Comprehensive income attributable to noncontrolling interest ( 0.1 ) — ( 0.2 ) ( 0.1 )

Comprehensive income attributable to controlling interest $ 12.1 $ 8.2

Comprehensive income (loss) attributable to controlling interest $ 13.6 $ ( 12.4 ) $ 25.7 $ ( 4.2 )

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

2 unchanged sentences

(In millions, unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Provision for warranties 10.6 6.4

Deferred compensation benefit — ( 0.8 )

Deferred compensation expense (benefit) 0.1 ( 0.9 )

Share-based compensation 2.2 3.4

Deferred tax benefit ( 4.7 ) ( 8.0 )

Gain on disposition of property and equipment ( 3.4 ) —

Gain on disposition of property and equipment, net ( 3.5 ) —

Asset impairment charges, net 0.8 3.0

Amortization of debt issuance costs 0.2 —

1 unchanged sentence

Change in operating assets and liabilities:

(Purchase) sale of trading securities, net ( 0.8 ) 0.6

Purchase of trading securities, net ( 1.1 ) ( 0.5 )

Receivables and other contract assets 9.7 ( 21.5 )

11 unchanged sentences

Cash flows from investing activities:

Acquisitions, net of cash acquired — ( 17.8 )

Expenditures for property and equipment ( 17.1 ) ( 18.8 )

1 unchanged sentence

Purchase of investments ( 0.5 ) ( 0.6 )

Sale of investments 0.1 0.1

Net cash provided by (used in) investing activities 2.6 ( 36.9 )

2 unchanged sentences

(In millions, unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

2 unchanged sentences

Repayments of borrowings on credit facilities and bank loans ( 128.1 ) ( 25.3 )

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

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

17 unchanged sentences

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

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

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

Balance, December 31, 2022 22,624,031 $ 4.5 $ 135.8 $ ( 40.1 ) $ ( 1.1 ) $ 527.8 $ — $ 626.9

7 unchanged sentences

Balance, March 31, 2023 22,690,567 $ 4.5 $ 135.2 $ ( 40.1 ) $ ( 1.1 ) $ 537.0 $ 0.1 $ 635.6

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

Net income — — — — — 13.1 0.1 13.2

Other comprehensive income — — — 0.5 — — — 0.5

Dividends ($ 0.13 per share)

— — — — — ( 3.0 ) — ( 3.0 )

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

Issuance of common stock under incentive plan 46,003 — — — — — — —

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

Balance, June 30, 2023 22,736,570 $ 4.5 $ 136.4 $ ( 39.6 ) $ ( 1.1 ) $ 547.1 $ 0.2 $ 647.5

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

Balance, December 31, 2021 22,767,052 $ 4.5 $ 130.6 $ ( 32.4 ) $ ( 1.2 ) $ 549.3 $ 0.5 $ 651.3

7 unchanged sentences

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

Net loss — — — — — ( 3.9 ) — ( 3.9 )

Other comprehensive loss — — — ( 8.5 ) — — — ( 8.5 )

Dividends ($ 0.12 per share)

— — 0.1 — — ( 2.7 ) — ( 2.6 )

Share-based compensation — — 1.6 — — — — 1.6

Issuance of common stock under incentive plan 27,482 — — — — — — —

Withholding tax paid upon equity award vesting — — ( 0.3 ) — — — — ( 0.3 )

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

Balance, June 30, 2022 22,864,529 $ 4.6 $ 132.6 $ ( 36.8 ) $ ( 1.1 ) $ 544.0 $ 0.6 $ 643.9

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

28 unchanged sentences

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 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 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).

6 unchanged sentences

Actual results could differ from those estimates.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income (loss) for the three months ended March 31, 2023 and 2022, the financial position as of March 31, 2023 and December 31, 2022 and the cash flows for the three months ended March 31, 2023 and 2022, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022, the financial position as of June 30, 2023 and December 31, 2022 and the cash flows for the six months ended June 30, 2023 and 2022, and except as otherwise discussed herein, such adjustments consist only of those of a normal recurring nature.

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

1 unchanged sentence

Reclassifications and Adjustments

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three months ended March 31, 2023.

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the six months ended June 30, 2023.

• The Company elected to present research and development expenses in "Selling, general and administrative expenses".

1 unchanged sentence

• 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 income (expenses), net".

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

4 unchanged sentences

Recently Adopted Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board 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).

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update ("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 ASU 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.

12 unchanged sentences

Proforma financial information is not included since not significant.

Acquisition and integration costs incurred were nominal during the three months ended March 31, 2023 for this acquisition.

Acquisition and integration costs incurred were $ 0.5 million during the three months ended March 31, 2022.

Acquisition and integration costs incurred were nominal during the three and six months ended June 30, 2023 for this acquisition.

Acquisition and integration costs incurred were $ 0.4 million and $ 0.9 million during the three and six months ended June 30, 2022, respectively.

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

17 unchanged sentences

Inventories consist of the following:

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Raw materials and parts $ 315.9 $ 302.9

5 unchanged sentences

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.

The Company's deferred compensation programs ("DCP") 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.

13 unchanged sentences

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

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of March 31, 2023 and December 31, 2022 are Level 1 and Level 2 in the fair value hierarchy as defined above:

March 31, 2023

As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of June 30, 2023 and December 31, 2022 are Level 1 and Level 2 in the fair value hierarchy as defined above:

June 30, 2023

(in millions) Level 1 Level 2 Total

15 unchanged sentences

Financial liabilities:

Derivative financial instruments $ — $ 0.1 $ 0.1

Deferred compensation programs' liabilities $ — $ 6.6 $ 6.6

23 unchanged sentences

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

Changes in the Company's product warranty liability for the three month periods ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31,

Changes in the Company's product warranty liability for the three and six month periods ended June 30, 2023 and 2022 are as follows:

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

(in millions) 2023 2022 2023 2022

2 unchanged sentences

Warranty liabilities settled ( 2.6 ) ( 2.8 ) ( 6.0 ) ( 5.2 )

Other — ( 0.1 ) — ( 0.1 )

Reserve balance, end of the period $ 16.5 $ 11.6 $ 16.5 $ 11.6

3 unchanged sentences

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

Total accrued loss reserves were $ 6.2 million and $ 5.8 million at March 31, 2023 and December 31, 2022, respectively, of which $ 3.9 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at both March 31, 2023 and December 31, 2022.

For the three months ended March 31, 2023, the Company recorded an income tax expense of $ 4.4 million, reflecting a 26.7 % effective tax rate, compared to a $ 0.9 million income tax expense for the three months ended March 31, 2022, reflecting an 18.0 % effective tax rate.

The income tax expense for the three months ended March 31, 2023 was higher compared to the same period in 2022, primarily due to higher pretax book income and valuation allowance increases related to a domestic subsidiary, partially offset by a net discrete tax benefit related to a research and development credit.

The Company's recorded liability for uncertain tax positions was $ 12.2 million and $ 12.0 million as of March 31, 2023 and December 31, 2022, respectively.

The increase is the result of $ 0.2 million of incremental reserves associated with the 2023

research and development credit.

Total accrued loss reserves were $ 6.4 million and $ 5.8 million at June 30, 2023 and December 31, 2022, respectively, of which $ 4.3 million and $ 3.9 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at June 30, 2023 and December 31, 2022, respectively.

For the three months ended June 30, 2023, the Company recorded an income tax expense of $ 2.7 million, reflecting a 17.0 % effective tax rate, compared to a $ 0.8 million income tax benefit for the three months ended June 30, 2022, reflecting a 17.0 % effective tax rate.

The income tax expense for the three months ended June 30, 2023 as compared to the benefit for the same period in 2022 was primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net discrete tax benefit related to a research and development credit.

For the six months ended June 30, 2023, the Company recorded an income tax provision of $ 7.1 million, reflecting a 21.9 % effective tax rate, compared to $ 0.1 million expense for the six months ended June 30, 2022.

The income tax expense for the six months ended June 30, 2023 was higher compared to the same period in 2022, primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net discrete tax benefit related to a research and development credit.

The Company's recorded liability for uncertain tax positions was $ 12.5 million and $ 12.0 million as of June 30, 2023 and December 31, 2022, respectively.

The increase is the result of $ 0.5 million of incremental reserves associated with the 2023 research and development credit.

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

2 unchanged sentences

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

As of March 31, 2023, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits, resulting in no material impact on its consolidated financial position, results of operations and cash flows.

As of June 30, 2023, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits, resulting in no material impact on its consolidated financial position, results of operations and cash flows.

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

2 unchanged sentences

The IRA levies a 1% excise tax on net stock repurchases after December 31, 2022 and imposes a 15% corporate alternative minimum tax ("CAMT") for tax years beginning after December 31, 2022.

The Company did not repurchase any shares during the three months ended March 31, 2023.

The Company did not repurchase any shares during the three and six months ended June 30, 2023.

CAMT does not impact the Company's results of operations or financial position.

1 unchanged sentence

Certain customers have financed purchases of Company products through arrangements with third-party financing institutions.

Under these arrangements, the Company is contingently liable for customer debt of $ 1.9 million and $ 2.4 million at March 31, 2023 and December 31, 2022, respectively.

Under these arrangements, the Company is contingently liable for customer debt of $ 1.0 million and $ 2.4 million at June 30, 2023 and December 31, 2022, respectively.

These arrangements expire at various dates running through September 2026.

1 unchanged sentence

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

The Company has recorded a liability of $ 0.8 million and $ 1.0 million related to these guarantees which were included in "Other current liabilities" in the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively.

The Company has recorded a liability of $ 0.6 million and $ 1.0 million related to these guarantees, which were included in "Other current liabilities" in the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively.

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

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 $ 250.0 million revolving credit facility (the "Credit Facilities"), which outstanding letters of credit totaled $ 2.6 million as of March 31, 2023.

The outstanding letters of credit expire at various dates through February 2024.

The maximum potential 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 March 31, 2023.

As of March 31, 2023, the Company's foreign subsidiaries are contingently liable for a total of $ 4.4 million in performance letters of credit, advance payments and retention guarantees, of which $ 2.9 million is secured by separate credit facilities with local financial institutions.

The maximum potential amount of future payments under these letters of credit and bank guarantees for which the Company could be liable is $ 9.7 million as of March 31, 2023.

The outstanding letters of credit expire at various dates through April 2024.

As of June 30, 2023, the Company's foreign subsidiaries are contingently liable for a total of $ 7.5 million in performance letters of credit, advance payments and retention guarantees, of which $ 5.6 million is secured by separate credit facilities with local financial institutions.

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.

18 unchanged sentences

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

The original purchase price of

the equipment was approximately $ 8.5 million.

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

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

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

3 unchanged sentences

was dismissed.

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

The Company and GEFCO each dispute the plaintiffs' allegations and are 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.

7 unchanged sentences

Revenue Recognition

The following tables disaggregate the Company's revenue by major source for the three month periods ended March 31, 2023 and 2022 (excluding intercompany sales):

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

The following tables disaggregate the Company's revenue by major source for the three and six month periods ended June 30, 2023 and 2022 (excluding intercompany sales):

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

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

16 unchanged sentences

Total net sales $ 218.1 $ 130.2 $ 1.7 $ 350.0 $ 209.6 $ 107.4 $ 1.2 $ 318.2

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

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

Net Sales-Domestic:

Equipment sales $ 220.2 $ 143.1 $ 1.7 $ 365.0 $ 209.3 $ 101.4 $ 0.1 $ 310.8

Parts and component sales 109.6 43.6 0.1 153.3 100.1 41.9 — 142.0

Service and equipment installation revenue 34.4 0.4 0.1 34.9 12.6 0.3 — 12.9

Used equipment sales 2.6 — — 2.6 2.0 — — 2.0

Freight revenue 12.2 4.5 — 16.7 12.8 3.8 — 16.6

Other 0.1 ( 5.1 ) 0.2 ( 4.8 ) 0.2 ( 1.6 ) — ( 1.4 )

Total domestic revenue 379.1 186.5 2.1 567.7 337.0 145.8 0.1 482.9

Net Sales-International:

Equipment sales 42.0 33.8 3.2 79.0 43.6 32.8 0.8 77.2

Parts and component sales 22.2 20.1 0.1 42.4 23.3 19.8 0.1 43.2

Service and equipment installation revenue 2.3 2.3 0.3 4.9 1.8 1.2 0.2 3.2

Used equipment sales 0.6 0.8 — 1.4 0.2 0.6 — 0.8

Freight revenue 1.8 0.6 — 2.4 1.2 0.7 — 1.9

Other — — 0.1 0.1 — 0.2 — 0.2

Total international revenue 68.9 57.6 3.7 130.2 70.1 55.3 1.1 126.5

Total net sales $ 448.0 $ 244.1 $ 5.8 $ 697.9 $ 407.1 $ 201.1 $ 1.2 $ 609.4

Sales into major geographic regions were as follows:

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Canada 13.5 22.1 35.3 36.3

Europe 11.0 5.4

Australia 14.1 10.3 23.8 20.5

Africa 9.9 5.9 18.0 15.0

South America (Excluding Brazil) 5.6 5.2

Europe 5.5 7.9 16.5 13.3

Brazil 9.3 7.0 13.8 10.8

South America (Excluding Brazil) 3.7 7.4 9.3 12.6

Asia 2.8 3.1 3.7 7.1

Central America (Excluding Mexico) 1.0 1.0 3.1 3.6

3 unchanged sentences

Total net sales $ 350.0 $ 318.2 $ 697.9 $ 609.4

As of March 31, 2023, the Company had contract assets of $ 5.6 million and contract liabilities, excluding customer deposits, of $ 5.7 million, including $ 2.5 million of deferred revenue related to extended warranties.

As of December 31, 2022, the Company had contract assets of $ 3.8 million and contract liabilities, excluding customer deposits, of $ 5.5 million, including $ 2.9 million of deferred revenue related to extended warranties.

As of June 30, 2023, the Company had contract assets of $ 3.0 million and contract liabilities, excluding customer deposits, of $ 5.3 million, including $ 2.3 million of deferred revenue related to extended warranties.

As of December 31, 2022, the Company

had contract assets of $ 3.8 million and contract liabilities, excluding customer deposits, of $ 5.5 million, including $ 2.9 million of deferred revenue related to extended warranties.

Segment Information

17 unchanged sentences

Segment Information:

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

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

2 unchanged sentences

Segment Operating Adjusted EBITDA 26.7 18.3 ( 12.3 ) 32.7 15.9 9.5 ( 12.3 ) 13.1

A reconciliation of total Segment Operating Adjusted EBITDA to the Company's "Net income attributable to controlling interest" is as follows:

Three Months Ended March 31,

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

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

Revenues from external customers $ 448.0 $ 244.1 $ 5.8 $ 697.9 $ 407.1 $ 201.1 $ 1.2 $ 609.4

Intersegment sales 3.9 26.9 0.6 31.4 5.1 21.7 — 26.8

Segment Operating Adjusted EBITDA 54.0 33.6 ( 19.1 ) 68.5 32.3 21.7 ( 22.1 ) 31.9

A reconciliation of total Segment Operating Adjusted EBITDA to the Company's "Net income (loss) attributable to controlling interest" is as follows:

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

(in millions) 2023 2022 2023 2022

Net income attributable to controlling interest

Net income (loss) attributable to controlling interest

Segment Operating Adjusted EBITDA $ 32.7 $ 13.1 $ 68.5 $ 31.9

1 unchanged sentence

Restructuring and other related charges ( 0.4 ) ( 0.4 ) ( 7.5 ) ( 1.4 )

Asset impairment ( 0.8 ) ( 3.0 ) ( 0.8 ) ( 3.0 )

Gain on sale of property and equipment, net 0.1 — 3.5 —

2 unchanged sentences

Depreciation and amortization ( 6.2 ) ( 6.9 ) ( 12.5 ) ( 13.6 )

Income tax provision ( 4.4 ) ( 0.9 )

Elimination of intercompany profit ( 0.6 ) —

Net income attributable to controlling interest $ 12.1 $ 4.1

Strategic Transformation and Restructuring and Other Asset Charges

Income tax (provision) benefit ( 2.7 ) 0.8 ( 7.1 ) ( 0.1 )

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

(Elimination) recapture of intercompany profit ( 0.4 ) 0.1 ( 1.0 ) 0.1

Net income (loss) attributable to controlling interest $ 13.1 $ ( 3.9 ) $ 25.2 $ 0.2

Strategic Transformation and Restructuring, Impairment and Other Asset Charges, net

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

5 unchanged sentences

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

Costs incurred of $ 7.2 million and $ 5.3 million related to these strategic transformational initiatives in the three months ended March 31, 2023 and 2022, respectively, are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Total costs of $ 7.8 million and $ 15.0 million were incurred related to these strategic transformation initiatives in the three and six months ended June 30, 2023, respectively, of which $ 7.7 million and $ 14.9 million, respectively, are recorded in "Selling, general and administrative expenses" and $ 0.1 million in each period is included in "Cost of sales" in the Consolidated Statements of Operations.

Costs totaling $ 6.4 million and $ 11.7 million were incurred in the three and six months ended June 30, 2022, respectively, and are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

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 the Company 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 and other asset charges, net" in the Consolidated Statements of Operations to the extent they are experienced.

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

Three Months Ended March 31,

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 to the extent they are experienced.

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

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

(in millions) 2023 2022 2023 2022

4 unchanged sentences

Total restructuring related charges 0.4 0.4 7.5 1.4

Asset impairment charges:

Other impairment charges 0.8 3.0 0.8 3.0

Total asset impairment charges 0.8 3.0 0.8 3.0

Gain on sale of property and equipment, net:

1 unchanged sentence

Total gain on sale of property and equipment, net ( 0.1 ) — ( 3.5 ) —

Restructuring and other asset charges, net $ 3.7 $ 1.0

Restructuring, impairment and other asset charges, net $ 1.1 $ 3.4 $ 4.8 $ 4.4

Restructuring charges by segment are as follows:

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

2 unchanged sentences

Total restructuring related charges $ 0.4 $ 0.4 $ 7.5 $ 1.4

Impairment charges by segment are as follows:

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

(in millions) 2023 2022 2023 2022

Infrastructure Solutions $ — $ 2.1 $ — $ 2.1

Corporate and Other 0.8 0.9 0.8 0.9

Total impairment charges $ 0.8 $ 3.0 $ 0.8 $ 3.0

Net gains on sale of property and equipment by segment are as follows:

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

Infrastructure Solutions $ — $ — $ ( 3.4 ) $ —

Corporate and Other ( 0.1 ) — ( 0.1 ) —

Total gain on sale of property and equipment, net $ ( 0.1 ) $ — $ ( 3.5 ) $ —

Restructuring charges accrued, but not paid, were $ 2.5 million and $ 4.7 million as of March 31, 2023 and December 31, 2022, respectively.

Restructuring charges accrued, but not paid, were $ 0.3 million and $ 4.7 million as of June 30, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

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 of restructuring related charges during the three months ended March 31, 2022 in "Restructuring and other asset charges, net" in the Consolidated Statements of Operations.

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

The Company recorded the Tacoma facility's land, building and certain equipment assets of $ 15.4 million as held for sale in its Consolidated Balance Sheets at December 31, 2022.

The sale of these assets was completed in the first quarter of 2023 for $ 19.9 million.

The Company recorded a gain on the sale of $ 3.4 million, which was recorded in "Restructuring and other asset charges, net" in the Consolidated Statements of Operations.

Additional restructuring costs of $ 0.1 million and $ 0.2 million were incurred during the three months ended March 31, 2023 and 2022, respectively, for the Company's exited oil and gas drilling product lines produced at its former Enid, Oklahoma ("Enid") location.

The Company recorded a gain on the sale of $ 3.4 million, which was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

Additional restructuring costs of $ 0.1 million and $ 0.2 million were incurred during the three and six months ended June 30, 2023, respectively, for the Company's exited oil and gas drilling product lines produced at its former Enid, Oklahoma ("Enid") location.

Costs of $ 0.4 million and $ 0.6 million were incurred during the three and six months ended June 30, 2022, respectively.

Effective as of January 6, 2023, Mr.

1 unchanged sentence

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

Ruffalo (the "Separation Agreement") pursuant

to which, Mr.

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

Ruffalo was entitled to certain severance payments and benefits.

During the first quarter of 2023, $ 1.8 million of restructuring costs, related to the modification of Mr.

Ruffalo's equity awards and other third-party transition support costs, were recorded in "Restructuring and other asset charges, net" in the Consolidated Statements of Operations.

The related recovery of $ 1.6 million of incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Ruffalo's equity awards and other third-party transition support costs, were recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

The related recovery of $ 1.6 million of incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the first quarter of 2023.

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

2 unchanged sentences

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 $ 5.3 million for employee termination costs, including equity award modifications, were incurred in the first quarter of 2023 and recorded in "Restructuring and other asset charges, net" in the Consolidated Statements of Operations.

The related recovery of $ 0.8 million of incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

Earnings Per Common Share

Basic earnings per common share is determined by dividing "Net income attributable to controlling interest" by the weighted average number of common shares outstanding during the reporting period.

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

Charges of $ 0.3 million and $ 5.5 million for employee termination costs, including equity award modifications, were incurred in the three and six months ended June 30, 2023, respectively, and recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.

The related recovery of $ 0.2 million and $ 1.0 million of incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the three and six months ended June 30, 2023, respectively.

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 $ 0.8 million and $ 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 quarters of 2023 and 2022, respectively.

Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is determined by dividing "Net income (loss) attributable to controlling interest" by the weighted average number of common shares outstanding during the reporting period.

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

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

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

Three Months Ended March 31,

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

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

2023 2022 2023 2022

Denominator for basic earnings per common share 22,723,748 22,850,515 22,689,990 22,816,684

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements