NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar and share amounts in thousands, except per share amounts, unless otherwise specified)
Note 1. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting
principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and the notes thereto included in the Astec Industries, Inc. Annual Report on Form 10-K for the year ended December 31, 2018.
The unaudited condensed consolidated balance sheet as of December 31, 2018 has been derived from the audited consolidated financial statements
at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
Dollar and share amounts shown are in thousands, except per share amounts, unless otherwise specified.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which significantly changes the accounting for operating leases by
lessees. The accounting applied by lessors is largely unchanged from that applied under previous guidance. The new guidance establishes a right-of-use (“ROU”) model and requires lessees to recognize lease assets and lease liabilities in the balance
sheet, initially measured at the present value of the lease payments, for leases which were classified as operating leases under previous guidance. Lease cost included in the statements of income will be calculated so that the cost of the lease is
allocated over the lease term, generally on a straight-line basis. Lessees may make an accounting policy election to exclude leases with a term of 12 months or less from the requirement to record related assets and liabilities. Certain provisions of
ASU No. 2016-02 were later modified or clarified by the issuance of ASU 2018-11, “Leases (Topic 842): Targeted Improvements” and ASU 2018-10, “Codification Improvements to Topic 842, Leases”. A modified retrospective transition approach is required
by the ASU and its provisions must be applied to all leases existing at the date of initial application. An entity may choose to use either (1) the standard’s effective date or (2) the beginning of the earliest comparative period presented in the
financial statements as its date of initial application. The new standards were effective for public companies for fiscal years beginning after December 15, 2018 and the Company adopted the new standards effective January 1, 2019 using the effective
date as the date of initial application
.
Consequently, financial information and the disclosures required under the new standards have not been provided for periods
prior to January 1, 2019. The adoption of these standards did not have a material impact on the Company’s financial position, results of operations or cash flows. See Note 10, Leases, for additional information regarding the Company’s adoption of
these standards.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial
Instruments”. The standard changes how credit losses are measured for most financial assets and certain other instruments that currently are not measured through net income. The standard will require an expected loss model for instruments measured at
amortized cost as opposed to the current incurred loss approach. In valuing available for sale debt securities, allowances will be required to be recorded, rather than the current approach of reducing the carrying amount, for other than temporary
impairments. A cumulative adjustment to retained earnings is to be recorded as of the beginning of the period of adoption to reflect the impact of applying the provisions of the standard. The standard is effective for public companies for periods
beginning after December 15, 2019 and the Company expects to adopt the new standard as of January 1, 2020. As the Company’s credit losses are typically minimal, the Company does not expect the adoption of this new standard to have a material impact
on the Company's financial position, results of operations or cash flows.
In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815), Targeted Improvements to Hedging Activities”, to improve
the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The new guidance is effective for public companies for fiscal years beginning after
December 15, 2018 and interim periods within those fiscal years with early adoption permitted in any interim period after its issuance. The Company adopted the new standard effective January 1, 2019. The application of this standard did not have a
material impact on the Company’s financial position, results of operations or cash flows.
In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220), Reclassification of Certain
Tax Effects from Accumulated Other Comprehensive Income”, which permits companies to reclassify tax effects stranded in accumulated other comprehensive income (“OCI”) as a result of U.S. tax reform impacting tax rates or other items, such as changing
from a worldwide tax system to a territorial system, from OCI to retained earnings. Other tax effects stranded in OCI due to other reasons, such as prior changes in tax laws or changes in valuation allowances, may not be reclassified. The new
standard was effective for fiscal years beginning after December 15, 2018, and the Company adopted its provisions as of January 1, 2019. As a result of adopting this new standard, the Company reclassified $721 of previously stranded tax effects from
accumulated comprehensive loss to retained earnings as shown on the accompanying unaudited condensed consolidated statement of equity for the three months ended March 31, 2019.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure
Requirements for Fair Value Measurement” which aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing fair value measurement disclosures. The standard is effective
for annual and interim periods beginning after December 15, 2019 with early adoption permitted. The Company has not yet adopted this new standard. The Company does not expect the adoption of this new standard to have a material impact on its
financial position, results of operations or cash flows.
Note 2. Earnings per Share
Basic earnings per share are determined by dividing earnings by the weighted average number of common shares outstanding during each period.
Diluted earnings per share include the potential dilutive effect of restricted stock units and shares held in the Company’s Supplemental Executive Retirement Plan.
The following table sets forth net income attributable to controlling interest and the number of basic and diluted shares used in the
computation of earnings per share:
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Numerator:
|
|
|
|
|
|
|
|
Net income attributable to controlling interest
|
|
$
|
14,274
|
|
|
$
|
20,267
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Denominator for basic earnings per share
|
|
|
22,498
|
|
|
|
23,045
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
Restricted stock units
|
|
|
100
|
|
|
|
136
|
|
|
Supplemental Executive Retirement Plan
|
|
|
48
|
|
|
|
55
|
|
|
Denominator for diluted earnings per share
|
|
|
22,646
|
|
|
|
23,236
|
|
|
|
|
|
|
|
|
|
|
|
Note 3. Receivables
Receivables are net of allowances for doubtful accounts of $1,183 and $1,184 as of March 31, 2019 and December 31, 2018, respectively.
Note 4. Inventories
Inventories consist of the following:
|
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
|
Raw materials and parts
|
|
$
|
181,982
|
|
|
$
|
173,919
|
|
|
Work-in-process
|
|
|
70,327
|
|
|
|
69,718
|
|
|
Finished goods
|
|
|
90,583
|
|
|
|
89,152
|
|
|
Used equipment
|
|
|
23,943
|
|
|
|
23,155
|
|
|
Total
|
|
$
|
366,835
|
|
|
$
|
355,944
|
|
Raw materials and parts are comprised of purchased steel and other purchased items for use in the manufacturing process or held for sale for
the after-market parts business. The category also includes the manufacturing cost of completed equipment sub-assemblies produced for either integration into equipment manufactured at a later date or for sale in the Company’s after-market parts
business.
Work-in-process consists of the value of materials, labor and overhead incurred to date in the manufacturing of incomplete equipment or
incomplete equipment sub-assemblies being produced.
Finished goods consist of completed equipment manufactured for sale to customers.
Used equipment consists of equipment accepted in trade or purchased on the open market. The category also includes equipment rented to
prospective customers on a short-term or month-to-month basis. Used equipment is valued at the lower of acquired or trade-in cost or net realizable value determined on each separate unit. Each unit of rental equipment is valued at the lower of
original manufacturing, acquired or trade-in cost or net realizable value.
Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, which requires the Company to make specific
estimates, assumptions and judgments in determining the amount, if any, of reductions in the valuation of inventories to their net realizable values. The net realizable values of the Company’s products are impacted by a number of factors, including
changes in the price of steel, competitive sales pricing, quantities of inventories on hand, the age of the individual inventory items, market acceptance of the Company’s products, actions by our competitors, the condition of our used and rental
inventory and general economic factors. Once an inventory item’s value has been deemed to be less than cost, a net realizable value adjustment is calculated and a new “cost basis” for that item is effectively established. This new cost is retained
for that item until such time as the item is disposed of or the Company determines that an additional write-down is necessary. Additional write-downs may be required in the future based upon changes in assumptions due to general economic downturns in
the markets in which the Company operates, changes in competitor pricing, new product design or other technological advances introduced by the Company or its competitors and other factors unique to individual inventory items.
The most significant component of the Company’s inventory is steel. A significant decline in the market price of steel could result in a
decline in the market value of the Company's equipment or parts. During periods of significant declining steel prices, the Company reviews the valuation of its inventories to determine if reductions are needed in the recorded value of inventory on
hand to its net realizable value.
The Company reviews the individual items included in its finished goods, used equipment and rental equipment inventory on a model-by-model or
unit-by-unit basis to determine if any item’s net realizable value is below its carrying value. This analysis is expanded to include items in work-in-process and raw material inventory if factors indicate those items may also be impacted. In
performing this review, judgments are made and, in addition to the factors discussed above, additional consideration is given to the age of the specific items of used or rental inventory, prior sales offers or lack thereof, the physical condition of
the specific items and general market conditions for the specific items. Additionally, an analysis of raw material inventory is performed to calculate reserves needed for obsolete inventory based upon quantities of items on hand, the age of those
items and their recent and expected future usage or sale.
When the Company determines that the value of inventory has become impaired through damage, deterioration, obsolescence, changes in price
levels, excessive levels of inventory or other causes, the Company reduces the carrying value to the net realizable value based on estimates, assumptions and judgments made from the information available at that time. Abnormal amounts of idle
facility expense, freight, handling cost and wasted materials are recognized as current period charges.
Note 5. Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation of $257,402 and $254,493 as of March 31, 2019 and December 31, 2018,
respectively.
Note 6. Fair Value Measurements
The Company has various financial instruments that must be measured at fair value on a recurring basis, including marketable debt and equity
securities held by Astec Insurance Company (“Astec Insurance”), the Company’s captive insurance company, and marketable equity securities held in an unqualified Supplemental Executive Retirement Plan (“SERP”). The obligations of the Company
associated with the financial assets held in the SERP also constitute a liability of the Company for financial reporting purposes and are included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets.
The Company’s subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.
The carrying amount of cash and cash equivalents, trade receivables, other receivables, revolving debt, accounts payable and long-term debt
approximates their fair value because of their short-term nature and/or interest rates associated with the instruments. Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted
prices exist, other observable inputs for the asset. The fair values of foreign currency exchange contracts are based on quotations from various banks for similar instruments using models with market based inputs.
Financial assets and liabilities are categorized based upon the level of judgment associated with the inputs used to measure their fair value.
The inputs used to measure the fair value are identified in the following hierarchy:
|
Level 1 -
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
Level 2 -
|
Unadjusted quoted prices in active markets for similar assets or liabilities; or unadjusted
quoted prices for identical or similar assets or liabilities in markets that are not active; or
inputs other than quoted prices that are observable for the asset or liability.
|
|
Level 3 -
|
Inputs reflect management’s best estimate of what market participants would use in pricing
the asset or liability at the measurement date. Consideration is given to the risk inherent in
the valuation technique and the risk inherent in the inputs to the model.
|
As indicated in the tables below (which excludes the Company’s pension assets), the Company has determined that all of its financial assets and
liabilities as of March 31, 2019 and December 31, 2018 are Level 1 and Level 2 in the fair value hierarchy as defined above:
|
|
|
March 31, 2019
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
Trading equity securities:
|
|
|
|
|
|
|
|
|
|
|
SERP money market fund
|
|
$
|
452
|
|
|
$
|
--
|
|
|
$
|
452
|
|
|
SERP mutual funds
|
|
|
5,127
|
|
|
|
--
|
|
|
|
5,127
|
|
|
Preferred stocks
|
|
|
266
|
|
|
|
--
|
|
|
|
266
|
|
|
Trading debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
4,371
|
|
|
|
--
|
|
|
|
4,371
|
|
|
Municipal bonds
|
|
|
--
|
|
|
|
1,301
|
|
|
|
1,301
|
|
|
Floating rate notes
|
|
|
1,356
|
|
|
|
--
|
|
|
|
1,356
|
|
|
U.S. government securities
|
|
|
2,227
|
|
|
|
--
|
|
|
|
2,227
|
|
|
Asset backed securities
|
|
|
--
|
|
|
|
428
|
|
|
|
428
|
|
|
Other
|
|
|
--
|
|
|
|
1,034
|
|
|
|
1,034
|
|
|
Derivative financial instruments
|
|
|
--
|
|
|
|
147
|
|
|
|
147
|
|
|
Total financial assets
|
|
$
|
13,799
|
|
|
$
|
2,910
|
|
|
$
|
16,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP liabilities
|
|
$
|
--
|
|
|
$
|
7,387
|
|
|
$
|
7,387
|
|
|
Total financial liabilities
|
|
$
|
--
|
|
|
$
|
7,387
|
|
|
$
|
7,387
|
|
|
|
|
December 31, 2018
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Total
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
|
Trading equity securities:
|
|
|
|
|
|
|
|
|
|
|
SERP money market fund
|
|
$
|
229
|
|
|
$
|
--
|
|
|
$
|
229
|
|
|
SERP mutual funds
|
|
|
4,755
|
|
|
|
--
|
|
|
|
4,755
|
|
|
Preferred stocks
|
|
|
248
|
|
|
|
--
|
|
|
|
248
|
|
|
Trading debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
|
5,398
|
|
|
|
--
|
|
|
|
5,398
|
|
|
Municipal bonds
|
|
|
--
|
|
|
|
1,546
|
|
|
|
1,546
|
|
|
Floating rate notes
|
|
|
1,300
|
|
|
|
--
|
|
|
|
1,300
|
|
|
U.S. government securities
|
|
|
2,210
|
|
|
|
--
|
|
|
|
2,210
|
|
|
Asset backed securities
|
|
|
--
|
|
|
|
442
|
|
|
|
442
|
|
|
Other
|
|
|
--
|
|
|
|
708
|
|
|
|
708
|
|
|
Derivative financial instruments
|
|
|
--
|
|
|
|
333
|
|
|
|
333
|
|
|
Total financial assets
|
|
$
|
14,140
|
|
|
$
|
3,029
|
|
|
$
|
17,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP liabilities
|
|
$
|
--
|
|
|
$
|
6,641
|
|
|
$
|
6,641
|
|
|
Total financial liabilities
|
|
$
|
--
|
|
|
$
|
6,641
|
|
|
$
|
6,641
|
|
The Company reevaluates the volume of trading activity for each of its investments at the end of each quarter and adjusts the level within the
fair value hierarchy as needed. No investments changed hierarchy levels from December 31, 2018 to March 31, 2019.
The trading equity investments noted above are valued at their fair value based on their quoted market prices, and the debt securities are
valued based upon a mix of observable market prices and model driven prices derived from a matrix of observable market prices for assets with similar characteristics obtained with the assistance of a nationally recognized third-party pricing
service. Additionally, a significant portion of the SERP’s investments in trading equity securities are in money market and mutual funds. As these money market and mutual funds are held in a SERP, they are also included in the Company’s liability
under its SERP.
Trading debt securities are comprised of marketable debt securities held by Astec Insurance. Astec Insurance has an investment strategy that
focuses on providing regular and predictable interest income from a diversified portfolio of high-quality fixed income securities.
Note 7.
Debt
On April 12, 2017, the Company and certain of its subsidiaries entered into an amended and restated credit agreement whereby Wells Fargo
extended to the Company an unsecured line of credit of up to $100,000, including a sub-limit for letters of credit of up to $30,000. In February 2019, the agreement was again amended to increase the unsecured line of credit to a maximum of $150,000
and to extend the maturity date to December 29, 2023. Upon disposition of the wood pellet plant, the Company is required to apply the proceeds, if any, as payment against any outstanding balance on the line of credit. Other significant terms were
left unchanged. As of March 31, 2019, outstanding borrowings under the agreement totaled $55,758, which are included in long-term debt in the accompanying unaudited condensed consolidated balance sheets. The highest borrowing amount outstanding at
any time during the three-month period ended March 31, 2019 was $81,776. Letters of credit totaling $9,481, including $3,200 of letters of credit issued to banks in Brazil to secure the local debt of Astec do Brasil Fabricacao de Equipamentos Ltda.
(“Astec Brazil”), were outstanding under the credit facility as of March 31, 2019. Additional borrowing available under the credit facility is $84,761 as of March 31, 2019. Borrowings under the agreement are subject to an interest rate equal to the
daily one-month LIBOR rate plus a 0.75% margin, resulting in a rate of 3.25% as of March 31, 2019. The unused facility fee is 0.125%. Interest only payments are due monthly. The amended and restated credit agreement contains certain financial
covenants, including provisions concerning required levels of annual net income and minimum tangible net worth.
The Company’s South African subsidiary, Osborn Engineered Products SA (Pty) Ltd (“Osborn”), has a credit facility of $6,544 with a South
African bank to finance short-term working capital needs, as well as to cover performance letters of credit, advance payment and retention guarantees. As of March 31, 2019, Osborn had no outstanding borrowings but had $461 in performance, advance
payment and retention guarantees outstanding under the facility. The facility has been guaranteed by Astec Industries, Inc., but is otherwise unsecured. A 0.75% unused facility fee is charged if less than 50% of the facility is utilized. As of March
31, 2019, Osborn had available credit under the facility of $6,083. The interest rate is 0.25% less than the South Africa prime rate, resulting in a rate of 10.0% as of March 31, 2019.
The Company’s Brazilian subsidiary, Astec Brazil, has a $1,084 working capital loan outstanding as of March 31, 2019 from Brazilian banks with
an interest rate of 10.4%. The loan’s final monthly payment is due in April 2024 and the debt is secured by Astec Brazil’s manufacturing facility and also by letters of credit totaling $3,200 issued by Astec Industries, Inc. Additionally, Astec
Brazil has various five-year equipment financing loans outstanding with Brazilian banks in the aggregate of $66 as of March 31, 2019 that have interest rates ranging from 6.0% to 16.3%. These equipment loans have maturity dates ranging from April
2019 to April 2020. Astec Brazil’s loans are included in the accompanying unaudited condensed consolidated balance sheets as current maturities of long-term debt ($279) and long-term debt ($871) as of March 31, 2019.
Note 8. Product Warranty Reserves
The Company warrants its products against manufacturing defects and performance to specified standards. The warranty period and performance
standards vary by market and uses of its products, but generally range from three months to two years or up to a specified number of hours of operation. The Company estimates the costs that may be incurred under its warranties and records a liability
at the time product sales are recorded. The product warranty liability is primarily based on historical claim rates, nature of claims and the associated cost.
Changes in the Company’s product warranty liability for the three-month periods ended March 31, 2019 and 2018 are as follows:
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Reserve balance, beginning of the period
|
|
$
|
10,928
|
|
|
$
|
15,410
|
|
|
Warranty liabilities accrued
|
|
|
2,746
|
|
|
|
3,453
|
|
|
Warranty liabilities settled
|
|
|
(2,643
|
)
|
|
|
(2,825
|
)
|
|
Other
|
|
|
20
|
|
|
|
(25
|
)
|
|
Reserve balance, end of the period
|
|
$
|
11,051
|
|
|
$
|
16,013
|
|
Note 9. Accrued Loss Reserves
The Company records reserves for losses related to known workers’ compensation and general liability claims that have been incurred but not yet
paid or are estimated to have been incurred but not yet reported to the Company. The undiscounted reserves are actuarially determined based on the Company’s evaluation of the type and severity of individual claims and historical information,
primarily its own claims experience, along with assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause these estimates to change in the future. Total accrued loss reserves were $8,301 as of
March 31, 2019 and $7,889 as of December 31, 2018, of which $6,230 and $6,057 were included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.
Note 10. Leases
The Company leases certain real estate, computer systems, material handling, office, automobiles and other equipment. The Company determines
if a contract is a lease at the inception of the agreement. The Company adopted ASU No. 2016-02, Leases, on January 1, 2019 using the effective date method. Upon adoption, right-of-use (“ROU”) assets totaling $4,973 were recorded on the Company’s
balance sheet. Incremental borrowing rates used in the calculation of the ROU asset, when not apparent in the lease agreements, were estimated based upon secured borrowing rates quoted by the Company’s banks for loans of various lengths ranging from
1 to 20 years. Operating leases with original maturities less than one year in duration or with present values of less than $5 were excluded. The calculation of the ROU asset considered lease agreement provisions concerning termination, extensions,
end of lease purchase and whether or not those provisions were reasonably certain of being exercised. Certain agreements contain lease and non-lease components, which are accounted for separately. The financial results for periods prior to January
1, 2019 are unchanged from results previously reported. No cumulative effect adjustment was necessary at the time of adoption. Based upon an extensive contract review and related calculations, none of the Company’s leases were deemed to be
financing leases. Lease expense recorded in the three-month period ended March 31, 2019 under ASC 842 was not materially different from lease expense that would have been recorded under the previous lease accounting standard. Other transitional
practical expedients allowed under ASU No. 2016-02 were adopted.
Other information concerning the Company’s operating leases and the related expense, assets and liabilities follow:
|
|
|
Three Months
Ended
March 31, 2019
|
|
|
Operating lease expense for the three months ended March 31, 2019
|
|
$
|
601
|
|
|
Cash paid for operating leases included in operating cash flows
|
|
|
645
|
|
|
|
|
|
|
|
|
|
|
As of
March 31, 2019
|
|
|
Operating lease right-of-use asset
|
|
$
|
4,335
|
|
|
Operating lease short-term liability included in other current liabilities
|
|
|
1,824
|
|
|
Operating lease long-term liability included in other long-term liabilities
|
|
|
2,529
|
|
|
Weighted average remaining lease term
|
|
4.86 years
|
|
|
Weighted average discount rate used in calculating right-of-use asset
|
|
|
4.11
|
%
|
Future annual minimum lease payments as of March 31, 2019 are as follows:
|
|
|
Amount
|
|
|
2019 (nine months remaining)
|
|
$
|
1,628
|
|
|
2020
|
|
|
1,175
|
|
|
2021
|
|
|
631
|
|
|
2022
|
|
|
331
|
|
|
2023
|
|
|
168
|
|
|
2024 and thereafter
|
|
|
891
|
|
|
Total
|
|
$
|
4,824
|
|
|
|
|
|
|
|
The Company adopted ASU No. 2016-02 on January 1, 2019 as noted above. As required by the ASU, the following table discloses the minimum
rental commitments for all non-cancelable operating leases at December 31, 2018 as reported in the Company’s 2018 10-K under previous ASC 840 guidance:
|
|
|
Amount
|
|
|
2019
|
|
$
|
1,992
|
|
|
2020
|
|
|
1,100
|
|
|
2021
|
|
|
388
|
|
|
2022
|
|
|
144
|
|
|
2023
|
|
|
66
|
|
|
2024 and thereafter
|
|
|
12
|
|
|
Total
|
|
$
|
3,702
|
|
|
|
|
|
|
|
Note 11. Income Taxes
The Company's combined effective income tax rates were 21.0% and 23.0% for the three-month periods ended March 31, 2019 and 2018, respectively.
The Company's effective tax rate for each period includes the effect of state income taxes and other discrete items as well as a benefit for research and development credits.
The Company's recorded liability for uncertain tax positions as of March 31, 2019 has increased by approximately $49 as compared to December
31, 2018 due to exposure related to federal and state credits, plus additional taxes and interest on existing reserves.
Note 12. Revenue Recognition:
The following tables disaggregate our revenue by major source for the three-month periods ended March 31, 2019 and 2018 (excluding intercompany
sales):
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
|
Infrastructure
Group
|
|
|
Aggregate
and Mining
Group
|
|
|
Energy
Group
|
|
|
Total
|
|
|
Net Sales-Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
$
|
79,364
|
|
|
$
|
55,204
|
|
|
$
|
39,731
|
|
|
$
|
174,299
|
|
|
Parts and component sales
|
|
|
42,191
|
|
|
|
19,159
|
|
|
|
12,308
|
|
|
|
73,658
|
|
|
Service and equipment installation revenue
|
|
|
3,231
|
|
|
|
625
|
|
|
|
1,543
|
|
|
|
5,399
|
|
|
Used equipment sales
|
|
|
1,493
|
|
|
|
413
|
|
|
|
1,270
|
|
|
|
3,176
|
|
|
Freight revenue
|
|
|
3,830
|
|
|
|
1,595
|
|
|
|
1,570
|
|
|
|
6,995
|
|
|
Other
|
|
|
437
|
|
|
|
(1,281
|
)
|
|
|
146
|
|
|
|
(698
|
)
|
|
Total domestic revenue
|
|
|
130,546
|
|
|
|
75,715
|
|
|
|
56,568
|
|
|
|
262,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales-International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
|
16,452
|
|
|
|
19,049
|
|
|
|
4,962
|
|
|
|
40,463
|
|
|
Parts and component sales
|
|
|
6,273
|
|
|
|
10,178
|
|
|
|
2,492
|
|
|
|
18,943
|
|
|
Service and equipment installation revenue
|
|
|
1,364
|
|
|
|
391
|
|
|
|
33
|
|
|
|
1,788
|
|
|
Used equipment sales
|
|
|
110
|
|
|
|
466
|
|
|
|
--
|
|
|
|
576
|
|
|
Freight revenue
|
|
|
240
|
|
|
|
668
|
|
|
|
183
|
|
|
|
1,091
|
|
|
Other
|
|
|
9
|
|
|
|
64
|
|
|
|
17
|
|
|
|
90
|
|
|
Total international revenue
|
|
|
24,448
|
|
|
|
30,816
|
|
|
|
7,687
|
|
|
|
62,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
154,994
|
|
|
$
|
106,531
|
|
|
$
|
64,255
|
|
|
$
|
325,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
Infrastructure
Group
|
|
|
Aggregate
and Mining
Group
|
|
|
Energy
Group
|
|
|
Total
|
|
|
Net Sales-Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
$
|
85,518
|
|
|
$
|
63,494
|
|
|
$
|
36,731
|
|
|
$
|
185,743
|
|
|
Parts and component sales
|
|
|
41,113
|
|
|
|
17,834
|
|
|
|
11,315
|
|
|
|
70,262
|
|
|
Service and equipment installation revenue
|
|
|
1,928
|
|
|
|
326
|
|
|
|
2,096
|
|
|
|
4,350
|
|
|
Used equipment sales
|
|
|
1,624
|
|
|
|
1,410
|
|
|
|
167
|
|
|
|
3,201
|
|
|
Freight revenue
|
|
|
4,038
|
|
|
|
1,808
|
|
|
|
1,332
|
|
|
|
7,178
|
|
|
Other
|
|
|
265
|
|
|
|
(1,036
|
)
|
|
|
113
|
|
|
|
(658
|
)
|
|
Total domestic revenue
|
|
|
134,486
|
|
|
|
83,836
|
|
|
|
51,754
|
|
|
|
270,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales-International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales
|
|
|
5,914
|
|
|
|
22,327
|
|
|
|
4,762
|
|
|
|
33,003
|
|
|
Parts and component sales
|
|
|
5,062
|
|
|
|
10,289
|
|
|
|
2,473
|
|
|
|
17,824
|
|
|
Service and equipment installation revenue
|
|
|
812
|
|
|
|
311
|
|
|
|
--
|
|
|
|
1,123
|
|
|
Used equipment sales
|
|
|
503
|
|
|
|
856
|
|
|
|
--
|
|
|
|
1,359
|
|
|
Freight revenue
|
|
|
256
|
|
|
|
1,331
|
|
|
|
264
|
|
|
|
1,851
|
|
|
Other
|
|
|
61
|
|
|
|
117
|
|
|
|
39
|
|
|
|
217
|
|
|
Total international revenue
|
|
|
12,608
|
|
|
|
35,231
|
|
|
|
7,538
|
|
|
|
55,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
$
|
147,094
|
|
|
$
|
119,067
|
|
|
$
|
59,292
|
|
|
$
|
325,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales into major geographic regions were as follows:
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
United States
|
|
$
|
262,829
|
|
|
$
|
270,076
|
|
|
Canada
|
|
|
22,993
|
|
|
|
14,109
|
|
|
Australia
|
|
|
8,813
|
|
|
|
5,967
|
|
|
Africa
|
|
|
7,091
|
|
|
|
10,041
|
|
|
South America
|
|
|
7,054
|
|
|
|
8,867
|
|
|
Europe
|
|
|
6,490
|
|
|
|
10,461
|
|
|
Central America
|
|
|
3,549
|
|
|
|
3,553
|
|
|
China, Japan & Korea
|
|
|
2,140
|
|
|
|
656
|
|
|
Asia (excl. China, Japan & Korea)
|
|
|
2,131
|
|
|
|
844
|
|
|
West Indies
|
|
|
1,378
|
|
|
|
109
|
|
|
Middle East
|
|
|
851
|
|
|
|
630
|
|
|
Other
|
|
|
461
|
|
|
|
140
|
|
|
Total foreign
|
|
|
62,951
|
|
|
|
55,377
|
|
|
Total consolidated sales
|
|
$
|
325,780
|
|
|
$
|
325,453
|
|
Revenue is generally recognized when obligations under the terms of a contract are satisfied and generally occurs with the transfer of control
of the product or services at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company generally obtains purchase authorizations from its
customers for a specified amount of products at a specified price with specific delivery terms. A significant portion of the Company’s equipment sales represents equipment produced in the Company’s manufacturing facilities under short-term contracts
for a customer’s project or equipment designed to meet a customer’s requirements. Most of the equipment sold by the Company is based on standard configurations, some of which are modified to meet customer’s needs or specifications. The Company
provides customers with technical design and performance specifications and typically performs pre-shipment testing, when feasible, to ensure the equipment performs according to the customer’s need, regardless of whether the Company provides
installation services in addition to selling the equipment. Significant down payments are required on many equipment orders with other terms allowing for payment shortly after shipment, typically 30 days. Taxes assessed by a governmental authority
that are directly imposed on revenue-producing transactions between the Company and its customers, such as sales, use, value-added and some excise taxes, are excluded from revenue. Expected warranty costs for our standard warranties are expensed at
the time the related revenue is recognized. Costs of obtaining sales contracts with an expected duration of one year or less are expensed as incurred. As contracts are typically fulfilled within one year from the date of the contract, revenue
adjustments for a potential financing component or the costs to obtain the contract are not made.
Depending on the terms of the arrangement with the customer, recognition of a portion of the consideration received may be deferred and
recorded as a contract liability if we have to satisfy a future obligation, such as to provide installation assistance, service work to be performed in the future without charge, floor plan interest to be reimbursed to our dealer customers, payments
for extended warranties, for annual rebates given to certain high volume customers or for obligations for future estimated returns to be allowed based upon historical trends.
Certain contracts include terms and conditions pursuant to which the Company recognizes revenues upon the completion of production, and the
equipment is subsequently stored at the Company’s plant at the customer’s request. Revenue is recorded on such contracts upon the customer’s assumption of title and risk of ownership, which transfers control of the equipment, and when collectability
is reasonably assured. In addition, there must be a fixed schedule of delivery of the goods consistent with the customer’s business practices, the Company must not have retained any specific performance obligations such that the earnings process is
not complete and the goods must have been segregated from the Company’s inventory prior to revenue recognition.
Service and Equipment Installation Revenue – Purchasers of certain of the Company’s equipment often contract with the Company to provide
installation services. Installation is typically separately priced in the contract based upon observable market prices for stand-alone performance obligations or a cost plus margin approach when one is not available. The Company may also provide
future services on equipment sold at the customer’s request, which may be for equipment repairs after the warranty period expires. Service is billed on a cost plus margin approach or at a standard rate per hour.
Used Equipment Sales
–
Used equipment is obtained by trade-in on new equipment sales, as a separate purchase in the open market or from the Company’s equipment rental business. Revenues from the sale of used
equipment are recognized upon transfer of control to the customer at agreed upon pricing.
Freight Revenue – Under a practical expedient allowed under ASU No. 2014-09, the Company records revenues earned for shipping and handling as
revenue at the time of shipment, regardless of whether or not it is identified as a separate performance obligation. The cost of shipping and handling is classified as cost of goods sold concurrently.
Other Revenues – Miscellaneous revenues and offsets not associated with one of the above classifications include rental revenues, extended
warranty revenues, early pay discounts and floor plan interest reimbursements.
Note 13. Segment Information
The Company has three reportable segments, each of which is comprised of multiple business units that offer similar products and services and
meet the requirements for aggregation. A brief description of each segment is as follows:
Infrastructure Group
- The
Infrastructure Group segment is comprised of five business units. These business units include Astec, Inc. (“Astec”), Roadtec, Inc. (“Roadtec”), Carlson Paving Products, Inc. (“Carlson”), Astec Mobile Machinery GmbH (“AMM”) and Astec Australia Pty
Ltd (“Astec Australia”). Three of the business units (Astec, Roadtec and Carlson) design, engineer, manufacture and market a complete line of asphalt plants and their related components, asphalt pavers, screeds, milling machines, material transfer
vehicles, stabilizers and related ancillary equipment. The other two business units (AMM and Astec Australia) primarily sell, service and install products produced by the manufacturing subsidiaries of the Company and a majority of their sales are to
customers in the infrastructure industry. During late 2018, the Company decided to close AMM, located in Germany, in 2019, and its assets are currently being liquidated. The principal purchasers of the products produced by this group are asphalt
producers, highway and heavy equipment contractors, and foreign and domestic governmental agencies.
Aggregate and Mining Group
- The
Company's Aggregate and Mining Group is comprised of eight business units which are focused on designing and manufacturing heavy processing equipment, as well as servicing and supplying parts for the aggregate, metallic mining, recycling, ports and
bulk handling markets. These business units are Telsmith, Inc. (“Telsmith”), Kolberg-Pioneer, Inc. (“KPI”), Astec Mobile Screens, Inc. (“AMS”), Johnson Crushers International, Inc. (“JCI”), Breaker Technology Ltd/Breaker Technology, Inc. (“BTI”),
Osborn Engineered Products, SA (Pty) Ltd (“Osborn”), Astec do Brasil Fabricacao de Equipamentos Ltda. (“Astec Brazil”) and Telestack Limited (“Telestack”). The principal purchasers of products produced by this group are distributors, open mine
operators, quarry operators, port and inland terminal operators, highway and heavy equipment contractors and foreign and domestic governmental agencies.
Energy Group
- The Company’s Energy
Group is comprised of six business units focused on supplying heavy equipment such as heaters, drilling rigs, concrete plants, wood chippers and grinders, pump trailers, storage equipment and related parts to the oil and gas, construction, and water
well industries, as well as commercial and industrial burners used primarily in commercial, industrial and process heating applications. The business units included in the Energy Group are Heatec, Inc. (“Heatec”), CEI Enterprises, Inc. (“CEI”),
GEFCO, Inc. (“GEFCO”), Peterson Pacific Corp. (“Peterson”), Power Flame Incorporated (“Power Flame”) and RexCon, Inc. (“RexCon”). The principal purchasers of products produced by this group are oil, gas and water well drilling industry contractors,
processors of oil, gas and biomass for energy production, ready mix concrete producers and contractors in the construction and demolition recycling markets.
Corporate
- This category consists of
business units that do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments and includes the Company's parent company, Astec Industries, Inc., a captive insurance company and a
Company-owned distributor in the start-up phase of operations in Chile. The Company evaluates performance and allocates resources to its operating segments based on profit or loss from operations before U.S. federal income taxes, state deferred taxes
and corporate overhead and thus these costs are included in the Corporate category.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
Intersegment sales and transfers are valued at prices comparable to those for unrelated parties.
Segment Information:
|
|
|
Three Months Ended March 31, 2019
|
|
|
|
|
Infrastructure
Group
|
|
|
Aggregate
and Mining
Group
|
|
|
Energy
Group
|
|
|
Corporate
|
|
|
Total
|
|
|
Net sales to external customers
|
|
$
|
154,994
|
|
|
$
|
106,531
|
|
|
$
|
64,255
|
|
|
$
|
--
|
|
|
$
|
325,780
|
|
|
Intersegment sales
|
|
|
2,071
|
|
|
|
4,757
|
|
|
|
7,021
|
|
|
|
--
|
|
|
|
13,849
|
|
|
Gross profit (loss)
|
|
|
35,506
|
|
|
|
25,545
|
|
|
|
15,479
|
|
|
|
(4
|
)
|
|
|
76,526
|
|
|
Gross profit percent
|
|
|
22.9
|
%
|
|
|
24.0
|
%
|
|
|
24.1
|
%
|
|
|
--
|
|
|
|
23.5
|
%
|
|
Segment profit (loss)
|
|
$
|
15,238
|
|
|
$
|
8,678
|
|
|
$
|
3,394
|
|
|
$
|
(13,470
|
)
|
|
$
|
13,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
Infrastructure
Group
|
|
|
Aggregate
and Mining
Group
|
|
|
Energy
Group
|
|
|
Corporate
|
|
|
Total
|
|
|
Net sales to external customers
|
|
$
|
147,094
|
|
|
$
|
119,067
|
|
|
$
|
59,292
|
|
|
$
|
--
|
|
|
$
|
325,453
|
|
|
Intersegment sales
|
|
|
8,271
|
|
|
|
3,906
|
|
|
|
5,139
|
|
|
|
--
|
|
|
|
17,316
|
|
|
Gross profit
|
|
|
33,280
|
|
|
|
29,289
|
|
|
|
15,286
|
|
|
|
150
|
|
|
|
78,005
|
|
|
Gross profit percent
|
|
|
22.6
|
%
|
|
|
24.6
|
%
|
|
|
25.8
|
%
|
|
|
--
|
|
|
|
24.0
|
%
|
|
Segment profit (loss)
|
|
$
|
14,852
|
|
|
$
|
13,110
|
|
|
$
|
4,611
|
|
|
$
|
(11,248
|
)
|
|
$
|
21,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of total segment profit to the Company’s consolidated totals is as follows:
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Total segment profit
|
|
$
|
13,840
|
|
|
$
|
21,325
|
|
|
Recapture (elimination) of intersegment profit
|
|
|
377
|
|
|
|
(1,109
|
)
|
|
Net income
|
|
|
14,217
|
|
|
|
20,216
|
|
|
Net loss attributable to non-controlling interest in subsidiaries
|
|
|
57
|
|
|
|
51
|
|
|
Net income attributable to controlling interest
|
|
$
|
14,274
|
|
|
$
|
20,267
|
|
|
|
|
|
|
|
|
|
|
|
Note 14. Contingent Matters
Certain customers have financed purchases of Company products through arrangements in which the Company is contingently liable for customer
debt of $2,646 at March 31, 2019. These arrangements expire at various dates through December 2023 and provide that the Company will receive the lender's full security interest in the equipment financed if the Company is required to fulfill its
contingent liability under these arrangements. The Company has recorded a liability of $1,362 related to these guarantees as of March 31, 2019
.
In addition, the Company is contingently liable under letters of credit issued by a domestic lender totaling $9,481 as of March 31, 2019,
including $3,200 of letters of credit guaranteeing certain Astec Brazil bank debt. The outstanding letters of credit expire at various dates through December 2020. As of March 31, 2019, the Company’s foreign subsidiaries are contingently liable for a
total of $2,498 in performance letters of credit, advance payments and retention guarantees. The maximum potential amount of future payments under these letters of credit and guarantees for which the Company could be liable is $11,979 as of March 31,
2019
.
The Company manufactured its first wood pellet plant for a customer under a Company-financed arrangement whereby the Company deferred the
recognition of revenue as payment under the arrangement was not assured. The original customer is attempting to obtain financing to purchase the plant at a reduced price; however, the Company believes the ultimate consummation of the sale to this
customer is uncertain. After considering the uncertainty of completing the sale to the existing customer; the lack of success in attempting to market the plant to other pellet plant operators; the cost of repossessing the plant; and the Company’s
decision to exit the pellet plant business line, the pellet plant inventory’s net realizable value was written down to zero in late 2018.
The Company and certain of its current and former executive officers have been named as defendants in a putative shareholder class action
lawsuit filed on February 1, 2019, in the United States District Court for the Eastern District of Tennessee. The action is styled City of Taylor General Employees Retirement System v. Astec Industries, Inc., et al., Case No. 1:19-cv-00024-PLR-CHS.
The complaint generally alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and that the individual
defendants are control person under Section 20(a) of the Exchange Act. The complaint was filed on behalf of shareholders who purchased shares of the Company’s stock between July 26, 2016 and October 22, 2018 and seeks monetary damages on behalf of
the purported class. The Company disputes these allegations and intends to defend this lawsuit vigorously. The Company is unable to estimate the possible loss or range of loss at this time.
The Company is currently a party to various claims and legal proceedings that have arisen in the ordinary course of business. If management
believes that a loss arising from such claims and legal proceedings is probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated legal fees) or the minimum estimated liability when the loss is estimated
using a range and no point within the range is more probable than another. As management becomes aware of additional information concerning such contingencies, any potential liability related to these matters is assessed and the estimates are
revised, if necessary. If management believes that a loss arising from such claims and legal proceedings is either (i) probable but cannot be reasonably estimated or (ii) reasonably possible but not probable, the Company does not record the amount of
the loss, but does make specific disclosure of such matter. Based upon currently available information and with the advice of counsel, management believes that the ultimate outcome of its current claims and legal proceedings, individually and in the
aggregate, will not have a material adverse effect on the Company's financial position, cash flows or results of operations. However, claims and legal proceedings are subject to inherent uncertainties and rulings unfavorable to the Company could
occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse effect on the Company's financial position, cash flows or results of operations.
Note 15. Shareholders’ Equity
Under the Company’s long-term incentive plans, key members of management may be issued restricted stock units (“RSUs”) each year based upon the
financial performance of the Company and its subsidiaries. The number of RSUs granted to employees each year is determined based upon the performance of individual subsidiaries and consolidated financial performance. Generally, for RSUs granted
through 2016, each award will vest at the end of five years from the date of grant, or at the time a recipient retires after reaching age 65, if earlier. Awards granted in 2017 and thereafter will vest at the end of three years from the date of grant
or at the time a recipient retires after reaching age 65, if earlier. Additional RSUs are granted to the Company’s outside directors under the Company’s Non-Employee Directors Compensation Plan with a one-year vesting period.
A total of 13 and 24 RSUs vested during the three-month periods ended March 31, 2019 and 2018, respectively. The Company withheld 4 and 7
shares due to statutory payroll tax withholding requirements upon the vesting of the RSUs during each of the first three-month periods in 2019 and 2018, respectively, and used Company funds to remit the related required minimum withholding taxes to
the various tax authorities. The vesting date fair value of the RSUs that vested during the first three months of 2019 and 2018 was $509 and $1,412, respectively. The grant date fair value of the RSUs granted during the first three months of 2019
and 2018 was $1,448 and $3,098, respectively. Compensation expense of $887 and $752 was recorded in the three-month periods ended March 31, 2019 and 2018, respectively, to reflect the fair value of RSUs granted (or anticipated to be granted for 2019
performance) to employees amortized over the portion of the vesting period occurring during the periods.
Note 16. Other Income, Net of Expenses
Other income, net of expenses for the three-month periods ended March 31, 2019 and 2018 is presented below:
|
|
|
Three Months Ended
March 31
,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Interest income
|
|
$
|
275
|
|
|
$
|
214
|
|
|
Gain (loss) on investments
|
|
|
149
|
|
|
|
(103
|
)
|
|
Other
|
|
|
44
|
|
|
|
350
|
|
|
Total
|
|
$
|
468
|
|
|
$
|
461
|
|
Note 17. Derivative Financial Instruments
The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by using derivative instruments is
foreign currency risk. From time to time the Company’s foreign subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates. The fair value of the derivative financial instruments is
recorded on the Company’s unaudited condensed consolidated balance sheet and is adjusted to fair value at each measurement date. The changes in fair value are recognized in the accompanying unaudited condensed consolidated statements of income in
the current period. The Company does not engage in speculative transactions nor does it hold or issue financial instruments for trading purposes. The average U.S. dollar equivalent notional amount of outstanding foreign currency exchange contracts
was $10,116 during the three-month period ended March 31, 2019. The Company reported $147 and $333 of derivative assets in other current assets at March 31, 2019 and December 31, 2018, respectively. The Company recognized, as a component of cost of
sales, a net loss of $76 and a net gain of $187 on the changes in fair value of derivative financial instruments in the three-month periods ended March 31, 2019 and 2018, respectively. There were no derivatives that were designated as hedges at
March 31, 2019.
Note 18. Stock Buy Back Program
On July 29, 2018, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $150,000 of
its common stock.
Under the share repurchase plan, the Company may purchase common stock in open market transactions, block or privately negotiated transactions, and may
from time to time purchase shares pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or by any combination of such methods. The number of shares to be purchased and the
timing of the purchases are based on a variety of factors. During 2018, the Company repurchased 582 shares of its stock at total cost of $24,138 under this program. No additional shares were repurchased during the three months ended March 31,
2019. No time limit was set for completion of repurchases under the authorization and the program may be suspended or discontinued at any time.