Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesFor the three months ended September 30, 2022, the Company recorded an income tax expense of $0.7 million, reflecting a 58.3% effective tax rate, compared to a $2.9 million income tax benefit for the three months ended September 30, 2021, reflecting a (47.5)% effective tax rate. The income tax expense for the three months ended September 30, 2022 as compared to the benefit in the same period in 2021 was primarily driven by prior year net discrete tax benefits that did not reoccur in the

current year related to the release of a valuation allowance associated with the Company's Brazilian subsidiary and a research and development ("R&D") credit partially offset by the tax effect of lower pre-tax earnings.

For the nine months ended September 30, 2022, the Company recorded an income tax provision of $0.8 million, reflecting a 53.3% effective tax rate, compared to nominal expense for the nine months ended September 30, 2021. The income tax expense for the nine months ended September 30, 2022 was higher compared to the same period of 2021 primarily driven by prior year net discrete tax benefits that did not reoccur in the current year related to the release of a valuation allowance associated with the Company's Brazilian subsidiary, a favorable net benefit from the R&D credit and the release of reserves for uncertain tax positions associated with Astec Mobile Machinery GmbH partially offset by the tax effect of lower pre-tax earnings.

The Company's recorded liability for uncertain tax positions was $11.3 million and $10.8 million as of September 30, 2022 and December 31, 2021, respectively. The increase is the result of $0.5 million of incremental reserves associated with the 2022 research and development credit. The Company does not anticipate a significant change in unrecognized tax benefits due to the expiration of relevant statutes of limitations and federal, state, and foreign tax audit resolutions over the next twelve months.

The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. The Company is currently under audit by the U.S. Internal Revenue Service for the federal income tax return from the 2018 tax year as well as various other state income tax and jurisdictional audits. As of September 30, 2022, the Company believes that it is more-likely-than-not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position, results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company's estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties and/or interest assessments.