8-K
ASTEC INDUSTRIES INC (ASTE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 3, 2020
ASTEC INDUSTRIES INC
(Exact Name of Registrant as Specified in Charter)
| TN | 001-11595 | 62-0873631 |
|---|---|---|
| (State or Other Jurisdiction<br><br> of Incorporation) | (Commission File Number) | (IRS Employer<br><br> Identification No.) |
1725 SHEPHERD ROAD
CHATTANOOGA, TN 37421
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (423) 899-5898
N/A
\(Former Name or Former Address, if Changed Since Last Report\)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||
|---|---|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common Stock | ASTE | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On March 3, 2020 Astec Industries, Inc. (the “Company”) reported results of operations for the three months and year ended December 31, 2019. The press release attached as Exhibit 99.1 includes additional information regarding the foregoing and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure
On March 4, 2020 the Company will hold a live audio webcast to discuss its financial results for the three months and year ended December 31, 2019. In connection with the webcast, the Company is furnishing to the U.S. Securities and Exchange Commission the following documents attached as exhibits to this Current Report on Form 8-K and incorporated by reference to this Item 7.01: the slide presentation attached as Exhibit 99.2 hereto.
Item 9.01. Financial Statements and Exhibits
| (d) | Exhibits |
|---|---|
| 99.1 | Press release dated March 3, 2020 issued by the Company |
| --- | --- |
| 99.2 | Slide Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Astec Industries, Inc.<br><br> <br>(Registrant) | ||
|---|---|---|
| Date: March 3, 2020 | By: | /s/ Rebecca A. Weyenberg |
| Rebecca A. Weyenberg | ||
| Chief Financial Officer, |
EXHIBIT INDEX
| 99.1 | Earnings release dated March 3, 2020 issued by the Company |
|---|---|
| 99.2 | Slide Presentation |
Exhibit 99.1
Astec Industries, Inc.
1725 Shepherd Rd.
Chattanooga TN 37421
News Release
ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS
Fourth Quarter 2019 Highlights (all comparisons are made to the prior year fourth quarter):
| • | Net Sales decreased 10.7% to $283.2M |
|---|---|
| • | Gross profit of 12.2%; adjusted gross profit of 21.5% decreased 250bps |
| --- | --- |
| • | EPS loss of $0.85; adjusted EPS of $0.40 decreased from $0.61 a year ago |
| --- | --- |
| • | Adjusted EBITDA of $15.0M decreased 46.6%; adjusted EBITDA margin of 5.3% declined 350bps |
| --- | --- |
2019 Highlights (all comparisons are made to the prior year):
| • | Net sales were relatively flat; adjusted net sales decreased 7.8% to $1.15B |
|---|---|
| • | Gross profit of 21.1%; adjusted gross profit of 22.0% decreased 180bps |
| --- | --- |
| • | EPS of $0.95; adjusted EPS of $1.59 decreased from $2.94 a year ago |
| --- | --- |
| • | Adjusted EBITDA of $68.3M decreased 41.3%; adjusted EBITDA margin of 5.9% declined 340bps |
| --- | --- |
| • | Began restructuring initiatives related to strategic pillars for profitable growth – Simplify, Focus and Grow |
| --- | --- |
CHATTANOOGA, Tenn. (March 3, 2020) – Astec Industries, Inc. (Nasdaq: ASTE) announced today its financial results for fourth quarter and full-year ended December 31, 2019.
Fourth Quarter 2019 Results
Fourth quarter net sales of $283.2 million decreased 10.7% compared to $317.0 million for the fourth quarter of 2018. Domestic sales of $209.6 million decreased 15.5% from $248.2 million a year ago, while International sales of $73.6 million increased 7.0% from $68.8 million in the fourth quarter of 2018. Excluding the impact of foreign currency, net sales decreased 10.4%.
Backlog as of December 31, 2019 of $263.7 million decreased by $81.3 million, or 23.6% compared to the backlog of $344.9 million a year ago. Domestic backlog decreased by 25.4% to $194.5 million from $260.7 million in 2018. International backlog of $69.2 million decreased compared to $84.2 million last year. Although we experienced a decline in each segment, weakness was concentrated in the Aggregate and Mining Group as dealers had increased their inventory levels throughout 2018 to meet demand but then began to destock in 2019.
An operating loss of $28.1 million compared to a loss of $69.4 million in the fourth quarter 2018. In relation to the company’s efforts to simplify the organization, the company incurred a $9.9 million pre-tax restructuring charge, or $0.34 per diluted share for the fourth quarter. The restructuring items are related to the expected sale of the GEFCO subsidiary, closure of our German operation and the transfer of the CEI products to Heatec and RexCon. In the fourth quarter of 2019, after considering new management’s revised inventory control and working capital control objectives and the Company’s assessment of the age, quantities on hand, market acceptance of the equipment, and other related factors, it was determined that various specific equipment models in each of the Company’s business units required additions to their net realizable value reserves. The fourth quarter results include a pre-tax inventory write-down of $26.5 million or $0.91 per diluted share. Fourth quarter adjusted operating income of $8.4 million decreased 60.5% compared to $21.2 million a year ago. Adjusted operating margin of 3.0% declined 370 basis points from 6.7% in fourth quarter 2018. Adjusted operating income declined primarily due to the lower volumes. SGA&E expenses declined 4.0% on a dollar basis but increased as a percent of sales 130 basis points to 18.6% from 17.3% in the fourth quarter of 2018 due to the decline in sales.
Adjusted EBITDA of $15.0 million decreased 46.6% compared to $28.0 million a year ago. Adjusted EBITDA margin of 5.3% declined 350 basis points from 8.8% in fourth quarter 2018.
Net loss of $19.2 million or $0.85 per diluted share, compared to a net loss of $47.0 million or $2.08 per diluted share for the fourth quarter of 2018. Excluding unusual items and restructuring charges mentioned above, adjusted net income of $9.0 million decreased 35.4% compared to the same period a year ago. Adjusted EPS of $0.40 decreased 34.4% compared to $0.61 last year.
“Fourth quarter results showed continued softness in North America that was partially offset by an increase in international sales. Despite the temporary headwinds, I am encouraged by the progress we are making towards our strategic initiatives to Simplify, Focus and Grow the organization,” stated Barry Ruffalo, CEO of Astec Industries, Inc. “As recently announced, we are in the process of marketing the GEFCO business for sale. This will further simplify the organization, strengthen our financial position and release additional capital to deploy toward strategic growth opportunities. Additionally, we have taken important steps to restructure the company and streamline business units to increase internal transparency and improve the decision-making process. These collective actions are important in building the foundation for the future success of Astec Industries.”
Full Year 2019 Results
Net sales for 2019 were $1,169.6 million, or relatively flat when compared to 2018. Domestic sales decreased 0.8% to $908.5 million from $915.8 million a year ago, while International sales increased 2.1% to $261.1 million from $255.8 million in 2018. Excluding the impact of foreign currency, net sales increased 0.5%.
Operating income of $23.9 million compares to a loss of $86.4 million in 2018. The company incurred a total of $37.9 million in pre-tax restructuring charges and inventory write-downs for 2019, or $1.36 per diluted share. Adjusted operating income of $41.8 million decreased 52.4% compared to $87.8 million in 2018. Adjusted operating margin of 3.6% declined 340 basis points from 7.0% in 2018. Adjusted operating income declined primarily because of a reduction in gross margin of 180 basis points to 22.0% from 23.8% in 2018.
Adjusted EBITDA of $68.3 million decreased 41.3% compared to $116.3 million in 2018. Adjusted EBITDA margin of 5.9% declined 340 basis points from 9.3% in 2018.
Net income of $21.5 million or $0.95 per diluted share, compared to a net loss of $60.4 million or $2.64 per diluted share in 2018. Adjusted net income of $36.0 million decreased 46.6% compared to 2018. Adjusted EPS of $1.59 decreased 45.9% compared to $2.94 last year.
The Company identified certain material weaknesses in its internal control over financial reporting. As a result, the Company needs additional time to complete the compilation of information and finalization of its assessment of the effectiveness of internal control over financial reporting for its consolidated financial statements and related disclosures to be filed as part of the 2019 Form 10-K. The Company has filed a Form 12b-25 with the Securities and Exchange Commission in order to extend the due date of its 2019 Annual Report on Form 10-K for 15 days, as permitted by Rule 12b-25 under the Securities Exchange Act.
Investor Conference Call and Web Simulcast
Astec will conduct a conference call and live webcast today, March 4, 2020, at 10:00 A.M. Eastern Time, to review its fourth quarter and year end results as well as current business conditions. The number to call for this interactive teleconference is (877) 407-9210 (at least 10 minutes prior to the scheduled time for the call). International callers should dial (201) 689-8049. You may also access a live webcast of the call by visiting https//www.webcaster4.com/Webcast/Page/2146/33412. You will need to give your name and company affiliation and reference Astec Industries. An archived webcast will be available for ninety days at www.astecindustries.com.
A replay of the conference call will be available through March 17, 2020 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Conference ID #33412. A transcript of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 business days after the call.
About Astec Industries, Inc.
Astec Industries, Inc., (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building, aggregate processing and concrete production. Astec’s manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and a diversified portfolio of equipment used in various industries including energy-related markets (Energy Group).
Forward-Looking Statements
The information contained in this press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) restructuring initiatives, (ii) the potential sale of the GEFCO business, (iii) increases in international demand, and (iv) product demand in North America. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.
For Additional Information Contact:
Steve Anderson
Senior Vice President Administration, Investor Relations & Corporate Secretary
Phone: \(423\) 899-5898
Fax: \(423\) 899-4456
E-mail: sanderson@astecindustries.com
| Astec Industries, Inc. | ||||
|---|---|---|---|---|
| Condensed Consolidated Balance Sheets | ||||
| (in thousands) | ||||
| (unaudited) | ||||
| Dec | Dec | |||
| 2019 | 2018 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 48,857 | $ | 25,821 |
| Investments | 1,547 | 1,946 | ||
| Receivables and contract assets, net | 124,103 | 133,978 | ||
| Inventories | 278,863 | 355,944 | ||
| Prepaid expenses and other | 59,603 | 43,302 | ||
| Total current assets | 512,973 | 560,991 | ||
| Property and equipment, net | 182,404 | 192,448 | ||
| Other assets | 104,387 | 102,018 | ||
| Total assets | $ | 799,764 | $ | 855,457 |
| Liabilities and equity | ||||
| Current liabilities | ||||
| Accounts payable - trade | $ | 55,055 | $ | 70,614 |
| Other current liabilities | 117,873 | 118,617 | ||
| Total current liabilities | 172,928 | 189,231 | ||
| Long-term debt, less current maturities | 690 | 59,709 | ||
| Non-current liabilities | 24,490 | 21,227 | ||
| Total equity | 601,656 | 585,290 | ||
| Total liabilities and equity | $ | 799,764 | $ | 855,457 |
| Astec Industries, Inc. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Operations | ||||||||||||
| (in thousands, except per share data) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| Dec 31 2019 | Dec 31 2018 | Dec 31 2019 | Dec 31 2018 | |||||||||
| Net sales | $ | 283,224 | $ | 317,005 | $ | 1,169,613 | $ | 1,171,599 | ||||
| Cost of sales | 248,797 | 318,636 | 923,159 | 1,035,833 | ||||||||
| Gross profit (loss) | 34,427 | (1,631 | ) | 246,454 | 135,766 | |||||||
| Selling, general, administrative & engineering expenses | 52,554 | 54,732 | 211,148 | 209,127 | ||||||||
| Restructuring and asset impairment charges | 9,942 | 13,060 | 11,373 | 13,060 | ||||||||
| Income (loss) from operations | (28,069 | ) | (69,423 | ) | 23,933 | (86,421 | ) | |||||
| Interest expense | (68 | ) | (557 | ) | (1,367 | ) | (1,045 | ) | ||||
| Other | 250 | 11 | 1,629 | 1,783 | ||||||||
| Income (loss) before income taxes | (27,887 | ) | (69,969 | ) | 24,195 | (85,683 | ) | |||||
| Income taxes | (8,701 | ) | (22,932 | ) | 2,720 | (25,234 | ) | |||||
| Net income (loss) attributable to controlling interest | $ | (19,186 | ) | $ | (47,037 | ) | $ | 21,475 | $ | (60,449 | ) | |
| Earnings (loss) per Common Share | ||||||||||||
| Net income (loss) attributable to controlling interest | ||||||||||||
| Basic | $ | (0.85 | ) | $ | (2.08 | ) | $ | 0.95 | $ | (2.64 | ) | |
| Diluted | $ | (0.85 | ) | $ | (2.08 | ) | $ | 0.95 | $ | (2.64 | ) | |
| Weighted average common shares outstanding | ||||||||||||
| Basic | 22,531 | 22,582 | 22,515 | 22,902 | ||||||||
| Diluted | 22,531 | 22,582 | 22,674 | 22,902 |
| Astec Industries, Inc. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Segment Revenues and Profits (Losses) | |||||||||||||||
| For the three months ended December 31, 2019 and 2018 | |||||||||||||||
| (in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Aggregate<br><br> <br>and Mining<br><br> <br>Group | Energy<br><br> <br>Group | Corporate | Total | ||||||||||||
| 2019 Revenues | 115,671 | 91,981 | 75,170 | 402 | 283,224 | ||||||||||
| 2018 Revenues | 124,930 | 116,064 | 76,011 | - | 317,005 | ||||||||||
| Change | (9,259 | ) | (24,083 | ) | (841 | ) | 402 | (33,781 | ) | ||||||
| Change % | (7.4 | %) | (20.7 | %) | (1.1 | %) | - | (10.7 | %) | ||||||
| 2019 Gross Profit | 11,220 | 13,041 | 8,511 | 1,655 | 34,427 | ||||||||||
| 2019 Gross Profit % | 9.7 | % | 14.2 | % | 11.3 | % | 411.7 | % | 12.2 | % | |||||
| 2018 Gross Profit (Loss) | (41,462 | ) | 30,347 | 9,375 | 109 | (1,631 | ) | ||||||||
| 2018 Gross Profit (Loss) % | (33.2 | %) | 26.1 | % | 12.3 | % | - | (0.5 | %) | ||||||
| Change | 52,682 | (17,306 | ) | (864 | ) | 1,546 | 36,058 | ||||||||
| 2019 Loss | (3,815 | ) | (179 | ) | (12,192 | ) | (3,070 | ) | (19,256 | ) | |||||
| 2018 Profit (Loss) | (69,833 | ) | 10,796 | (13,336 | ) | 22,015 | (50,358 | ) | |||||||
| Change | 66,018 | (10,975 | ) | 1,144 | (25,085 | ) | 31,102 | ||||||||
| Change % | 94.5 | % | (101.7 | %) | 8.6 | % | (113.9 | %) | 61.8 | % | |||||
| Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment revenues. A<br> reconciliation of total segment losses to the Company's net loss attributable to controlling interest is as follows (in thousands): | |||||||||||||||
| Three months ended December 31 | |||||||||||||||
| 2019 | 2018 | Change | |||||||||||||
| Total loss for all segments | $ | (19,256 | ) | $ | (50,358 | ) | 31,102 | ||||||||
| Recapture of intersegment profit | 64 | 3,263 | (3,199 | ) | |||||||||||
| Net loss attributable to non-controlling interest | 6 | 58 | (52 | ) | |||||||||||
| Net loss attributable to controlling interest | $ | (19,186 | ) | $ | (47,037 | ) | 27,851 |
All values are in US Dollars.
| Astec Industries, Inc. | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Segment Revenues and Profits (Losses) | |||||||||||||
| For the Year ended December 31, 2019 and 2018 | |||||||||||||
| (in thousands) | |||||||||||||
| (unaudited) | |||||||||||||
| Aggregate<br><br> <br>and Mining<br><br> <br>Group | Energy<br><br> <br>Group | Corporate | Total | ||||||||||
| 2019 Revenues | 492,118 | 404,971 | 272,122 | 1,169,613 | |||||||||
| 2018 Revenues | 442,289 | 453,164 | 276,146 | 1,171,599 | |||||||||
| Change | 49,829 | (48,193 | ) | (4,024 | ) | (1,986 | ) | ||||||
| Change % | 11.3 | % | (10.6 | %) | (1.5 | %) | (0.2 | %) | |||||
| 2019 Gross Profit | 105,012 | 84,917 | 54,719 | 246,454 | |||||||||
| 2019 Gross Profit % | 21.3 | % | 21.0 | % | 20.1 | % | % | 21.1 | % | ||||
| 2018 Gross Profit (Loss) | (37,357 | ) | 112,972 | 59,751 | 135,766 | ||||||||
| 2018 Gross Profit (Loss) % | (8.4 | %) | 24.9 | % | 21.6 | % | 11.6 | % | |||||
| Change | 142,369 | (28,055 | ) | (5,032 | ) | 110,688 | |||||||
| 2019 Profit (Loss) | 35,449 | 22,790 | (567 | ) | ) | 20,181 | |||||||
| 2018 Profit (Loss) | (112,954 | ) | 45,464 | 3,070 | (62,834 | ) | |||||||
| Change | 148,403 | (22,674 | ) | (3,637 | ) | ) | 83,015 | ||||||
| Change % | 131.4 | % | (49.9 | %) | (118.5 | %) | %) | 132.1 | % | ||||
| Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment revenues. A<br> reconciliation of total segment profits (losses) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands): | |||||||||||||
| Year ended December 31 | |||||||||||||
| 2019 | 2018 | Change | |||||||||||
| Total profit (loss) for all segments | $ | 20,181 | $ | (62,834 | ) | ||||||||
| Recapture of intersegment profit | 1,162 | 2,090 | ) | ||||||||||
| Net loss attributable to non-controlling interest | 132 | 295 | ) | ||||||||||
| Net income (loss) attributable to controlling interest | $ | 21,475 | $ | (60,449 | ) | ||||||||
| Astec Industries, Inc. | |||||||||||||
| Backlog by Segment | |||||||||||||
| December 31, 2019 and 2018 | |||||||||||||
| (in thousands) | |||||||||||||
| (unaudited) | |||||||||||||
| Aggregate<br><br> <br>and Mining<br><br> <br>Group | Energy<br><br> <br>Group | Total | |||||||||||
| 2019 Backlog | 139,081 | 74,127 | 50,497 | ||||||||||
| 2018 Backlog | 149,437 | 130,691 | 64,834 | ||||||||||
| Change | (10,356 | ) | (56,564 | ) | (14,337 | ) | ) | ||||||
| Change % | (6.9 | %) | (43.3 | %) | (22.1 | %) | %) |
All values are in US Dollars.
| Glossary | ||||||||
|---|---|---|---|---|---|---|---|---|
| In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These<br> non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Nonetheless, this<br> non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses. | ||||||||
| The amounts described below are unaudited, reported in thousands of U.S. Dollars (Except Share data), and as of or for the periods indicated. | ||||||||
| Q4 2019 GAAP to Non-GAAP Reconciliation Table | ||||||||
| As Reported (GAAP) | Restructuring and Unusual Charges | As Adjusted (Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net Sales | $ | 283,224 | $ | - | $ | 283,224 | ||
| GP | 34,427 | 26,509 | 60,936 | |||||
| GP% | 12.2 | % | 21.5 | % | ||||
| Op Income (Loss) | (28,069 | ) | 36,453 | 8,384 | ||||
| Income Tax (Benefit) Expense | (8,701 | ) | 8,245 | (456 | ) | |||
| Net Income (Loss) | (19,186 | ) | 28,208 | 9,022 | ||||
| EPS | $ | (0.85 | ) | $ | 1.25 | $ | 0.40 | |
| EBITDA | (21,495 | ) | 36,452 | 14,957 | ||||
| Free Cash Flow | 22,870 | 10,494 | 33,364 | |||||
| Infrastructure | ||||||||
| Net Sales | 115,671 | - | 115,671 | |||||
| GP | 11,220 | 12,098 | 23,318 | |||||
| GP% | 9.7 | % | 20.2 | % | ||||
| EBITDA | (2,656 | ) | 12,479 | 9,823 | ||||
| Aggregate and Mining | ||||||||
| Net Sales | 91,981 | - | 91,981 | |||||
| GP | 13,041 | 4,261 | 17,302 | |||||
| GP% | 14.2 | % | 18.8 | % | ||||
| EBITDA | 97 | 4,511 | 4,608 | |||||
| Energy | ||||||||
| Net Sales | 75,170 | - | 75,170 | |||||
| GP | 8,511 | 10,150 | 18,661 | |||||
| GP% | 11.3 | % | 24.8 | % | ||||
| EBITDA | (10,046 | ) | 19,463 | 9,417 |
| Q4 2018 GAAP to Non-GAAP Reconciliation Table | ||||||||
|---|---|---|---|---|---|---|---|---|
| As Reported (GAAP) | Restructuring and Unusual Charges | As Adjusted (Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net Sales | $ | 317,005 | $ | - | $ | 317,005 | ||
| GP | (1,631 | ) | 77,574 | 75,943 | ||||
| GP% | (0.5 | )% | 24.0 | % | ||||
| Op Income (Loss) | (69,423 | ) | 90,634 | 21,211 | ||||
| Income Tax (Benefit) Expense | (22,932 | ) | 29,628 | 6,696 | ||||
| Net Income (Loss) | (47,037 | ) | 61,005 | 13,968 | ||||
| EPS | (2.08 | ) | 2.69 | 0.61 | ||||
| EBITDA | (62,603 | ) | 90,634 | 28,031 | ||||
| Infrastructure | ||||||||
| Net Sales | 124,930 | - | 124,930 | |||||
| GP | (41,462 | ) | 69,792 | 28,330 | ||||
| GP% | (33.2 | )% | 22.7 | % | ||||
| EBITDA | (63,515 | ) | 71,663 | 8,148 | ||||
| Aggregate and Mining | ||||||||
| Net Sales | 116,064 | - | 116,064 | |||||
| GP | 30,347 | 294 | 30,641 | |||||
| GP% | 26.1 | % | 26.4 | % | ||||
| EBITDA | 13,224 | 294 | 13,518 | |||||
| Energy | ||||||||
| Net Sales | 76,011 | - | 76,011 | |||||
| GP | 9,375 | 7,487 | 16,862 | |||||
| GP% | 12.3 | % | 22.2 | % | ||||
| EBITDA | (11,708 | ) | 18,677 | 6,969 |
| FYE 2019 GAAP to Non-GAAP Reconciliation Table | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| As Reported (GAAP) | Restructuring and Unusual Charges | As Adjusted (Non-GAAP) | |||||||
| Consolidated | |||||||||
| Net Sales | $ | 1,169,613 | $ | (20,000 | ) | $ | 1,149,613 | ||
| Domestic Sales | 908,466 | (20,000 | ) | 888,466 | |||||
| International Sales | 261,147 | - | 261,147 | ||||||
| GP | 246,454 | 6,533 | 252,987 | ||||||
| GP% | 21.1 | % | 22.0 | % | |||||
| Op Income | 23,933 | 17,906 | 41,839 | ||||||
| Income Tax (Benefit) Expense | 2,720 | 3,420 | 6,140 | ||||||
| Net Income | 21,475 | 14,487 | 35,962 | ||||||
| EPS | 0.95 | 0.64 | 1.59 | ||||||
| EBITDA | 50,440 | 17,906 | 68,346 | ||||||
| Free Cash Flow | 90,287 | (7,413 | ) | 82,874 | |||||
| FYE 2018 GAAP to Non-GAAP Reconciliation Table | |||||||||
| As Reported (GAAP) | Restructuring and Unusual Charges | As Adjusted (Non-GAAP) | |||||||
| Consolidated | |||||||||
| Net Sales | $ | 1,171,599 | $ | 74,778 | $ | 1,246,377 | |||
| Domestic Sales | 915,814 | 74,778 | 990,592 | ||||||
| International Sales | 255,785 | - | 255,785 | ||||||
| GP | 135,766 | 161,185 | 296,951 | ||||||
| GP% | 11.6 | % | 23.8 | % | |||||
| Op Income (Loss) | (86,421 | ) | 174,245 | 87,824 | |||||
| Income Tax (Benefit) Expense | (25,234 | ) | 46,502 | 21,268 | |||||
| Net Income (Loss) | (60,449 | ) | 127,744 | 67,295 | |||||
| EPS | (2.64 | ) | 5.58 | 2.94 | |||||
| EBITDA | (57,897 | ) | 174,245 | 116,348 |
4Q19 Earnings Presentation MARCH 4, 2020
Safe Harbor 2 The information contained in this presentation and discussion contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) restructuring initiatives, (ii) the potential sale of the GEFCO business, (iii) increases in international demand, and (iv) product demand in North America. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.
Astec overview & 4Q19 Highlights Barry Ruffalo | President & CEO
4 2019 Highlights KEY STATISTICS1 Founded 1972 Headquarters Chattanooga, TN Employees ~3,900 Global Locations 25 in 8 Countries Market-cap $947M Product Categories 100+ Design, Manufacture and Provide Innovative, Productive, Reliable, Eco-friendlyand Safe Equipment to Drive Value for Customers and Shareholders By Segment By Geography 2019 REVENUE MIX | ~$1.15B2 1 As of 12/31/19; 2 Ex-pellets.
5 4Q19 Financial Performance Note: All comparisons are YoY, unless otherwise stated. 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2 Calculated by dividing LTM Adjusted FCF by Adjusted Net Income. INCOME STATEMENT BALANCE SHEET AND CASH FLOW Revenues decreased 10.7% to $283.2MAdj. Gross Profit1 decreased 250 bps to 21.5%Adj. EBITDA1 decreased 46.6% to $15.0MAdj. EBITDA1 margin decreased 350 bps to 5.3%Adj. EPS1 decreased 34.4% to $0.40 Adj. FCF of $33.4MAdj. FCF Conversion2 of 370%Cash position $48.9MDividends of $2.5M or $0.11 per share
6 2019 Financial Performance Note: All comparisons are YoY, unless otherwise stated. 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2 Calculated by dividing LTM Adjusted FCF by Adjusted Net Income. INCOME STATEMENT BALANCE SHEET AND CASH FLOW Adj. Revenues decreased 7.8% to $1.15BAdj. Gross Profit decreased 180 bps to 22.0%Adj. EBITDA1 decreased 41.3% to $68.3MAdj. EBITDA1 margin decreased 340 bps to 5.9%Adj. EPS1 decreased 45.9% to $1.59 YTD Adj. FCF of $82.9MYTD Adj. FCF Conversion2 of 230%Cash position $48.9MDividends of $9.9M or $0.44 per share
Total company & Segment financial results Becky Weyenberg | Chief financial Officer
8 4Q19 Financial Results ($M, except per share data) 1 See Appendix for GAAP to Non-GAAP reconciliation table. Equipment sales decreased $48.9M or 21.4%Parts sales increased $6.9M or 9.5%Domestic sales decreased $38.5M or 15.5%International sales increased $4.8M or 6.9%Excluding the impact of foreign currency, sales decreased 10.4% Order intake decreased in oil and gas due to sustained low oil pricesRoad building orders decreased due to lower dealer activityOrder intake normalized in aggregates following a peak in Q4 2018 Adjusted EBITDA decreased due to decreased gross profit primarily driven by an increase in under-absorbed Mfg. overheads of $4.0MAdj. EBITDA margin of 5.3% decreased 350 bpsSGA&E decreased 4.0% driven by lower commissions, consulting fees and payroll $9.9M of restructuring costsAdjusted net effective tax rate for the quarter was (5.3%)Adjusted effective tax rate for the year was 14.6%
9 Infrastructure | 4Q19 Financial Performance ($M) Revenues decrease driven by weakness in domestic equipment, partially offset by increase in partsEquipment sales decreased $9.7M or 11.7% Parts sales increased $2.8M or 9.0%Domestic sales decreased $9.6M or 9.0% Road building orders decreased due to lower dealer activity and a softer US market Infrastructure gross profit impacted by an increase in under absorption of $3.2MAdjusted gross profit of 20.2% decreased 250 bps Adjusted EBITDA of $9.8M excludes $12.5M of unusual itemsAdjusted EBITDA margin of 8.5% increased 200 bpsBenefit from $4.1M drop in SGA&E due to reduced commissions and consulting fees
10 Aggregate & Mining | 4Q19 Financial Performance ($M) Revenues decreased in aggregate equipment due primarily to lower dealer activityEquipment sales were down $28.7M or 34.1%Parts sales were up $1.3M or 4.6%International sales decreased $2.8M or 6.7%Domestic sales decreased $21.3M or 28.6% Order intake normalized in aggregates following a peak in Q4 2018 Gross profit impacted by increase of $0.9M in under absorptionAdjusted gross profit of 18.8% decreased 760 bps Adjusted EBITDA margin of 5.0% decreased 660 bps due to gross profit compressionBenefit from $4.3M drop in SGA&E due to reduced commissions, payroll and consulting fees
11 Energy | 4Q19 Financial Performance ($M) Equipment sales were down $10.7M or 17.3%Parts sales were up $2.6M or 20.3%International sales increased $6.8M or 77.0%Domestic sales decreased $7.7M or 11.4% Order intake decreased in oil and gas due to sustained low oil prices Adjusted gross profit of 24.8% increased 260 bps Adjusted EBITDA margin of 12.5% increased 330 bpsBenefit from $0.5M drop in SGA&E due to reduced consulting fees
12 Focused on Maintaining a Strong Balance Sheet Focused on Maintaining a Strong Balance Sheet KEY HIGHLIGHTSOverall strength of the balance sheet provides the financial flexibility to accomplish long-term strategic initiativesInventory turnover improved to 2.6x from 2.5x a year ago Cash position improved by 89.2%Total liquidity available of $190.5M ($M) 12/31/19 12/31/18 Cash and Cash Equivalents $ 48.9 $ 25.8 Total Current Assets $ 513.0 $ 561.0 Total Assets $ 799.8 $ 855.5 Total Current Liabilities $ 172.9 $ 189.2 Total Debt $ 2.0 $ 60.1 Total Liabilities and Equity $ 799.8 $ 855.5 SUMMARY BALANCE SHEET
13 Disciplined Capital Deployment Framework Continually evaluate strategy to ensure a balanced approach Use of Cash Over Last 3 Years~$150M Reinvestments Acquisitions Returns to Shareholders Internal investments meeting return objectives of >14% ROIC Future acquisitions to align with growth strategy and meet financial criteria Dividend of $0.11 per share$150M repurchase program authorizedRepurchased $24M in 2018
Aligned Strategy for Profitable Growth 14 FOCUS SIMPLIFY GROW Leveraging global footprint and scale while maintaining strong customer relationships Reduce organizational structure complexityConsolidate and rationalize footprint and product portfolioOptimize supply chain by leveraging size and scale of business Strengthen customer-centric approach by providing a holistic set of solutionsDrive commercial excellence Embrace and streamline operational excellence processes Enhance accountability through a performance-based culture with aligned KPIs and incentives Reinvigorate innovation with a new product development approachLeverage technology and digital connectivity to enhance customer experienceCapitalize on global growth opportunitiesAllocate capital effectively to drive greatest shareholder value
Transformation Progress 15 Changed from subsidiary structure to align by product groupsRefreshed executive leadership team and board membersExecuted Astec Strategic Procurement initiative consolidating supply chainAssessing 1Q20 re-segmentation to streamline reporting structure SIMPLIFY Hired SVP of Operational Excellence and Chief Information OfficerAligned financial metrics to management incentivesImplementing Enterprise Data Analytic Platform system to consolidate reportingInstill operational excellence across organizationOptimize product portfolio FOCUS Hired SVP of InnovationEnhance customer engagement Global expansionProfitable GrowthMargin Improvement GROW 2020 - 2021+ 2019 - 2021 2019 - 2020
Q&A
17 Contact Information STEVE ANDERSONSVP of Administration, Investor Relations & Corporate SecretaryPhone: 423-553-5934Email: sanderson@astecindustries.com
Appendix
19 Income Statement
20 Balance Sheet
21 Q4 GAAP to Non-GAAP Reconciliation Table
22 FY GAAP to Non-GAAP Reconciliation Table
Exhibit 99.2