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): August 5, 2020
ASTEC INDUSTRIES INC
(Exact Name of Registrant as Specified in Charter)
| Tennessee | 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, Tennessee 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 August 5, 2020 Astec Industries, Inc. (the “Company”) reported results of operations for the three and six months ended June 30, 2020. 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 August 5, 2020 the Company held a live audio webcast to discuss its financial results for the three and six months ended June 30, 2020. 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 June 30, 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>(Registrant) | ||
|---|---|---|
| Date: August 5, 2020 | By: | /s/ Rebecca A. Weyenberg |
| Rebecca A. Weyenberg | ||
| Chief Financial Officer, |
Document
| NEWS RELEASE
ASTEC REPORTS SECOND QUARTER 2020 RESULTS
Second Quarter 2020 Highlights (all comparisons are made to the prior year second quarter):
•Net Sales decreased 13.0% to $265.3M; Adjusted Net Sales decreased just 6.8% due to $20.0M included in 2019 sale of a wood pellet plant
•Gross margin of 22.5% decreased 480 bps; Adjusted Gross margin increased 100 bps
•EPS of $0.41 compared to $1.03 a year ago; adjusted EPS of $0.67 increased 81.1%
•EBITDA decreased 53.2% to $17.4M; adjusted EBITDA of $25.3M increased 46.9% from $17.2M a year ago; adjusted EBITDA margin of 9.5% increased 350 bps
•Announced the closure of our Mequon, Wisconsin facility; in-line with global footprint consolidation strategy
CHATTANOOGA, Tenn. (August 5, 2020) – Astec Industries, Inc. (Nasdaq: ASTE) announced today its financial results for second quarter 2020 ending June 30, 2020.
Second quarter of 2020 net sales of $265.3 million decreased 13.0% compared to $304.8 million for the second quarter of 2019. Domestic sales decreased $24.7 million or 10.0% and international sales decreased $14.8 million or 25.3% due to COVID-19 related business disruptions in the second quarter versus last year. Excluding the impact of foreign currency, net sales decreased 11.4%.
Backlog as of June 30, 2020 of $182.0 million decreased by $64.1 million, or 26.1% compared to the backlog of $246.1 million a year ago driven by lower Materials and Infrastructure Solutions orders, which were down 17.3% and 30.9%, respectively. Domestic backlog decreased by 20.6% to $128.3 million while International backlog decreased by 36.6% to $53.6 million. Lower orders were driven by COVID-19 uncertainties.
Operating income of $10.9 million in the second quarter of 2020 decreased 64.4% compared to $30.5 million in the second quarter 2019. In relation to the company’s efforts to simplify the organization, the company incurred a $7.9 million pre-tax restructuring charge or $0.26 per share net of taxes related to asset impairment, inventory write-down, reduction in labor force and the closing of our Mequon, Wisconsin facility. Second quarter of 2020 adjusted operating income of $18.8 million, increased 77.8% compared to $10.5 million a year ago. Adjusted operating margin of 7.1% increased 340 basis points from 3.7% in second quarter 2019 largely driven by our transformation initiatives put in place beginning in late 2019. SG&A expenses decreased 19.0% on a dollar basis driven by reductions in consulting fees, travel and employee expenses.
Adjusted EBITDA of $25.3 million increased 46.9% compared to $17.2 million a year ago. Adjusted EBITDA margin of 9.5% increased 350 basis points from 6.0% in second quarter 2019.
Excluding restructuring charges mentioned above, adjusted net income of $15.3 million increased 81.6% compared to the prior year period, while adjusted EPS of $0.67 increased 81.1% compared to $0.37 for second quarter 2019.
"During the second quarter, we continued to make significant progress against our initiatives to Simplify, Focus and Grow our business. In the quarter, we announced the closure of our Mequon, Wisconsin location, which is where we built our Telsmith products. This closure will enable us to leverage our footprint more efficiently as these products are transferred to different Astec facilities," said Barry Ruffalo, CEO of Astec. "In addition, supporting our Grow strategic pillar, we recently announced the acquisition of two premier full-line concrete batch plant manufacturers, CON-E-CO and BMH, both of which will significantly strengthen our Infrastructure Solutions group and provide our customers with access to the most robust line of concrete products in the infrastructure industry. We continue to look for ways to grow regionally in attractive markets that build upon our strong foundational product lines."
"Second quarter results also demonstrated traction on our strategic transformation with Adjusted EBITDA and 350 bps expansion in Adjusted EBITDA margin, despite the decrease in net sales, a direct result of the restructuring initiatives taken in 2019 and 2020. While we remain cautious given the global pandemic, we are well positioned to navigate the economic challenges ahead of us with a more efficient and streamlined organizational structure, a strong balance sheet and ample liquidity."
We have provided a spreadsheet recasting two years of historical segment financials that have been made available under the Investor Relations section of the Astec Industries, Inc. website.
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
COVID-19 Business Continuity and Operations Update
We continue to execute on COVID-19 measures we announced in our April 1, 2020 COVID-19 Business Update and our first quarter 2020 earnings call. These measures were taken in order to ensure the health and wellbeing of our employees, their families and communities in which we operate, while continuing to serve our customers’ critical needs. Below is a COVID-related update by category:
Balance Sheet and Liquidity
The Company remains focused on liquidity and cash preservation. We ended the quarter with a net cash position of $119.8 million with total debt of $1.4 million. The Company has available liquidity in excess of $270.6 million as of June 30, 2020.
Operations
During the second quarter of 2020, we experienced a temporary suspension of operations at two of our facilities, Johannesburg, South Africa, and Omagh, Northern Ireland, in observance of government mandates. These two facilities were closed for approximately one month and both resumed operations during the month of May.
All of our facilities are now operational and able to meet current demand levels. We continue to manufacture our products to building and maintaining the infrastructure used to move goods to market, facilitate the transportation needs of communities and for public health and safety.
Supply Chain
We have not experienced any interruption to our supply chain and are able to source the necessary materials needed to meet our customers’ needs. We are closely monitoring our supply chain and are ready to take proactive actions as needed to mitigate any potential disruptions. We have increased the frequency of communications with our suppliers and customers to ensure business continuity, anticipate, and prepare for any new developments.
Cost Management
We have implemented additional actions to help mitigate the financial and operations impacts of COVID-19, including reducing expenses and conserving cash. These actions include:
•Overall headcount reduction of 15% since 2Q19
•Suspension of all hiring, except for critical positions
•Discretionary spending reductions
•Working capital management to ensure efficient accounts receivable processing with our customers
Mr. Ruffalo continued, “I am very proud of how our team members have embraced and adapted to the COVID-19 situation as an organization and how we have managed through this challenging environment. At the onset of the pandemic, we immediately took proactive measures to ensure the safety and wellbeing of our employees, suppliers and customers, while we continued to execute on our strategy and drive profitable growth in the quarter. We remain well-positioned to navigate the economic challenges ahead of us with our more efficient and streamlined organizational structure, a strong balance sheet and ample liquidity. I am confident that we will come out of the COVID-19 pandemic a stronger and more resilient organization.”
Investor Conference Call and Web Simulcast
Astec will conduct a conference call and live webcast today, August 5, 2020, at 10:00 A.M. Eastern Time, to review its second quarter 2020 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 www.webcaster4.com/Webcast/Page/2146/36087. 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 August 19, 2020 by dialing (877) 481-4010 or (919) 882-2331 for international callers, Conference ID # 36087. A transcript of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within five business days after the call.
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
About Astec
Astec, (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 two primary business segments: Infrastructure Solutions that includes road building, asphalt and concrete plant, thermal and storage solutions; and Materials Solutions that include our aggregate processing and mining equipment.
Forward-Looking Statements
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) changes in the business segments (iii) the effect of changes in backlog (iv) the acquisition of CON-E-CO and BMH, (v) the closure of our Mequon, Wisconsin location and associated efficiencies, (vi) the impact of the COVID-19 pandemic on the global demand for the Company's products, and (vii) the impacts of the COVID-19 pandemic on the Company's financial condition and business operations. 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, 2019.
For Additional Information Contact:
Steve Anderson
Senior Vice President of Administration and Investor Relations, Secretary
Phone: (423) 899-5898
Fax: (423) 899-4456
E-mail: sanderson@astecindustries.com
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Astec Industries Inc.
Condensed Consolidated Statements of Income
(In millions, except shares in thousands and per share amounts; unaudited)
| Three Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Net sales | $ | 265.3 | $ | 304.8 | $ | 554.1 | $ | 630.6 |
| Cost of sales | 205.7 | 221.5 | 420.5 | 470.4 | ||||
| Gross profit | 59.6 | 83.3 | 133.6 | 160.2 | ||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 42.7 | 52.8 | 98.9 | 110.9 | ||||
| Restructuring and asset impairment charges | 6.0 | — | 8.7 | 0.6 | ||||
| Total operating expenses | 48.7 | 52.8 | 107.6 | 111.5 | ||||
| Operating income | 10.9 | 30.5 | 26.0 | 48.7 | ||||
| Other income (expense): | ||||||||
| Interest expense | (0.1) | (0.5) | (0.2) | (1.1) | ||||
| Miscellaneous, net | 0.3 | 0.4 | 0.8 | 0.8 | ||||
| Income before income taxes | 11.1 | 30.4 | 26.6 | 48.4 | ||||
| Provision (benefit) from income taxes | 1.8 | 7.0 | (3.3) | 10.7 | ||||
| Net income attributable to controlling interest | $ | 9.3 | $ | 23.4 | $ | 29.9 | $ | 37.7 |
| Earnings per common share | ||||||||
| Basic | $ | 0.41 | $ | 1.04 | $ | 1.33 | $ | 1.67 |
| Diluted | 0.41 | 1.03 | 1.32 | 1.66 | ||||
| Weighted-average shares outstanding | ||||||||
| Basic | 22,584 | 22,509 | 22,567 | 22,503 | ||||
| Diluted | 22,711 | 22,667 | 22,715 | 22,656 | ||||
| EPS * | $ | 0.41 | $ | 1.03 | $ | 1.32 | $ | 1.66 |
| Restructuring and unusual | 0.35 | (0.88) | 0.39 | (0.86) | ||||
| Goodwill impairment | — | — | 0.07 | — | ||||
| Provision of income taxes | (0.09) | 0.22 | (0.11) | 0.22 | ||||
| Adjusted EPS * | $ | 0.67 | $ | 0.37 | $ | 1.67 | $ | 1.02 |
| * Diluted EPS |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Astec Industries Inc.
Segment Revenues and Profits
(In thousands; unaudited)
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Infrastructure<br>Solutions | Material<br>Solutions | Corporate | Total | Infrastructure<br>Solutions | Material<br>Solutions | Corporate | Total | |||||||||||||||
| 2020 Revenues | $ | 181,851 | $ | 83,448 | $ | — | $ | 384,469 | $ | 169,678 | $ | — | ||||||||||
| 2019 Revenues | 197,965 | 106,837 | — | 304,802 | 417,214 | 213,368 | — | 630,582 | ||||||||||||||
| Change $ | (16,114) | (23,389) | — | (39,503) | (32,745) | (43,690) | — | (76,435) | ||||||||||||||
| Change % | (8.1) | % | (21.9) | % | — | % | (13.0) | % | (7.8) | % | (20.5) | % | — | % | (12.1) | % | ||||||
| 2020 Gross profit | 38,289 | 21,214 | 112 | 59,615 | 91,213 | 42,219 | 204 | 133,636 | ||||||||||||||
| 2020 Gross profit % | 21.1 | % | 25.4 | % | — | % | 22.5 | % | 23.7 | % | 24.9 | % | — | % | 24.1 | % | ||||||
| 2019 Gross profit | 57,743 | 25,493 | 81 | 83,317 | 109,053 | 51,038 | 76 | 160,167 | ||||||||||||||
| 2019 Gross profit % | 29.2 | % | 23.9 | % | — | % | 27.3 | % | 26.1 | % | 23.9 | % | — | % | 25.4 | % | ||||||
| Change $ | (19,454) | (4,279) | 31 | (23,702) | (17,840) | (8,819) | 128 | (26,531) | ||||||||||||||
| 2020 Profit / (loss) | 14,215 | 8,469 | (13,604) | 9,080 | 31,435 | 14,504 | (16,528) | 29,411 | ||||||||||||||
| 2019 Profit / (loss) | 26,926 | 8,489 | (12,563) | 22,852 | 44,996 | 17,166 | (25,471) | 36,691 | ||||||||||||||
| Change $ | (12,711) | (20) | (1,041) | (13,772) | (13,561) | (2,662) | 8,943 | (7,280) | ||||||||||||||
| Change % | (47.2) | % | (0.2) | % | 8.3 | % | (60.3) | % | (30.1) | % | (15.5) | % | (35.1) | % | (19.8) | % | ||||||
| Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on intersegment revenues. A reconciliation of total segment profits to the Company's net income attributable to controlling interest is as follows (in thousands): | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
| Total profit for all segments | $ | 9,080 | $ | 22,852 | $ | 29,411 | $ | 36,691 | ||||||||||||||
| Recapture of intersegment profit | 226 | 509 | (283) | 378 | 888 | (510) | ||||||||||||||||
| Net loss attributable to non-controlling interest | (48) | 16 | (64) | 113 | 72 | 41 | ||||||||||||||||
| Net income attributable to controlling interest | $ | 9,258 | $ | 23,377 | $ | 29,902 | $ | 37,651 |
All values are in US Dollars.
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Astec Industries Inc.
Condensed Consolidated Balance Sheets
(In millions; unaudited)
| June 30,<br>2020 | June 30,<br>2019 | |||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 119.8 | $ | 24.9 |
| Investments | 2.9 | 1.2 | ||
| Receivables, net | 118.7 | 139.2 | ||
| Inventories, net | 263.2 | 360.9 | ||
| Other current assets | 25.8 | 31.3 | ||
| Total current assets | 530.4 | 557.5 | ||
| Property, plant and equipment, net | 177.8 | 191.9 | ||
| Other long-term assets | 85.6 | 99.2 | ||
| Total assets | $ | 793.8 | $ | 848.6 |
| Liabilities | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 48.2 | $ | 70.3 |
| Other current liabilities | 95.8 | 103.6 | ||
| Total current liabilities | 144.0 | 173.9 | ||
| Long-term debt | 0.4 | 28.9 | ||
| Other long-term liabilities | 27.6 | 25.2 | ||
| Total equity | 621.8 | 620.6 | ||
| Total liabilities and equity | $ | 793.8 | $ | 848.6 |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Astec Industries Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands; unaudited)
| Six Months Ended June 30, | ||||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Cash flows from operating activities: | ||||
| Net income | $ | 29,788 | $ | 37,579 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 12,601 | 13,139 | ||
| Provision for doubtful accounts | 780 | 806 | ||
| Provision for warranties | 5,137 | 4,496 | ||
| Deferred compensation expense | 193 | 144 | ||
| Stock-based compensation | 2,987 | 1,739 | ||
| Deferred income tax provision | 13,428 | 8,412 | ||
| (Gain) loss on disposition of fixed assets | (730) | 176 | ||
| Asset impariment charge | 4,146 | — | ||
| Distributions to SERP participants | (434) | (1,007) | ||
| Change in operating assets and liabilities: | ||||
| (Purchase) sale of trading securities, net | (9) | 50 | ||
| Trade and other receivables | 5,445 | (6,719) | ||
| Inventories | 31,365 | (5,240) | ||
| Prepaid expenses and other assets | 2,681 | 911 | ||
| Accounts payable | (7,714) | (2,006) | ||
| Accrued payroll and related expenses | (2,869) | (2,807) | ||
| Accrued product warranty | (4,538) | (5,287) | ||
| Customer deposits | (20,053) | (13,025) | ||
| Prepaid and income taxes payable, net | 10,622 | 7,669 | ||
| Other | 2,015 | 3,841 | ||
| Net cash provided by operating activities | 84,841 | 42,871 | ||
| Cash flows from investing activities: | ||||
| Expenditures for property and equipment | (7,407) | (8,657) | ||
| Proceeds from sale of property and equipment | 1,987 | 136 | ||
| Other | (205) | 433 | ||
| Net cash used by investing activities | (5,625) | (8,088) | ||
| Cash flows from financing activities: | ||||
| Payment of dividends | (4,971) | (4,956) | ||
| Bank loan repayments, net | (188) | (31,014) | ||
| Sale of Company shares held by SERP | 125 | 222 | ||
| Withholding tax paid upon vesting of restricted stock units | (565) | (160) | ||
| Net cash used by financing activities | (5,599) | (35,908) | ||
| Effect of exchange rates on cash | (2,677) | 209 | ||
| Net change in cash and cash equivalents | 70,940 | (916) | ||
| Cash and cash equivalents, beginning of period | 48,857 | 25,821 | ||
| Cash and cash equivalents at end of period | $ | 119,797 | $ | 24,905 |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Appendix
In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These 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 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.
| 2Q 2020 GAAP to Non-GAAP Reconciliation Table | ||||||||
|---|---|---|---|---|---|---|---|---|
| As Reported<br>(GAAP) | Restructuring<br>Charges | As Adjusted<br>(Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net sales | $ | 265,299 | $ | — | $ | 265,299 | ||
| GP | 59,615 | 1,908 | 61,523 | |||||
| GP% | 22.5 | % | 23.2 | % | ||||
| Operating income | 10,860 | 7,900 | 18,760 | |||||
| Provision (benefit) from income taxes | 1,868 | 1,906 | 3,774 | |||||
| Net income attributable to controlling interest | 9,258 | 5,994 | 15,252 | |||||
| EPS | 0.41 | 0.26 | 0.67 | |||||
| EBITDA | 17,365 | 7,900 | 25,265 | |||||
| Infrastructure Solutions | ||||||||
| Net sales | 181,851 | — | 181,851 | |||||
| GP | 38,289 | 1,908 | 40,197 | |||||
| GP% | 21.1 | % | 22.1 | % | ||||
| EBITDA | 18,980 | 3,611 | 22,591 | |||||
| Materials Solutions | ||||||||
| Net sales | 83,448 | — | 83,448 | |||||
| GP | 21,214 | — | 21,214 | |||||
| GP% | 25.4 | % | 25.4 | % | ||||
| EBITDA | 10,562 | 1,550 | 12,112 | |||||
| 2Q YTD 2020 GAAP to Non-GAAP Reconciliation Table | ||||||||
| As Reported<br>(GAAP) | Restructuring<br>Charges | As Adjusted<br>(Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net sales | $ | 554,147 | $ | — | $ | 554,147 | ||
| GP | 133,636 | 1,908 | 135,544 | |||||
| GP% | 24.1 | % | 24.5 | % | ||||
| Operating income | 26,003 | 10,612 | 36,615 | |||||
| Provision (benefit) from income taxes | (3,275) | 2,543 | (732) | |||||
| Net income attributable to controlling interest | 29,902 | 8,069 | 37,971 | |||||
| EPS | 1.32 | 0.35 | 1.67 | |||||
| EBITDA | 38,913 | 10,612 | 49,525 | |||||
| Infrastructure Solutions | ||||||||
| Net sales | 384,469 | — | 384,469 | |||||
| GP | 91,213 | 1,908 | 93,121 | |||||
| GP% | 23.7 | % | 24.2 | % | ||||
| EBITDA | 41,221 | 6,290 | 47,511 | |||||
| Materials Solutions | ||||||||
| Net sales | 169,678 | — | 169,678 | |||||
| GP | 42,219 | — | 42,219 | |||||
| GP% | 24.9 | % | 24.9 | % | ||||
| EBITDA | 18,922 | 1,582 | 20,504 |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
| 2Q 2019 GAAP to Non-GAAP Reconciliation Table | ||||||||
|---|---|---|---|---|---|---|---|---|
| As Reported (GAAP) | Restructuring Charges | As Adjusted (Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net sales | $ | 304,802 | $ | (20,000) | $ | 284,802 | ||
| GP | 83,317 | (19,974) | 63,343 | |||||
| GP% | 27.3 | % | 22.2 | % | ||||
| Operating income | 30,481 | (19,932) | 10,549 | |||||
| Provision (benefit) from income taxes | 7,008 | (4,953) | 2,055 | |||||
| Net income attributable to controlling interest | 23,377 | (14,979) | 8,398 | |||||
| EPS | 1.03 | (0.66) | 0.37 | |||||
| EBITDA | 37,128 | (19,932) | 17,196 | |||||
| Infrastructure Solutions | ||||||||
| Net sales | 197,965 | (20,000) | 177,965 | |||||
| GP | 57,743 | (19,974) | 37,769 | |||||
| GP% | 29.2 | % | 21.2 | % | ||||
| EBITDA | 32,431 | (19,932) | 12,499 | |||||
| Materials Solutions | ||||||||
| Net sales | 106,837 | — | 106,837 | |||||
| GP | 25,493 | — | 25,493 | |||||
| GP% | 23.9 | % | 23.9 | % | ||||
| EBITDA | 11,315 | — | 11,315 | |||||
| 2Q YTD 2019 GAAP to Non-GAAP Reconciliation Table | ||||||||
| As Reported (GAAP) | Restructuring Charges | As Adjusted (Non-GAAP) | ||||||
| Consolidated | ||||||||
| Net sales | $ | 630,582 | $ | (20,000) | $ | 610,582 | ||
| GP | 160,167 | (19,974) | 140,193 | |||||
| GP% | 25.4 | % | 23.0 | % | ||||
| Operating income | 48,660 | (19,420) | 29,240 | |||||
| Provision (benefit) from income taxes | 10,789 | (4,955) | 5,834 | |||||
| Net income attributable to controlling interest | 37,651 | (14,465) | 23,186 | |||||
| EPS | 1.66 | (0.64) | 1.02 | |||||
| EBITDA | 62,067 | (19,421) | 42,646 | |||||
| Infrastructure Solutions | ||||||||
| Net sales | 417,214 | (20,000) | 397,214 | |||||
| GP | 109,053 | (19,974) | 89,079 | |||||
| GP% | 26.1 | % | 22.4 | % | ||||
| EBITDA | 55,575 | (19,420) | 36,155 | |||||
| Materials Solutions | ||||||||
| Net sales | 213,368 | — | 213,368 | |||||
| GP | 51,038 | — | 51,038 | |||||
| GP% | 23.9 | % | 23.9 | % | ||||
| EBITDA | 22,499 | — | 22,499 |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
| NEWS RELEASE
Astec Industries Inc.
GAAP vs Non-GAAP Adj. EPS Reconciliations
(In thousands, except share and per share amounts; unaudited)
| Three Months Ended<br><br>June 30, | Six Months Ended<br><br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||
| Net income attributable to controlling interest | $ | 9,258 | $ | 23,377 | $ | 29,902 | $ | 37,651 |
| Plus: Restructuring | 7,900 | (19,932) | 8,966 | (19,420) | ||||
| Plus: Goodwill impairment | — | — | 1,646 | — | ||||
| Less: Provision from income taxes | (1,906) | 4,953 | (2,543) | 4,955 | ||||
| Adjusted net income attributable to controlling interest | $ | 15,252 | $ | 8,398 | $ | 37,971 | $ | 23,186 |
| Diluted EPS | $ | 0.41 | $ | 1.03 | $ | 1.32 | $ | 1.66 |
| Plus: Restructuring | 0.35 | (0.88) | 0.39 | (0.86) | ||||
| Plus: Goodwill impairment | — | — | 0.07 | — | ||||
| Less: Provision from income taxes | (0.09) | 0.22 | (0.11) | 0.22 | ||||
| Adjusted EPS | $ | 0.67 | $ | 0.37 | $ | 1.67 | $ | 1.02 |
1725 Shepherd Road | Chattanooga, Tennessee 37421 | 423.899.5898 | astecindustries.com
aste_2q20earningspresent
2Q20 Earnings Presentation August 5, 2020
Safe Harbor 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) changes in the business segments (iii) the effect of changes in backlog (iv) the acquisition of Con-e-Co and BMH, (v) the closure of our Mequon, Wisconsin location and associated efficiencies, (vi) the impact of the COVID-19 pandemic on the global demand for the Company’s products, and (vii) the impacts of the COVID-19 pandemic on the Company’s financial condition and business operations. 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, 2019. 2Q20 Earnings Presentation | 2
Astec Overview & 2Q20 Highlights Barry Ruffalo | President & CEO 2Q20 Earnings Presentation |
Today’s Key Messages 01 Strong 2Q20 performance fueled by continued progress of transformation plan and proactive actions taken since 2019 02 Resilient customer demand as products remain essential for building infrastructure and transportation markets; we remain vigilant throughout ongoing pandemic 03 Well positioned to execute through challenging market conditions with our strong, flexible balance sheet and liquidity with net cash position 04 Solid execution of strategic transformation with Simplify, Focus, and Grow pillars and new organizational structure to drive profitable growth 05 Proactively preparing for upside and downside scenarios due to COVID-19 pandemic; controlling the controllable and had a head start on cost savings initiatives 2Q20 Earnings Presentation | 4
Rock to RoadTM: Simplification of Our Business Segments Materials Solutions: 31% Key Products Crushing and Screening • Washing and Classifying • Material Handling • Rock Breaker Technology • Plants and Systems Leading Brands Infrastructure Solutions: 69% Key Products Roadbuilding • Paving • Forestry • Recycling • Asphalt Plants • Concrete Plants • Burners and Heaters • Silos and Storage Tanks Leading Brands Acquired in 3Q’20 NEW STRUCTURE FROM THREE SEGMENTS TO TWO FOR MORE EFFECTIVE MANAGEMENT Note: Percentages are a % of total company revenue for 2Q20 Adjusted Revenues. See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 5
COVID-19 Preparedness Update New Organizational Structure Has Enhanced Company-wide Communication ✓ In early March 2020, formed a COVID-19 task force, which continually monitors information from our sites, government agencies and other sources ✓ Continue to manufacture, sell and service our products with appropriate precautions ✓ Reinforced good hygiene practices at all facilities including frequent handwashing, social distancing and regular cleaning of surfaces, in accordance with U.S. Center of Disease Control and Prevention (CDC) and World Health Organization (WHO) guidelines to reduce health risks ✓ Enacted policies to keep our employees, customers and suppliers safe by greatly reducing travel and utilizing technology to meet virtually as business permits ✓ Introduced health screening procedures for on-site, essential employees and visitors, including temperature screenings ✓ COVID-19 playbook in place with senior leaders sharing best practices, processes and tools across organization PROACTIVELY MANAGING THROUGH THE PANDEMIC WITH NO SIGNIFICANT DISRUPTIONS 2Q20 Earnings Presentation | 6
Business Dynamics and Observations Current Transformation to Simplify, Focus, and Grow Strategy Has Reduced Organizational Structure Complexity and Enabled More Efficient COVID-19 Response and Sharing of Best Practices ✓ Bipartisan support for U.S. infrastructure construction; both House and Senate calling for funding increases (House: ~40% / Senate: ~27% increase compared to FAST-Act) ✓ Customers are still working and need our solutions; some have discussed postponing capex decisions and delaying shipments to future quarters ✓ All factories are open; temporary closures of two Materials Solutions sites due to preemptive government mandates in South Africa (reopened on 5/4/20) and Northern Ireland (reopened on 5/11/20) ✓ Limited impact in 1H and situation remains fluid for the remainder of 2020 ACTIVELY RUNNING SCENARIO ANALYSES TO ENSURE PREPAREDNESS FOR CHANGES IN DEMAND 2Q20 Earnings Presentation | 7
Total Company & Segment Results Becky Weyenberg | Chief Financial Officer 2Q20 Earnings Presentation |
2Q20 Financial Results ($M, except earnings per share data) ADJ. REVENUES1 BACKLOG ADJ. EBITDA1 ADJ. EPS1 $246.1 $284.8 $0.67 $265.3 $182.0 $25.3 $17.2 $0.37 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 • Equipment sales decreased • Materials Solutions backlog • Adjusted EBITDA increased due • $7.9M of restructuring and $12.2M or 6.5% declined 17.3% or $15.2M to favorable mix and unusual costs improvements in Mfg. • Parts sales decreased $7.7M or • Infrastructure Solution orders ‒ Asset impairment: $2.5M performance 10.4% declined 30.9% or $48.9M ‒ Inventory write-down: $1.9M • Adj. EBITDA margin of 9.5% • Used equipment sales increased • Domestic backlog declined 20.6% ‒ Reduction in force: $1.4M increased 350 bps $4.7M or 119.1% or $33.2M ‒ Mequon: $1.3M • SG&A decreased 19.0% or • Domestic sales decreased $4.7M • International backlog declined • Net effective tax rate adjusted for $10.0M, driven by reductions in or 2.1% 36.6% for $30.9M the quarter was 20% consulting fees, travel and • International sales decreased employee expenses $14.8M or 25.3% 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 9
2Q20 Adjusted EBITDA1 Margin Bridge 310 bps 9.5% (90) bps 210 bps 6.0% (80 bps) Q2 2019 Volume & Rightsizing, Cost savings Other Q2 2020 mix organization initiatives transformation OPERATIONS EXCELLENCE INITIATIVES DRIVE 520 BPS OF YOY MARGIN IMPROVEMENT 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 10
Infrastructure Solutions | 2Q20 Financial Performance ($M) ADJ. REVENUES1 ADJ. GROSS PROFIT1 ADJ. EBITDA1 $181.9 $178.0 $40.2 $37.8 $22.6 $12.5 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q PERFORMANCE DRIVERS • Strong order intake and backlog coming out of 1Q, realized in 2Q sales and plant absorption • Strong performance overall from good product mix particularly in asphalt plant sales and associated margins • Improved quality of earnings from restructuring, pricing initiatives, plant efficiencies and controlled spending 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 11
Materials Solutions | 2Q20 Financial Performance ($M) ADJ. REVENUES1 ADJ. GROSS PROFIT1 ADJ. EBITDA1 $106.8 $25.5 $12.1 $11.3 $83.4 $21.2 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q PERFORMANCE DRIVERS • Initiatives taken in 2019 to right size operations to current market demand; improving margin despite declining revenue • Further rightsizing including headcount reductions and cost control measures • Leveraging global footprint to optimize cost to produce and deliveries to end customer 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 12
YTD20 Financial Results ($M, except earnings per share data) ADJ. REVENUES1 BACKLOG ADJ. EBITDA1 ADJ. EPS1 $246.1 $610.6 $49.5 $1.67 $554.1 $42.6 $182.0 $1.02 YTD19 YTD20 YTD19 YTD20 YTD19 YTD20 YTD19 YTD20 • Equipment sales decreased • Materials Solutions backlog • Adjusted EBITDA increased due • $10.6M of restructuring and $51.4M or 12.8% declined 17.3% or $15.2M to favorable mix and unusual costs improvements in Mfg. • Parts sales decreased $11.6M or • Infrastructure Solution orders ‒ Asset impairment: $2.5M performance 6.9% declined 30.9% or $48.9M ‒ Inventory write-down: $1.9M • Adj. EBITDA margin of 8.9% • Used equipment sales increased • Domestic backlog declined 20.6% ‒ Reduction in force: $1.4M increased 190 bps $9.5M or 122.9% or $33.2M ‒ Mequon: $1.3M • SG&A decreased 10.8% or • Domestic sales decreased • International backlog declined ‒ Tacoma: $1.5M $12.0M, driven by reductions in $33.6M or 6.9% 36.6% for $30.9M consulting fees, travel and • Net effective tax rate adjusted for • International sales decreased employee expenses year to date was negative 2% $22.8M or 18.8% 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2Q20 Earnings Presentation | 13
Maintain Strong, Flexible Balance Sheet with Ample Liquidity SUMMARY BALANCE SHEET ($M) 6/30/20 ($M) 6/30/20 Cash and Cash Equivalents $ 119.8 Cash and Cash Equivalents $ 119.8 Total Current Assets $ 530.4 Available Credit $ 150.8 Total Assets $ 793.8 Total Available Liquidity $ 270.6 Total Current Liabilities $ 144.0 COMMENTARY • Total Gross Inventory Decreased $98.0 Total Debt $ 1.4 • Total Net Inventory Decreased $97.7 • Generated $68.3 cash in the quarter Total Liabilities and Equity $ 793.8 REMAIN DISCIPLINED WITH A LONG-TERM NET DEBT TO EBITDA RANGE OF 1.5X – 2.5X 2Q20 Earnings Presentation | 14
Disciplined Capital Deployment Framework Use of Cash Over Last 3 Years ~$150M Adjustments Given Current Environment Plant, Property • Internal investments meeting Continue to target > 14% 16% return objectives of >14% ROIC for new & Equipment ROIC investments 47% 19% • Future acquisitions to align Continue to focus on Acquisitions with growth strategy and meet strategic alignment and financial criteria financial discipline 18% Plant, Property & Equipment • Dividend of $0.11 per share Returns to • $150M repurchase program No buybacks expected Acquisitions Shareholders authorized in near term Dividends • Repurchased $24M in 2018 Share Repurchases CONTINUALLY EVALUATE STRATEGY TO ENSURE A BALANCED APPROACH 2Q20 Earnings Presentation | 15
Strategic M&A Approach Aligns to Our Growth Strategy Value Chain Gaps Financial Criteria Close to Core Attractive with Deeper Markets / Aligns Penetration to Macro Trends EPS Accretion in First Full Year Strategic Acquisition Filters Meet or Exceed #1 or #2 Market Recurring Leadership Long-term Financial Metrics Revenue Position Accelerate Investment in Technology and Innovation CONTINUE TO FOCUS ON STRATEGIC ALIGNMENT AND FINANCIAL DISCIPLINE 2Q20 Earnings Presentation | 16
Recent Acquisitions Strengthen Infrastructure Portfolio 2019 PRODUCT REVENUE MIX BY COMPANY 25% 35% 31% 40% 49% + 53% + 13% 40% 7% 7% Central Mix Dry Batch Mix Parts & Service Other 1 COMMENTARY • New complementary brands and products lines from CON-E-CO and BMH Systems enables us to have a more comprehensive concrete plant offering with stronger dry batch (Ready Mix) related revenue • Asphalt plant cross selling opportunities • Utilizing strong Canadian market presence and manufacturing capabilities to grow other Infrastructure Solutions product sales • Strengthens our International product portfolio CONSISTENT WITH OUR PROFITABLE GROWTH STRATEGY TO ENHANCE SHAREHOLDER VALUE 1 Includes: Bagging, paste-fill, etc. 2Q20 Earnings Presentation | 17
Downturn Playbook with Additional Levers to Pull Status Commentary Self-Adjusting • Revised annual and long-term incentive plans ✓ Metrics-based incentive plan Discretionary ✓ Professional services / consulting • Accelerating centralization efforts ✓ Tradeshows / marketing • Implemented travel restrictions; reduced number of ✓ 4-day work weeks exhibits and promotional items ▪ Delayed / freeze hiring • Standardizing commission / pay structures ▪ Suspend merit increases / other compensation benefits Investments • Focused investments on transformation activities including centralized corporate functions ✓ Investment reprioritization, deferrals • Accelerated Strategic Procurement / Operational o Product line rationalization Excellence projects Cash Preservation • Improve inventory turns ✓ Headcount reduction • Focused on cash management o Standardization of payment terms • Continued focus on centralizing business processes ✓ Activated o In-Process ▪ Additional Levers, If Needed 2Q20 Earnings Presentation | 18
Our Profitable Growth Strategy Remains Consistent SIMPLIFY FOCUS GROW • Leverage global footprint and scale • Strengthen customer-centric approach • Reinvigorate innovation with a new while maintaining strong customer by providing a holistic set of solutions product development approach relationships • Drive commercial excellence • Leverage technology and digital • Reduce organizational structure connectivity to enhance customer complexity • Embrace and streamline operational experience excellence processes • Consolidate and rationalize footprint • Capitalize on global growth and product portfolio • Enhance accountability through a opportunities performance-based culture with • Optimize supply chain by leveraging aligned KPIs and incentives • Allocate capital effectively to drive size and scale of business greatest shareholder value 2Q20 Earnings Presentation | 19
Update on Our Transformation Progress 2019 - 2020 2019 - 2021 2020 - 2021+ SIMPLIFY ✓ Changed from subsidiary structure to align by product groups FOCUS ✓ Refreshed executive leadership team and board members ✓ Hired SVP of Operational Excellence and Chief Information Officer GROW ✓ Executed Astec Strategic ✓ Aligned financial metrics to Procurement initiative consolidating ✓ Reinvigorate focus on innovation; new management incentives supply chain Innovation Council ✓ Implementing Enterprise Data ✓ 1Q20 re-segmentation to two ▪ Enhance customer engagement segment reporting structure Analytic Platform system to consolidate reporting ▪ Global expansion ✓ Within Infrastructure Solutions, integrated five service teams into a ✓ Announced divestiture of Enid ▪ Profitable growth unified service and construction team; (GEFCO; O&G products) one support call center ▪ Margin improvement ▪ Further drive operational excellence ✓ Rationalizing three sites in Hameln, across organization ▪ Disciplined and strategic acquisitions Germany, Albuquerque, NM and ▪ Optimize product portfolio with Mequon, WI to further streamline ongoing rationalization operations ▪ Improve working capital turns – clear ✓ Completed ▪ In-Process action plan in place 2Q20 Earnings Presentation | 20
Key Investment Highlights Leadership positions within attractive niche markets in industries 1 benefitting from long-term secular trends including population growth, urbanization and aging infrastructure Industry-leading reputation for innovation, high-quality products 2 and superior customer service Recurring, high-margin aftermarket revenue driven by a large 3 global installed base Strong balance sheet and liquidity with net cash position to 4 execute through challenging market conditions; our products are essential for building infrastructure Strategic transformation with Simplify, Focus, and Grow pillars; 5 cost savings initiatives underway and new organizational structure to drive profitable growth 2Q20 Earnings Presentation | 21
Q&A 2Q20 Earnings Presentation |
Contact Information STEVE ANDERSON SVP of Administration & Investor Relations Phone: 423-553-5934 Email: sanderson@astecindustries.com 2Q20 Earnings Presentation | 23
Appendix 2Q20 Earnings Presentation |
Company Targets LONG-TERM GOALS 5% - 10% > 12% > 10% > 100% > 14% REVENUE GROWTH EBITDA MARGIN EPS GROWTH Net Income ROIC FCF CONVERSION1 Create Value for Shareholders Alignment to Incentive Plan Stand through Cycles 1 Calculated by dividing LTM Adjusted FCF by Adjusted Net Income. 2Q20 Earnings Presentation | 25
Income Statement Astec Industries Inc. Condensed Consolidated Statements of Income (In millions, except share and per share amounts; unaudited) Three Months Ended Year To Date June 30, June 30, 2020 2019 2020 2019 Net sales $ 265.3 $ 304.8 $ 554.1 $ 630.6 Cost of sales 205.7 221.5 420.5 470.4 Gross profit 59.6 83.3 133.6 160.2 Operating expenses: Selling, general and administrative 42.7 52.8 98.9 110.9 Restructuring and asset impairment charges 6.0 0.0 8.7 0.6 Total operating expenses 48.7 52.8 107.6 111.5 Operating income 10.9 30.5 26.0 48.7 Other income (expense): Interest expense (0.1) (0.5) (0.2) (1.1) Miscellaneous, net 0.3 0.4 0.8 0.8 Income before income taxes 11.1 30.4 26.6 48.4 Provision (benefit) from income taxes 1.8 7.0 (3.3) 10.7 Net income attributable to controlling interest $ 9.3 $ 23.4 $ 29.9 $ 37.7 Earnings per common share Basic $ 0.41 $ 1.04 $ 1.33 $ 1.67 Diluted 0.41 1.03 1.32 1.66 Weighted-average shares outstanding Basic 22,584 22,509 22,567 22,503 Diluted 22,711 22,667 22,715 22,656 EPS * $ 0.41 $ 1.03 $ 1.32 $ 1.66 Restructuring and unusual 0.35 (0.88) 0.39 (0.86) Goodwill imparement 0.07 Provision of income taxes (0.09) 0.22 (0.11) 0.22 Adjusted EPS * $ 0.67 $ 0.37 $ 1.67 $ 1.02 * Diluted EPS 2Q20 Earnings Presentation | 26
Balance Sheet Astec Industries Inc. Condensed Consolidated Balance Sheets (In millions; unaudited) June 30, June 30, 2020 2019 Assets Current assets: Cash and cash equivalents $ 119.8 $ 24.9 Investments 2.9 1.2 Receivables, net 118.7 139.2 Inventories, net 263.2 360.9 Other current assets 25.8 31.3 Total current assets 530.4 557.5 Property, plant and equipment, net 177.8 191.9 Other long-term assets 85.6 99.2 Total assets $ 793.8 $ 848.6 Liabilities Current liabilities: Accounts payable $ 48.2 $ 70.3 Other current liabilities 95.8 103.6 Total current liabilities 144.0 173.9 Long-term debt 0.4 28.9 Other long-term liabilities 27.6 25.2 Total equity 621.8 620.6 Total liabilities and equity $ 793.8 $ 848.6 2Q20 Earnings Presentation | 27
Cash Flow Statement (In thousands; unaudited) Six Months Ended June 30, 2020 2019 Cash flows from operating activities: Net income $ 29,788 $ 37,579 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,601 13,139 Provision for doubtful accounts 780 806 Provision for warranties 5,137 4,496 Deferred compensation expense 193 144 Stock-based compensation 2,987 1,739 Deferred income tax provision 13,428 8,412 (Gain) loss on disposition of fixed assets (730) 176 Asset impariment charge 4,146 -- Distributions to SERP participants (434) (1,007) Change in operating assets and liabilities: Sale (purchase) of trading securities, net (9) 50 Trade and other receivables 5,445 (6,719) Inventories 31,365 (5,240) Prepaid expenses and other assets 2,681 911 Accounts payable (7,714) (2,006) Accrued payroll and related expenses (2,869) (2,807) Accrued product warranty (4,538) (5,287) Customer deposits (20,053) (13,025) Prepaid and income taxes payable, net 10,622 7,669 Other 2,015 3,841 Net cash provided by operating activities 84,841 42,871 Cash flows from investing activities: Expenditures for property and equipment (7,407) (8,657) Proceeds from sale of property and equipment 1,987 136 Other (205) 433 Net cash used by investing activities (5,625) (8,088) Cash flows from financing activities: Payment of dividends (4,971) (4,956) Bank loan repayments, net (188) (31,014) Sale of Company shares held by SERP 125 222 Withholding tax paid upon vesting of restricted stock units (565) (160) Net cash used by financing activities (5,599) (35,908) Effect of exchange rates on cash (2,677) 209 Net change in cash and cash equivalents 70,940 (916) Cash and cash equivalents, beginning of period 48,857 25,821 Cash and cash equivalents at end of period $ 119,797 $ 24,905 2Q20 Earnings Presentation | 28
Q2 GAAP to Non-GAAP Reconciliation Table 2Q20 GAAP to Non-GAAP Reconciliation Table YTD2Q20 GAAP to Non-GAAP Reconciliation Table As Reported Restructuring As Adjusted As Reported Restructuring As Adjusted (GAAP) Charges (Non-GAAP) (GAAP) Charges (Non-GAAP) Consolidated Consolidated Net sales $ 265,299 $ - $ 265,299 Net sales $ 554,147 $ - $ 554,147 GP 59,615 1,908 61,523 GP 133,636 1,908 135,544 GP% 22.5% 23.2% GP% 24.1% 24.5% Operating income 10,860 7,900 18,760 Operating income 26,003 10,612 36,615 Provision (benefit) from income taxes 1,868 1,906 3,774 Provision (benefit) from income taxes (3,275) 2,543 (732) Net income attributable to controlling interest 9,258 5,994 15,252 Net income attributable to controlling interest 29,902 8,069 37,971 EPS 0.41 0.26 0.67 EPS 1.32 0.35 1.67 EBITDA 17,365 7,900 25,265 EBITDA 38,913 10,612 49,525 Infrastructure Solutions Infrastructure Solutions Net sales 181,851 - 181,851 Net sales 384,469 - 384,469 GP 38,289 1,908 40,197 GP 91,213 1,908 93,121 GP% 21.1% 22.1% GP% 23.7% 24.2% EBITDA 18,980 3,611 22,591 EBITDA 41,221 6,290 47,511 Materials Solutions Materials Solutions Net sales 83,448 - 83,448 Net sales 169,678 - 169,678 GP 21,214 - 21,214 GP 42,219 - 42,219 GP% 25.4% 25.4% GP% 24.9% 24.9% EBITDA 10,562 1,550 12,112 EBITDA 18,922 1,582 20,504 In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These 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 non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses. The amounts described above are unaudited, reported in thousands of U.S. Dollars (Except Share data), and as of or for the periods indicated. 2Q20 Earnings Presentation | 29
GAAP vs Non-GAAP Adj. EPS Reconciliation (In thousands, except share and per share amounts; unaudited) Three Months Ended Year To Date Ended June 30, June 30, 2020 2019 2020 2019 Net income attributable to controlling interest $ 9,258 $ 23,377 $ 29,902 $ 37,651 Plus: Restructuring and unusual 7,900 (19,932) $ 8,966 $ (19,420) Plus: Goodwill impairment -- -- $ 1,646 Less: Provision from income taxes (1,906) 4,953 $ (2,543) $ 4,955 Adjusted net income attributable to controlling interest $ 15,252 $ 8,398 $ 37,971 $ 23,186 Diluted EPS $ 0.41 $ 1.03 $ 1.32 $ 1.66 Plus: Restructuring and unusual 0.35 (0.88) 0.39 (0.86) Plus: Goodwill impairment -- -- 0.07 -- Less: Provision from income taxes (0.09) 0.22 (0.11) 0.22 Adjusted EPS $ 0.67 $ 0.37 $ 1.67 $ 1.02 In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These 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 non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses. The amounts described above are unaudited, reported in thousands of U.S. Dollars (Except Share data), and as of or for the periods indicated. 2Q20 Earnings Presentation | 30