ASTEC INDUSTRIES INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
ASTE$35.71+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000792987-24-000027
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000792987-24-000044
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 115 current paragraphs.
41 unchanged; 30 reworded; 44 added; 20 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (44)
Current report
•Net sales were $345.5 million, a decrease of 1.3%
Current report
•Gross profit was $81.3 million, a decrease of 1.9%
Current report
•Results include a pre-tax non-cash goodwill impairment charge of $20.2 million
Current report
•Diluted loss per share was $0.61, a decrease of 205.2%
Current report
•Backlog was $531.1 million, a decrease of 22.9%
Current report
Strategic Transformation –We are undergoing a multi-year phased implementation of a standardized ERP system across our global organization, which is replacing much of our existing disparate core financial systems. To date, we have launched the human capital resources module in our locations in the United States and converted the operations of three manufacturing sites along with Corporate, two of which occurred during the second quarter of 2024. We are changing the pace of deployment of future site conversions in order to improve efficiencies and reduce business disruptions at each manufacturing site, which will have the effect of reducing the scope to exclude sites outside North America. With these modifications, we expect the project to conclude in 2027 with total approximate implementation costs anticipated to range from $180 to $200 million. Through the second quarter of 2024, we have incurred total implementation costs of approximately $119 million. Annual costs are expected to peak in 2024 to a range of $40 to $45 million and decrease annually each year through the final implementations in 2027.
Current report
See Note 11, Strategic Transformation, Restructuring, Impairment and Other Asset Charges, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of the costs related to these strategic initiatives.
Current report
Goodwill Impairment –During the second quarter of 2024, we identified that indicators of goodwill impairment were present due to current macroeconomic conditions, including declines in our publicly quoted share price and increased interest rates, as well as lower than expected operating results. 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 concluded that a further quantitative analysis was required for the Materials Solutions reporting unit. 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. As a result, we recognized a pre-tax 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.
Current report
Net sales for the first six months of 2024 were $654.7 million compared to $697.9 million for the first six months of 2023, a decrease of $43.2 million, or 6.2%. The decrease in net sales was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreases in (i) equipment sales of $26.8 million, (ii) service and equipment installation
Current report
revenue of $20.3 million, (iii) used equipment of $3.9 million and (iv) freight revenue of $2.6 million. These decreases were partially offset by an increase in parts and component sales and other revenue of $7.3 million and $3.1 million, respectively. Sales reported by our foreign subsidiaries in U.S. dollars for the first six months of 2024 would have been $1.2 million higher had the first six months of 2024 foreign exchange rates been the same as the first six months of 2023 rates.
Current report
Domestic sales for the second quarter of 2024 were $272.1 million, or 78.8% of consolidated net sales, compared to $286.4 million, or 81.8% of consolidated net sales, for the second quarter of 2023, a decrease of $14.3 million, or 5.0%. Domestic sales decreased primarily due to decreases in (i) service and equipment installation revenue of $12.8 million, (ii) parts and components sales of $5.0 million and (iii) used equipment sales of $1.6 million. These decreases were partially offset by increases in equipment sales and other revenue of $4.5 million and $1.3 million, respectively.
Current report
International sales for the second quarter of 2024 were $73.4 million, or 21.2% of consolidated net sales, compared to $63.6 million, or 18.2% of consolidated net sales, for the second quarter of 2023, an increase of $9.8 million, or 15.4%. International sales increased primarily due to increases in equipment sales and parts and component sales of $8.7 million and $1.6 million, respectively.
Current report
International sales for the first six months of 2024 were $139.4 million, or 21.3% of consolidated net sales, compared to $130.2 million, or 18.7% of consolidated net sales, for the first six months of 2023, an increase of $9.2 million, or 7.1%. International sales increased primarily due to increases in equipment sales and parts and component sales of $7.6 million and $2.7 million, respectively. These increases were partially offset by decreased used equipment sales of $1.4 million.
Current report
Gross profit for the second quarter of 2024 was $81.3 million, or 23.5% of net sales, as compared to $82.9 million, or 23.7% of net sales, for the second quarter of 2023, a decrease of $1.6 million, or 1.9%. The decrease was primarily driven by (i) manufacturing inefficiencies of $13.6 million, (ii) the impact of inflation on materials, labor and overhead of $3.7 million and (iii) increased net scrap expenses of $0.9 million. These decreases were partially offset by (i) the sales impact of favorable pricing partially offset by net unfavorable volume and mix of $10.6 million, (ii) a net favorable impact of inventory adjustments of $3.7 million and (iii) reduced warranty program costs of $2.3 million.
Current report
Gross profit for the first six months of 2024 was $158.2 million, or 24.2% of net sales, as compared to $172.1 million, or 24.7% of net sales, for the first six months of 2023, a decrease of $13.9 million, or 8.1%. The decrease was primarily driven by (i) manufacturing inefficiencies of $18.0 million, (ii) the impact of inflation on materials, labor and overhead of $5.5 million and (iii) increased net scrap expenses of $1.9 million. The net favorable sales impact from pricing partially offset by unfavorable volume and mix of $9.9 million and reduced warranty program costs of $1.6 million offset a portion of the decreases.
Current report
Selling, general and administrative expenses increased $6.6 million, or 10.2%, to $71.1 million, or 20.6% of net sales, for the second quarter of 2024, compared to $64.5 million, or 18.4% of net sales, for the second quarter of 2023. The increases in selling general and administrative expenses are primarily due to (i) higher costs related to our strategic transformation program of $3.3 million, (ii) higher technology support costs and certain professional services of $2.9 million, (iii) higher provision for credit losses of $1.8 million and (iv) higher exhibit and promotional costs of $0.9 million. These increases were partially offset by lower customer concessions and dealer commissions of $1.6 million. Decreased employee incentive compensation costs of $4.0 million were largely offset by general employee cost increases from higher headcount and wage inflation.
Current report
Goodwill Impairment
Current report
At the end of the second quarter, we determined that the carrying value of the Materials Solutions reporting unit exceeded its fair value as of June 30, 2024. As a result, we recognized a pre-tax non-cash goodwill impairment charge of $20.2 million in "Goodwill impairment" in the Consolidated Statements of Operations to fully impair the goodwill allocated to the Materials Solutions reporting unit. After this impairment charge, the Consolidated Balance Sheet as of June 30, 2024 reflects no goodwill related to Materials Solutions. See Note 4, Goodwill of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for discussion of the pre-tax non-cash goodwill impairment charge.
Current report
Our income tax expense for the first six months of 2024 was $1.7 million compared to $7.1 million for the first six months of 2023. Our effective tax rate was (18.9)% for the first six months of 2024 compared to 21.9% for the first six months of 2023. The income tax expense for the six months ended June 30, 2024 was lower compared to the same period in 2023, primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net nondeductible goodwill impairment.
Current report
Segment Net Sales– Three Months Ended:
Current report
Sales in this segment were $221.4 million for the second quarter of 2024 compared to $199.4 million for the same period in 2023, an increase of $22.0 million, or 11.0%. The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated higher equipment sales of $38.6 million partially offset by decreases in (i) service and equipment installation revenue of $12.9 million, (ii) parts and component sales of $2.5 million and (iii) used equipment sales of $1.6 million.
Current report
Domestic sales for the Infrastructure Solutions segment increased $18.0 million, or 9.5%, for the second quarter of 2024 compared to the same period in 2023 primarily due to increased equipment sales of $35.2 million partially offset by decreases in (i) service and equipment installation sales of $12.8 million, (ii) parts and component sales of $3.1 million and (iii) used equipment sales of $1.6 million.
Current report
International sales for the Infrastructure Solutions segment increased $4.0 million, or 39.2%, for the second quarter of 2024 compared to the same period in 2023 primarily due to increased equipment and parts and component sales of $3.4 million and $0.6 million, respectively.
Current report
International sales for the Materials Solutions segment increased $5.8 million, or 10.9%, for the second quarter of 2024 compared to the same period in 2023 primarily due to increased equipment and parts and component sales of $5.3 million and $1.0 million, respectively. These increases were partially offset by lower used equipment sales of $0.6 million.
Current report
Segment Net Sales– Six Months Ended:
Current report
Sales in this segment were $423.6 million for the first six months of 2024 compared to $414.9 million for the same period in 2023, an increase of $8.7 million, or 2.1%. The increase was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increased equipment and parts and component sales of $23.8 million and $9.3 million, respectively. These increases were partially offset by decreased service and equipment installation revenue and used equipment sales of $21.5 million and $2.5 million, respectively.
Current report
Domestic sales for the Infrastructure Solutions segment increased $11.9 million, or 3.1%, for the first six months of 2024 compared to the same period in 2023 primarily due to increased equipment and parts and component sales of $27.4 million and $8.3 million, respectively. These increases were partially offset by decreased service and equipment installation revenue and used equipment sales of $21.1 million and $2.5 million, respectively.
Current report
Sales in this segment were $231.1 million for the first six months of 2024 compared to $283.0 million for the same period in 2023, a decrease of $51.9 million, or 18.3%. The decrease was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreased (i) equipment sales of $50.6 million, (ii) parts and component sales of $2.0 million and (iii) used equipment sales of $1.4 million. These decreases were partially offset by increased other revenue of $2.2 million.
Current report
Domestic sales for the Materials Solutions segment decreased by $64.3 million, or 34.5%, for the first six months of 2024 compared to the same period in 2023, driven by decreased equipment sales and parts and component sales of $61.8 million and $3.7 million, respectively. This decrease was partially offset by increased other revenue of $2.2 million.
Current report
Segment Operating Adjusted EBITDA– Three Months Ended:
Current report
Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $27.2 million for the second quarter of 2024 compared to $25.7 million for the same period in 2023, an increase of $1.5 million, or 5.8%. The increase in Segment Operating
Current report
Adjusted EBITDA was primarily driven by (i) the sales impact of favorable pricing coupled with favorable volume and mix that generated higher gross profit of $14.6 million, (ii) net favorable inventory adjustments of $4.4 million, (iii) lower annual incentive compensation of $1.5 million and (iv) lower customer concessions of $0.9 million. These increases were partially offset by (i) manufacturing inefficiencies of $9.8 million, (ii) the impact of inflation on materials, labor and overhead of $2.9 million, (iii) higher technology support costs and certain professional services of $2.0 million, (iv) increased personnel-related costs of $2.8 million driven by general employee cost increases from higher headcount and wage inflation and (v) $0.8 million of increased net scrap expenses.
Current report
Segment Operating Adjusted EBITDA for the Materials Solutions segment was $10.2 million for the second quarter of 2024 compared to $18.3 million for the same period in 2023, a decrease of $8.1 million, or 44.3%. The decrease in Segment Operating Adjusted EBITDA was primarily driven by (i) manufacturing inefficiencies of $4.3 million, (ii) the sales impact of net unfavorable volume and mix partially offset by favorable pricing that decreased gross profit by $3.2 million, (iii) higher provision for credit losses of $1.2 million, (iv) the impact of inflation on materials, labor and overhead of $0.8 million and (v) net unfavorable inventory adjustments of $0.7 million. These decreases were partially offset by reduced warranty program costs of $2.5 million and lower customer concessions of $0.7 million.
Current report
Segment Operating Adjusted EBITDA– Six Months Ended:
Current report
Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $52.8 million for the first six months of 2024 compared to $54.2 million for the same period in 2023, a decrease of $1.4 million, or 2.6%. The decrease in Segment Operating Adjusted EBITDA resulted primarily from (i) manufacturing inefficiencies of $13.1 million, (ii) the impact of inflation on materials, labor and overhead of $3.9 million, (iii) higher technology support costs and certain professional services of $3.4 million, (iv) increased personnel-related costs of $3.8 million driven by general employee cost increases from higher headcount and wage inflation and (v) $1.8 million of increased net scrap expenses. These decreases were partially offset by the sales impact primarily related to (i) favorable pricing which impacted gross profit by $18.8 million, (ii) a net favorable impact of inventory adjustments of $2.5 million and (iii) $1.6 million of lower annual incentive compensation costs.
Current report
Segment Operating Adjusted EBITDA for the Materials Solutions segment was $15.5 million for the first six months of 2024 compared to $32.9 million for the same period in 2023, a decrease of $17.4 million, or 52.9%. The decrease in Segment Operating Adjusted EBITDA resulted primarily from (i) the sales impact of net unfavorable volume and mix partially offset by favorable pricing that decreased gross profit by $7.1 million, (ii) manufacturing inefficiencies of $5.5 million, (iii) net unfavorable inventory adjustments of $2.9 million, (iv) inflation on materials, labor and overhead of $1.6 million and (v) increased personnel-related costs of $2.0 million driven by general employee cost increases from higher headcount and wage inflation. These decreases were partially offset by reduced warranty program costs of $2.1 million and lower annual incentive compensation costs of $0.9 million.
Current report
Corporate and Other Operations
Current report
Corporate and Other operations had net expenses of $9.8 million for the second quarter of 2024 compared to $11.8 million for the same period in 2023, a decrease of $2.0 million, or 16.9%. The decrease in expenses was primarily driven by lower annual incentive compensation costs of $1.8 million.
Current report
INDEX
Showing the first 40 of 44 passages. Open the source sections for the rest.
Removed paragraphs (20)
Previous report
•Net sales were $309.2 million, a decrease of 11.1%
Previous report
•Gross profit was $76.9 million, a decrease of 13.8%
Previous report
•Diluted earnings per share were $0.15, a decrease of 71.7%
Previous report
•Backlog was $559.8 million, a decrease of 30.0%
Previous report
Strategic Transformation –We are undergoing a multi-year phased implementation of a standardized ERP system across our global organization, which will replace much of our existing disparate core financial systems. In addition to one manufacturing site and Corporate, which transitioned to the new ERP in 2023, we converted the operations of two additional manufacturing sites during April 2024. We anticipate incurring total costs associated with the ERP implementation in the range of $125 million to $150 million, with an estimated $25 to $30 million incurred per year, which such incurrence of expenses began in 2022 and is expected to continue through 2025.
Previous report
Total costs of $6.5 million were incurred related to these strategic transformation initiatives in the three months ended March 31, 2024, of which $6.4 million and $0.1 million are recorded in "Selling, general and administrative expenses" and "Cost of sales," respectively, in the Consolidated Statements of Operations. In the three months ended March 31, 2023, $7.2 million of costs
Previous report
related to these initiatives were incurred and are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. Additionally, as of March 31, 2024, we have capitalized $34.5 million in deferred implementation costs associated with the ERP implementation that are being amortized ratably over the remaining contract term, of which $3.9 million and $30.6 million were included in "Prepaid expenses and other assets" and "Other long-term assets" in the Consolidated Balance Sheets, respectively. Amortization of these capitalized implementation costs totaled $0.7 million and $0.1 million during the three months ended March 31, 2024 and 2023, respectively, which is included in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.
Previous report
In addition, other factors, including but not limited to industry and competitive environment conditions, overall financial performance, business specific events and market conditions, circumstances or events may affect the fair value of our goodwill reporting units. If these or other factors result in changes that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value, we will test goodwill for impairment.
Previous report
International sales for the first quarter of 2024 were $66.0 million, or 21.3% of consolidated net sales, compared to $66.6 million, or 19.1% of consolidated net sales, for the first quarter of 2023, a decrease of $0.6 million, or 0.9%. International sales decreased primarily due to decreases in new and used equipment sales of $1.1 million and $0.8 million, respectively. These decreases were partially offset by increases in parts and component sale and service and equipment installation revenue of $1.1 million and $0.7 million, respectively.
Previous report
Gross profit for the first quarter of 2024 was $76.9 million, or 24.9% of net sales, as compared to $89.2 million, or 25.6% of net sales, for the first quarter of 2023, a decrease of $12.3 million or 13.8%. The impact of net unfavorable volume and mix was offset by favorable pricing with the decrease in gross profit primarily driven by (i) manufacturing inefficiencies of $5.2 million, (ii) $4.1 million of higher unfavorable inventory adjustments inclusive of an out-of-period benefit of $1.9 million associated with the correction of over-accruals of inventory-related expenses recorded in the first quarter of 2023 that did not recur, (iii) higher inflation on materials, labor and overhead of $1.8 million and (iv) $1.0 million of increased net scrap expenses.
Previous report
Net Sales by Segment
Previous report
Infrastructure Solutions
Previous report
Domestic sales for the Infrastructure Solutions segment decreased $6.1 million, or 3.2%, for the first quarter of 2024 compared to the same period in 2023, primarily due to decreases in (i) service and equipment installation revenue of $8.3 million, (ii) equipment sales of $7.8 million, (iii) freight revenue of $1.2 million and (iv) used equipment sales of $0.9 million. These decreases were partially offset by higher parts and component sales of $11.4 million.
Previous report
Materials Solutions
Previous report
Sales in this segment were $107.0 million for the first quarter of 2024 compared to $132.2 million for the same period in 2023, a decrease of $25.2 million, or 19.1%. The decrease was primarily driven by net unfavorable volume and mix, partially offset by favorable pricing that generated decreased (i) equipment sales of $25.2 million, (ii) parts and component sales of $1.1 million and (iii) used equipment sales of $0.8 million. These decreases were partially offset by increased other revenue and service and equipment installation revenue of $1.4 million and $0.9 million, respectively.
Previous report
Infrastructure Solutions
Previous report
Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $25.6 million for the first quarter of 2024 compared to $28.5 million for the same period in 2023, a decrease of $2.9 million or 10.2%. The decrease in Segment Operating Adjusted EBITDA was primarily driven by (i) manufacturing inefficiencies of $3.8 million, (ii) an out-of-period benefit of $1.9 million associated with the correction of over-accruals of inventory-related expenses recorded in the first quarter of 2023 that did not recur, (iii) higher consulting and technology support costs of $1.4 million (iv) higher inflation on materials, labor and overhead of $1.0 million and (v) $1.0 million of increased net scrap expenses. These decreases were offset in part by higher gross profit of $4.8 million generated from favorable pricing partially offset by net unfavorable volume and mix and $1.5 million of lower exhibit and promotional costs primarily due to the triennial ConExpo industry trade show held in 2023.
Previous report
Materials Solutions
Previous report
Segment Operating Adjusted EBITDA for the Materials Solutions segment was $5.3 million for the first quarter of 2024 compared to $14.6 million for the same period in 2023, a decrease of $9.3 million, or 63.7%. The decrease in Segment Operating Adjusted EBITDA was primarily driven by (i) the impact of net unfavorable volume and mix, partially offset by favorable pricing that resulted in $3.6 million lower gross profit, (ii) higher unfavorable inventory adjustments of $2.2 million, (iii) manufacturing inefficiencies of $1.5 million, (iv) increased selling, general and administrative costs of $1.3 million and (v) the impact of higher inflation on materials, labor and overhead costs of $0.8 million.
Previous report
Corporate and Other
Reworded paragraphs (30)
Previous wording
•Income from operations decreased $11.3 million to $6.3 million
Current wording
•Income from operations decreased $28.0 million to a loss of $10.7 million
Previous wording
•Net income attributable to Astec decreased $8.7 million to $3.4 million
Current wording
•Net income attributable to Astec decreased $27.1 million to a loss of $14.0 million
Previous wording
In addition, we largely completed a lean manufacturing initiative at one of our largest sites during 2023. Certain capital investments related to this initiative are continuing in early 2024, which once completed, and along with the other elements of the initiative, are expected to drive improvement in gross margin at that site in the second half of 2024.
Current wording
In addition, a lean manufacturing initiative at one of our largest sites was largely completed during 2023 with certain capital investments finalized in early 2024. These investments, along with the other elements of the initiative, are expected to drive improvement in gross margin at that site in the second half of 2024.
Previous wording
Steel is a major component of our equipment. We anticipate that steel prices will remain at relatively high levels and that steel demand will remain relatively stable throughout 2024. Whenever possible, we attempt to cover increased costs of production by adjusting the prices of our products. The markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases.
Current wording
Steel is a major component of our equipment. We anticipate that steel prices will remain consistent, and that steel demand will remain relatively stable throughout the remainder of 2024. Whenever possible, we attempt to cover increased costs of production by adjusting the prices of our products. The markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases.
Previous wording
Additionally, significant portions of our revenues from the Infrastructure Solutions segment relate to the sale of equipment involved in the production, handling, recycling or application of asphalt mix. Liquid asphalt is a by-product of oil refining, and changes in the price of oil impact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products. Based on the current macroeconomic environment, including ongoing international conflicts, we anticipate that oil prices will remain at relatively high levels throughout 2024.
Current wording
Additionally, significant portions of our revenues from the Infrastructure Solutions segment relate to the sale of equipment involved in the production, handling, recycling or application of asphalt mix. Liquid asphalt is a by-product of oil refining, and changes in the price of oil impact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products. Based on the current macroeconomic environment, including ongoing international conflicts, we anticipate that oil prices will remain at relatively high levels throughout the remainder of 2024.
Previous wording
Net sales for the first quarter of 2024 were $309.2 million compared to $347.9 million for the first quarter of 2023, a decrease of $38.7 million, or 11.1%. The decrease in net sales was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreases in (i) equipment sales of $40.0 million, (ii) service and equipment installation revenue of $7.7 million, (iii) freight revenue of $1.8 million and (iv) used equipment sales of $1.7 million. These decreases were partially offset by increases in parts and component sales and other revenue of $10.7 million and $1.8 million, respectively. Sales reported by our foreign subsidiaries in U.S. dollars for the first quarter of 2024 would have been $0.7 million higher had foreign exchange rates been the same as 2023 rates.
Current wording
Net sales for the second quarter of 2024 were $345.5 million compared to $350.0 million for the second quarter of 2023, a decrease of $4.5 million, or 1.3%. The decrease in net sales was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreases in (i) service and equipment installation revenue of $12.6 million, (ii) parts and component sales of $3.4 million and (iii) used equipment sales of $2.2 million. These decreases were partially offset by increases in equipment sales and other revenue of $13.2 million and $1.3 million, respectively. Sales reported by our foreign subsidiaries in U.S. dollars for the second quarter of 2024 would have been $0.5 million higher had second quarter 2024 foreign exchange rates been the same as second quarter 2023 rates.
Previous wording
Domestic sales for the first quarter of 2024 were $243.2 million, or 78.7% of consolidated net sales, compared to $281.3 million, or 80.9% of consolidated net sales, for the first quarter of 2023, a decrease of $38.1 million, or 13.5%. Domestic sales decreased primarily due to decreases in (i) equipment sales of $38.9 million, (ii) service and equipment installation revenue of $8.4 million, (iii) freight revenue of $1.4 million and (iv) used equipment sales $0.9 million. These decreases were partially offset by increased parts and component sales and other revenue of $9.6 million and $1.9 million, respectively.
Current wording
Domestic sales for the first six months of 2024 were $515.3 million, or 78.7% of consolidated net sales, compared to $567.7 million, or 81.3% of consolidated net sales, for the first six months of 2023, a decrease of $52.4 million, or 9.2%. Domestic sales decreased primarily due to decreases in (i) equipment sales of $34.4 million, (ii) service and equipment installation revenue of $21.2 million, (iii) used equipment sales of $2.5 million and (iv) freight revenue of $2.1 million. These decreases were partially offset by increases in parts and component sales and other revenue of $4.6 million and $3.2 million, respectively.
Previous wording
Selling, general and administrative expenses increased $3.5 million, or 5.2%, to $71.4 million, or 23.1% of net sales, for the first quarter of 2024, compared to $67.9 million, or 19.5% of net sales, for the first quarter of 2023. The increases in selling general and administrative expenses are primarily due to increased personnel-related costs of $4.1 million, which was largely driven by 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 $2.4 million, and $3.0 million higher consulting and technology support costs. These increases were partially offset by lower exhibit and promotional costs of $2.1 million, primarily due to the triennial ConExpo industry trade show held in 2023 and reduced costs related to our strategic transformation program of $0.8 million.
Current wording
Selling, general and administrative expenses increased $10.1 million, or 7.6%, to $142.5 million, or 21.8% of net sales, for the first six months of 2024, compared to $132.4 million, or 19.0% of net sales, for the first six months of 2023. The increases in selling, general and administrative expenses are primarily due to (i) increased personnel-related costs of $7.4 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 CEO and the limited overhead restructuring action implemented in February 2023 of $2.6 million, (ii) higher technology support costs and certain professional services of $5.9 million, (iii) increased costs related to our strategic transformation program of $2.5 million and (iv) higher provision for credit losses of $1.6 million. These increases were partially offset by $3.6 million of employee incentive compensation costs and lower exhibit and promotional costs of $1.2 million.
Previous wording
Restructuring and Other Asset Gains and Charges, net
Current wording
Restructuring, Impairment and Other Asset Gains and Charges, net
Previous wording
Restructuring and the net gain on sale of property and equipment for the three-month periods ended March 31, 2024 and 2023 are presented below:
Current wording
Restructuring, asset impairment charges and the net gain on sale of property and equipment for the three and six-month periods ended June 30, 2024 and 2023 are presented below:
Previous wording
See Note 10, Strategic Transformation, Restructuring and Other Asset Gains and Charges of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for discussion of the individual restructuring actions taken.
Current wording
See Note 11, Strategic Transformation, Restructuring, Impairment and Other Asset Charges, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for discussion of the individual restructuring actions taken.
Previous wording
Interest expense of $2.7 million was incurred in the three months ended March 31, 2024, as compared to $2.0 million in the three months ended March 31, 2023, primarily related to higher average outstanding borrowings on the Credit Facility in the first quarter of 2024 as compared to the same period in 2023 combined with higher interest rates.
Current wording
Interest expense of $3.1 million and $5.8 million was incurred in the three and six months ended June 30, 2024, respectively, as compared to $2.0 million and $4.0 million in the three and six months ended June 30, 2023, respectively, primarily related to higher average outstanding borrowings on the Credit Facility in 2024 as compared to the corresponding periods in 2023.
Previous wording
Our income tax expense for the first quarter of 2024 was $1.4 million compared to $4.4 million for the first quarter of 2023. Our effective income tax rate was 29.8% for the first quarter of 2024 compared to 26.7% for the first quarter of 2023. The income tax
Current wording
Our income tax provision for the second quarter of 2024 was $0.3 million compared to $2.7 million for the second quarter of 2023. Our effective income tax rate was (2.2)% for the second quarter of 2024 compared to 17.0% for the second quarter of 2023. The income tax expense for the three months ended June 30, 2024 was lower compared to the same period in 2023 primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net nondeductible goodwill impairment.
Previous wording
The backlog of orders as of March 31, 2024 was $559.8 million compared to $800.2 million as of March 31, 2023, a decrease of $240.4 million, or 30.0%. Domestic backlog decreased $247.9 million, or 36.2%, partially offset by an increase in international backlog of $7.5 million, or 6.6%. The backlog decreased $99.8 million to $372.7 million in the Infrastructure Solutions segment and decreased $140.6 million to $187.1 million in the Materials Solutions segment.
Current wording
The backlog of orders as of June 30, 2024 was $531.1 million compared to $688.8 million as of June 30, 2023, a decrease of $157.7 million, or 22.9%. Domestic backlog decreased $171.0 million, or 29.1%, partially offset by an increase in international backlog of $13.3 million, or 13.2%. The backlog decreased $70.0 million to $368.6 million in the Infrastructure Solutions segment and decreased $87.7 million to $162.5 million in the Materials Solutions segment.
Previous wording
Sales in this segment were $202.2 million for the first quarter of 2024 compared to $215.5 million for the same period in 2023, a decrease of $13.3 million, or 6.2%. The decrease was primarily driven by net unfavorable volume and mix, partially offset by favorable pricing that generated decreased (i) equipment sales of $14.8 million, (ii) service and equipment installation revenue of $8.6 million, (iii) freight revenue of $1.4 million and (iv) used equipment sales of $0.9 million. These decreases were partially offset by higher parts and component sales of $11.8 million.
Current wording
Sales in this segment were $124.1 million for the second quarter of 2024 compared to $150.8 million for the same period in 2023, a decrease of $26.7 million, or 17.7%. The decrease was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreased (i) equipment sales of $25.4 million, (ii) parts and component sales of $0.9 million and (iii) freight revenue of $0.9 million. These decreases were partially offset by increased other revenue of $0.8 million.
Previous wording
Domestic sales for the Materials Solutions segment decreased by $31.8 million, or 35.7%, for the first quarter of 2024 compared to the same period in 2023, primarily driven by decreased equipment sales and parts and component sales of $31.1 million and $1.8 million, respectively. These decreases were partially offset by increased other revenue of $1.4 million.
Current wording
Domestic sales for the Materials Solutions segment decreased by $32.5 million, or 33.4%, for the second quarter of 2024 compared to the same period in 2023, primarily driven by decreased equipment sales and parts and component sales of $30.7 million and $1.9 million, respectively. These decreases were partially offset by increased other revenue of $0.8 million.
Previous wording
International sales for the Infrastructure Solutions segment decreased $7.2 million, or 30.6%, for the first quarter of 2024 compared to the same period in 2023, primarily due to decreased equipment sales of $7.0 million.
Current wording
International sales for the Infrastructure Solutions segment decreased $3.2 million, or 9.5%, for the first six months of 2024 compared to the same period in 2023 primarily due to decreased equipment sales of $3.6 million.
Previous wording
International sales for the Materials Solutions segment increased $6.6 million, or 15.3%, for the first quarter of 2024 compared to the same period in 2023, primarily due to increases in (i) new equipment sales of $5.9 million, (ii) service and equipment installation revenue of $1.0 million and (iii) parts and component sales of $0.7 million. These increases were partially offset by decreased used equipment sales of $0.8 million.
Current wording
International sales for the Materials Solutions segment increased $12.4 million, or 12.8%, for the first six months of 2024 compared to the same period in 2023 primarily due to increased equipment and parts and component sales of $11.2 million and $1.7 million, respectively. These increases were partially offset by decreased used equipment sales of $1.4 million.
Previous wording
Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our CEO, who is considered to be the CODM, to evaluate performance and allocate resources to the operating segments. 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. This non-GAAP financial measure can be useful to investors in understanding operating results and the performance of our core business from management's perspective. Our presentation of Segment Operating Adjusted EBITDA may not be comparable to similar measures used by other companies and is not necessarily indicative of the results of operations that would have occurred had each reportable segment been an independent, stand-alone entity during the periods presented. See Note 9, Segment Information, of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated net income attributable to controlling interest.
Current wording
Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our CEO, who is considered to be the CODM, to evaluate performance and allocate resources to the operating segments. 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. Our presentation of Segment Operating Adjusted EBITDA may not be comparable to similar measures used by other companies and is not necessarily indicative of the results of operations that would have occurred had each reportable segment been an independent, stand-alone entity during the periods presented. See Note 10, Segment Information, of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated net income attributable to controlling interest.
Previous wording
Corporate and Other operations had net expenses of $12.0 million for the first quarter of 2024 compared to $7.9 million for the first quarter of 2023, an increase of $4.1 million, or 51.9%. The increase in net expenses was primarily driven by $3.6 million of higher general and administrative expenses, primarily due to the prior year recovery of share-based compensation expense 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 $2.4 million as well as $1.4 million of higher consulting and technology support costs.
Current wording
Corporate and Other operations had net expenses of $21.8 million for the first six months of 2024 compared to $19.7 million for the first six months of 2023, an increase of $2.1 million, or 10.7%. The increase in expenses was driven by higher general and administrative expenses, primarily due to $2.3 million of higher technology support costs and certain professional services. Personnel related costs were materially consistent driven by $2.6 million in the prior year related to the recovery of share-based compensation expense 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 that did not recur which was partially offset by decreases in annual incentive compensation costs of $1.1 million and general employee cost decreases.
Previous wording
Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under the Credit Facility and cash flows from operations. As of March 31, 2024, our total liquidity was $170.5 million, consisting of $55.3 million of cash and cash equivalents available for operating purposes and $115.2 million available for additional borrowings under the Credit Facility, to the extent our compliance with financial covenants permits such borrowings. Our foreign subsidiaries held $27.9 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.
Current wording
Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under the Credit Facility and cash flows from operations. As of June 30, 2024, our total liquidity was $175.8 million, consisting of $60.6 million of cash and cash equivalents available for operating purposes and $115.2 million available for additional borrowings under the Credit Facility, subject to our continued compliance with financial covenants under the Credit Agreement. Our foreign subsidiaries held $33.6 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.
Previous wording
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. 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, transformation initiatives, strategic acquisitions and share repurchases under our share repurchase authorization. We believe that our current working capital, cash flows generated from future
Current wording
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. 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, transformation initiatives, strategic acquisitions and share repurchases under our share repurchase authorization. We believe that our current working capital, cash flows generated from future operations and available capacity under the Credit Facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.
Previous wording
We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of March 31, 2024, open purchase obligations totaled $147.6 million, of which $142.8 million are expected to be fulfilled within the remainder of 2024.
Current wording
We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of June 30, 2024, open purchase obligations totaled $120.3 million, of which $108.0 million are expected to be fulfilled within the remainder of 2024.
Previous wording
The following table summarizes cash flows during the three months ended March 31, 2024 and 2023, respectively:
Current wording
The following table summarizes cash flows during the six months ended June 30, 2024 and 2023, respectively:
Previous wording
Net cash used in operating activities increased by $27.8 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to higher net cash usages for our operating assets and liabilities of $23.1 million and lower net income reduced by non-cash charges of $4.8 million. The increased net cash usage for our operating assets and liabilities were mainly driven by (i) the timing of collections on trade and other receivables of $34.6 million, which includes a $13.7 million receivable from our insurance carriers recorded in the first quarter of 2024 related to a pending litigation settlement, (ii) decreased employee-related liabilities of $7.0 million, (iii) decreased income tax liabilities of $3.5 million and (iv) the timing of inventory purchases of $3.4 million. The net usage was partially offset by timing impacts for accrued liabilities of $18.1 million, which includes $13.7 million related to a pending litigation settlement corresponding to the related receivable from our insurance carriers and customer deposits of $12.0 million, resulting in cash inflows.
Current wording
Net cash used in operating activities increased by $33.6 million during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to higher net cash usages for our operating assets and liabilities of $18.9 million and lower net income reduced by non-cash charges of $14.6 million. The increased net cash usage for our operating assets and liabilities were mainly driven by (i) the timing of collections on trade and other receivables of $78.3 million, which includes a $13.7 million receivable from our insurance carriers recorded in the first quarter of 2024 related to a pending litigation settlement, (ii) the timing of payments on trade accounts payables of $14.1 million and (iii) higher employee-related payments of $13.6 million. The net cash usage was partially offset by (i) the timing of inventory purchases of $35.5 million, (ii) the increase in customer deposits of $30.4 million and (iii) the timing impacts for accrued liabilities of $27.8 million, which includes $13.7 million related to a pending litigation settlement corresponding to the related receivable from our insurance carriers, resulting in cash inflows.
Previous wording
Our investing activities used net cash of $5.9 million during the three months ended March 31, 2024 as compared to providing net cash of $11.8 million during the three months ended March 31, 2023, primarily due to the cash inflows from the sale of the
Current wording
Our investing activities used net cash of $12.6 million during the six months ended June 30, 2024 as compared to providing net cash of $2.6 million during the six months ended June 30, 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. Additionally, capital expenditures decreased $3.7 million during the six months ended June 30, 2024 as compared to the same period of 2023.
Previous wording
Our financing activities provided net cash of $48.4 million during the three months ended March 31, 2024 as compared to a net cash use of $16.2 million during the three months ended March 31, 2023, primarily due to increased borrowings, net of repayments, of $63.6 million.
Current wording
Our financing activities provided net cash of $49.5 million during the six months ended June 30, 2024 as compared to a net cash use of $22.0 million during the six months ended June 30, 2023, primarily due to increased borrowings, net of repayments, of $70.3 million.
Previous wording
We paid quarterly dividends of $0.13 per common share to shareholders in the first quarter of both 2024 and 2023.
Current wording
We paid quarterly dividends of $0.13 per common share to shareholders in the second quarter of both 2024 and 2023.
Previous wording
Our total current assets increased to $778.8 million as of March 31, 2024 from $719.5 million as of December 31, 2023, an increase of $59.3 million, or 8.2%, due primarily to increases of $39.3 million in trade and other receivables, which includes a $13.7 million receivable from our insurance carriers recorded in the first quarter of 2024 related to a pending litigation settlement, and $28.4 million in inventory, partially offset by decreases of $5.1 million in cash, cash equivalents and restricted cash and $3.1 million in prepaid and refundable income taxes.
Current wording
Our total current assets increased to $778.8 million as of June 30, 2024 from $719.5 million as of December 31, 2023, an increase of $59.3 million, or 8.2%, due primarily to increases of $65.5 million in trade and other receivables, which includes a $13.7 million receivable from our insurance carriers recorded in the first quarter of 2024 related to a pending litigation settlement, partially offset by decreases of $3.3 million in prepaid expenses and other assets and $2.1 million in prepaid and refundable income taxes.
Previous wording
Our total current liabilities increased to $310.4 million as of March 31, 2024 from $299.0 million as of December 31, 2023, an increase of $11.4 million, or 3.8%, due primarily to net increases of $11.3 million in other current liabilities, which includes $13.7 million related to a pending litigation settlement corresponding to the related receivable from our insurance carriers, and $9.8 million in customer deposits, partially offset by decreases of $8.0 million in accrued employee related liabilities and $1.4 million in short-term debt.
Current wording
Our total current liabilities increased to $311.2 million as of June 30, 2024 from $299.0 million as of December 31, 2023, an increase of $12.2 million, or 4.1%, due primarily to net increases of $19.5 million in other current liabilities, which includes $13.7 million related to a pending litigation settlement corresponding to the related receivable from our insurance carriers, $18.9 million
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
expense for three months ended March 31, 2024 was lower compared to the same period in 2023, primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.
Previous report — wording carried elsewhere
operations and available capacity under the Credit Facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.
Previous report — wording carried elsewhere
Tacoma facility's land, building and certain equipment assets for $19.9 million in the first quarter of 2023. Additionally, capital expenditures decreased $2.2 million during the three months ended March 31, 2024 as compared to the same period of 2023.