XML 43 R25.htm IDEA: XBRL DOCUMENT v3.25.0.1
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Certain customers have financed purchases of Company products through arrangements with third-party financing institutions in which the Company is contingently liable for customer debt of $1.4 million and $1.1 million as of December 31, 2024 and 2023, respectively. These arrangements expire at various dates through November 2026. Additionally, the Company is also contingently liable for 1.75% of the unpaid balance, determined as of December 31 of the prior year (or approximately $0.1 million for 2024), on certain past customer equipment purchases that were financed by an outside finance company. The agreements 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 $0.3 million and $0.6 million related to these guarantees, which were included in "Other current liabilities" in the Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.

The Company reviews off-balance sheet guarantees individually and at the loss pool level based on one agreement. Prior history is considered with respect to the Company having to perform on any off-balance sheet guarantees, as well as future projections of individual customer credit worthiness with respect to assessing credit losses related to off-balance sheet guarantees.

In addition, the Company is contingently liable under letters of credit issued under its Credit Facilities totaling $5.2 million as of December 31, 2024. The outstanding letters of credit expire at various dates through November 2025. Unused letters of credit under the Credit Facilities are $24.8 million as of December 31, 2024. The Company is additionally contingently liable for a total of $5.4 million in performance letters of credit and retention guarantees primarily held by its foreign subsidiaries, of which $3.7
million are secured by separate credit facilities with various financial institutions as of December 31, 2024. Unused letters of credit under these separate credit facilities are $12.4 million as of December 31, 2024.

The Company and certain of its former executive officers were previously named as defendants in a putative shareholder class action lawsuit filed in 2019 alleging 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. On September 10, 2024, the court formally approved the parties' agreement to settle the action for $13.7 million, which was funded entirely by the Company's insurance carriers, and the settlement agreement was entered into between the parties. The court dismissed the case with prejudice the same day.

The Company's GEFCO, Inc. ("GEFCO" or "Enid") subsidiary was named a defendant in a lawsuit filed in 2018 alleging breaches of warranty and other similar claims regarding equipment sold by GEFCO in 2013. On October 8, 2024, the parties reached an agreement to resolve this action for $8.4 million, which was paid in the fourth quarter of 2024. In connection with this settlement, management recorded a loss in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations during the third quarter of 2024.

The Company's Telsmith, Inc. (“Telsmith”) subsidiary was named as a defendant in a lawsuit filed in 2019 alleging breaches of warranty and negligent misrepresentation regarding equipment manufactured by Telsmith and purchased by 37 Building Products, Ltd. in 2017 through one of the Company's dealers. In October 2023, a jury rendered a verdict against Telsmith, and a judgment was issued in the amount of $7.9 million (the "Judgment"). In March 2024, Telsmith filed a notice of appeal with the Texas Court of Appeals to appeal the Judgment by the district court. As of June 30, 2024, the total loss contingency recorded inclusive of post-judgment interest was $8.2 million. In September 2024, the parties reached an agreement to resolve this action for $6.3 million, which the Company paid in September 2024 whereby the full loss contingency was released. The $1.9 million net impact of the loss contingency release and the final settlement amount was recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations during the third quarter of 2024.

In addition to the matters noted above, the Company is currently a party, and may become a party, to various other claims and legal proceedings in the ordinary course of business. If management believes that a loss arising from any claims and legal proceedings is probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated legal fees) or, when the loss is estimated using a range and no point within the range is more probable than another, the minimum estimated liability. 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 estimable 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.