Accounts Receivable and Note Receivable

9 Months Ended

Sep. 30, 2023

Accounts receivable consist of the following:


(In thousands)	September 30 2023		December 31 2022
Trade accounts receivable	$	301,636	$	272,775
Less: Allowance for expected credit losses	(13,606)		(8,347)

Trade accounts receivable, net	$	288,030	$	264,428

Other receivables (a)	$	29,557	$	25,379

(a) Other receivables include employee receivables, insurance receivable, tax claims and refunds and other miscellaneous items not included in Trade accounts receivable, net.

The provision for expected credit losses related to trade accounts receivable was as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2023		2022		2023		2022
Provision for expected credit losses related to trade accounts receivable	$	5,962	$	(340)	$	6,356	$	(283)

At September 30, 2023, $14.2 million of the Company's trade accounts receivable were past due by twelve months or more, with $9.8 million of this amount reserved. One of HE's steel mill customers located in the Middle East, has idled operations and missed contractual progress payments. Due to the Company's assessment of collectability, although the customer had indicated plans to either restart operations or sell to a third party, the Company recorded a reserve against their net remaining receivable balance of $5.3 million during the three months ended September 30, 2023.

Accounts Receivable Securitization Facility

In June 2022, the Company and its SPE entered into an AR Facility with PNC Bank, National Association ("PNC") to accelerate cash flows from trade accounts receivable. The AR Facility has a three-year term. The maximum purchase commitment by PNC is $150.0 million.

The total outstanding balance of trade receivables that have been sold and derecognized by the SPE is $150.0 million and $145.0 million as of September 30, 2023 and December 31, 2022, respectively. The SPE owned $86.0 million and $69.7 million of trade receivables as of September 30, 2023 and December 31, 2022, respectively, which is included in the caption Trade accounts receivable, net, on the Condensed Consolidated Balance Sheets. See Note 9, Debt and Credit Agreements, for AR Facility expenses incurred.

Proceeds received from the AR Facility were as follows and are included in cash from operating activities in the Condensed Consolidated Statements of Cash Flows:


	Nine Months Ended September 30
(In millions)	2023		2022
Upon execution in June 2022	$	—	$	120.0
Additional proceeds	5.0		25.0
Total received	$	5.0	$	145.0

Factoring Arrangements

The Company maintains factoring arrangements with a financial institution to sell certain accounts receivable that are also accounted for as a sale of financial assets. The following table reflects balances for net amounts sold and program capacities for the arrangements:


(In millions)	September 30 2023		December 31 2022
Net amounts sold under factoring arrangements	$	15.8	$	17.3
Program capacities	31.2		31.4

Note Receivable

In January 2020, the Company sold IKG for $85.0 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer has a face value of $40.0 million, bearing interest at 2.50%, that is paid in kind and matures on January 31, 2027. Any unpaid principal, along with any accrued but unpaid interest is payable at maturity. Prepayment is required in case of a change in control or a percentage of excess cash flow, as defined in the note receivable agreement. Because there are no scheduled payments under the terms of the note receivable, the balance is classified as noncurrent as of September 30, 2023 and December 31, 2022, and is included in the caption Other assets on the Condensed Consolidated Balance Sheet. During the nine months ended September 30, 2023, the Company received a payment of $11.2 million related to excess cash flow.


(In millions)	September 30 2023		December 31 2022
Note receivable, at amortized cost	$	13.7	$	23.9
Note receivable, fair value	15.2		23.8