Astec Industries(ASTE) - 2024 Q4 - Annual Report

Financial Performance - Net sales for 2024 were $1,305.1 million, a decrease of 2.5$1,338.2 million in 2023[266]. - Gross profit for 2024 was $327.9 million, slightly down from$330.8 million in 2023, resulting in a gross margin of 25.1%[266]. - Net income for 2024 was $4.1 million, a significant decline from$33.7 million in 2023, reflecting a net margin of 0.3%[266]. - The company reported a goodwill impairment of $20.2 million in 2024, compared to no impairment in 2023[266]. - Cash flows from operating activities generated$23.0 million in 2024, down from $27.8 million in 2023[272]. - The company reported a comprehensive loss of$13.3 million for the year ended December 31, 2024, compared to a comprehensive income of $2.1 million in 2023[277]. - Income before income taxes decreased significantly from$42.8 million in 2023 to $13.9 million in 2024, a decline of 67.6$9.8 million, compared to $9.1 million in 2023, representing a 7.7$722.8 million in 2024 from $719.5 million in 2023, primarily driven by an increase in cash and cash equivalents[264]. - Total liabilities remained relatively stable at$406.0 million in 2024, compared to $405.6 million in 2023[264]. - As of December 31, 2024, the total equity of the company is$637.6 million, an increase from $626.9 million in 2023[277]. - The total cash and cash equivalents, including restricted cash, amounted to$541.7 million as of December 31, 2024[289]. - The company had total borrowings outstanding of $105.0 million under its credit facilities as of December 31, 2024, up from$72.0 million in 2023[385]. Inventory and Cost Management - The company’s inventory is significantly composed of steel, which is subject to market price volatility, impacting overall financial performance[241]. - As of December 31, 2024, total inventories decreased to $422.7 million from$455.6 million in 2023, with raw materials and parts at $275.4 million[357]. - The company reviews individual items in its inventory to determine if any item's net realizable value is below its carrying value[303]. - The company accrues for estimated product warranty costs at the time revenue is recognized, based on historical claims experience[320]. Foreign Operations and Currency Risk - Foreign operations represented 26.9$17.7 million and net income by $2.0 million for the year ended December 31, 2024[240]. - The company evaluates the need to hedge foreign currency transactions, but does not apply hedge accounting, impacting earnings recognition[239]. - The company’s foreign subsidiaries' operations are subject to currency fluctuations, which can affect the valuation of net assets in U.S. dollars[238]. Shareholder and Legal Matters - The company settled a shareholder class action lawsuit for$13.7 million, fully funded by insurance carriers, with the case dismissed on September 10, 2024[411]. - The company reached a settlement of $8.4 million related to a lawsuit involving its GEFCO subsidiary, paid in the fourth quarter of 2024[412]. - The company recorded a loss of$1.9 million related to the settlement of a lawsuit involving its Telsmith subsidiary, which was resolved for $6.3 million in September 2024[413]. Research and Development - Research and development costs amounted to$23.8 million, $22.0 million, and$31.5 million for the years 2024, 2023, and 2022, respectively[339]. Segment Information - The company operates in two reportable segments: Infrastructure Solutions and Materials Solutions, focusing on equipment for road building and related construction activities[282]. - The Infrastructure Solutions segment focuses on manufacturing and servicing asphalt and concrete plants, catering to a diverse range of customers including governmental agencies[433]. Tax and Deferred Tax Assets - The total deferred tax assets increased from $54.7 million in 2023 to$64.6 million in 2024, primarily due to an increase in amortization of research and experimental expenditures[398]. - The valuation allowance for deferred tax assets decreased by $0.1 million in 2024, driven by the release of the valuation allowance on deferred tax assets related to NOLs generated by the Company's Chilean subsidiary[399]. - The Company had unrecognized tax benefits of$16.8 million as of December 31, 2024, an increase from $13.0 million in 2023, reflecting a rise of 29$79.0 million, down from $80.3 million in 2023, reflecting the impairment charge[370]. - The total intangible assets amounted to$66.5 million, with a net carrying value of $11.2 million after accumulated amortization[371]. - The amortization expense on intangible assets for 2024 was$4.8 million, compared to $5.5 million in 2023 and$8.5 million in 2022[371]. Compensation and Employee Benefits - The Company’s share-based compensation expense was $5.0 million in 2024, up from$4.1 million in 2023[277]. - The Company’s contributions to the 401(k) plan increased to $10.1 million in 2024, up from$8.1 million in 2023 and $7.7 million in 2022, reflecting a growth of 24.8% year-over-year[395].