Notes to Consolidated Financial Statements
1. Business and Organization
Description of Business
Astec Industries, Inc. is a Tennessee corporation which was incorporated in 1972. The Company designs, engineers, manufactures and markets equipment and components used primarily in road building and related construction activities, as well as other products discussed below. The Company's products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface. The Company also manufactures certain equipment and components unrelated to road construction, including equipment for the mining, quarrying, construction and demolition industries and port and rail yard operators; industrial heat transfer equipment; commercial whole-tree pulpwood chippers; horizontal grinders; blower trucks; concrete plants; commercial and industrial burners; and combustion control systems.
The Company's products are marketed both domestically and internationally primarily to asphalt producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycle and crushing 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 our business.
The Company consists of a total of 33 companies that are consolidated in the Company's consolidated financial statements, of which 25 represent manufacturing sites and sites that operate as sales offices for the Company's manufacturing locations. During the first quarter of 2020, management completed an internal reorganization focused on transitioning from a decentralized management structure to a more centralized structure with major directives and decisions being made at the segment and/or parent company level. As a result of this reorganization, we realigned the Company's reportable segments moving from three to two reportable segments (plus Corporate) - Infrastructure Solutions and Materials Solutions. The Company's two reportable business segments comprise sites based upon the nature of the products or services produced, the type of customer for the products, the similarity of economic characteristics, the manner in which management reviews results and the nature of the production process, among other considerations.
The Corporate category consists primarily of the parent company and Astec Insurance Company ("Astec Insurance" or the "captive"), a captive insurance company, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments. Management evaluates performance and allocates resources to the operating segments based on profit or loss from operations before United States ("U.S.") federal income taxes, state deferred taxes and corporate overhead and, thus, these costs are included in the Corporate category.
Amounts previously reported under the previous segment structure have been restated to conform to the new segment structure.
COVID-19 Pandemic
The COVID-19 pandemic has caused significant disruptions to national and global economies. During 2020, the Company's sales and profits were negatively impacted by the COVID-19 pandemic, and it may continue to negatively disrupt the Company's business and results of operations in the future. The full extent of the COVID-19 pandemic on the Company's operations and the markets it serves remains highly uncertain and will depend largely on future developments related to the COVID-19 pandemic, including infection rates increasing or returning in various geographic areas, the ultimate duration of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as re-imposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things. These developments are constantly evolving and cannot be accurately predicted.
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 U.S. generally accepted accounting principles ("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 not owned by the Company in a consolidated subsidiary. Since the Company controls this subsidiary, its consolidated 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" on the Consolidated Balance Sheets and as "Net loss attributable to noncontrolling interest" in the Consolidated Statements of Operations.
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 inventory obsolescence costs, warranty costs, inventory net realizable value, self-insurance loss reserves, employee benefit programs 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.
In the opinion of management, the consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations and comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018.
All dollar amounts, except share and per share amounts, are in millions of dollars unless otherwise indicated.
Significant Accounting Policies
Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less when purchased are considered to be cash equivalents. The Company's maintains cash balances with high credit quality institutions, the balances of which may exceed federally insured limits.
The Company had $137.0 million in a government money market fund at December 31, 2020 and $30.2 million in an interest-bearing account at December 31, 2019, each of which is included in "Cash and cash equivalents" in the Consolidated Balance Sheets.
Investments - Investments consist primarily of investment-grade marketable securities. Trading securities are carried at fair value, with unrealized holding gains and losses included in "Net income (loss)" 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. Credit risk is driven by conditions within the economy and the industry and is principally dependent on each customer's financial condition. To minimize credit risk, the Company monitors credit levels and financial conditions of customers on a continuing basis. After considering historical trends for uncollectible accounts, current and projected economic conditions and specific customer recent payment history and financial stability, the Company records an allowance for credit losses at a level which management believes is sufficient to cover probable credit losses. 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. As of December 31, 2020, concentrations of credit risk with respect to receivables are limited due to the wide variety of customers.
Allowance for Credit Losses - The Company adopted the provisions of Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments – Credit Losses (Topic 326)" on January 1, 2020 and, accordingly, measures its credit losses on receivables using an expected loss model. See additional disclosure of this adoption below in Recently Adopted Accounting Pronouncements.
The Company currently monitors credit levels and financial conditions of customers on a continuing basis. After considering historical trends for uncollectible accounts, current economic conditions and specific customer recent payment history and financial stability, each site records an allowance for credit losses at a level which management believes is sufficient to cover all probable future credit losses as of the balance sheet date based on a rolling twelve-month "look-back", specific reserves and an expectation of future economic conditions that might impact customers, which would currently include the impact of COVID-19.
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 for the years ended December 31, 2020, 2019 and 2018:
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Years Ended December 31,
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(in millions)
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2020
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2019
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2018
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Allowance balance, beginning of year
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$
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1.4
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$
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1.2
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$
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1.7
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Provision
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0.9
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1.2
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0.2
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Write offs
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(0.6)
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(1.0)
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(0.7)
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Allowance balance, end of year
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$
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1.7
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$
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1.4
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$
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1.2
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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.
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.
The most significant component 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 – As of December 31, 2020, the Company recorded assets held for sale of $6.3 million related to land and building assets of its former Enid business and one of the Company's planes, which are being marketed for sale. In connection with the closing of the Company's AMM site in Germany and its Albuquerque site, the Company accounted for their land and building as assets held for sale as of December 31, 2019. The AMM land and building sale was completed in early 2020. The Albuquerque site was closed as of March 31, 2020, and its land and building were sold in the third quarter of 2020.
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.
Property and equipment are primarily depreciated over the following useful lives:
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Years
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Buildings and improvements
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5 - 40
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Airplanes and aviation equipment
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5 - 20
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Machinery, equipment and tooling
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3 - 10
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Furniture and fixtures
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5 - 10
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Computer hardware and software
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3 - 5
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Leases - The Company leases certain real estate, computer systems, material handling equipment, offices, 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.
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 have 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.
Goodwill and Other Intangible Assets - Goodwill represents the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Goodwill is not amortized but is tested for impairment annually on October 31, or more frequently, as events dictate. The Company uses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.
Goodwill impairment is the excess of the carrying amount of a reporting unit (that includes goodwill) over its fair value. Impairment is limited to the carrying amount of goodwill allocated to the reporting unit. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, management determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative impairment test is unnecessary and the goodwill is considered to be unimpaired. However, if based on the qualitative assessment management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will proceed with performing the quantitative evaluation process.
The quantitative evaluation compares the carrying value of each reporting unit that has goodwill with the estimated fair value of the respective reporting unit. Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, a goodwill impairment charge will be recognized in the amount by which the reporting unit's carrying amount exceeds its fair value, but not to exceed the total goodwill assigned to the reporting unit. The determination of the fair value of the Company's reporting units is based on a combination of a market approach, that considers benchmark company market multiples, and an income approach, that utilizes discounted cash flows for each reporting unit. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as expectations of future performance and the expected future economic environment, which are partly based upon historical experience. Management's estimates are subject to change given the inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on management's judgment of the rates that would be utilized by a hypothetical market participant. As part of the goodwill impairment testing, management also considers the Company's market capitalization in assessing the reasonableness of the combined fair values estimated for its reporting units. While management believes such assumptions and estimates are reasonable, the actual results may differ materially from the projected amounts.
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.
Intangible assets with definite lives are amortized on a straight-line basis over the following estimated useful lives:
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Years
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Dealer network and customer relationships
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8 - 19
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Trade names
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2 - 4
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Other
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3 - 19
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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.
Pension and Retirement Plans - The determination of obligations and expenses under the Company's pension plan is dependent on the Company's selection of certain assumptions used by independent actuaries in calculating such amounts. Those assumptions are described in Note 14, Pension and Retirement Plans and include among others, the discount rate, expected return on plan assets and the expected mortality rates. Actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense in such periods. Significant differences in actual experience or significant changes in the assumptions used may materially affect the pension obligations and future expenses.
The Company recognizes the overfunded or underfunded status of its pension plan as an asset or liability. Actuarial gains and losses, amortization of prior service cost (credit) and amortization of transition obligations are recognized through other comprehensive income (loss) in the year in which the changes occur. The Company measures the funded status of its pension plan as of the date of the Company's fiscal year-end.
Product Warranty Reserve - The Company accrues for the estimated cost of product warranties at the time revenue is recognized. 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 our estimates, revisions to the estimated warranty liability may be required.
Income Taxes - Income taxes are based on pre-tax 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 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.
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 consolidated into 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 at all of the Company's domestic manufacturing subsidiaries. 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" on 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.
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 fulfilled within one year from the date of the contract, 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 we have to satisfy a future obligation, such as to provide installation assistance, service work to be performed in the future without charge, floor plan interest to be reimbursed to the Company's dealer customers, payments for extended warranties, for annual rebates given to certain high volume customers or for obligations for future estimated returns to be allowed based upon historical trends.
Certain contracts include terms and conditions pursuant to which the Company recognizes revenues upon the completion of production, and the equipment is subsequently stored at the Company's plant at the customer's request. Revenue is recorded on such contracts upon the customer's assumption of title and risk of ownership, which transfers control of the equipment, and when collectability is reasonably assured. In addition, there must be a fixed schedule of delivery of the goods consistent with the customer's business practices, the Company must not have retained any specific performance obligations such that the earnings process is not complete, and the goods must have been segregated from the Company's inventory prior to revenue recognition.
The Company had one large wood pellet plant sale through 2018 and other smaller non-wood pellet plant orders in 2019 and 2020 on which revenue was recorded over time based upon the ratio of costs incurred to estimated total costs. Penalties were accounted for as a reduction in sales.
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 obtained by trade-in on new equipment sales, as a separate purchase in the open market or from the Company's equipment rental business. 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 include rental revenues, extended warranty revenues, early pay discounts and floor plan interest reimbursements.
Advertising Expense - The cost of advertising is expensed as incurred. The Company incurred $2.6 million, $3.7 million and $4.1 million in advertising costs during 2020, 2019 and 2018, 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 performance 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 non-market 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.
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. Third-party acquisition costs are expensed as incurred and contingent consideration is booked at its fair value as part of the purchase price. See Note 3, Acquisitions for additional information on the Company's acquisitions.
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 income (loss) 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 on 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 average U.S. dollar equivalent notional amount of outstanding foreign currency exchange contracts was $9.9 million during 2020. The Company reported $0.1 million of derivative assets in "Prepaid expenses and other assets" and $0.5 million of derivative liabilities in "Other current liabilities" at December 31, 2020. Nominal derivative assets and liabilities were reported in 2019.
The Company recognized, as a component of "Cost of sales", a net gain on the change in fair value of derivative instruments of $0.2 million for the year ended December 31, 2020. The Company recognized a net loss on the change in fair value of derivative instruments of $0.1 million and a net gain of $1.1 million for the years ended December 31, 2019 and 2018, respectively. There were no derivatives that were designated as hedges at December 31, 2020 or 2019.
Foreign Currency Translation - Subsidiaries located in Australia, Brazil, Canada, Chile, India, Northern Ireland, South Africa and Thailand operate primarily using local functional currencies. Accordingly, assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of "Accumulated other comprehensive loss". Foreign currency transaction gains and losses, net are included in "Cost of sales" and amounted to losses of $1.1 million and $0.6 million in 2020 and 2019, respectively, and a gain of $0.5 million in 2018.
Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by dividing "Net income (loss)" 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 (loss) per share. Diluted earnings (loss) per share includes the dilutive effect of common stock equivalents consisting of restricted stock units, performance stock units and stock held in the Company's supplemental executive retirement plan, using the treasury stock method. Performance stock units, which are considered contingently issuable, are considered dilutive when the related performance criterion has been met.
The following table sets forth a reconciliation of the number of shares used in the computation of basic and diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Denominator:
|
|
|
|
|
|
Denominator for basic earnings (loss) per share
|
22,585,515
|
|
|
22,515,161
|
|
|
22,901,511
|
|
Effect of dilutive securities:
|
|
|
|
|
|
Unvested restricted stock units
|
185,965
|
|
|
110,974
|
|
|
—
|
|
Unvested performance stock units
|
65,404
|
|
|
—
|
|
|
—
|
|
Supplemental executive retirement plan
|
40,859
|
|
|
48,047
|
|
|
—
|
|
Denominator for diluted earnings (loss) per share
|
22,877,743
|
|
|
22,674,182
|
|
|
22,901,511
|
|
Recently Adopted Accounting Pronouncements
Effective January 1, 2019, the Company adopted the provisions of ASU 2016-02, "Leases (Topic 842)" including subsequent amendments issued thereafter (collectively, "ASC Topic 842"), which requires lessees to recognize a right-of-use asset and corresponding lease liability on the balance sheet for operating leases while the accounting for finance leases remains substantially unchanged. Upon adoption, right-of-use assets totaling $5.0 million were recorded on the Consolidated Balance Sheets. Incremental borrowing rates used in the calculation of the ROU asset were estimated based upon secured borrowing rates quoted by the Company’s banks for loans of various lengths ranging from one year to 20 years. Operating leases with original maturities less than one year in duration were excluded. The calculation of the ROU asset considered lease agreement provisions concerning termination, extensions, end of lease purchase and whether or not those provisions were reasonably certain of being exercised. Certain agreements contain lease and non-lease components, which are accounted for separately. The financial results for periods prior to January 1, 2019 are unchanged from results previously reported. No cumulative effect adjustment was necessary at the time of adoption. Based upon a contract review and related calculations, none of the Company’s leases were deemed to be finance leases. Lease expense recorded for the year ended December 31, 2019 under ASC Topic 842 was not materially different from lease expense that would have been recorded under the previous lease accounting standard. Other transitional practical expedients allowed under ASU No. 2016-02 were adopted.
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments" including subsequent amendments issued thereafter (collectively "Topic 326"). The standard changes how credit losses are measured for most financial assets and certain other instruments that currently are not measured through net income (loss). The standard requires an expected loss model for instruments measured at amortized cost as opposed to the current incurred loss approach. In valuing available for sale debt securities, allowances will be required to be recorded, rather than the current approach of reducing the carrying amount, for other than temporary impairments. A cumulative adjustment to retained earnings was to be recorded as of the beginning of the period of adoption to reflect the impact of applying the provisions of the standard. The standard was effective for public companies for periods beginning after December 15, 2019, and the Company adopted the new standard as of January 1, 2020. As the Company's credit losses are typically minimal, the adoption of the new standard did not have a significant impact on the Company's financial position, results of operations or cash flows and no cumulative adjustment to retained earnings was recorded.
In February 2018, the FASB issued ASU No. 2018-2, "Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", which permits companies to reclassify tax effects stranded in accumulated other comprehensive income ("OCI") as a result of U.S. tax reform impacting tax rates or other items, such as changing from a worldwide tax system to a territorial system, from OCI to retained earnings. Other tax effects stranded in OCI due to other reasons, such as prior changes in tax laws or changes in valuation allowances, may not be reclassified. The new standard was effective for fiscal years beginning after December 15, 2018, and the Company adopted its provisions as of January 1, 2019. As a result of adopting this new standard, the Company reclassified $0.7 million of previously stranded tax effects from "Accumulated other comprehensive loss" to "Retained earnings" as shown on the Consolidated Statements of Equity for the year ended December 31, 2019.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use-Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. This ASU is effective for fiscal years, and interim periods, beginning after December 15, 2019. The Company adopted the provisions of this standard as of January 1, 2020, and it has been applied prospectively for applicable implementation costs incurred subsequent to the effective date.
In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" which aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing fair value measurement disclosures. The standard is effective for annual and interim periods beginning after December 15, 2019 with early adoption permitted. The Company adopted this new standard effective January
1, 2020. The adoption of this new standard did not have a material impact on its financial position, results of operations, cash flows or disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes", which eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The new standard is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years with early adoption permitted in interim or annual periods if the Company has not yet issued financial statements. If the Company elects to early adopt the amendments in an interim period, it should reflect any adjustments as of the beginning of the annual period that includes the interim period and must adopt all amendments in the same period applying all guidance prospectively, except for certain amendments. The Company expects the impact of the statement's provision on its financial position, results of operations or cash flows to be nominal.
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)", which provides optional guidance for a limited period of time to ease the potential burden in accounting (or recognizing the effects of) reference rate reform on financial reporting. This was in response to stakeholders raising certain operational challenges likely to arise in accounting for contract modifications and hedge accounting because of reference rate reform. Some of those challenges relate to the significant volume of contracts and other arrangements, such as debt agreements, lease agreements and derivative instruments, which will be modified to replace references to discontinued rates with references to replacement rates. For accounting purposes, such contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. Stakeholders indicated that due to the significant volume of affected contracts and other arrangements, together with a compressed time frame for making contract modifications, the application of existing accounting standards on assessing modifications versus extinguishments could be costly and burdensome. In addition, stakeholders indicated that financial reporting results should reflect the intended continuation of such contracts and arrangements during the period of the market-wide transition to alternative reference rates. This new standard is effective for annual and interim periods beginning after December 31, 2022. The Company has yet to determine what effects, if any, this will have on its debt instrument.
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. Acquisitions
CON-E-CO Acquisition - The Company entered into a Stock Purchase Agreement, dated as of July 20, 2020, by and between Oshkosh Corporation for the purchase of the CON-E-CO concrete equipment company in Nebraska. The purchase price was $13.8 million, after adjustments, and was paid in cash. The Company's preliminary allocation of the purchase price resulted in the recognition of $3.9 million of intangible assets primarily consisting of customer relationships (8 year life) and trade name (3 year life). Significant inputs and assumptions used in determining the fair values of these intangible assets include management's forecasts of future revenues, earnings and cash flows, a discount rate based on the median weighted average cost of capital of the Company and select market competitors, and proportion of intangible assets acquired in relation to tangible assets. The acquisition provides the Company with a broader line of concrete batch plant manufacturing, which will strengthen the Infrastructure Solutions segment. Results of operations have been consolidated from the date of acquisition.
The following table summarizes the preliminary allocations of the total purchase price:
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Amount
|
|
|
|
Accounts receivable
|
|
$
|
2.3
|
|
Inventories
|
|
8.1
|
|
Other assets
|
|
6.6
|
|
Intangible assets
|
|
3.9
|
|
Total assets acquired
|
|
$
|
20.9
|
|
Accounts payable and other
|
|
(4.3)
|
|
Advance customer deposits
|
|
(2.8)
|
|
Total liabilities assumed
|
|
(7.1)
|
|
Total purchase price
|
|
$
|
13.8
|
|
Proforma financial information is not included since not significant.
BMH Systems Acquisition - The Company entered into a Share Purchase Agreement, dated as of August 3, 2020, by and between BMH Systems Corporation ("St. Bruno") for the purchase of a concrete equipment company in Quebec, Canada. The purchase price was $15.7 million, after adjustments, and was paid in cash. The Company's preliminary allocation of the purchase price resulted in the recognition of $6.4 million of goodwill and $5.7 million of other intangible assets primarily consisting of customer relationships (9 year life) and trade name (3 year life). Significant inputs and assumptions used in determining the fair values of these intangible assets include management's
forecasts of future revenues, earnings and cash flows, a discount rate based on the median weighted average cost of capital of the Company and select market competitors, and proportion of intangible assets acquired in relation to tangible assets. The acquisition provides the Company with a broader line of concrete batch plant manufacturing, which will strengthen the Infrastructure Solutions segment. Results of operations have been consolidated from the date of acquisition. The goodwill is not expected to be deductible for income tax purposes.
The following table summarizes the preliminary allocations of the total purchase price:
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Amount
|
Cash
|
|
$
|
1.2
|
|
Accounts receivable and contract assets
|
|
6.4
|
|
Inventories
|
|
2.0
|
|
Goodwill
|
|
6.4
|
|
Other assets
|
|
3.8
|
|
Intangible assets
|
|
5.7
|
|
Total assets acquired
|
|
$
|
25.5
|
|
Total liabilities assumed
|
|
(9.8)
|
|
Total purchase price
|
|
$
|
15.7
|
|
Proforma financial information is not included since not significant.
On November 2, 2020, the Company closed a transaction pursuant to which it purchased certain assets of Grathwol Automation, LLC ("Grathwol"). Grathwol is engaged in the business of developing and providing advanced telematics and remote diagnostics for construction equipment and related products and services. Assets purchased primarily comprise technology assets. The total purchase price was $6.0 million, of which $1.8 million is deferred and will be recognized as expense and be paid out in two equal annual installments on the anniversary date of the acquisition.
4. Inventories
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(in millions)
|
|
2020
|
|
2019
|
Raw materials and parts
|
|
$
|
154.6
|
|
|
$
|
160.9
|
|
Work-in-process
|
|
57.3
|
|
|
61.3
|
|
Finished goods
|
|
34.0
|
|
|
53.6
|
|
Used equipment
|
|
3.8
|
|
|
18.7
|
|
Total
|
|
$
|
249.7
|
|
|
$
|
294.5
|
|
During the year ended December 31, 2020, in conjunction with exiting the oil and gas drilling product lines, Enid's inventories were written down by $4.4 million, which was reported within "Cost of sales" in the Company's Consolidated Statements of Operations.
In the fourth quarter of 2019, through the Company’s assessment of the age, quantities on hand, market acceptance of the equipment, the Company’s exit of the Enid oil and gas drilling product lines and other related factors, it was determined that various specific equipment models at each of the Company’s sites and certain other inventories required increases to their net realizable value reserves. As such, during the fourth quarter of 2019, the Company recorded an inventory write-down of $32.6 million within "Cost of sales" in the Consolidated Statements of Operations.
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; marketable equity securities held in a non-qualified Supplemental Executive Retirement Plan ("SERP"); and a money market fund held by a foreign subsidiary. Although the SERP investments are allocated to individual participants and investment decisions are made solely by those participants, the SERP is a non-qualified plan. Consequently, the Company owns the assets and the related offsetting liability for disbursement until such time as a participant makes a qualifying withdrawal, which is recorded in "Other long-term liabilities" 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 and cash equivalents, 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 upon 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 -
|
|
Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
|
As indicated in the tables below, the Company has determined that all of its financial assets and liabilities as of December 31, 2020 and 2019 are Level 1 and Level 2 in the fair value hierarchy as defined above:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Total
|
Financial assets:
|
|
|
|
|
|
|
Trading equity securities:
|
|
|
|
|
|
|
SERP money market fund
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
SERP mutual funds
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
Preferred stocks
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
Equity Funds
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
Trading debt securities:
|
|
|
|
|
|
|
Corporate bonds
|
|
4.8
|
|
|
—
|
|
|
4.8
|
|
Municipal bonds
|
|
—
|
|
|
0.9
|
|
|
0.9
|
|
Floating rate notes
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
U.S. government securities
|
|
1.8
|
|
|
—
|
|
|
1.8
|
|
Asset-backed securities
|
|
—
|
|
|
2.1
|
|
|
2.1
|
|
Other
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
Derivative financial instruments
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
Total financial assets
|
|
$
|
14.0
|
|
|
$
|
4.1
|
|
|
$
|
18.1
|
|
Financial liabilities:
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.5
|
|
SERP liabilities
|
|
—
|
|
|
7.3
|
|
|
7.3
|
|
Total financial liabilities
|
|
$
|
—
|
|
|
$
|
7.8
|
|
|
$
|
7.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Total
|
Financial Assets:
|
|
|
|
|
|
|
Trading equity securities:
|
|
|
|
|
|
|
SERP money market fund
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
SERP mutual funds
|
|
4.4
|
|
|
—
|
|
|
4.4
|
|
Preferred stocks
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
|
|
|
|
|
|
Trading debt securities:
|
|
|
|
|
|
|
Corporate bonds
|
|
5.1
|
|
|
—
|
|
|
5.1
|
|
Municipal bonds
|
|
—
|
|
|
1.2
|
|
|
1.2
|
|
Floating rate notes
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
U.S. Government Securities
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
Asset-backed securities
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
Other
|
|
0.5
|
|
|
1.1
|
|
|
1.6
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
$
|
13.0
|
|
|
$
|
4.6
|
|
|
$
|
17.6
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP liabilities
|
|
$
|
—
|
|
|
$
|
6.6
|
|
|
$
|
6.6
|
|
Total financial liabilities
|
|
$
|
—
|
|
|
$
|
6.6
|
|
|
$
|
6.6
|
|
6. Investments
The Company's trading securities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
(Net Carrying
Amount)
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Trading equity securities
|
|
$
|
6.4
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
7.0
|
|
Trading debt securities
|
|
10.8
|
|
|
0.3
|
|
|
0.1
|
|
|
11.0
|
|
Total
|
|
$
|
17.2
|
|
|
$
|
0.9
|
|
|
$
|
0.1
|
|
|
$
|
18.0
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Trading equity securities
|
|
$
|
4.7
|
|
|
$
|
0.3
|
|
|
$
|
0.1
|
|
|
$
|
4.9
|
|
Trading debt securities
|
|
12.7
|
|
|
0.1
|
|
|
0.1
|
|
|
12.7
|
|
Total
|
|
$
|
17.4
|
|
|
$
|
0.4
|
|
|
$
|
0.2
|
|
|
$
|
17.6
|
|
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 equity money market and mutual funds and also comprise a portion of the Company's liability under its SERP. See Note 14, Pension and Retirement Plans, for additional information on these investments and the SERP.
Trading debt securities are comprised mainly 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 completed the acquisitions of CON-E-CO and BMH Systems during the year ended December 31, 2020, which increased goodwill $6.4 million.
The Company tests goodwill for impairment annually, as of October 31, 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.
In the first quarter of 2020, as part of the Company's ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value, the Company performed an interim goodwill impairment test as of March 31, 2020 over the mobile asphalt equipment reporting unit. Based on the results of this testing, the Company recorded a $1.6 million pre-tax non-cash impairment charge in the Infrastructure Solutions segment to fully impair the mobile asphalt
equipment reporting unit’s goodwill in the first quarter of 2020. This impairment charge was reflected as a component of "Restructuring, impairment and other asset charges, net" for the year ended December 31, 2020.
For the annual test of goodwill performed as of October 31, 2020, management performed a qualitative assessment as described above and concluded that there was no additional impairment of goodwill. This review included the Company's evaluation of relevant events and circumstances in totality that affect the fair value of the reporting units. These events and circumstances include, but are not limited to, macroeconomic conditions (including the impact of the COVID-19 pandemic), industry and competitive environment conditions, overall financial performance, business specific events and market considerations. The majority of the Company's goodwill were generated on a legacy basis and as a result have fair values that sufficiently exceed their underlying carrying values.
Management performed a quantitative valuation for the October 31, 2019 annual impairment analysis, which indicated no impairment. The valuation performed in 2018 indicated $11.2 million of impairment in the Infrastructure Solutions reporting segment. In addition, as part of a restructuring action, additional goodwill of $1.0 million was written off in 2018. These charges were reflected as a component of "Restructuring, impairment and other asset charges, net" for the year ended December 31, 2018.
The changes in the carrying amount of goodwill and accumulated impairment losses by reporting segment during the years ended December 31, 2020 and 2019 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Infrastructure
Solutions
|
|
Materials
Solutions
|
|
Total
|
Balance, December 31, 2018:
|
|
|
|
|
|
|
Goodwill
|
|
$
|
32.7
|
|
|
$
|
32.4
|
|
|
$
|
65.1
|
|
Accumulated impairment
|
|
(20.2)
|
|
|
(12.2)
|
|
|
(32.4)
|
|
Net
|
|
$
|
12.5
|
|
|
$
|
20.2
|
|
|
$
|
32.7
|
|
2019 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
Total 2019 activity
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
Balance, December 31, 2019:
|
|
|
|
|
|
|
Goodwill
|
|
$
|
32.7
|
|
|
$
|
32.8
|
|
|
$
|
65.5
|
|
Accumulated impairment losses
|
|
(20.2)
|
|
|
(12.2)
|
|
|
(32.4)
|
|
Net
|
|
$
|
12.5
|
|
|
$
|
20.6
|
|
|
$
|
33.1
|
|
2020 Activity:
|
|
|
|
|
|
|
Foreign currency translation
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
|
$
|
0.8
|
|
Acquisitions
|
|
6.4
|
|
|
—
|
|
|
6.4
|
|
Impairment
|
|
(1.6)
|
|
|
—
|
|
|
(1.6)
|
|
Total 2020 activity
|
|
$
|
5.1
|
|
|
$
|
0.5
|
|
|
$
|
5.6
|
|
Balance, December 31, 2020:
|
|
|
|
|
|
|
Goodwill
|
|
$
|
39.4
|
|
|
$
|
33.3
|
|
|
$
|
72.7
|
|
Accumulated impairment
|
|
(21.8)
|
|
|
(12.2)
|
|
|
(34.0)
|
|
Net
|
|
$
|
17.6
|
|
|
$
|
21.1
|
|
|
$
|
38.7
|
|
8. Intangible Assets
Intangible assets consisted of the following at December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
(in millions)
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
Dealer network and customer relationships
|
|
$
|
39.2
|
|
|
$
|
20.9
|
|
|
$
|
18.3
|
|
|
$
|
31.1
|
|
|
$
|
17.7
|
|
|
$
|
13.4
|
|
Trade names
|
|
10.8
|
|
|
4.8
|
|
|
6.0
|
|
|
9.6
|
|
|
3.2
|
|
|
6.4
|
|
Other
|
|
12.5
|
|
|
5.6
|
|
|
6.9
|
|
|
8.7
|
|
|
5.0
|
|
|
3.7
|
|
Total
|
|
$
|
62.5
|
|
|
$
|
31.3
|
|
|
$
|
31.2
|
|
|
$
|
49.4
|
|
|
$
|
25.9
|
|
|
$
|
23.5
|
|
Amortization expense on intangible assets was $6.1 million, $4.4 million and $5.1 million for 2020, 2019 and 2018, respectively.
Future annual expected amortization expense on intangible assets as of December 31, 2020 are as follows (in millions):
|
|
|
|
|
|
|
|
|
2021
|
|
$
|
9.6
|
|
2022
|
|
7.5
|
|
2023
|
|
4.3
|
|
2024
|
|
3.1
|
|
2025
|
|
1.7
|
|
2026 and thereafter
|
|
5.0
|
|
9. Property and Equipment
Property and equipment at cost, less accumulated depreciation, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(in millions)
|
|
2020
|
|
2019
|
Land
|
|
$
|
15.6
|
|
|
$
|
15.2
|
|
Building and land improvements
|
|
148.3
|
|
|
151.6
|
|
Construction in progress
|
|
3.1
|
|
|
10.2
|
|
Manufacturing and office equipment
|
|
238.7
|
|
|
266.7
|
|
Aviation equipment
|
|
4.7
|
|
|
14.4
|
|
Less accumulated depreciation
|
|
(237.6)
|
|
|
(267.7)
|
|
Total
|
|
$
|
172.8
|
|
|
$
|
190.4
|
|
Depreciation expense was $20.8 million, $21.4 million and $22.4 million for the years ended December 31, 2020, 2019 and 2018, 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, 2020, none of the Company's leases were deemed to be finance leases.
Additional information related to the Company’s operating leases is reflected in the tables below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
|
Operating lease expense
|
|
$
|
2.6
|
|
|
$
|
2.6
|
|
|
|
Cash paid for operating leases included in operating cash flows
|
|
2.7
|
|
|
2.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(in millions)
|
|
2020
|
|
2019
|
Operating lease right-of-use asset
|
|
$
|
6.6
|
|
|
$
|
3.9
|
|
Operating lease short-term liability
|
|
1.9
|
|
|
1.8
|
|
Operating lease long-term liability
|
|
4.7
|
|
|
2.0
|
|
Weighted average remaining lease term (in years)
|
|
6.55
|
|
4.66
|
Weighted average discount rate used in calculating right-of-use asset
|
|
3.66
|
%
|
|
3.56
|
%
|
Future annual minimum lease payments as of December 31, 2020 are as follows (in millions):
|
|
|
|
|
|
2021
|
$
|
2.0
|
|
2022
|
1.2
|
|
2023
|
0.9
|
|
2024
|
0.6
|
|
2025
|
0.5
|
|
2026 and thereafter
|
2.2
|
|
Total lease payments
|
$
|
7.4
|
|
Less: Interest
|
(0.8)
|
|
Operating lease liabilities
|
$
|
6.6
|
|
Operating lease expense under prior guidance for 2018 was $3.6 million.
11. Debt
In February 2019, the Company and certain of its subsidiaries amended the 2012 amended and restated credit agreement with Wells Fargo Bank, N.A. (the "Credit Facility") whereby the lender increased the Company's unsecured line of credit to $150.0 million, including a sub-limit for letters of credit of up to $30.0 million, and extended the maturity date to December 29, 2023. Other significant terms were left unchanged. Borrowings under the agreement are subject to an interest rate equal to the daily one-month LIBOR rate plus a 0.75% margin. The unused facility fee is 0.125%. The Credit Facility contains certain financial covenants, including provisions concerning required levels of annual net income and minimum tangible net worth.
The Company's Brazilian subsidiary maintains a separate term loan for working capital purposes with a bank in Brazil, which is secured by its manufacturing facility. Prior to 2020, equipment financing loans were also outstanding.
Certain of the Company's international subsidiaries in Africa, Australia, Brazil, Canada and Northern Ireland each have separate credit facilities with local financial institutions to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees. In addition, the Brazilian subsidiary also enters into order anticipation agreements with a local bank 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" on 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 except in Brazil where the credit facilities are supported by letters of credit issued under the Credit Facility.
Additional details for the Company's Credit Facility, term loan and credit facilities are summarized in total below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except maturity dates and interest rates)
|
|
December 31, 2020
|
|
December 31, 2019
|
|
|
|
|
|
Credit Facility
|
|
|
|
|
Unsecured line of credit - maximum
|
|
$
|
150.0
|
|
|
$
|
150.0
|
|
Letters of credit - maximum
|
|
30.0
|
|
|
30.0
|
|
Borrowings outstanding
|
|
—
|
|
|
—
|
|
Amount of letters of credit outstanding
|
|
7.6
|
|
|
8.3
|
|
Line of credit, additional borrowing capacity
|
|
142.4
|
|
|
141.7
|
|
|
|
|
|
|
Term Loan
|
|
|
|
|
Current maturities
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Long-term maturities
|
|
0.4
|
|
|
0.7
|
|
Interest rate range
|
|
10.37
|
%
|
|
9.50% - 16.33%
|
Maturity date or date range
|
|
April 15, 2024
|
|
April 9, 2020 - April 15, 2024
|
|
|
|
|
|
International Credit Facilities and Short-Term Debt
|
|
|
|
|
Total credit line
|
|
$
|
12.8
|
|
|
$
|
9.8
|
|
Available credit line
|
|
11.4
|
|
|
8.4
|
|
Letters of credit - maximum
|
|
7.3
|
|
|
7.1
|
|
Amount of letters of credit outstanding
|
|
2.6
|
|
|
3.5
|
|
Short-term debt
|
|
1.4
|
|
|
1.1
|
|
Interest rate range
|
|
2.40% - 6.75%
|
|
9.75%
|
Debt maturities for the Company's short-term and long-term debt are expected to be $1.6 million, $0.2 million, $0.1 million and $0.1 million in the years ending December 31, 2021, 2022, 2023 and 2024, respectively.
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 2020, 2019 and 2018 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Reserve balance, January 1
|
|
$
|
10.3
|
|
|
$
|
10.9
|
|
|
$
|
15.4
|
|
Warranty liabilities accrued
|
|
9.8
|
|
|
9.8
|
|
|
13.2
|
|
Warranty liabilities settled
|
|
(10.2)
|
|
|
(10.5)
|
|
|
(17.5)
|
|
Other
|
|
0.4
|
|
|
0.1
|
|
|
(0.2)
|
|
Reserve balance, December 31
|
|
$
|
10.3
|
|
|
$
|
10.3
|
|
|
$
|
10.9
|
|
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 $7.2 million and $6.8 million at December 31, 2020 and 2019, respectively, of which $4.2 million and $4.5 million were included in "Other long-term liabilities" in the Consolidated Balance Sheets at December 31, 2020 and 2019, respectively.
14. Pension and Retirement Plans
Pension Plan
Prior to December 31, 2003, all employees of the Company's Kolberg-Pioneer, Inc. subsidiary were covered by a defined benefit pension plan ("the Pension Plan"). After December 31, 2003, all benefit accruals under the plan ceased and no new employees could become participants in the plan. Benefits paid under this plan are based on years of service multiplied by a monthly amount. The Company's funding policy for the plan is to make at least the minimum annual contributions required by applicable regulations.
The Company's investment strategy for the plan is to earn a rate of return sufficient to match or exceed the long-term growth of pension liabilities. The investment policy states that the Plan Committee in its sole discretion shall determine the allocation of plan assets among the following four asset classes: cash equivalents, fixed-income securities, domestic equities and international equities. The Plan Committee attempts to ensure adequate diversification of the invested assets through investment in an exchange traded mutual fund that invests in a diversified portfolio of stocks, bonds and money market securities.
The following provides information regarding benefit obligations, plan assets and the funded status of the plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
(in millions)
|
|
2020
|
|
2019
|
Change in benefit obligation:
|
|
|
|
|
Benefit obligation, beginning of year
|
|
$
|
17.1
|
|
|
$
|
15.7
|
|
Interest cost
|
|
0.5
|
|
|
0.6
|
|
Actuarial loss
|
|
1.6
|
|
|
1.6
|
|
Benefits paid
|
|
(0.8)
|
|
|
(0.8)
|
|
Benefit obligation, end of year
|
|
18.4
|
|
|
17.1
|
|
Accumulated benefit obligation
|
|
18.4
|
|
|
17.1
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
Fair value of plan assets, beginning of year
|
|
18.0
|
|
|
14.5
|
|
Actual gain on plan assets
|
|
2.2
|
|
|
2.7
|
|
Employer contribution
|
|
—
|
|
|
1.6
|
|
Benefits paid
|
|
(0.8)
|
|
|
(0.8)
|
|
Fair value of plan assets, end of year
|
|
19.4
|
|
|
18.0
|
|
Funded status, end of year
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
|
|
|
|
|
Amounts recognized in the consolidated balance sheets:
|
|
|
|
|
Noncurrent asset
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
Net amount recognized
|
|
$
|
1.0
|
|
|
$
|
0.9
|
|
|
|
|
|
|
Amounts recognized in accumulated other comprehensive loss consist of:
|
|
|
|
|
Net loss
|
|
$
|
4.9
|
|
|
$
|
4.9
|
|
Net amount recognized
|
|
$
|
4.9
|
|
|
$
|
4.9
|
|
|
|
|
|
|
Weighted average assumptions used to determine the benefit obligation:
|
|
|
|
|
Discount rate
|
|
2.30
|
%
|
|
3.10
|
%
|
Rate of compensation increase
|
|
N/A
|
|
N/A
|
The primary driver of the actuarial loss in the Company's Pension Plan in 2020 and 2019 within the change in benefit obligation is a result of a decrease in the discount rate assumption.
All assets in the plan are invested in an exchange-traded mutual fund (Level 1 in the fair value hierarchy). The allocation of assets within the mutual fund as of December 31 and the target asset allocation ranges by asset category are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Allocation
|
|
|
Asset Category
|
|
2020
|
|
2019
|
|
Target Allocation Ranges
|
Equity securities
|
|
48.4
|
%
|
|
45.9
|
%
|
|
40% - 65%
|
Debt securities
|
|
41.0
|
%
|
|
42.2
|
%
|
|
30% - 50%
|
Cash and equivalents
|
|
10.6
|
%
|
|
11.9
|
%
|
|
0% - 15%
|
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Net periodic benefit cost for 2020, 2019 and 2018 included the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Components of net periodic benefit (income) cost:
|
|
|
|
|
|
|
Interest cost
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Expected return on plan assets
|
|
(1.0)
|
|
|
(0.8)
|
|
|
(0.8)
|
|
Amortization of actuarial loss
|
|
0.4
|
|
|
0.5
|
|
|
0.5
|
|
Net periodic benefit (income) cost
|
|
$
|
(0.1)
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
|
|
|
|
|
|
|
Net actuarial loss (gain) for the year
|
|
$
|
0.4
|
|
|
$
|
(0.3)
|
|
|
$
|
0.7
|
|
Amortization of net loss
|
|
(0.4)
|
|
|
(0.5)
|
|
|
(0.5)
|
|
Total recognized in other comprehensive income (loss)
|
|
—
|
|
|
(0.8)
|
|
|
0.2
|
|
Total recognized in net periodic benefit cost and other comprehensive income (loss)
|
|
$
|
(0.1)
|
|
|
$
|
(0.5)
|
|
|
$
|
0.5
|
|
Weighted average assumptions used to determine net periodic benefit cost for years ended December 31:
|
|
|
|
|
|
|
Discount rate
|
|
3.10
|
%
|
|
4.10
|
%
|
|
3.50
|
%
|
Expected return on plan assets
|
|
6.00
|
%
|
|
6.00
|
%
|
|
6.25
|
%
|
Rate of compensation increase
|
|
N/A
|
|
N/A
|
|
N/A
|
To develop the expected long-term rate of return on assets assumptions, the Company considers the historical returns and future expectations for returns in each asset class, as well as targeted asset allocation percentages within the asset portfolios. No contributions are expected to be funded by the Company during 2021. Amounts in "Accumulated other comprehensive loss" expected to be recognized in net periodic benefit cost in 2021 for the amortization of a net loss is $0.4 million.
The following estimated future benefit payments are expected in the years indicated:
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Pension Benefits
|
2021
|
|
$
|
1.0
|
|
2022
|
|
0.9
|
|
2023
|
|
0.9
|
|
2024
|
|
1.0
|
|
2025
|
|
0.9
|
|
2026 and thereafter
|
|
4.9
|
|
Other Retirement Plans
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 $6.9 million, $7.0 million and $7.5 million in 2020, 2019 and 2018, respectively.
The Company maintains a SERP for certain of its executive officers. The plan is a non-qualified deferred compensation plan administered by the Board of Directors of the Company, pursuant to which the Company makes quarterly cash contributions of a certain percentage of executive officers' compensation. Investments are self-directed by participants and can include Company stock. Upon retirement, participants receive their apportioned stock of the plan assets in the form of cash.
Assets of the SERP consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
(in millions)
|
|
Cost
|
|
Market
|
|
Cost
|
|
Market
|
Company stock
|
|
$
|
1.5
|
|
|
$
|
2.3
|
|
|
$
|
1.7
|
|
|
$
|
2.0
|
|
Equity securities
|
|
4.5
|
|
|
5.0
|
|
|
4.4
|
|
|
4.6
|
|
Total
|
|
$
|
6.0
|
|
|
$
|
7.3
|
|
|
$
|
6.1
|
|
|
$
|
6.6
|
|
The Company periodically adjusts the deferred compensation liability such that the balance of the liability equals the total fair market value of all assets held by the trust established under the SERP. Such liabilities are included in "Other long-term liabilities" 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 as a reduction in "Shareholders' equity" in the Consolidated Balance Sheets.
The change in the fair market value of Company stock held in the SERP 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 SERP is recorded as a reduction of "Shareholders' equity" 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 $0.6 million, $0.6 million and $1.6 million in 2020, 2019 and 2018, respectively, related to the change in the fair value of the Company stock held in the SERP.
15. Income Taxes
For financial reporting purposes, income (loss) before income taxes includes the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
United States
|
|
$
|
42.1
|
|
|
$
|
26.7
|
|
|
$
|
(86.8)
|
|
Foreign
|
|
3.6
|
|
|
(1.5)
|
|
|
0.9
|
|
Income (loss) before income taxes
|
|
$
|
45.7
|
|
|
$
|
25.2
|
|
|
$
|
(85.9)
|
|
The (benefit) provision for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Current (benefit) provision:
|
|
|
|
|
|
|
Federal
|
|
$
|
(14.0)
|
|
|
$
|
(0.5)
|
|
|
$
|
(4.0)
|
|
State
|
|
2.4
|
|
|
0.8
|
|
|
0.9
|
|
Foreign
|
|
1.8
|
|
|
1.0
|
|
|
3.3
|
|
Total current (benefit) provision
|
|
(9.8)
|
|
|
1.3
|
|
|
0.2
|
|
Deferred provision (benefit):
|
|
|
|
|
|
|
Federal
|
|
12.3
|
|
|
2.8
|
|
|
(19.1)
|
|
State
|
|
(1.4)
|
|
|
(1.0)
|
|
|
(5.8)
|
|
Foreign
|
|
(2.3)
|
|
|
(0.1)
|
|
|
(0.5)
|
|
Total deferred provision (benefit)
|
|
8.6
|
|
|
1.7
|
|
|
(25.4)
|
|
Total (benefit) provision:
|
|
|
|
|
|
|
Federal
|
|
(1.7)
|
|
|
2.3
|
|
|
(23.1)
|
|
State
|
|
1.0
|
|
|
(0.2)
|
|
|
(4.9)
|
|
Foreign
|
|
(0.5)
|
|
|
0.9
|
|
|
2.8
|
|
Total income tax (benefit) provision
|
|
$
|
(1.2)
|
|
|
$
|
3.0
|
|
|
$
|
(25.2)
|
|
The Company's "Income tax (benefit) provision" is computed based on the domestic and foreign federal statutory rates and the average state statutory rates, net of related federal benefit.
The (benefit) provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes. A reconciliation of the (benefit) provision for income taxes at the statutory federal income tax rate to the amount provided is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Tax expense (benefit) at the statutory federal income tax rate
|
|
$
|
9.6
|
|
|
$
|
5.3
|
|
|
$
|
(18.1)
|
|
|
|
|
|
|
|
|
State income tax, net of federal income tax
|
|
0.3
|
|
|
(2.3)
|
|
|
(3.0)
|
|
Research and development tax credits
|
|
(4.3)
|
|
|
(6.7)
|
|
|
(4.6)
|
|
FIN 48 impact
|
|
4.0
|
|
|
3.2
|
|
|
1.9
|
|
Liquidation of subsidiary
|
|
—
|
|
|
(0.9)
|
|
|
(1.4)
|
|
True-up of foreign subsidiary net operation loss carryforward
|
|
(0.3)
|
|
|
(1.4)
|
|
|
—
|
|
Valuation allowance impact
|
|
(1.0)
|
|
|
5.8
|
|
|
1.0
|
|
Changes in tax rates
|
|
0.3
|
|
|
0.1
|
|
|
(0.2)
|
|
Effects of CARES Act - 2018 NOL Carryback
|
|
(9.5)
|
|
|
—
|
|
|
—
|
|
Other items
|
|
(0.3)
|
|
|
(0.1)
|
|
|
(0.8)
|
|
Total income tax (benefit) provision
|
|
$
|
(1.2)
|
|
|
$
|
3.0
|
|
|
$
|
(25.2)
|
|
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)
|
|
2020
|
|
2019
|
Deferred tax assets:
|
|
|
|
|
Inventory reserves
|
|
$
|
3.2
|
|
|
$
|
6.1
|
|
Warranty reserves
|
|
2.0
|
|
|
2.1
|
|
Credit loss reserves
|
|
0.3
|
|
|
0.3
|
|
State tax loss carryforwards
|
|
11.6
|
|
|
9.8
|
|
Accrued vacation
|
|
1.4
|
|
|
1.5
|
|
Deferred compensation
|
|
1.5
|
|
|
1.1
|
|
Share-based compensation
|
|
1.5
|
|
|
1.5
|
|
Goodwill
|
|
2.1
|
|
|
2.1
|
|
Outside basis difference
|
|
4.7
|
|
|
4.0
|
|
Federal net operating loss
|
|
—
|
|
|
12.1
|
|
Foreign net operating loss
|
|
9.5
|
|
|
8.6
|
|
Lease obligation
|
|
0.9
|
|
|
0.8
|
|
Other
|
|
1.5
|
|
|
0.9
|
|
Domestic Credit Carryforwards
|
|
1.6
|
|
|
3.1
|
|
Deferred revenue
|
|
1.2
|
|
|
1.5
|
|
Deferred payroll tax - CARES Act
|
|
2.4
|
|
|
—
|
|
Pension and post-employment benefits
|
|
1.0
|
|
|
1.2
|
|
Valuation allowances
|
|
(14.1)
|
|
|
(14.6)
|
|
Total deferred tax assets
|
|
32.3
|
|
|
42.1
|
|
Deferred tax liabilities:
|
|
|
|
|
Property and equipment
|
|
14.7
|
|
|
15.8
|
|
Intangibles
|
|
0.9
|
|
|
0.3
|
|
Right-of-use assets
|
|
0.9
|
|
|
0.8
|
|
Pension
|
|
1.3
|
|
|
1.4
|
|
Total deferred tax liabilities
|
|
17.8
|
|
|
18.3
|
|
Total net deferred assets
|
|
$
|
14.5
|
|
|
$
|
23.8
|
|
As of December 31, 2020, the Company does not have a federal net operating loss carryforward. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was passed which modified the net operating loss ("NOL") carryback provisions allowing the Company to carryback its 2018 NOL to prior years. The tax provision for the year ended December 31, 2020 includes a $9.5 million tax benefit related to the NOL carryback which occurred due to a change in rates from 35% to 21%.
As of December 31, 2020, the Company has state net operating loss carryforwards of $193.0 million and foreign net operating loss carryforwards of approximately $31.5 million, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2021 and 2032. A significant portion of the valuation allowance for deferred tax assets relates to the future utilization of state and foreign net operating loss and state tax credit carryforwards. Future utilization of these net operating loss and state tax credit carryforwards is evaluated by the Company on a periodic basis, and the valuation allowance is adjusted accordingly. In 2020, the valuation allowance on these carryforwards was a $1.0 million net decrease due to the unrealizable portion of certain entities’ state and foreign net operating loss carryforwards and certain other deferred tax assets in foreign jurisdictions. In 2020, the valuation allowance for the Company's subsidiary in Australia ("Astec Australia") was released in full as this entity became profitable in 2019 and 2020 and is no longer in a cumulative three-year loss position. The tax provision for the year ended December 31, 2020 includes a benefit of $1.5 million for the release of Astec Australia’s valuation allowance.
The following table represents a roll forward of the deferred tax asset valuation allowance for the years ended December 31, 2020, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Allowance balance, beginning of year
|
|
$
|
14.6
|
|
|
$
|
8.5
|
|
|
$
|
8.3
|
|
Provision
|
|
1.5
|
|
|
5.8
|
|
|
1.0
|
|
Reversals
|
|
(1.5)
|
|
|
—
|
|
|
—
|
|
Other
|
|
(0.5)
|
|
|
0.3
|
|
|
(0.8)
|
|
Allowance balance, end of year
|
|
$
|
14.1
|
|
|
$
|
14.6
|
|
|
$
|
8.5
|
|
Undistributed foreign earnings are considered to be indefinitely reinvested outside the U.S. as of December 31, 2020. 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 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, 2020, the cumulative amount of undistributed U.S. GAAP earnings for the Company's foreign subsidiaries was $48.7 million.
The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by authorities for years prior to 2014. 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 2016.
The Company has a liability for unrecognized tax benefits of $9.7 million and $5.7 million (excluding accrued interest and penalties) as of December 31, 2020 and 2019, respectively. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. The Company did not recognize any tax benefits for penalties and interest related to amounts that were settled for less than previously accrued in 2020 and recognized $0.1 million in 2019. The net total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $10.5 million and $6.1 million at December 31, 2020 and 2019, respectively. The Company does not expect a significant increase or decrease to the total amount of unrecognized tax benefits within the next twelve months.
A reconciliation of the beginning and ending unrecognized tax benefits excluding interest and penalties is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Balance, beginning of year
|
|
$
|
5.7
|
|
|
$
|
2.1
|
|
|
$
|
0.4
|
|
Additions for tax positions taken in current year
|
|
0.5
|
|
|
3.0
|
|
|
1.7
|
|
Additions for tax positions taken in prior period
|
|
3.5
|
|
|
0.7
|
|
|
—
|
|
|
|
|
|
|
|
|
Decreases related to settlements with tax authorities
|
|
—
|
|
|
(0.1)
|
|
|
—
|
|
Balance, end of year
|
|
$
|
9.7
|
|
|
$
|
5.7
|
|
|
$
|
2.1
|
|
The tax positions in the December 31, 2020 balance of unrecognized tax benefits are expected to reverse through income in future years.
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 $2.9 million and $1.5 million at December 31, 2020 and 2019, respectively. These arrangements expire at various dates through December 2023. Additionally, the Company is also potentially liable for 1.75% of the unpaid balance, determined as of December 31 of the prior year (or approximately $0.6 million for 2020), 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 $2.0 million and $1.7 million related to these guarantees as of December 31, 2020 and 2019, respectively.
The Company reviews off-balance sheet guarantees individually and at the loss pool level based on one agreement. Prior history is considered in regard to the Company having to perform on any off-balance sheet guarantees, as well as future projections of individual customer credit
worthiness. During the year ended December 31, 2020, the Company considered the implications of COVID-19 in regard to assessing credit losses related to off-balance sheet guarantees.
In addition, the Company is contingently liable under letters of credit issued under its Credit Facility totaling $7.6 million as of December 31, 2020, including $3.2 million of letters of credit guaranteeing certain bank credit facilities of the Company's Brazilian subsidiary. The outstanding letters of credit expire at various dates through June 2023. The maximum potential amount of future payments under letters of credit issued under the Credit Facility for which the Company could be liable is $30.0 million as of December 31, 2020. As of December 31, 2020, the Company's foreign subsidiaries are contingently liable for a total of $2.6 million in performance letters of credit, advance payments and retention guarantees. The maximum potential amount of future payments under these letters of credit and guarantees for which the Company could be liable is $7.3 million as of December 31, 2020.
The Company and certain of its former executive officers were named as defendants in a putative shareholder class action lawsuit filed on February 1, 2019, as amended on August 26, 2019, in the United States District Court for the Eastern District of Tennessee. The action was styled City of Taylor General Employees Retirement System v. Astec Industries, Inc., et al., Case No. 1:19-cv-24-CEA-CHS. The complaint generally alleged that the defendants violated the Securities Exchange Act of 1934, as amended (the "Exchange Act'), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and that the individual defendants were control persons under Section 20(a) of the Exchange Act. The complaint was filed on behalf of shareholders who purchased stock of the Company between July 26, 2016 and October 22, 2018 and sought monetary damages on behalf of the purported class. The Company disputed these allegations and filed a motion to dismiss the lawsuit on October 25, 2019. On February 19, 2021, the motion to dismiss was granted with prejudice and judgment was entered for the defendants.
The Company's GEFCO subsidiary has been named a defendant in a lawsuit originally filed on August 16, 2018 with an amended complaint filed on January 25, 2019, in the United States District Court for the Western District of Oklahoma. The action is styled VenVer S.A. and Americas Coil Tubing LLP v. GEFCO, Inc., Case No. CIV-18-790-SLP. The complaint alleges breaches of warranty and other similar claims regarding equipment sold by GEFCO in 2013. In addition to seeking a rescission of the purchase contract, the plaintiff is seeking special and consequential damages. The original purchase price of the equipment was approximately $8.5 million. GEFCO disputes the plaintiff's allegations and intends to defend this lawsuit vigorously. On July 7, 2020, the plaintiffs filed a separate lawsuit directly against Astec Industries, Inc. Besides a new claim based on fraudulent transfer, the allegations essentially mirror the GEFCO suit. Astec Industries, Inc. is vigorously defending this suit as well. The Company is unable to determine whether or not a future loss will be incurred due to this litigation or estimate the possible loss or range of loss, if any, at this time.
The Company is currently a party to various claims and legal proceedings that have arisen in the ordinary course of business. If management believes that a loss arising from such claims and legal proceedings is probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated legal fees) or the minimum estimated liability when the loss is estimated using a range and no point within the range is more probable than another. 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
The Company's 2011 Incentive Plan ("2011 Plan") was established to provide for the grant of share-based awards to its employees, officers, directors and consultants. The 2011 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. The 2011 Plan is administered by the Company's Compensation Committee of the Board of Directors ("Compensation Committee"). Up to 0.7 million shares of newly-issued Company stock are reserved for issuance under the 2011 Plan of which approximately 0.2 million awards were available for issuance at December 31, 2020. The Company has outstanding restricted stock units, performance stock units and deferred stock units none of which participate in Company-paid dividends.
The Company also has an Amended and Restated Non-Employee Directors Compensation Plan, which provides that annual retainers payable to the Company's non-employee directors will be paid in the form of cash, unless the director elects to receive the annual retainer in the form of common stock, which may, at the director’s option, be received on a deferred basis. If the director elects to receive common stock, whether on a current or deferred basis, the number of shares to be received is determined by dividing the dollar value of the annual retainer by the fair market value of the Company's common stock on the date the retainer is payable. Deferred stock units under this plan are entitled to dividends in the form of shares.
Share-based compensation expense of $5.1 million, $2.6 million and $2.0 million was recorded in the years ended December 31, 2020, 2019 and 2018, respectively, and recognized in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.
Restricted Stock Units ("RSUs")
Prior to 2020, key members of management were awarded with restricted stock units ("RSUs") each year based upon the financial performance of the Company and its subsidiaries. Beginning in 2020, awards were determined based on a predetermined award value of the base salary of eligible employees aligned to a total compensation program.
Restricted stock unit awards granted in 2016 and prior vest at the end of five years from the date of grant, or at the time a recipient retires after reaching age 65, if earlier, while awards granted in 2017 and 2018 vest three years from the date of grant. RSUs granted in 2019 and 2020 vest ratably, at the end of each 12-month period, over a three-year period. Additional RSUs are granted on an annual basis to the Company's outside directors under the Company's Non-Employee Directors Compensation Plan with a one-year vesting period. Certain awards granted in 2019 were established as liability-based awards but have subsequently converted to equity awards in 2020.
Changes in restricted stock units during the year ended December 31, 2020 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, 2020
|
|
188
|
|
|
$
|
45.78
|
|
Granted
|
|
210
|
|
|
$
|
34.99
|
|
Vested
|
|
(90)
|
|
|
$
|
47.64
|
|
Forfeited
|
|
(29)
|
|
|
$
|
39.32
|
|
Unvested as of December 31, 2020
|
|
279
|
|
|
$
|
37.72
|
|
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)
|
|
2020
|
|
2019
|
|
2018
|
Weighted average grant date fair value per award
|
|
$
|
34.99
|
|
|
$
|
34.57
|
|
|
$
|
58.45
|
|
Fair value of awards vested
|
|
$
|
3.8
|
|
|
$
|
1.6
|
|
|
$
|
1.9
|
|
Tax (expense) benefit for restricted stock compensation expense
|
|
$
|
(0.4)
|
|
|
$
|
0.7
|
|
|
$
|
0.5
|
|
As of December 31, 2020, the Company had $5.8 million of unrecognized compensation expense before tax related to restricted stock, which is expected to be recognized over a weighted average period of 2.0 years.
Performance Stock Units ("PSUs")
Beginning in 2020, PSUs were 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 goals established by the Compensation Committee. A participant generally must be employed by the Company on the vesting date of each award. However, adjusted awards will be paid if employment terminates earlier on account of a qualifying employment termination event such as death, disability and retirement at age 65.
PSUs granted in 2020 were divided into three equal tranches with cliff vesting periods of one year, two years and three years. The number of PSUs that vest may range from zero to 200% of the target shares granted and is determined for each tranche based on the achievement of two equally weighted performance criteria: 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, 2020 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, 2020
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
96
|
|
|
$
|
35.46
|
|
Vested
|
|
(1)
|
|
|
$
|
34.66
|
|
Forfeited
|
|
(8)
|
|
|
$
|
36.08
|
|
Unvested as of December 31, 2020
|
|
87
|
|
|
$
|
35.41
|
|
Tax benefits for the year ended December 31, 2020 were nominal. As of December 31, 2020, the Company had $1.6 million of unrecognized compensation expense before tax related to PSUs, which is expected to be recognized over a weighted average period of 1.6 years.
Deferred Stock Units ("DSUs")
The 2011 Plan and the Non-Employee Directors Compensation Plan each allow for deferred delivery of shares as received including at vesting. As of December 31, 2020, there were 34,145 fully vested deferred stock units, which were excluded from the tables above. The aggregate fair value of these units at December 31, 2020 was $2.0 million.
18. Revenue Recognition
The following tables disaggregates the Company's revenue by major source for the period ended December 31, 2020 and 2019 (excluding intercompany sales):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2020
|
(in millions)
|
|
Infrastructure Solutions
|
|
Materials Solutions
|
|
Corporate
|
|
Total
|
Net Sales – Domestic:
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
$
|
354.1
|
|
|
$
|
152.0
|
|
|
$
|
—
|
|
|
$
|
506.1
|
|
|
|
|
|
|
|
|
|
|
Parts and component sales
|
|
172.8
|
|
|
69.2
|
|
|
—
|
|
|
242.0
|
|
Service and equipment installation revenue
|
|
21.0
|
|
|
1.2
|
|
|
—
|
|
|
22.2
|
|
Used equipment sales
|
|
19.3
|
|
|
2.1
|
|
|
—
|
|
|
21.4
|
|
Freight revenue
|
|
19.7
|
|
|
5.1
|
|
|
—
|
|
|
24.8
|
|
Other
|
|
1.8
|
|
|
(1.3)
|
|
|
—
|
|
|
0.5
|
|
Total domestic revenue
|
|
588.7
|
|
|
228.3
|
|
|
—
|
|
|
817.0
|
|
|
|
|
|
|
|
|
|
|
Net Sales – International:
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
78.0
|
|
|
58.1
|
|
|
—
|
|
|
136.1
|
|
|
|
|
|
|
|
|
|
|
Parts and component sales
|
|
29.1
|
|
|
29.4
|
|
|
—
|
|
|
58.5
|
|
Service and equipment installation revenue
|
|
2.4
|
|
|
1.7
|
|
|
—
|
|
|
4.1
|
|
Used equipment sales
|
|
2.4
|
|
|
2.2
|
|
|
—
|
|
|
4.6
|
|
Freight revenue
|
|
2.0
|
|
|
1.6
|
|
|
—
|
|
|
3.6
|
|
Other
|
|
0.2
|
|
|
0.3
|
|
|
—
|
|
|
0.5
|
|
Total international revenue
|
|
114.1
|
|
|
93.3
|
|
|
—
|
|
|
207.4
|
|
Total net sales
|
|
$
|
702.8
|
|
|
$
|
321.6
|
|
|
$
|
—
|
|
|
$
|
1,024.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2019
|
(in millions)
|
|
Infrastructure Solutions
|
|
Materials Solutions
|
|
Corporate
|
|
Total
|
Net Sales – Domestic:
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
$
|
413.6
|
|
|
$
|
166.9
|
|
|
$
|
—
|
|
|
$
|
580.5
|
|
Pellet plant revenue
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
20.0
|
|
Parts and component sales
|
|
169.0
|
|
|
74.5
|
|
|
—
|
|
|
243.5
|
|
Service and equipment installation revenue
|
|
19.2
|
|
|
8.0
|
|
|
—
|
|
|
27.2
|
|
Used equipment sales
|
|
11.4
|
|
|
1.2
|
|
|
—
|
|
|
12.6
|
|
Freight revenue
|
|
18.0
|
|
|
6.3
|
|
|
—
|
|
|
24.3
|
|
Other
|
|
3.3
|
|
|
(2.9)
|
|
|
—
|
|
|
0.4
|
|
Total domestic revenue
|
|
654.5
|
|
|
254.0
|
|
|
—
|
|
|
908.5
|
|
|
|
|
|
|
|
|
|
|
Net Sales – International:
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
70.4
|
|
|
95.5
|
|
|
—
|
|
|
165.9
|
|
|
|
|
|
|
|
|
|
|
Parts and component sales
|
|
28.6
|
|
|
47.0
|
|
|
—
|
|
|
75.6
|
|
Service and equipment installation revenue
|
|
6.2
|
|
|
2.0
|
|
|
—
|
|
|
8.2
|
|
Used equipment sales
|
|
2.2
|
|
|
3.3
|
|
|
—
|
|
|
5.5
|
|
Freight revenue
|
|
2.5
|
|
|
3.0
|
|
|
—
|
|
|
5.5
|
|
Other
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.4
|
|
Total international revenue
|
|
110.1
|
|
|
151.0
|
|
|
—
|
|
|
261.1
|
|
Total net sales
|
|
$
|
764.6
|
|
|
$
|
405.0
|
|
|
$
|
—
|
|
|
$
|
1,169.6
|
|
As of December 31, 2020, the Company had contract assets of $4.3 million and contract liabilities of $8.9 million, including $2.9 million of deferred revenue related to extended warranties. As of December 31, 2019, the Company had contract assets of $4.7 million and contract liabilities of $6.5 million, including $3.5 million of deferred revenue related to extended warranties. Total extended warranty sales were $1.7 million and $1.9 million in 2020 and 2019, respectively.
19. Operations by Industry Segment and Geographic Area
The Company has two reportable segments, each of which comprise sites based upon the nature of the products or services produced, the type of customer for the products, the similarity of economic characteristics, the manner in which management reviews results and the nature of the production process, among other considerations. A brief description of each segment is as follows:
Infrastructure Solutions – The Infrastructure Solutions segment comprises 15 sites and designs, engineers, manufactures and markets a complete line of asphalt plants, concrete plants and their related components and ancillary equipment as well as supplying other heavy equipment. The U.S. based sites within the Infrastructure Solutions segment are primarily manufacturing operations while those located internationally market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites. The primary purchasers of the products produced by this segment are asphalt producers, highway and heavy equipment contractors, ready mix concrete producers, contractors in the construction and demolition recycling markets and domestic and foreign governmental agencies.
Materials Solutions – The Materials Solutions segment comprises 10 sites and designs and manufactures heavy processing equipment, in addition to servicing and supplying parts for the aggregate, metallic mining, recycling, ports and bulk handling markets. The sites within the Materials Solutions segment are primarily manufacturing operations with the AME and India sites functioning to market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of the Company's manufacturing sites. Additionally, the Materials Solutions segment offers consulting and engineering services to provide complete "turnkey" processing systems. The principal purchasers of aggregate processing equipment include distributors, highway and heavy equipment contractors, sand and gravel producers, recycle and crushing contractors, open mine operators, quarry operators, port and inland terminal authorities, power stations and foreign and domestic governmental agencies.
Corporate – The Corporate category consists primarily of our parent company and our captive insurance company, Astec Insurance, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments. The parent company and the captive insurance company provide support and corporate oversight for all of the sites. The Company evaluates performance and allocates resources to its operating segments based on profit or loss from operations before U.S. federal income taxes, state deferred taxes and corporate overhead and thus these costs are included in the Corporate category.
The accounting policies of the reportable segments are the same as those described in Note 2, Basis of Presentation and Significant Accounting Policies. Intersegment sales and transfers are valued at prices comparable to those for unrelated parties.
Segment information for 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Infrastructure Solutions
|
|
Materials Solutions
|
|
Corporate
|
|
Total
|
Revenues from external customers
|
|
$
|
702.8
|
|
|
$
|
321.6
|
|
|
$
|
—
|
|
|
$
|
1,024.4
|
|
Intersegment revenues
|
|
33.5
|
|
|
40.7
|
|
|
—
|
|
|
74.2
|
|
Restructuring, impairment and other asset charges, net
|
|
6.6
|
|
|
(1.3)
|
|
|
2.8
|
|
|
8.1
|
|
Interest expense
|
|
—
|
|
|
0.2
|
|
|
0.5
|
|
|
0.7
|
|
Interest income
|
|
0.1
|
|
|
0.3
|
|
|
0.4
|
|
|
0.8
|
|
Depreciation and amortization
|
|
17.8
|
|
|
7.9
|
|
|
1.2
|
|
|
26.9
|
|
Income taxes
|
|
0.4
|
|
|
1.2
|
|
|
(2.8)
|
|
|
(1.2)
|
|
Profit (loss)
|
|
53.8
|
|
|
32.1
|
|
|
(40.1)
|
|
|
45.8
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
938.8
|
|
|
639.3
|
|
|
535.3
|
|
|
2,113.4
|
|
Capital expenditures
|
|
7.9
|
|
|
4.8
|
|
|
2.7
|
|
|
15.4
|
|
Segment information for 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Infrastructure Solutions
|
|
Materials Solutions
|
|
Corporate
|
|
Total
|
Revenues from external customers
|
|
$
|
764.6
|
|
|
$
|
405.0
|
|
|
$
|
—
|
|
|
$
|
1,169.6
|
|
Intersegment revenues
|
|
29.2
|
|
|
22.2
|
|
|
—
|
|
|
51.4
|
|
Restructuring, impairment and other asset charges, net
|
|
2.9
|
|
|
0.3
|
|
|
—
|
|
|
3.2
|
|
Interest expense
|
|
—
|
|
|
0.3
|
|
|
1.1
|
|
|
1.4
|
|
Interest income
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
1.2
|
|
Depreciation and amortization
|
|
16.9
|
|
|
8.2
|
|
|
1.1
|
|
|
26.2
|
|
Income taxes
|
|
0.8
|
|
|
0.6
|
|
|
1.6
|
|
|
3.0
|
|
Profit (loss)
|
|
33.8
|
|
|
22.8
|
|
|
(35.6)
|
|
|
21.0
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
865.8
|
|
|
608.4
|
|
|
420.9
|
|
|
1,895.1
|
|
Capital expenditures
|
|
14.2
|
|
|
7.4
|
|
|
1.0
|
|
|
22.6
|
|
Segment information for 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Infrastructure Solutions
|
|
Materials Solutions
|
|
Corporate
|
|
Total
|
Revenues from external customers
|
|
$
|
718.4
|
|
|
$
|
453.2
|
|
|
$
|
—
|
|
|
$
|
1,171.6
|
|
Intersegment revenues
|
|
39.1
|
|
|
16.6
|
|
|
—
|
|
|
55.7
|
|
Restructuring, impairment and other asset charges, net
|
|
13.1
|
|
|
—
|
|
|
—
|
|
|
13.1
|
|
Interest expense
|
|
—
|
|
|
0.4
|
|
|
0.6
|
|
|
1.0
|
|
Interest income
|
|
0.1
|
|
|
0.4
|
|
|
0.5
|
|
|
1.0
|
|
Depreciation and amortization
|
|
17.6
|
|
|
9.4
|
|
|
0.9
|
|
|
27.9
|
|
Income taxes
|
|
1.2
|
|
|
2.4
|
|
|
(28.8)
|
|
|
(25.2)
|
|
Profit (loss)
|
|
(109.9)
|
|
|
45.5
|
|
|
1.6
|
|
|
(62.8)
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
846.1
|
|
|
590.5
|
|
|
367.2
|
|
|
1,803.8
|
|
Capital expenditures
|
|
19.4
|
|
|
8.7
|
|
|
0.8
|
|
|
28.9
|
|
The totals of segment information for all reportable segments reconciles to consolidated totals as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Net income (loss) attributable to controlling interest
|
|
|
|
|
|
|
Total profit (loss) for reportable segments
|
|
$
|
85.9
|
|
|
$
|
56.6
|
|
|
$
|
(64.4)
|
|
Corporate (expenses) income, net
|
|
(40.1)
|
|
|
(35.6)
|
|
|
1.6
|
|
Net loss attributable to non-controlling interest
|
|
—
|
|
|
0.1
|
|
|
0.3
|
|
Recapture of intersegment profit
|
|
1.1
|
|
|
1.2
|
|
|
2.1
|
|
Total consolidated net income (loss) attributable to controlling interest
|
|
$
|
46.9
|
|
|
$
|
22.3
|
|
|
$
|
(60.4)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Total assets for reportable segments
|
|
$
|
1,578.1
|
|
|
$
|
1,474.2
|
|
|
$
|
1,436.6
|
|
Corporate assets
|
|
535.3
|
|
|
420.9
|
|
|
367.2
|
|
Elimination of intercompany profit in inventory
|
|
(2.8)
|
|
|
(3.8)
|
|
|
(5.0)
|
|
Elimination of intercompany receivables
|
|
(906.2)
|
|
|
(767.9)
|
|
|
(664.9)
|
|
Elimination of investment in subsidiaries
|
|
(329.6)
|
|
|
(296.7)
|
|
|
(300.7)
|
|
Other
|
|
(26.6)
|
|
|
(26.2)
|
|
|
22.3
|
|
Total consolidated assets
|
|
$
|
848.2
|
|
|
$
|
800.5
|
|
|
$
|
855.5
|
|
Sales into major geographic regions were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
United States
|
|
$
|
817.0
|
|
|
$
|
908.5
|
|
|
$
|
915.8
|
|
Canada
|
|
57.9
|
|
|
66.8
|
|
|
61.6
|
|
Australia and Oceania
|
|
28.5
|
|
|
42.3
|
|
|
38.6
|
|
Other European Countries
|
|
23.2
|
|
|
32.2
|
|
|
26.0
|
|
Africa
|
|
22.4
|
|
|
44.7
|
|
|
45.6
|
|
South America (excluding Brazil)
|
|
21.9
|
|
|
17.9
|
|
|
30.1
|
|
Brazil
|
|
20.4
|
|
|
11.6
|
|
|
6.3
|
|
Japan and Korea
|
|
8.1
|
|
|
3.6
|
|
|
3.6
|
|
West Indies
|
|
6.1
|
|
|
6.4
|
|
|
1.5
|
|
Russia
|
|
4.0
|
|
|
5.1
|
|
|
9.6
|
|
Middle East
|
|
3.2
|
|
|
2.6
|
|
|
7.9
|
|
Post-Soviet States (excluding Russia)
|
|
3.1
|
|
|
7.3
|
|
|
2.7
|
|
Mexico
|
|
2.9
|
|
|
5.3
|
|
|
9.6
|
|
Other Asian Countries
|
|
2.7
|
|
|
6.5
|
|
|
5.5
|
|
Central America (excluding Mexico)
|
|
1.3
|
|
|
4.9
|
|
|
2.7
|
|
China
|
|
1.2
|
|
|
2.2
|
|
|
2.8
|
|
India
|
|
0.5
|
|
|
1.0
|
|
|
1.0
|
|
Other
|
|
—
|
|
|
0.7
|
|
|
0.7
|
|
Total foreign
|
|
207.4
|
|
|
261.1
|
|
|
255.8
|
|
Total net sales
|
|
$
|
1,024.4
|
|
|
$
|
1,169.6
|
|
|
$
|
1,171.6
|
|
Long-lived assets by major geographic region are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(in millions)
|
|
2020
|
|
2019
|
United States
|
|
$
|
140.3
|
|
|
$
|
158.0
|
|
Northern Ireland
|
|
11.9
|
|
|
10.8
|
|
Brazil
|
|
6.3
|
|
|
8.3
|
|
Australia
|
|
5.1
|
|
|
4.6
|
|
Canada
|
|
4.8
|
|
|
4.0
|
|
South Africa
|
|
4.0
|
|
|
4.5
|
|
Chile
|
|
0.4
|
|
|
0.2
|
|
|
|
|
|
|
Total foreign
|
|
32.5
|
|
|
32.4
|
|
Total
|
|
$
|
172.8
|
|
|
$
|
190.4
|
|
20. Accumulated Other Comprehensive Loss
The after-tax components comprising "Accumulated other comprehensive loss" are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
(in millions)
|
|
2020
|
|
2019
|
Foreign currency translation adjustment
|
|
$
|
(30.4)
|
|
|
$
|
(28.6)
|
|
Unrecognized pension and postretirement benefits cost, net of tax of $1.3 and $1.3, respectively
|
|
(3.1)
|
|
|
(3.2)
|
|
Accumulated other comprehensive loss
|
|
$
|
(33.5)
|
|
|
$
|
(31.8)
|
|
See Note 14, Pension and Retirement Plans, for discussion of the amounts recognized in "Accumulated other comprehensive loss" related to the Company's defined pension plan.
21. Other Income
Other income consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Investment income (loss)
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
(0.2)
|
|
|
|
|
|
|
|
|
Gain on disposal of subsidiary
|
|
1.6
|
|
|
—
|
|
|
—
|
|
Curtailment gain on postretirement benefits
|
|
0.5
|
|
|
—
|
|
|
—
|
|
Other
|
|
0.5
|
|
|
0.1
|
|
|
0.7
|
|
Total
|
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
0.5
|
|
22. Restructuring, Impairment and Other Charges, Net
Beginning in 2018, the Company made several strategic decisions to divest of underperforming manufacturing sites or product lines, including its plan to exit from the wood pellet plant line of business; the closing of its subsidiary in Germany (Astec Mobile Machinery ("AMM")); its plan to close and sell its manufacturing sites in Albuquerque, New Mexico, Mequon, Wisconsin and Tacoma, Washington (the product lines manufactured at each of these sites will continue to be produced and marketed at other Company locations); its plan to exit the oil, gas and water well product lines; and its plan to sell certain Company-owned airplanes. These actions generally include facility rationalization, workforce reduction and the associated costs of organizational integration activities. In addition, the Company periodically sells or disposes of its assets in the normal course of its business operations as they are no longer needed or used and may incur gains or losses on these disposals. Certain of the costs associated with these decisions are separately identified as restructuring. The Company reports asset impairment charges and gains or losses on the sales of property and equipment collectively, with restructuring charges in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations. The Company incurred costs for these activities of $8.1 million, $3.2 million and $13.1 million in 2020, 2019 and 2018, respectively.
The restructuring and asset impairment charges incurred in 2020, 2019 and 2018 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Restructuring related charges:
|
|
|
|
|
|
|
Costs associated with exiting the wood pellet business
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
Costs associated with closing AMM
|
|
0.3
|
|
|
1.3
|
|
|
1.9
|
|
Costs associated with closing Albuquerque
|
|
1.3
|
|
|
—
|
|
|
—
|
|
Costs associated with closing Mequon
|
|
3.3
|
|
|
—
|
|
|
—
|
|
Costs associated with closing Enid
|
|
2.5
|
|
|
—
|
|
|
—
|
|
Costs associated with closing Tacoma
|
|
0.9
|
|
|
—
|
|
|
—
|
|
Workforce reductions at multiple sites
|
|
1.3
|
|
|
1.1
|
|
|
—
|
|
Other restructuring charges
|
|
0.3
|
|
|
—
|
|
|
—
|
|
Total restructuring related charges
|
|
9.9
|
|
|
2.9
|
|
|
1.9
|
|
|
|
|
|
|
|
|
Asset impairment charges:
|
|
|
|
|
|
|
Goodwill impairment charges
|
|
1.6
|
|
|
—
|
|
|
11.2
|
|
Airplane impairment charges
|
|
2.3
|
|
|
0.3
|
|
|
—
|
|
Other impairment charges
|
|
0.5
|
|
|
—
|
|
|
—
|
|
Total asset impairment charges
|
|
4.4
|
|
|
0.3
|
|
|
11.2
|
|
|
|
|
|
|
|
|
Gain on sale of property and equipment, net:
|
|
|
|
|
|
|
Gain on sale of property and equipment, net
|
|
(6.2)
|
|
|
—
|
|
|
—
|
|
Total gain on sale of property and equipment, net
|
|
(6.2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
Restructuring, impairment and other asset charges, net
|
|
$
|
8.1
|
|
|
$
|
3.2
|
|
|
$
|
13.1
|
|
Restructuring charges by segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Infrastructure Solutions
|
|
$
|
6.2
|
|
|
$
|
2.9
|
|
|
$
|
1.9
|
|
Materials Solutions
|
|
3.6
|
|
|
—
|
|
|
—
|
|
Corporate
|
|
0.1
|
|
|
—
|
|
|
—
|
|
Total restructuring related charges
|
|
$
|
9.9
|
|
|
$
|
2.9
|
|
|
$
|
1.9
|
|
Impairment charges by segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Infrastructure Solutions
|
|
$
|
1.9
|
|
|
$
|
—
|
|
|
$
|
11.2
|
|
Materials Solutions
|
|
(0.2)
|
|
|
0.3
|
|
|
—
|
|
Corporate
|
|
2.7
|
|
|
—
|
|
|
—
|
|
Total impairment charges
|
|
$
|
4.4
|
|
|
$
|
0.3
|
|
|
$
|
11.2
|
|
The net gain on sale of property and equipment by segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
(in millions)
|
|
2020
|
|
2019
|
|
2018
|
Infrastructure Solutions
|
|
$
|
(1.5)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Materials Solutions
|
|
(4.7)
|
|
|
—
|
|
|
—
|
|
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
Total gain on sale of property and equipment, net
|
|
$
|
(6.2)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charges accrued, but not paid, as of December 31, 2020 were $1.1 million and were not significant as of December 31, 2019.
In late 2018, it was determined that AMM did not meet the desired performance metrics, and the decision was made to close this site. Documents were filed by the Company in the German court system in December 2018 to begin the process of liquidating AMM. Essentially
all of the assets were liquidated prior to December 31, 2019, with the exception of the sale of its land and building, which were included in assets held for sale and valued at $0.3 million in the Consolidated Balance Sheets at December 31, 2019 and sold in January 2020. Losses on the liquidation are included in "Restructuring, impairment and other asset charges, net" in the Consolidated Statement of Operations for the year ended December 31, 2019. The sale of AMM's land and building was completed in January 2020 and the resulting gain on sale of fixed assets of $0.7 million was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the first quarter of 2020.
On October 21, 2019, the Company announced the closing of its Albuquerque, New Mexico location. The decision to close the site was based in part on market conditions and manufacturing facilities underutilization. The marketing and manufacturing of products previously produced by the site were transferred to other Company facilities. The site was closed as of March 31, 2020. The site's land, building and leasehold improvements, which were included in assets held for sale and valued at $2.8 million in the Consolidated Balance Sheets as of December 31, 2019, were sold in the third quarter of 2020 for $3.2 million. The resulting $0.4 million gain recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the third quarter of 2020.
In late 2019, the oil and gas drilling product lines produced at the Enid, Oklahoma location were impaired and discontinued. The remaining assets were sold in the third quarter of 2020 for $1.1 million, which is reported in "Other income" in the Consolidated Statements of Operations. Enid's land and building assets totaling $5.1 million are included in "Assets held for sale" in the Consolidated Balance Sheets at December 31, 2020.
In June 2020, the Company announced the closing of the Mequon site in order to simplify and consolidate operations. The Mequon facility ceased production operations in August 2020, and the sale of the land and building for $8.5 million was completed in December 2020. The Company recorded a gain on the sale of $4.7 million, which was recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the fourth quarter of 2020.
In October 2020, the Company closed a transaction for the sale of water well assets of the Company's Enid location, which included equipment, inventories and intangible assets. The purchase price for this transaction was approximately $6.9 million, net of purchase price adjustments completed in January 2021 whereby the Company has an obligation to pay the buyer $1.1 million. This obligation is included in "Other current liabilities" in the Consolidated Balance Sheets at December 31, 2020. The Company recorded a $0.5 million gain on the sale of this business in the fourth quarter of 2020 in "Other income" in the Consolidated Statements of Operations.
In January 2021, the Company announced plans to close the Tacoma facility in order to simplify and consolidate operations. The Tacoma facility is expected to cease operations in the second quarter of 2021. Manufacturing and marketing of Tacoma product lines are expected be transferred to other facilities. In conjunction with this action, the Company recorded $0.9 million of restructuring related charges during the fourth quarter of 2020 in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.
23. SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except for per share data)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
2020
|
Net sales
|
$
|
288.8
|
|
|
$
|
265.3
|
|
|
$
|
231.4
|
|
|
$
|
238.9
|
|
|
Gross profit (1)
|
73.4
|
|
|
59.6
|
|
|
50.2
|
|
|
56.9
|
|
|
Net income
|
20.4
|
|
|
9.3
|
|
|
1.7
|
|
|
15.5
|
|
|
Net income attributable to controlling interest
|
20.6
|
|
|
9.3
|
|
|
1.6
|
|
|
15.4
|
|
|
Earnings per common share
|
|
|
|
|
|
|
|
|
Net income attributable to controlling interest:
|
|
|
|
|
|
|
|
|
Basic
|
0.92
|
|
|
0.41
|
|
|
0.07
|
|
|
0.68
|
|
|
Diluted
|
0.91
|
|
|
0.41
|
|
|
0.07
|
|
|
0.67
|
|
|
Dividends paid per share
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
2019
|
Net sales
|
$
|
325.8
|
|
|
$
|
304.8
|
|
|
$
|
255.8
|
|
|
$
|
283.2
|
|
|
Gross profit
|
76.8
|
|
|
83.3
|
|
|
51.9
|
|
|
27.4
|
|
|
Net income (loss)
|
14.2
|
|
|
23.4
|
|
|
3.0
|
|
|
(18.4)
|
|
|
Net income (loss) attributable to controlling interest
|
14.3
|
|
|
23.4
|
|
|
3.0
|
|
|
(18.4)
|
|
|
Earnings (loss) per common share
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to controlling interest:
|
|
|
|
|
|
|
|
|
Basic
|
0.63
|
|
|
1.04
|
|
|
0.13
|
|
|
(0.81)
|
|
|
Diluted
|
0.63
|
|
|
1.03
|
|
|
0.13
|
|
|
(0.81)
|
|
|
Dividends paid per share
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
|
0.11
|
|
(1) Gross profit has been revised from amounts previously reported in the respective Quarterly Reports on Form 10-Q to reflect a reclassification of gain on property and equipment, net from "Cost of sales" to "Restructuring, impairment and other asset charges, net" of $0.6 million and $0.2 million for the first and third quarters of 2020, respectively.