ECOBAT Resources Germany GmbH

Braubach

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Ecobat, LLC

Dallas, Texas/ USA

CONSOLIDATED FINANCIAL STATEMENTS Ecobat, LLC Years ended December 31, 2022 and 2021

With Report of Independent Auditor

Contents

Report of Independent Auditor

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Members' Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Management's Discussion and Analysis (Unaudited)

Report of Independent Auditors

The Members of Ecobat, LLC,

Opinion

We have audited the consolidated financial statements of Ecobat, LLC (the Company), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive loss, members' equity and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

•	Exercise professional judgment and maintain professional skepticism throughout the audit.
•	Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
•	Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
•	Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
•	Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

April 7, 2023

Ernst + Young LLP

Consolidated Balance Sheets

(Amounts in USD Thousands)

	December 31, 2022	December 31, 2021
Assets
Current assets
Cash and cash equivalents	$ 105,342	$ 136,972
Accounts receivable (net of allowance for doubtful accounts of $1,077 as of December 31, 2022 and $1,127 as of December 31, 2021)	173.359	203,092
Inventories	249,174	259,448
Other current assets	60,049	38.755
Current assets held for sale	50.099	197,105
Total current assets	638,023	835,372
Property, plant and equipment, net	375,651	347.476
Goodwill and other intangible assets	64,842	51.653
Operating lease right-of-use assets	57,736	-
Other noncurrent assets	6,870	64,940
Noncurrent assets held for sale	-	37,715
Total assets	$ 1,143,122	$ 1,337,156
Liabilities and members' equity
Current liabilities
Accounts payable	$ 98,593	$ 136,588
Current maturities of long-term debt and short-term borrowings	39,276	17,520
Operating lease liabilities	9,699	-
Other current liabilities	126,714	126,183
Current liabilities held for sale	68,212	59,224
Total current liabilities	342,494	339,515
Long-term debt, less current portion	86,444	95,802
Environmental liabilities and asset retirement obligations	18,883	14,217
Pension liabilities	29,430	47,668
Noncurrent operating lease liabilities	47,333	-
Other liabilities	91,505	84,656
Noncurrent liabilities held for sale	-	28,029
Total liabilities	616,089	609,887
Members' equity
Members' capital	953,372	953,179
Accumulated deficit	(232,337)	(115,931)
Accumulated other comprehensive loss	(194,022)	(110,278)
Noncontrolling interests	20	299
Total members' equity	527,033	727,269
Total liabilities and members' equity	$ 1,143,122	$ 1,337,156

See accompanying notes.

Consolidated Statements of Operations

(Amounts in USD Thousands)

	Year ended December 31,
	2022	2021
Net sales	$ 1,911,315	$ 1,993,602
Cost of sales	(1,734,514)	(1,762,586)
Gross profit	176,801	231,016
Selling, general and administrative expenses	(178,053)	(168,405)
Restructuring and other charges	(4,072)	(3,917)
Impairment of assets	(2,343)	(22,378)
(Loss) income from continuing operations	(7,667)	36,316
Net finance (costs) income	(249)	7,851
Gain on sale of an investment	-	4,706
Other income (expense), net	1,246	(159)
(Loss) income from continuing operations before income taxes	(6,670)	48,714
Income tax expense	(13,401)	(28,875)
Net (loss) income from continuing operations	(20,071)	19,839
Net loss from discontinued operations	(96,835)	(90,829)
Less: Net loss (income) attributable to noncontrolling interest	250	(146)
Net loss attributable to discontinued operations	(96,585)	(90,975)
Net loss	$ (116,656)	$ (71,136)

See accompanying notes.

Consolidated Statements of Comprehensive Loss

(Amounts in USD Thousands)

	Twelve months ended December 31,
	2022	2021
Net (loss) income	$ (116,656)	$ (71,282)
Other comprehensive loss, net of taxes:
Changes in foreign currency translation adjustments	(85,754)	(19,396)
Changes in defined benefit obligations	9,878	14,750
Other	(7,897)	-
Other comprehensive loss, net	(83,773)	(4,646)
Total comprehensive loss	$ (200,429)	$ (75,928)
Total comprehensive (loss) income attributable to non-controlling interest	$ (279)	$ (186)
Total comprehensive loss attributable to Ecobat, LLC	(200,150)	(75,742)

See accompanying notes.

Consolidated Statements of Members' Equity

(Amounts in USD Thousands)

	Members' equity	Accumulated deficit	Accumulated other comprehensive loss	Noncontrolling interests	Total
Balance at January 1, 2021	$ 952,974	$ 105,199	$ (105,672)	$ 485	$ 952,986
Partner Distribution	-	(149,994)	-	-	(149,994)
Incentive compensation	205	-	-	-	205
Net loss	-	(71,136)	-	(146)	(71,282)
Other comprehensive loss	-	-	(4,606)	(40)	(4,646)
Balance at December 31, 2021	$ 953,179	$ (115,931)	$ (110,278)	$ 299	$ 727,269
Incentive compensation	193	-	-	-	193
Net loss	-	(116,406)	-	(250)	(116,656)
Other comprehensive loss	-	-	(83,744)	(29)	(83,773)
Balance at December 31, 2022	$ 953,372	$ (232,337)	$ (194,022)	$ 20	$ 527,033

See accompanying notes.

Consolidated Statements of Cash Flows

(Amounts in USD Thousands)

	Year ended December 31,
	2022	2021
Cash flows from operating activities
Net loss	$ (116,656)	$ (71,282)
Adjustments to reconcile net loss to cash flows from ooerating activities:
Depreciation and amortization	53,954	69.858
Gain on disposal of an investment	-	(4,706)
Asset impairments	34,875	139,989
Loss on classification of held for sale	84.785	-
Property insurance proceeds	(49,644)	(15,396)
Deferred tax expense (benefit)	19.397	(4,260)
Provision for losses on receivables, net	-	427
Realized loss (gain) from foreign currency derivative contracts	26.715	(6,563)
Foreign currency loss (gain) on borrowings and deposits	9.997	(11,456)
Unrealized (gain) loss from foreign currency exchange and derivative contracts, net	(42,391)	22.762
Other	(67)	(8,168)
Changes in operating assets and liabilities:
Accounts receivables	49,988	(51,843)
Inventories	66,191	28,821
Accounts payables	(34,956)	17,213
Other assets and liabilities	(13,995)	12,376
Net cash from operating activities	88,194	117,772
Cash flows from investing activities
Capital expenditures	(125,037)	(78,810)
(Payment of) proceeds from foreign currency derivative contracts	(26,715)	6,563
Acquisition of subsidiary, net of cash acquired	-	(19,677)
Proceeds from the sale of an investment	-	4,799
Proceeds from sales of property, plant and equipment	313	1,067
Payment of deferred consideration	(2,460)	-
Proceeds from property insurance recoveries	49,644	15,396
Net cash used by investing activities	(104,255)	(70,662)
Cash flows from financing activities
Proceeds from Global ABL facility	81,000	96,265
Repayment of Global ABL facility	(68,839)	-
Proceeds from Term Loans	1,930	-
Repayment of Term Loans	(3,009)	(30,690)
Proceeds from Euro Factoring	210,944	16,838
Repayment of Euro Factoring	(208,450)	-
Proceeds from Financing arrangements	19,065	-
Repayment of Financing arrangement	(11,247)	-
Net repayment of Trade Financing Facility	-	(27,658)
Net repayment of European Credit Facility	-	(50,015)
Payment of debt issuance costs	-	(4,606)
Partner Distributions	(4,248)	(145,745)
Net cash from (used by) financing activities	17.146	(145,611)
Net increase (decrease) in cash, restricted cash and cash equivalents	1,085	(98,501)
Effect of exchange rates	(29,744)	(23,825)
Cash, restricted cash and cash equivalents at beginning of year	150,536	272,862
Cash, restricted cash and cash equivalents at end of year	$ 121,877	$ 150,536
Supplemental cash flow information:
Cash paid for interest	$ 5,098	$ 4,303
Cash paid for income taxes	16,714	12,862
Capital accruals	$ 2,268	$ 4,189
Reconciliation of cash, restricted cash and cash equivalents
Cash and cash equivalents - continuing operations	$ 105,342	$ 136,972
Cash and cash equivalents - held for sale	10,958	9.944
Restricted cash - continuing operations (Other noncurrent assets)	4,473	3,620
Restricted cash - held for sale	1,104	-
Total cash, restricted cash and cash equivalents	$ 121,877	$ 150,536

See accompanying notes.

Notes to the Consolidated Financial Statements

1. Nature of Operations

Ecobat, LLC ("the Company") was formed in the United States ("U.S.") and organized in the state of Delaware on November 7, 2018 as part of a previous restructuring through which certain lenders agreed to receive Ecobat, LLC equity upon completion of the restructuring. The Company is the holding company of the wholly owned subsidiary, Ecobat Holdings, Inc (formerly EB Holdings II, Inc).

Stolberg Flood

On July 14, 2021 our manufacturing facility in Stolberg, Germany experienced a catastrophic flooding event which has temporarily shut down the facility and has taken a significant amount of time to clean, repair, and replace equipment to return to normal operation.

The Company has property and business interruption insurance policies under which the Company has filed and settled a claim to cover both the property damage and interruption to the business. In relation to the settlement there were no amounts outstanding as of December 31, 2022. The Company received payments under the policies amounting to $81.3 million (€77.0 million) during 2022, of which $31.7 million (€30 million) is allocated to business interruption and $49.6 million (€47.0 million) to repair and replacement of assets which are both within discontinued operations. In note 22 results of the operations for 2022 and 2021, business interruption insurance is included within cost of sales while the proceeds for repair and replacement of assets is disclosed as a separate line.

In 2021 the Company received $46.4 million (€40.0 million) of insurance proceeds with $15.4 million (€13.3 million) received for repair and replacement of assets and a further $31.0 million (€26.7 million) for business interruption insurance which are both with discontinued operations.

On February 14th, 2023, the Company disposed of 100% of the equity in Ecobat Resources Stolberg, the owner of the manufacturing facility in Stolberg. See note 22 for further discussion.

Italian lead operations

On August 31, 2022 the Company temporarily ceased operation of its lead production plants in Paderno and Marcaise with an effective date of October 1, 2022. This temporary cessation of the plants was a result of the increasing energy costs within Europe. The Company has assessed the impact of the temporary cessation of the plants on the carrying value of the Italian lead operations assets and liabilities and, where appropriate, has made the necessary impairments (see note 10 for further discussion). The Company continues to evaluate energy costs with a focus on when there will be an opportunity to restart the plants.

Restructuring and Other Charges

The Company incurred $4.1 million in the twelve months ended December 31, 2022 related to employee benefit expenses pertaining to Corporate as well as North American and German operations, compared to $4.2 million in the twelve months ended December 31, 2021 related to employee benefit expenses pertaining to France, Germany, Austria, and North America.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned and majority owned subsidiaries. Intercompany account balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company's consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of net sales and expenses during the reporting period.

Significant items subject to such estimates and assumptions include the valuation of assets acquired and liabilities assumed in acquisitions; the carrying value of inventory and long-lived assets, including goodwill; valuation allowances for deferred income taxes; potential litigation claims and settlements; and environmental liabilities. Actual results could differ significantly from these estimates and assumptions.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash on deposit and short-term, highly liquid investments with original maturities of three months or less at the date of purchase.

The Company's restricted cash balance represents amounts held for post closure costs required by environmental regulators. The balance of restricted cash attributed to continuing operations was $4.5 million as of December 31, 2022, which is included in other current assets on the consolidated balance sheets. The Company had $3.6 million in restricted cash as of December 31, 2021. There was $1.1 million of restricted cash included within held for sale assets.

Account Receivables and Allowance for Doubtful Accounts

Account receivables are amounts due from customers for products sold or services performed in the ordinary course of business.

The Company maintains an allowance for doubtful accounts to reflect its estimate of the collectability of trade and other receivables. These reserves are based on a combination of factors, including historical trends, current market conditions, and customer specific financial health. Accounts deemed uncollectible are written off. The Company maintains credit insurance for the majority of its customers. Accounts receivable have been shown net of the allowance for doubtful accounts of $1.1 million and $1.1 million at December 31, 2022 and 2021, respectively. Bad debt expense was approximately $0.1 million and $0.3 million for the year end December 31, 2022 and 2021, respectively. Write-offs of accounts receivable were approximately $0.1 million and $0.3 million for the year ended December 31, 2022 and 2021, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Raw materials, spares, consumables, and tooling are valued at purchase cost on a first-in, first-out ("FIFO") basis. Finished goods and work-in-progress are made up of the cost of direct materials, direct labor, and a portion of manufacturing overhead based on normal operating capacity, excluding borrowing costs.

Property, Plant and Equipment, Net

Property, plant and equipment ("PP&E") are recorded at cost. Leased PP&E is accounted for in accordance with Accounting Standards Codification ("ASC") 842, Leases, with finance leases recorded as PP&E. Repairs and maintenance of PP&E are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the various assets or the lease term, whichever is shorter, as follows:

Property, Plant and Equipment	Estimated Useful Life
Land	Not depreciated
Freehold buildings	50 years
Short leasehold buildings	Life of the lease
Plant and equipment	3 to 30 years
Assets under construction	Not depreciated

The carrying values of PP&E are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. For each asset or group of assets held for use with indicators of impairment, the Company compares the sum of the expected undiscounted future cash flows generated by the asset or group of assets with its associated net carrying value. If the net carrying value of the asset or group of assets exceeds expected undiscounted future cash flows, the excess of the net book value over estimated fair value is charged to impairment loss in the accompanying consolidated statements of earnings. The Company evaluates the useful life of fixed assets annually to ensure that they remain appropriate.

Goodwill and Other Intangible Assets

Goodwill is not amortized but is tested for impairment at the reporting unit level annually and whenever events or circumstances indicate that the carrying value may not be fully recoverable.

To evaluate goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, management utilizes a quantitative test that compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is indicated in the amount that the carrying value exceeds the fair value of the reporting unit, not to exceed the goodwill value for the reporting unit. The Company's reporting units represent an operating segment or one level below an operating segment.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is the fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.

Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives and assessed for impairment whenever events or circumstances indicate that the carrying value may not be fully recoverable. The amortization period and the amortization method are reviewed at least at each fiscal year end.

The amortization expense of intangible assets with finite lives is recognized in the income statement in either cost of sales or selling, general and administrative expense, depending upon the use of the intangible asset.

Amortization is calculated on a straight-line basis over the estimated useful life of the asset as follows:

Intangible Asset	Estimated Useful Life
Software	1 to 10 years
Patents and licenses	Period of the patent or license
Customer relationships	6 to 7 years
Brands	5 years

The Company does not have intangible assets with indefinite useful lives.

Financial Instruments

Financial instruments held by the Company include cash and cash equivalents, accounts receivable, lead commodity forward contracts, foreign currency forward contracts, accounts payable, and notes payable. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes. The carrying amounts of cash and cash equivalents, accounts receivable, notes payable, and accounts payable approximate fair value due to the short-term maturities of these instruments.

Derivative Instruments

The Company uses a variety of derivative financial instruments such as forward foreign currency contracts and currency options to economically hedge its risks associated with foreign currency fluctuations. In addition, the Company uses forward metal contracts and options to hedge its risk associated with movements in the prices of the various metals that it transacts. The Company recognizes derivatives as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value. Derivatives that are not designated as hedges are adjusted to fair value through net earnings. The Company does not have derivatives that are designated as hedges.

Fair Value

The fair value of forward exchange and metal contracts is calculated by reference to current forward exchange rates and metal prices for contracts with similar maturity profiles. The fair values of currency and metal options are determined with the assistance of third parties with access to actively quoted rates and prices.

The Company measures certain of the Company's assets and liabilities based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three-level hierarchy, from highest to lowest level of observable inputs, are as follows:

	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities,
	Level 2 - Inputs that are observable, either directly or indirectly, but do not qualify as Level 1 inputs. (i.e., quoted prices for similar assets or liabilities), and
	Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Income Taxes

The income tax for the period comprises current and deferred tax. Income tax is recognized in the consolidated statements of operations, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In these cases, the applicable tax amount is recognized in other comprehensive income or directly in equity, respectively.

The Company or a subsidiary of the Company may change its tax status from nontaxable to taxable or from taxable to nontaxable. Upon such tax status change, a deferred tax liability or asset shall be recognized for temporary differences at the date that a nontaxable entity becomes a taxable entity and the effect of recognizing or derecognizing the deferred tax liability or asset shall be included in income from continuing operations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the income tax bases of assets and liabilities, as well as the net tax effects of net operating loss carryforwards. Valuation allowances are provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company records uncertain income tax positions based on a more likely than not threshold that the tax positions will be sustained on examination by the taxing authorities having full knowledge of all relevant information.

Class D & E Equity Compensation

All Class D & E equity compensation is valued at the grant date and expensed over the requisite service period, which is based on a liquidity event. Forfeitures of awards are recognized in the period in which they occur.

Environmental Liabilities and Contingencies

The Company provides for claims and litigation, including environmental investigation and remediation costs, when they are both probable and the amount can be reasonably estimated. Environmental costs are based upon estimates regarding the sites for which the Company will be responsible, the scope and cost of work to be performed at each site, the portion of costs that will be shared with other parties and the timing of remediation. Where timing and amounts cannot be reasonably determined, a range is estimated, and the lower end of the range is typically recorded.

If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the notes to the consolidated financial statements. The Company does not recognize potential recoveries from third parties, including insurance carriers, until such a time as funds are probable of recovery. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures.

Asset Retirement Obligations

ASC 410, Asset Retirement and Environmental Obligations addresses the accounting for legal obligations arising from the retirement of all tangible, long-lived assets. The standard requires companies to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. Upon initial recognition of a liability for retirement obligations, a company should capitalize that cost as part of the cost basis of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the retirement obligation, a company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

ASC 410 also requires that an entity recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. Conditional asset retirement obligations under this pronouncement are legal obligations to perform asset retirement activities for which the timing and/or method of settlement are conditional on a future event or may not be within the control of the entity. The interpretation also provides additional guidance for evaluating whether sufficient information to reasonably estimate the fair value of an asset retirement obligation is available.

The Company has concluded that there are conditional asset retirement obligations at its manufacturing facilities; however, the expectation is that the owned facilities will be operated indefinitely. Accordingly, the asset retirement obligations are not expected to be settled in the foreseeable future. As a result, there is not sufficient information about the timing of settlement to make a reasonable estimate of the fair value of the asset retirement obligation. No amounts have been recorded as of December 31, 2022 or 2021, related to the conditional asset retirement obligations related to owned facilities.

The Company recognizes asset retirement obligations for leases under ASC 842, when an obligation within the contract exists. During the year the Company recognized an asset retirement obligation of $8.9 million relating to its leased manufacturing facility in Austria. The lease term is expected to expire in 15 years and unless renewed at which point the facility would be required to be dismantled. The Company amortizes the asset retirement obligation over the remaining lease term, the liability is included within environmental and asset retirement obligations (see note 20) and a corresponding asset included within long-lived assets.

Employee Compensation

Defined benefit pension and other post-employment benefits

The cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. Actuarial valuations involve making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Because of the long-term nature of these plans, such estimates can be subject to significant uncertainty.

Pension costs primarily represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in respect of employee service in previous years, net of expected return on plan assets. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income in the period in which they arise. Pension cost components other than service cost is considered part of the finance charge and recorded in other expense, net in the consolidated statements of operations.

The Company also provides certain additional post-retirement healthcare benefits to employees in South Africa ("SA Medical"). These benefits are unfunded, and the obligations are provided for on the balance sheet within held for sale liabilities.

Business Combinations

The Company recognizes and measures the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date, with any remaining difference compared to the purchase consideration recorded as goodwill or gain from a bargain purchase. Subsequent to the acquisition, and no later than one year from the acquisition date, the Company may record adjustments to the estimated fair values of assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments of the estimated fair values are recorded to earnings. Acquisition-related costs are expensed as incurred.

Revenue Recognition

The Company has applied the five-step method outlined in ASC 606, Revenue Recognition, in determining when and how revenue is recognized to all contracts. Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration received or expected to be received in exchange for those goods or services. The Company's performance obligations arise from (i) sales of lead products, certain precious metals, and other by-products and materials and (ii) other related services.

The shipment of products to customers is considered a fulfillment activity and amounts billed to customers for shipping and freight are included in net sales, and the related costs are included in cost of sales. Net sales are presented net of taxes.

Tolling

The Company has tolling contracts to supply metal to customers, whereby the customer supplies scrap material and takes delivery of finished goods of an equivalent amount of the processed product. The Company bears the risks and rewards of the scrap material and the related lead extraction. Revenue under these agreements is accounted for on a grossed-up basis since, in substance, the material has been purchased from the customer and an agreed quantity of finished product, not necessarily from the same feedstock of scrap material, is subsequently delivered back to the customer. Tolling material held in inventory is similarly grossed-up, with an equivalent amount being recorded in customer deposits and tolling metal liabilities, representing the liability to return material to the customer. The Company receives a conversion fee that is included in net sales.

Tolling contracts were considered in accordance with agent versus principal and non-cash consideration accounting guidance as part of the assessment in accordance with ASC 606. If the Company meets the definition of control under ASC 606-10 over specified tolling production before it is transferred to the customer, revenue is recognized gross as the principal.

Foreign Currencies

The Company's functional and reporting currency is the U.S. dollar. The functional currencies of its subsidiaries are the currencies of the primary economic environment in which the subsidiaries operate.

Transactions in foreign currencies are initially recorded in the functional currency of the transacting entity at the exchange rate at the date of the transaction. Foreign currency assets and liabilities are remeasured into functional currency at current exchange rates, except for non-monetary items such as inventory, property, intangible assets, and other assets which are remeasured at historical exchange rates. Gains and losses from foreign currency remeasurement are included in the earnings of the period. For the twelve months ended December 31, 2022 gains were $1.4 million and a gain of $5.8 million was incurred for the twelve months ended December 31, 2021.

As of the reporting date, the assets and liabilities of overseas subsidiaries are translated into the Company's reporting currency at the rate of exchange at the balance sheet date and their statements of operations and cash flows are translated at the appropriate average exchange rate for each month of the year. The exchange differences arising from translation of assets and liabilities are recognized in other comprehensive income. On disposal of a foreign operation, the deferred cumulative amount recognized in other comprehensive income relating to that foreign operation is recognized in the Company's consolidated statements of operations.

Leases

The Company determines whether an arrangement is a lease at inception and leases certain properties, motor vehicles, and small machinery for use in its operations. For leases with renewal periods at the Company's option, the Company determines the expected lease period based on whether the renewal of any options are reasonably certain to be exercised at the inception of the lease. For the purposes of measurement and amortization of the right-of-use asset and associated lease liability over the terms of the leases, the Company uses the date it takes possession of the asset. As most leases do not provide an implicit rate, the Company uses a risk-free rate based on the information available on the commencement date in determining the present value of lease payments. The Company has lease agreements that contain both lease and non-lease components which are not separated. Certain leases require the Company to pay a portion of real estate taxes, utilities, building operating expenses, insurance, and other charges in addition to rent.

Advertising cost

We expense advertising and other promotional costs as incurred. This expense was $2.8 million and $2.4 million in 2022 and 2021, respectively.

Accounting Pronouncements Adopted

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016- 02, "Leases (Topic 842)", as amended ("ASU 2016-02"). ASU 2016-02 amended the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new guidance also required additional disclosures about leases. The Company adopted the requirements of this new standard on January 1, 2022 using the modified retrospective approach. The Company also elected the package of practical expedients permitted under the transition guidance which, among other things, allowed us to maintain the historic lease classification for leases in effect at the date of adoption, and to not separate lease components from non-lease components for all leases in effect at the date of adoption. Upon adoption, we recorded a right of use asset of $66.6 million, and operating lease liabilities of $67.3 million. The adoption of this standard did not materially affect our consolidated statement of earnings or consolidated statement of cash flows.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)" which applies to all employers that sponsor defined benefit pension or other post-retirement plans and is part of the disclosure framework project to improve the effectiveness of disclosures in notes to the financial statements. The amendment is effective for fiscal years ending after December 15, 2021 and is required to be adopted on a retrospective basis for all periods presented. The impact of the adoption did not materially affect our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,'' which changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans, and requires entities to use a new forward-looking expected loss model that will result in the earlier recognition of allowances for losses. Additionally, the FASB issued ASU 2018-19, 2019-04, 2019-05, 2019-10 and 2019-11 to clarify the implementation of ASU 2016-13. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact of the amendment on the Company's consolidated financial statements; however, it is not expected to have a material impact on the financial statements.

In January 2017, FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment" to simplify the subsequent measurement of goodwill, the Board eliminated Step 2 from the goodwill impairment test. Under this amendment, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This standard is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2022. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The impact of the adoption is not expected to be material.

3. Net Sales

The Company derives its net sales from contracts with customers for the transfer of goods and services over time and at a point in time in the following major product lines:

Lead: Sale of pure lead, lead alloys and lead sheet by the Company's secondary lead production operations.

Battery distribution: Distribution and sale of new batteries.

Other: Production and sale of value-added lead products such as lead anodes, plastics and minerals, and collection of nonlead scrap batteries including lithium and other non-lead products.

(Amounts in thousands)	Year ended December 31,
	2022	2021
Lead	$ 1,513,464	$ 1,575,311
Battery distribution	224,368	210,486
Other	173,483	207,805
Total net sales	$ 1,911,315	$ 1,993,602

Sales and Tolling Contracts

During 2022 and 2021, approximately 90% and 84% of lead sales were made under either sales or tolling contracts, respectively, with the balance of the Company's lead production being sold through spot sales based on the London Metal Exchange (LME) price.

Approximately 48% and 39% of lead sales in 2022 and 2021, respectively, were structured as sales contracts to deliver a minimum tonnage of a specified product to a certain customer location. The contracts typically provide for a term of one to five years and a sales price that is equal to an adjusted scrap price index over the LME price. Approximately 48% and 47% of tonnage in 2022 and 2021, respectively, was sold pursuant to tolling contracts based on a negotiated fee to take a customer's scrap batteries and convert the scrap into pure lead and lead alloys. These sales are accounted for on a "grossed-up" basis since, in substance, the material has been purchased from the customer and an agreed quantity of finished product, not necessarily from the same feedstock, is subsequently delivered back to the customer. The contracts can provide for a term of up to five years and the fee earned, which is adjusted annually, is equal to a fixed tolling charge per ton, although adjustment mechanisms for costs and lead prices are incorporated into some contracts. Some tolling contracts include an adjustment mechanism whereby the tolling fee the Company receives increases with certain increases in the lead price.

The remaining 10% of lead sales in 2022 and 16% in 2021 were sold in the form of spot sales. Spot sales are based on the LME price plus a premium which is competitively determined.

The 10 largest customers represent net sales of $1.1 billion and $1.1 billion, accounting for approximately 55% and 57% of the Company's total net sales, for both December 31, 2022 and 2021, respectively. These customers had accounts receivable balances of $83.8 million and $108.6 million, accounting for approximately 48% and 53% of the Company's accounts receivable balances as of December 31,2022 and 2021, respectively.

4. Cash, Cash Equivalents and Restricted Cash

Cash at bank are funds available without notice periods and are non-interest bearing or earn interest at floating rates based on overnight bank rates. Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates. The fair value of cash and cash equivalents approximates the carrying value.

The Company's restricted cash balance represents amounts held for post closure costs required by environmental regulators.

5. Other Assets

Other assets consist of the following (in thousands):

	December 31, 2022	December 31, 2021
Current
Other taxation receivable, including VAT	$ 27,660	$ 19,453
Other receivables	11,756	9,937
Prepayments	18,721	7,329
Deposits	1,033	405
Derivative gains	879	1,631
Total other current assets	$ 60,049	$ 38,755
Non-Current
Deferred Tax	$ -	$ 39,085
Pension	-	18,713
Other receivables	6,870	7,142
Total other non-current assets	$ 6,870	$ 64,940

6. Inventories

The components of inventories are as follows (in thousands):

	December 31, 2022	December 31, 2021
Inventories on FIFO cost basis:
Raw material and supplies	$ 56,742	$ 62,578
Work-in-process	62,563	70,726
Finished goods	99,863	99,800
Spares and consumables	30,006	26,344
Total inventory	$ 249,174	$ 259,448
Amounts secured under tolling contracts	$ 31,125	$ 28,094

7. Acquisitions

We completed the acquisitions of Promesa GmbH and Emrol BV (collectively the "Acquisitions") during the second half of 2021. The assets acquired included land and buildings, plant and machinery, and customer relationships. The purchase price for the Acquisitions totaled $20.6 million (€18.1 million) and was financed through cash from operations with the exception of $1.14 million (€1 million) that was deferred and paid during the third quarter of 2022. The Acquisitions have been accounted for as business combinations with the assets and liabilities acquired recognized at their fair value as of the acquisition date.

The Company has finalized the fair values of the assets acquired and liabilities assumed in the Acquisitions. The following table summarizes the allocation of the purchase price to assets acquired and liabilities assumed as of December 31, 2022 (in thousands):

Cash	$ 2,080
Inventories	2,782
Account receivable	2,606
Other current assets	433
Property, plant and equipment	3,231
Intangible Assets	10,389
Liabilities	(4,729)
Total Net Assets	16,792
Goodwill	3,838
Total Purchase Price	$ 20,630

Goodwill represents the excess purchase price over the fair values of assets acquired and liabilities assumed. The Goodwill was generated by the opportunity associated with the expansion of our battery distribution business and lithium recycling business.

Intangible assets, excluding goodwill, consisted of the following (amounts in thousands):

	Weight-Average Life	Estimated Fair Value
Permits	10	7,447
Customer relationships	6	2,942
Total Intangible Assets		$ 10,389

8. Property, Plant and Equipment, Net

Property, plant and equipment consist of the following (in thousands):

	December 31, 2022	December 31, 2021
Land and buildings	$ 365,238	$ 315,205
Plant and equipment	885,104	725,884
Construction-in-progress	38,003	48,404
Property, plant and equipment, gross	$ 1,288,345	$ 1,089,493
Accumulated depreciation and impairment:
Property, plant and equipment	$ (757,158)	$ (591,759)
Impairment	(155,536)	(150,258)
Property, plant and equipment, net	$ 375,651	$ 347,476
Depreciation during the year	$ 49,198	$ 53,104
Capital expenditures	$ 84,199	$ 69,681

9. Goodwill and Other Intangible Assets

(Amounts in thousands)	December 31, 2022	December 31, 2021
Goodwill	$ 46,951	$ 55,726
Other intangibles	54,350	43.817
Assets under construction	22.482	6,753
Total goodwill and other intangible assets, gross	$ 123,783	$ 106,296
Allowance:
Amortization and impairment on other intangibles	$ (42,335)	$ (37,197)
Impairment on goodwill	(16,606)	(17,446)
Total goodwill and other intangible assets, net	$ 64,842	$ 51,653

Other intangibles consist of customer relationships, brands, patents, software and operating licenses, all of which have finite lives. Total amortization expense recorded during the year was $2.2 million and $2.2 million for both December 31, 2022 and 2021, respectively. The net book value of the Company's goodwill was $30.3 million and $38.3 million, as of December 31, 2022 and 2021, respectively.

Research and development related costs of $1.5 million and $0.2 million in 2022 and 2021, respectively, were expensed directly in the periods they were incurred and were not capitalized. Capitalized software totaled $20.6 million and $6.7 million as of December 31, 2022 and 2021, respectively.

10. Impairment

The Company evaluates its long-lived assets and finite-lived intangibles for impairment whenever there are events or changes in circumstances indicate that their carrying amount may not be recoverable in accordance with ASC 360. For goodwill in accordance with ASC 350, the Company first assesses qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. In respect of long-lived assets and finite-lived intangibles management evaluated whether any impairment indicators existed for the year ended December 31, 2022.

During 2022, the Company recorded $2.3 million of additional impairment charges primarily related to our operations in Italy, which was previously impaired in 2021. The additional charges were primarily a result of the impairment of ROU assets capitalized upon the adoption ASC 842, and the impairment of other assets due to increased energy costs in the region which resulted in the suspension of the two plants.

In addition, a $32.5 million impairment charge was recorded related to the Company's German operations in Stolberg, the impairment charge is presented within discontinued operations. The impairment charge relates to the adoption of ASC 842 recognition of the leased assets, and capital expenditures which related to the rebuilding of the facility following the flood in 2021 (mentioned above).

In 2021 the Company recorded an impairment charge representing substantially all of the net assets for the Stolberg and Italy asset groups. The impairment charges related to goodwill and tangible assets in Italy totaled $0.8 million and $21.7 million, respectively. The impairment is primarily driven by a challenging environment within Italy particularly in relation to energy cost and battery prices. There were impairment charges related to the Company's German operations in Stolberg. Stolberg was adversely impacted by a flood in July 2021, significantly impacting the operations of that business. As a result, $75.7 million and $2.6 million of impairment was recorded in respect to fixed assets and finite-lived intangible assets. In conjunction with the impairment of long-lived tangible assets and finite-lived intangible assets the Company has impaired $38.3 million of inventory which is no longer deemed recoverable at Stolberg, Germany. The impairment charges related to Stolberg, are included within discontinued operations. There were other immaterial impairments amounting to $0.9 million.

11. Financial instruments and fair value measurements

Current derivative financial instruments represent the mark-to-market valuation for forward currency contracts and forward commodity contracts used to economically hedge the Company's exposure to financial risk from exchange rate and metal price fluctuations. These derivatives were not designated as hedges for accounting purposes.

The following tables set forth information on the presentation of these derivative instruments in the Company's accompanying condensed consolidated financial statements (in thousands):

	Balance Sheet	December 31, 2022	December 31, 2021
Asset derivatives:
Forward currency contracts	Other current assets	$ -	$ 739
Forward commodity contracts	Other current assets	879	891
		$ 879	$ 1,630
Liability derivatives:
Forward currency contracts	Other current liabilities	$ 304	$ 126
Forward commodity contracts	Other current liabilities	9,020	2,090
		$ 9,324	$ 2,216

		Year ended December 31,
Total gain (loss) before income taxes		2022	2021
Forward currency contracts	Cost of sales	$ (553)	$ (2,104)
Forward commodity contracts	Cost of sales	$ (8,868)	$ (13,893)
Forward currency contracts	Net finance costs	$ (26,715)	$ 5,754

As of December 31, 2022 and December 31, 2021, the notional amounts for these derivative contracts are set out below (in thousands):

	December 31, 2022	December 31, 2021
Asset derivatives:
Forward currency contracts	$ 1,870	$ 222,294
Forward commodity contracts	135,280	74,881
Liability derivatives:
Forward currency contracts	$ 22,169	$ 61,305
Forward commodity contracts	36,096	108,650

The below tables summarize the assets and liabilities measured at fair value on a recurring basis as of December 31,2022 and December 31,2021 (in thousands):

	Fair Value Measurement at Reporting Date Using:
	December 31, 2022	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Assets -
Investments (Listed & Unlisted) ⁽¹⁾	$ 28	$ -	$ -	$ 28
Derivative financial instruments ⁽²⁾	879	-	879	-
Liabilities -
Derivative financial instruments ⁽²⁾	9,324	-	9,324	-

	Fair Value Measurement at Reporting Date Using:
	December 31, 2021	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Assets -
Investments (Listed & Unlisted) ⁽¹⁾	$ 29	$ -	$ -	$ 29
Derivative financial instruments ⁽²⁾	1.630	-	1,630	-
Liabilities -
Derivative financial instruments ⁽²⁾	2,217	-	2,217	-

⁽¹⁾ Unlisted investments comprise subscriptions in local funds that are not traded in the market. The fair values have been assessed by management based on certain market information. There was one transfer out of level 3 during 2021 due to the disposal of an investment there were no transfers in or out during 2022.
⁽²⁾ Derivative assets and liabilities classified as Level 2 are commodity futures contracts based on broker quotes in the over- the-counter market.

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable approximate the fair value due to their short maturities.

12. Income Tax

The components of (loss) income from continuing operations before income taxes were as follows:

	Year Ended December 31,
	2022	2021
U.S.	10,788	55,485
Foreign	(17,458)	(6,771)
Total (loss) income before income taxes	(6,670)	48,714

The income taxes included in the consolidated statements of operations were as follows:

	Year Ended December 31,
	2022	2021
Current:
U.S.	(3,310)	19,650
Foreign Total current taxes	7,511	9,235
	4,201	28,885
Deferred:
U.S.	9,827	241
Foreign Total deferred tax expense (benefit)	(627)	(251)
	9,199	(10)
Income taxes	13,401	28,875

A reconciliation of the significant differences between the U.S. federal statutory tax rate of 21% and the effective income tax rate on income from continuing operations is as follows:

	Year Ended December 31,
	2022	2021
Income tax provision computed at U.S. federal statutory tax rate	(2,787)	43,150
Foreign tax rate differentials	(582)	592
U.S. Branch Income	(6,844)	(24,879)
State income taxes	1,293	-
(Income) expense not resulting in tax impact, net	(14,250)	21,787
Hybrid Disallowance	13,390	1,639
FX Gains/Losses	(5,157)	-
Amended Return Adjustments	(1,971)	-
Prior Year and Return-to-Provision Adjustments	(38,378)	-
Uncertain Tax Positions	9,056	3,940
Change in valuation allowance	54.758	(12,146)
NOL adjustments, net of VA	-	1,849
Other, net	4,872	(7,057)
Income tax provision	13,401	28,875
Effective income tax rate	(200.91) %	59.28 %

The income tax effects of significant temporary differences for both continuing and discontinued operations giving rise to deferred tax assets and liabilities were as follows:

	December 31,
	2022	2021
Deferred Tax Liabilities
Other	-	(213)
Goodwill and other intangibles	(4,112)	-
Total Deferred Tax Liabilities	(4,112)	(213)
Deferred Tax Assets
Property, plant and equipment	50,428	40,585
Goodwill and other intangibles	-	15,183
Other	21.780	20,146
Pension and post-employment benefits	13,973	12,838
Foreign tax loss carryforwards and credits	57,333	27,874
Inventory	9.818	23,581
Foreign exchange	16,559	545
Total Deferred Tax Assets	169,891	140,752
Less valuation allowance	(165,972)	(104,528)
Net Deferred Tax Assets	3,919	36.224
Total Net Deferred Tax (Liabilities) Assets	(193)	36,011

The Company had gross foreign net operating loss carryforwards of $223 million and $118 million as of December 31, 2022 and December 31, 2021, respectively, which relate to losses of subsidiaries in Germany, France, Italy, and South Africa and the United States. All net operating losses can be carried forward indefinitely.

Valuation Allowance

Management reviews the deferred tax accounts of all jurisdictions and considers historical and prospective economic performance to determine whether a valuation allowance against any net deferred tax asset position is necessary. As of December 31,2022, management has determined that a full valuation allowance is appropriate against the net deferred tax assets for France, Germany, Italy, and the United States, due to the uncertain timing of realization of the deferred tax assets.

Uncertain Tax Position ("UTP")

As of December 31, 2022, the Company had $79 million of unrecognized tax benefits recorded compared to $74 million as of December 31, 2021. The $79 million unrecognized tax benefits, recorded as a long-term income tax liability, if recognized, would impact the effective tax rate. The Company does not expect that the amount of unrecognized benefits will change significantly within the next 12 months. At December 31, 2022 and 2021, the Company had $9.4 million and $5.2 million, respectively, of accrued interest and penalties related to the unrecognized tax benefits. The Company recognizes interest and penalties related to UTP's on the income tax expense line in the accompanying Consolidated Statement of Operations. Accrued interest and penalties are included on the related tax liability line in the Consolidated Balance Sheet.

The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitation. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of tax years subject to examination:

	U.S. Federal - 2019 and forward
	U.S. States - 2018 and forward
	Foreign - 2016 and forward

As of December 31, 2022, the Austrian tax returns for 2016-2018 are under audit by the country's tax collecting agency and the U.S. returns for 2019 and 2020 are under audit by the Internal Revenue Service. The Company believes that an adequate provision for income taxes has been made for all open tax years related to the examination.

13. Other Liabilities

Other liabilities consist of the following (in thousands):

	December 31, 2022	December 31, 2021
Current
Forward currency contracts	$ 304	$ 126
Forward commodity contracts	9,020	2,090
Income tax payables	3,551	14,284
Environmental liabilities and asset retirement obligations	10,345	9,033
Legal contingencies	8,150	1.304
Tolling	31,125	28,094
Other taxes and social security costs	12,615	13,111
Short-term employee benefits	18,551	18,962
Other accrued liabilities	33,053	39,179
Total other current liabilities	$ 126,714	$ 126,183
Non-Current
Long-term employee benefits	$ 1,284	$ 965
Deferred tax liabilities	218	2,739
Income tax payables	87,942	79,278
Other accrued liabilities	2.061	1,674
Total other non-current liabilities	$ 91,505	$ 84,656

14. Debt

The Company's debt consists of the following (in thousands):

	December 31, 2022	December 31, 2021
Current
Term Loans	$ 2,903	$ 683
Global ABL	10,000	-
European Factoring Agreement	18,382	16,837
Financing arrangements	7,991	-
Total current maturities of long-term debt and short-term borrowings	$ 39,276	$ 17,520

	December 31, 2022	December 31, 2021
Non-Current
Global ABL	$ 88,847	$ 95,941
Term Loans	1,843	5,260
Total Debt	90,690	101,201
Less: Debt Origination Costs	(4,246)	(5,399)
Total long-term debt, less current portion	$ 86,444	$ 95,802

The principal maturities over the next five years and thereafter of total debt as of December 31, 2022 are as follows (in thousands):

	Principal Maturity Amount
2023	$ 39,276
2024	1,185
2025	658
2026	88,847
Total	$ 129,966

The amount available under the Company's facilities are shown below (in thousands):

	December 31, 2022
Facilities available	$ 190,313
Less:
Amount drawn	(117,968)
Letter of credit	(6,435)
Availability	$ 65,910

The Company had two uncommitted trade financing facilities as of December 31, 2022 and December 31, 2021 totaling $70.0 million. These facilities have variable interest rates based on LIBOR plus a margin of between 1.5% and 3.5% depending on the borrowings. They support purchasing of concentrates in Germany.

In November 2020, the Company increased its access to funding in Europe using receivable factoring facilities including receivables of France, Italy, Belgium, and the Netherlands. The capacity of these factoring facilities totaled approximately $26.8 million and $28.3 million as of December 31, 2022 and December 31, 2021, respectively (€25 million denominated in Euro). As of December 31, 2022, the Company had availability of $8.4 million.

In November 2021, the Company secured a $200 million global ABL facility. This facility is secured by certain receivables, inventories, and other assets of subsidiaries based in Germany, the UK, and the US. As of December 31, 2022 the total facility was $163.5 million due to a reduction in collateral available. Interest on the ABL facility shall be as follows (i) in the case of Base Rate Loan, at the Base Rate in effect from time to time, plus the Applicable Margin for such Base Rate Loan (ii) in the case of a Term SOFR Revolver Loan or EURIBOR Revolver Loan, at a rate equal to the Adjusted TERM SOFR rate or Adjusted EURIBOR plus the Applicable Margin for Term SOFR Revolver Loans or EURIBOR Revolver Loans (iii) in the case of RFR Loan, at a rate equal to the applicable Adjusted Daily Simple RFR plus the Applicable Margin for such RFR Loans. The applicable margin ranges from 0.75% to 2.25% based on the indebtedness of the Company. The ABL facility includes a $30 million letter of credit facility. As of December 31, 2022 the Company had availability of $59.9 million.

In addition, the Company has several term loans in Germany, France, and Spain, available to support working capital, shortterm cash needs, and certain capital expenditure projects. As of December 31, 2022 and December 31, 2021, the Company had overall outstanding balances for term loans of $4.7 million and $5.9 million, respectively. The loans are generally being charged at market floating rates. During 2022, the Company also entered into a financing arrangement to support the payment of insurance premiums. As of December 31, 2022 $8 million was outstanding. There was no balance outstanding associated with this arrangement as of December 31, 2021. The financing is being charged interest at market rates.

15. Lease Commitments

The Company determines whether an arrangement is a lease at inception. The Company has entered into operating leases on certain properties, motor vehicles, and small items of machinery. The Company also has finance leases covering certain motor vehicles and small machinery. These leases have a range of terms between one and twenty-two years with renewal terms included in the contracts and are at the option of the specific entity that holds the lease. Lease terms may include options to renew when it is reasonably certain that the Company will exercise the option. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. In calculating the present value of future minimum lease payments, we use a risk-free rate. Additionally, we lease certain equipment under short-term leases with initial terms of less than twelve months. These short-term equipment leases are not recorded on the balance sheet.

Payments due under our operating and finance leases include fixed payments as well as variable payments. For our office leases, variable payments include amounts for our proportionate share of operating expenses, utilities, property taxes, insurance, common area maintenance and other facility-related expenses. For our vehicle and equipment leases, variable payments consist of sales tax.

The components of lease cost for the year ended December 31, 2022 are as follows (in thousands):

	Year ended December 31,
	2022
Operating lease cost	$ 10,489
Finance lease cost	625
Variable lease cost ⁽¹⁾	2,536
Total lease cost	$ 13,650

⁽¹⁾ Variable lease cost includes short term lease cost, which is considered immaterial.

The amounts recognized in the Company's accompanying consolidated balance sheets associated with our operating leases (in thousands) are as follows:

	December 31, 2022
Operating leases
Operating lease right-of-use assets	$ 57,736
Current operating lease liabilities	$ 9,699
Noncurrent operating lease liabilities	47,333
Total Operating Lease Liabilities	$ 57,032

Amounts reported in the consolidated balance sheet as of December 31, 2022 for finance leases are included in the table below. Finance lease right-of-use assets are recorded within property, plant and equipment, net of accumulated depreciation within our consolidated balance sheets. Finance lease liabilities are recorded within current portion of long-term obligations and long-term obligations, less current portion within our consolidated balance sheets.

	December 31, 2022
Finance leases
Finance lease right-of-use assets	$ 2,471
Accumulated amortization	(1,161)
Finance lease right-of-use assets, net	$ 1,311
Current finance lease liabilities	$ 613
Noncurrent finance lease liabilities	756
Total Finance Lease Liabilities	$ 1,369

Supplemental cash flow information and non-cash activity related to our leases are as follows (in thousands):

	For the Year Ended December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities and ROU assets:
Operating cash flow from operating leases	$ 10,067
Financing cash flow from finance leases	690
ROU assets obtained in exchange for lease obligations:
Operating leases	18,141
Finance leases	450
Reductions to ROU assets resulting from reductions to lease obligations:
Operating leases	(43)
Finance leases	-

Weighted average lease term and discount rate information related to leases is as follows:

	December 31, 2022
Weighted average remaining lease term:
Operating leases	7.80 years
Finance leases	3,48 years
Weighted average discount rate:
Operating leases	2.36%
Finance leases	1.74%

Maturities of lease liabilities as of December 31, 2022 are as follows (in thousands):

	Operating Leases	Finance Leases
2023	$ 10,827	$ 670
2024	9,751	440
2025	8,521	228
2026	7,201	142
2027	5,906	62
Thereafter	23,058	46
Total undiscounted lease payments	65,264	1,588
Less: Imputed interest	(8,232)	(219)
Total lease liabilities	$ 57,032	$ 1,369

As of December 31, 2021, minimum lease payments under non-cancelable operating leases by period were expected to be as follows (in thousands):

	Operating Leases	Finance Leases
2022	$ 12,960	$ 355
2023	11,538	314
2024	11,139	101
2025	12,606	17
2026	9,980	-
Thereafter	16.423	-
Total	$ 74,646	$ 787

See notes 2 and 10 for details on the adoption of ASU 2016-02 and impairment of right-of-use assets, respectively.

16. Employee Compensation

Collective Bargaining Agreements

Certain of the Company's employees belong to unions for collective bargaining purposes and may be covered by arrangements prescribed under the laws of the states and countries in which they are located. Approximately 34% of the Company's employees are covered by collective bargaining agreements. The earliest expiration date of these agreements starts from October 2023. The Company regularly communicates with labor unions and believes that present labor relations are generally good.

Defined Contribution Plans

The Company has defined contribution plans for its salaried and hourly employees in certain countries of its operations. These plans are maintained, and contributions are made, in accordance with applicable laws and regulations in each jurisdiction. Company expenses for these plans totaled $5.4 million and $5.1 million for the years ended December 31,2022 and 2021, respectively.

Retirement Plans

U.S. Plans

Substantially all employees are provided retirement benefits through various noncontributory pension plans. The plans provide pension benefits based primarily on years of service and/or average salary received during the five consecutive calendar years yielding the highest average.

The Company's current funding policy is to make annual contributions of at least the minimum amounts required under the Employee Retirement Income Security Act of 1974, as amended. Plan assets are invested through a bank's trust department in common trust funds, primarily in corporate equity and bond securities. The plans have a targeted investment structure of 60% equities and 40% fixed income, and the equities are invested in diversified mutual funds (large cap, mid cap, small cap, and international). The common trust funds are measured at net asset value.

An internal pension committee consisting of internal members meets at least quarterly to review plan performance along with general economic updates and any recommendations for changing the fund structure. The Company establishes its estimated long-term return on plan assets considering various factors, which include the targeted asset allocation percentages, historic returns, and expected future returns.

Non-U.S. Plans

In the UK, the Company operates a defined benefit pension scheme, the H J Enthoven Limited Pension Scheme (the "Scheme"). The Scheme is closed to new members but continues to operate for existing members as well as for deferred members and pensioners. The UK Defined Benefit pension scheme is a funded scheme governed by the laws of the United Kingdom. The assets of the Scheme are separate from those of the Company.

The Scheme is a separate legal entity from the Company and is managed by a Board of Trustees ("BoT") which comprises two Company-nominated trustees, two Member-nominated trustees and an independent third-party trustee who is currently the Chairman of the BoT. Scheme administration is outsourced to a recognized leading provider, who also provides actuarial advice.

The BoT consisting of both employer-nominated and member-nominated trustees, is responsible for the investment of the Scheme's assets and has delegated this to a leading Fiduciary Manager, who also provides investment strategy and risk management advice.

The Fiduciary Manager invests the Scheme's assets in pooled funds with multiple providers, and has a portfolio comprised mainly of equity securities invested in diversified mutual funds and debt instruments. These funds are measured using Net Asset Value ("NAV") as they are not publicly quoted funds, however, the underlying investments are quoted securities. These funds are not invested in any of the Company's own financial instruments nor in real estate or other assets used by the Company.

The BoT meets regularly to oversee the management of the Scheme and, in conjunction with the Scheme Actuary, review the level of funding, as required by UK legislation. The BoT reaches an understanding with the Company as to the required contributions to the Scheme, the risk management policy, and, if necessary, a series of recovery payments to eliminate the pension deficit based on the latest triennial actuarial valuation.

Pension liabilities are adjusted annually for inflation and are exposed to interest rate risks and changes to life expectancy for pensioners.

The Company also operates defined contribution schemes in the UK, the costs of which are charged to the income statement in the period in which they become payable.

The Company has several overseas arrangements for retirement benefits which vary according to local legislation and practice and include schemes of both defined benefit and defined contribution types. Any liabilities in respect of these schemes are booked as a provision in the balance sheet and are reported as non-UK pensions. From January 1, 2007, the Company's subsidiary in Italy operated a defined benefit pension scheme, with contributions being defined by the government and charged to the income statement. Pensions in France are provided by the state and the Company has no specific responsibility in this area above paying annual social charges based on salaries and a retirement benefit indemnity in the form of a lump sum when an employee reaches retirement age and leaves the Company. In Austria, the Company's employees are entitled to termination pay when retiring. A provision for these entitlements is made, representing the discounted value of all possible future payments.

The Company's subsidiaries in Germany have unfunded pension benefit obligations, which are provided for in the balance sheet. In addition, there are support and welfare funds for former employees, which are held in separately administered schemes. Other pension arrangements in Germany grant fixed payments dependent on years of service. These amounts are fully provided for in the financial statements. In the Netherlands and Belgium, the Company's subsidiaries operate defined contribution pension schemes and the costs borne are expensed in the year.

The Company's South African subsidiaries operate a defined contribution pension scheme and the costs borne are expensed in the year. The Company also provides certain additional post-retirement healthcare benefits to employees in South Africa. These benefits are unfunded, and the obligations are provided for on the balance sheet and included in held for sale liabilities.

All disclosures below are for consolidated US and Non-US Plans. A reconciliation of the changes in projected benefit obligations ("PBO") for the Company defined benefit plans is as follows (in thousands):

	Year Ended December 31,
	2022	2021
Benefit obligation at beginning of year	$ 311,834	$ 327,654
Service cost	4,838	5,551
Interest cost	6,289	5,662
Actuarial (gain) loss	(93,031)	(14,319)
Plan amendments	-	(154)
Benefits paid	(13,206)	(9,638)
Participant contributions	15	19
Settlements and curtailments ^(a)	(6,448)	(187)
Foreign exchange rate changes	(19,192)	(2,753)
Benefit obligation at end of year	$ 191,099	$ 311,834

^(a) Beginning June 30, 2022, the Company froze benefit accruals for certain pension plans resulting in a decrease in the expected obligation.

A reconciliation of the changes in fair value of plan assets is as follows (in thousands):

	Year Ended December 31,
	2022	2021
Fair value of plan assets at beginning of year	$ 282,347	$ 279,348
Actual return on plan assets	(88,660)	10,972
Employer contributions	476	3,171
Benefits paid	(12,513)	(8,803)
Participant contributions	15	19
Settlements and curtailments	-	(187)
Foreign exchange rate changes	(20,013)	(2,173)
Fair value of plan assets at end of year	$ 161,652	$ 282,347

Other than cash and cash equivalents, all of the plan assets above are invested in quoted instruments. The pension plans have not invested in any of the Company's own financial instruments nor in real estate or other assets used by the Company.

The funded status of the plans is as follows (in thousands):

	December 31,
	2022	2021
Funded status	$ (29,447)	$ (29,488)

Amounts recognized in the consolidated balance sheets consisted of (in thousands):

	December 31,
	2022	2021
Other assets (noncurrent)	$ -	$ 18,713
Other liabilities (current)	(17)	(533)
Other liabilities (noncurrent)	(29,430)	(47,668)
Net amount recognized	$ (29,447)	$ (29,488)

Pension costs included the following components (in thousands):

	Year Ended December 31,
	2022	2021
Service cost	$ 4,502	$ 5,449
Interest cost	6,170	5,662
Expected return on plan assets	(9,437)	(9,580)
Amortization of prior service cost	(490)	(191)
Recognized net actuarial loss	1,735	3,787
Settlement and curtailment gains	588	31
Net pension benefit cost	$ 3,068	$ 5,158

Other changes in plan assets and benefit obligations recognized in other comprehensive income were as follows (in thousands):

	Year Ended December 31,
	2022	2021
Net actuarial (gain) loss	$ (1,438)	$ (15,677)
Prior service cost	-	(2,297)
Amortization of net gain	(1,994)	(1,836)
Expected return on assets	3	4
Actual return on assets, net of expenses	(15)	(250)
Amortization of prior service cost	(88)	475
Total (gain) loss recognized in other comprehensive income	$ (3,532)	$ (19,581)

There is approximately $1.6 million in estimated prior service credits and $1.0 million in estimated net actuarial gains for these plans that will be amortized from accumulated other comprehensive income into net periodic pension cost in 2023.

Pension liabilities and current service costs are determined with the advice of independent and certified actuaries, on the basis of annual valuations using the projected unit credit method. Plan assets are stated at their market values at the respective balance sheet dates.

Defined benefit plans - disaggregated plan information

The following table provides information related to the accumulated benefit obligation ("ABO") as of December 31, 2022 and 2021. The PBO is the actuarially computed present value of earned benefits based on service to date and includes the estimated effect of any future salary increases. The ABO is the actuarially computed present value of earned benefits based on service to date but differs from the PBO in that it is based on current salary levels.

	December 31,
	2022	2021
Projected benefit obligation	$ 191,099	$ 311,833
Accumulated benefit obligation	$ 191,018	$ 304,587
Fair value of plan assets	$ 161,652	$ 282,347

Defined benefit plans - key assumptions

Weighted average assumptions used to determine benefit obligation were as follows:

	December 31,
	2022	2021
Discount rate	4.98%	1.98%
Average rate of increase in compensation	2.28%	2.49%

Assumptions used to determine net periodic benefit cost were as follows:

	December 31,
	2022	2021
Discount rate	4.03%	2.86%
Expected return on assets	3.93%	3.69%
Average rate of increase in compensation	2.21%	2.53%

The discount rates used to calculate the net present value of future benefit obligations for the Company's U.S. plans is based on the average of current rates earned on long-term bonds that receive a Moody's rating of "Aa" or better. The Company has determined that the timing and amount of expected cash outflows on its plans reasonably match this index. For the Company's non-U.S. plan, the discount rate used to calculate the net present value of future benefit obligations is determined by using a yield curve of high-quality bond portfolios with an average maturity approximating that of the liabilities.

In developing the expected long-term rate of return on assets, the Company considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets for the portfolio.

Defined benefit plans - plan assets

Weighted average asset allocations were as follows:

	December 31,
	2022		2021
	Actual	Target	Actual	Target
Equity securities	27%	12-60%	16%	12-60%
Liability hedging	47%	22 - 37%	29%	22 - 37%
Investment funds	14%	23 - 100%	49%	23- 100%
Cash and cash equivalents	13%	2 - 42%	6%	2 - 42%

The target asset allocation is intended to generate sufficient capital to meet plan obligations and provide a portfolio rate of return equal to or greater than the return realized using appropriate blended, market benchmark over a full market cycle (usually a three to five-year time period). Actual allocations may deviate from the target range, however any deviation from the target range of asset allocations must be approved by the Trust's governing committee if applicable.

The actual fair values of pension plan assets are as follows (in thousands):

	Fair Value Measurement at Reporting Date Using:
	Estimated Fair Value Measurements
Pension Plan Assets	December 31, 2022	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)	Other ^(a)
Equity securities	$ 43,359	$ -	$ 24,404	$ -	$ 18,955
Liability hedging	75,548	4,360	71,188	-
Investment funds	22,071	189	8,135	78	13,670
Cash and cash equivalents	20,675	20,675	-	-
Total	$ 161,652	$ 25,224	$ 103,727	$ 78	$ 32,624

^(a) Consists of equity securities and investment funds measured at net asset value per share.

	Fair Value Measurement at Reporting Date Using:
	Estimated Fair Value Measurements
Pension Plan Assets	December 31, 2021	Quoted prices in active markets for identical assets (Level 1)	Significant other observable inputs (Level 2)	Significant unobservable inputs (Level 3)
Equity securities	$ 45,535	$ -	$ 45,535	$ -
Debt instruments	82,708	-	82,708	-
Investment funds	137.028	367	136,661	-
Cash and cash equivalents	17,076	17,076	-	-
Total	$ 282,347	$ 17,443	$ 264,904	$ -

Defined benefit plans - cash flows

In 2022 and 2021, the Company made $0.5 million and $3.2 million contributions to the defined benefit plans, respectively. The Company expects the aggregate minimum contributions to defined benefit plans in 2022, subject to applicable law, to be approximately $1.0 million. The Company continues to monitor and evaluate funding options based upon market conditions and may increase contributions at its discretion.

The following table summarizes the Company's estimated future benefit payments as of December 31, 2022 (in thousands):

Year Ended December 31,
2023	$ 10,416
2024	10,227
2025	10,520
2026	11.167
2027	11.471
Next five years	62,793

17. Class D and E Equity Compensation

On September 10, October 1, and December 11, 2020 the Company granted certain Employees and Directors Class D and E units, those units vest when certain performance criteria are satisfied at which point they are converted into cash. All units vest upon the portion of the distribution being above the Participation Threshold value, a Sale Transaction or Post-Restructuring Liquidity Event as defined within the partnership agreement. Upon either of the events occurring, the vesting of the Units will immediately accelerate and be paid out. The Class E units are capped limiting the upside value of the units at predetermined threshold. The Class D awards granted during the period totaled 400 and the associated expense is immaterial.

The units were valued using a Black Scholes-Merton Option Pricing Model and are expensed over a 36-month service period. There were no grants were made in 2021 or 2022. Internal valuations were produced to determine the equity value of the Company, which in turn was used to calculate the stock price, peer companies were used for determining expected volatility. A dividend yield of 0.00% was applied, along with a risk-free rate based on U.S. Treasury rates. The strike price is equivalent to the Participation Threshold. The expected life of the awards was determined based on the timing of a liquidity event.

A portion of the Class E units are phantom units and are provided to non-independent Directors, due to the terms of the award no expense has been recognized as the requisite vesting only occurs when the above-mentioned performance criteria are met. All units remained unvested as of the balance sheet date.

18. Members' Equity

The Company is authorized to issue 100,000 Class A, 1,000,000 Class B, 10,000 Class C, 5,810 Class D and 3,270 Class E membership units. Class A members have limited voting rights. Class B and C members are entitled to one vote for each unit held and have the right to appoint an unlimited number of additional directors, with majority of class approval. Class D and Class E are for executive members and non-employee board members respectively, and these constitute profit interests with no voting rights.

As of December 31, 2022 and December 31, 2021, by applying the pooling of interest method, the outstanding members' units were:

	December 31, 2022	December 31, 2021
Authorized
Class A	100,000	100,000
Class B	1,000,000	1,000,000
Class C	10,000	10,000
Class D	5,810	5,810
Class E	3,270	3,270
Issued
Class A	100,000	100,000
Class B	1,000,000	1,000,000
Class C	10,000	10,000
Class D	4,448	4,715
Class E	3,270	3,270

During 2022 667 Class D units were forfeited, whilst 400 were issued. There were no other changes to the authorized units.

19. Accumulated Other Comprehensive Loss

The following table presents the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) for the years ended December 31, 2022 and 2021. All amounts within the tables are shown net of tax and net of noncontrolling interests (in thousands):

	Defined Benefit Obligation	Foreign Currency Translation	Total
Balance at January 1, 2021	$ (80,667)	$ (25,005)	$ (105,672)
Amounts arising during the period	10,828	(19,396)	(8,568)
Amounts reclassified	3,922	-	3,922
Balance at December 31, 2021	(65,917)	(44,401)	(110,318)
Amounts arising during the period	8,633	(85,754)	(77,121)
Amounts reclassified	1,245	-	1,245
Other	-	(7,897)	(7,897)
Balance at December 31, 2022	$ (56,039)	$ (138,052)	$ (194,091)

Reclassification from accumulated other comprehensive income (loss) are related to the amortization of actuarial gains and losses and prior service costs and are recognized as income or expense in the consolidated statement of operations through other expense.

20. Contingencies

Legal Matters

The Company has been subject to civil lawsuits and has been made aware of possible claims of governmental agencies and other parties involving environmental, worker health and safety, product liability, toxic waste, and other matters, some of which resulted, and others of which may result, in litigation. The Company maintains a policy of vigorously defending against all such claims. The Company's operations are subject to a number of risks and hazards that could have a materially adverse effect on its business, its financial condition, and/or its results of operations. Although the Company maintains insurance coverage consistent with industry practice, such insurance does not necessarily provide coverage for the full effect of all such operating risks.

From time to time, the Company is involved in legal and administrative proceedings incidental to its business, including various proceedings instituted by governmental authorities arising under the provisions of applicable laws or regulations relating to the protection of the environment. In addition to the environmental liabilities, from time to time, the Company and its subsidiaries are involved in various other proceedings and litigation that arise in the normal course of their operations. The Company records a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

The Company also evaluated other ongoing and new legal matters developed in 2022 and holds a legal reserve of $8.2 million as of December 31, 2022, reflecting its best estimate with the information currently available. The legal reserve as of December 31, 2021 was $1.3 million. These matters generally involve third party claims, wage disputes, and state government alleged violations.

Environmental Liabilities and Asset Retirement Obligations

The Company and its operating subsidiaries are subject to environmental laws and regulations concerning air emissions and wastewater, including solid waste disposal, hazardous material management, and worker exposures.

The Company's loss estimates for environmental-related claims are based on information obtained from independent and/or Company-employed environmental engineers and/or from the Company's experts regarding the nature and extent of environmental contamination and the cleanup criteria required by relevant governmental agencies. In some cases, the claims are preliminary, and a range of loss cannot yet be estimated. The ultimate loss to be incurred is dependent upon several factors, including the level of participation from other responsible parties, the actual cost to perform the cleanup, and the amount of recovery from insurance carriers. The Company had total environmental provisions of $28.9 million and $23.2 million as of December 31, 2022 and 2021, respectively, for potential liabilities to restore land used for the processing of metals in accordance with local authorities' requirements and repair any alleged damage to properties at the Company's subsidiaries. The measurement of the liability, or a component of the liability, may be discounted if the amount and timing of the cash payments for the liability or component are reliably determinable. The Company discounted components of the environmental liabilities at a weighted average rate of 6.3% as of December 31, 2022 and 4.2% as of December 31, 2021. The remaining components of the environmental liabilities are recorded at undiscounted amounts. The undiscounted portion of this component was $39.4 million as of December 31, 2022.

A reconciliation of the beginning and ending carrying amounts of the Company's provision for environmental matters is as follows (in thousands):

	December 31, 2022	December 31, 2021
Balance as of beginning of year	$ 23,207	$ 22,397
Liabilities incurred	10,801	4,695
Liabilities settled	(4,450)	(2,675)
Accretion	78	78
Revisions in estimated cash flows	(77)	(65)
Foreign exchange rate impact	(705)	(1,222)
Balance as of end of year	$ 28,856	$ 23,207

Due to the nature of the business and ongoing changes to environmental legislation it is possible that liabilities may arise in future years. However, it is not possible to predict or estimate any such potential future costs and, other than as provided for in these financial statements, no such liabilities are currently known.

21. Related-Party Transactions

The Company entered into certain transactions in the ordinary course of business with parties that were controlling members, management, or their affiliates. Balances and transactions between the parent company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. The Company recorded director expenses of $1.4 million during 2022 and as of December 31, 2022 there was no payable to those directors. In 2021, the $3.8 million in related party expenses included supplemental director compensation made in conjunction with the partner distribution in December 2021.

During the years ended December 31, 2022 and 2021, the Company did not provide or benefit from any guarantees for any related party receivables or payables or made any provisions for doubtful debts relating to amounts owed by related parties.

22. Discontinued Operations

We are currently in the process of divesting the Company's operations in South Africa and Stolberg and the criteria for held for sale was met as of December 31, 2022 as the disposals are expected to close within one year. We have classified the results of the South African and Stolberg operations as discontinued operations, net of income taxes in our consolidated statements of operations, as the planned disposal represents a strategic shift and significant impact on the Company's results. Additionally, the assets and liabilities associated with those operations have been classified as held for sale within current assets and current liabilities in our condensed consolidated balance sheet as of December 31, 2022 and December 31, 2021.

The following table presents the financial results of South Africa (in thousands):

	Year ended December 31,
	2022	2021
Net sales	$ 173,118	$ 190,773
Cost of sales	(146,825)	(162,441)
Gross profit	26,293	28,332
Selling, general and administrative expenses	(16,339)	(18,283)
Impairment of assets	-	(1,024)
Restructuring expenses	-	(292)
Transaction costs	(2,995)	(2,897)
Income from discontinued operations	6,959	5,836
Net finance income	190	690
Other expense, net	(801)	(577)
Income from discontinued operations before income tax	6,348	5,949
Loss on classification as held for sale	(84,785)	-
Income tax expense	(6,839)	(3,433)
Net (loss) income from discontinued operations, net of income tax	(85,276)	2.516
Less: Net loss (income) attributable to noncontrolling interest	250	(146)
Net (loss) income attributable to discontinued operations, net of income tax	$ (85,026)	$ 2,662

The following table presents the aggregated carrying amounts of assets and liabilities of discontinued operations for South Africa in the consolidated balance sheet (in thousands):

	December 31, 2022	December 31, 2021
Assets:
Cash	$ 10,958	$ 9,944
Account receivable	11,746	17,690
Inventory	27,468	29.697
Property, plant and equipment, net	31,370	31,227
Operating lease right-of-use assets	634	-
Goodwill and other intangibles assets, net	608	662
Other assets	8,188	8,200
Valuation allowance	(84,785)	-
Total assets, discontinued operations	$ 6,187	$ 97,420
Liabilities:
Accounts payable	$ 8,614	$ 10,756
Operating lease liabilities	661	-
Environmental liabilities and asset retirement obligations	637	584
Pension liabilities	7,083	7,886
Other liabilities	10,602	13,874
Total liabilities, discontinued operations	$ 27,597	$ 33,100

The following table presents the supplemental cash flow information for South Africa in the consolidated cash flow statements (in thousands):

	Year ended December 31,
	2022	2021
Cash activity:
Depreciation and Amortization	$ 3,758	$ 4,245
Capital expenditures	4,217	5,655
Noncash activity:
Loss on held for sale designation	$ 84,785	$ -
Impairment charges	-	1,024

The following table presents the financial results of Stolberg (in thousands):

	Year ended December 31,
	2022	2021
Net sales	$ 96,353	$ 520,523
Cost of sales	(99,216)	(494,082)
Gross (loss) profit	(2,863)	26,441
Selling, general and administrative expenses	(11,169)	(7,662)
Transaction costs	(7,082)	(1,566)
Impairment of assets	(32,518)	(116,587)
Insurance proceeds	49.644	15,396
Loss from discontinued operations	(3,988)	(83,978)
Net finance costs	(2,560)	(5,566)
Other expense, net	(457)	(453)
Loss from discontinued operations before income tax	(7,005)	(89,997)
Income tax expense	(4,555)	(3,640)
Net loss attributable to discontinued operations, net of income tax	$ (11,560)	$ (93,637)

The following table presents the aggregated carrying amounts of assets and liabilities of discontinued operations for Stolberg in the consolidated balance sheet (in thousands):

	December 31, 2022	December 31, 2021
Assets:
Account receivable	$ 3,086	$ 29,448
Inventory	22,888	95,340
Property, plant and equipment, net	16,311	-
Other assets	1,627	12,612
Valuation allowance	-	-
Total assets, discontinued operations	$ 43,912	$ 137,400
Liabilities:
Accounts payable	$ 4,463	$ 6,402
Operating lease liabilities	18,133	-
Debt	857	1.213
Pension liabilities	7,169	12,758
Other liabilities	9,993	33,780
Total liabilities, discontinued operations	$ 40,615	$ 54,153

The following table presents the supplemental cash flow information for Stolberg in the consolidated cash flow statements (in thousands):

	Year ended December 31,
	2022	2021
Cash activity:
Depreciation and Amortization	$ 86	$ 10,309
Capital expenditures	24,125	4,758
Noncash activity:
Loss on held for sale designation	$ -	$ -
Impairment charges	32,518	116,587

23. Subsequent Events

Management performed an evaluation of the Company's activities through the date these consolidated financial statements were available to be issued on April 7, 2023. On February 14, 2023, the Company completed the announced disposal of Ecobat Resources Stolberg which is shown with discontinued operations as of December 31, 2022. On March 31, 2023 the Company announced the restart of its Italian operations which were suspended in October, 2022.

Management's Discussion and Analysis

OVERVIEW

With operations throughout Europe and the United States, the Company is a leader in the collection, recycling, production, and distribution of energy storage solutions, lead and polypropylene products, precious metals, and other commodities. As a market leader, we drive advancement within our industry and work to develop innovative and sustainable products that benefit our stakeholders and meet the ever-growing need for more efficient, reliable energy storage solutions. We are also leading the way on lithium battery collection and recycling management services to empower sustainability efforts around the world.

Factors affecting Business Conditions and Financial results

Volatility of commodities and foreign currencies

Our results within an operating year may be affected substantially by movements in foreign currency as well as commodity markets relevant to our business, particularly those relating to lead.

Conflict in Ukraine

The ongoing conflict in Ukraine with Russia has had a material adverse impact on the Company's European operations, driven by increased commodity and raw material costs, particularly natural gas and electricity. The Company has taken action to mitigate the impact both from suppliers as well as revisiting commercial terms with its customers.

Market outlook

Following the challenging macro conditions in Q3 2022 and optimism driving some recovery in Q4, the macroeconomic environment at the beginning of 2023 is relatively uncertain. Favorably, peak inflation is likely past, China has reopened, and energy and freight prices are dropping. Conversely, inflation has proven persistent, a number of high-profile companies have announced layoffs, and cracks in the global banking system are beginning to show. Interest rates continue to rise, and analysts are divided on the odds of a recession, and whether to expect a short-lived event, or a sustained, rolling recession.

Secondary lead market indicators are mixed. The lead LME, which dropped below $1,900 per metric ton ("mt") at the end of Q3 and finished the year around $2,300 per mt, has been in a narrower band between $2,000 per mt and $2,200 per mt for most of Q1 2023. Energy prices have dropped from the astronomical levels seen in 2022 but remain above five-year average trends. For example, the TTF natural gas price averaged 53 €/MWh in February 2023, below the pre-Ukraine war price of around 75 €/MWh, but well above the same period in 2021, which averaged 17 €/MWh.

Demand for refined lead continues to outstrip supply in the US market, with a supply gap of roughly 300kmt projected for 2023. This will continue to support higher premiums. Recycling capacity is also insufficient to process available scrap, driving down prices. Global freight rate reductions may ease the imbalance via an increased opportunity for arbitrage. As of March 2023, China container rates are down 80% YoY on the Shanghai - Los Angeles route. Supply and demand in Europe are more balanced, with a projected supply gap closer to 50kmt. Several operations were temporarily or permanently closed in Europe in 2022, including the Company's own Italian smelting operations. Should more capacity come back online, it could swing the market in favor of buyers, reducing the premium for refined lead, and putting upward pressure on scrap prices.

LME and SHFE lead inventories have been steadily tightening throughout the last 18 months. The year began at historic lows, and while LME stocks have remained near this low point, the SHFE stocks have come up from a low of around 35kmt to 50kmt. This may be attributed to the restart of the Chinese economy post-COVID. Low inventories are broadly supportive of the LME lead price. Additionally, the inclusion of lead in the Bloomberg Commodities index in Q4 2022 at a modest 1% weighting increases investment fund exposure to lead and provides further support.

RESULTS OF CONTINUING OPERATIONS

Comparison of the twelve months ended December 31, 2022 and 2021

	For the year ended December 31,		Change
	2022	2021	$	%
Average LME lead price per tonne	$2,153	$2,205	$(51)	(2)%
Period end LME lead price per tonne	$2,335	$2,329	$7	0%
Tonnes of refined lead sold 000's	648	672	(24)	(4)%
Amounts in USD thousands
Net sales	$1,911,315	$1,993,602	$(82,287)	(4)%
Cost of sales (exc MTM)	(1,727,611)	(1,760,686)	33,075	(2)%
Mark to market loss	(6,903)	(1,900)	(5,003)	^*
Gross profit	176,801	231,016	(54,215)	(23)%
Selling, general & administrative expenses	(178,053)	(168,405)	(9,648)	6%
Restructuring expenses	(4,072)	(3,917)	(155)	4%
Impairment of assets	(2,343)	(22,378)	20,035	(90)%
(Loss) income from operations	(7,667)	36,316	(43,983)	(121)%
Net finance (costs) income	(249)	7.851	(8,100)	^*
Gain on sale of an investment	-	4,706	(4,706)	^*
Other income (expense), net	1,246	(159)	1,405	(884)%
(Loss) income from operations before income taxes	(6,670)	48,714	(55,384)	(114)%
Income tax expense	(13,401)	(28,875)	15,474	(54)%
Net (loss) income from continuing operations	$(20,071)	$19,839	$(39,910)	^*

^* Percentage change is greater than +/- 100%, therefore not meaningful for comparability.

Net sales

Net sales decreased by $82.3 million, or 4%, to $1.9 billion. The decrease in net sales was largely due to a combination of reduced volumes and weaker LME prices, notably volumes were decreased in Italy with both facilities being shutdown temporarily in Q4.

Cost of sales

Excluding mark-to-market, cost of sales decreased by $33.1 million, or 2%, to $1.7 billion. This decrease was largely related to reduced sales volumes slightly offset by increased energy costs, consumables and higher repairs and maintenance. The effects of mark-to-market on outstanding hedging contracts were losses of $6.9 million compared with a loss of $1.9 million in the equivalent period of 2021.

Gross profit

Gross profit was $176.8 million, a decrease of $54.2 million compared to the equivalent period in 2021 resulting from the factors described above in net sales and cost of sales.

Selling, general & administrative expenses ("SG&A")

SG&A increased by $9.6 million, or 6% to $178.1 million. The increase is largely attributable to higher advisory costs incurred and higher salary expenses (primarily to help resource the finance function and support business optimization projects).

See Note 2 for discussion of restructuring charges.

(Loss) Income from operations

In the twelve months ended December 31, 2022, the Company generated a loss of $7.7 million compared to income of $36.3 million in the equivalent period in 2021 which resulted from the factors described above in SG&A as well as Note 2.

Net finance costs

Net finance costs decreased by $8.1 million to a net cost of $0.2 million for the twelve months ended December 31, 2022. This is primarily a result of foreign exchange effects (comprising foreign currency movements on intercompany loans, foreign currency movements on deposits, foreign currency mark to market and hedge settlements) and interest (expense) income net. The reduction in interest income is a result of lower cash balances held throughout the year.

(Amounts in thousands)	Year ended December 31,
	2022	2021
Interest (expense) income, net	$ (481)	$ 2,795
Foreign currency exchange, net	2,193	5,662
Other	(1,961)	(606)
Total net finance (costs) income	$ (249)	$ 7,851

Income tax expense

Tax expense was $13.4 million for the twelve months ended December 31, 2022 which was comparable to the twelve months ended December 31, 2021.

Net (loss) income from continuing operations

Net loss in the period was $20.1 million for the twelve months ended December 31, 2022 compared with a net income of $19.8 million in the equivalent period in 2021 due to the factors described above in SG&A and Cost of sales.

Reconciliation

A reconciliation of the Company's net income to non-GAAP adjusted EBITDA (AEBITDA) is as follows (in thousands):

	For the year ended December 31,
	2022	2021
Net (loss) income from continuing operations	$ (20,071)	$ 19,839
Depreciation and amortization	51,439	55,304
Asset impairment	2,343	22,378
Restructuring expenses	4,072	3.917
Net finance (costs) income	249	(7,851)
Income taxes	13,401	28,875
Legal expenses	10,783	10,985
Property tax refund	(2,467)	-
Board member fees	-	4,750
Gain on sale of investment	-	(4,476)
Advisory costs	19,658	6,640
Other	9,107	4,414
Stranded cost adjustment	5,823	2,547
Mark to Market loss (included within Cost of sales)	6.903	1,900
AEBITDA income from operations pre-mark-to-market	$ 101,240	$ 149,222

Liquidity and Capital Resources Continuing and Discontinued Operations

Historically, the Company has funded its cash requirements from internally generated cash flow and available borrowing facilities. The principal uses of cash have been to fund capital expenditures, interest payments on outstanding debt and financing facilities, and cash settlement requirements for derivative contracts.

The Company aims to have sufficient committed borrowing facilities to cover its estimated peak cash requirements for at least the next twelve months. The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts, bank loans and facilities, factoring and letters of credit.

The table below reflects the Company's sources, facilities, and availability of liquidity as of December 31, 2022 (in thousands):

	Total facility	Outstanding	Letter of credit	Available
Global ABL	$ 163,549	$ (98,847)	$ (4,835)	$ 59,867
Factoring facility	26,764	(18,382)	-	8.382
Committed facilities	190.313	(117,229)	(4,835)	68,249
Trade financing ^*	70.000	-	-	-
South Africa facility	16,576	(739)	(1,600)	14,237
Subtotal	276,889	(117,968)	(6,435)	82.486
Term loans	4,746	(4,746)	-	-
Total	$ 281,635	$ (122,714)	$ (6,435)	$ 82,486
Cash and cash equivalents				116,300
Overdraft facility				(1,818)
Total liquidity				$ 196,968

^* The trade financing facilities were available for financing of concentrate purchases made by the Stolberg Operations, the ability to draw on these facilities is restricted to the amount of concentrates the Company holds.

Total liquidity at December 31, 2022 is $197.0 million, which comprises $114.5 million cash and cash equivalents net of overdraft plus $82.5 million availability from facilities. Cash and cash equivalents includes $105.3 million attributable to continuing operations and $11.0 million related to held for sale entities which is excluded from cash and cash equivalents on the balance sheet.

Management considers the Company's overall credit facilities are sufficient for its present requirements. The Company's facilities are subject to certain covenants and conditions, including change of control provisions. The Company restructured its European and US credit facilities in November 2021, replacing these facilities with a $200 million global ABL facility (see Note 14 for details), approximately $163.5 million of the facility was available as of December 31, 2022.

The following table shows the Company's sources and uses of funds for the twelve months ended December 31, 2022 and 2021 (in thousands):

	Year ended December 31,
	2022	2021
Net cash from operating activities	$ 88,194	$ 117,772
Net cash used by investing activities	(104,255)	(70,662)
Net cash from (used by) financing activities	17,146	(145,611)
Changes in cash, restricted cash and cash equivalents ^*	$ 1,085	$ (98,501)

^* Cash and cash equivalents include cash on deposit and short-term deposits and is stated before the effects of exchange rate adjustments.

Net Cash Flow from Operations

Net cash provided by operating activities was $88.2 million in the twelve months ended December 31, 2022, compared to a net cash provided by operating activities of $117.8 million in the equivalent period of 2021:

―	Results from operations decreased by $44.0 million to a loss of $7.7 million in 2022 compared to income of $36.3 million in 2021.
―	Non-cash losses on mark-to-market outstanding contracts were $6.9 million in 2022 compared with gains of $1.9 million in the equivalent period of 2021.

The following tables shows the Company's cash flows within key components of working capital for the twelve months ended December 31, 2022 and 2021 (in thousands):

	Twelve months ended December 31,
	2022
	Group	Stolberg Operations	Group excluding Stolberg Operations
Accounts Receivable	$ 49,988	$ 35,282	$ 14,706
Inventory	66,191	74,389	(8,198)
Accounts Payable	(34,956)	(16,074)	(18,882)
Inter Company	-	194	(194)
Rec/Payables
	$ 81,223	$ 93,791	$ (12,568)

	Twelve months ended December 31,
	2021
	Group	Stolberg Operations	Group excluding Stolberg Operations
Accounts Receivable	$ (51,843)	$ (13,214)	$ (38,629)
Inventory	28,821	56,808	(27,987)
Accounts Payable	17,213	(21,759)	38,972
Inter Company	-	1,138	(1,138)
Rec/Payables
	$ (5,809)	$ 22,973	$ (28,782)

―	Accounts receivable decrease was $50.0 million in the twelve months ended December 31, 2022 compared with a $51.8 million increase in 2021. The variance reflects the reduction in activity in the Stolberg facility through the collection of receivables prior to the flood.
―	Inventories decreased $66.2 million in 2022 compared with a decrease of $28.8 million in 2021. The increased realization of cash in the current year was largely attributable to a reduction in concentrates and finished goods on hand at the Stolberg facility which is currently shutdown due to flooding.
―	The timing of purchase payments resulted in the $35.0 million decrease in accounts payable in the twelve months ended December 31, 2022 against a $17.2 million increase in accounts payables in 2021.

Net Cash Flow from Investing Activities

Cash outflows with respect to investing activities were $104.3 million in the twelve months ended December 31, 2022 compared to $70.7 million of outflow in the equivalent period of 2021:

―	Capital expenditures were $125.0 million in 2022 compared to $78.8 million in 2021, $19.4 million of the $46.2 million increase relates to the rebuild at Stolberg, Germany, while a further $15.3 million relates to the expansion of the Solutions business and $3.7 million relates to the build of the Company's new ERP system.
―	Insurance recoveries related to the Stolberg, Germany flood for reimbursement of repairs and replacement assets totaled $49.6 million in 2022 compared to $15.4 million in 2021.
―	Outflows from derivative contracts were $26.7 million in the twelve months ended December 31, 2022 compared to $6.6 million of proceeds in 2021.

Net Cash Flow from Financing Activities

The net cash inflow with respect to financing activities was $17.1 million in the twelve months ended December 31, 2022 compared to $145.6 million outflow in 2021:

―	$13.6 million inflow in 2022 related to increased usage under the Global ABL facility.
―	The outflow in 2022 is predominantly related to the $4.2 million payment of withholding tax related to the year-end distribution.