# Astec Industries Inc: Form 10-Q for the period ended Mar 31, 2025

- Company: [Astec Industries Inc](/companies/aste.md) (CIK 792987)
- Form: 10-Q
- Filed: 2025-04-29
- Accepted by EDGAR: Apr 29, 2025, 16:26 ET
- Period: 2025-03-31
- Accession: 0000792987-25-000029
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/792987/000079298725000029/aste-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/792987/000079298725000029/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-01-01 to 2025-03-31 | $329.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-01-01 to 2025-03-31 | $237.0m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-01-01 to 2025-03-31 | $92.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-01-01 to 2025-03-31 | $71.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | $20.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $2.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $5.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $14.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.62 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.63 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 22,976,526 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $20.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $3.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $2.9m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $92.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $737.2m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $1.06bn | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $277.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $402.9m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $2.3m | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2025-03-31 | $11.5m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2025-03-31 | $653.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 25,223 characters.

The financial condition, results of operations and cash flows 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." The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. The financial position, results of operations, cash flows and other information included herein are not necessarily indicative of the financial position, results of operations and cash flows that may be expected in future periods.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q, particularly the following discussion and analysis of our results of operations, financial condition and liquidity in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the United States and global economies. Statements in this Quarterly Report on Form 10-Q that are not historical are hereby identified as "forward-looking statements" and may be indicated by words or phrases such as "anticipates," "supports," "plans," "projects," "expects," "believes," "should," "would," "could," "forecast," "management is of the opinion," or use of the future tense and similar words or phrases.

These forward-looking statements are based largely on management's expectations, which are subject to a number of known and unknown risks, uncertainties and other factors described under the caption "Item 1A. Risk Factors" in Part II of this Report, elsewhere herein and in other documents filed by the Company with the Securities and Exchange Commission, including "Part I, Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, which may cause actual results, financial or otherwise, to be materially different from those anticipated, expressed or implied by the forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.

### Executive Summary

Highlights of our financial results for the three months ended March 31, 2025 as compared to the same period of the prior year include the following:

- Net sales were $329.4 million, an increase of 6.5%
- Gross profit was $92.4 million, an increase of 20.2%
- Income from operations was $20.5 million, an increase of 225.4%
- Net income attributable to Astec was $14.3 million, an increase of 320.6%
- Diluted earnings per share was $0.62, an increase of 313.3%
- Backlog was $402.6 million, a decrease of 28.1%

### Business Conditions and Trends

*Strategic Transformation Program –* Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized ERP system, which is replacing much of our existing disparate core financial systems. 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. We expect the project to conclude in 2028 or 2029 with total approximate implementation costs anticipated to range from $180 to $200 million. Through the first quarter of 2025, we have incurred total implementation costs of approximately $140 million.

See Note 10, Strategic Transformation, Restructuring and Other Asset Gains, 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.

*Economic Conditions –* We monitor macroeconomic and other factors that may affect our business such as steel and oil prices and geopolitical conflicts, among others.

Steel is a major component of our equipment. In reaction to new or increased tariffs imposed by the Trump Administration and reciprocal actions by foreign governments, steel prices increased in the first quarter 2025. We anticipate that steel prices will remain at elevated levels in conjunction with further tariff actions, marginal demand growth, domestic reshoring activities and a global focus on construction projects.

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. Oil prices have routinely fluctuated in recent years, and based on the current macroeconomic environment, we anticipate that oil prices will experience moderate fluctuation throughout 2025.

New or ongoing geopolitical conflicts may cause a downturn in the construction industries in which we operate, cause an increase in oil prices, damage a significant portion of our inventory or materially impair our ability to distribute our products to customers. We monitor, adjust and potentially cease our operations in affected jurisdictions to ensure compliance with any governmental actions made in response to such conflicts.

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.

### Results of Operations

### Net Sales

Net sales for the first quarter of 2025 were $329.4 million compared to $309.2 million for the first quarter of 2024, an increase of $20.2 million, or 6.5%. The increase in net sales was primarily driven by net favorable pricing coupled with volume and mix that generated increases in (i) equipment sales of $20.4 million, (ii) used equipment sales of $2.3 million, (iii) freight revenue of $1.3 million and (iv) service and equipment installation revenue of $1.2 million. These increases were partially offset by a decrease in parts and component sales of $4.5 million. Sales reported by our foreign subsidiaries in U.S. dollars for the first quarter of 2025 would have been $1.6 million higher had foreign exchange rates been the same as 2024 rates.

Domestic sales for the first quarter of 2025 were $273.8 million, or 83.1% of consolidated net sales, compared to $243.2 million, or 78.7% of consolidated net sales, for the first quarter of 2024, an increase of $30.6 million, or 12.6%. Domestic sales increased primarily due to increases in (i) equipment sales of $28.4 million, (ii) used equipment sales $2.3 million, (iii) freight revenue of $1.1 million and (iv) service and equipment installation revenue of $1.0 million. These increases were partially offset by a decrease in parts and component sales of $1.8 million.

International sales for the first quarter of 2025 were $55.6 million, or 16.9% of consolidated net sales, compared to $66.0 million, or 21.3% of consolidated net sales, for the first quarter of 2024, a decrease of $10.4 million, or 15.8%. International sales decreased primarily due to decreases in equipment and parts and component sales of $8.0 million and $2.7 million, respectively.

### Gross Profit

Gross profit for the first quarter of 2025 was $92.4 million, or 28.1% of net sales, as compared to $76.9 million, or 24.9% of net sales, for the first quarter of 2024, an increase of $15.5 million or 20.2%. The increase in gross profit was primarily driven by the impact of net favorable pricing coupled with favorable volume and mix which generated $16.0 million higher gross profit and manufacturing efficiencies of $3.7 million. These increases were partially offset by higher warranty program costs of $2.0 million and net unfavorable inventory adjustments of $1.5 million.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses were $71.9 million, or 21.8% of net sales, for the first quarter of 2025, compared to $71.4 million, or 23.1% of net sales, for the first quarter of 2024, an increase of $0.5 million, or 0.7%, primarily due to (i) increased personnel-related costs of $2.4 million, largely driven by $1.2 million of employee incentive compensation costs, (ii) increased technology support costs of $1.0 million and (iii) increased acquisition and integration costs of $0.8 million. These increases were partially offset by lower professional services of $0.9 million.

### Restructuring Charges and Other Asset Gains, net

Restructuring charges and the gain on sale of property and equipment, net for the three-month periods ended March 31, 2025 and 2024 are presented below:

*(in millions)*

| Restructuring charges: | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Costs associated with exited operations – Enid | $— | $0.1 |
| Total restructuring related charges | — | 0.1 |
| **Gain on sale of property and equipment, net:** |  |  |
| Gain on sale of property and equipment, net | — | (0.9) |
| Total gain on sale of property and equipment, net | — | (0.9) |
| Restructuring and other asset gains, net | $— | $(0.8) |

### Interest Expense

Interest expense of $2.0 million was incurred in the three months ended March 31, 2025, as compared to $2.7 million in the three months ended March 31, 2024, primarily related to lower interest rates combined with lower average outstanding borrowings on the Credit Facility in the first quarter of 2025 as compared to the same period in 2024.

### Income Tax

Our income tax expense for the first quarter of 2025 was $5.4 million compared to $1.4 million for the first quarter of 2024. Our effective income tax rate was 27.4% for the first quarter of 2025 compared to 29.8% for the first quarter of 2024. The income tax expense for three months ended March 31, 2025 was higher compared to the same period in 2024, primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss.

### Backlog

*(in millions, except percentage data)*

|  | March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Infrastructure Solutions | $276.4 | $372.7 | $(96.3) | (25.8)% |
| Materials Solutions | 126.2 | 187.1 | (60.9) | (32.5)% |
| Domestic Backlog | 329.3 | 437.8 | (108.5) | (24.8)% |
| International Backlog | 73.3 | 122.0 | (48.7) | (39.9)% |

The backlog of orders as of March 31, 2025 was $402.6 million compared to $559.8 million as of March 31, 2024, a decrease of $157.2 million, or 28.1%.

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 as a result of macroeconomic factors such as higher inflation, including the impact of recently enacted or increased tariffs, and elevated interest rates, among other factors. These factors have influenced customer ordering patterns and are expected to continue.

### Net Sales by Segment

*(in millions, except percentage data)*

|  | Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Infrastructure Solutions | $236.0 | $202.2 | $33.8 | 16.7% |
| Materials Solutions | 93.4 | 107.0 | (13.6) | (12.7)% |

20

### Infrastructure Solutions

Sales in this segment were $236.0 million for the first quarter of 2025 compared to $202.2 million for the same period in 2024, an increase of $33.8 million, or 16.7%. The increase was primarily driven by net favorable pricing coupled with volume and mix that generated increased (i) equipment sales of $32.1 million, (ii) used equipment sales of $2.1 million, (iii) freight revenue of $1.9 million and (iv) service and equipment installation revenue of $1.0 million. These increases were partially offset by lower parts and component sales of $3.3 million.

Domestic sales for the Infrastructure Solutions segment increased $35.8 million, or 19.3%, for the first quarter of 2025 compared to the same period in 2024, primarily due to increases in (i) equipment sales of $32.9 million, (ii) used equipment sales of $2.1 million, (iii) freight revenue of $1.8 million and (iv) service and equipment installation revenue of $0.9 million. These increases were partially offset by lower parts and component sales of $1.9 million.

International sales for the Infrastructure Solutions segment decreased $2.0 million, or 12.3%, for the first quarter of 2025 compared to the same period in 2024, primarily due to decreased parts and component and equipment sales of $1.4 million and $0.8 million, respectively.

### Materials Solutions

Sales in this segment were $93.4 million for the first quarter of 2025 compared to $107.0 million for the same period in 2024, a decrease of $13.6 million, or 12.7%. The decrease was primarily driven by net unfavorable volume and mix, partially offset by favorable pricing that generated decreased equipment sales and parts and component sales of $11.7 million and $1.2 million, respectively.

Domestic sales for the Materials Solutions segment decreased by $5.2 million, or 9.1%, for the first quarter of 2025 compared to the same period in 2024, primarily driven by decreased equipment sales and freight revenue of $4.5 million and $0.7 million, respectively.

International sales for the Materials Solutions segment decreased $8.4 million, or 16.9%, for the first quarter of 2025 compared to the same period in 2024, primarily due to decreased equipment and parts and component sales of $7.2 million and $1.3 million, respectively.

### Segment Operating Adjusted EBITDA

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by the CEO, who is the CODM, to evaluate performance and allocate resources to the reportable 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. See Note 9, Operations by Industry Segment and Geographic Area, 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 income before income taxes.

*(in millions, except percentage data)*

|  | Three Months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Infrastructure Solutions | $42.9 | $25.6 | $17.3 | 67.6% |
| Materials Solutions | 5.2 | 5.3 | (0.1) | (1.9)% |

### Infrastructure Solutions

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $42.9 million for the first quarter of 2025 compared to $25.6 million for the same period in 2024, an increase of $17.3 million or 67.6%. The increase in Segment Operating Adjusted EBITDA was primarily driven by (i) the impact of net favorable pricing coupled with favorable volume and mix which generated $19.0 million higher gross profit (ii) manufacturing efficiencies of $4.9 million and (iii) reduced prototype and project costs of $0.7 million. These increases were partially offset by (i) net unfavorable inventory adjustments of $3.3 million, (ii) higher quality-related costs of $2.8 million and (iii) higher personnel related costs of $1.2 million.

### Materials Solutions

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $5.2 million for the first quarter of 2025 compared to $5.3 million for the same period in 2024, a decrease of $0.1 million, or 1.9%. The decrease in Segment Operating Adjusted EBITDA was primarily driven by the impact of net unfavorable volume and mix, partially offset by favorable pricing, that resulted in $3.0 million lower gross profit and manufacturing inefficiencies of $1.0 million. These decreases were partially offset by net favorable inventory adjustments of $1.8 million.

### Corporate and Other Operations

Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $12.9 million for the first quarter of 2025 compared to $12.0 million for the same period in 2024, an increase of $0.9 million, or 7.5%, primarily driven by transaction costs of $0.8 million and employee incentive compensation costs of $0.7 million.

### Liquidity and Capital Resources

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, 2025, our total liquidity was $238.9 million, consisting of $90.1 million of cash and cash equivalents available for operating purposes and $148.8 million available for additional borrowings under our revolving credit facility, to the extent our compliance with financial covenants permits such borrowings. Our foreign subsidiaries held $29.6 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. In addition, our variable cash uses may include transformation initiatives, strategic acquisitions, dividend payments 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.

On December 19, 2022, we entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Credit Agreement provides for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $125.0 million (the "Credit Facilities") and (iii) a maturity date of December 19, 2027. The Credit Agreement contains certain financial covenants, including requirements related to our Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio, each as defined in the agreement. 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 March 31, 2025.

We had $96.0 million in outstanding borrowings under the Credit Facilities as of March 31, 2025. Our outstanding letters of credit totaling $5.2 million decreased borrowing availability to $148.8 million under the revolving credit facility as of March 31, 2025.

Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom each have separate credit facilities with local financial institutions primarily to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees. In addition, the Brazilian subsidiary also enters into order anticipation agreements on a periodic basis. Both the outstanding borrowings under the credit facilities of the international subsidiaries and the order anticipation agreements are recorded in "Short-term debt" in our Consolidated Balance Sheets. Each of the credit facilities are generally guaranteed by Astec Industries, Inc. and/or secured with certain assets of the local subsidiary.

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of March 31, 2025, open purchase obligations totaled $134.7 million, of which $131.6 million are expected to be fulfilled within the remainder of 2025.

We estimate that our capital expenditures will be between $35.0 million and $45.0 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.

### Cash Flows

The following table summarizes cash flows during the three months ended March 31, 2025 and 2024, respectively:

*(in millions)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $20.5 | $(47.0) |
| Net cash used in investing activities | (4.2) | (5.9) |
| Net cash (used in) provided by financing activities | (15.0) | 48.4 |
| Effect of exchange rates on cash | 0.5 | (0.6) |
| Increase (decrease) in cash, cash equivalents and restricted cash | 1.8 | (5.1) |
| Cash, cash equivalents and restricted cash, end of period | $92.6 | $58.1 |

### Net cash provided by (used in) operating activities

Our operating activities provided net cash of $20.5 million for the three months ended March 31, 2025 as compared to a net use of $47.0 million for the three months ended March 31, 2024. This increase is primarily due to lower net cash usages for our operating assets and liabilities of $52.5 million coupled with increased cash inflows from net income reduced by non-cash charges of $15.0 million. The decreased net cash usage for our operating assets and liabilities were mainly driven the timing impacts of (i) collections on trade and other receivables of $35.2 million, which includes $13.7 million recorded in the first quarter of 2024 related to a subsequently finalized litigation settlement, (ii) inventory purchases of $19.7 million, (iii) payments of trade accounts payables of $10.1 million and (iv) lower employee-related payments of $7.8 million. The decreased net cash usage was partially offset by decreased customer deposits of $15.2 million associated with lower backlog and the timing impacts for accrued liabilities of $14.9 million, which includes $13.7 million recorded in the first quarter of 2024 related to a subsequently finalized litigation settlement.

### Net cash used in investing activities

Net cash used in investing activities was $4.2 million during the three months ended March 31, 2025 as compared to $5.9 million during the three months ended March 31, 2024, primarily due to decreased capital expenditures of $1.9 million.

### Net cash (used in) provided by financing activities

Our financing activities used net cash of $15.0 million during the three months ended March 31, 2025 as compared to providing net cash of $48.4 million during the three months ended March 31, 2024, primarily due to net repayments on our Credit Facilities in 2025 as compared to net borrowings in 2024.

### Dividends

We paid quarterly dividends of $0.13 per common share to shareholders in the first quarter of both 2025 and 2024.

### Financial Condition

Our total current assets increased to $737.2 million as of March 31, 2025 from $722.8 million as of December 31, 2024, an increase of $14.4 million, or 2.0%, due primarily to increases in (i) inventories of $12.2 million, (ii) trade and other receivables of $5.4 million and (iii) cash, cash equivalents and restricted cash of $1.8 million. These increases were partially offset by a decrease in prepaid and refundable income taxes of $4.6 million.

Our total current liabilities increased to $277.0 million as of March 31, 2025 from $271.7 million as of December 31, 2024. Increases of $12.4 million and $1.7 million in accounts payables and accrued product warranty, respectively, were partially offset by (i) decreases in customer deposits of $5.0 million, (ii) decreases in short term debt of $1.8 million and (iii) decreases in other current liabilities of $1.8 million.

### Critical Accounting Estimates

Our critical accounting estimates are described in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2024 was filed.

## Market risk

As filed, 387 characters.

Our quantitative and qualitative disclosures about market risk are incorporated by reference from "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2024. Our market risk exposures have not materially changed since our Annual Report on Form 10-K for the year ended December 31, 2024 was filed.

## Controls and procedures

As filed, 2,623 characters.

### Disclosure Controls and Procedures

Our management has established and maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including our CEO and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. Management carried out an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our CEO and CFO have concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective.

### Internal Control over Financial Reporting

We are currently undertaking a significant multi-year global ERP implementation to upgrade our information technology platforms and business processes. The implementation is occurring in phases over several years, which began in 2023. During 2023, we implemented the human capital resources management module, including the payroll application for all locations within the United States, the ERP at Corporate and one manufacturing site and the consolidations and reporting module. During 2024, we implemented the ERP at two additional manufacturing sites.

As a result of this multi-year implementation, we expect certain changes to our processes and procedures, which, in turn, will result in changes to our internal control over financial reporting. While we expect this implementation to strengthen our internal control over financial reporting by automating certain manual processes and standardizing business processes and reporting across our organization, we will continue to evaluate and monitor our internal control over financial reporting as processes and procedures in the affected areas evolve.

With the exception of the implementations described above, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three month period ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

## Risk factors

As filed, 3,403 characters.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. Other than as described below, there have been no material changes from the risk factors previously disclosed therein. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2024 and in this Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to management or that management currently deems to be immaterial also may materially and adversely affect our business, financial condition or operating results.

***We may not complete the acquisition of TerraSource Holdings, LLC ("TerraSource") or complete the acquisition within the time frame we anticipate; the acquired business may underperform relative to our expectations; the acquisition may cause our financial results to differ from our expectations or the expectations of the investment community; we may not be able to achieve anticipated cost savings or other anticipated benefits.***

The completion of the acquisition of TerraSource is subject to a number of conditions. The failure to satisfy all of the required conditions could delay the completion of the acquisition or prevent it from occurring at all. Furthermore, we expect to incur significant indebtedness in connection with the acquisition of TerraSource, which could have a material adverse effect on our financial position.

The success of the acquisition will depend, in part, on our ability to successfully combine and integrate the acquired business and realize the anticipated benefits, including synergies, cost savings, innovation opportunities and operational efficiencies from the acquisition. If we are unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected, and the value of our common stock may decline.

The integration of the acquired business may result in material challenges, including, without limitation:

- We and TerraSource must obtain certain regulatory approvals and clearances to complete the acquisition, which, if delayed, not granted or granted with unacceptable conditions, could prevent, substantially delay or impair completion of the acquisition, result in additional expenditures of money and resources or reduce the anticipated benefits of the acquisition;
- the acquisition, including uncertainty regarding the acquisition, may cause customers, suppliers or strategic partners to delay or defer decisions concerning us and TerraSource, and may adversely affect each company’s ability to effectively manage its respective businesses;
- failure to motivate and retain key personnel could diminish the anticipated benefits of the acquisition;
- the possibility of significant costs involved in connection with completing the acquisition, including costs to achieve expected synergies;
- coordinating geographically overlapping organizations;
- unanticipated issues in integrating information technology, communications and other systems; and
- unforeseen expenses or delays associated with the acquisition.

Filed Apr 29, 2025.
Source: SEC EDGAR, the filing index for accession 0000792987-25-000029. Last ingested by Listed: Nov 5, 2026, 18:02 ET. No prices; not investment advice.