Financial Performance - Net sales for 2024 were $1,305.1 million, a decrease of 2.5% compared to $1,338.2 million in 2023[266]. - Gross profit for 2024 was $327.9 million, slightly down from $330.8 million in 2023, resulting in a gross margin of 25.1%[266]. - Net income for 2024 was $4.1 million, a significant decline from $33.7 million in 2023, reflecting a net margin of 0.3%[266]. - The company reported a goodwill impairment of $20.2 million in 2024, compared to no impairment in 2023[266]. - Cash flows from operating activities generated $23.0 million in 2024, down from $27.8 million in 2023[272]. - The company reported a comprehensive loss of $13.3 million for the year ended December 31, 2024, compared to a comprehensive income of $2.1 million in 2023[277]. - Income before income taxes decreased significantly from $42.8 million in 2023 to $13.9 million in 2024, a decline of 67.6%[396]. - The total income tax provision for 2024 was $9.8 million, compared to $9.1 million in 2023, representing a 7.7% increase[396]. Assets and Liabilities - Total current assets increased to $722.8 million in 2024 from $719.5 million in 2023, primarily driven by an increase in cash and cash equivalents[264]. - Total liabilities remained relatively stable at $406.0 million in 2024, compared to $405.6 million in 2023[264]. - As of December 31, 2024, the total equity of the company is $637.6 million, an increase from $626.9 million in 2023[277]. - The total cash and cash equivalents, including restricted cash, amounted to $541.7 million as of December 31, 2024[289]. - The company had total borrowings outstanding of $105.0 million under its credit facilities as of December 31, 2024, up from $72.0 million in 2023[385]. Inventory and Cost Management - The company’s inventory is significantly composed of steel, which is subject to market price volatility, impacting overall financial performance[241]. - As of December 31, 2024, total inventories decreased to $422.7 million from $455.6 million in 2023, with raw materials and parts at $275.4 million[357]. - The company reviews individual items in its inventory to determine if any item's net realizable value is below its carrying value[303]. - The company accrues for estimated product warranty costs at the time revenue is recognized, based on historical claims experience[320]. Foreign Operations and Currency Risk - Foreign operations represented 26.9% of total assets and 13.5% of total net sales for the year ended December 31, 2024, indicating significant exposure to foreign exchange risk[238]. - A 10% fluctuation in foreign exchange rates would have impacted net sales by $17.7 million and net income by $2.0 million for the year ended December 31, 2024[240]. - The company evaluates the need to hedge foreign currency transactions, but does not apply hedge accounting, impacting earnings recognition[239]. - The company’s foreign subsidiaries' operations are subject to currency fluctuations, which can affect the valuation of net assets in U.S. dollars[238]. Shareholder and Legal Matters - The company settled a shareholder class action lawsuit for $13.7 million, fully funded by insurance carriers, with the case dismissed on September 10, 2024[411]. - The company reached a settlement of $8.4 million related to a lawsuit involving its GEFCO subsidiary, paid in the fourth quarter of 2024[412]. - The company recorded a loss of $1.9 million related to the settlement of a lawsuit involving its Telsmith subsidiary, which was resolved for $6.3 million in September 2024[413]. Research and Development - Research and development costs amounted to $23.8 million, $22.0 million, and $31.5 million for the years 2024, 2023, and 2022, respectively[339]. Segment Information - The company operates in two reportable segments: Infrastructure Solutions and Materials Solutions, focusing on equipment for road building and related construction activities[282]. - The Infrastructure Solutions segment focuses on manufacturing and servicing asphalt and concrete plants, catering to a diverse range of customers including governmental agencies[433]. Tax and Deferred Tax Assets - The total deferred tax assets increased from $54.7 million in 2023 to $64.6 million in 2024, primarily due to an increase in amortization of research and experimental expenditures[398]. - The valuation allowance for deferred tax assets decreased by $0.1 million in 2024, driven by the release of the valuation allowance on deferred tax assets related to NOLs generated by the Company's Chilean subsidiary[399]. - The Company had unrecognized tax benefits of $16.8 million as of December 31, 2024, an increase from $13.0 million in 2023, reflecting a rise of 29%[403]. Goodwill and Intangible Assets - The Company’s goodwill balance as of December 31, 2024, was $79.0 million, down from $80.3 million in 2023, reflecting the impairment charge[370]. - The total intangible assets amounted to $66.5 million, with a net carrying value of $11.2 million after accumulated amortization[371]. - The amortization expense on intangible assets for 2024 was $4.8 million, compared to $5.5 million in 2023 and $8.5 million in 2022[371]. Compensation and Employee Benefits - The Company’s share-based compensation expense was $5.0 million in 2024, up from $4.1 million in 2023[277]. - The Company’s contributions to the 401(k) plan increased to $10.1 million in 2024, up from $8.1 million in 2023 and $7.7 million in 2022, reflecting a growth of 24.8% year-over-year[395].

Financial Data and Key Metrics Changes - The company reported record quarterly net sales, adjusted net income, and adjusted EBITDA for Q4 2024, with adjusted EBITDA of $47.9 million, a 47% increase year-over-year [8][13][26] - Full year net sales were relatively flat at $1.3 billion, with adjusted EBITDA for the year at $111.8 million, a 1.6% increase [11][13][27] - Adjusted EBITDA margin increased by 360 basis points to 13.3% in Q4, while full year adjusted EBITDA margins increased by 40 basis points to 8.6% [13][27] Business Line Data and Key Metrics Changes - The Infrastructure Solutions segment saw strong net sales driven by capital equipment and aftermarket parts, with a 4.6% increase in net sales for the year [28] - The Material Solutions segment faced challenges with lower capital equipment sales due to high interest rates and dealer destocking, although aftermarket parts sales remained stable [9][30] - Adjusted EBITDA margins for the Infrastructure Solutions segment reached a record 21.3% in Q4, while the Material Solutions segment's performance was negatively impacted by lower sales volumes [28][30] Market Data and Key Metrics Changes - Domestic funding for infrastructure projects remains strong, with states committing over $180 billion in highway and bridge formula funds for new projects [20] - The total value of state and local government highway and bridge contract awards increased to nearly $121 billion in 2024, up from $114.6 billion in 2023 [20] - The company sees international markets as opportunities for growth, with strong brand recognition but modest market share [22][23] Company Strategy and Development Direction - The company is focused on operational excellence, procurement efforts, and exploring inorganic growth opportunities as part of its capital allocation priorities [14][33] - New product launches and advanced digital integrations are planned for 2025, with a strong emphasis on customer engagement and satisfaction [18][36] - The company aims to leverage its strong balance sheet to fund growth and capitalize on multiyear federal and state funding for infrastructure [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding customer expectations for 2025, with expectations of second-half tailwinds [36] - Concerns over interest rate reductions persist, but there are positive signs of inventory reductions and order intake in early 2025 [37][50] - The company anticipates adjusted EBITDA in the range of $105 million to $125 million for 2025, with a seasonal distribution of earnings expected [33] Other Important Information - The company generated positive free cash flow of $32.1 million in Q4 due to profitable sales and effective working capital management [32] - Approximately 80% of net sales are domestic, with less than 15% of purchases sourced from China, mitigating some tariff risks [15] Q&A Session Summary Question: Progress on manufacturing inefficiencies - Management noted steady improvement in manufacturing efficiencies, with Q4 showing one of the lowest inefficiencies in recent times [44][46] Question: Normalized backlog levels for Infrastructure Solutions - Management indicated strong order intake for asphalt and concrete plant equipment, expressing confidence in the Infrastructure Solutions segment [51][52] Question: Importance of bonus depreciation for orders and backlog - Management acknowledged that reinstating bonus depreciation would significantly benefit smaller customers and potentially improve order and backlog levels [56] Question: Impact of interest rates on the mobile market - Management highlighted that while elevated interest rates have posed challenges, there are signs that customers are adapting and beginning to replace aging equipment [59][60]

Fourth Quarter and Full Year Earnings February 26, 2025 B U I L T T O C O N N E C T Safe Harbor Certain statements contained in this presentation contain forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the ...

Financial Performance - Record net sales of $359.0 million, an increase of 6.5% compared to $337.2 million in Q4 2023[4] - Strong net income of $21.1 million, up 41.6% from $14.9 million in Q4 2023; adjusted net income of $27.2 million, a 32.0% increase[4] - EBITDA of $40.0 million, a 57.5% increase from $25.4 million in Q4 2023; record adjusted EBITDA of $47.9 million, up 46.9%[4] - Diluted EPS of $0.92, a 41.5% increase from $0.65 in Q4 2023; record adjusted EPS of $1.19, up 32.2%[4] - Gross profit for Q4 2024 was $102.9 million, compared to $89.1 million in Q4 2023, reflecting a significant improvement in profitability[22] - Income from operations for Q4 2024 was $34.8 million, compared to $18.9 million in Q4 2023, with adjusted income from operations rising to $42.8 million from $26.3 million[43] - Adjusted operating margin improved to 11.9% in Q4 2024 from 7.8% in Q4 2023, reflecting operational efficiency gains[43] Segment Performance - Infrastructure Solutions segment net sales of $248.8 million increased by 11.9% due to strong demand for asphalt and concrete plants[13] - Materials Solutions segment net sales of $110.2 million decreased by 4.1% primarily due to lower domestic equipment sales[13] - Infrastructure Solutions segment net sales increased by 11.9% to $248.8 million, while Materials Solutions segment sales decreased by 4.1% to $110.2 million[26] - The Infrastructure Solutions segment's operating adjusted EBITDA margin improved to 14.5% in 2024 from 12.8% in 2023[30] Cash Flow and Liquidity - Operating cash flow of $36.6 million and free cash flow of $32.1 million in Q4 2024[4] - Total liquidity of $228.1 million, consisting of $88.3 million in cash and cash equivalents and $139.8 million available for additional borrowings[13] - Cash, cash equivalents, and restricted cash increased to $90.8 million as of December 31, 2024, compared to $63.2 million at the end of 2023[32] - The company reported a net cash provided by operating activities of $23.0 million for the year ended December 31, 2024, down from $27.8 million in 2023[36] - Free cash flow for Q4 2024 was $32.1 million, down from $37.5 million in Q4 2023, while net cash provided by operating activities decreased to $36.6 million from $46.6 million[52] Debt and Backlog - Long-term debt rose to $105.0 million in 2024 from $72.0 million in 2023, indicating increased leverage[32] - Backlog decreased by 26.4% to $419.6 million compared to $569.8 million in Q4 2023[4] Future Outlook - For full year 2025, the company expects adjusted EBITDA in the range of $105 million to $125 million[4] Transformation and Restructuring - Transformation program costs for 2024 totaled $33.5 million, up from $29.7 million in 2023, indicating ongoing investment in strategic initiatives[43] - The company is focused on restructuring efforts, with related charges of $9.5 million in 2024, compared to $7.7 million in 2023, aimed at simplifying operations[43] - Goodwill impairment charges of $20.2 million were recorded in 2024, reflecting challenges in the Materials Solutions reporting unit[43] Yearly Performance - For the year ended December 31, 2024, net sales were $1,305.1 million, a decline of 2.5% from $1,338.2 million in 2023[30] - Net sales for Q4 2024 were $359.0 million, an increase from $337.2 million in Q4 2023, while total net sales for the year decreased to $1,305.1 million from $1,338.2 million[43] - Total operating expenses decreased to $68.1 million in Q4 2024 from $70.2 million in Q4 2023, contributing to improved operating income[22]

Core Points - Astec Industries, Inc. will hold a conference call to discuss its fourth quarter and full year 2024 financial results on February 26, 2025 [1] - The call will be hosted by key executives including the President and CEO, CFO, and Senior VP of Administration and Investor Relations [2] - A replay of the call will be available until March 12, 2025, and a transcript will be provided within 5 business days after the call [3] Company Overview - Astec is a manufacturer specializing in equipment for asphalt road building, aggregate processing, and concrete production [4] - The company's operations are divided into two main segments: Infrastructure Solutions and Materials Solutions [4]

Financial Performance - Net sales for Q3 2024 were $291.4 million, a decrease of 3.9% compared to $303.1 million in Q3 2023[94]. - Gross profit for Q3 2024 was $66.8 million, representing 22.9% of net sales, down from $69.6 million or 23.0% in Q3 2023, a decrease of 4.0%[113]. - Loss from operations for Q3 2024 was $7.2 million, an increase of 38.5% compared to the prior year[94]. - Domestic sales for Q3 2024 were $211.2 million, or 72.5% of consolidated net sales, down 8.0% from $229.6 million in Q3 2023[109]. - International sales for Q3 2024 increased to $80.2 million, or 27.5% of consolidated net sales, up 9.1% from $73.5 million in Q3 2023[111]. Backlog and Orders - Backlog as of Q3 2024 was $475.9 million, a decrease of 22.6% from the previous year[94]. - The backlog of orders decreased by $138.9 million, or 22.6%, to $475.8 million as of September 30, 2024, compared to $614.7 million as of September 30, 2023[122]. Expenses - Selling, general and administrative expenses decreased by $8.7 million, or 11.7%, to $65.6 million in Q3 2024[115]. - Selling, general and administrative expenses increased by $1.4 million, or 0.7%, to $208.1 million for the first nine months of 2024, compared to $206.7 million for the same period in 2023[116]. - The total restructuring-related charges for the three months ended September 30, 2024, were $8.4 million, compared to $0.5 million for the same period in 2023[118]. Segment Performance - Infrastructure Solutions segment sales increased by $1.8 million, or 1.1%, to $165.0 million for the third quarter of 2024, while Materials Solutions segment sales decreased by $13.5 million, or 9.6%, to $126.4 million[124][128]. - Segment Operating Adjusted EBITDA for Infrastructure Solutions was $15.6 million for the third quarter of 2024, an increase of $2.3 million, or 17.3%, compared to the same period in 2023[138][139]. - Materials Solutions segment Operating Adjusted EBITDA was $14.5 million for Q3 2024, up $5.0 million or 52.6% from $9.5 million in Q3 2023, primarily due to litigation-related adjustments and favorable inventory changes[140]. - For the first nine months of 2024, Infrastructure Solutions segment Operating Adjusted EBITDA was $68.4 million, an increase of $0.9 million or 1.3% from $67.5 million in the same period of 2023, driven by favorable pricing and reduced costs[142]. - Materials Solutions segment Operating Adjusted EBITDA decreased to $30.0 million for the first nine months of 2024, down $12.4 million or 29.2% from $42.4 million in 2023, mainly due to manufacturing inefficiencies and unfavorable sales volume[143]. Cash Flow and Liquidity - Net cash used in operating activities for the nine months ended September 30, 2024, was $(13.6) million, an improvement of $5.2 million compared to $(18.8) million in the same period of 2023[154]. - Net cash used in investing activities was $14.0 million for the nine months ended September 30, 2024, compared to $3.9 million in the same period of 2023, primarily due to the absence of prior year asset sales[156]. - Total liquidity as of September 30, 2024, was $195.1 million, consisting of $52.7 million in cash and cash equivalents and $142.4 million available for additional borrowings[146]. - As of September 30, 2024, the company had $99.0 million in outstanding borrowings under its Credit Facilities, with $142.4 million available for future borrowings[149]. Impairments and Charges - A goodwill impairment charge of $20.2 million was recognized for the Materials Solutions reporting unit due to macroeconomic conditions[98]. - A pretax non-cash goodwill impairment charge of $20.2 million was recognized for the Materials Solutions reporting unit during the second quarter of 2024[117]. Market Outlook - The company expects total implementation costs for the ERP system to range from $180 to $200 million, with $127 million incurred to date[95]. - The company anticipates that steel prices will remain stable and oil prices will remain high throughout 2024 and into 2025[102][103]. Taxation - The effective income tax rate for the third quarter of 2024 was 27.1%, compared to 8.5% for the third quarter of 2023, driven by higher pretax book loss[120]. Dividends - The company paid quarterly dividends of $0.13 per common share in both Q3 2024 and Q3 2023[158].

Financial Data and Key Metrics Changes - Consolidated net sales for Q3 2024 were $291.4 million, a decrease of 3.9% year-over-year due to reductions in equipment and parts sales [9][28] - Adjusted EBITDA increased by 74%, with an adjusted EBITDA margin improvement of 270 basis points [29] - Adjusted earnings per share was $0.31 compared to a loss of $0.01 in the prior year [30] Business Line Data and Key Metrics Changes - Infrastructure Solutions segment net sales increased by 1.1% to $165 million, driven by an $8.4 million increase in equipment sales [31] - Material Solutions segment net sales decreased by 9.6% to $126.4 million, primarily due to lower domestic equipment sales [32] - Segment operating adjusted EBITDA for Infrastructure Solutions increased by 17.3% to $15.6 million, while Material Solutions saw a 52.6% increase to $14.5 million [31][32] Market Data and Key Metrics Changes - Domestic sales accounted for approximately 72% of consolidated net sales, with a year-over-year decrease of 8%, while international sales increased by 9.1% [29] - The backlog at the end of the quarter was $476 million, with Infrastructure Solutions showing stability and Material Solutions experiencing moderating trends [12][19] Company Strategy and Development Direction - The company is focused on three core pillars: empowering employees, customer focus, and industry-changing innovations [13] - The strategic roadmap aims to enhance operational efficiency and drive sustainable growth [38] - The company is exploring inorganic growth opportunities that align with its financial criteria [40] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging market environment but emphasized strong demand for asphalt and concrete plant deliveries [36] - There is cautious optimism for future orders based on strong quoting activity and customer feedback [49][57] - The company expects full-year sales to be broadly flat compared to the prior year, with gross margin anticipated at the lower end of the previously provided range [41] Other Important Information - The company generated $19.9 million of free cash flow in the quarter and ended with total available liquidity of $195.1 million [34] - The company is committed to sustainability and has introduced innovative products that minimize environmental impact [22][24] Q&A Session Summary Question: What attracted you to the opportunity at Astec? - The new CFO highlighted the strong foundation built by the management team and the potential for value creation through growth drivers [45] Question: Was there a favorable impact to EBITDA from a legal settlement in this third quarter? - Management clarified that there was a $2 million release related to a legal case, contrasting with a $6.4 million charge in the prior year [46] Question: How much has dealer destocking been impacting sales and orders? - Management noted a 4% to 5% reduction in dealer inventory and expressed optimism based on positive dealer feedback [47][48] Question: Do you expect the positive quoting activity to translate to orders in the fourth quarter? - Management indicated historical trends suggest a positive conversion of rental agreements in Q4, with a focus on larger systems [49] Question: Can you talk about ongoing manufacturing efficiencies? - Management expressed satisfaction with cross-site production efforts and emphasized the need to balance cost reductions with expected output [51] Question: What is the outlook for cash flow generation in Q4? - Management expects positive cash flow in Q4, despite some additional cash outflows related to legal settlements [54] Question: Will CapEx remain at maintenance levels next year? - Management indicated that CapEx will likely remain strong, with ongoing investments in operations and potential manufacturing capacity in India [56]

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Financial Performance - Net sales for Q3 2024 were $291.4 million, a decrease of 3.9% compared to Q3 2023[1]. - The net loss was $6.2 million, which included an $8.4 million charge related to a legacy litigation settlement; adjusted net income was $7.0 million[1][2]. - Adjusted EBITDA increased by 74.0% to $17.4 million, while EBITDA declined to $0.6 million, a decrease of 66.7%[1][3]. - The company reported a loss from operations of $7.2 million for Q3 2024, compared to a loss of $5.2 million in Q3 2023[28]. - Adjusted income from operations for Q3 2024 was $9.9 million, up from $3.1 million in Q3 2023, resulting in an adjusted operating margin of 3.4%[28]. - The net loss attributable to controlling interest for Q3 2024 was $6.2 million, slightly improved from a loss of $6.6 million in Q3 2023[29]. - The company reported an adjusted EPS of $0.31 for Q3 2024, compared to a loss of $0.01 in Q3 2023[29]. - EBITDA margin for Q3 2024 was 0.2%, down from 0.6% in Q3 2023[30]. Sales Performance - Domestic sales decreased by 8.0% to $211.2 million, while international sales increased by 9.1% to $80.2 million[3]. - Infrastructure Solutions segment net sales increased slightly to $165.0 million, with operating adjusted EBITDA rising 17.3% to $15.6 million[6]. - Materials Solutions segment net sales decreased by 9.6% to $126.4 million, but operating adjusted EBITDA increased by 52.6% to $14.5 million[7]. - Infrastructure Solutions revenue increased to $165.0 million, up 1.1% from $163.2 million in 2023[18]. - Materials Solutions revenue decreased to $126.4 million, down 9.6% from $139.9 million in 2023[18]. - Net sales totaled $291.4 million, a decline of 3.9% compared to $303.1 million in 2023[18]. Cash Flow and Liquidity - Total liquidity was $195.1 million, consisting of $52.7 million in cash and $142.4 million available for additional borrowings[8]. - Free cash flow for the quarter was $19.9 million after capital expenditures of $2.6 million[8]. - Free cash flow for Q3 2024 was $19.9 million, a significant improvement from a negative $24.2 million in Q3 2023[31]. - Net cash used in operating activities was $(13.6) million for the nine months ended September 30, 2024, compared to $(18.8) million in 2023[21]. - Cash, cash equivalents, and restricted cash decreased to $55.3 million from $63.2 million at the end of 2023[20]. Backlog and Assets - The backlog decreased by 22.6% to $475.8 million, with domestic backlog down 26.0% to $377.6 million[3][6]. - Total assets as of September 30, 2024, were $1,067.1 million, compared to $1,059.3 million at the end of 2023[20]. - Current liabilities remained stable at $299.2 million, slightly up from $299.0 million in 2023[20]. Charges and Impairments - The company incurred restructuring and related charges of $8.4 million in Q3 2024, compared to only $0.1 million in Q3 2023[28]. - Goodwill impairment charges of $20.2 million were recorded in the nine months ended September 30, 2024, with no charges in the same period of 2023[29]. - The transformation program costs are included in "Cost of sales" and "Selling, general and administrative expenses" and are part of ongoing strategic initiatives[23].

Core Insights - Astec Industries, Inc. reported a net sales decrease of 3.9% to $291.4 million in Q3 2024 compared to Q3 2023, with a net loss of $6.2 million, which included an $8.4 million charge related to a litigation settlement [1][2][3] - Adjusted net income for the quarter was $7.0 million, with adjusted EBITDA increasing by 74.0% to $17.4 million [1][3][32] - The company experienced mixed results across its segments, with Infrastructure Solutions showing sales and margin growth, while Materials Solutions faced challenging market conditions [2][6][7] Financial Performance - Net sales: $291.4 million in Q3 2024 vs. $303.1 million in Q3 2023, a decrease of 3.9% [1][17] - Domestic sales decreased by 8.0% to $211.2 million, while international sales increased by 9.1% to $80.2 million [3][17] - Backlog decreased by 22.6% to $475.8 million, with domestic backlog down 26.0% and international backlog down 5.7% [3][17] Segment Results - Infrastructure Solutions segment net sales increased slightly to $165.0 million, with an operating adjusted EBITDA of $15.6 million, up 17.3% [6][17] - Materials Solutions segment net sales decreased by 9.6% to $126.4 million, but operating adjusted EBITDA increased by 52.6% to $14.5 million [7][17] Cash Flow and Liquidity - Operating cash flow for the quarter was $22.5 million, with free cash flow of $19.9 million after capital expenditures of $2.6 million [1][8] - Total liquidity stood at $195.1 million, comprising $52.7 million in cash and cash equivalents and $142.4 million available for additional borrowings [8][20] Balance Sheet Highlights - Total assets increased to $1,067.1 million as of September 30, 2024, compared to $1,059.3 million at the end of 2023 [20] - Total equity decreased to $631.4 million from $653.7 million [20] Strategic Focus - The company is concentrating on commercial and operational excellence, aiming to drive sustainable value creation for shareholders [2][3] - Ongoing transformation initiatives include a phased implementation of a standardized enterprise resource planning system and lean manufacturing efforts [24][25]