ASTEC INDUSTRIES INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to the Financial Statements and Supplementary Data: Reports of Independent Registered Public Accounting Firms 35 Consolidated Balance Sheets 38 Consolidated Statements of Operations 39 Consolidated Statements of Comprehensive (Loss) Income 40 Consolidated Statements of Cash Flows 41 Consolidated Statements of Equity 43 Notes to Consolidated Financial Statements 44 Note 1. Business and Organization 44 Note 2. Ba sis of Presentat i on and Significant Accounting Policies 44 Note 3. Acquisition 52 Note 4. Inventories 53 Note 5. Fair Value Measurements 53 Note 6. Investments 55 Note 7. Goodwill 55 Note 8. Intangible Assets 56 Note 9. Property and Equipment 57 Note 10. Leases 57 Note 11. Debt 58 Note 12. Product Warranty Reserves 59 Note 13. Accrued Loss Reserves 59 Note 14. Employee Benefit Plans 60 Note 15. Income Taxes 61 Note 16. Commitments and Contingencies 63 Note 17. Share-Based Compensation 64 Note 18. Revenue Recognition 66 Note 19. Operations by Industry Segment and Geographic Area 67 Note 20. Other Expenses and Income, net 73 Note 21. Strategic Transformation and Restructuring, Impairment and Other Asset Charges, net 73 All schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto. 34 Table of Content s Reports of Independent Registered Public Accounting Firms To the shareholders and the Board of Directors of Astec Industries, Inc. Opinions on the 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, 2024 and 2023, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the 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 audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the 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 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. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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 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 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 financial statements, taken as a whole, and 35 Table of Content s 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. Revenue Recognition – Certain Contracts with Customers – Refer to Note 2 to the financial statements Critical Audit Matter Description Certain contracts include terms and conditions pursuant to which the Company recognizes revenue upon the completion of production and, at the request of the customer, stores the equipment at the Company's facilities. Under the terms of such contracts, revenue is recorded upon the customer's assumption of title and risk of ownership and when the Company has a present right to payment. In addition, the equipment is segregated from the Company's inventory, specifically identified as belonging to the customer and is ready for physical transfer to the customer, and the equipment cannot be used or redirected to another customer. The Company has not retained any specific performance obligations such that the earnings process is not complete prior to revenue recognition. We identified the evaluation of terms and conditions in these contracts for the timing of revenue recognition to be a critical audit matter because of the judgment management makes in evaluating such contracts and the impact of such judgment on the amount of revenue recognized in a given period. This required a high degree of auditor judgment and an increased extent of audit effort in performing procedures and evaluating whether terms and conditions in certain contracts and timing of revenue recognition were appropriately identified and evaluated by the Company. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the timing of recording of revenue from contracts with customers where the equipment is stored at the Company’s facilities included the following, among others: • We tested the effectiveness of internal controls over management's review to determine whether revenue should be recognized. • We tested the accuracy and completeness of the completed orders recognized in revenue through physical observation of a selected sample of the equipment stored at the Company’s facilities. • We selected a sample of completed contracts with customers where the equipment was stored at the Company’s facilities and performed the following procedures for each selection: ◦ Sent confirmations to customers regarding key contractual terms, including that the customer has requested the arrangement. ◦ Obtained and read the customer contract and correspondence to determine whether the Company has a present right to payment. ◦ Tested management’s determination that the equipment is ready for physical transfer to the customer and management’s identification of the equipment as belonging to the customer. ◦ Evaluated management’s identification of significant contract terms and the associated timing of revenue recognized in the consolidated financial statements. /s/ Deloitte & Touche LLP Nashville, Tennessee February 26, 2025 We have served as the Company's auditor since 2023. 36 Table of Content s To the Stockholders and Board of Directors Astec Industries, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying statements of operations, comprehensive (loss) income, equity, and cash flows of Astec Industries, Inc. and subsidiaries (the Company) for the year ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit 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. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG LLP We served as the Company's auditor from 2015 to 2022. Atlanta, Georgia March 1, 2023, except for Note 19, as to which the date is February 26, 2025 37 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Balance Sheets (In millions, except share and per share data) December 31, 2024 2023 ASSETS Current assets: Cash, cash equivalents and restricted cash $ 90.8 $ 63.2 Investments 3.0 5.7 Trade receivables, contract assets and other receivables, net 167.2 152.7 Inventories 422.7 455.6 Prepaid and refundable income taxes 9.3 14.6 Prepaid expenses and other assets 29.8 27.7 Total current assets 722.8 719.5 Property and equipment, net 181.9 187.6 Investments 18.9 13.8 Goodwill 25.0 46.3 Intangible assets, net 11.2 16.4 Deferred income tax assets 45.8 37.5 Other long-term assets 38.0 38.2 Total assets $ 1,043.6 $ 1,059.3 LIABILITIES AND EQUITY Current liabilities: Current maturities of long-term debt $ — $ 0.1 Short-term debt 13.3 11.0 Accounts payable 79.2 116.9 Customer deposits 77.3 70.2 Accrued product warranty 16.1 16.5 Accrued employee related liabilities 38.2 44.1 Accrued loss reserves 1.7 2.7 Other current liabilities 45.9 37.5 Total current liabilities 271.7 299.0 Long-term debt 105.0 72.0 Deferred income tax liabilities 2.4 1.1 Other long-term liabilities 26.9 33.5 Total liabilities 406.0 405.6 Commitments and contingencies (Note 16) Shareholders' equity: Preferred stock – authorized 2,000,000 shares of $ 1.00 par value; none issued — — Common stock – authorized 40,000,000 shares of $ 0.20 par value; issued and outstanding – 22,803,976 in 2024 and 22,740,635 in 2023 4.6 4.5 Additional paid-in capital 142.9 138.4 Accumulated other comprehensive loss ( 51.1 ) ( 38.1 ) Company stock held by deferred compensation programs, at cost ( 0.3 ) ( 0.8 ) Retained earnings 541.7 549.4 Shareholders' equity 637.8 653.4 Noncontrolling interest ( 0.2 ) 0.3 Total equity 637.6 653.7 Total liabilities and equity $ 1,043.6 $ 1,059.3 The accompanying notes are an integral part of these consolidated financial statements. 38 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Statements of Operations (In millions, except share and per share data) Years Ended December 31, 2024 2023 2022 Net sales $ 1,305.1 $ 1,338.2 $ 1,274.5 Cost of sales 977.2 1,007.4 1,010.4 Gross profit 327.9 330.8 264.1 Selling, general and administrative expenses 276.1 276.4 247.6 Goodwill impairment 20.2 — — Restructuring, impairment and other asset charges, net 8.4 5.8 9.0 Income from operations 23.2 48.6 7.5 Other expenses, net: Interest expense ( 10.7 ) ( 8.9 ) ( 2.5 ) Interest income 2.0 2.1 1.0 Other (expenses) income, net ( 0.6 ) 1.0 ( 1.6 ) Income before income taxes 13.9 42.8 4.4 Income tax provision 9.8 9.1 5.0 Net income (loss) 4.1 33.7 ( 0.6 ) Net loss (income) attributable to noncontrolling interest 0.2 ( 0.2 ) 0.5 Net income (loss) attributable to controlling interest $ 4.3 $ 33.5 $ ( 0.1 ) Per share data: Earnings per common share - Basic $ 0.19 $ 1.47 $ — Earnings per common share - Diluted $ 0.19 $ 1.47 $ — Weighted average shares outstanding - Basic 22,799,071 22,719,900 22,790,717 Weighted average shares outstanding - Diluted 22,853,451 22,781,369 22,790,717 The accompanying notes are an integral part of these consolidated financial statements. 39 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Statements of Comprehensive (Loss) Income (In millions) Years Ended December 31, 2024 2023 2022 Net income (loss) $ 4.1 $ 33.7 $ ( 0.6 ) Other comprehensive (loss) income: Foreign currency translation adjustments ( 13.3 ) 2.1 ( 7.7 ) Other comprehensive (loss) income ( 13.3 ) 2.1 ( 7.7 ) Comprehensive loss (income) attributable to noncontrolling interest 0.5 ( 0.3 ) 0.5 Comprehensive (loss) income attributable to controlling interest $ ( 8.7 ) $ 35.5 $ ( 7.8 ) The accompanying notes are an integral part of these consolidated financial statements. 40 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Statements of Cash Flows (In millions) Years Ended December 31, 2024 2023 2022 Cash flows from operating activities Net income (loss) $ 4.1 $ 33.7 $ ( 0.6 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 26.8 25.6 27.9 Provision for credit losses 0.6 1.6 1.2 Provision for warranties 18.6 17.6 12.6 Deferred compensation benefit ( 0.1 ) ( 0.1 ) ( 0.9 ) Share-based compensation 5.0 4.1 6.8 Deferred tax benefit ( 6.8 ) ( 6.4 ) ( 17.1 ) Gain on disposition of property and equipment, net ( 1.1 ) ( 3.1 ) ( 0.7 ) Goodwill impairment 20.2 — — Other impairment charges — 1.2 3.5 Amortization of debt issuance costs 0.3 0.3 — Distributions to deferred compensation programs' participants ( 1.1 ) ( 1.8 ) ( 1.0 ) Change in operating assets and liabilities, excluding the effects of acquisitions: (Purchase) sale of trading securities, net ( 1.5 ) ( 0.3 ) 0.7 Receivables and other contract assets ( 20.6 ) 20.5 ( 28.0 ) Inventories 27.4 ( 63.0 ) ( 96.4 ) Prepaid expenses ( 3.5 ) 2.2 ( 2.8 ) Other assets ( 0.9 ) ( 12.8 ) ( 16.2 ) Accounts payable ( 35.9 ) 7.7 25.5 Accrued loss reserves ( 0.9 ) 1.4 ( 0.1 ) Accrued employee related liabilities ( 5.4 ) 8.7 4.3 Other accrued liabilities ( 2.0 ) ( 0.8 ) 2.6 Accrued product warranty ( 18.9 ) ( 13.1 ) ( 11.1 ) Customer deposits 7.6 1.0 9.9 Income taxes payable/prepaid 11.1 3.6 6.0 Net cash provided by (used in) operating activities 23.0 27.8 ( 73.9 ) Cash flows from investing activities: Acquisitions, net of cash acquired — — ( 17.8 ) Expenditures for property and equipment ( 20.5 ) ( 34.1 ) ( 40.7 ) Proceeds from sale of property and equipment 2.3 20.3 5.7 Proceeds from insurance 0.4 — — Purchase of investments ( 1.1 ) ( 1.0 ) ( 1.0 ) Sale of investments 0.9 1.9 0.6 Net cash used in investing activities ( 18.0 ) ( 12.9 ) ( 53.2 ) (Continued) 41 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Statements of Cash Flows (Continued) (In millions) Years Ended December 31, 2024 2023 2022 Cash flows from financing activities: Payment of dividends ( 11.9 ) ( 11.8 ) ( 11.2 ) Proceeds from borrowings on credit facilities and bank loans 215.6 240.6 223.0 Repayments of borrowings on credit facilities and bank loans ( 179.2 ) ( 245.8 ) ( 138.5 ) Payment of debt issuance costs — — ( 1.5 ) Sale of Company stock by deferred compensation programs, net 0.4 0.3 0.2 Withholding tax paid upon vesting of share-based compensation awards ( 0.5 ) ( 1.6 ) ( 1.8 ) Repurchase of Company stock — — ( 10.1 ) Net cash provided by (used in) financing activities 24.4 ( 18.3 ) 60.1 Effect of exchange rates on cash ( 1.8 ) 0.6 ( 1.4 ) Increase (decrease) in cash and cash equivalents and restricted cash 27.6 ( 2.8 ) ( 68.4 ) Cash, cash equivalents and restricted cash, beginning of period 63.2 66.0 134.4 Cash, cash equivalents and restricted cash, end of period $ 90.8 $ 63.2 $ 66.0 Supplemental Cash Flow Information Cash paid during the year for: Interest $ 8.5 $ 7.0 $ 1.1 Income taxes paid, net $ 8.2 $ 13.8 $ 17.7 Supplemental disclosures of non-cash items Non-cash investing activities: Capital expenditures in accounts payable $ 1.0 $ 1.5 $ 1.5 Non-cash financing activities: Additions to right-of-use assets and lease liabilities $ 2.4 $ 0.8 $ 7.3 The accompanying notes are an integral part of these consolidated financial statements. 42 Table of Content s ASTEC INDUSTRIES, INC. Consolidated Statements of Equity (In millions, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-in-Capital Accumulated Other Comprehensive Loss Company Shares Held by DCP, at Cost 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 Net loss — — — — — ( 0.1 ) ( 0.5 ) ( 0.6 ) Other comprehensive loss — — — ( 7.7 ) — — — ( 7.7 ) Dividends ($ 0.49 per share) — — 0.2 — — ( 11.4 ) — ( 11.2 ) Share-based compensation — — 6.8 — — — — 6.8 Issuance of common stock under incentive plan 108,066 0.1 ( 0.1 ) — — — — — Withholding tax paid upon equity award vesting — — ( 1.8 ) — — — — ( 1.8 ) 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 22,624,031 $ 4.5 $ 135.8 $ ( 40.1 ) $ ( 1.1 ) $ 527.8 $ — $ 626.9 Net income — — — — — 33.5 0.2 33.7 Other comprehensive income — — — 2.0 — — 0.1 2.1 Dividends ($ 0.52 per share) — — 0.1 — — ( 11.9 ) — ( 11.8 ) Share-based compensation — — 4.1 — — — — 4.1 Issuance of common stock under incentive plan 116,604 — — — — — — — Withholding tax paid upon equity award vesting — — ( 1.6 ) — — — — ( 1.6 ) Deferred compensation programs' transactions, net — — — — 0.3 — — 0.3 Balance, December 31, 2023 22,740,635 $ 4.5 $ 138.4 $ ( 38.1 ) $ ( 0.8 ) $ 549.4 $ 0.3 $ 653.7 Net income — — — — — 4.3 ( 0.2 ) 4.1 Other comprehensive loss — — — ( 13.0 ) — — ( 0.3 ) ( 13.3 ) Dividends ($ 0.52 per share) — — 0.1 — — ( 12.0 ) — ( 11.9 ) Share-based compensation — — 5.0 — — — — 5.0 Issuance of common stock under incentive plan 63,341 0.1 — — — — — 0.1 Withholding tax paid upon equity award vesting — — ( 0.5 ) — — — — ( 0.5 ) Deferred compensation programs' transactions, net — — ( 0.1 ) — 0.5 — — 0.4 Balance, December 31, 2024 22,803,976 $ 4.6 $ 142.9 $ ( 51.1 ) $ ( 0.3 ) $ 541.7 $ ( 0.2 ) $ 637.6 The accompanying notes are an integral part of these consolidated financial statements. 43 Table of Content s ASTEC INDUSTRIES, INC. Notes to Consolidated Financial Statements 1. Business and Organization Description of Business Astec Industries, Inc. ("Astec" or the "Company") is a Tennessee corporation which was incorporated in 1972. The Company designs, engineers, manufactures, markets and services equipment and components used primarily in asphalt and concrete 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's product portfolio includes both asphalt and concrete equipment. 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; commercial whole-tree pulpwood chippers; horizontal grinders; blower trucks; commercial and industrial burners; and combustion control systems. The Company's products are marketed both domestically and internationally primarily to asphalt and concrete producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycling and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations and domestic and foreign government agencies. In addition to equipment sales, the Company manufactures and sells replacement parts for equipment in each of its product lines and replacement parts for some competitors' equipment. The distribution and sale of replacement parts is an integral part of the Company's business. The Company operates in two reportable segments - 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 and Astec Insurance Company ("Astec Insurance" or the "captive"), a captive insurance company, which do not meet the requirements as an operating segment or inclusion in one of the other reporting segments. 2. Basis of Presentation and Significant Accounting Policies Basis of Presentation and Principles of Consolidation 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"). The Company prepares its consolidated financial statements in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All intercompany balances and transactions between the Company and its affiliates have been eliminated in consolidation. Noncontrolling interest in the Company's consolidated financial statements represents the 7 % interest in a consolidated subsidiary which is not owned by the Company. Since the Company controls this subsidiary, the subsidiary's financial statements are consolidated with those of the Company, and the noncontrolling owner's 7 % share of the subsidiary's net assets and results of operations is deducted and reported as "Noncontrolling interest" in the Consolidated Balance Sheets and as "Net 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 to acquire their outstanding interest in full for R$ 10.0 M (approximately $ 2.0 million, subject to the effect of exchange rates). Completion of the transaction is subject to resolution of certain disputes between the parties. Use of Estimates The preparation of financial statements in conformity with U.S. 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 excess and obsolete inventory, inventory net realizable value, product warranty obligations, capitalized implementation costs, goodwill and other intangible assets 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. On an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results could differ from those estimates. All dollar amounts, except per share amounts, are in millions of dollars unless otherwise indicated. 44 Table of Content s Significant Accounting Policies Cash, Cash Equivalents and Restricted Cash - All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents. The Company maintains cash balances with high credit quality institutions, the balances of which may exceed federally insured limits. The Company had cash of $ 2.5 million and $ 3.4 million as of December 31, 2024 and 2023, respectively, that is restricted as to withdrawal or use primarily related to retention guarantees mainly held by its foreign subsidiaries, which is included in "Cash, cash equivalents and restricted cash" in the Consolidated Balance Sheets. Investments - Investments consist primarily of investment-grade marketable securities. All investments held as of December 31, 2024 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. Purchases and sales are recorded on a trade-date basis. Management determines the appropriate classification of its investments at the time of acquisition and reevaluates such determination at each balance sheet date. Accounts Receivable - The Company sells products to a wide variety of customers. Accounts receivable are carried at their outstanding principal amounts, less an allowance for credit losses. 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. A portion of the Company's credit risk is limited through credit insurance in certain international jurisdictions. The Company held notes and other receivables, net totaling $ 3.3 million and $ 3.4 million as of December 31, 2024 and 2023, respectively in "Trade receivables, contract assets and other receivables, net" in the Consolidated Balance Sheets. 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, 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, contract assets and other receivables, 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. Past due amounts are charged off when reasonable collection efforts have been exhausted and the amounts are deemed uncollectible by management. The majority of the Company’s receivables are related to equipment that requires significant down payment with other terms allowing for payment shortly after shipment, typically 30 days, which the Company believes is short-term in nature. The following table represents a rollforward of the allowance for credit losses related to trade receivables for the years ended December 31, 2024, 2023 and 2022: Years Ended December 31, (in millions) 2024 2023 2022 Allowance balance, beginning of year $ 3.3 $ 2.3 $ 2.3 Provision 0.9 1.6 1.2 Write offs ( 1.8 ) ( 0.6 ) ( 1.2 ) Recoveries and other ( 0.1 ) — — Allowance balance, end of year $ 2.3 $ 3.3 $ 2.3 In addition, an allowance for credit losses related to outstanding notes receivables of $ 0.7 million is included in "Trade receivables, contract assets and other receivables, net" in the Consolidated Balance Sheets for the year ended December 31, 2023. Inventories - The Company's inventory is comprised of raw materials and parts, work-in-process, finished goods and used equipment. Raw material and parts inventory comprises purchased steel and other purchased items for use in the manufacturing process or held for sale for the after-market parts business. The category also includes the manufacturing cost of completed equipment sub-assemblies produced for either integration into equipment manufactured at a later date or for sale in the Company's after-market parts business. 45 Table of Content s 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. Finished goods inventory consists of completed equipment manufactured for sale to customers. Used equipment inventory consists of equipment accepted in trade or purchased on the open market. This category also includes equipment rented to prospective customers on a short-term or month-to-month basis. Used equipment is valued at the lower of acquired or trade-in cost or net realizable value determined on each separate unit. Each unit of rental equipment is valued at the lower of original manufacturing, acquired or trade-in cost or net realizable value. Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, which requires the Company to make specific estimates, assumptions and judgments in determining the amount, if any, of reductions in the valuation of inventories to their net realizable values. The net realizable values of the Company's products are impacted by a number of factors, including changes in the price of steel, competitive sales pricing, quantities of inventories on hand, the age of the individual inventory items, market acceptance of the Company's products, the Company's normal gross margins, actions by the Company or its competitors, the condition of its used and rental equipment inventory and general economic factors. Once an inventory item's value has been deemed to be less than cost, a net realizable value allowance is calculated and a new cost basis for that item is effectively established. This new cost is retained for that item until such time as the item is disposed of or the Company determines that an additional write-down is necessary. Additional write-downs may be required in the future based upon changes in assumptions due to general economic downturns in the markets in which the Company operates, changes in competitor pricing, new product design or other technological advances introduced by the Company or its competitors and other factors unique to individual inventory items. One of the most significant components of the Company's inventory is steel. A significant decline in the market price of steel could result in a decline in the market value of the Company's equipment or parts. During periods of significant declining steel prices, the Company reviews the valuation of its inventories to determine if reductions are needed in the recorded value of inventory on hand to its net realizable value. The Company reviews the individual items included in its finished goods, used equipment and rental equipment inventory on a model-by-model or unit-by-unit basis to determine if any item's net realizable value is below its carrying value. This analysis is expanded to include items in work-in-process and raw material inventory if factors indicate those items may also be impacted. In performing this review, judgments are made and, in addition to the factors discussed above, additional consideration is given to the age of the specific items of used or rental equipment inventory, prior sales offers or lack thereof, the physical condition of the specific items and general market conditions for the specific items. Additionally, an analysis of raw material inventory is performed to calculate reserves needed for slow-moving or obsolete inventory based upon quantities of items on hand, the age of those items and their recent and expected future usage or sale. When the Company determines that the value of inventory has become impaired through damage, deterioration, obsolescence, changes in price levels, excessive levels of inventory or other causes, the Company reduces the carrying value to the net realizable value based on estimates, assumptions and judgments made from the information available at that time. Abnormal amounts of idle facility expense, freight, handling cost and wasted materials are recognized as current period charges. 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 sell, 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. Property and Equipment - Property and equipment is stated at cost. Expenditures for maintenance, repairs and minor renewals are charged against earnings as incurred. Expenditures for major renewals and improvements that substantially extend the capacity or useful life of an asset are capitalized and are then depreciated. The cost and accumulated depreciation for property and equipment sold, retired or otherwise disposed of are relieved from the accounts and resulting gains or losses are reflected in earnings. Property and equipment are depreciated over the estimated useful lives of the assets using the straight-line depreciation method for financial reporting and on accelerated methods for income tax purposes. Land is recorded at historical cost and is not depreciated. The useful lives are estimated based on historical experience with similar assets, considering anticipated technological or other changes. The Company periodically reviews these lives relative to physical factors and industry trends. 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. 46 Table of Content s Property and equipment are primarily depreciated over the following useful lives: Years Buildings and improvements 5 - 40 Airplanes and aviation equipment 5 - 20 Machinery, equipment and tooling 3 - 10 Furniture and fixtures 5 - 10 Computer hardware and software 3 - 5 Impairment of Long-Lived Assets - In the event that facts and circumstances indicate the carrying amounts of long-lived assets may be impaired, an evaluation of recoverability is performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the carrying amount for each asset (or group of assets) to determine if a write-down is required. If this review indicates that the assets will not be recoverable, the carrying values of the impaired assets are reduced to their estimated fair value. 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, automobiles and other equipment. The Company determines if a contract is a lease (or contains an embedded lease) at the inception of the agreement. For a contract to be determined to be a lease or contain a lease, it must include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or finance. For operating leases, the Company recognizes a lease liability equal to the present value of the remaining lease payments and a right-of-use ("ROU") asset equal to the lease liability, subject to certain adjustments, such as prepaid rent. 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, 2024 and 2023, the Company did not have any finance leases. The Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company's incremental borrowing rate is the rate of interest that it would incur to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company determines the incremental borrowing rates based upon secured borrowing rates quoted by the Company's banks for loans of a corresponding length to the lease. The lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considers a number of factors when evaluating whether the options in its lease contracts are reasonably certain of exercise, such as length of time before an option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to the Company's operations, costs to negotiate a new lease and any contractual or economic penalties. The Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less. Capitalization of Implementation Costs and Internal Use Software - Software development activities generally consist of three stages: (i) the preliminary project stage, (ii) the application development stage and (iii) the post implementation and operation stage. The Company capitalizes certain software development costs during the application development stage. These costs may include vendor hosted software costs, personnel expenses for employees and costs for third-party consulting services which are directly associated with the software development. Capitalization ends once the implementation is substantially complete, at which point the capitalized costs are amortized ratably over the remaining contract term plus any reasonably certain renewal periods. Software development costs that do not meet the qualification for capitalization are expensed as incurred and recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. 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 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. The Company may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test. If a 47 Table of Content s qualitative assessment indicates that it is more likely than not that a reporting unit's fair value is less than its carrying amount, the Company will perform a quantitative test. The quantitative goodwill impairment test requires the comparison of 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. If a quantitative assessment indicates that it is more likely than not that a reporting unit's fair value is less than its carrying amount, a goodwill impairment charge would be recorded. The Company's intangible assets have definite lives and are subject to amortization. Intangible assets are tested for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors considered when determining useful lives include the contractual terms of agreements, the history of the asset, the Company's long-term strategy for the use of the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions. The Company tests intangible assets with definite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic market or a change in the assessment of future operations. An impairment charge is recorded when the carrying value of the definite lived intangible asset is not recoverable by the future undiscounted cash flows expected to be generated from the use of the asset, which are evaluated at the asset group level. Intangible assets with definite lives are amortized on a straight-line basis over the following estimated useful lives: Years Dealer network and customer relationships 8 - 18 Trade names 3 Other 3 - 12 Product Warranty Reserve - The Company accrues for the estimated cost of product warranties at the time revenue is recognized. Warranty obligations by product line or model are evaluated based on historical warranty claims experience. For equipment, the Company's standard product warranty terms generally include post-sales support and repairs of products at no additional charge for periods ranging from three months to two years or up to a specified number of hours of operation. For parts from component suppliers, the Company relies on the original manufacturer's warranty that accompanies those parts. Generally, Company fabricated parts are not covered by specific warranty terms. Although failure of fabricated parts due to material or workmanship is rare, if it occurs, the Company's policy is to replace fabricated parts at no additional charge. Estimated warranty obligations are based upon warranty terms, product failure rates, repair costs and current period machine shipments. If actual product failure rates, repair costs, service delivery costs or post-sales support costs differ from the Company's estimates, these estimates will be re-evaluated and adjustments to the estimated warranty liability will be made, if required. Income Taxes - Income taxes are based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. The Company periodically assesses the need to establish valuation allowances against its deferred tax assets to the extent the Company no longer believes it is more likely than not that the tax assets will be fully utilized. The Company evaluates a tax position to determine whether it is more likely than not that the tax position will be sustained upon examination, based upon the technical merits of the position. A tax position that meets the more likely than not recognition threshold is subject to a measurement assessment to determine the amount of benefit to recognize and the appropriate reserve to establish, if any. If a tax position does not meet the more likely than not recognition threshold, no benefit is recognized. The Company is periodically audited by U.S. federal and state as well as foreign tax authorities. While it is often difficult to predict a final outcome or timing of resolution of any particular tax matter, the Company believes its reserve for uncertain tax positions is adequate to reduce the uncertain positions to the greatest amount of benefit that is more likely than not realizable. Self-Insurance Reserves - The Company retains the risk for a portion of its workers' compensation claims and general liability claims by way of a captive insurance company, Astec Insurance. The objectives of Astec Insurance are to improve control over and reduce the cost of claims; to improve focus on risk reduction with the development of a program structure which rewards proactive loss control; and to ensure management participation in the defense and settlement process for claims. 48 Table of Content s For general liability claims, the captive is liable for the first $ 1.0 million per occurrence. The Company carries general liability, excess liability and umbrella policies for claims in excess of amounts covered by the captive. For workers' compensation claims, the captive is liable for the first $ 0.35 million per occurrence. 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 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. 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 for all of the Company's domestic employees. The Company carries reinsurance coverage to limit its exposure for individual health claims above certain limits. Third parties administer health claims and prescription medication claims. The Company maintains a reserve for the self-insured health plan which is included in "Accrued loss reserves" in the Company's Consolidated Balance Sheets. This reserve includes both unpaid claims and an estimate of claims incurred but not reported, based on historical claims and payment experience. Historically, the reserves have been sufficient to provide for claims payments. Changes in actual claims experience or payment patterns could cause the reserve to change, but the Company does not believe it is reasonably likely that the reserve level will materially change in the near future. Employees of the Company's foreign subsidiaries are insured under separate health plans. No reserves are necessary for these fully-insured health plans. Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss is comprised of foreign currency translation adjustments of $ 51.1 million and $ 38.1 million as of December 31, 2024 and 2023, respectively. Revenue Recognition - Revenue is generally recognized when the Company satisfies a performance obligation by transferring control of goods or providing services. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company generally obtains purchase authorizations from its customers for a specified amount of products at a specified price with specific delivery terms. A significant portion of the Company's equipment sales represents equipment produced in the Company's manufacturing facilities under short-term contracts for a customer's project or equipment designed to meet a customer’s requirements. Most of the equipment sold by the Company is based on standard configurations, some of which are modified to meet customer's needs or specifications. The Company provides customers with technical design and performance specifications and typically performs pre-shipment testing, when feasible, to ensure the equipment performs according to the customer's need, regardless of whether the Company provides installation services in addition to selling the equipment. Significant down payments are required on many equipment orders with other terms allowing for payment shortly after shipment, typically 30 days. Taxes assessed by a governmental authority that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use, value-added and some excise taxes, are excluded from revenue. The Company offers extended warranties for sale on certain equipment sold to its customers. Costs of obtaining sales contracts with an expected duration of one year or less are expensed as incurred. 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 or for obligations for future estimated returns to be allowed based upon historical trends. Other contract assets and liabilities are typically not material as a percentage of total assets or total liabilities, respectively. When sales contain multiple performance obligations, revenue attributable to the sale of a product is recognized when the product is shipped, and the revenue attributable to services provided with respect to the product (such as installation services) is recognized when the service is performed. Consideration is allocated to deliverables using observable market prices from stand-alone performance obligations or a cost plus margin approach when one is not available. Otherwise, the Company uses third-party evidence of selling price or an estimate of the selling price for the deliverables. Sales with multiple performance obligations are evaluated to determine whether revenue related to individual elements should be recognized separately or as a combined unit. 49 Table of Content s The Company had orders totaling approximately $ 24.5 million, $ 16.0 million and $ 20.7 million in 2024, 2023 and 2022, respectively, on which revenue was recorded over time based upon the ratio of costs incurred to estimated total costs. Certain contracts include terms and conditions pursuant to which the Company recognizes revenues upon the completion of production and, at the request of the customer, stores the equipment at the Company's facilities. Under the terms of such contracts, revenue is recorded upon the customer's assumption of title and risk of ownership and when the Company has a present right to payment. In addition, the equipment is segregated from the Company's inventory, specifically identified as belonging to the customer, ready for physical transfer to the customer and cannot be used by the Company or redirected to another customer. The Company has not retained any specific performance obligations such that the earnings process is not complete prior to revenue recognition. Service and Equipment Installation Revenue - Purchasers of certain of the Company's equipment often contract with the Company to provide installation services. Installation is typically separately priced in the contract based upon observable market prices for stand-alone performance obligations or a cost plus margin approach when one is not available. The Company may also provide future services on equipment sold at the customer's request, which may be for equipment repairs after the warranty period expires. Service is billed on a cost plus margin approach or at a standard rate per hour. Used Equipment Sales - Used equipment is typically obtained by trade-in on new equipment sales or as a separate purchase in the open market. Revenues from the sale of used equipment are recognized upon transfer of control to the customer at agreed upon pricing. Freight Revenue - The Company records revenues earned for shipping and handling as revenue at the time of shipment, regardless of whether or not it is identified as a separate performance obligation. The cost of shipping and handling is classified as cost of goods sold concurrently. Other Revenues - Miscellaneous revenues and offsets not associated with one of the above classifications primarily include floor plan interest reimbursements, extended warranty revenues and rental revenues. Advertising Expense - The cost of advertising is expensed as incurred. The Company incurred $ 2.1 million, $ 1.8 million and $ 2.1 million in advertising costs during 2024, 2023 and 2022, respectively, which are included in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. Research and Development - Research and development costs primarily include employee compensation and prototype materials costs related to the development of new products and significant improvements to existing product lines. These costs are expensed as incurred. The Company incurred $ 23.8 million, $ 22.0 million and $ 31.5 million in research and development costs during 2024, 2023 and 2022, respectively, which are included in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. Share-Based Compensation - The grant date fair value of share-based compensation awards is based upon the closing market price of the Company's common stock on the day prior to the grant date, except for performance stock awards with a total shareholder return ("TSR") market metric for which the Company estimates fair value using a Monte-Carlo simulation model. The Company recognizes compensation expense for all awards over the requisite service period. Forfeitures are recognized as they occur. Compensation expense is based on the grant date fair value as described above, except for performance stock awards with a return on invested capital ("ROIC") performance metric. For these awards, compensation expense is based on the probable outcome of achieving the specified performance conditions. The Company reassesses whether achievement of the ROIC performance metric is probable at each reporting date. The Company's equity awards are further described in Note 17, Share-Based Compensation. Restructuring - The Company continually reviews its 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, significant restructuring actions may be implemented. These actions can include personnel terminations, reorganization efforts to simplify and consolidate the Company's operations or the divestiture of underperforming manufacturing sites or product lines. Employee severance and related termination benefits are primarily based on the Company's employment policies and substantive severance plans. The Company records liabilities related to severance programs when the actions are probable and the amounts are reasonably estimable, which typically is when a restructuring plan has been approved. Additional liabilities may be recorded if a restructuring plan is extended or additional benefits are provided. In the event that affected employees are required to render additional service in order to receive severance benefits at their termination dates, severance costs are measured at the date that benefits are communicated to the applicable employees and recognized as expense over the employees’ remaining service periods. Any incremental or recovery of expense related to stock compensation programs are recognized at the end of the employees' service periods. Restructuring costs include any ongoing costs related to exited businesses as such costs are incurred. Contract termination costs, if applicable, are recorded when contracts are terminated. See Note 21, Strategic Transformation and Restructuring, Impairment and Other Asset Charges, net for additional discussion of the most recent restructuring actions taken. 50 Table of Content s Acquisitions - The Company accounts for business combinations using the acquisition method. 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, if applicable, is booked at its fair value as part of the purchase price. See Note 3, Acquisition for additional information on the Company's most recent acquisition. Derivatives and Hedging Activities - The Company recognizes all derivatives in the Consolidated Balance Sheets at their fair value. Derivatives that are not hedges are adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of assets, liabilities or firm commitments through income or recognized in other comprehensive (loss) income until the hedged item is recognized in income. The ineffective portion of a derivative's change in fair value is immediately recognized in income. From time to time, the Company's foreign subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuation in currency exchange rates. The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency risk. The fair value of the derivative financial instrument is recorded in the Consolidated Balance Sheets and is adjusted to fair value at each measurement date. The changes in fair value are recognized in the Consolidated Statements of Operations in the current period. The Company does not engage in speculative transactions, nor does it hold or issue derivative financial instruments for trading purposes. The weighted average U.S. dollar equivalent notional amount of outstanding foreign currency exchange contracts was $ 14.1 million during the year ended December 31, 2024. The Company reported no derivative assets as of December 31, 2024 or 2023. The Company held no derivative liabilities as of December 31, 2024 and $ 0.1 million derivative liabilities in "Other current liabilities" as of December 31, 2023. The Company recognized, as a component of "Other (expenses) income, net", net losses on the change in fair value of derivative instruments of $ 0.2 million, $ 0.4 million and $ 0.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. There were no derivatives that were designated as hedges as of December 31, 2024 or 2023. Foreign Currency - Subsidiaries located in Australia, Belgium, Brazil, Canada, France, India, South Africa and the United Kingdom 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 in effect during the period. The resulting adjustments are presented as a separate component of "Accumulated other comprehensive loss". Foreign currency transaction gains and losses, net are included in "Other (expenses) income, net" and amounted to a loss of $ 1.0 million, a gain of $ 1.1 million and a loss of $ 0.4 million in 2024, 2023 and 2022, respectively. Earnings Per Share - Basic earnings per share is computed by dividing "Net income (loss) 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, 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. The following table sets forth a reconciliation of the number of shares used in the computation of basic and diluted earnings per share: Years Ended December 31, 2024 2023 2022 Denominator: Denominator for basic earnings per share 22,799,071 22,719,900 22,790,717 Effect of dilutive securities: Restricted stock units 24,644 31,847 — Unvested performance share units 13,743 3,144 — Deferred compensation programs 15,993 26,478 — Denominator for diluted earnings per share 22,853,451 22,781,369 22,790,717 Antidilutive securities excluded from the calculation of diluted earnings per share 26,710 7,495 255,738 Related Party Transactions - The Company had no material related party transactions during the years ended December 31, 2024, 2023 and 2022. 51 Table of Content s Adjustments - During the first quarter of 2023, the Company identified immaterial errors associated with over-accruals of inventory-related expenses in its historical financial statements. The cumulative effect of the errors generated in 2021 and 2022 was corrected during the first quarter of 2023, resulting in a decrease in "Cost of sales" of $ 1.9 million. During the fourth quarter of 2024, the Company identified immaterial errors associated with the calculation of its income tax provisions in its historical financial statements. The cumulative effect of the errors generated in prior years was corrected during the fourth quarter of 2024, resulting in an increase in "Income tax provision" of $ 2.7 million. These adjustments were not considered material to the Company's consolidated financial statements for the previously filed annual periods. Recently Adopted Accounting Pronouncements In October 2021, the Financial Accounting Standards Board ("FASB") 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. 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 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvement to Reportable Segment Disclosures", which requires entities to disclose significant segment expenses, other segment items, the title and position of the chief operating decision maker ("CODM") and information related to how the CODM assesses segment performance and allocates resources, among certain other required disclosures. Additionally, current annual disclosures will be required in interim periods. The new standard is effective, on a retrospective basis, for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this guidance beginning with the form 10-K filing herein for the year ended December 31, 2024. See Note 19, Operations by Industry Segment and Geographic Area for additional information on the Company's reportable segments. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires entities to disclose specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a specified quantitative threshold. In addition, the new standard requires disclosure of the amount of income taxes paid disaggregated by federal, state and foreign taxes and by jurisdiction for exceeding a specified quantitative threshold. Additionally, income or loss from continuing operations before income tax will be required to be disaggregated between domestic and foreign classifications and income tax expense will be required to be disaggregated between federal, state and foreign classifications. The new standard is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact this ASU will have on its financial statement disclosures, but this standard will not impact the Company's results of operations, financial position or cash flows. In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires entities to disclose specific types of expenses included in the expense captions presented on the face of the income statement, among other disclosures. The new guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027 on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact this ASU will have on its financial statement disclosures, but this standard will not impact the Company's results of operations, financial position or cash flows. Recent accounting guidance not discussed above is not applicable, did not have or is not expected to have a material impact on the Company. 3. Acquisition The Company entered into a Share Purchase Agreement, dated as of March 22, 2022, by and between MINDS Automation Group, Inc. ("MINDS"), a leader in plant automation control systems and cloud-based data management in the asphalt industry in Canada. The purchase price was $ 19.3 million, which was paid in cash. 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. 52 Table of Content s 4. Inventories Inventories consist of the following: December 31, (in millions) 2024 2023 Raw materials and parts $ 275.4 $ 298.6 Work-in-process 60.9 87.1 Finished goods 83.5 68.3 Used equipment 2.9 1.6 Total $ 422.7 $ 455.6 5. 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 and marketable equity securities held in the Company's deferred compensation programs. 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 DCP 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 DCP assets and related offsetting liabilities are recorded in non-current "Investments" and "Other long-term liabilities", respectively, in the Consolidated Balance Sheets. The Company's subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates. The carrying amount of cash, cash equivalents and restricted cash, trade receivables and contract assets, other receivables, accounts payable, short-term debt and long-term debt approximates their fair value because of their short-term nature and/or interest rates associated with the instruments. Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted prices exist, other observable inputs for the asset. The fair values of foreign currency exchange contracts are based on quotations from various banks for similar instruments using models with market-based inputs. Financial assets and liabilities are categorized based on the level of judgment associated with the inputs used to measure their fair value. The inputs used to measure the fair value are identified in the following hierarchy: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability. Level 3 - Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. 53 Table of Content s As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of December 31, 2024 and 2023 are Level 1 and Level 2 in the fair value hierarchy as defined above: December 31, 2024 (in millions) Level 1 Level 2 Total Financial assets: Trading equity securities: Deferred compensation programs' mutual funds $ 5.1 $ — $ 5.1 Preferred stocks 0.3 — 0.3 Equity funds 0.6 — 0.6 Trading debt securities: Corporate bonds 3.2 — 3.2 Agency bonds — 1.5 1.5 U.S. government securities 2.4 — 2.4 Asset-backed securities — 7.1 7.1 Exchange traded funds 0.8 — 0.8 Mortgage backed securities — 0.4 0.4 Other 0.2 0.3 0.5 Total financial assets $ 12.6 $ 9.3 $ 21.9 Financial liabilities: Deferred compensation programs' liabilities $ — $ 6.1 $ 6.1 Total financial liabilities $ — $ 6.1 $ 6.1 December 31, 2023 (in millions) Level 1 Level 2 Total Financial assets: Trading equity securities: Deferred compensation programs' mutual funds $ 4.2 $ — $ 4.2 Preferred stocks 0.3 — 0.3 Equity funds 0.7 — 0.7 Trading debt securities: Corporate bonds 3.4 — 3.4 Agency bonds — 2.5 2.5 U.S. government securities 1.9 — 1.9 Asset-backed securities — 4.0 4.0 Exchange traded funds 1.3 — 1.3 Mortgage backed securities — 0.5 0.5 Other 0.2 0.5 0.7 Total financial assets $ 12.0 $ 7.5 $ 19.5 Financial liabilities: Derivative financial instruments $ — $ 0.1 $ 0.1 Deferred compensation programs' liabilities — 5.5 5.5 Total financial liabilities $ — $ 5.6 $ 5.6 54 Table of Content s 6. Investments The Company's trading securities consist of the following: December 31, 2024 (in millions) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) Trading equity securities $ 5.5 $ 0.5 $ — $ 6.0 Trading debt securities 16.3 — 0.4 15.9 Total $ 21.8 $ 0.5 $ 0.4 $ 21.9 December 31, 2023 (in millions) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) Trading equity securities $ 5.1 $ 0.2 $ 0.1 $ 5.2 Trading debt securities 14.6 — 0.3 14.3 Total $ 19.7 $ 0.2 $ 0.4 $ 19.5 Trading equity investments are valued at their estimated fair value based on their quoted market prices, and trading debt securities are valued based upon a mix of observable market prices and model driven prices derived from a matrix of observable market prices for assets with similar characteristics obtained from a nationally recognized third-party pricing service. Additionally, a significant portion of the trading equity securities are in mutual funds and also comprise a portion of the Company's liability under its DCP. See Note 14, Employee Benefit Plans, for additional information on these investments and the DCP. 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. 7. Goodwill The Company tests goodwill for impairment annually on October 1, 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. Beginning January 1, 2024, Astec Digital, which was previously included in the Corporate and Other category, has been moved to the Infrastructure Solutions segment. As a result of this change in segment composition, the goodwill related to Astec Digital was allocated to another reporting unit within the Infrastructure Solutions segment. During the second quarter of 2024, the Company identified that indicators of goodwill impairment were present due to current macroeconomic conditions, including declines in the Company's publicly quoted share price and increased interest rates, as well as lower than expected operating results. These factors indicated that one or more of the Company's reporting units may have fallen below their carrying amounts. Management elected to perform a qualitative assessment on all reporting units, and the Company concluded that a further quantitative analysis was required for the Materials Solutions reporting unit. The Company determined the fair value of the Materials Solutions 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. The Company calculates the discount rate based on a market-participant, risk-adjusted weighted average cost of capital, which considers industry specific rates of return on debt and equity capital for a target industry capital structure, adjusted for risks associated with business size, geography and other factors specific to the reporting unit. A change in the discount rate, as a result of a change in economic conditions or otherwise, could result in the carrying value of the reporting unit exceeding its fair value. 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. 55 Table of Content s Based on the quantitative impairment test, the Company determined that the carrying value of the Materials Solutions reporting unit exceeded its fair value as of June 30, 2024. As a result, the Company recognized a pretax non-cash goodwill impairment charge of $ 20.2 million in "Goodwill impairment" in the Consolidated Statements of Operations to fully impair the goodwill allocated to the Materials Solutions reporting unit. After the change to the segment composition and the impairment of the Materials Solutions reporting unit noted above, the Company's goodwill is allocated to two remaining reporting units. Management elected to perform a subsequent qualitative assessment for the October 1, 2024 annual impairment analysis, which indicated no additional impairment at its remaining reporting units. 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, industry and competitive environment conditions, overall financial performance, business specific events and market considerations. The majority of the Company's goodwill was generated on a legacy basis and as a result have fair values that sufficiently exceed their underlying carrying values. Management performed a qualitative and a quantitative assessment for the annual tests of goodwill impairment performed on October 1, 2023 and 2022, respectively, and concluded that there was no impairment of goodwill. Prior periods have been revised to reflect the segment composition change for comparability. The changes in the carrying amount of goodwill and accumulated impairment losses by reporting segment during the years ended December 31, 2024 and 2023 are as follows: (in millions) Infrastructure Solutions Materials Solutions Total Balance, December 31, 2022: Goodwill $ 47.6 $ 31.6 $ 79.2 Accumulated impairment losses ( 21.8 ) ( 12.2 ) ( 34.0 ) Net $ 25.8 $ 19.4 $ 45.2 2023 Activity: Foreign currency translation $ 0.4 $ 0.7 $ 1.1 Total 2023 activity $ 0.4 $ 0.7 $ 1.1 Balance, December 31, 2023: Goodwill $ 48.0 $ 32.3 $ 80.3 Accumulated impairment ( 21.8 ) ( 12.2 ) ( 34.0 ) Net $ 26.2 $ 20.1 $ 46.3 2024 Activity: Foreign currency translation $ ( 1.2 ) $ 0.1 $ ( 1.1 ) Impairment — ( 20.2 ) ( 20.2 ) Total 2024 activity $ ( 1.2 ) $ ( 20.1 ) $ ( 21.3 ) Balance, December 31, 2024: Goodwill $ 46.8 $ 32.2 $ 79.0 Accumulated impairment ( 21.8 ) ( 32.2 ) ( 54.0 ) Net $ 25.0 $ — $ 25.0 8. Intangible Assets Intangible assets consisted of the following as of December 31, 2024 and 2023: 2024 2023 (in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Dealer network and customer relationships $ 41.4 $ 32.0 $ 9.4 $ 42.3 $ 29.8 $ 12.5 Trade names 10.3 10.3 — 10.3 10.2 0.1 Other 14.8 13.0 1.8 15.1 11.3 3.8 Total $ 66.5 $ 55.3 $ 11.2 $ 67.7 $ 51.3 $ 16.4 Amortization expense on intangible assets was $ 4.8 million, $ 5.5 million and $ 8.5 million for 2024, 2023 and 2022, respectively. 56 Table of Content s Future annual expected amortization expense on intangible assets as of December 31, 2024 are as follows (in millions): 2025 $ 2.7 2026 2.2 2027 1.9 2028 1.7 2029 1.0 2030 and thereafter 1.7 9. Property and Equipment Property and equipment at cost, less accumulated depreciation, is as follows: December 31, (in millions) 2024 2023 Land $ 12.3 $ 12.7 Building and land improvements 158.8 149.1 Construction in progress 3.9 20.3 Manufacturing and office equipment 266.7 249.0 Aviation equipment 4.6 4.6 Less accumulated depreciation ( 264.4 ) ( 248.1 ) Total $ 181.9 $ 187.6 Depreciation expense was $ 22.0 million, $ 20.1 million and $ 19.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. 10. Leases 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, 2024 and 2023, the Company did not have any finance leases. Additional information related to the Company’s operating leases is reflected in the tables below: Years Ended December 31, (in millions) 2024 2023 2022 Operating lease expense $ 3.2 $ 3.6 $ 2.8 Short-term lease expense 3.1 2.5 2.9 Cash paid for operating leases included in operating cash flows 3.2 3.6 2.5 December 31, (in millions) 2024 2023 Operating lease right-of-use asset $ 7.8 $ 8.5 Operating lease short-term liability 2.6 2.3 Operating lease long-term liability 5.5 6.5 Weighted average remaining lease term (in years) 3.61 4.45 Weighted average discount rate used in calculating right-of-use asset 5.04 % 4.75 % 57 Table of Content s Future annual minimum lease payments as of December 31, 2024 are as follows (in millions): 2025 $ 2.9 2026 2.5 2027 2.0 2028 0.6 2029 0.4 2030 and thereafter 0.4 Total lease payments $ 8.8 Less: Interest ( 0.7 ) Operating lease liabilities $ 8.1 11. Debt 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 previously existing credit facility. Unamortized debt issuance costs for the Credit Facilities total $ 0.9 million as of December 31, 2024, of which $ 0.3 million are included in "Prepaid expenses and other assets" and $ 0.6 million are included in "Other long-term assets" in the Company's Consolidated Balance Sheets. 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 the financial covenants as of December 31, 2024. 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 maintained a separate term loan for working capital purposes with a bank in Brazil, which was secured by its manufacturing facility. This term loan was fully repaid at maturity on April 15, 2024 and bore interest at 10.37 %. The current maturities related to this term loan were $ 0.1 million as of December 31, 2023. 58 Table of Content s 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. Each of the credit facilities are generally guaranteed by Astec Industries, Inc. and/or secured with certain assets of the local subsidiary. Additional details for the Company's Credit Facilities and international credit facilities are summarized in total below: (in millions, except maturity dates and interest rates) December 31, 2024 December 31, 2023 Credit Facilities Line of credit - maximum $ 250.0 $ 250.0 Letters of credit - maximum 30.0 30.0 Borrowings outstanding 105.0 72.0 Amount of letters of credit outstanding 5.2 3.3 Line of credit, additional borrowing capacity 139.8 174.7 International credit facilities and short-term debt Total credit line $ 23.4 $ 21.7 Available credit line 9.5 9.9 Letters of credit - maximum 12.7 9.7 Amount of letters of credit outstanding 2.9 2.7 Short-term debt 13.3 11.0 Weighted average interest rate 9.02 % 11.35 % Debt maturities for the Company's long-term debt are expected to be as follows: (in millions) Maturity Amounts 2025 $ — 2026 — 2027 105.0 12. Product Warranty Reserves The Company warrants its products against manufacturing defects and performance to specified standards. The warranty period and performance standards vary by product but generally range from three months to two years or up to a specified number of hours of operation. The Company estimates the costs that may be incurred under its warranties and records a liability at the time product sales are recorded. The warranty liability is primarily based on historical claim rates, nature of claims and the associated costs. Changes in the Company's product warranty liability during 2024, 2023 and 2022 are as follows: (in millions) 2024 2023 2022 Reserve balance, January 1 $ 16.5 $ 11.9 $ 10.5 Warranty liabilities accrued 18.6 17.6 12.6 Warranty liabilities settled ( 18.9 ) ( 13.1 ) ( 11.1 ) Other ( 0.1 ) 0.1 ( 0.1 ) Reserve balance, December 31 $ 16.1 $ 16.5 $ 11.9 13. Accrued Loss Reserves 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. Changes in assumptions, as well as changes in actual experience, could cause these estimates to change in the future. Total accrued loss reserves were $ 6.3 million and $ 7.2 million as of December 31, 2024 and December 31, 2023, respectively, of which $ 4.6 million and $ 4.5 million 59 Table of Content s were included in "Other long-term liabilities" in the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively. 14. Employee Benefit Plans Deferred Compensation Programs The Company's DCP includes 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 management. 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 participants' 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 maintains a Deferred Compensation Plan for certain of its executive and senior management. 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, 2024 December 31, 2023 (in millions) Cost Market Cost Market Money market fund $ 0.7 $ 0.7 $ 0.5 $ 0.5 Company stock 0.3 0.3 0.8 0.8 Equity securities 4.6 5.1 4.1 4.2 Total $ 5.6 $ 6.1 $ 5.4 $ 5.5 The Company records an adjustment to the deferred compensation liability related to the DCP such that the balance of the liability equals the total fair market value of all assets held by the trusts established under the programs each period. 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 $ 0.1 million in both 2024 and 2023 and $ 0.9 million in 2022 in related to the change in the fair value of the Company stock held in the DCP. 401(k) 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 $ 10.1 million, $ 8.1 million and $ 7.7 million in 2024, 2023 and 2022, respectively. 60 Table of Content s 15. Income Taxes For financial reporting purposes, income before income taxes includes the following components: Years Ended December 31, (in millions) 2024 2023 2022 United States $ 25.9 $ 36.4 $ 8.5 Foreign ( 12.0 ) 6.4 ( 4.1 ) Income before income taxes $ 13.9 $ 42.8 $ 4.4 The provision for income taxes consists of the following: Years Ended December 31, (in millions) 2024 2023 2022 Current provision: Federal $ 13.3 $ 8.2 $ 17.4 State 0.9 4.5 2.4 Foreign 2.6 2.8 2.3 Total current provision 16.8 15.5 22.1 Deferred benefit: Federal ( 8.2 ) ( 3.6 ) ( 18.3 ) State 0.8 ( 2.8 ) ( 1.0 ) Foreign 0.4 — 2.2 Total deferred benefit ( 7.0 ) ( 6.4 ) ( 17.1 ) Total provision: Federal 5.1 4.6 ( 0.9 ) State 1.7 1.7 1.4 Foreign 3.0 2.8 4.5 Total income tax provision $ 9.8 $ 9.1 $ 5.0 The Company's "Income tax provision" is computed based on the domestic and foreign federal statutory rates and the average state statutory rates, net of related federal benefit. The 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 provision for income taxes at the statutory federal income tax rate to the amount provided is as follows: Years Ended December 31, (in millions) 2024 2023 2022 Tax expense at the statutory federal income tax rate $ 2.9 $ 8.9 $ 0.9 State income tax, net of federal income tax 3.9 0.4 0.6 Research and development tax credits ( 2.8 ) ( 2.8 ) ( 3.3 ) Impact of uncertain tax positions ( 0.5 ) 1.0 1.2 Valuation allowance impact 1.7 0.3 6.0 Changes in tax rates 0.7 0.8 0.2 Share-based compensation 0.1 0.6 0.4 Foreign-derived intangible income deduction ( 0.4 ) ( 0.7 ) ( 0.9 ) Foreign tax credit ( 0.4 ) ( 0.5 ) ( 0.2 ) Goodwill impairment 2.9 — — Other items 1.7 1.1 0.1 Total income tax provision $ 9.8 $ 9.1 $ 5.0 61 Table of Content s 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. Significant components of the Company's deferred tax assets and liabilities are as follows: December 31, (in millions) 2024 2023 Deferred tax assets: Amortization of research and experimental expenditures $ 30.7 $ 24.7 Inventory reserves 7.6 5.8 Warranty reserves 3.7 3.7 Credit loss reserves 0.5 0.8 State tax loss carryforwards 11.5 11.5 Accrued vacation 1.4 1.2 Deferred compensation 1.0 1.1 Share-based compensation 1.3 2.6 Goodwill 2.8 1.7 Foreign net operating loss 8.3 7.9 Lease obligation 1.6 1.3 Employee & insurance accruals 3.1 1.0 Domestic credit carryforwards 1.5 1.5 Uncertain tax provision reserve 1.1 0.2 Deferred revenue 0.9 2.2 Valuation allowances ( 12.4 ) ( 12.5 ) Total deferred tax assets 64.6 54.7 Deferred tax liabilities: Property and equipment 15.8 14.0 Intangibles 0.9 1.8 Right-of-use assets 1.5 1.3 Post-retirement benefits 0.8 0.5 Other 2.2 0.7 Total deferred tax liabilities 21.2 18.3 Total net deferred assets $ 43.4 $ 36.4 As of December 31, 2024, the Company had gross state net operating losses ("NOL") carryforwards of $ 235.9 million and gross foreign NOL carryforwards of approximately $ 28.3 million, which are available to offset future taxable income. If not used, these carryforwards will expire between 2025 and 2035. The Company does no t have a federal net operating loss carryforward. A significant portion of the valuation allowance for deferred tax assets relates to the future utilization of state and foreign NOL and state tax credit carryforwards. Future utilization of these NOL and state tax credit carryforwards is evaluated by the Company on a periodic basis, and the valuation allowance is adjusted accordingly. In 2024, the valuation allowance on these carryforwards decreased by $ 0.1 million, driven by the release of the valuation allowance on the deferred tax assets related to NOLs generated by the Company's Chilean ("LatAm") subsidiary of $ 1.5 million, partially offset by a $ 1.0 million increase related to the Company's Brazilian subsidiary. The following table represents a rollforward of the deferred tax asset valuation allowance for the years ended December 31, 2024, 2023 and 2022: Years Ended December 31, (in millions) 2024 2023 2022 Allowance balance, beginning of year $ 12.5 $ 11.9 $ 5.9 Provision 1.3 1.8 6.0 Reversals ( 1.5 ) ( 1.6 ) — Other 0.1 0.4 — Allowance balance, end of year $ 12.4 $ 12.5 $ 11.9 Undistributed foreign earnings are considered to be indefinitely reinvested outside the U.S. as of December 31, 2024. Because those earnings are considered to be indefinitely reinvested, no deferred income taxes have been provided thereon. If the Company were to make a distribution of any portion of those earnings in the form of dividends or otherwise, any such amounts 62 Table of Content s would be subject to withholding taxes payable to various foreign jurisdictions; however, the amounts would not be subject to any additional U.S. income tax. As of December 31, 2024, the cumulative amount of undistributed U.S. GAAP earnings for the Company's foreign subsidiaries was $ 68.5 million. The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. The Company is currently under examination for the years 2013, 2014, 2016, 2018 and 2019 with taxing authorities in the United States. The Company is no longer subject to U.S. federal income tax examinations by authorities for years prior to 2013. With few exceptions, the Company is no longer subject to state and local or non-U.S. income tax examinations by authorities for years prior to 2020. The Company has a liability for unrecognized tax benefits of $ 16.8 million and $ 13.0 million (excluding accrued interest and penalties) as of December 31, 2024 and 2023, respectively. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in "Interest expense" and "Selling, general and administrative expenses", respectively, in the Consolidated Statements of Operations. The Company did not recognize any tax benefits for interest and penalties related to amounts that were settled for less than previously accrued in 2024 or 2023. The net amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate was $ 15.1 million as of December 31, 2024, of which $ 10.7 million and $ 9.5 million were included in "Other current liabilities" and "Other long-term liabilities", respectively, partially offset by $ 5.1 million included in "Deferred income tax assets" in the Consolidated Balance Sheets. The net amount of these unrecognized tax benefits was $ 15.7 million as of December 31, 2023 included in "Other long-term liabilities" in the Consolidated Balance Sheets. A reconciliation of the beginning and ending unrecognized tax benefits excluding interest and penalties is as follows: Years Ended December 31, (in millions) 2024 2023 2022 Balance, beginning of year $ 13.0 $ 12.0 $ 10.8 Additions for tax positions taken in current year 5.2 0.9 1.2 Additions for tax positions taken in prior period — 0.1 — Reductions due to lapse of statutes of limitations ( 1.4 ) — — Balance, end of year $ 16.8 $ 13.0 $ 12.0 The tax positions in the December 31, 2024 balance of unrecognized tax benefits are expected to reverse through income in future years. In 2024, additional jurisdictions in which the Company operates enacted local legislation formally adopting the Global Anti-Base Erosion Model Rules ("Pillar Two"), which generally provides for a global minimum corporate tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The effective dates are generally January 1, 2024, and January 1, 2025, for different aspects of the rules and vary by jurisdiction. Pillar Two has not had a material impact on the Company's effective tax rate, consolidated results of operations, financial position or cash flows. Additional jurisdictions are expected to implement the model rules under local law in the future, with varying effective dates. The Company is continuing to evaluate the potential effect on future periods of the Pillar Two implementation, pending legislative adoption by additional individual countries and the ongoing issuance of additional administrative guidance by the OECD. 16. 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 $ 1.4 million and $ 1.1 million as of December 31, 2024 and 2023, respectively. These arrangements expire at various dates through November 2026. 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 $ 0.1 million for 2024), on certain past customer equipment purchases that were financed by an outside finance company. The agreements provide that the Company will receive the lender's full security interest in the equipment financed if the Company is required to fulfill its contingent liability under these arrangements. The Company has recorded a liability of $ 0.3 million and $ 0.6 million related to these guarantees, which were included in "Other current liabilities" in the Consolidated Balance Sheets as of December 31, 2024 and 2023, 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 Credit Facilities totaling $ 5.2 million as of December 31, 2024. The outstanding letters of credit expire at various dates through November 2025. Unused letters of credit under the Credit Facilities are $ 24.8 million as of December 31, 2024. The Company is additionally contingently liable for a total of $ 5.4 million in performance letters of credit and retention guarantees primarily held by its foreign subsidiaries, of which $ 3.7 63 Table of Content s million are secured by separate credit facilities with various financial institutions as of December 31, 2024. Unused letters of credit under these separate credit facilities are $ 12.4 million as of December 31, 2024. The Company and certain of its former executive officers were previously named as defendants in a putative shareholder class action lawsuit filed in 2019 alleging 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. On September 10, 2024, the court formally approved the parties' agreement to settle the action for $ 13.7 million, which was funded entirely by the Company's insurance carriers , and the settlement agreement was entered into between the parties. The court dismissed the case with prejudice the same day. The Company's GEFCO, Inc. ("GEFCO" or "Enid") subsidiary was named a defendant in a lawsuit filed in 2018 alleging breaches of warranty and other similar claims regarding equipment sold by GEFCO in 2013. On October 8, 2024, the parties reached an agreement to resolve this action for $ 8.4 million, which was paid in the fourth quarter of 2024. In connection with this settlement, management recorded a loss in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the third quarter of 2024. The Company's Telsmith, Inc. (“Telsmith”) subsidiary was named as a defendant in a lawsuit filed in 2019 alleging breaches of warranty and negligent misrepresentation regarding equipment manufactured by Telsmith and purchased by 37 Building Products, Ltd. in 2017 through one of the Company's dealers. In October 2023, a jury rendered a verdict against Telsmith, and a judgment was issued in the amount of $ 7.9 million (the "Judgment"). In March 2024, Telsmith filed a notice of appeal with the Texas Court of Appeals to appeal the Judgment by the district court. As of June 30, 2024, the total loss contingency recorded inclusive of post-judgment interest was $ 8.2 million. In September 2024, the parties reached an agreement to resolve this action for $ 6.3 million, which the Company paid in September 2024 whereby the full loss contingency was released. The $ 1.9 million net impact of the loss contingency release and the final settlement amount was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the third quarter of 2024. 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. 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. If management believes that a loss arising from such claims and legal proceedings is either (i) probable but cannot be reasonably estimated or (ii) reasonably estimable but not probable, the Company does not record the amount of the loss but does make specific disclosure of such matter. Based upon currently available information and with the advice of counsel, management believes that the ultimate outcome of its current claims and legal proceedings, individually and in the aggregate, will not have a material adverse effect on the Company's financial position, cash flows or results of operations. However, claims and legal proceedings are subject to inherent uncertainties and rulings unfavorable to the Company could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse effect on the Company's financial position, cash flows or results of operations. 17. Share-Based Compensation 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 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 Plan. The 2021 Plan authorizes the grant of options, share appreciation rights, restricted stock, restricted stock units, deferred stock units, performance awards, dividend equivalents and other share-based and cash awards. Awards granted under the 2021 Plan 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 $ 5.0 million, $ 4.1 million and $ 6.8 million was recorded in the years ended December 31, 2024, 2023 and 2022, respectively, and recognized in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. Restricted Stock Units ("RSUs") Key members of management are awarded with RSUs each year based on a predetermined award value of the base salary of eligible employees aligned to a total compensation program. RSUs 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 64 Table of Content s as death, disability or retirement at age 65 . Additional RSUs are granted on an annual basis to the Company's outside directors under the 2021 Plan generally with a one-year vesting period. Changes in restricted stock units during the year ended December 31, 2024 are as follows: (in thousands, except weighted average grant date fair value) Restricted Stock Units Weighted Average Grant Date Fair Value Unvested as of January 1, 2024 128 $ 47.34 Granted 142 $ 36.76 Vested ( 70 ) $ 47.99 Forfeited ( 30 ) $ 39.76 Unvested as of December 31, 2024 170 $ 39.58 The following additional activity occurred for the Company's restricted stock units: Years Ended December 31, (in millions, except weighted average grant date fair value per award granted) 2024 2023 2022 Weighted average grant date fair value per award $ 36.76 $ 43.50 $ 47.11 Fair value of awards vested and issued 2.9 4.8 4.7 Tax expense for restricted stock compensation expense ( 0.7 ) ( 0.4 ) ( 0.1 ) As of December 31, 2024, the Company had $ 3.7 million of unrecognized compensation expense before tax related to RSUs, which is expected to be recognized over a weighted average period of 1.7 years. Performance Stock Units ("PSUs") PSUs are granted to officers and other key employees. 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, 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 or retirement at age 65 . Awards granted 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 award based on the achievement of two equally weighted performance criteria: ROIC and TSR. The PSUs are settled in common stock of the Company, with holders receiving one common share for each PSU that vests. Changes in PSUs during the year ended December 31, 2024 are as follows: (in thousands, except weighted average grant date fair value) Performance Stock Units Weighted Average Grant Date Fair Value Unvested as of January 1, 2024 106 $ 56.72 Granted 104 $ 36.62 Vested (1) ( 20 ) $ 92.98 Forfeited ( 39 ) $ 42.94 Unvested as of December 31, 2024 151 $ 41.56 (1) The vested PSUs presented are based on the target amount of the award. In accordance with the terms of the underlying award agreements, no shares were earned and distributed for the performance period ended during 2024. 65 Table of Content s The following additional activity occurred for the Company's performance stock units: Years Ended December 31, (in millions, except weighted average grant date fair value per award granted) 2024 2023 2022 Weighted average grant date fair value per award $ 36.62 $ 43.19 $ 51.56 Fair value of awards vested and issued (2) — 1.6 1.7 Tax (expense) benefit for performance stock compensation expense — ( 1.0 ) 0.2 (2) As noted above, in accordance with the terms of the underlying PSU award agreements, no shares were earned and distributed for the performance period ended during 2024. As of December 31, 2024, the Company had $ 3.1 million of unrecognized compensation expense before tax related to PSUs, which is expected to be recognized over a weighted average period of 1.9 years. Deferred Stock Units ("DSUs") The Non-Employee Directors Compensation Plan allows for deferred delivery of shares granted as payment of directors' annual retainer. As of December 31, 2024, there were 22,693 fully vested deferred stock units, which were excluded from the tables above. The aggregate fair value of these units as of December 31, 2024 was $ 0.8 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, 2024, there were 3,851 fully vested deferred stock units, which are excluded from the unvested balances as of December 31, 2024 in the tables above. The aggregate fair value of these units as of December 31, 2024 was $ 0.1 million. 18. Revenue Recognition The following tables disaggregate the Company's revenue by major source for the periods ended December 31, 2024, 2023 and 2022 (excluding intercompany sales): For the Year Ended December 31, 2024 (in millions) Infrastructure Solutions Materials Solutions Total Net Sales-Domestic: Equipment sales $ 510.9 $ 150.3 $ 661.2 Parts and component sales 220.3 80.8 301.1 Service and equipment installation revenue 23.5 0.8 24.3 Used equipment sales 3.4 — 3.4 Freight revenue 22.7 6.6 29.3 Other 2.3 ( 6.2 ) ( 3.9 ) Total domestic revenue 783.1 232.3 1,015.4 Net Sales-International: Equipment sales 32.7 154.2 186.9 Parts and component sales 19.7 67.4 87.1 Service and equipment installation revenue 0.9 11.2 12.1 Used equipment sales — 0.4 0.4 Freight revenue 0.9 2.5 3.4 Other 0.1 ( 0.3 ) ( 0.2 ) Total international revenue 54.3 235.4 289.7 Total net sales $ 837.4 $ 467.7 $ 1,305.1 66 Table of Content s For the Year Ended December 31, 2023 (in millions) Infrastructure Solutions Materials Solutions Total Net Sales-Domestic: Equipment sales $ 461.2 $ 252.5 $ 713.7 Parts and component sales 215.9 83.7 299.6 Service and equipment installation revenue 43.5 0.8 44.3 Used equipment sales 3.6 — 3.6 Freight revenue 22.6 8.0 30.6 Other 1.9 ( 10.3 ) ( 8.4 ) Total domestic revenue 748.7 334.7 1,083.4 Net Sales-International: Equipment sales 30.5 125.7 156.2 Parts and component sales 18.7 62.4 81.1 Service and equipment installation revenue 1.3 11.9 13.2 Used equipment sales — 0.2 0.2 Freight revenue 1.0 2.8 3.8 Other 0.2 0.1 0.3 Total international revenue 51.7 203.1 254.8 Total net sales $ 800.4 $ 537.8 $ 1,338.2 For the Year Ended December 31, 2022 (in millions) Infrastructure Solutions Materials Solutions Total Net Sales-Domestic: Equipment sales $ 457.0 $ 219.7 $ 676.7 Parts and component sales 198.4 85.1 283.5 Service and equipment installation revenue 21.5 0.7 22.2 Used equipment sales 6.7 — 6.7 Freight revenue 23.5 8.0 31.5 Other 0.3 ( 6.6 ) ( 6.3 ) Total domestic revenue 707.4 306.9 1,014.3 Net Sales-International: Equipment sales 37.5 125.8 163.3 Parts and component sales 16.5 66.2 82.7 Service and equipment installation revenue 1.2 6.2 7.4 Used equipment sales 0.3 2.4 2.7 Freight revenue 1.2 2.5 3.7 Other 0.1 0.3 0.4 Total international revenue 56.8 203.4 260.2 Total net sales $ 764.2 $ 510.3 $ 1,274.5 As of December 31, 2024, the Company had contract assets of $ 6.6 million and contract liabilities, excluding customer deposits, of $ 5.8 million, of which $ 1.3 million was deferred revenue related to extended warranties. As of December 31, 2023, the Company had contract assets of $ 3.7 million and contract liabilities, excluding customer deposits, of $ 5.6 million, of which $ 0.8 million was deferred revenue related to extended warranties. Total extended warranty sales were $ 1.3 million, $ 1.1 million and $ 1.1 million in 2024, 2023 and 2022, respectively. 19. Operations by Industry Segment and Geographic Area The Company has two operating and 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 Australia and LatAm sites and Astec Digital have changed reportable segments beginning January 1, 2024. The Australia and LatAm sites were previously reported in the Infrastructure Solutions segment and have moved to the 67 Table of Content s Materials Solutions segment. Astec Digital was previously included in the Corporate and Other category and has moved to the Infrastructure Solutions segment. Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by the Company's Chief Executive Officer ("CEO"), who is the CODM, to evaluate performance and allocate resources to the reportable segments. The CODM uses this measure to allocate resources, including headcount, financial resources and capital resources, for each segment, predominantly in the annual budgeting process. Additionally, Segment Operating Adjusted EBITDA is believed to strongly correlate with shareholder returns and is, therefore, included as a key component in the compensation of certain employees. This metric is used to monitor actual results versus budget and forecast on a monthly basis to assess segment performance as compared to expectations. Segment Operating Adjusted EBITDA 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. Beginning January 1, 2024, the Company's presentation of Segment Operating Adjusted EBITDA has been modified to exclude the net income or loss attributable to the noncontrolling interest and include intersegment profit. Prior periods have been revised to reflect the changes for both the segment composition and the segment profit or loss metric calculation for comparability. A brief description of each segment is as follows: 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, including industrial automation controls and telematics platforms, as well as supply asphalt road construction equipment, industrial thermal systems, land clearing, recycling 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 generally 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, commercial and residential paving 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 rock processing equipment, in addition to servicing and supplying parts for the aggregate, mining, recycling, ports and bulk handling markets. The sites within the Materials Solutions segment are primarily manufacturing operations, with the AME, Australia and LatAm sites functioning to market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites. Additionally, the Materials Solutions segment offers consulting and engineering services to provide complete "turnkey" processing systems. The principal purchasers of aggregate processing equipment include distributors, highway and heavy equipment contractors, sand and gravel producers, demolition, recycling and crushing contractors, open mine operators, quarry operators, port and inland terminal authorities, power stations and foreign and domestic governmental agencies. Segment Information: 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 between foreign subsidiaries are valued at prices comparable to those for unrelated parties. The Company has revised its presentation for the prior periods below to remove the presentation of Corporate and Other in conjunction with the reportable segment results and reconcile the total of the reportable segments’ revenues from external customers and measure of profit or loss to "Net sales" and "Income before income taxes", respectively, whereby Corporate and Other costs, net of eliminations, have been removed from total reportable segments’ revenues from external customers and Segment Operating Adjusted EBITDA and included in the reconciliations to "Net sales" and "Income before income taxes", respectively. 68 Table of Content s Information for the Company's reportable segments are set forth below: Year Ended December 31, 2024 (in millions) Infrastructure Solutions Materials Solutions Total Reportable segment revenues: Revenues from external customers $ 837.4 $ 467.7 $ 1,305.1 Intersegment revenues 48.3 7.0 55.3 Total revenues - reportable segments $ 885.7 $ 474.7 $ 1,360.4 Significant reportable segment expenses: Manufacturing operation costs: Equipment $ 397.8 $ 231.0 $ 628.8 Parts 121.5 80.7 202.2 Other 104.8 41.0 145.8 General and administrative 52.4 28.0 80.4 Sales and marketing 44.3 28.1 72.4 Quality costs (1) 17.3 12.3 29.6 Research and development 16.1 7.7 23.8 Inventory period costs (2) 10.3 7.8 18.1 Other segment items (3) ( 0.3 ) 0.9 0.6 Reportable Segment Operating Adjusted EBITDA $ 121.5 $ 37.2 $ 158.7 Reportable segment assets and capital expenditures: Assets $ 1,095.8 $ 772.3 $ 1,868.1 Capital expenditures 15.0 5.2 20.2 (1) Quality costs related to repair or other remediation expenses incurred for corrective action on product failures covered by warranties or voluntarily for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of the Company's products and maintain the goodwill of customers. (2) Inventory period costs primarily relate to inventory reserves and adjustments and net scrap sales. (3) Other segment items consists of foreign exchange gains and losses, investment income and loss and other income and expense amounts that are included in Segment Operating Adjusted EBITDA that are not considered to be significant segment expenses. 69 Table of Content s Year Ended December 31, 2023 (in millions) Infrastructure Solutions Materials Solutions Total Reportable segment revenues: Revenues from external customers $ 800.4 $ 537.8 $ 1,338.2 Intersegment revenues 37.8 1.0 38.8 Total revenues - reportable segments $ 838.2 $ 538.8 $ 1,377.0 Significant reportable segment expenses: Manufacturing operation costs: Equipment $ 408.5 $ 274.4 $ 682.9 Parts 121.9 82.1 204.0 Other 65.8 41.8 107.6 General and administrative 53.5 39.2 92.7 Sales and marketing 44.6 27.6 72.2 Quality costs (1) 15.1 12.1 27.2 Research and development 15.1 6.7 21.8 Inventory period costs (2) 11.3 4.9 16.2 Other segment items (3) — ( 0.7 ) ( 0.7 ) Reportable Segment Operating Adjusted EBITDA $ 102.4 $ 50.7 $ 153.1 Reportable segment assets and capital expenditures: Assets $ 1,041.5 $ 800.2 $ 1,841.7 Capital expenditures 24.8 8.9 33.7 (1) Quality costs related to repair or other remediation expenses incurred for corrective action on product failures covered by warranties or voluntarily for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of the Company's products and maintain the goodwill of customers. (2) Inventory period costs primarily relate to inventory reserves and adjustments and net scrap sales. (3) Other segment items consists of foreign exchange gains and losses, investment income and loss and other income and expense amounts that are included in Segment Operating Adjusted EBITDA that are not considered to be significant segment expenses. 70 Table of Content s Year Ended December 31, 2022 (in millions) Infrastructure Solutions Materials Solutions Total Reportable segment revenues: Revenues from external customers $ 764.2 $ 510.3 $ 1,274.5 Intersegment revenues 36.1 2.4 38.5 Total revenues - reportable segments $ 800.3 $ 512.7 $ 1,313.0 Significant reportable segment expenses: Manufacturing operation costs: Equipment $ 404.0 $ 242.3 $ 646.3 Parts 108.7 96.3 205.0 Other 99.6 58.8 158.4 General and administrative 39.6 27.9 67.5 Sales and marketing 37.7 22.5 60.2 Quality costs (1) 12.9 6.6 19.5 Research and development 15.7 10.4 26.1 Inventory period costs (2) 12.8 ( 0.8 ) 12.0 Other segment items (3) 0.1 0.7 0.8 Reportable Segment Operating Adjusted EBITDA $ 69.2 $ 48.0 $ 117.2 Reportable segment assets and capital expenditures: Assets $ 965.2 $ 734.6 $ 1,699.8 Capital expenditures 31.1 9.0 40.1 (1) Quality costs related to repair or other remediation expenses incurred for corrective action on product failures covered by warranties or voluntarily for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of the Company's products and maintain the goodwill of customers. (2) Inventory period costs primarily relate to inventory reserves and adjustments and net scrap sales. (3) Other segment items consists of foreign exchange gains and losses, investment income and loss and other income and expense amounts that are included in Segment Operating Adjusted EBITDA that are not considered to be significant segment expenses. 71 Table of Content s Reconciliations for the Company's reportable segment information are set forth below: Years Ended December 31, (in millions) 2024 2023 2022 Reconciliation of reportable segment revenues to "Net sales" Total revenues - reportable segments $ 1,360.4 $ 1,377.0 $ 1,313.0 Elimination of intersegment revenues ( 55.3 ) ( 38.8 ) ( 38.5 ) Net sales $ 1,305.1 $ 1,338.2 $ 1,274.5 Reconciliation of Reportable Segment Operating Adjusted EBITDA to "Income before income taxes" Segment Operating Adjusted EBITDA - reportable segments $ 158.7 $ 153.1 $ 117.2 Corporate and Other expenses ( 46.9 ) ( 43.1 ) ( 46.4 ) Transformation program ( 32.8 ) ( 29.2 ) ( 25.5 ) Restructuring and other related charges ( 9.5 ) ( 7.7 ) ( 6.2 ) Goodwill impairment ( 20.2 ) — — Asset impairment — ( 1.2 ) ( 3.5 ) Gain on sale of property, equipment and business, net 1.1 3.1 0.7 Transaction costs ( 0.8 ) — ( 2.0 ) Interest expense, net ( 8.7 ) ( 6.8 ) ( 1.5 ) Depreciation and amortization ( 26.8 ) ( 25.6 ) ( 27.9 ) Net (loss) income attributable to noncontrolling interest ( 0.2 ) 0.2 ( 0.5 ) Income before income taxes $ 13.9 $ 42.8 $ 4.4 Reconciliation of reportable segment assets to "Total assets" Total assets - reportable segments $ 1,868.1 $ 1,841.7 $ 1,699.8 Corporate and Other 864.4 770.9 645.3 Elimination of intercompany receivables ( 1,121.1 ) ( 999.4 ) ( 842.2 ) Elimination of investment in subsidiaries ( 522.9 ) ( 521.5 ) ( 465.8 ) Other ( 44.9 ) ( 32.4 ) ( 22.7 ) Total assets $ 1,043.6 $ 1,059.3 $ 1,014.4 Reconciliation of reportable segment capital expenditures to "Expenditures for property and equipment" Total capital expenditures - reportable segments $ 20.2 $ 33.7 $ 40.1 Corporate and Other 0.3 0.4 0.6 Total capital expenditures $ 20.5 $ 34.1 $ 40.7 72 Table of Content s "Net sales" into major geographic regions, attributable to the shipping location or the location where service was performed, were as follows: Years Ended December 31, (in millions) 2024 2023 2022 United States $ 1,015.4 $ 1,083.4 $ 1,014.3 Canada 67.4 58.5 63.0 Australia and Oceania 52.3 55.7 46.7 Africa 40.5 36.6 36.1 Brazil 32.9 27.0 24.8 Mexico 23.8 8.4 10.7 Other European Countries 23.7 26.2 28.0 South America (excluding Brazil) 17.8 19.8 20.0 Other Asian Countries 12.3 7.7 10.3 Post-Soviet States (excluding Russia) 7.2 2.5 2.7 Central America (excluding Mexico) 5.6 4.1 10.7 West Indies 3.8 2.5 0.4 Middle East 1.8 4.9 3.1 India 0.6 0.6 2.9 Japan and Korea — 0.3 0.4 Russia — — 0.3 Other — — 0.1 Total foreign 289.7 254.8 260.2 Total consolidated sales $ 1,305.1 $ 1,338.2 $ 1,274.5 "Property and equipment, net" by major geographic region is as follows: December 31, (in millions) 2024 2023 United States $ 148.2 $ 151.7 United Kingdom 16.5 15.2 Brazil 4.9 7.4 South Africa 4.1 3.6 Australia 4.0 4.4 Canada 3.9 5.0 France 0.1 0.2 Chile 0.1 0.1 Other 0.1 — Total foreign 33.7 35.9 Total property and equipment, net $ 181.9 $ 187.6 20. Other Expenses and Income, net Other (expenses) income, net, consists of the following: Years Ended December 31, (in millions) 2024 2023 2022 Foreign exchange (losses) gains, net $ ( 1.2 ) $ 0.7 $ ( 0.9 ) Investment income (loss), net — 0.2 ( 0.9 ) Other, net 0.6 0.1 0.2 Total $ ( 0.6 ) $ 1.0 $ ( 1.6 ) 21. Strategic Transformation and Restructuring, Impairment and Other Asset Charges, net The Company's strategic transformation program includes the ongoing multi-year phased implementation of a standardized enterprise resource planning ("ERP"), which is replacing much of the existing disparate core financial systems. The upgraded ERP will initially convert internal operations, manufacturing, finance, human capital resources management and customer 73 Table of Content s relationship systems to cloud-based platforms. An implementation of this scale is a major financial undertaking and requires substantial time and attention of management and key employees. In addition, a lean manufacturing initiative at one of the Company's largest sites was largely completed during 2023 with certain capital investments finalized in early 2024. Net capitalized implementation costs associated with the ERP implementation totaled $ 31.9 million, of which $ 3.7 million and $ 28.2 million were included in "Prepaid expenses and other assets" and "Other long-term assets", respectively, in the Consolidated Balance Sheets as of December 31, 2024. Net capitalized implementation costs totaled $ 30.6 million, of which $ 3.3 million and $ 27.3 million were included in "Prepaid expenses and other assets" and "Other long-term assets", respectively, in the Consolidated Balance Sheets as of December 31, 2023. Accumulated amortization associated with these capitalized implementation costs totaled $ 5.5 million and $ 1.9 million as of December 31, 2024 and 2023, respectively. Costs associated with these strategic transformation programs are presented below: Years Ended December 31, (in millions) 2024 2023 2022 Strategic transformation programs Selling, general and administrative expenses $ 33.0 $ 29.4 $ 25.5 Cost of sales 0.5 0.3 — Total costs related to strategic transformation initiatives $ 33.5 $ 29.7 $ 25.5 Amortization of capitalized implementation costs (1) $ 3.6 $ 1.9 $ — (1) Amortization of capitalized implementation costs is recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. In addition, the Company periodically sells or disposes of its assets in the normal course of its business operations as they are no longer needed or used and may incur gains or losses on these disposals. Certain of the costs associated with these decisions are separately identified as restructuring. The Company reports asset impairment charges and gains or losses on the sales of property and equipment collectively, with restructuring charges in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations to the extent they are experienced. Restructuring, impairment and other asset charges, net incurred in 2024, 2023 and 2022 are as follows: Years Ended December 31, (in millions) 2024 2023 2022 Restructuring related charges: Costs associated with exited operations – Enid $ 8.6 $ 0.4 $ 1.0 Workforce reductions 0.9 — — Costs associated with leadership change and overhead restructuring — 7.3 4.4 Costs associated with closing Tacoma — — 0.8 Total restructuring related charges 9.5 7.7 6.2 Asset impairment charges: Other impairment charges — 1.2 3.5 Total asset impairment charges — 1.2 3.5 Gain on sale of property and equipment, net: Gain on sale of property and equipment, net ( 1.1 ) ( 3.1 ) ( 0.7 ) Total gain on sale of property and equipment, net ( 1.1 ) ( 3.1 ) ( 0.7 ) Restructuring, impairment and other asset charges, net $ 8.4 $ 5.8 $ 9.0 74 Table of Content s Restructuring charges by reportable segment and the Corporate and Other category are as follows: Years Ended December 31, (in millions) 2024 2023 2022 Infrastructure Solutions $ 9.0 $ 0.5 $ 1.8 Materials Solutions 0.3 — — Corporate and Other 0.2 7.2 4.4 Total restructuring related charges $ 9.5 $ 7.7 $ 6.2 Impairment charges by reportable segment and the Corporate and Other category are as follows: Years Ended December 31, (in millions) 2024 2023 2022 Infrastructure Solutions $ — $ 0.4 $ 2.5 Corporate and Other — 0.8 1.0 Total impairment charges $ — $ 1.2 $ 3.5 The net gain on sale of property and equipment by reportable segment are as follows: Years Ended December 31, (in millions) 2024 2023 2022 Infrastructure Solutions $ ( 0.3 ) $ ( 3.1 ) $ ( 0.7 ) Materials Solutions ( 0.8 ) — — Total gain on sale of property and equipment, net $ ( 1.1 ) $ ( 3.1 ) $ ( 0.7 ) In late 2019, the oil and gas drilling product lines produced at the Company's Enid, Oklahoma location formally included in the Company's Infrastructure Solutions segment, were impaired and discontinued. The sale of the land and building assets was completed in the fourth quarter of 2022 for approximately $ 4.7 million. On October 8, 2024, the Company reached an agreement to resolve the action styled VenVer S.A. and Americas Coil Tubing LLP v. GEFCO, Inc., related to Enid for $ 8.4 million. In connection with the settlement, management recorded a loss of $ 8.4 million in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations and "Other current liabilities" in the Consolidated Balance Sheets during the third quarter of 2024. See Note 16, Commitments and Contingencies for further discussion of this matter. In January 2021, the Company announced plans to close the Tacoma facility in order to simplify and consolidate operations. 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 2022, in " Restructuring, other impairment and asset charges, net " in the Consolidated Statements of Operations. The Company completed the sale of the Tacoma facility's land, building and certain equipment assets 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. During the second quarter of 2022, the Company determined that certain manufacturing equipment contracted to be constructed by a third-party vendor for a site within the Infrastructure Solutions segment, which had been prepaid, would not be recovered. As such, impairment charges of $ 2.1 million were recorded in " Restructuring, other impairment and asset charges, net " in the Consolidated Statements of Operations during 2022. Effective January 6, 2023, Mr. Barry A. 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 was entitled to certain severance payments and benefits. There were $ 4.4 million of restructuring costs incurred related to Mr. Ruffalo's separation during the year ended December 21, 2022, with an additional $ 1.8 million of restructuring costs, related to the modification of Mr. Ruffalo's equity awards and other third-party transition support costs incurred in the year ended December 31, 2023, which were recorded in " Restructuring, other impairment and asset charges, net " in the Consolidated Statements of Operations. The related recovery of $ 1.6 million of previously 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 includes a release and waiver by Mr. Ruffalo and other customary provisions. 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, the Company 75 Table of Content s effected workforce reductions during the second quarter of 2024, whereby charges of $ 0.9 million were incurred during the three months ended June 30, 2024 and recorded in " Restructuring, other impairment and asset charges, net " in the Consolidated Statements of Operations. In February 2023, the Company implemented a limited restructuring plan to right-size and reduce the fixed cost structure of certain overhead departments. Total charges of $ 5.5 million for employee termination costs, including equity award modifications, were recorded in " Restructuring, other impairment and asset charges, net " in the Consolidated Statements of Operations. The related recovery of $ 1.0 million of previously incurred share-based compensation expense was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. 76 Table of Content s ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.