Core Viewpoint - Astec Industries, Inc. is set to release its first quarter 2025 financial results on April 29, 2025, and will host a conference call to discuss these results [1][2]. Group 1: Conference Call Details - The conference call will be hosted by Jaco van der Merwe (President and CEO), Brian Harris (CFO), and Steve Anderson (Senior VP of Administration and Investor Relations) [2]. - Participants can access the call by dialing (888) 440-4118 or +1 (646) 960-0833 for international callers, at least 10 minutes prior to the scheduled time [2]. - A live webcast will also be available, and an archived version will be accessible for ninety days post-call [2][3]. Group 2: Company Overview - Astec Industries, Inc. specializes in manufacturing equipment for asphalt road building, aggregate processing, and concrete production [4]. - The company operates in two primary business segments: Infrastructure Solutions and Materials Solutions [4].

Group 1 - Astec Industries, Inc. will participate in the Sidoti Small Cap Virtual Conference on March 19, 2025, with key executives presenting and engaging in one-on-one meetings [1] - The presentation by Astec will occur from 1:45 P.M. to 2:15 P.M. Eastern time, and interested parties can access it via a provided link [1] - The company specializes in manufacturing equipment for asphalt road building, aggregate processing, and concrete production, divided into two main business segments: Infrastructure Solutions and Materials Solutions [2] Group 2 - Infrastructure Solutions includes road building, asphalt and concrete plants, as well as thermal and storage solutions, while Materials Solutions encompasses aggregate processing and mining equipment [2] - Astec also offers controls and automation products aimed at enhancing productivity through improved equipment performance [2]

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]

Financial Highlights - Net sales for the full year reached $13051 billion[6] - Adjusted EBITDA for the full year was $1118 million[6] - Free cash flow for the full year was $25 million[6] - Q4 net sales increased by 65% to $3590 million compared to $3372 million in Q4 2023[28] - Q4 Adjusted EBITDA increased by 469% to $479 million compared to $326 million in Q4 2023[28] - Q4 Adjusted EPS increased by 322% to $119 compared to $090 in Q4 2023[28] Segment Performance - Infrastructure Solutions net sales increased by 119% to $2488 million in Q4 2024[31] - Materials Solutions net sales decreased by 41% to $1102 million in Q4 2024[34] Backlog and Orders - Consolidated backlog moderated to $4196 million[6] - Consolidated implied orders for Q4 2024 increased by 283% quarter-over-quarter[16]

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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