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]

Group 1 - The article discusses the perspective of a value-oriented analyst focused on the oil and gas sector, emphasizing the importance of analyzing cash flows and assessing company value [1] - The analyst employs Benjamin Graham's investment philosophy combined with a contrarian approach to identify businesses trading at significant discounts to their intrinsic value [1] Group 2 - The analyst runs a newsletter called Crude Value Insights, which aims to provide insights into the valuation of companies within the oil and gas industry [1]

Core Viewpoint - Astec Industries, Inc. is set to release its third quarter 2024 financial results on November 6, 2024, followed by a conference call to discuss the results [1]. Group 1: Financial Results Announcement - The third quarter results will be released to the wire service at approximately 7:00 a.m. Eastern Time on November 6, 2024 [1]. - A live conference call will take place at 8:30 a.m. Eastern Time on the same day, hosted by key executives including the President and CEO, CFO, and other senior management [1]. Group 2: Access Information - Participants can access the call by dialing (888) 440-4118 or (646) 960-0833 for international callers, at least 10 minutes prior to the scheduled time [1]. - A live webcast of the call will also be available through a provided link, with an archived version accessible for ninety days post-call [1]. Group 3: Company Overview - Astec is a manufacturer specializing in equipment for asphalt road building, aggregate processing, and concrete production, divided into two main business segments: Infrastructure Solutions and Materials Solutions [3].

Group 1 - Astec Industries, Inc. will present at the Sidoti Small-Cap Virtual Investor Conference on September 19, 2024, at 10:00 a.m. EDT, with key executives participating in one-on-one meetings with investors [1] - The conference aims to provide a platform for small and microcap companies to engage with investors, highlighting Astec's focus on investor relations [1][2] - Registration for the conference and one-on-one meetings is free and open to all interested participants, not limited to Sidoti clients [1] Group 2 - Astec Industries specializes in manufacturing equipment for asphalt road building, aggregate processing, and concrete production, operating through two main segments: Infrastructure Solutions and Materials Solutions [3] - The Infrastructure Solutions segment includes products related to road building, asphalt and concrete plants, as well as thermal and storage solutions [3] - The Materials Solutions segment focuses on aggregate processing equipment, indicating a comprehensive approach to construction and infrastructure needs [3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-11595 Astec Industries, Inc. (Exact name of registrant as specified in its charter) Tennessee 62-0873631 (State or o ...

Financial Data and Key Metrics Changes - In Q2 2024, the company reported net sales of $345.5 million, a slight decrease of 1.3% compared to the previous year [16] - Gross margin was 23.5%, with adjusted EBITDA declining 14.3% to $27.6 million and adjusted EBITDA margin decreasing 120 basis points to 8% [17][20] - Adjusted EPS was $0.61, down 29.9% from $0.87 in the prior year [17] Business Line Data and Key Metrics Changes - Infrastructure Solutions segment net sales increased 11% year-over-year to $221.4 million, driven by strong equipment sales [10][12] - Material Solutions segment net sales decreased 17.7% year-over-year to $124.1 million, impacted by longer product conversions and finance capacity constraints [19] - Infrastructure Solutions operating adjusted EBITDA margin was 12.3%, down 60 basis points, while Material Solutions operating adjusted EBITDA margin was 8.2%, down 390 basis points [10][19] Market Data and Key Metrics Changes - Domestic sales decreased by $14.3 million or 5%, while international sales increased by $9.8 million or 15.4% [16] - Total backlog as of June 30, 2024, was $531 million, with Infrastructure Solutions backlog at $369 million (down 16% year-over-year) and Material Solutions backlog at $163 million (down 35.1% year-over-year) [13][18] Company Strategy and Development Direction - The company is focusing on three core pillars: empowered employees, customer focus, and industry-changing innovation [8] - A restructuring program was implemented to address manufacturing inefficiencies, with expected savings of $1.5 million to $1.8 million per quarter [34] - The company anticipates flat to low single-digit sales growth for the full year compared to 2023, supported by strong demand in the infrastructure construction market [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the business despite market challenges, highlighting strong demand for asphalt and concrete plants [22] - The company expects continued strong demand in the infrastructure construction market through early 2025, with a healthy backlog supporting future sales [11][50] - Management noted that the electronic component issues affecting deliveries have largely been resolved, allowing for a more stable outlook [41] Other Important Information - The company reduced inventory by 5.9% or $28.7 million compared to Q1 2024 [7] - Cash and cash equivalents at the end of the quarter were $60.6 million, with total available liquidity of $175.8 million [20] - The company returned cash to shareholders through a dividend of $0.13 per share and spent $7.6 million on capital expenditures [21] Q&A Session Summary Question: How does the company view revenue for Material Solutions in the second half? - Management indicated that Material Solutions sales need to align with the beginning of the year to reach similar levels as the second quarter, with strong quoting activity supporting this outlook [27][29] Question: What is the expected EBITDA margin for Material Solutions in the second half? - Management expressed confidence that the margin outlook for H2 will be in line with Q2, with efforts to minimize under-absorption in factories [30][31] Question: Will the company adjust its gross margin target for the year? - Management confirmed that they are comfortable maintaining the gross margin target range of 24% to 25.5% for the year, despite lower margins in the first half [36][37] Question: How is the demand for asphalt and concrete expected to evolve? - Management noted that demand remains strong, with visibility into backlog extending into 2025, and they expect continued strong performance in the asphalt and concrete segments [47][50]

| --- | --- | --- | |---------------------------------------------------------|-------|-------| | | | | | Second Quarter Earnings BUILT TO CONNECT August 7, 2024 | | | | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Astec Q2 2024 Financial Results [Q2 2024 Key Financial Highlights](index=1&type=section&id=Second%20Quarter%202024%20Overview) Astec's Q2 2024 net sales slightly decreased, with diluted EPS heavily impacted by a $20.2 million goodwill impairment Q2 2024 Financial Performance Summary (in millions, except per share data) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $345.5M | $350.0M | (1.3)% | | Diluted EPS | $(0.61) | $0.58 | (205.2)% | | Adjusted EPS | $0.61 | $0.87 | (29.9)% | | Backlog | $531.1M | $688.8M | (22.9)% | | International Sales | $73.4M | $63.6M | 15.4% | | (Loss) Income from Operations | $(10.7)M | $17.3M | (161.8)% | - A pre-tax non-cash goodwill impairment charge of **$20.2 million** was recognized for the Materials Solutions reporting unit, significantly contributing to the quarterly operating loss. This impairment had an **$0.89 per share** impact on Diluted EPS[2](index=2&type=chunk)[7](index=7&type=chunk) - Implied orders showed positive momentum, increasing **5.9%** sequentially from Q1 2024, driven by high demand in the Infrastructure Solutions segment[2](index=2&type=chunk)[4](index=4&type=chunk) - Management noted that federal highway bill spending is still in its early stages, with only about **20%** of funds disbursed, suggesting future potential for the domestic road building market[2](index=2&type=chunk) [Segment Performance](index=2&type=section&id=Segments%20Results) Segment performance was mixed, with Infrastructure Solutions growing and Materials Solutions declining due to financing constraints Infrastructure Solutions Q2 2024 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $221.4M | $199.4M | +11.0% | | Segment Operating Adjusted EBITDA | $27.2M | $25.7M | +5.8% | | Segment Operating Adjusted EBITDA Margin | 12.3% | 12.9% | -60 bps | - The Infrastructure Solutions segment's sales growth was fueled by a strong infrastructure construction market, with healthy demand for asphalt and concrete plant deliveries expected through early 2025[9](index=9&type=chunk) Materials Solutions Q2 2024 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $124.1M | $150.8M | -17.7% | | Segment Operating Adjusted EBITDA | $10.2M | $18.3M | -44.3% | | Segment Operating Adjusted EBITDA Margin | 8.2% | 12.1% | -390 bps | - The decline in the Materials Solutions segment was primarily due to lower equipment sales resulting from finance capacity constraints among contractors and dealers, which led to fewer product conversions[10](index=10&type=chunk) [Financial Position and Cash Flow](index=2&type=section&id=Balance%20Sheet%2C%20Cash%20Flow%20and%20Liquidity) Astec maintained total liquidity of $175.8 million, with net cash used in operating activities at $36.1 million - Total liquidity stood at **$175.8 million**, comprising **$60.6 million** in cash and cash equivalents and **$115.2 million** available under the revolving credit facility[11](index=11&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2024, was **$36.1 million**[11](index=11&type=chunk) - Capital expenditures for efficiency improvements were **$7.6 million** in Q2 2024, and the company paid a dividend of **$0.13 per share**[12](index=12&type=chunk) [Strategic Initiatives and Outlook](index=2&type=section&id=Strategic%20Transformation%20Initiative%20Update) Astec continues its multi-year ERP system implementation, expected to complete in 2027, while driving cost efficiencies - Management anticipates market dynamics to improve in the latter half of the year and expects benefits from transformation programs in future operating results[4](index=4&type=chunk) - The company is implementing a standardized ERP system. The pace of deployment is being adjusted to improve efficiencies, with the project now expected to conclude in **2027**[13](index=13&type=chunk) - Total anticipated implementation costs for the ERP project range from **$180 to $200 million**, with approximately **$119 million** incurred through Q2 2024. Annual costs are expected to peak in **2024**[14](index=14&type=chunk) [Detailed Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q2 and H1 2024 and 2023 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statements of Operations (in millions, except per share data) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | **2024** | **2023** | **2024** | **2023** | | **Net sales** | **$345.5** | **$350.0** | **$654.7** | **$697.9** | | Gross profit | $81.3 | $82.9 | $158.2 | $172.1 | | (Loss) income from operations | $(10.7) | $17.3 | $(4.4) | $34.9 | | Net (loss) income | $(14.0) | $13.2 | $(10.7) | $25.3 | | **Diluted EPS** | **$(0.61)** | **$0.58** | **$(0.47)** | **$1.11** | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $63.2 | $63.2 | | Inventories, net | $455.3 | $455.6 | | Total current assets | $778.8 | $719.5 | | Total assets | $1,107.0 | $1,059.3 | | Total current liabilities | $311.2 | $299.0 | | Long-term debt | $125.0 | $72.0 | | Total equity | $633.3 | $653.7 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(36.1) | $(2.5) | | Net cash (used in) provided by investing activities | $(12.6) | $2.6 | | Net cash provided by (used in) financing activities | $49.5 | $(22.0) | | Change in cash, cash equivalents and restricted cash | $0.0 | $(21.5) | [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=GAAP%20vs%20Non-GAAP%20Reconciliations) This section reconciles U.S. GAAP to non-GAAP financial measures, adjusting for non-core items to reflect core performance - The company excludes costs it does not believe are indicative of core business operations, including transformation program costs, restructuring charges, and goodwill impairment[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Adjusted Income from Operations Reconciliation](index=12&type=section&id=GAAP%20vs%20Non-GAAP%20Adjusted%20Income%20from%20Operations%20Reconciliations) Reconciliation of (Loss) Income from Operations to Adjusted (in millions) | | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | (Loss) income from operations (GAAP) | $(10.7) | $17.3 | | Transformation program | $11.2 | $7.8 | | Restructuring and other related charges | $0.9 | $0.4 | | Goodwill impairment | $20.2 | - | | **Adjusted income from operations (Non-GAAP)** | **$21.4** | **$26.2** | | **Adjusted operating margin** | **6.2%** | **7.5%** | [Adjusted EPS Reconciliation](index=13&type=section&id=GAAP%20vs%20Non-GAAP%20Adjusted%20EPS%20Reconciliations) Reconciliation of Diluted EPS to Adjusted EPS | | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $(0.61) | $0.58 | | Transformation program | $0.49 | $0.34 | | Restructuring and other related charges | $0.03 | $0.01 | | Goodwill impairment | $0.89 | - | | Income tax impact of adjustments | $(0.18) | $(0.09) | | **Adjusted EPS (Non-GAAP)** | **$0.61** | **$0.87** | [EBITDA and Adjusted EBITDA Reconciliation](index=14&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliations) Reconciliation of Net (Loss) Income to Adjusted EBITDA (in millions) | | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net (loss) income (GAAP) | $(14.0) | $13.1 | | Interest, Taxes, D&A | $9.6 | $10.4 | | EBITDA | $(4.4) | $23.5 | | Transformation program | $11.1 | $7.6 | | Goodwill impairment | $20.2 | - | | Other adjustments | $0.7 | $1.1 | | **Adjusted EBITDA (Non-GAAP)** | **$27.6** | **$32.2** | | **Adjusted EBITDA margin** | **8.0%** | **9.2%** |

Second Quarter 2024 Overview (all comparisons are made to the corresponding prior year second quarter unless otherwise specified): Net sales of $345.5 million decreased 1.3% from the record sales in the prior year.Implied orders increased 5.9% sequentially from the first quarter.Inventory initiatives drove $28.7 million sequential reduction from the first quarter.Diluted EPS of $(0.61), which included an $0.89 per share impact related to goodwill impairment, compared to $0.58; Adjusted EPS of $0.61 compared ...