What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-03 · 127 added, 93 removed, 524 unchanged (30% of the section changed)

3 unchanged sentences

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

June 30, 2023 December 31, 2022

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

issued and outstanding – 22,739,296 as of September 30, 2023 and 22,624,031 as of December 31, 2022

Additional paid-in capital 137.7 135.8

10 unchanged sentences

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

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

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

2023 2022 2023 2022

4 unchanged sentences

Restructuring, impairment and other asset charges, net 0.5 0.1 5.3 4.5

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

(Loss) income from operations ( 5.2 ) 1.9 29.7 4.2

Other expenses, net:

1 unchanged sentence

Interest income 0.5 0.3 1.5 0.7

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

Other (expenses) income, net — ( 0.4 ) 0.5 ( 1.8 )

(Loss) income before income taxes ( 7.1 ) 1.2 25.3 1.5

Income tax (benefit) provision ( 0.6 ) 0.7 6.5 0.8

Net (loss) income ( 6.5 ) 0.5 18.8 0.7

Net (income) loss attributable to noncontrolling interest ( 0.1 ) 0.2 ( 0.2 ) 0.2

Net (loss) income attributable to controlling interest $ ( 6.6 ) $ 0.7 $ 18.6 $ 0.9

Per share data:

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

(Loss) earnings per common share - Basic $ ( 0.29 ) $ 0.03 $ 0.82 $ 0.04

(Loss) earnings per common share - Diluted $ ( 0.29 ) $ 0.03 $ 0.82 $ 0.04

Weighted average shares outstanding - Basic 22,746,783 22,837,314 22,709,238 22,824,028

2 unchanged sentences

ASTEC INDUSTRIES, INC.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive (Loss) Income

(In millions, unaudited)

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

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

2023 2022 2023 2022

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

Other comprehensive income (loss):

Net (loss) income $ ( 6.5 ) $ 0.5 $ 18.8 $ 0.7

Other comprehensive loss:

Foreign currency translation adjustments ( 4.6 ) ( 9.2 ) ( 4.0 ) ( 13.5 )

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

Other comprehensive loss ( 4.6 ) ( 9.2 ) ( 4.0 ) ( 13.5 )

Comprehensive (loss) income ( 11.1 ) ( 8.7 ) 14.8 ( 12.8 )

Comprehensive (income) loss attributable to noncontrolling interest ( 0.1 ) 0.2 ( 0.3 ) 0.1

Comprehensive (loss) income attributable to controlling interest $ ( 11.2 ) $ ( 8.5 ) $ 14.5 $ ( 12.7 )

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

2 unchanged sentences

(In millions, unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

8 unchanged sentences

Gain on disposition of property and equipment, net ( 3.1 ) ( 0.4 )

Asset impairment charges, net 0.8 3.0

Asset impairment charges 0.8 3.4

Amortization of debt issuance costs 0.2 —

20 unchanged sentences

Sale of investments 1.7 0.5

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

Net cash used in investing activities ( 3.9 ) ( 45.0 )

ASTEC INDUSTRIES, INC.

1 unchanged sentence

(In millions, unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

4 unchanged sentences

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

Net cash used in financing activities ( 22.0 ) ( 3.7 )

Repurchase of Company stock — ( 6.1 )

Net cash provided by (used in) financing activities 30.8 ( 8.4 )

Effect of exchange rates on cash ( 0.3 ) ( 3.4 )

Decrease in cash, cash equivalents and restricted cash ( 21.5 ) ( 83.8 )

Increase (decrease) in cash, cash equivalents and restricted cash 7.8 ( 113.6 )

Cash, cash equivalents and restricted cash, beginning of period 66.0 134.4

31 unchanged sentences

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

Net (loss) income — — — — — ( 6.6 ) 0.1 ( 6.5 )

Other comprehensive loss — — — ( 4.6 ) — — — ( 4.6 )

Dividends ($ 0.13 per share)

— — — — — ( 3.0 ) — ( 3.0 )

Share-based compensation — — 1.3 — — — — 1.3

Issuance of common stock under incentive plan 2,726 — — — — — — —

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

Balance, September 30, 2023 22,739,296 $ 4.5 $ 137.7 $ ( 44.2 ) $ ( 1.0 ) $ 537.5 $ 0.3 $ 634.8

ASTEC INDUSTRIES, INC.

Consolidated Statements of Equity (Continued)

(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 DCP Retained Earnings Noncontrolling Interest Total Equity

17 unchanged sentences

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

Net income (loss) — — — — — 0.7 ( 0.2 ) 0.5

Other comprehensive loss — — — ( 9.2 ) — — — ( 9.2 )

Dividends ($ 0.12 per share)

— — — — — ( 2.8 ) — ( 2.8 )

Share-based compensation — — 2.0 — — — — 2.0

Issuance of common stock under incentive plan 6,343 — — — — — — —

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

Share repurchases ( 160,445 ) $ ( 0.1 ) $ — $ — $ — $ ( 6.0 ) $ — $ ( 6.1 )

Balance, September 30, 2022 22,710,427 $ 4.5 $ 134.4 $ ( 46.0 ) $ ( 1.1 ) $ 535.9 $ 0.4 $ 628.1

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

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

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 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.

In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive (loss) income for the three and nine months ended September 30, 2023 and 2022, the financial position as of September 30, 2023 and December 31, 2022 and the cash flows for the nine months ended September 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 six months ended June 30, 2023.

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

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

3 unchanged sentences

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

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

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

During the first quarter of 2023, the Company identified immaterial errors associated with over-accruals of inventory-related expenses in its historical financial statements.

18 unchanged sentences

Proforma financial information is not included since not significant.

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.

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

Acquisition and integration costs incurred were $ 0.2 million and $ 1.1 million during the three and nine months ended September 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) June 30, 2023 December 31, 2022

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

Raw materials and parts $ 313.1 $ 302.9

21 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 June 30, 2023 and December 31, 2022 are Level 1 and Level 2 in the fair value hierarchy as defined above:

June 30, 2023

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

September 30, 2023

(in millions) Level 1 Level 2 Total

40 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 and six month periods ended June 30, 2023 and 2022 are as follows:

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

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

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

(in millions) 2023 2022 2023 2022

8 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 $ 6.4 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.

Total accrued loss reserves were $ 7.1 million and $ 5.8 million as of September 30, 2023 and December 31, 2022, respectively, of which $ 4.2 million and $ 3.9 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, respectively.

For the three months ended September 30, 2023, the Company recorded an income tax benefit of $ 0.6 million, reflecting an 8.5 % effective tax rate, compared to a $ 0.7 million income tax expense for the three months ended September 30, 2022, reflecting a 58.3 % effective tax rate.

The income tax benefit for the three months ended September 30, 2023 as compared to the expense for the same period in 2022 was primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

For the nine months ended September 30, 2023, the Company recorded an income tax provision of $ 6.5 million, reflecting a 25.7 % effective tax rate, compared to $ 0.8 million expense, reflecting a 53.3 % effective tax rate, for the nine months ended September 30, 2022.

The income tax expense for the nine months ended September 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 $ 12.7 million and $ 12.0 million as of September 30, 2023 and December 31, 2022, respectively.

The increase is the result of $ 0.7 million of incremental reserves associated with the 2023 research and development credit.

3 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 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.

As of September 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 and six months ended June 30, 2023.

The Company did not repurchase any shares during the three and nine months ended September 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 $ 1.0 million and $ 2.4 million at June 30, 2023 and December 31, 2022, respectively.

Under these arrangements, the Company is contingently liable for customer debt of $ 0.9 million and $ 2.4 million as of September 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 $ 0.6 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 has recorded a liability of $ 0.5 million and $ 1.0 million related to these guarantees, which were included in "Other current liabilities" in the Consolidated Balance Sheets as of September 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 June 30, 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.

As of September 30, 2023, the Company's foreign subsidiaries are contingently liable for a total of $ 6.1 million in performance letters of credit, advance payments and retention guarantees, of which $ 4.5 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.

26 unchanged sentences

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

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

On October 5, 2023, a jury, in the 355 th Judicial District Court, Hood County, State of Texas, rendered a verdict against the Company's Telsmith, Inc.

subsidiary in the matter styled 37 Building Products, Ltd.

Telsmith, Inc.

("Telsmith"), et al.

originally filed on January 28, 2019, with additional defendants later added.

All other defendants settled prior to trial except Telsmith.

Telsmith will receive credit for the settlement amounts of all other defendants against any judgment entered in this case against Telsmith.

37 BP alleged breaches of warranty and negligent misrepresentation regarding equipment manufactured by Telsmith and purchased by 37 BP in 2017 through one of the Company's dealers.

Based on the jury verdict, management has determined that a loss for this matter is probable in a range between $ 6.4 million and $ 18.1 million, inclusive of attorneys' fees and prejudgment interest.

A loss contingency of $ 6.4 million was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations and "Other current liabilities" in the Consolidated Balance Sheets during the third quarter of 2023 representing management's best estimate of the loss.

A judgment has not been entered by the trial court, however, a judgment is anticipated to be entered by the end of 2023 or during the first quarter of 2024.

The judgment, once entered, may result in a change to the estimate of loss recorded and will incur post-judgment interest charges.

The Company will evaluate the judgment once entered, including whether to appeal any judgment entered by the court.

In addition to the matters noted above, the Company is currently a party, and may become a party, to various other claims and legal proceedings 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, when the loss is estimated using a range and no point within the range is more probable than another, the minimum estimated liability.

5 unchanged sentences

Revenue Recognition

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

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

Three Months Ended September 30, 2023 Three Months Ended September 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 $ 190.8 $ 110.5 $ 1.8 $ 303.1 $ 201.9 $ 111.8 $ 1.5 $ 315.2

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

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

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

17 unchanged sentences

Sales into major geographic regions were as follows:

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

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

(in millions) 2023 2022 2023 2022

7 unchanged sentences

Asia 2.8 1.5 6.5 8.6

Central America (Excluding Mexico) 1.0 1.0 3.1 3.6

Mexico 3.4 4.2 6.2 9.1

Central America (Excluding Mexico) 0.5 3.9 3.6 7.5

Other 0.8 0.3 4.7 2.7

1 unchanged sentence

Total net sales $ 303.1 $ 315.2 $ 1,001.0 $ 924.6

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.

As of September 30, 2023, the Company had contract assets of $ 3.6 million and contract liabilities, excluding customer deposits, of $ 6.2 million, including $ 2.6 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 June 30, 2023 Three Months Ended June 30, 2022

Three Months Ended September 30, 2023 Three Months Ended September 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 16.5 8.3 ( 14.4 ) 10.4 17.6 13.1 ( 14.2 ) 16.5

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

Nine Months Ended September 30, 2023 Nine Months Ended September 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 70.5 41.9 ( 33.5 ) 78.9 49.9 34.8 ( 36.3 ) 48.4

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,

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

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

(in millions) 2023 2022 2023 2022

Net income (loss) attributable to controlling interest

Net (loss) income attributable to controlling interest

Segment Operating Adjusted EBITDA $ 10.4 $ 16.5 $ 78.9 $ 48.4

2 unchanged sentences

Asset impairment — ( 0.4 ) ( 0.8 ) ( 3.4 )

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

(Loss) gain on sale of property and equipment, net ( 0.4 ) 0.4 3.1 0.4

Transaction costs — ( 0.5 ) — ( 1.9 )

1 unchanged sentence

Depreciation and amortization ( 7.1 ) ( 7.3 ) ( 19.6 ) ( 20.9 )

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

Income tax benefit (provision) 0.6 ( 0.7 ) ( 6.5 ) ( 0.8 )

Net (income) loss attributable to noncontrolling interest ( 0.1 ) 0.2 ( 0.2 ) 0.2

Elimination of intercompany profit ( 0.3 ) ( 0.1 ) ( 1.3 ) —

Net (loss) income attributable to controlling interest $ ( 6.6 ) $ 0.7 $ 18.6 $ 0.9

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

6 unchanged sentences

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

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.

Total costs of $ 7.8 million and $ 22.8 million were incurred related to these strategic transformation initiatives in the three and nine months ended September 30, 2023, respectively, of which $ 7.7 million and $ 22.6 million, respectively, are recorded in "Selling, general and administrative expenses" and $ 0.1 million and $ 0.2 million, respectively, are included in "Cost of sales" in the Consolidated Statements of Operations.

Costs totaling $ 7.0 million and $ 18.7 million were incurred in the three and nine months ended September 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.

1 unchanged sentence

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,

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

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

(in millions) 2023 2022 2023 2022

7 unchanged sentences

Total asset impairment charges — 0.4 0.8 3.4

Gain on sale of property and equipment, net:

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

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

Loss (gain) on sale of property and equipment, net

Loss (gain) on sale of property and equipment, net 0.4 ( 0.4 ) ( 3.1 ) ( 0.4 )

Total loss (gain) on sale of property and equipment, net 0.4 ( 0.4 ) ( 3.1 ) ( 0.4 )

Restructuring, impairment and other asset charges, net $ 0.5 $ 0.1 $ 5.3 $ 4.5

Restructuring charges by segment are as follows:

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

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

(in millions) 2023 2022 2023 2022

3 unchanged sentences

Impairment charges by segment are as follows:

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

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

(in millions) 2023 2022 2023 2022

2 unchanged sentences

Total impairment charges $ — $ 0.4 $ 0.8 $ 3.4

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

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

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

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Corporate and Other — — ( 0.1 ) —

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

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

Total loss (gain) on sale of property and equipment, net $ 0.4 $ ( 0.4 ) $ ( 3.1 ) $ ( 0.4 )

Restructuring charges accrued, but not paid, were $ 0.2 million and $ 4.7 million as of September 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.

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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 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 as of 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, 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.

Additional restructuring costs of $ 0.1 million and $ 0.3 million were incurred during the three and nine months ended September 30, 2023, respectively, for the Company's exited oil and gas drilling product lines produced at its former Enid, Oklahoma ("Enid") location.

Costs of $ 0.1 million and $ 0.7 million were incurred during the three and nine months ended September 30, 2022, respectively.

An impairment charge of $ 0.4 million was incurred during the third quarter of 2022 to record certain land and building assets held for sale at fair value less costs to sell.

Effective as of January 6, 2023, Mr.

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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 $ 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.

Total charges of $ 5.5 million for employee termination costs, including equity award modifications, were recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations, of which $ 5.2 million and $ 0.3 million were recorded in the first and second quarters of 2023, respectively.

The related recovery of $ 1.0 million of incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations, of which $ 0.8 million and $ 0.2 million were recorded during the first and second quarters of 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.

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

(Loss) Earnings Per Common Share

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

Diluted (loss) 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 deferred compensation programs, using the treasury stock method.

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

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

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

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

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

2023 2022 2023 2022

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

What changed 10-Q

Item 1. Financial Statements