Astec Industries (ASTE) 8-K Astec Industries Reports Third Quarter 2019 Results

 3Q19 Earnings call PRESENTATION  October 29, 2019 

 This presentation and discussion may contain forward-looking statements regarding the future performance of the Company, including representations about the Company's future financial performance, market conditions, the long-term growth prospects of the Company and its markets, opportunities for market share gains and acquisitions and performance of companies in Astec's markets. These forward-looking statements reflect management’s beliefs and assumptions. They are not guarantees of performance and are therefore subject to risks and uncertainties. The information in this presentation is not an update or reaffirmation of previously disclosed information. Future events and actual results could differ materially from those expressed in or implied by the forward-looking statements. Factors that could cause future events or actual results to differ materially from the Company’s expectations include uncertainty in the economy, rising oil and liquid asphalt prices, rising interest rates, changes in highway funding availability, the timing of large contracts, production capacity, changes in size and mix of backlog, seasonality and cyclicality in operating results, seasonality of sales volumes, demand for the Company's products, competitive activity and those other factors listed from time to time in the Company’s reports filed with the SEC.  Safe Harbor  2 

 Astec overview & 3Q19 Highlights  Barry Ruffalo | President & CEO 

 4  Astec Industries at a Glance (NASDAQ: ASTE)  KEY STATISTICS1    Founded  1972  Headquarters  Chattanooga, TN  Employees  ~4,100  Global Locations  26 in 6 Countries  Market-cap  $732M  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  TTM 3Q19 REVENUE MIX | ~$1.2B2  1 As of 9/30/19; 2 Ex-pellets. 

   3Q19 Financial Performance   5  Note: All comparisons are YoY, unless otherwise stated. 1 See Appendix for GAAP to Non-GAAP reconciliation table. 2 Calculated by dividing YTD Adjusted FCF by Adjusted Net Income.     INCOME STATEMENT  BALANCE SHEET AND CASH FLOW    Revenues decreased 0.3% to $255.8MGross Margin decreased 240 bps to 20.3%Adj. EBITDA1 decreased 22.8% to $10.7MAdj. EBITDA1 margin decreased 120 bps to 4.2%Adj. EPS1 decreased 43.3% to $0.17  YTD Adj. FCF of $47.7MYTD Adj. FCF Conversion2 of 179%Net cash positionDividends of $2.5M or $0.11 per share 

 Total company & Segment financial results  David Silvious | CFO, VP & Treasurer 

 3Q19 Financial Results ($M, except per share data)  7  (0.3%)  (43.3%)  (22.8%)    Adjustments  1 See Appendix for GAAP to Non-GAAP reconciliation table.    Adjustments  Equipment sales decreased $3.7M or 2.2%Parts sales increased $3.6M or 5.2%Domestic sales decreased $4.4M or 2.3%International sales increased $3.6M or 5.7%  Order intake decreased in oil and gas due to sustained low oil pricesRoad building orders decreased due to lower dealer activity and a softer US marketOrder intake increased in aggregates due to historically high backlog in 2Q18 leading to an easy comp in 3Q18 when backlogs fell  EBITDA decreased due to decrease in gross profit primarily driven by increase in negative absorption variance of $3.8MAdj. EBITDA Margin of 4.2% decreased 120 bps YoYSGA&E decreased 6.7% driven by lower consulting fees, payroll and benefits, legal and professional fees   $0.875M of restructuring costsNet effective tax rate for the quarter was 17.6%Expected effective tax rate for the year is 22% 

 8  Infrastructure | 3Q19 Financial Performance ($M)  1.3%  1 See Appendix for GAAP to Non-GAAP reconciliation table.  (40.1%)    Adjustments  Revenues increased in asphalt production equipment while decreasing in road building equipmentEquipment sales increased $1.6M or 3.1% Parts sales were consistent with 3Q18International sales decreased $8.4M or 43.4%Domestic sales increased $9.6M or 14.1%  Infrastructure gross profit impacted by increase of $1.7M in under absorptionGross margin of 17.5% decreased 390 bps  Adjusted EBITDA of $2.6M excludes $0.875M of restructuringEBITDA Margin of 1.9% decreased 300 bps YoY due to gross margin compressionBenefit from $2.1M drop in SGA&E due to reduced payroll and consulting fees  (17.4%) 

 9  Aggregate & Mining | 3Q19 Financial Performance ($M)  (2.1%)  (14.2%)  Revenues decreased in aggregate equipment due primarily to lower dealer activityEquipment sales were down $5.9M or 8.8%Parts sales were up $2.5M or 8.5%International sales increased $7.3M or 20.1%Domestic sales decreased $9.4M or 14.4%  Gross profit impacted by increase of $2.1M in under absorptionGross margin of 20.9% decreased 300 bps  EBITDA Margin of 8.8% decreased 290 bps YoY due to gross margin compressionBenefit from $1.0M drop in SGA&E due to payroll reduction and reduced professional fees 

 10  Energy | 3Q19 Financial Performance ($M)   0.2%  Equipment sales were down $0.6M or 1.3%Parts sales were up $1.2M or 10.0%International sales increased $4.7M or 70.4%Domestic sales decreased $4.5M or 7.4%  Gross margin of 22.9% increased 40 bps  EBITDA Margin of 10.7% increased 230 bps YoYBenefit from $1.2M drop in SGA&E due to payroll reductions and reduced consulting fees 

 Focused on Maintaining a Strong Balance Sheet  Managing Cash Flow and Balance Sheet with Great Financial Discipline  11  KEY HIGHLIGHTSOverall strength of the balance sheet provides the financial flexibility to accomplish long-term strategic initiativesInventory turnover improved to 2.6x from 2.4x a year ago Net cash positionTotal liquidity available of $167.6M  ($M)  9/30/19  Cash and Cash Equivalents  $ 26.3  Total Current Assets  $ 529.9  Total Assets  $ 815.7  Total Current Liabilities  $ 173.1  Total Debt  $ 0.9  Total Liabilities and Equity  $ 815.7  SUMMARY BALANCE SHEET 

   12  Disciplined Capital Deployment Framework  Continually evaluate strategy to ensure a balanced approach    Use of Cash Over Last 3 Years~$196M  Reinvestments  Acquisitions  Returns to Shareholders  Internal investments meeting return objectives of >14% ROIC  Future acquisitions to align with growth strategy and meet financial criteria   Quarterly dividend of $0.11 per share$150M repurchase program authorizedRepurchased $24M in 2018 

 Key Observations as Newly Appointed CEO  Excellent Foundation to Create Shareholder Value  13  KEY, STRATEGICOPPORTUNITY AREASOPTIMIZED STRUCTURESimplify the organization, be closer to customers, make quicker decisionsTECHNOLOGYEnhance customer engagement with more touch points to provide greater value for all stakeholdersOPERATIONAL EXCELLENCEInvesting in people and tools to be best in classGLOBAL EXPANSIONDriving our strategy for international growthPROFITABLE GROWTHAlign organizational structure and optimize product portfolio to maximize shareholder value      FOUNDATIONAL COMPANY STRENGTHSPeopleCustomer FocusInnovationMarket PositionGlobal FootprintBalance Sheet            

 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  

   Company Targets  15    Long-term Goals  Revenue Growth  5% - 10%  EBITDA Margin  > 12%  EPS Growth  > 10%  FCF Conversion1  > 100% Net Income  ROIC  > 14%    Create Value for Shareholders    Alignment to Incentive Plan    Stand through Cycles  1 Calculated by dividing YTD Adjusted FCF by Adjusted Net Income.  

 Key Investment Highlights  16  Leadership positions within attractive niche markets in industries benefitting from long-term secular trends including population growth, urbanization and aging infrastructure    Industry-leading reputation for innovation, high-quality products and superior customer service    Recurring, high-margin aftermarket revenue driven by a large global installed base    Financial strength to execute our strategic priorities to improve productivity and drive long-term earnings growth    Refreshed Board members supporting new experienced leadership team to drive long-term shareholder value creation              1  2  3  4  5 

 Q&A 

   18  Contact Information  STEVE ANDERSONVP of Administration & Director of Investor RelationsPhone: 423-553-5934Email: sanderson@astecindustries.com  

 Appendix 

 Income Statement  20 

 Balance Sheet  21 

 Non-GAAP to GAAP Reconciliation Table  Q3 2019  As Reported (GAAP)  Restructuring Charges  Pellet Plant Sale  As Adjusted (Non-GAAP)  Consolidated          Op Income  $3,342  $875  -  $4,217  Income Tax Expense (Benefit) 1  632  (132)  -  764  Net Income attrib. to controlling interest  3,010  743  -  3,753  EPS  0.13  0.04  -  0.17  EBITDA  9,869  875  -  10,744  Infrastructure          EBITDA  1,681  875  -  2,556  YTD September 30, 2019 Consolidated          Free Cash Flow  66,251  1,431  (20,000)  47,682  Income Tax Expense (Benefit) 1  11,421  132  (4,731)  6,822  Net Income attrib. to controlling interest  $40,662  $1,299  $(15,269)  $26,692            1 Tax effect on restructuring charges is calculated using the applicable jurisdictional blended tax rate.