Note 14. Commitments and Contingencies

Purchase Commitments

As of October 31, 2023, the Company was contractually committed for $30.2 million of capital expenditures for purchases of property and equipment. A majority of these obligations are expected to be satisfied in the next twelve months.

Insurance

Commercial Self-Insured Losses

For the fiscal years ended October 31, 2023 and 2022, the Company retains a significant portion of the risk for workers' compensation, automobile, and general liability losses (“self-insured commercial liability”) with the following deductibles (per occurrence):

¹In 2023, the Company is subject to the first $250,000 deductible plus 50% of any claim incurred in the amounts between $0.5 million and $1.0 million.

Reserves have been recorded that reflect the undiscounted estimated liabilities including claims incurred but not reported. When a recognized liability is covered by third-party insurance, the Company records an insurance claim receivable to reflect the covered liability. Amounts estimated to be paid within one year have been included in Accrued expenses and other current liabilities, with the remainder included in Other liabilities, non-current on the Consolidated Balance Sheets. Insurance claims receivables that are expected to be received from third-party insurance within one year have been included in Prepaid expenses and other current assets, with the remainder included in Other non-current assets on the Consolidated Balance Sheets.

The following table summarizes as of October 31, 2023 for (1) recorded liabilities, related to both asserted as well as unasserted insurance claims and (2) any related insurance claims receivables.

The Company has accrued $7.6 million and $7.0 million, as of October 31, 2023 and 2022, respectively, for estimated (1) losses reported and (2) claims incurred but not reported, net of recoveries.

Medical Self-Insured Losses

The Company offers employee health benefits via a partially self-insured medical benefit plan. Participant claims exceeding certain limits are covered by a stop-loss insurance policy. As of October 31, 2023 and 2022, the Company had accrued $1.2 million and $3.3 million, respectively, for estimated health claims incurred but not reported based on historical claims amounts and average lag time. These accruals are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The Company contracts with a third-party administrator to process claims, remit benefits, etc. The third-party administrator required the Company to maintain a bank account to facilitate the administration of claims.

Litigation

The Company is currently involved in certain legal proceedings and other disputes with third parties that have arisen in the ordinary course of business. Management believes that the outcomes of these matters will not have a material impact on the Company’s financial statements and does not believe that any amounts need to be recorded for contingent liabilities in the Company’s consolidated balance sheet.

Effective April 1, 2020, the state of Washington Department of Revenue (“DOR”) published a rule which effectively deems the provision of standalone concrete pumping services as a retail sale subject to sales tax. The Company does not charge sales tax to its customers that provide a reseller certificate, treating this as a wholesale transaction rather than as a retail sale. As such, for the period from April 1, 2020 through October 31, 2023, the Company has continued to not charge sales tax where its customers provide a reseller certificate and has petitioned for declaratory relief from the rule. In February 2023, the Company received an adverse ruling from the Thurston County superior court regarding its position, which it has appealed and oral argument is scheduled for February 2024 in the Court of Appeals in Tacoma. The Company believes there is a basis for its position that standalone concrete pumping services provided to a wholesale reseller, rather than to a retail customer, is not a retail sale, and contests the adverse ruling in its appeal. As of the fiscal year ended October 31, 2023, no liability has been recorded in connection with the adverse ruling. If the Company is not successful in its arguments against the DOR in its appeal, an estimated $3.5 million in sales tax, inclusive of interest and penalties, may be owed and would be accrued in the quarter in which the court makes any unfavorable determination.

Letters of credit

The ABL Facility provides for up to $22.5 million of standby letters of credit. As of October 31, 2023, total outstanding letters of credit totaled $4.1 million, the vast majority of which had been committed to the Company’s general liability insurance provider.