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ASTEC INDUSTRIES INC

ASTEC INDUSTRIES INCASTEEarnings & Financial Report

Nasdaq · Industrials · Construction Machinery & Equip

Astec International plc, better known as Astec Power or just Astec, was an international electronics company originally based in Hong Kong that manufactured power supply units and electric power conversion hardware. It was a major vendor of power supply units for computer systems, and for a time it was the largest global manufacturer of power supplies.

What changed in ASTEC INDUSTRIES INC's 10-K — 2023 vs 2024

Top changes in ASTEC INDUSTRIES INC's 2024 10-K

273 paragraphs added · 295 removed · 212 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

56 edited+8 added−18 removed51 unchanged
In addition to salaries, we provide regional programs, which can include annual bonuses, share-based compensation awards, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work arrangements, employee assistance programs, tuition assistance and on-site services.
In addition to salaries, we provide regional programs, which can include annual bonuses, share-based compensation awards, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family and parental leave, family care resources, flexible work arrangements, employee assistance programs, tuition assistance and on-site services.
Specific actions we are taking to strengthen and maintain our focus on our customers include: • Strengthening our capabilities to deliver an enhanced aftermarket experience that best meets our customers' needs while creating scalable growth. • Driving commercial and operational excellence and providing innovative solutions to strengthen our relationships with customers and dealers while maintaining our market leadership positions. • Simplifying our product offerings and production processes through the development of a rationalized global product portfolio executed through manufacturing centers of excellence. • Identifying opportunities to strengthen our global presence in attractive new markets, supplement our current product offerings or accelerate technologies or other enhancements that leverage our existing product portfolio to better meet our customers' needs either through strategic acquisition, partnerships or organic growth. • Enhancing quality, parts availability and customer connectivity through Astec Digital.
Specific actions we are taking to strengthen and maintain our focus on our customers include: • Strengthening our capabilities to deliver an enhanced aftermarket experience that best meets our customers' needs while creating scalable growth. • Driving commercial and operational excellence and providing innovative solutions to strengthen our relationships with customers and dealers while maintaining our market leadership positions. • Simplifying our product offerings and production processes through the development of a rationalized global product portfolio executed through manufacturing centers of excellence. • Identifying opportunities to strengthen our global presence in attractive new markets, supplement our current product offerings or accelerate technologies or other enhancements that leverage our existing product portfolio to better meet our customers' needs either through strategic acquisition, partnerships or organic growth. • Enhancing quality, parts availability and customer connectivity.
Firm orders are signed commitments from customers to complete a purchase for machinery, equipment or parts that is expected to be noncancellable and are included in backlog when we are in receipt of an executed contract and any required deposits or security and have not yet been recognized into net sales.
Firm orders are signed commitments from customers to complete a purchase for machinery, equipment or parts that is expected to be noncancellable and are included in backlog when we are in receipt of an executed contract and any required deposits or security and the orders have not yet been recognized into net sales.
Our products are marketed both domestically and internationally primarily to asphalt and concrete producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycle and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations and domestic and foreign government agencies.
Our products are marketed both domestically and internationally primarily to asphalt and concrete producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycling and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations and domestic and foreign government agencies.
Due to the size and weight of certain equipment we manufacture, we and our customers may encounter various state regulations on maximum weights transportable on highways. Some states have regulations governing the operation of asphalt mixing plants, and most states have regulations relating to the accuracy of weights and measures, which affect some of the control systems we manufacture.
Due to the size and weight of certain equipment we manufacture, we and our customers may encounter various state regulations on maximum weights transportable on highways. Additionally, some states have regulations governing the operation of asphalt mixing plants, and most states have regulations relating to the accuracy of weights and measures, which affect some of the control systems we manufacture.
We make available, free of charge on or through our website (www.astecindustries.com), access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A, Section 16 reports, amendments to those reports and other 10 Table of Contents documents filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is filed with, or furnished to, the Securities and Exchange Commission ("SEC").
We make available, free of charge on or through our website (www.astecindustries.com), access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A, Section 16 reports, amendments to those reports and other documents filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is filed with, or furnished to, the Securities and Exchange Commission ("SEC").
Approximately 78 of our active U.S. employees are covered by a collective bargaining agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC on behalf of its local affiliate Local Union No. 11-508-03, with an expiration date of December 11, 2025.
Approximately 73 of our active U.S. employees are covered by a collective bargaining agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC on behalf of its local affiliate Local Union No. 11-508-03, with an expiration date of December 11, 2025.
The mobile, self-propelled material transfer vehicle, known as the "Shuttle Buggy," allows 4 Table of Contents continuous paving, reducing time and haul trucks required while keeping asphalt mix temperatures consistent to create a smooth, durable finished product. While our large asphalt plants excel in the North American market, we have designed single-load and single-chassis portable plants tailored for international markets.
The mobile, self-propelled material transfer vehicle, known as the "Shuttle Buggy," allows for continuous paving, reducing time and haul trucks required while keeping asphalt mix temperatures consistent to create a smooth, durable finished product. 4 Table of Content s While our large asphalt plants excel in the North American market, we have designed single-load and single-chassis portable plants tailored for international markets.
Marketing The principal purchasers of aggregate processing equipment include distributors, highway and heavy equipment contractors, sand and gravel producers, demolition, recycle and crushing contractors, open mine operators, quarry operators, port and inland terminal authorities, power stations and both domestic and foreign governmental agencies.
Marketing The principal purchasers of aggregate processing equipment include distributors, highway and heavy equipment contractors, sand and gravel producers, demolition, recycling and crushing contractors, open mine operators, quarry operators, port and inland terminal authorities, power stations and both domestic and foreign governmental agencies.
Approximately $323.2 million of the decline in backlog between periods relates to orders from domestic customers. Competition Each business segment operates in domestic markets that are highly competitive with respect to price, service and product quality.
Approximately $112.2 million of the decline in backlog between periods relates to orders from domestic customers. Competition Each business segment operates in domestic markets that are highly competitive with respect to price, service and product quality.
Our Safety Committee, comprised of cross-functional experts, meets regularly to assess and address emerging safety challenges. This collaborative approach ensures that we are proactive in identifying potential hazards and implementing effective preventative measures. Through transparent communication, regular safety audits, and the integration of feedback from employees and regulatory agencies, we strive to maintain the highest standards of safety performance.
Our Safety Committees, comprised of cross-functional experts, meet regularly to assess and address emerging safety challenges. This collaborative approach ensures that we are proactive in identifying potential hazards and implementing effective preventative measures. Through transparent communication, regular safety audits and the integration of feedback from employees and regulatory agencies, we strive to maintain the highest standards of safety performance.
With complete lines of washing, classifying, fines recovery and water clarification plants and systems, we offer solutions for any operation in portable and stationary configurations. 6 Table of Contents We design and manufacture a broad range of material and bulk handling products for all production goals.
With complete lines of washing, classifying, fines recovery and water clarification plants and systems, we offer solutions for any operation in portable and stationary configurations. We design and manufacture a broad range of material and bulk handling products for all production goals.
We also have 129 trademarks registered in foreign jurisdictions, including Argentina, Australia, Brazil, Canada, Chile, China, the European Union, France, Germany, India, Italy, Kazakhstan, Mexico, New Zealand, Paraguay, Peru, Russia, South Africa, South Korea, Taiwan, Thailand, the United Kingdom, Ukraine, Uruguay and Vietnam. We have 5 United States and 12 foreign trademark registration applications pending.
We also have 124 trademarks registered in foreign jurisdictions, including Argentina, Australia, Brazil, Canada, Chile, China, the European Union, France, Germany, India, Italy, Kazakhstan, Mexico, New Zealand, Paraguay, Peru, Russia, South Africa, South Korea, Taiwan, Thailand, the United Kingdom, Ukraine, Uruguay and Vietnam. We have 12 United States and 3 foreign trademark registration applications pending.
Compliance with these government regulations has not had a material effect on our capital expenditures, earnings or competitive position within the market to date. Patents and Trademarks We seek to obtain patents to protect the novel features of our products and processes. Our subsidiaries hold 116 United States patents and 128 foreign patents.
Compliance with these government regulations has not had a material effect on our capital expenditures, earnings or competitive position within the market to date. Patents and Trademarks We seek to obtain patents to protect the novel features of our products and processes. Our subsidiaries hold 113 United States patents and 129 foreign patents.
Our subsidiaries have 10 United States and 28 foreign patent applications pending. We have 83 trademarks registered in the United States, including logos for Astec, Carlson Paving, Heatec, KPI-JCI, Peterson Pacific, Power Flame, Roadtec and Telsmith, and the names ASTEC, CARLSON, HEATEC, JCI, KOLBERG, PETERSON, POWER FLAME, ROADTEC and TELSMITH, as well as a number of other product names.
Our subsidiaries have 10 United States and 23 foreign patent applications pending. We have 77 trademarks registered in the United States, including logos for Astec, Carlson Paving, Heatec, KPI-JCI, Peterson Pacific, Power Flame, Roadtec and Telsmith, and the names ASTEC, CARLSON, HEATEC, JCI, KOLBERG, PETERSON, POWER FLAME, ROADTEC and TELSMITH, as well as a number of other product names.
While specific competitors are named within each business segment discussion above, imports do not generally constitute significant competition for us in the United States, except for milling machines and track-mounted crushers. In international sales, however, we often compete with foreign manufacturers that may have a local presence in the market we are attempting to penetrate.
While specific competitors are named within each business segment discussion above, imports do not generally constitute significant competition for us in the United States, except for milling machines and track-mounted crushers. In 8 Table of Content s international sales, however, we often compete with foreign manufacturers that may have a local presence in the market we are attempting to penetrate.
Our comprehensive range of rock breaker boom systems are designed to break oversized material at large gyratories, grizzlies and primary/secondary crushing application sites. These systems include boom-mounted configurations, automatic greasing packages, motor starter panels, joystick controls and easy plant integration.
Our comprehensive range of rock breaker boom systems are designed to break oversized material at large gyratories, grizzlies and primary/secondary crushing application sites. These systems 6 Table of Content s include boom-mounted configurations, automatic greasing packages, motor starter panels, joystick controls and easy plant integration.
In everyday work, our employees embody our core values of Safety, Devotion, Integrity, Respect and Innovation. They do so by living our winning behaviors of Open and Honest Communications, Drive Creativity, Customer Driven Innovation and OneASTEC in all they do.
In everyday work, our employees embody our core values of Safety, Devotion, Integrity, Respect and Innovation. They do so by living our winning behaviors of Open and Honest Communications, Collaboration, Customer Driven Innovation and OneASTEC in all they do.
When market dynamics warrant, we strategically and selectively order inventory items beyond a just in time basis. Although raw materials for manufacturing are normally readily available, certain highly customized components may require longer than normal lead times such as engines, gearboxes, hydraulic and electronic systems.
When market dynamics warrant, we strategically and selectively order inventory items beyond a just in time basis. 7 Table of Content s Although raw materials for manufacturing are normally readily available, certain highly customized components may require longer than normal lead times such as engines, gearboxes, and hydraulic and electronic systems.
Certain orders for which we have received binding letters of intent or contracts will not be included in backlog until all required contractual documents and deposits are received. As of December 31, 2023 and 2022, we had a backlog for delivery of products at certain dates in the future of approximately $569.8 million and $912.7 million, respectively.
Certain orders for which we have received binding letters of intent or contracts will not be included in backlog until all required contractual documents and deposits are received. As of December 31, 2024 and 2023, we had a backlog for delivery of products at certain dates in the future of approximately $419.6 million and $569.8 million, respectively.
Unions also represent approximately seven percent of our employees at our manufacturing facilities outside the U.S. We consider our employee relations to be good. 9 Table of Contents Compensation and Benefits As an employer of choice, we provide competitive and robust compensation and benefits. We achieve this by regularly conducting market reviews and adjusting as needed.
Unions also represent approximately 12 percent of our employees at our facilities outside the U.S. We consider our employee relations to be good. Compensation and Benefits As an employer of choice, we provide competitive and robust compensation and benefits. We achieve this by regularly conducting market reviews and adjusting as needed.
As of December 31, 2023, the functional representation of our employees was as follows: 2,869 were engaged in manufacturing, 366 in engineering, including support staff, and 1,087 in selling, administrative and management functions. Unions are certified as bargaining agents for approximately two percent of our U.S. direct employees.
As of December 31, 2024, the functional representation of our employees was as follows: 2,626 were engaged in manufacturing, 431 in engineering, including support staff, and 1,091 in selling, administrative and management functions. Unions are certified as bargaining agents for approximately two percent of our U.S. direct employees.
Infrastructure Solutions Segment Overview The Infrastructure Solutions segment designs, engineers, manufactures and markets a complete line of asphalt and concrete plants, components and ancillary equipment as well as asphalt road construction equipment, industrial thermal systems, land clearing, recycling and other heavy equipment.
Infrastructure Solutions Segment Overview The Infrastructure Solutions segment designs, engineers, manufactures and markets a complete line of asphalt plants, concrete plants and their related components and ancillary equipment, including industrial automation controls and telematics platforms, as well as asphalt road construction equipment, industrial thermal systems, land clearing, recycling and other heavy equipment.
Blower trucks are used for erosion control, landscaping, green roofs and the application of playground chips. Our pavers are designed for minimal maintenance costs while exceeding road surface smoothness requirements.
Drum chippers create biomass wood chips from un-merchantable wood for energy production, erosion control, playground chips or landscaping. Blower trucks are used for erosion control, landscaping, green roofs and the application of playground chips. Our pavers are designed for minimal maintenance costs while exceeding road surface smoothness requirements.
Empowered, Enabled and Engaged Employees We strive to develop empowered, enabled and engaged employees by providing competitive compensation and benefits, offering professional and technical skills development opportunities and maintaining a focus on safety.
Our strategic pillars are aligned to support our Vision and are focused on our employees, our customers and our innovation. Empowered, Enabled and Engaged Employees We strive to develop empowered, enabled and engaged employees by providing competitive compensation and benefits, offering professional and technical skills development opportunities and maintaining a focus on safety.
Our concrete plants, known for quick setup, tear-down and reliability, cater to both portable and stationary needs, providing custom-engineered design flexibility. Focus on Sustainability We recognize the significance of RAP in new paving applications.
Our product lines extend beyond asphalt production, encompassing full milling machines, soil stabilizers, patented screeds and concrete production equipment. Our concrete plants, known for quick setup, tear-down and reliability, cater to both portable and stationary needs, providing custom-engineered design flexibility. Focus on Sustainability We recognize the significance of RAP in new paving applications.
Products and Services The primary products produced and services provided by the Infrastructure Solutions segment include: Asphalt plants and related components Heaters Concrete dust control systems Asphalt pavers Vaporizers Concrete material handling systems Screeds Heat recovery units Paste back-fill plants Asphalt storage tanks Hot oil heaters Bagging plants Fuel storage tanks Industrial and asphalt burners and systems Blower trucks and trailers Material transfer vehicles Soil stabilizing/reclaiming machinery Wood chippers and grinders Milling machines Soil remediation plants Control systems Pump trailers Concrete batch plants Service, construction and retrofits Liquid terminals Storage equipment and related parts Engineering and environmental permitting services Polymer plants Concrete mixers As the backbone of road infrastructure development, asphalt and concrete mixing plants play a crucial role in the construction industry.
Beginning January 1, 2024, Astec Digital, which was previously included in the Corporate and Other category, is reported in the Infrastructure Solutions segment while the Australia and Chile ("LatAm") sites, which were previously included in the Infrastructure Solutions segment, are reported in the Materials Solutions segment. 3 Table of Content s Products and Services The primary products produced and services provided by the Infrastructure Solutions segment include: Asphalt plants and related components Heaters Concrete dust control systems Asphalt pavers Vaporizers Concrete material handling systems Screeds Heat recovery units Paste back-fill plants Asphalt storage tanks Hot oil heaters Bagging plants Fuel storage tanks Industrial and asphalt burners and systems Blower trucks and trailers Material transfer vehicles Soil stabilizing/reclaiming machinery Wood chippers and grinders Milling machines Soil remediation plants Control systems Pump trailers Concrete batch plants Service, construction and retrofits Liquid terminals Storage equipment and related parts Engineering and environmental permitting services Polymer plants Concrete mixers Cold central plant recycle systems Industrial automation controls Telematics platforms As the backbone of road infrastructure development, asphalt and concrete mixing plants play a crucial role in the construction industry.
We evaluate performance and allocate resources to our operating segments based on Segment Operating Adjusted EBITDA. Segment Operating Adjusted EBITDA, a non-GAAP financial measure, is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered in the evaluation of ongoing operating performance.
Segment Operating Adjusted EBITDA is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered in the evaluation of ongoing operating performance.
In addition to equipment sales, we manufacture and sell replacement parts for equipment in each of our product lines and replacement parts for some competitors' equipment. The distribution and sale of replacement parts is an integral part of our business.
In addition to equipment sales, we manufacture and sell replacement parts for equipment in each of our product lines and replacement parts for some competitors' equipment. The distribution and sale of replacement parts is an integral part of our business. Corporate Strategic Objectives Our OneASTEC Vision is: To build industry changing solutions that create life-changing opportunities .
Our commitment to safety extends beyond our facilities to encompass the entire supply chain, fostering a holistic approach to risk management. We believe that by prioritizing safety, we not only safeguard our workforce but also contribute to the long-term sustainability and success of our business. We believe in following a proactive approach to identify and mitigate safety issues.
We believe that by prioritizing safety, we not only safeguard our workforce but also contribute to the long-term sustainability and success of our business. 9 Table of Content s We believe in following a proactive approach to identify and mitigate safety issues.
We are continuing to build on that legacy by: • Focusing on innovation with a new product development approach that increases our market competitiveness over time. • Leveraging technology and digital connectivity to enhance the customer experience through controls and automation and other technologies. 2 Table of Contents • Developing the Astec Digital Ecosystem to enable customers to leverage our entire product portfolio and associated data.
We are continuing to build on that legacy by: • Focusing on innovation with a new product development approach that increases our market competitiveness over time. • Leveraging technology and digital connectivity to enhance the customer experience through controls and automation and other technologies. • Developing the Astec Digital Ecosystem to enable customers to leverage our entire product portfolio and associated data. 2 Table of Content s Strategic Transformation Program Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized enterprise resource planning ("ERP") system, which is replacing much of our existing disparate core financial systems.
Our expertly engineered components and plants help producers meet the most stringent material specifications and get the most out of their material, while significantly decreasing water usage.
Our washing and classifying equipment is well-suited for a wide range of applications and production goals. Our expertly engineered components and plants help producers meet the most stringent material specifications and get the most out of their material, while significantly decreasing water usage.
In addition to manufacturing core Materials Solutions products and asphalt plants, Belo Horizonte markets all our products to the Brazilian market. At December 31, 2023, we had an ownership interest of approximately 93% in Belo Horizonte. During the first quarter of 2022, we executed an agreement with the noncontrolling interest holder to acquire their outstanding interest in full.
In addition to manufacturing core Materials Solutions products and asphalt plants, Belo Horizonte, our Brazilian site, markets all our products to the Brazilian market. As of December 31, 2024, we had an ownership interest of approximately 93% in Belo Horizonte.
Talent Development, Diversity, Equity and Inclusion Talent and Diversity are key components of our OneASTEC business model. We strive to create an environment that attracts top talent and where high performance is fostered and thrives, continuous learning is engrained, diverse experience is leveraged as a competitive advantage and careers are propelled forward.
We strive to create an environment that attracts top talent and where high performance is fostered and thrives, continuous learning is engrained, diverse experience is leveraged as a competitive advantage and careers are propelled forward. We utilize our High Performance Framework process to ensure company-wide alignment to achieve company goals and targets.
We offer a wide variety of vibrating screens including incline, horizontal, high frequency, multi-frequency, combo and dewatering screens. Our high frequency screens utilize a high-speed vibration directly induced into the screen media to improve screening efficiency and production rates. The screens' unique rotary tensioning system allows for quick media changes.
Our high frequency screens utilize a high-speed vibration directly induced into the screen media to improve screening efficiency and production rates. The screens' unique rotary tensioning system allows for quick media changes. Our screens are available in multiple sizes with up to four decks and in a variety of configurations including stationary, portable and mobile.
Milling equipment • Bomag (part of Fayat Group) • Caterpillar Paving Products (part of Caterpillar, Inc.) • CMI Roadbuilding • Dynapac (part of Fayat Group) • Wirtgen Group (a John Deere Company) Forestry and recycling equipment • Bandit Industries, Inc. • Diamond Z • Doppstadt • EDGE Innovate • Tigercat • Morbark (part of Alamo Group) 5 Table of Contents Backlog The backlog for the Infrastructure Solutions segment at December 31, 2023 and 2022 was approximately $404.6 million and $567.1 million, respectively.
Milling equipment • Bomag (part of Fayat Group) • Caterpillar Paving Products (part of Caterpillar, Inc.) • CMI Roadbuilding • Dynapac (part of Fayat Group) • Wirtgen Group (a John Deere Company) Forestry and recycling equipment • Bandit Industries, Inc. • Diamond Z • Doppstadt • EDGE Innovate • Tigercat • Morbark (part of Alamo Group) Backlog The backlog for the Infrastructure Solutions segment as of December 31, 2024 and 2023 was approximately $305.5 million and $364.7 million, respectively. 5 Table of Content s Materials Solutions Segment Overview The Materials Solutions segment designs and manufactures heavy rock processing equipment, in addition to servicing and supplying parts for the aggregate, mining, recycling, ports and bulk handling markets.
We utilized our High Performance Framework process for the second year during 2023 to ensure company-wide alignment to achieve company goals and targets. This model includes values, professional development and cascaded common performance goals. We provide all employees a wide range of professional development experiences, both formal and informal, at various stages in their careers.
This model includes values, professional development and cascaded common performance goals. We provide all employees a wide range of professional development experiences, both formal and informal, at various stages in their careers. Specifically, we offer leadership training to all employees at the supervisor and manager level worldwide.
Backlog represents the dollar value of firm orders for equipment, parts and related installation which are expected to be recognized in net sales in the future.
Seasonality and Backlog Revenues have historically been strongest during the first, second and fourth quarters with the third quarter typically generating weaker results. Backlog represents the dollar value of firm orders for equipment, parts and related installation which are expected to be recognized in net sales in the future.
During 2023, we offered leadership training to all employees at the supervisor and manager level worldwide. This training focused on building key leadership competencies including leading diverse and inclusive teams. In addition, talent development and succession planning for critical roles is a cornerstone of our talent program.
This training focuses on building key leadership competencies including leading diverse and inclusive teams. In addition, talent development and succession planning for critical roles is a cornerstone of our talent program. Development plans are created and monitored for critical roles to ensure progress is made along the established timelines.
Development plans are created and monitored for critical roles to ensure progress is made along the established timelines. One of our core values - Respect- reflects the behavior we strive to include in every aspect of the way we conduct business. We recognize that our best performance comes when our teams are diverse and inclusive.
One of our core values - Respect - reflects the behavior we strive to include in every aspect of the way we conduct business. We recognize that our best performance comes when our teams are diverse and inclusive. These efforts touch all levels of our organization including our Board of Directors.
We also focused on re-establishing engagement at the site level after a lengthy period of pandemic-related social distancing requirements. Employee Profile As of December 31, 2023, we employed 4,322 individuals, including 3,650 employees in the U.S. and Canada. We also retain consultants, independent contractors and temporary and part-time workers.
Employee Profile As of December 31, 2024, we employed 4,148 individuals, including 3,419 employees in the U.S. and Canada. We also retain consultants, independent contractors and temporary and part-time workers.
The Corporate and Other category consists primarily of our parent company, Astec Insurance Company ("Astec Insurance" or the "captive"), our captive insurance company, and Astec Digital, our controls and automation business including the MINDS Automation Group, Inc. business acquired in April 2022, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments.
The Corporate and Other category consists primarily of our parent company and Astec Insurance Company ("Astec Insurance" or the "captive"), our captive insurance company, which do not meet the requirements as an operating segment or inclusion in one of the other reporting segments. We evaluate performance and allocate resources to our operating segments based on Segment Operating Adjusted EBITDA.
Raw materials used in the manufacture of our products include carbon steel in flat rolled, long products and pipe as well as various types of alloy steel. Our steel suppliers include mills, distributors and other sources. To effectively manage inventory at our manufacturing facilities, we purchase a substantial portion of carbon steel products on a just in time basis.
Raw Materials We purchase raw materials, manufactured components and replacement parts for our products from leading suppliers both domestically and internationally. Raw materials used in the manufacture of our products include carbon steel in flat rolled, long products and pipe as well as various types of alloy steel. Our steel suppliers include mills, distributors and other sources.
We strive for continual, incremental improvements in our safety program to reduce recordable injuries and lost time each year. During the year ended December 31, 2023, we had zero recordable injuries at five of our manufacturing sites.
We aspire to reduce recordable injuries and lost time each year and have added safety resources at all our sites and within our corporate structure to improve our overall safety program. During the year ended December 31, 2024, we had zero recordable injuries at three of our manufacturing sites.
We engaged our employees through the Voice of OneASTEC survey in 2022, with 81% of our workforce responding and providing us with valuable feedback. With the strong survey results provided in 2022, we continued our focus during 2023 on the areas of opportunity identified: communication, performance management and change management.
We engaged our employees through the Voice of OneASTEC survey in 2024, with 83% of our workforce responding and providing us with valuable feedback. Astec's overall engagement score improved by 5% since the last survey completed in 2022. The 2024 survey also showed improvements in our previously identified focus areas of opportunity: communication, performance management and change management.
Our manufacturing operations consist primarily of fabricating steel components and the integration of supplier purchased components, including the assembly and testing of our finished products to ensure that we achieve high quality standards. Raw Materials We purchase raw materials, manufactured components and replacement parts for our products from leading suppliers both domestically and internationally.
In many cases, we design, engineer and manufacture equipment and component parts to meet the particular needs of individual customers. Our manufacturing operations consist primarily of fabricating steel components and the integration of supplier purchased components, including the assembly and testing of our finished products to ensure that we achieve high quality standards.
The Materials Solutions segment was operated from the following sites in 2023 : Site Location Site Location AME Johannesburg, South Africa Sterling Illinois, United States Belo Horizonte Belo Horizonte, Brazil Thailand Bangkok, Thailand EUG-Franklin Blvd Oregon, United States Thornbury Ontario, Canada Johannesburg Johannesburg, South Africa Yankton South Dakota, United States Omagh Omagh, United Kingdom The sites within the Materials Solutions segment primarily focus on manufacturing operations with the AME and Thailand 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 our manufacturing sites.
Materials Solutions manufacturing operations are primarily located in the United States, Brazil, Canada, South Africa and the United Kingdom. Locations in Australia, Chile and Thailand function 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 our manufacturing sites.
Corporate and Other The Corporate and Other category consists primarily of the parent company, the Company's captive insurance company, Astec Insurance, and the controls and automation business including the MINDS Automation Group, Inc. business acquired in April 2022, collectively, Astec Digital, which do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments.
Backlog As of December 31, 2024 and 2023, the backlog for the Materials Solutions segment was approximately $114.1 million and $205.1 million, respectively. Corporate and Other The Corporate and Other category consists primarily of the parent company and the captive, which do not meet the requirements as an operating segment or inclusion in one of the other reporting segments.
We continue to define our diversity, equity and inclusion strategy. These efforts touch all levels of our organization including our Board of Directors. Corporate and Available Information Astec Industries, Inc. is a Tennessee corporation which was incorporated in 1972.
Corporate and Available Information Astec Industries, Inc. is a Tennessee corporation which was incorporated in 1972.
In 2023, we experienced a 35% decrease in our OSHA Recordable Incident Rate for the year ended December 31, 2023, to 1.27 compared to 1.96 for the year ended December 31, 2022. We continually assess safety risks in order to address issues before accidents happen.
However, we experienced a 31% increase in our OSHA Recordable Incident Rate for the year ended December 31, 2024, to 1.66 compared to 1.27 for the year ended December 31, 2023. Although we have seen an increase in the recordable incident rate, the incidents are concentrated in a limited number of sites.
The parent company and the captive insurance company provide support and corporate oversight for other sites. Astec Digital is responsible for the development and delivery of the Astec Digital Ecosystem that can enable customers to leverage our product portfolio and associated data into a competitive advantage. Astec Digital products include our industrial automation controls and our telematics platforms.
Astec Digital, which is included in the Infrastructure Solutions segment, is responsible for the development and delivery of the Astec Digital Ecosystem which enables customers to leverage our product portfolio and associated data to provide insight into their operations.
We materially completed the ERP global design in 2022, launched the human capital resources module in our locations in the United States in January 2023 and converted the operations of one manufacturing site along with Corporate during the second quarter of 2023 to set the foundation before accelerating the implementation at additional sites in 2024 and 2025.
To date, we have launched the human capital resources module in our U.S. locations and converted the operations of three manufacturing sites along with Corporate, two of which occurred during the second quarter of 2024. Business Segments We operate manufacturing sites and sites that operate as sales and service offices for our manufacturing locations.
Horizontal grinders are used to create mulch from green waste for water retention, erosion control and compost for soil amendments. Our new 5710E Horizontal Grinder allows for efficiency gains and higher productivity while also delivering reduced fuel consumption per unit of material produced and safety enhancements during maintenance activities.
Horizontal grinders are used to create mulch from green waste for water retention, erosion control and compost for soil amendments. Our horizontal grinders allow the diversion of low value material away from landfills and conversion to high value saleable product for our customers.
Our newly redesigned FT-Series Mobile Cone Crushers are equipped with updated controls systems, more reliable engines and increased capacity for use in secondary and tertiary crushing applications. Our industry-leading hydraulic-relief jaw crushers offer enhanced safety and easy maintenance. Our crushers are available as individual components, portable wheeled plants and mobile track plants.
Our industry-leading hydraulic-relief jaw crushers offer enhanced safety and easy maintenance. Our crushers are available as individual components, portable wheeled plants and mobile track plants. We offer a wide variety of vibrating screens including incline, horizontal, high frequency, multi-frequency, combo and dewatering screens.
Manufacturing We manufacture our equipment and related component parts for our products at both our domestic and international facilities. In many cases, we design, engineer and manufacture equipment and component parts to meet the particular needs of individual customers.
The parent company and the captive provide support and corporate oversight for our other sites. Common to Both Reporting Segments The following information applies to both the Infrastructure Solutions and the Materials Solutions reporting segments. Manufacturing We manufacture our equipment and related component parts for our products at both our domestic and international facilities.
Our focus is to connect all Astec products in the "Rock to Road" value chain and leverage this data and emerging technologies to provide our customers with insight into their operations that can allow them to be more efficient, productive and sustainable. 7 Table of Contents Common to Both Reporting Segments The following information applies to both the Infrastructure Solutions and the Materials Solutions reporting segments.
Our focus is to connect all Astec products to the Astec Digital Ecosystem and leverage this data to create a competitive advantage for our customers that can allow them to be more efficient, productive and sustainable. Astec Digital has locations in Belgium, Canada, France, the United Kingdom and the United States.
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Corporate Strategic Objectives In late 2023, management refreshed our OneASTEC Vision: To build industry changing solutions that create life-changing opportunities . Our strategic pillars are aligned to support our Vision and are focused on our employees, our customers and our innovation.
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During 2024, we modified the pace of deployment of future site conversions to improve efficiencies and reduce business disruptions at our manufacturing sites, which will reduce the scope of the program to exclude sites outside North America.
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Strategic Transformation Program We are undergoing a multi-year phased implementation of a standardized enterprise resource planning ("ERP") system across our global organization, which will replace much of our existing disparate core financial systems.
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Infrastructure Solutions manufacturing operations are primarily located in the United States and Canada. Our India site services and installs equipment and provides parts in the region in which it operates for many of the products produced by all of the Company's manufacturing sites.
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The upgraded ERP will support our focus on our employees, our customers and innovation initially through the conversion of our internal operations, manufacturing, finance, human capital resources management and customer relationship systems to cloud-based platforms.
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During the first quarter of 2022, we executed an agreement with the noncontrolling interest holder to acquire their outstanding interest in full. Completion of the transaction is subject to resolution of certain disputes between the parties.
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This new ERP system will also provide for standardized processes and integrated technology solutions that enable us to better leverage automation and process efficiency, transforming how we connect people, products and processes to operate as OneASTEC.
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Beginning January 1, 2024, the Australia and LatAm sites, which were previously included in the Infrastructure Solutions segment, are reported in the Materials Solutions segment.
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Additionally, in the first quarter of 2022, a lean manufacturing initiative at one of our largest sites was initiated and is expected to drive improvement in gross margin at that site. We substantially completed the design efforts for this project during 2022.
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To effectively manage inventory at our manufacturing facilities, we purchase a substantial portion of carbon steel products on a just in time basis.
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We also began executing investments to acquire and install manufacturing equipment intended to drive increased efficiencies in our production processes. We continued these capital investments during 2023, which were largely completed as of December 31, 2023. Gross margin improvements are expected to be realized in conjunction with the project completion in early to mid-2024.
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Our commitment to safety extends beyond our facilities to encompass the entire supply chain, fostering a holistic approach to risk management.
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This improvement is intended to serve as the optimal blueprint for our other manufacturing facilities. Business Segments We operate manufacturing sites and sites that operate as sales and service offices for our manufacturing locations.
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We have taken action to address these localized safety issues by increasing the number of corporate safety audits, providing thorough training at the site, realigning site safety focus, providing standardized safety policies and procedures and focusing on proactive injury prevention.
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The Infrastructure Solutions segment was operated from the following sites in 2023 : Site Location Site Location Australia Brisbane, Australia EUG-Airport Rd Oregon, United States Blair Nebraska, United States India Ahmedabad, India Burlington Wisconsin, United States LatAm Santiago, Chile CHA-Jerome Ave Tennessee, United States Parsons Kansas, United States CHA-Manufacturers Rd Tennessee, United States St-Bruno Quebec, Canada CHA-Wilson Rd Tennessee, United States 3 Table of Contents The sites based in North America within the Infrastructure Solutions segment are primarily manufacturing operations while those located outside of North America generally market, service and install equipment and provide parts in the regions in which they operate for many of the products produced by all of our manufacturing sites.
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We are focused on improving our safety training and communications by being proactive and transparent and persistently delivering our safety messaging to all Astec employees. Talent Development Talent and Diversity are key components of our OneASTEC business model.
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The 5710E represents a new generation of organic waste reducing machines, diverting low value material away from landfills and turning it into high value saleable product for our customers. Drum chippers create biomass wood chips from un-merchantable wood for energy production, erosion control, playground chips or landscaping.
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Our product lines extend beyond asphalt production, encompassing full milling machines, soil stabilizers, patented screeds and concrete production equipment. The new RX-405 Cold Planer is ideal for contractors who need a smaller cold planer with the high productivity that our larger milling machines are known for.
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This new machine allows for a range of cut widths from two to five feet thanks to a quick-change drum, and tooth changes are made faster with an electric drum indexer. The all new operator station also makes controlling the machine more ergonomic and intuitive.
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Materials Solutions Segment Overview The Materials Solutions segment designs and manufactures heavy rock processing equipment, in addition to servicing and supplying parts for the aggregate, mining, recycling, ports and bulk handling markets.
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Completion of the transaction is subject to obtaining certain judicial approval in Brazil.
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Our screens are available in multiple sizes with up to four decks and in a variety of configurations including stationary, portable and mobile. Our washing and classifying equipment is well-suited for a wide range of applications and production goals.
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Backlog At December 31, 2023 and 2022, the backlog for the Materials Solutions segment was approximately $162.7 million and $341.2 million, respectively.
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In addition, we are focused on innovation in our core products to support the "Rock to Road" value chain. 8 Table of Contents Seasonality and Backlog Revenues have historically been strongest during the first, second and fourth quarters with the third quarter typically generating weaker results.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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In addition, unfavorable currency fluctuations could result in our products and services being more expensive than local competitors. The implementation of more restrictive trade policies, such as higher tariffs, duties or charges, in countries where we operate could negatively impact our business, results of operations and financial condition.
The implementation of more restrictive trade policies, such as higher tariffs, duties or charges, in countries where we operate could negatively impact our business, results of operations and financial condition. In addition, unfavorable currency fluctuations could result in our products and services being more expensive than local competitors.
Whether increased operating costs can be passed through to the customer depends on a number of factors, including the price of competing products and the nature of our customers' orders. Further, we rely on a limited number of suppliers for steel and certain other raw materials, parts and components in the manufacturing process.
Whether increased operating costs can be passed through to the customer depends on a number of factors, including the price of competing products, the nature of our customers' orders and overall demand for our products. Further, we rely on a limited number of suppliers for steel and certain other raw materials, parts and components in the manufacturing process.
Department of Treasury’s Office of Foreign Assets Control and various non-U.S. government entities, including applicable import and export control regulations and customs requirements, imposition by the U.S. and foreign governments of additional taxes, tariffs, economic sanctions on countries, entities or persons, embargoes, or other restrictions on trade, currency exchange 16 Table of Contents regulations and transfer pricing regulations.
Department of Treasury’s Office of Foreign Assets Control and various non-U.S. government entities, including applicable import and export control regulations and customs requirements, imposition by the U.S. and foreign governments of additional taxes, tariffs, economic sanctions on countries, entities or persons, embargoes or other restrictions on trade, currency exchange regulations and transfer pricing regulations.
We, except as required by law, undertake no obligation to update or revise this risk factors discussion, whether as a result of new developments or otherwise. Economic and Industry Risks Downturns in the general economy or decreases in government infrastructure spending or commercial and residential construction spending may adversely affect our revenues and operating results.
We, except as required by law, undertake no obligation to update or revise this risk factors discussion, whether as a result of new developments or otherwise. 10 Table of Content s Economic and Industry Risks Downturns in the general economy or decreases in government infrastructure spending or commercial and residential construction spending may adversely affect our revenues and operating results.
In addition, changes in intellectual property laws or their interpretation may 17 Table of Contents impact our ability to protect and assert our intellectual property rights, increase costs and uncertainties in the prosecution of patent applications and enforcement or defense of issued patents, and diminish the value of our intellectual property.
In addition, changes in intellectual property laws or their interpretation may impact our ability to protect and assert our intellectual property rights, increase costs and uncertainties in the prosecution of patent applications and enforcement or defense of issued patents and diminish the value of our intellectual property.
Coupled with our strategic pillars that are aligned to focus on our employees, our customers and our innovation, 13 Table of Contents the OneASTEC business model is centered around continuous improvement. Our future success is partly dependent upon successfully executing and realizing performance improvements, revenue gains, cost savings and other benefits from our initiatives.
Coupled with our strategic pillars that are aligned to focus on our employees, our customers and our innovation, the OneASTEC business model is centered around continuous improvement. Our future success is partly dependent upon successfully executing and realizing performance improvements, revenue gains, cost savings and other benefits from our initiatives.
Environmental, Social and Governance risks could adversely affect our reputation and shareholder, employee, customer and third party relationships and may negatively affect our stock price. As a public company, we face increased public and investor scrutiny related to Environmental, Social and Governance (“ESG”) activities.
Environmental, Social and Governance risks could adversely affect our reputation and shareholder, employee, customer and third party relationships and may negatively affect our stock price. As a public company, we face public and investor scrutiny related to Environmental, Social and Governance ('ESG") activities.
Several factors, including the following, could cause a downturn in the commercial and residential construction industries in which we operate: • a decrease in the availability of funds for construction; • declining economy domestically and internationally; • labor disputes in the construction industry causing work stoppages; • rising gas and oil prices; • rising steel prices and steel surcharges; • rising interest rates; • energy or building materials shortages; • natural disasters and inclement weather; • changes in regulations; • availability of credit for customers; • geopolitical conflicts; and • general economic and political uncertainty.
Several factors, including the following, could cause a downturn in the commercial and residential construction industries in which we operate: • a decrease in the availability of funds for construction; • declining economy domestically and internationally; • labor disputes in the construction industry causing work stoppages; • rising gas and oil prices; • rising steel prices and steel surcharges, including as a result of tariffs or other trade policies; • rising interest rates; • energy or building materials shortages; • natural disasters and inclement weather; • changes in regulations; • availability of credit for customers; • geopolitical conflicts; and • general economic and political uncertainty.
If we are unable to attract the most talented candidates, and cannot retain and engage 15 Table of Contents additional highly qualified managerial, technical, manufacturing, and sales and marketing personnel by investing in their talent and personal development, our operational and financial performances could continue to suffer.
If we are unable to attract the most talented candidates, and cannot retain and engage additional highly qualified managerial, technical, manufacturing and sales and marketing personnel by investing in their talent and personal development, our operational and financial performances could continue to suffer.
Failure to comply with such regulations could subject us to criminal and civil penalties, disgorgement and other sanctions, remedial measures, legal expenses and reputational damage, all of which could have an adverse impact on our business, financial condition, results of operations and liquidity.
Failure to comply with such regulations could subject us to criminal and civil penalties, disgorgement and other 16 Table of Content s sanctions, remedial measures, legal expenses and reputational damage, all of which could have an adverse impact on our business, financial condition, results of operations and liquidity.
Our operations in foreign countries, and continued expansion into additional international markets, could expose us to risks inherent in doing business outside of the United States. In 2023, international sales represented approximately 19.0% of our total sales as compared to 20.4% in 2022. We plan to continue increasing our already significant sales and production efforts in international markets.
Our operations in foreign countries, and continued expansion into additional international markets, could expose us to risks inherent in doing business outside of the United States. In 2024, international sales represented approximately 22.2% of our total sales as compared to 19.0% in 2023. We plan to continue increasing our already significant sales and production efforts in international markets.
Inefficiencies in our financial reporting processes due to the conversion to our new ERP could adversely affect our ability to produce accurate financial statements on a 18 Table of Contents timely basis until the new ERP and processes have matured.
Inefficiencies in our financial reporting processes due to the conversion to our new ERP could adversely affect our ability to produce accurate financial statements on a timely basis until the new ERP and processes have matured.
Periods of rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our products, make it more difficult for customers to cost-effectively secure financing to fund the purchase of new equipment or our customers' ability to repay obligations to us.
Continued periods of higher interest rates, compared to historic low levels, could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our products, make it more difficult for customers to cost-effectively secure financing to fund the purchase of new equipment or our customers' ability to repay obligations to us.
Furthermore, we may incur higher than anticipated costs in connection with our ERP implementation, which could adversely impact our results of operations and financial condition. Additionally, the effectiveness of our internal control over financial reporting could be adversely affected if the new ERP is not successfully implemented. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Furthermore, we may incur higher than anticipated costs in connection with our ERP implementation, which could adversely impact our results of operations and financial condition. Additionally, the effectiveness of our internal control over financial reporting could be adversely affected if the new ERP is not successfully implemented.
The design and development phase requires meaningful lead time before a product is ready for market, which often requires a significant investment in potentially new technologies and manufacturing techniques to evolve our existing products and introduce new products prior to realizing any revenues associated with such improved or new products. This also requires us to anticipate changing customer demands.
The design and development phase requires meaningful lead time before a product is ready for market, which often requires a significant investment in potentially new technologies and manufacturing techniques to evolve our existing products and introduce new products prior to realizing any revenues associated with such improved or new products.
Irrespective of any effect on the overall demand for construction equipment, the effect of these changes can make our products less competitive relative to local producing competitors or other non-U.S. competitors and, in extreme cases, can result in our products not being cost-effective for customers. As a result, our international sales and profit margins could decline.
Irrespective of any effect on the overall demand for construction equipment, the effect of these changes can make our products less competitive relative to local producing competitors or other non-U.S. competitors and, in extreme cases, can result in our products not being cost-effective for customers.
Additionally, we typically incur substantial research and development costs each year and have historically received significant research and development tax credits due to these expenditures. Congress could reduce or eliminate such tax credits in future years, which could have a material adverse effect on our operating results. Goodwill and other intangible assets comprise a material portion of our total assets.
Additionally, we typically incur substantial research and development costs each year and have historically received significant research and development tax credits due to these expenditures. Congress could reduce or eliminate such tax credits in future years, which could have a material adverse effect on our operating results.
Such leadership changes can be inherently difficult to manage, and an inadequate transition may cause disruption to our business, including to our relationships with our customers, suppliers, vendors and employees. It may also make it more difficult for us to hire and retain key employees.
Furthermore, changes in leadership that occur from time to time can be inherently difficult to manage, and an inadequate transition may cause disruption to our business, including to our relationships with our customers, suppliers, vendors and employees. It may also make it more difficult for us to hire and retain key employees.
We rely upon our information technology systems to run critical functions, including accounting and financial information systems, process receivables, manage and replenish inventory, fill and ship customer orders on a timely basis and coordinate our sales activities across all products and services.
Our operations are dependent upon our information technology systems, which encompass all of our major business functions. We rely upon our information technology systems to run critical functions, including accounting and financial information systems, process receivables, manage and replenish inventory, fill and ship customer orders on a timely basis and coordinate our sales activities across all products and services.
Furthermore, the presidential and congressional elections in November 2024 could alter legislative priorities and have a material impact on government funding of infrastructure projects. 11 Table of Contents The cyclical nature of our industry and the product mix of the equipment we sell may cause adverse fluctuations to our revenues and operating results.
Furthermore, the 2024 U.S. presidential and congressional election results could alter legislative priorities and have a material impact on government funding of infrastructure projects. The cyclical nature of our industry and the product mix of the equipment we sell may cause adverse fluctuations to our revenues and operating results.
As part of our growth strategy, we may pursue acquisitions in the future and may not be successful in completing such acquisitions on favorable terms or be able to realize the anticipated benefits from such acquisitions.
As part of our growth strategy, we may pursue acquisitions in the future and may not be successful in completing such acquisitions on favorable terms or be able to realize the anticipated benefits from such acquisitions. As part of our growth strategy, we may pursue attractive acquisition opportunities if and when they become available.
As of December 31, 2023, we had outstanding borrowings of $72.0 million and an additional $3.3 million in letters of credit outstanding under the credit agreement. We may also borrow additional amounts under the credit agreement in the future.
As of December 31, 2024, we had outstanding borrowings of $105.0 million and an additional $5.2 million in letters of credit outstanding under the credit agreement. We may also borrow additional amounts under the credit agreement in the future.
From time to time, we may be involved in various legal proceedings and subject to government investigations. We are unable to predict when claims or matters will arise and the extent to which they will affect our business, and the international nature of our business exposes us to legal and regulatory matters that arise in foreign jurisdictions as well.
We are unable to predict when claims or matters will arise and the extent to which they will affect our business, and the international nature of our business exposes us to legal and regulatory matters that arise in foreign jurisdictions as well.
Moreover, compliance with applicable laws and regulations and the pursuit of other ESG-related objectives may require us to make additional capital and operational expenditures that may have a material adverse effect on its earnings, liquidity, financial condition or competitive position. We are subject to a variety of legal proceedings, the outcome of which may be unfavorable to us.
Moreover, compliance with applicable laws and regulations and the pursuit of other ESG-related objectives may require us to make additional capital and operational expenditures that may have a material adverse effect on our earnings, liquidity, financial condition or competitive position.
While we maintain cyber risk insurance, in the event of a significant security or data breach, this insurance may not cover all of the losses that we may suffer and may result in increased cost or impact the future availability of coverage.
While we maintain cyber risk insurance, in the event of a significant security or data breach, this insurance may not cover all of the losses that we may suffer and may result in increased cost or impact the future availability of coverage. We may not be able to successfully implement our new enterprise resource planning system.
Production delays, design changes, adverse weather conditions and other factors can also result in construction and testing delays, which can cause significant cost overruns or failure to meet required completion dates.
In addition, any number of unforeseen circumstances can impact actual project costs. Production delays, design changes, adverse weather conditions and other factors can also result in construction and testing delays, which can cause significant cost overruns or failure to meet required completion dates.
Manufacturing and Operations Risks Our profitability may be negatively affected by changes in the availability and price of certain parts, components and raw materials. We require access to various parts, components and raw materials at competitive prices in order to manufacture our products.
As a result, our international sales and profit margins could decline. 12 Table of Content s Manufacturing and Operations Risks Our profitability may be negatively affected by changes in the availability and price of certain parts, components and raw materials. We require access to various parts, components and raw materials at competitive prices in order to manufacture our products.
As of December 31, 2023, we were in compliance with the financial covenants contained in our credit agreement. However, in the future we may be unable to comply with the financial covenants in our credit facility or to obtain waivers with respect to such financial covenants.
However, in the future we may be unable to comply with the financial covenants in our credit facility or to obtain waivers with respect to such financial covenants.
Failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant adverse effect on our business. 12 Table of Contents Our international sales and associated operating results are subject to currency exchange risk.
Failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant adverse effect on our business. Our international sales and associated operating results are subject to currency exchange risk. We are exposed to risk as a result of fluctuations in foreign currency exchange rates from transactions involving foreign operations and currencies.
Our results of operations could be adversely affected by, among other things, changes in the effective tax rates in the U.S. and foreign jurisdictions, a change in the mix of earnings between U.S. and non-U.S. jurisdictions or among jurisdictions with differing tax rates, changes in tax laws or treaties, including the global implementation of a minimum tax under Pillar 2 of the Organization for Economic Co-Operation and Development's Base Erosion and Profit Shifting Pillar 2 rules and related changes in generally accepted accounting principles.
Our results of operations could be adversely affected by, among other things, changes in the effective tax rates in the U.S. and foreign jurisdictions, a change in the mix of earnings between U.S. and non-U.S. jurisdictions or among jurisdictions with differing tax rates, changes in tax laws or treaties and related changes in generally accepted accounting principles.
Our success depends on our ability to invest in new technologies and manufacturing techniques to continue to meet those changing demands. If we are unable to accurately anticipate such customer demands, we will likely incur losses associated with such product development. In addition, any number of unforeseen circumstances can impact actual project costs.
This also requires us to 13 Table of Content s anticipate changing customer demands. Our success depends on our ability to invest in new technologies and manufacturing techniques to continue to meet those changing demands. If we are unable to accurately anticipate such customer demands, we will likely incur losses associated with such product development.
We believe our employees and experienced leadership group are competitive advantages, as the best people, over time, produce the best results. Our ability to attract and retain qualified engineers, skilled manufacturing personnel and other professionals, either through direct hiring or acquisition of other businesses employing such professionals, will also be an important factor in determining our future success.
Our ability to attract and retain qualified engineers, skilled manufacturing personnel and other professionals, either through direct hiring or acquisition of other businesses employing such professionals, will also be an important factor in determining our future success.
Additionally, if our products are deemed to infringe upon the patents or proprietary rights of others, we could be required to modify the design of our products, change the name of our products or obtain a license for the use of some of the technologies used in our products.
Additionally, if our products are deemed to infringe upon the patents or proprietary rights of others, we could be required to modify the design of our products, change the name of our products or obtain a license for the use of some of the technologies used in our products. 17 Table of Content s Information Technology and Cybersecurity Risks Our operations may be adversely affected by any disruption in our information technology systems.
We are exposed to risk as a result of fluctuations in foreign currency exchange rates from transactions involving foreign operations and currencies. We derive significant revenue, earnings and cash flow from operations outside of the U.S., where business operations are transacted in local currencies.
We derive significant revenue, earnings and cash flow from operations outside of the U.S., where business operations are transacted in local currencies.
Any defect in or improper operation of our equipment can result in personal injury and death, and damage to or destruction of property, any of which could cause product liability claims to be filed against us.
We manufacture heavy machinery, which is used by our customers at excavation and construction sites, ports and inland terminals and on high-traffic roads. Any defect in or improper operation of our equipment can result in personal injury, death or damage to or destruction of property, any of which could cause product liability claims to be filed against us.
Competition for such personnel is intense, and we cannot assure that they will be available when required, or that we will have the ability to attract and retain them. The loss of any of these individuals or an inability to attract, retain and maintain additional personnel could prevent us from implementing our business strategy.
The loss of any of these individuals or an inability to attract, retain and maintain additional personnel could prevent us from implementing our business strategy. There is no assurance that we will be able to retain our existing management personnel or to attract additional qualified personnel when needed.
In addition, although we have been successful in the past with the integration of numerous acquisitions, we may not be able to fully integrate the operations of any future acquired businesses with our own operations in an efficient and cost-effective manner or without significant disruption to our or the acquired companies’ existing operations.
Failure to identify and acquire suitable acquisition candidates on appropriate terms could adversely impact our growth strategy. In addition, we may not be able to fully integrate the operations of any future acquired businesses with our own operations in an efficient and cost-effective manner or without significant disruption to our or the acquired companies’ existing operations.
Our failure to fully integrate future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness, could prevent us from remaining competitive and, ultimately, could adversely affect our financial condition, operating results and cash flows. 14 Table of Contents Financial Risks We may be unsuccessful in complying with the financial ratio covenants or other provisions of our credit agreement.
The issuance of new shares of our common stock could dilute the equity value of our existing shareholders. Our failure to fully integrate future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness, could prevent us from remaining competitive and, ultimately, could adversely affect our financial condition, operating results and cash flows.
An implementation of this scale is a major financial undertaking and has, and will continue to, require substantial time and attention of management and key employees. We may not be able to successfully implement our ERP system without delays related to resource constraints or challenges with the critical design phases of the implementation.
We may not be able to successfully implement our ERP system without delays related to resource constraints or challenges with the critical design phases of the implementation.
Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom have entered into their own independent loan agreements with the same lenders to our credit agreement as well as with other lending institutions.
Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom have entered into their own independent loan agreements with the same lenders to our credit agreement as well as with other lending institutions. 14 Table of Content s We are subject to income taxes in the United States and certain foreign jurisdictions, and changes to the tax codes, effective tax rates and accounting principles related thereto could negatively impact our results of operations.
Changes in interest rates and the lack of credit and third-party financing arrangements for our customers could reduce demand for our products. Throughout 2022 and 2023, global interest rates increased substantially from historically low levels, which had facilitated low financing costs for construction projects.
Changes in interest rates and the lack of credit and third-party financing arrangements for our customers could reduce demand for our products.
Human Capital Risks Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees. We believe our culture focused on safety, devotion, integrity, respect and innovation, is one of our strongest assets. Our strong culture positions us to recruit and retain top-level talent across our organization.
We believe our culture, focused on safety, devotion, integrity, respect and innovation, is one of our strongest assets. Our strong culture positions us to recruit and retain top-level talent across our organization. We believe our employees and experienced leadership group are competitive advantages, as the best people, over time, produce the best results.
Some of our domestic and international competitors have greater financial, product development and marketing resources than we have. If competition in our industry intensifies or if our current competitors enhance their products or lower their prices for competing products, we may lose sales or be required to lower the prices we charge for our products.
If competition in our industry intensifies or if our current competitors enhance their products or lower their prices for competing products, we may lose sales or be required to lower the prices we charge for our products. This may reduce revenue from our products and services, lower our gross margins or cause us to lose market share.
Potential new indebtedness may be substantial and may limit our flexibility in using our cash flow from operations. The issuance of new shares of our common stock could dilute the equity value of our existing shareholders.
We may also be required to incur additional debt or issue additional shares of our common stock in order to consummate acquisitions in the future. Potential new indebtedness may be substantial and may limit our flexibility in using our cash flow from operations.
This may reduce revenue from our products and services, lower our gross margins or cause us to lose market share. In addition to the general competitive challenges we face, international trade policies could negatively affect the demand for our products and services and reduce our competitive position in such markets.
In addition to the general competitive challenges we face, international trade policies could negatively affect the demand for our products and services and reduce our competitive position in such markets. The 2024 U.S. presidential and congressional election results may have a significant impact on U.S. domestic and global trade policies.
In addition, any failure to ensure the effective transfer of knowledge and a smooth transition could hinder our strategic planning, execution and future performance. Our business operations are dependent upon the ability of our new employees to learn their new roles.
In addition, any failure to ensure the effective transfer of knowledge and a smooth transition could hinder our strategic planning, execution and future performance. Legal, Regulatory and Compliance Risks We are subject to an ongoing risk of product liability claims and other litigation arising in the ordinary course of business.
We may be unable to successfully complete potential acquisitions due to multiple factors, such as issues related to regulatory review of the proposed transactions or obtaining favorable financing. We may also be required to incur additional debt or issue additional shares of our common stock in order to consummate acquisitions in the future.
We may be unable to successfully complete potential acquisitions due to multiple factors, such as issues related to regulatory review of the proposed transactions or obtaining favorable financing or losing out on attractive acquisition opportunities to competing bidders that may have greater financial resources than us.
Our customers’ inability to secure financing for projects on attractive terms could result in the delay, cancellation or downsizing of new purchases which could adversely affect our sales.
Our customers’ inability to secure financing for projects on attractive terms could result in the delay, cancellation or downsizing of new purchases which could adversely affect our sales. 11 Table of Content s Market Condition Risks Competition could reduce revenue from our products and services and cause us to lose market share, and our ability to compete in international jurisdictions is dependent upon trade policies, which are subject to change.
We depend to a large extent on the abilities and continued participation of our executive officers and other key employees. We believe that as our activities increase and change in character, additional experienced personnel will be required to implement our OneASTEC business model.
We depend to a large extent on the abilities and continued participation of our executive officers and other key employees. Competition for such personnel is intense, and we cannot assure that they will be available when required, or that we will have the ability to attract and retain them.
The upgraded ERP will convert our internal operations, manufacturing, finance, human capital resources management and customer relationship systems to cloud-based platforms. This new ERP system will provide for standardized processes and integrated technology solutions that enable us to better leverage automation and process efficiency, transforming how we connect people, products and processes to operate as OneASTEC.
This new ERP system will provide for standardized processes and integrated technology solutions that enable us to better leverage automation and process efficiency, transforming how we connect people, products and processes. An implementation of this scale is a major financial undertaking and has, and will continue to, require substantial time and attention of management and key employees.
A decrease in our market capitalization, profitability or negative or declining cash flows increases the risk of goodwill or other intangible asset impairments. Future impairment charges could have a material adverse impact on our results of operations and shareholders' equity.
At October 1, 2024, we performed a subsequent qualitative assessment of goodwill impairment, and our testing indicated no additional impairment had occurred at any of our reporting units. A decrease in our market capitalization, profitability or negative or declining cash flows increases the risk of goodwill or other intangible asset impairments.
We are subject to income taxes in the United States and certain foreign jurisdictions, and changes to the tax codes, effective tax rates and accounting principles related thereto could negatively impact our results of operations. We are subject to income taxes in the United States and other jurisdictions.
We are subject to income taxes in the United States and other jurisdictions.
Other intangible assets are subject to impairment assessments if conditions exist that indicate the carrying value may not be recoverable. At October 1, 2023, we performed a qualitative assessment of goodwill impairment, and our testing indicated no impairment had occurred at any of our four reporting units.
Other intangible assets are subject to impairment assessments if conditions exist that indicate the carrying value may not be recoverable. During the second quarter of 2024, we identified that indicators of goodwill impairment were present due to macroeconomic conditions, including declines in our publicly quoted share price and increased interest rates, as well as lower than expected operating results.
Removed
Market Conditions Competition could reduce revenue from our products and services and cause us to lose market share, and our ability to compete in international jurisdictions is dependent upon trade policies, which are subject to change. We currently face strong competition in product performance, price and service.
Added
We currently face strong competition in product performance, price and service. Some of our domestic and international competitors have greater financial, product development and marketing resources than we have.
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We have historically grown, in large part, through strategic acquisitions, and our strategy is to continue to pursue attractive acquisition opportunities if and when they become available. Failure to identify and acquire suitable acquisition candidates on appropriate terms could adversely impact our growth strategy.
Added
Increased production costs could become particularly significant if the U.S. or foreign governments impose additional tariffs, including on steel. The Trump administration recently imposed a 25% tariff on all steel and aluminum imports, which may result in meaningfully higher steel costs and, as a result, increased production costs that we may not be able to pass onto our customers.
Removed
There is no assurance that we will be able to retain our existing management personnel or to attract additional qualified personnel when needed. Furthermore, we have had recent leadership changes and transitions involving our senior leadership team, including our Chief Executive Officer, Group Presidents of both of our Infrastructure Solutions and Materials Solutions segments and General Counsel, as previously announced.
Added
Furthermore, many of our competitors are larger than us and have more financial resources to invest in new technologies and manufacturing techniques. If we are unable to keep pace with these competitors in terms of new technology and innovation we may lose market share and our results of operations may be adversely affected.
Removed
In connection with the recent leadership changes noted above and our strategic initiatives, we have replaced, redirected or hired many employees in key functions, including in important management roles. Any significant management change involves inherent risk and any failure to ensure the effective transfer of knowledge and a smooth transition could hinder our strategic planning, execution and future performance.
Added
Financial Risks We may be unsuccessful in complying with the financial ratio covenants or other provisions of our credit agreement. As of December 31, 2024, we were in compliance with the financial covenants contained in our credit agreement.
Removed
As new employees gain experience in their roles, we could experience inefficiencies or a lack of business continuity due to loss of historical knowledge and a lack of familiarity of new employees with business processes, operating requirements, policies and procedures, some of which are new, and key information technologies and related infrastructure used in our day-to-day operations and financial reporting.
Added
We may not be able to adequately manage the risks associated with our products and systems, including increased warranty costs.
Removed
We may also experience additional costs as these new employees learn their roles and gain necessary experience. It is important to our success that these new employees quickly adapt to and excel in their new roles. If they are unable to do so, our business and financial results could be materially adversely affected.
Added
The success of our products depends on our ability to manage the risks that our products may have quality or other defects or deficiencies that result in their failure to satisfy performance or reliability requirements, including costs associated with design, manufacturing and warranties.
Removed
In addition, if we were to lose the services of any one or more key employees, whether due to death, disability or termination of employment, our ability to successfully operate our business segments, financial plans, marketing and other objectives could be significantly impaired.
Added
Managing these risks can be costly and technologically challenging and we cannot determine the ultimate effect they may have. Warranty liabilities and the related reserve estimation process is highly judgmental as a result of the complex nature of these exposures and the unique circumstances of each claim.
Removed
Legal, Regulatory and Compliance Risks We are subject to an ongoing risk of product liability claims and other litigation arising in the ordinary course of business. We manufacture heavy machinery, which is used by our customers at excavation and construction sites, ports and inland terminals and on high-traffic roads.
Added
Furthermore, once claims are asserted for an alleged product defect by customers, it can be difficult to determine the level of potential exposure or liability related to such allegation or the extent to which the assertion of these claims may expand geographically.
Removed
Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations.
Added
Although we maintain insurance for certain product related claims, such policies may not be available to us or adequately cover the liability for damages, the cost of repairs or the expense of litigation. Current and future claims may arise out of events or circumstances not covered by insurance and not subject to effective indemnification agreements with our subcontractors.
Removed
In 2023, we published our first Corporate Sustainability Report, which includes information about our ESG activities and may result in increased investor, media and employee attention to such initiatives. If our ESG efforts are negatively perceived, our reputation and stock price may suffer.
Added
Failure to successfully manage these challenges could have a material adverse effect on our results of operations and harm our reputation. Goodwill and other intangible assets comprise a material portion of our total assets.
Removed
Information Technology and Cybersecurity Risks Our operations may be adversely affected by any disruption in our information technology systems. Our operations are dependent upon our information technology systems, which encompass all of our major business functions.
Added
These factors indicated that one or more of our reporting units may have fallen below their carrying amounts. We performed a qualitative assessment on all reporting units and concluded that a further quantitative analysis was required for the Materials Solutions reporting unit.
Removed
We may not be able to successfully implement our strategic transformation initiatives, including our new enterprise resource planning system. We have launched a multi-year phased implementation of a standardized ERP system across our global organization, which will replace our existing disparate core financial systems.
Added
Based on the quantitative impairment test, we determined that the carrying value of the Materials Solutions reporting unit exceeded its fair value as of June 30, 2024.
Added
As a result, we recognized a pretax non-cash goodwill impairment charge of $20.2 million in "Goodwill impairment" in the Consolidated Statements of Operations to fully impair the goodwill allocated to the Materials Solutions reporting unit.
Added
Future impairment charges could have a material adverse impact on our results of operations and shareholders' equity. 15 Table of Content s Human Capital Risks Our performance could suffer if we cannot maintain our culture as well as attract, retain and engage our employees.
Added
We are subject to a variety of legal proceedings, the outcome of which may be unfavorable to us. From time to time, we may be involved in various legal proceedings and subject to government investigations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Finally, we conduct cybersecurity training and awareness programs for relevant employees and periodically conduct tabletop exercises leveraging actual scenarios to validate and improve our cybersecurity incident response plan and ensure that our management has a thorough understanding of and experience executing their roles and responsibilities if a cybersecurity incident were to occur.
Finally, we conduct cybersecurity training and awareness programs for relevant employees, periodically conduct tabletop exercises leveraging actual scenarios to validate and improve our cybersecurity incident response plan and ensure that our management has a thorough understanding of and experience executing their roles and responsibilities if a cybersecurity incident were to occur.
Our CIO, supported by our Director of Cybersecurity provides quarterly reports to the Board, which, generally includes: • Our cybersecurity risk profile; • Any changes to our cybersecurity strategy; • Status of the execution of the cybersecurity strategy; and • Summary of any non-material cybersecurity incidents that have occurred over the past quarter, including the nature, impact and resolution of incidents.
Our CIO, supported by our Director of Cybersecurity, provides quarterly reports to the Board, which, generally includes: • Our cybersecurity risk profile; • Any changes to our cybersecurity strategy; • Status of the execution of the cybersecurity strategy; and • Summary of any material cybersecurity incidents that have occurred over the past quarter, including the nature, impact and resolution of incidents.
The management positions responsible for assessing and managing cybersecurity risks include our Director of Cybersecurity and our Chief Information Officer ("CIO"), who reports directly to our CFO. Our CIO is responsible for ensuring that we have a cybersecurity risk management program in place that is fully aligned with business requirements and strategy.
The management positions responsible for assessing and managing cybersecurity risks include our Director of Cybersecurity and our Chief Information Officer ("CIO"), who reports directly to our Chief Executive Officer ("CEO"). Our CIO is responsible for ensuring that we have a cybersecurity risk management program in place that is fully aligned with business requirements and strategy.
Additionally, our Director of Cybersecurity has experience developing and implementing cybersecurity programs for multiple manufacturing firms. 19 Table of Contents As part of our defined cybersecurity policies and cybersecurity incident response plan, management is regularly updated on the status of the execution of our cybersecurity strategy and daily operations of the program.
Additionally, our Director of Cybersecurity has experience developing and implementing cybersecurity programs for multiple manufacturing firms. 19 Table of Content s As part of our defined cybersecurity policies and cybersecurity incident response plan, management is regularly updated on the status of the execution of our cybersecurity strategy and daily operations of the program.
To reduce the risk that we are materially impacted by a cybersecurity incident, we employ a multi-layered defense approach to cybersecurity leveraging people, controls, tools and automated/monitored platforms to support the detection and response to cybersecurity incidents.
To reduce the risk that we are materially impacted by a cybersecurity incident, we employ a multi-layered defense approach to cybersecurity leveraging our people, external resources, controls, tools and automated/monitored platforms to support the detection and response to cybersecurity incidents.
Our CIO and Director of Cybersecurity have over 19 and 20 years, respectively, of cybersecurity oversight experience. Our CIO previously served as CIO for a New York Stock Exchange listed manufacturing company prior to joining the Company.
Our CIO and Director of Cybersecurity both have over 20 years of cybersecurity oversight experience. Our CIO previously served as CIO for a New York Stock Exchange listed manufacturing company prior to joining the Company.
CYBERSECURITY Risk Management and Strategy We have developed and implemented a comprehensive cybersecurity strategy and risk management program that is informed by the following key elements: • Periodic cybersecurity program maturity assessments to evaluate the overall controls, processes, skills and platforms leveraged to assess, identify and manage material risks from cybersecurity threats. • Periodic Business Impact Assessments ("BIAs") of key business processes and services that enable us to identify sensitive and critical aspects of the business, the impact of operational disruptions to those processes and services and the sensitivity of the data leveraged in those processes and services. • An external assessment of the cybersecurity risks associated with our operations.
CYBERSECURITY Risk Management and Strategy We have developed and implemented a comprehensive cybersecurity strategy and risk management program that is informed by the following key elements: • Periodic cybersecurity program maturity assessments to evaluate the overall controls, processes, skills and platforms leveraged to assess, identify and manage material risks from cybersecurity threats. • Periodic business impact assessments of key business processes and services that enable us to identify sensitive and critical aspects of the business, the impact of operational disruptions to those processes and services and the sensitivity of the data leveraged in those processes and services. • An external assessment of the cybersecurity risks associated with our operations. • Periodic penetration testing of our internal and external IT environment to validate the real-world efficacy of our cybersecurity program and mitigate the risks of new cybersecurity vulnerabilities.
We also have a cybersecurity incident response plan that outlines the steps we will take to respond to a cybersecurity incident, which is tested on a periodic basis.
We also have a cybersecurity incident response plan that outlines the steps we will take to respond to a cybersecurity incident, which is tested on a periodic basis. Additionally, we have a retainer for external forensics support if required for a material incident.
We utilize internal information technology resources for the primary aspects of our cybersecurity program. Our internal team is supported by external service providers and consultants as needed. To minimize the risk to our core systems, we utilize well established enterprise-grade cloud service providers for our management and operational functions.
We utilize internal information technology resources for the primary aspects of our cybersecurity program. Our internal team is supported by external service providers and consultants as needed. We utilize third-party service providers to manage portions of our business operations. We have established processes to review, identify and manage cybersecurity risks associated with the use of service providers.
Removed
We review Service Organization Control Type 2 audit report results from each of these service providers to ensure that their programs meet our requirements.
Added
Prior to engaging these providers, we review the providers' SOC 2 Type II or other relevant security audit reports to ensure proper security controls are in place. We evaluate the service providers' controls for incident response strategy to identify any significant risks and adapt accordingly. We systematically review these assessments for any significant change throughout the relationship.
Added
Our risk management program consistently monitors for risk to our systems and services presented by these service providers and promotes strategies to address any threats identified.

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES As of December 31, 2023, our manufacturing, warehouse and office facilities total approximately 3.3 million square feet of space globally. We believe all properties to be well maintained and adequate for present use, with sufficient capacities for current needs as our business is presently conducted.
ITEM 2. PROPERTIES As of December 31, 2024, our manufacturing, warehouse and office facilities total approximately 3.3 million square feet of space globally. We believe all properties to be well maintained and adequate for present use, with sufficient capacities for current needs as our business is presently conducted.
The following table lists the principal locations (defined as greater than 20,000 square feet) that are owned or leased by us, as denoted, and which are utilized in our continuing business operations: Location Segment Facility Type/Use Approximate Square Feet United States Chattanooga, Tennessee (1) Infrastructure Solutions Manufacturing/rebuild, offices, training center, warehouse and storage 1,352,384 Yankton, South Dakota Materials Solutions Manufacturing, warehouse and offices 344,995 Eugene, Oregon Materials Solutions Manufacturing and offices 140,300 Eugene, Oregon Infrastructure Solutions Manufacturing and offices 135,920 Burlington, Wisconsin Infrastructure Solutions Manufacturing and offices 112,100 Prairie du Chien, Wisconsin Infrastructure Solutions Manufacturing 100,336 Parsons, Kansas Infrastructure Solutions Manufacturing and offices 91,600 Blair, Nebraska Infrastructure Solutions Manufacturing and offices 90,813 Sterling, Illinois Materials Solutions Manufacturing and offices 67,500 Rossville, Georgia Infrastructure Solutions Manufacturing 40,500 Chattanooga, Tennessee (1) Corporate and Other Offices and hangar 37,006 West Columbia, South Carolina (1) Infrastructure Solutions Distribution center 20,400 International Johannesburg, Gauteng, South Africa Materials Solutions Manufacturing and offices 229,000 Omagh, County Tyrone, United Kingdom (2) Materials Solutions Manufacturing and offices 205,000 Vespasiano, Minas Gerais, Brazil Materials Solutions Manufacturing and offices 132,400 Thornbury, Ontario, Canada Materials Solutions Manufacturing and offices 60,500 Acacia Ridge, Queensland, Australia Infrastructure Solutions Offices, service, light fabrication, warehouse and storage 36,000 Marieville, Quebec, Canada (1) Infrastructure Solutions Manufacturing, warehouse, offices and storage 27,495 St-Bruno, Quebec, Canada (1) Infrastructure Solutions Warehouse and offices 21,800 (1) These facilities are partially leased.
The following table lists the principal locations (defined as greater than 20,000 square feet) that are owned or leased by us, as denoted, and which are utilized in our continuing business operations: Location Segment Facility Type/Use Approximate Square Feet United States Chattanooga, Tennessee (1) Infrastructure Solutions Manufacturing/rebuild, offices, training center, warehouse and storage 1,352,384 Yankton, South Dakota Materials Solutions Manufacturing, warehouse and offices 344,995 Eugene, Oregon Materials Solutions Manufacturing and offices 140,300 Eugene, Oregon Infrastructure Solutions Manufacturing and offices 135,920 Blair, Nebraska Infrastructure Solutions Manufacturing and offices 114,831 Burlington, Wisconsin Infrastructure Solutions Manufacturing and offices 112,100 Prairie du Chien, Wisconsin Infrastructure Solutions Manufacturing 100,336 Parsons, Kansas Infrastructure Solutions Manufacturing and offices 91,600 Sterling, Illinois (1) Materials Solutions Manufacturing and offices 67,500 Rossville, Georgia Infrastructure Solutions Manufacturing 40,500 Chattanooga, Tennessee (1) Corporate and Other Offices and hangar 37,006 West Columbia, South Carolina (1) Infrastructure Solutions Distribution center 20,400 International Johannesburg, Gauteng, South Africa Materials Solutions Manufacturing and offices 229,000 Omagh, County Tyrone, United Kingdom Materials Solutions Manufacturing and offices 205,000 Vespasiano, Minas Gerais, Brazil Materials Solutions Manufacturing and offices 132,400 Thornbury, Ontario, Canada Materials Solutions Manufacturing and offices 60,500 Acacia Ridge, Queensland, Australia Infrastructure Solutions Offices, service, light fabrication, warehouse and storage 36,000 Marieville, Quebec, Canada (1) Infrastructure Solutions Manufacturing, warehouse, offices and storage 27,495 St-Bruno, Quebec, Canada (1) Infrastructure Solutions Warehouse and offices 21,800 (1) These facilities are partially or fully leased. 20 Table of Content s
Removed
(2) Includes a manufacturing facility expansion that was completed during December 2023. 20 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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MINE SAFETY DISCLOSURES None. 21 Table of Contents PART II
MINE SAFETY DISCLOSURES None. 21 Table of Content s PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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In addition, our payment of dividends may be limited by restrictive covenants in our revolving credit facility agreement. Performance Graph The stock performance graph below is intended to show our stock performance compared with that of comparable companies.
In addition, our payment of dividends may be limited by restrictive covenants in our revolving credit facility agreement. 22 Table of Content s Performance Graph The stock performance graph below is intended to show our stock performance compared with that of comparable companies.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock is traded on the Nasdaq National Market under the ticker symbol "ASTE". As of February 23, 2024, there were 242 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Common Stock Our common stock is traded on the Nasdaq National Market under the ticker symbol "ASTE". As of February 21, 2025, there were 232 holders of record of our common stock.
The stock performance graph compares the cumulative five-year total return provided to shareholders of Astec Industries, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index, our broad equity market comparative index, and the S&P 600 SmallCap Industrials index. 22 Table of Contents The graph assumes that the value of an investment in our common stock, in the Russell 2000 index and in the S&P 600 SmallCap Industrials index was $100 on December 31, 2018 and assumes reinvestment of all dividends as well as the relative performance of each through December 31, 2023.
The stock performance graph compares the cumulative five-year total return provided to shareholders of Astec Industries, Inc.'s common stock relative to the cumulative total returns of the Russell 2000 index, our broad equity market comparative index, and the S&P 600 SmallCap Industrials index.
The following table details dividends paid per share during 2023 and 2022: (in dollars) 2023 2022 First Quarter $ 0.13 $ 0.12 Second Quarter 0.13 0.12 Third Quarter 0.13 0.12 Fourth Quarter 0.13 0.13 Total $ 0.52 $ 0.49 Dividends are paid when, as and if declared at the discretion of our Board from funds legally available for that purpose.
Dividend Policy We paid quarterly dividends of $0.13 per common share to shareholders in all four quarters of both 2024 and 2023, totaling cash paid of $11.9 million and $11.8 million for dividends in 2024 and 2023, respectively. Dividends are paid when, as and if declared at the discretion of our Board from funds legally available for that purpose.
December 31, (in dollars) 2018 2019 2020 2021 2022 2023 Astec Industries, Inc. 100.00 140.92 196.27 236.43 140.32 130.06 Russell 2000 100.00 125.49 150.50 172.74 137.40 160.59 S&P 600 SmallCap Industrials 100.00 129.64 145.16 182.75 165.57 218.29 ITEM 6. [RESERVED]
December 31, (in dollars) 2019 2020 2021 2022 2023 2024 Astec Industries, Inc. 100.00 139.28 167.78 99.58 92.30 84.57 Russell 2000 100.00 119.93 137.66 109.49 127.97 142.73 S&P 600 SmallCap Industrials 100.00 111.94 140.80 127.39 167.57 196.11 ITEM 6. [RESERVED]
Removed
Dividend Policy We paid cash of $11.8 million and $11.2 million for dividends in 2023 and 2022, respectively.
Added
The graph assumes that the value of an investment in our common stock, in the Russell 2000 index and in the S&P 600 SmallCap Industrials index was $100 on December 31, 2019 and assumes reinvestment of all dividends as well as the relative performance of each through December 31, 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Item 6. [Reserved] 23 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 34 Item 8. Financial Statements and Supplementary Data 35 Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77 Item 9A. Controls and Procedures 77
Item 6. [Reserved] 23 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 33 Item 8. Financial Statements and Supplementary Data 34 Item 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77 Item 9A. Controls and Procedures 77 Item 9B.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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In addition, our variable cash uses may include the payment of our quarterly cash dividend, financing other strategic initiatives of our business, including, but not limited to, our strategic transformation initiatives and strategic acquisitions and share repurchases under our share repurchase authorization.
In addition, our variable cash uses may include the payment of our quarterly cash dividend, financing other strategic initiatives of our business, including, but not limited to, our strategic transformation initiatives, strategic acquisitions and share repurchases under our share repurchase authorization.
Firm orders are signed commitments from customers to complete a purchase for machinery, equipment or parts that is expected to be noncancellable and are included in backlog when we are in receipt of an executed contract and any required deposits or security and have not yet been recognized into net sales.
Firm orders are signed commitments from customers to complete a purchase for machinery, equipment or parts that is expected to be noncancellable and are included in backlog when we are in receipt of an executed contract and any required deposits or security and the orders have not yet been recognized into net sales.
On December 19, 2022, we entered into a new credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which replaced the previously existing credit facility with a borrowing capacity of $150.0 million and a maturity date of December 29, 2023 (the "Previous Credit Facility").
On December 19, 2022, we entered into a new credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which replaced the previously existing credit facility with a borrowing capacity of $150.0 million and a maturity date of December 29, 2023.
Our products are marketed both domestically and internationally primarily to asphalt and concrete producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycle and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations and domestic and foreign government agencies.
Our products are marketed both domestically and internationally primarily to asphalt and concrete producers; highway and heavy equipment contractors; utility contractors; sand and gravel producers; construction, demolition, recycling and crushing contractors; forestry and environmental recycling contractors; mine and quarry operators; port and inland terminal authorities; power stations and domestic and foreign government agencies.
We may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit's net assets to the fair value of the reporting unit.
We may elect not to perform the qualitative assessment for some or all reporting units and instead perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit's net assets to the fair value of the reporting unit.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included in Item 8 of this Annual Report on Form 10-K for the year ended December 31, 2024.
GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in 25 Table of Contents determining their backlog amounts. In addition, our backlog should not necessarily be viewed as an accurate indicator of revenue for any particular period and there is no guarantee that our backlog will be converted to net sales.
GAAP"), and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. In addition, our backlog should not necessarily be viewed as an accurate indicator of revenue for any particular period, and there is no guarantee that our backlog will be converted to net sales.
See Note 19, Operations by Industry Segment and Geographic 29 Table of Contents Area, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated net income attributable to controlling interest.
See Note 19, Operations by Industry Segment and Geographic Area, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated net income attributable to controlling interest.
Failure to satisfy these covenants could result in the accelerated repayment of our indebtedness. We were in compliance with all covenants of the Credit Facilities at December 31, 2023. Due to the increased borrowings under our Credit Facilities and higher interest rates, we expect our interest expense in the near-term to remain at elevated levels.
Failure to satisfy these covenants could result in the accelerated repayment of our indebtedness. We were in compliance with all covenants of the Credit Facilities as of December 31, 2024. Due to the increased borrowings under our Credit Facilities and higher interest rates, we expect our interest expense in the near-term to remain at elevated levels.
Our foreign subsidiaries held $25.1 million of cash and cash equivalents available for operating purposes which is considered to be indefinitely invested in those jurisdictions. Our future cash requirements primarily include working capital needs, debt service obligations, capital expenditures, vendor hosted software arrangements including the related implementation costs, unrecognized tax benefits and operating lease payments.
Our foreign subsidiaries held $31.6 million of cash and cash equivalents available for operating purposes which is considered to be indefinitely invested in those jurisdictions. Our future cash requirements primarily include working capital needs, debt service obligations, capital expenditures, vendor hosted software arrangements including the related implementation costs, unrecognized tax benefits and operating lease payments.
The Credit 30 Table of Contents Agreement provides for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $125.0 million (the "Credit Facilities") and (iii) a maturity date of December 19, 2027.
The Credit Agreement provides for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $125.0 million (the "Credit Facilities") and (iii) a maturity date of December 19, 2027.
The qualitative evaluation is an assessment of factors that includes, but is not limited to, the macroeconomic conditions, industry and competitive environment conditions, overall financial performance, business specific events and market considerations to determine whether it is more likely than not that a reporting unit's fair value is less than its carrying amount.
The qualitative evaluation is an assessment of factors that includes, but is not limited to, the macroeconomic conditions, industry and competitive environment conditions, overall financial performance, business specific events and market considerations to determine whether 31 Table of Content s it is more likely than not that a reporting unit's fair value is less than its carrying amount.
Recent Accounting Changes and Pronouncements See Note 2, Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of recently issued accounting pronouncements applicable to us and the impact of those standards on our consolidated financial statements and related disclosures. 33 Table of Contents
Recent Accounting Changes and Pronouncements See Note 2, Basis of Presentation and Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of recently issued accounting pronouncements applicable to us and the impact of those standards on our consolidated financial statements and related disclosures. 32 Table of Content s
We estimate that our capital expenditures will be between $25 and $35 million for the year ending December 31, 2024, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.
We estimate that our capital expenditures will be between $35 and $45 million for the year ending December 31, 2025, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.
While increasing oil prices may have a negative financial impact on many of our customers, our equipment can use a significant amount of reclaimed asphalt pavement, thereby partially mitigating the effect of increased oil prices on the final cost of asphalt for the customer.
While increasing oil prices may have a negative financial impact on many of our customers, our equipment can use a significant amount of reclaimed asphalt 25 Table of Content s pavement, thereby partially mitigating the effect of increased oil prices on the final cost of asphalt for the customer.
Risk Factors for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Risk Factors 23 Table of Content s for a discussion of uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Segment Operating Adjusted EBITDA, a non-GAAP financial measure, is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance.
Segment Operating Adjusted EBITDA is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance.
Each of the credit facilities are generally guaranteed by Astec Industries, Inc. and/or secured with certain assets of the local subsidiary. We regularly enter into agreements primarily to purchase inventory in the ordinary course of business. As of December 31, 2023, open purchase obligations totaled $177.7 million, of which $153.5 million are expected to be fulfilled within one year.
Each of the credit facilities are generally guaranteed by Astec Industries, Inc. and/or secured with certain assets of the local subsidiary. We regularly enter into agreements primarily to purchase inventory in the ordinary course of business. As of December 31, 2024, open purchase obligations totaled $122.0 million, of which $120.6 million are expected to be fulfilled within one year.
Warranty obligations by product line or model are evaluated based on historical warranty claims experience. 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.
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.
We continue to develop products and initiatives to reduce the amount of oil and related products required to produce asphalt. While oil prices had declined from the peak prices in 2022, throughout 2023 they have remained at relatively high levels.
We continue to develop products and initiatives to reduce the amount of oil and related products required to produce asphalt. While oil prices had declined from the peak prices in 2022, throughout 2024 they remained relatively stable.
Backlog levels provide management and investors additional details of committed orders that are expected to convert to future net sales. Management uses backlog information for capacity and resource planning as well as to monitor inventory levels in our facilities relative to expected future net sales. Our $569.8 million backlog of orders as of December 31, 2023 continues to remain strong.
Backlog levels provide management and investors additional details of committed orders that are expected to convert to future net sales. Management uses backlog information for capacity and resource planning as well as to monitor inventory levels in our facilities relative to expected future net sales.
Furthermore, given the volatility of steel prices and the nature of our customers' orders, we may not be able to pass through all increases in steel costs to our customers, which negatively impacts our gross profit and margins. We actively manage our global supply chain for any identified constraints and volatility.
Furthermore, given the volatility of steel prices and the nature of our customers' orders, we may not be able to pass through all increases in steel costs to our customers, which negatively impacts our gross profit and margins.
Income Tax Provision Income tax expense for the year ended December 31, 2023 was $9.1 million, reflecting a 21.3% effective tax rate, compared to $5.0 million for the year ended December 31, 2022, reflecting a 113.6% effective tax rate.
Income Tax Provision Income tax expense for the year ended December 31, 2024 was $9.8 million, reflecting a 70.5% effective tax rate, compared to $9.1 million for the year ended December 31, 2023, reflecting a 21.3% effective tax rate.
Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2022 . 23 Table of Contents The financial condition and results of operations discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Astec Industries, Inc. and its consolidated subsidiaries, collectively, the "Company," "Astec," "we," "our" or "us." Business Overview We design, engineer, manufacture, market and service equipment and components used primarily in asphalt and concrete road building and related construction activities, as well as certain other products.
The financial condition and results of operations discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Astec Industries, Inc. and its consolidated subsidiaries, collectively, the "Company," "Astec," "we," "our" or "us." Business Overview We design, engineer, manufacture, market and service equipment and components used primarily in asphalt and concrete road building and related construction activities, as well as certain other products.
Cash Flows The following table summarizes cash flows during the years ended December 31, 2023 and 2022, respectively: Years Ended December 31, (in millions) 2023 2022 Net cash provided by (used in) operating activities $ 27.8 $ (73.9) Net cash used in investing activities (12.9) (53.2) Net cash (used in) provided by financing activities (18.3) 60.1 Effect of exchange rates on cash 0.6 (1.4) Decrease in cash, cash equivalents and restricted cash (2.8) (68.4) Cash, cash equivalents and restricted cash, end of period $ 63.2 $ 66.0 Net cash provided by (used in) operating activities Our operating activities provided net cash of $27.8 million during 2023 as compared to a net use of $73.9 million in cash during 2022.
Cash Flows The following table summarizes cash flows during the years ended December 31, 2024 and 2023, respectively: Years Ended December 31, (in millions) 2024 2023 Net cash provided by operating activities $ 23.0 $ 27.8 Net cash used in investing activities (18.0) (12.9) Net cash provided by (used in) financing activities 24.4 (18.3) Effect of exchange rates on cash (1.8) 0.6 Increase (decrease) in cash, cash equivalents and restricted cash 27.6 (2.8) Cash, cash equivalents and restricted cash, end of period $ 90.8 $ 63.2 Net cash provided by operating activities Net cash provided by operating activities decreased to $23.0 million during 2024 as compared to $27.8 million during 2023.
Segment Operating Adjusted EBITDA Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our Chief Executive Officer, whom is determined to be the chief operating decision maker ("CODM"), to evaluate performance and allocate resources to the operating segments.
Segment Operating Adjusted EBITDA Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our CEO, who is the chief operating decision maker ("CODM"), to evaluate performance and allocate resources to the reportable segments.
The increase was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increased service and equipment installation revenue and parts and component sales of $23.0 million and $15.9 million, respectively. These increases were partially offset by lower new and used equipment sales of $4.4 million and $3.4 million, respectively.
The increase was primarily driven by favorable pricing coupled with net favorable volume and mix that generated increased new equipment sales and parts and component sales of $51.9 million and $5.4 million, respectively. These increases were partially offset by lower service and equipment installation revenue of $20.4 million.
Interest Expense Interest expense of $8.9 million was incurred for the year ended December 31, 2023 as compared to $2.5 million for the year ended December 31, 2022, an increase of $6.4 million, primarily related to higher outstanding borrowings on our revolving credit facility.
Interest Expense Interest expense of $10.7 million was incurred for the year ended December 31, 2024 as compared to $8.9 million for the year ended December 31, 2023, an increase of $1.8 million, primarily related to higher average outstanding borrowings on our revolving credit facility.
Sales reported by our foreign subsidiaries in U.S. dollars for 2023 would have been $8.1 million higher had foreign exchange rates been the same as the 2022 rates. Domestic sales for 2023 were $1,083.4 million, or 81.0% of net sales, compared to $1,014.3 million, or 79.6% of net sales, for 2022, an increase of $69.1 million, or 6.8%.
Sales reported by our foreign subsidiaries in U.S. dollars for 2024 would have been $2.8 million higher had foreign exchange rates been the same as the 2023 rates. Domestic sales for 2024 were $1,015.4 million, or 77.8% of net sales, compared to $1,083.4 million, or 81.0% of net sales, for 2023, a decrease of $68.0 million, or 6.3%.
These increases were partially offset by lower amortization expense of $3.3 million and reduced acquisition and integration related costs of $2.1 million primarily associated with the acquisition of MINDS. 27 Table of Contents Restructuring, Impairment and Other Asset Charges, Net Restructuring, asset impairment charges and the net gains on the sale of property and equipment for the years ended December 31, 2023 and 2022 are presented below: Years Ended December 31, (in millions) 2023 2022 Restructuring charges: Costs associated with leadership change and overhead restructuring $ 7.3 $ 4.4 Costs associated with exited operations - Enid 0.4 1.0 Costs associated with closing Tacoma — 0.8 Total restructuring related charges 7.7 6.2 Asset impairment charges: Other impairment charges 1.2 3.5 Total asset impairment charges 1.2 3.5 Gain on sale of property and equipment, net: Gain on sale of property and equipment, net (3.1) (0.7) Total gain on sale of property and equipment, net (3.1) (0.7) Restructuring, impairment and other asset charges, net $ 5.8 $ 9.0 See Note 21, Strategic Transformation and Restructuring, Impairment and Other Asset Charges, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of the individual restructuring actions taken and the impairment charges recorded.
Restructuring, Impairment and Other Asset Charges, Net Restructuring, impairment and other asset charges, net for the years ended December 31, 2024 and 2023 are presented below: Years Ended December 31, (in millions) 2024 2023 Restructuring charges: Costs associated with exited operations – Enid $ 8.6 $ 0.4 Workforce reductions 0.9 — Costs associated with leadership change and overhead restructuring — 7.3 Total restructuring related charges 9.5 7.7 Asset impairment charges: Other impairment charges — 1.2 Total asset impairment charges — 1.2 Gain on sale of property and equipment, net: Gain on sale of property and equipment, net (1.1) (3.1) Total gain on sale of property and equipment, net (1.1) (3.1) Restructuring, impairment and other asset charges, net $ 8.4 $ 5.8 See Note 21, Strategic Transformation and Restructuring, Impairment and Other Asset Charges, net, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of the individual restructuring actions taken and the impairment charges recorded.
Price volatility continues to make it difficult to predict the costs of oil-based products used in road construction such as liquid asphalt and gasoline. Oil prices have routinely fluctuated in recent years and are expected to continue to fluctuate in the future.
Price volatility continues to make it difficult to predict the costs of oil-based products used in road construction such as liquid asphalt and gasoline. Oil prices have routinely fluctuated in recent years and are expected to continue to fluctuate in the future. Based on the current macroeconomic environment, we anticipate that oil prices will experience moderate fluctuation throughout 2025.
We had $72.0 million and $78.0 million in outstanding borrowings under the Credit Facilities at December 31, 2023 and 2022, respectively. Our outstanding letters of credit totaling $3.3 million decreased borrowing availability to $174.7 million under the revolving credit facility as of December 31, 2023.
We had $105.0 million and $72.0 million in outstanding borrowings under the Credit Facilities as of December 31, 2024 and 2023, respectively. Our outstanding letters of credit totaling $5.2 million decreased borrowing availability to $139.8 million under the revolving credit facility as of December 31, 2024.
As of December 31, 2023, our total liquidity was $234.5 million, consisting of $59.8 million of cash and cash equivalents available for operating purposes and $174.7 million available for additional borrowings under our revolving credit facility, to the extent our compliance with financial covenants permits such borrowings.
As of December 31, 2024, our total liquidity was $228.1 million, consisting of $88.3 million of cash and cash equivalents available for operating purposes and $139.8 million available for additional borrowings under our revolving credit facility, to the extent our compliance with financial covenants permits such 29 Table of Content s borrowings.
Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under a $250.0 million revolving credit facility and cash flows from operations.
These increases were partially offset by decreased employee incentive compensation costs of $2.1 million. Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under a $250.0 million revolving credit facility and cash flows from operations.
As of December 31, 2023 and 2022 the net carrying amount of goodwill was $46.3 million and $45.2 million, respectively. No goodwill impairment charges were recognized in 2023, 2022 or 2021. Intangible assets with definite lives are tested for impairment if conditions exist that indicate the carrying value may not be recoverable.
No goodwill impairment charges were recognized in 2023 or 2022. Intangible assets with definite lives are tested for impairment if conditions exist that indicate the carrying value may not be recoverable.
The decrease in expenses was primarily driven by $2.2 million of lower general and administrative expenses, primarily associated with personnel related costs including the recovery of share-based compensation expense related to awards forfeited or modified in conjunction with the termination of our previous CEO and the limited overhead restructuring action implemented in February 2023 partially offset by increased technology support costs.
The increase in expenses was primarily driven by higher general and administrative expenses, primarily associated with personnel-related costs of $5.7 million, which includes the recovery of share-based compensation expense in the prior year that did not recur for awards that were forfeited or modified in conjunction with the termination of our previous CEO and the limited overhead restructuring action implemented in February 2023 of $2.6 million, and increased technology and support costs of $2.8 million.
Domestic sales for the Infrastructure Solutions segment increased by $40.0 million, or 5.7%, for 2023 compared to 2022 primarily due to increases in (i) service and equipment installation revenue of $21.9 million, (ii) parts and component sales of $17.4 million and (iii) equipment sales of $3.6 million. These increases were partially offset by lower used equipment sales of $3.1 million.
Domestic sales for the Infrastructure Solutions segment increased by $34.4 million, or 4.6%, for 2024 compared to 2023 primarily due to increases in equipment and parts and components sales of $49.7 million and $4.4 million, respectively. These increases were partially offset by lower service and equipment installation revenue of 20.0 million.
The increase was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increased equipment sales and service and equipment installation revenue of $30.2 million and $4.7 million, respectively.
The decrease was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreased equipment sales of $73.7 million.
These reductions are determined by management based on estimates, assumptions and judgments made from the information available at that time. We do not believe it is reasonably likely that the inventory values will materially change in the near future. Product Warranty Reserves: We accrue for the estimated cost of product warranties at the time revenue is recognized.
We do not believe it is reasonably likely that the inventory values will materially change in the near future. Product Warranty Reserves - We accrue 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.
Executive Summary Highlights of our financial results as of and for the year ended December 31, 2023 as compared to the prior year include the following: • Net sales were $1,338.2 million, an increase of 5.0% • Gross profit was $330.8 million, an increase of 25.3% • Income from operations increased $41.1 million to $48.6 million • Net income attributable to Astec increased $33.6 million to $33.5 million • Diluted earnings per share were $1.47, an increase of 100.0% • Backlog of $569.8 million, a decrease of 37.6% Significant Items Impacting Financial Results in 2023 Strategic Transformation Program We are undergoing a multi-year phased implementation of a standardized enterprise resource planning ("ERP") system across our global organization, which will replace much of our existing disparate core financial systems.
Executive Summary Highlights of our financial results as of and for the year ended December 31, 2024 as compared to the prior year include the following: • Net sales were $1,305.1 million, a decrease of 2.5% • Gross profit was $327.9 million, a decrease of 0.9% • Income from operations was $23.2 million, a decrease of 52.3% • Net income attributable to Astec was $4.3 million, a decrease of 87.2% • Diluted income per share was $0.19, a decrease of 87.1% • Backlog was $419.6 million, a decrease of 26.4% Significant Items Impacting Financial Results in 2024 Strategic Transformation Program Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized enterprise resource planning ("ERP") system, which is replacing much of our existing disparate core financial systems.
Goodwill is allocated to, and evaluated for impairment at, four identified reporting units. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test.
Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. Application of these principles requires us to make estimates and judgments that affect the amounts as reported in the consolidated financial statements. Accounting policies involving estimates that are critical to our financial statements are described below.
These decreases were partially offset by increased other liabilities and customer deposits of $8.4 million and $7.1 million, respectively. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. Application of these principles requires us to make estimates and judgments that affect the amounts as reported in the consolidated financial statements.
Gross Profit Consolidated gross profit for 2023 was $330.8 million, or 24.7% of net sales, as compared to $264.1 million, or 20.7% of net sales, in 2022, an increase of $66.7 million, or 25.3%.
Gross Profit Consolidated gross profit for 2024 was $327.9 million, or 25.1% of net sales, as compared to $330.8 million, or 24.7% of net sales, in 2023, a decrease of $2.9 million, or 0.9%.
Corporate and Other Corporate and Other operations had net expenses of $44.9 million for 2023 compared to $46.5 million for 2022, a decrease of $1.6 million or 3.4%.
Corporate and Other Operations Corporate and Other operations had net expenses of $46.9 million for 2024 compared to $43.1 million for 2023, an increase of $3.8 million or 8.8%.
These and other accounting policies are more fully described in Note 2, Basis of Presentation and Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. Inventory Valuation: Inventories are valued at the lower of first-in, first-out cost or net realizable value. The most significant component of our inventories is steel.
Accounting policies involving estimates that are critical to our financial statements are described below. These and other accounting policies are more fully described in Note 2, Basis of Presentation and Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
This increase is primarily due to reduced net cash usages from our operating assets and liabilities of $60.7 million and higher net income reduced by non-cash charges of $41.8 million.
This decrease is primarily due to decreased cash inflows from net income reduced by non-cash charges of $6.9 million partially offset by decreased net cash usages from our operating assets and liabilities of $1.4 million.
International sales for the Infrastructure Solutions segment decreased $8.6 million, or 6.0%, for 2023 compared to 2022 primarily due to decreased equipment sales of $8.0 million. Materials Solutions Sales in this segment were $450.0 million for 2023 compared to $422.7 million for 2022, an increase of $27.3 million, or 6.5%.
International sales for the Infrastructure Solutions segment increased $2.6 million, or 5.0%, for 2024 compared to 2023 primarily due to increased equipment sales of $2.2 million. Materials Solutions Sales in this segment were $467.7 million for 2024 compared to $537.8 million for 2023, a decrease of $70.1 million, or 13.0%.
These costs include personnel expenses for employees and costs for third-party consulting services which are directly associated with the implementation. Capitalization for each phase ends once the implementation for that phase is substantially complete, at which point the capitalized costs are amortized ratably over the remaining contract term plus any reasonably certain renewal periods.
Capitalization for each phase ends once the implementation for that phase is substantially complete, at which point the capitalized costs are amortized ratably over the remaining contract term plus any reasonably certain renewal periods. There is judgment involved in estimating the stage of development and the internal costs allocated to the implementation.
Open market prices are subject to volatility and determine our cost of steel. During periods when open market prices decline, we may need to reduce the carrying value of the inventory. In addition, certain items in inventory become obsolete over time, and we reduce the carrying value of these items to their net realizable value.
Inventory Valuation - Inventories are valued at the lower of first-in, first-out cost or net realizable value. The most significant component of our inventories is steel. Open market prices are subject to volatility and determine our cost of steel. During periods when open market prices decline, we may need to reduce the carrying value of the inventory.
The increase in net sales was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increases in (i) equipment sales of $29.9 million, (ii) service and equipment installation revenue of $27.9 million and (iii) parts and component sales of $14.5 million. These increases were partially offset by decreased used equipment sales of $5.6 million.
The decrease in net sales was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreases in equipment sales of $21.8 million and service and equipment installation revenue of $21.1 million. These decreases were partially offset by increased parts and component sales of $7.5 million and increased other revenue of $4.0 million.
The increase was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated $104.8 million higher gross profit and $2.3 million of gross profit generated by an acquired business. These increases were partially offset by the impact of inflation on materials, labor and overhead of $40.8 million.
The decrease was primarily driven by (i) manufacturing inefficiencies of $22.0 million, (ii) the impact of inflation on materials, labor and overhead of $10.0 million and (iii) increased net scrap expenses of $2.6 million. These decreases were partially offset by favorable pricing net of unfavorable volume and mix that generated $32.6 million higher gross profit.
These increases to Segment Operating Adjusted EBITDA were partially offset by the impact of higher inflation on materials, labor and overhead costs of $25.5 million and increased selling, general and administrative costs of $18.5 million, primarily due to $15.1 million higher personnel related costs largely driven by general employee cost increases and higher annual incentive compensation costs.
These increases to Segment Operating Adjusted EBITDA were partially offset by (i) manufacturing inefficiencies of $12.5 million, (ii) the impact of higher inflation on materials, labor and overhead costs of $6.9 million, (iii) increased IT and professional services costs of $5.1 million and (iv) increased selling, general and administrative personnel-related costs of $2.6 million.
Net Sales by Segment Years Ended December 31, (in millions) 2023 2022 $ Change % Change Infrastructure Solutions $ 878.8 $ 847.4 $ 31.4 3.7 % Materials Solutions $ 450.0 $ 422.7 $ 27.3 6.5 % Corporate and Other $ 9.4 $ 4.4 $ 5.0 113.6 % Infrastructure Solutions Sales in this segment were $878.8 million for 2023 compared to $847.4 million for 2022, an increase of $31.4 million, or 3.7%.
Net Sales by Segment Years Ended December 31, (in millions, except percentage data) 2024 2023 $ Change % Change Infrastructure Solutions $ 837.4 $ 800.4 $ 37.0 4.6 % Materials Solutions 467.7 537.8 (70.1) (13.0) % Infrastructure Solutions Sales in this segment were $837.4 million for 2024 compared to $800.4 million for 2023, an increase of $37.0 million, or 4.6%.
Years Ended December 31, (in millions) 2023 2022 $ Change % Change Infrastructure Solutions $ 105.8 $ 73.0 $ 32.8 44.9 % Materials Solutions $ 50.8 $ 44.5 $ 6.3 14.2 % Corporate and Other $ (44.9) $ (46.5) $ 1.6 3.4 % Infrastructure Solutions Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $105.8 million for 2023 compared to $73.0 million for 2022, an increase of $32.8 million, or 44.9%.
Years Ended December 31, (in millions, except percentage data) 2024 2023 $ Change % Change Infrastructure Solutions $ 121.5 $ 102.4 $ 19.1 18.7 % Materials Solutions 37.2 50.7 (13.5) (26.6) % Infrastructure Solutions Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $121.5 million for 2024 compared to $102.4 million for 2023, an increase of $19.1 million, or 18.7%.
Domestic sales increased primarily due to increases in (i) equipment sales of $37.0 million, (ii) service and equipment installation revenue of $22.1 million and (iii) parts and components sales of $16.1 million. These increases were partially offset by decreased used equipment sales of $3.1 million.
Domestic sales decreased primarily due to decreases in equipment sales of $52.5 million and service and equipment installation revenue of $20.0 million. These decreases were partially offset by increased other revenue of $4.5 million.
Net cash used in investing activities Net cash used in investing activities decreased by $40.3 million during 2023 as compared to 2022 primarily due to the cash inflows from the sale of the Tacoma facility's land, building and certain equipment assets for $19.9 million in the first quarter of 2023 and the net cash used to acquire MINDS in the second quarter of 2022 for $17.8 million. 31 Table of Contents Net cash (used in) provided by financing activities Our financing activities used net cash of $18.3 million during 2023 as opposed to providing net cash of $60.1 million during 2022 primarily due to increased net repayments on borrowings of $89.7 million partially offset by repurchases of stock under our share repurchase program of $10.1 million in 2022 that did not recur.
Net cash used in investing activities Net cash used in investing activities increased by $5.1 million during 2024 as compared to 2023 primarily due to the cash inflows from the sale of the Tacoma facility's land, building and certain equipment assets for $19.9 million in the first quarter of 2023 that did not recur.
Our effective tax rates are affected by recurring items which are generally consistent from period to period, as well as discrete items that may occur but are not consistent from period to period. The item having the most significant impact on the effective tax rate for 2023 is a net benefit of $1.8 million for research and development tax credits.
Our effective tax rates are affected by recurring items which are generally consistent from period to period, as well as discrete items that may occur but are not consistent from period to period.
During the fourth quarter of 2023, the loss contingency was increased $1.5 million based on the Judgment to a total of $7.9 million for the year ended December 31, 2023. See Note 16, Commitments and Contingencies of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of this matter.
See Note 16, Commitments and Contingencies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion of this matter.
A change in these estimates could materially impact the amount capitalized, the associated amortization expense in subsequent periods and the amount of expenses recognized in current periods that do not qualify for capitalization. 32 Table of Contents Goodwill and Other Intangible Assets Impairment: Goodwill is tested for impairment annually on October 1, or more frequently, if events or circumstances indicate that the carrying amount of the asset may not be recoverable.
A change in these estimates could materially impact the amount capitalized, the associated amortization expense in subsequent periods and the amount of expenses recognized in current periods that do not qualify for capitalization.
Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant. We performed a qualitative analysis during 2023 on our four reporting units whereby the fair values of each reporting unit exceeded its carrying value and therefore no indicators of impairment existed.
Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant.
We have experienced a reduction in new order intake and expect backlog to continue to decline primarily from our dealer customers as macroeconomic factors such as inflation and increased interest rates, among other factors, influence spending patterns. In addition, our shorter production lead times allow for customers to place orders closer to when the equipment delivery is desired.
Our shorter production lead times and parts fill rates have allowed for customers to place orders closer to the desired delivery date. Additionally, we have experienced variability in the ordering patterns from our dealer customers, most notably in the Materials Solutions segment, as a result of macroeconomic factors such as higher inflation and elevated interest rates, among other factors.
Our current liabilities increased to $299.0 million at December 31, 2023 from $274.0 million at December 31, 2022, an increase of $25.0 million, or 9.1%, primarily due to increases of $9.7 million in accounts payable, $8.8 million in accrued employee related liabilities and $4.6 million in accrued product warranty.
Our current liabilities decreased to $271.7 million as of December 31, 2024 from $299.0 million as of December 31, 2023, a decrease of $27.3 million, or 9.1%, primarily due to decreased accounts payable and accrued employee related liabilities of $37.7 million and $5.9 million, respectively.
A similar discussion of 2021 items and year-to-year comparisons between 2022 and 2021 can be found in Part II, Item 7.
A similar discussion of 2022 items and year-to-year comparisons between 2023 and 2022 can be found in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2023 .
Industry and Business Condition Our financial performance is affected by a number of factors, including the cyclical nature and varying conditions of the markets we serve.
Astec Digital was previously included in the Corporate and Other category and has moved to the Infrastructure Solutions segment. Prior periods have been revised to reflect the changes to the segment composition for comparability. Industry and Business Condition Our financial performance is affected by a number of factors, including the cyclical nature and varying conditions of the markets we serve.
The increase in Segment Operating Adjusted EBITDA resulted primarily from the impact of favorable pricing partially offset by net unfavorable volume and mix that generated $73.8 million higher gross profit and manufacturing efficiencies of $2.8 million.
The decrease in Segment Operating Adjusted EBITDA resulted primarily from (i) the impact of manufacturing inefficiencies of $10.9 million, (ii) unfavorable volume and mix partially offset by favorable pricing that generated $4.6 million lower gross profit, (iii) the impact of higher inflation on materials, labor and overhead costs of $3.1 million, (iv) increases in net scrap expenses of $1.7 million and (v) the net unfavorable impact of inventory adjustments of $1.4 million.
International sales for the Materials Solutions segment decreased $0.5 million, or 0.4%, for 2023 compared to 2022 primarily due to decreased new and used equipment sales of $2.6 million and $2.2 million, respectively, partially offset by higher service and equipment installation revenue of $4.6 million. Corporate and Other Corporate and Other sales are generated from our controls and automation business.
These decreases were partially offset by increased other revenue of $4.1 million. International sales for the Materials Solutions segment increased $32.3 million, or 15.9%, for 2024 compared to 2023 primarily due to increased equipment sales and parts and component sales of $28.5 million and $5.0 million, respectively.
The reduced net cash usages for our operating assets and liabilities were mainly driven by the timing of collections on trade accounts receivables $48.5 million and decreased inventory purchases in 2023 of $33.4 million partially offset by the timing of payments on trade accounts payables of $17.8 million and decreased customer deposits of $8.9 million associated with lower backlog.
The decreased net cash usages for our operating assets and liabilities were primarily driven by the timing of inventory purchases in 2024 of $90.4 million and reduced other assets of $11.9 million.
Domestic sales for the Materials Solutions segment increased $27.8 million, or 9.1%, for 2023 compared to 2022 primarily due to increased equipment sales of $32.8 million partially offset by decreased other revenue of $3.7 million primarily driven by increased utilization of our interest subsidy programs offered to certain of our dealer customers.
These decreases were partially offset by increased other revenue of $3.7 million. 28 Table of Content s Domestic sales for the Materials Solutions segment decreased $102.4 million, or 30.6%, for 2024 compared to 2023 primarily due to decreased equipment and parts and component sales of $102.2 million and $2.9 million, respectively.
Potential ongoing constraints in the supply of certain steel products may continue pressuring the availability of other components used in our manufacturing process.
We anticipate that steel demand will increase in 2025 driven by a global focus on construction projects. We continue to employ flexible strategies to ensure supply and minimize the impact of price volatility. Potential ongoing constraints in the supply of certain steel products may continue pressuring the availability of other components used in our manufacturing process.
Financial Condition Our current assets increased to $719.5 million at December 31, 2023 from $696.4 million at December 31, 2022, an increase of $23.1 million, or 3.3%, due primarily to increased inventories of $62.2 million.
Financial Condition Our current assets increased to $722.8 million as of December 31, 2024 from $719.5 million as of December 31, 2023, an increase of $3.3 million, or 0.5%, due primarily to increased cash, cash equivalents and restricted cash and trade and other net receivables and contract assets of $27.6 million and $14.5 million, respectively.
Materials Solutions Segment Operating Adjusted EBITDA for the Materials Solutions segment was $50.8 million for 2023 compared to $44.5 million for 2022, an increase of $6.3 million, or 14.2%. The increase in Segment Operating Adjusted EBITDA resulted primarily from the impact of favorable pricing that generated $31.7 million higher gross profit.
Materials Solutions Segment Operating Adjusted EBITDA for the Materials Solutions segment was $37.2 million for 2024 compared to $50.7 million for 2023, a decrease of $13.5 million, or 26.6%.
International sales for 2023 were $254.8 million, or 19.0% of net sales, compared to $260.2 million, or 20.4% of net sales, for 2022, a decrease of $5.4 million, or 2.1%. International sales decreased primarily due to lower equipment sales of $7.1 million partially offset by higher service and equipment installation revenue of $5.8 million.
International sales for 2024 were $289.7 million, or 22.2% of net sales, compared to $254.8 million, or 19.0% of net sales, for 2023, an increase of $34.9 million, or 13.7%. International sales increased primarily due to higher equipment sales of $30.7 million and parts and component sales of $6.0 million.
In addition, many of our markets are highly competitive, and our products compete worldwide with similar products produced and sold by a number of other manufacturers and dealers. Backlog represents the dollar value of firm orders for equipment, parts and related installation which are expected to be recognized in net sales in the future.
In addition, many of our markets are highly competitive, and our products compete worldwide with similar products produced and sold by a number of other manufacturers and dealers. Federal funding provides a significant portion of all highway, street, roadway and parking construction in the United States.
Future utilization of our NOLs and state tax credit carryforwards is evaluated on a periodic basis, and the valuation allowance is adjusted accordingly. There is no guarantee that we will not incur additional valuation allowances to our NOLs.
The item having the most significant impact on the effective tax rate for 2023 is a net benefit of $1.8 million for research and development tax credits. Future utilization of our NOLs and state tax credit carryforwards is evaluated on a periodic basis, and the valuation allowance is adjusted accordingly.
The sale of these assets was completed in the first quarter of 2023 for $19.9 million. We recorded a $3.4 million gain for the sale of these assets in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations. Leadership Change and Overhead Restructuring As previously announced on January 6, 2023, Mr. Barry A.
GEFCO, Inc. for $8.4 million, which was paid in the fourth quarter of 2024. In connection with the settlement, we recorded a loss of $8.4 million in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.
The markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases. Through our 26 Table of Contents operational excellence initiatives, we also strive to minimize the effect of inflation through cost reductions and improved manufacturing efficiencies.
The markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases. Results of Operations: 2024 vs. 2023 Net Sales Net sales decreased $33.1 million, or 2.5%, to $1,305.1 million in 2024 from $1,338.2 million in 2023.
Selling, General and Administrative Expenses Selling, general and administrative expenses for 2023 were $276.4 million, or 20.7% of net sales, compared to $247.6 million, or 19.4% of net sales, for 2022, an increase of $28.8 million, or 11.6%, primarily due to (i) increased net payroll and employee benefit costs of $13.6 million, which was largely driven by general employee cost increases and higher annual incentive compensation costs of $5.5 million, partially offset by lower share-based compensation expense of $3.8 million mainly related to the recovery of share-based compensation expense for awards that were forfeited or modified in conjunction with the termination of our previous Chief Executive Officer ("CEO") and the limited overhead restructuring action implemented in February 2023 and lower health insurance costs of $2.0 million, (ii) a $7.9 million loss contingency recorded related to the 37 BP litigation, (iii) $4.3 million increased consulting, prototype and project costs, (iv) $3.9 million of increased costs related to our strategic transformation program, (v) $2.8 million of higher exhibit and promotional costs primarily due to the ConExpo industry trade show held once every three years and (vi) incremental expenses associated with the acquisition of MINDS Automation Group, Inc.
These decreases were partially offset by (i) increased personnel-related costs of $9.4 million, which includes the recovery of share-based compensation expense in the prior year that did not recur for awards that were forfeited or modified in conjunction with the termination of our previous Chief Executive Officer ("CEO") and the limited overhead restructuring action implemented in February 2023 of $2.6 million, (ii) higher technology 26 Table of Content s support costs and certain professional services of $7.7 million and (iii) increased costs related to our strategic transformation program of $3.6 million.
The items having the most significant impact on the effective tax rate for 2022 include discrete tax expense for a foreign valuation allowance of $5.5 million for net operating losses ("NOLs") at our Brazilian subsidiary partially offset by the net benefits of $2.1 million for research and development tax credits and $0.9 million from the foreign derived intangible income deduction.
The items having the most significant impact on the effective tax rate for 2024 are the out-of-period expense associated with the correction of under-accruals of state income tax expenses recorded in the fourth quarter of 2024 and a net nondeductible goodwill impairment of $2.9 million partially offset by a net benefit of $3.3 million for research and development tax credits.
We materially completed the ERP global design in 2022, launched the human capital resources module in our locations in the United States in January 2023 and converted the operations of one manufacturing site along with Corporate during the second quarter of 2023 to set the foundation before accelerating the implementation at additional sites in 2024 and 2025.
To date, we have launched the human capital resources module in our U.S. locations and converted the operations of three manufacturing sites along with Corporate, two of which occurred during the second quarter of 2024. We expect the project to conclude in 2028 or 2029 with total approximate implementation costs anticipated to range from $180 to $200 million.
Based on the jury verdict, we recorded a loss contingency of $6.4 million in "Selling, general and administrative expenses" in the Consolidated Statements of Operations and "Other current liabilities" in the Consolidated Balance Sheets during the third quarter of 2023 representing management's best estimate of the loss at that time.
The $1.9 million net impact of the loss contingency release and the final settlement amount was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the third quarter of 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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A 10% fluctuation in foreign exchange rates throughout 2023 would have resulted in an impact of $17.9 million and $0.7 million to "Net sales" and "Net income (loss) attributable to controlling interest", respectively, in our Consolidated Statements of Operations for the year ended December 31, 2023.
A 10% fluctuation in foreign exchange rates throughout 2024 would have resulted in an impact of $17.7 million and $2.0 million to "Net sales" and "Net income (loss) attributable to controlling interest", respectively, in our Consolidated Statements of Operations for the year ended December 31, 2024.
We had outstanding Credit Facilities of $78.0 million as of December 31, 2022, a hypothetical 100 basis point increase in the interest rates would have had a $0.8 million impact on our annualized interest expense in 2022. We currently do not hedge variable interest.
We had outstanding Credit Facilities of $72.0 million as of December 31, 2023, a hypothetical 100 basis point increase in the interest rates would have had a $0.7 million impact on our annualized interest expense in 2023. We currently do not hedge variable interest.
Based on the outstanding balance on our domestic Credit Facilities of $72.0 million as of December 31, 2023, a hypothetical 100 basis point increase in the interest rates would have a $0.7 million impact on our annualized interest expense.
Based on the outstanding balance on our domestic Credit Facilities of $105.0 million as of December 31, 2024, a hypothetical 100 basis point increase in the interest rates would have a $1.1 million impact on our annualized interest expense.
We utilize strategies that include forward-looking contracts and advanced steel purchases to ensure supply and minimize the impact of price volatility. 34 Table of Contents
We utilize strategies that include forward-looking contracts and advanced steel purchases to ensure supply and minimize the impact of price volatility. 33 Table of Content s
Foreign Exchange Risk We are subject to foreign exchange risk at our foreign subsidiaries that have operations denominated in currencies other than the U.S. dollar. These foreign operations represent 28.8% and 26.9% of total assets at December 31, 2023 and 2022, respectively, and 13.4% and 17.1% of total net sales for the years ended December 31, 2023 and 2022, respectively.
These foreign operations represent 26.9% and 28.8% of total assets as of December 31, 2024 and 2023, respectively, and 13.5% and 13.4% of total net sales for the years ended December 31, 2024 and 2023, respectively.
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Foreign Exchange Risk We are subject to foreign exchange risk at our foreign subsidiaries that have operations denominated in currencies other than the U.S. dollar.
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We anticipate that steel prices will increase during 2025, including as a result of the tariffs on all steel imports recently imposed by the Trump administration and other trade policies implemented by the U.S. and foreign governments.

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