ASTE - Earnings call transcript Q2 2020

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Steve Anderson

Thank you and welcome to the Astec Industries Second Quarter 2020 Earnings Conference Call. My name is Steve Anderson and joining me on today's call are Barry Ruffalo, our Chief Executive Officer; and Becky Weyenberg, our Chief Financial Officer. In just a moment, I'll turn the call over to Barry to provide comments, and then Becky will summarize our financial results.

Before we begin, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company, and these statements are intended to qualify for the Safe Harbor liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions. our others highlighted filings are SEC. influence news today's with could and release, contained that results in are financial the Factors in our

usual, with familiarize As that factors. yourself ask we those you

Barry. comments should results point, our and slide appendix non-GAAP reconciliation they're made You in a over turn note during call the news to and non-GAAP will to GAAP this of our deck. I'll today's call of included At the refer results, to and also release

Barry Ruffalo

Steve. productively this the everyone demand environment. are update top open financial call the off details our this have followed how operations. here we control joining our and to transformation work for XXXX morning, highlighting of to results. continue you, also on managed and the have then safety call by us and adapted today's then also challenging the the profitable our share like Becky in long-term on to before start discuss that with Beginning through employees, discuss messages our Slide for quarter COVID-XX the to focus embraced within be will by made control I the in through on for the key Thank strategic thank from navigate would you highlight We'll from over members health of provide quarter. supply seeing messages to plan pleased I'll key COVID-XX Good and growth. and an Q&A. terms this and X, call update progress on Astec's an on response, our quarter on second we we're our very the with The turning what morning chain, results. suppliers and a situation we customers team and organization how our as on to driving call things I'm our as safely priority and an

to continued driving we facilitate as despite transform of excellence, the on in see solid in were the basis challenging focus with essential increase In our communities. compared the are increase we prior reduction infrastructure in a and we result a demand XX% to in the the in margin of and products XXXX needs a that drive EBITDA the from adjusted to and environment transportation EBITDA actions our XXX year, operational points and performance quarter, customers our macro for As quarter second to took our our company adjusted used continue resilient to are building revenue. able

While face customers support through the near-term solutions, to our vigilant to them ongoing continuing are remain continue and as Astec's we and uncertainties, we will navigate demand pandemic. they

products. demand plant-related Our and We including, the led is well July in end to a backlog importantly, at market by cash all slightly net for execute up, balance conditions liquidity, sheet position. a with remain positioned of strong

our quarters. further We success and in the also coming quarter make turns in to expect improving working improvement saw capital the in

under our transformation During Focus strategic to Simplify, on quarter, the continued Grow significant we progress and make second our pillars.

BMH, concrete our in line full customers strengthen Grow the are products Wisconsin week, the with our as of facilities. supporting Earlier which transferred premier closure to our the more Astec footprint concrete quarter, line both CON-E-CO will pillar, facility Infrastructure this of transformation strategic our global able efficiently during our plant provide we robust two announced Mequon, our leverage acquisitions, Telsmith and specifically access were most Solutions plan, With other products our to Group and of infrastructure batch industry. we the to further manufacturers, acquiring two

execute against on ways to product focused lines. remaining upon flexible build our economic Overall, strong to in continue will any grow look to markets we're We to foundational for agile attractive margin The our news which is the quarter. to with to advantageous cost savings good drive very had initiatives, in head helped start strategy, scenario. also we improvement transformation a that and second

Turning to Slide X.

As we from structure, segments. X is leading X the customer of our to year, beginning operations is and went as this continued Under efficient and end we the a serve this X aligned transformation, more part Positively, reminder, sales. organization base. markets to and better our with segment our already effective

quarter chain businesses quarries The Our and Material that key includes the asphalt our Solutions to revenue during XX% includes XX% our able Solutions. and to we serve chain, crushing from refer which a to everything road plants two our best-in-class here in screening construction acquisitions. That rock-to-road as Infrastructure mix value is and being products. was value to recent concrete

on Slide of other end regard and resulting put in we to the an through and update part been pandemic, the from as daily information connect did job, an Astec we all agencies turning organizations executive sources. phenomenal response. to very a of our monitor ensure effectively put basis, X. a We no policies thus in significant I've we At continually disruptions provide council the sites, our COVID-XX place. communicate Again, how on We our and place in of February, Now in managed government pleased far. right

Turning Slide to X.

our pandemic, under progress been to Through prior transformation than efficiently have in and possible prior result able more made our XXXX. a XXXX we we a still and extremely in even current with through constant were structure. of organizational most to crisis, busy react the communication with COVID-XX our into As backlog we been customers And of quickly environment, have would are the the customers. the

delayed uncertainties resulted COVID-XX-related orders and However, as CapEx postponements. some in expected,

reporting second support support continue of That see situation fluid for our order result, reduction customers remains solutions. of require saw quarter, the are XXXX the construction a critical as being we and segments. prepared to continue both work we infrastructure Astec remainder the for to to said, our across US they in as and As bipartisan

operations globe ability around operating flex now are Astec Regarding facilities our the operations, to all of needed. our with as

government reopened on Astec preemptive May Africa Northern to two the South reopened The and we facility Ireland on During and mandates due Xth, Africa sites XXth. Ireland. South May Northern temporarily site in the quarter, closed

front, we continue On uncertainty persists. near-term as customers from our the pandemic the see demand to

many our is the ongoing a today, we However, remain not any pandemic with our customers disruptions, chain, though to discussions rebound optimistic and With once have supply significant contained. are to maintaining experienced of cautiously identify our respect constantly we suppliers mitigate risks. for

chain support efforts. We expanded have risk our mitigation the of depth supply to also our

recently to topic our our to Becky, Before team core turning with members diversity company's aligns to all comments the the few inclusion I how of over importance it and and values integrity. like make a Astec. on I'd here communicated of at this and respect on of call

that creating it's the will diverse thing culture We only continue to grow and over now as our but inclusive growth. results. to Becky a do focus I'll detailed to also organization right and to turn the to financial our not and discuss our call critical success on we continued understand

Becky Weyenberg

to you, Thank I call. Barry and good on on join everyone. X. you Slide pleased morning, Starting am today's

quarter X.X% quarter. to million compared the adjusted revenue Second $XXX.X to decreased prior year

impact parts fell the year decreased to foreign sales X.X%. the while sales decreased X.X%, Equipment Excluding revenue compared prior XX.X% period. of adjusted currency,

XX%, Infrastructure and XX% COVID-XX million driven backlog customer were XX% constraints end, and respectively. capital by both Our orders, Lower driven at $XXX uncertainties. quarter were Solutions which orders Materials resulting to by decreased down from

improved the to $XX.X adjusted $XX.X million X.X% to basis margin prior XX% year increased EBITDA compared adjusted quarter prior year to period, and EBITDA million in period. points the XXX to Second compared

closing in to mix dollar the excluded expenses. are in adjusted other restructuring and earnings the office macro on quarter On charges noted, adjusted actions expenses asset year-over-year related earnings of margin in and SGA&E driven per Adjusted nearly ramping savings XXXX. a facility. EBITDA with our actions. Slide the second expansion. to share cost headcount chain items Of drivers addition management savings note, increase margin results These to the was reduction key IT $X.XX highlight related the our expenses Wisconsin we improvement we've the reductions corporate compared by of consulting our in and by Mequon, investing XX, This support. simplify points XX% supply back by ongoing in Barry XX% were volume we in impairment, Overall, labor million $X.XX the transformation EBITDA challenging organization, second Adjusted quarter our quarter inventory other XX% relation margin unusual driven from of In and was partially we basis environment. are year-over-year. the share, declined limited reduction despite As incurred savings. employee-related rose was and costs. company's in and and disruptions an reported as reduced $X.X from fees, strong up by expansion basis of to force write-down, to primarily XXX the and Adjusted per headcount to pre-tax restructuring and transformation the we with efforts associated additional and in travel second offset quarter, during COVID-XX and COVID-XX driven of

to on Slide Moving XX.

XX pricing initiatives, a X.X% to Infrastructure to customer primarily $XXX gross shifting restructuring driven margin by COVID-XX asphalt XX.X% direct $XX.X basis actions, gross by in and profit quarter controlled adjusted business Our points delays plant plant and Solutions QX to increased of X.X% the from revenue million million as to expanded and related result increased sales QX. orders our spending. Adjusted efficiencies

On period initiatives million, current increased the $XX.X to our revenues Adjusted large focus points to increased our EBITDA initiatives demand. by spending. Materials to million gross $XX.X to XX.X% operations compared primarily to basis margin due continue efficiencies the reducing well as XXXX and contribution. Adjusted $XX.X points gross million XXX primarily margin XX.X%. Adjusted COVID-XX. on and We XX.X% cost stable XX.X%. margin positive savings the while focused X.X% controlling favorable with declined and We right-sized improvements saving EBITDA Solutions same business execute to to as remain adjusted million, excellence margin EBITDA Adjusted discretionary from Adjusted on to XX, to increased on XX% during primarily remained Slide relatively right-size a ago further limiting to due business SG&A. gross quarter basis to actions. with EBITDA profit increased XXX market margin XX.X% decreased as points parts expanded to XXX a to to in sales drive mix quarter operational basis by cost year $XX.X driven

plan we make closure to progress products. Materials built our Wisconsin location, the quarter which Solutions is on our of our transformation XXXX Mequon, the continued in We with Telsmith where

leverage this will to us to our location line global noted, transferred production South quarter and are in the focusing products footprint and second strategy order of plants. highlighted to is customers. closer manufacturing to Barry lower as overall in demand. in shift As We plants of earnings quarter The performance the to African, to demonstrates our improved footprint manufacture improved right-size closure in also more Ireland Northern global operations profitability. the we Brazil last efficiently with enable committed to our to that key products different simplifying moving flexible basis, and these initiatives remain the to cost our to business continue drive decrease our Overall, market traction our and

Now turning Slide to XX.

to cash maintain sheet position continue debt over of just with net balance strong a a We and minimal million. $XXX

as remain on environment, sustained available cash million, and Given debt of was only sales down due preservation of $XXX accounts cash liquidity we decreased we on more focused Overall, XXth, periods the nearly note, to with million Of liquidity XXXX. on withstand XX% a $X.X market collections. and hand, have including year-over-year receivable effort June of in strong million to $XXX uncertainty. of total focused current

make improvement We saw we inventory as efforts on in in inventory $XX decreased continue reduction quarter, the progress turns. inventory million our and to nearly

maintaining withstand capital details our strong on believe with Slide XX, with sheet flexible what balance deployment is we which us As shared. Barry focused a will this variety economic noted, a ample situations. provide that and previously framework, consistent I to remain of and have enable liquidity we On will on

earnings in and to deployment, long-term have continue value. and of a We order the objectives the various capital our do we approach to cash of so maximize shareholder related flows our capital. to consider in deploying strategic context disciplined avenues revenue, When we

on in remain environment. for investments return priorities to equipment, current unchanged capital plant property, target invested continue the internal allocation XX% investments. in greater and we new capital will Our On than

growth internal criteria. acquisitions, meet only Regarding and are our that strategic we with align our acquisitions financial considering strategy

We within strategy Our see chain M&A regionally we rock-to-road maintain we our X the that position grow gaps markets. is as to within value attractive supply customer for our chain. X or look fill to to in seek number

technology to investments We and innovation. in potentially also that believe is our that a M&A mechanism allow will us accelerate

we the and that, abundance not not our financial out Barry. to Importantly, expect turn of the funding preserve in of I caution XXXX flexibility. and repurchased have remain near-term, committed any over to dividend, now we to an do since it do to shares will back so With

Barry Ruffalo

Thanks, Becky.

on reminder, of our which highlighted this Grow approach a strategic our execution here A As pillar. summarized helps Slide to M&A, Slide to support disciplined growth on of XX, recent XX. is strategy and our we example

Our recent of products. with will acquisitions with to strengthen and line profitable our support strategy concrete our Group to access us long-term. acquisitions provide Solutions robust opportunities Overall, significant most customers over our provide Infrastructure the these the growth

brands CON-E-CO our excited family will each to are and to shared to teams drive We to The Astec of value innovative present and look by working leveraging customers. combination welcome with strong opportunities. value-creating to the the these BMH approach serving many team's X forward them

XX. Slide to turning Now

This we Since if of playbook including the already of initiatives business, have taken remains additional levers expenses. headcount same. and we we reduction reduction that have actions across necessary. the and discretionary and onset the implemented a downturn of several can reprioritization cost that the pull, Our pandemic, summarizes investments

of Grow. of Now XX. profitable to a moving on our and three growth, the I'll Focus for strategy Simplify, pillars quick provide overview Slide

Simplify. First,

quarter our of and footprint consolidate, progress marked our our and of period our portfolio. proud on the another reduce across portfolio. team business simplify I'm complexity the leverage second organizational to efficiencies successful drive execution has The strategy our to and made rationalize product scale,

Second, Focus.

and approach, instilling performance-based driving We excellence streamlining to a strengthen continue our and culture. processes customer-centric commercial

Finally, Grow.

technology leveraging while global experience, allocating synergies, carefully capital innovation, opportunities exploring to enhancing internal are value. maximize also unlock and reinvigorating shareholder customer to the We growth

We've businesses team our analytic work data goal. XX milestones the I of economic our in environment. and our I pleased team which and quarter. far, hired with highlighted expected to connectivity incentive and consolidate reinvest our Excellence we were operational I'll Infrastructure in we our as on changed. key CON-E-CO quarter, lines instill progress of Mequon, further BMH, our the made accomplishing quarter and our that been enterprise footprint this aligned journey capital have organization on confident investment last an be Operational we outlines value. improving implementing executing in the highlights, platform significantly reporting. very taken, management's not Slide against Vice regardless the oversee further grow made the Solutions Chief done mentioned, Wisconsin develop has of this actions on the Becky data businesses conclude will savings great with we to We our And have the year to especially our Under to-date. in and streamline our progress majority in have am as where simplify, which programs we three made progress we working has our in we XX of turns. maximize shareholder the business. drive further to financial progress plant am order within major transformation recently business. acquisition so will we to focus environment. Under have the excellence and have in and we from a strengthen the the actions pillars, execute Information With and we our Grow, profitable growth the closure taken that second plan remained to focused across Simplify, transformational completed far will cost Slide made on these of are that current strategy able given some journey the on the product Under thus Senior of across President who to Officer Focus, the able with

through also Our adaptability to passion show as environment uncertain our great and on we customers support team this strategy. continues while executing our

operational have of leaders practices We on are group across a also and best the who great focused consistently organization. sharing excellence

once back the remains uncertainty are a the sheet a relative execute us simplify, economy pandemic, ample our navigate continue excited and continues given streamlined impact balance challenges about positioned global a rebound we and to we the economic for of liquidity. Astec to opens while against structure, optimistic COVID-XX, the to well of to and ahead focus to While future we efficient remain the sentiment organizational the business. grow And for as strong more general up. with cautious be I'm strategy

continue future the when We increased COVID-XX to confident strategic operator, I look our the evaluate am conference to out and proactively stronger organization, upcoming the that, are changes for market more up subsides. the pandemic situation any conditions, ramp calls. up preparing as and in for on to come of demand for a to maintaining progress that now open forward flexibility resilient of we this transformation questions. and will demand ready continued call sharing the I and we're With including

Operator

and we the [Operator Thank Instructions] Baird. Dobre Mig gentlemen, conducting very much, Please you of at Our sir. is time this go ahead. Ladies will be first question-and-answer from question session.

Mig Dobre

don't Good Well morning by a our just numbers Becky. saying perspective. start more I'll versus were start, often, on performances this. you're guys. the to say your where I is near-term Barry, very quarter, little a and - seeing this you. place mean great estimated remarkable. but demand quite from I it with color Barry Maybe Thank

in trending the give and maybe quantify from were prepared orders shifted it there kind subsequent related were that Thank of into this, disrupted know, you thinking we you. remarks, terms are maybe orders Or if So of some let's were at way other need understood Can And to call is of I the be that to in your quarters. to fair aware here? start is how there. dynamics your a million, maybe for potential $XXX As a there in sense XQ? about it, that into that QX, QX? pandemic us looking revenue roughly, of by I'm realized it, I'm think or about kind you demand number

Barry Ruffalo

thank comments. for your Mig morning, good and Hey, you

relative June. our to demand, of is the backlog where as up in July know You finished we X% from prepared about in comments, I at the the reported end actually

not giving rest a year. lot the around we're know know expect color You for you of the of we what

so. there's quarter you quarters would the one I probably typically we is our weakest of that But do well. as careful be think third know, to uncertainty enough as

backlog month. other think I to to give So the projection know end there much the at the you of going careful we're we be just realized than too that

said, the know, we COGS feel take another to of a the we XXXX. costs, potentially and you with you to prepared as the know we a and all got being they've I actions as through that both up we're And the we down as lines. SG&A business know that on backlog customers, go to right our you actually year You to our or our like the quarter, try know out and but going right-size the generally and make take we're company, continue for transformation turbulence believe goes around after it talk XXXX. rest into we as either into experience, Again, that

that's think positive. I so And

that purchases that comfortable think well that, that of know other, enough is. visibility some confidence to our maybe relationship It's what with a capital put some really that asphalt out. enough those them that's what customers our planned to namely I they is. getting have capital got our is more that money are color we well significant think about just are plan it, they good We've have Mig spent. by be And going more their expenditure about our would plants, know you customers around typically you when products, I

time, with the especially understand now, potential very And so and might we we stay make engaged be. what - that to all closely sure them

very sure in stay ready So our cycle. to customers to close to we're them that support make we

Mig Dobre

But order up level in you're like is Understood. versus being orders? pickup intake that conversion revenue the because that Barry, maybe your because normalizing, recognized X%, out figure QX? pushed that it is of the a backlog seen of frankly, in orders these we've Or

Barry Ruffalo

orders seen it's QX say a a that have latter, of more into not to would did I QX. pushout pushout Yeah. from QX, It's of as but from haven't We QX much we the Mig. orders.

Mig Dobre

provided, guess Okay. to for cost is, million call I these right, Maybe going a cost I'm the we on bridge question understood. is context Slide color looking my next All benefit. Then appreciate be XX. is right-sizing that the my how little as And items on Becky, side. you I more cost $X about items, By should it, forward. thinking math, or these out what

$X to million. The other bucket is closer

As kind you're variances planned? do of half of need the that have some you of thinking factor about again sort into we savings Are estimates? similar second our to there year, the

Becky Weyenberg

thank Yes. Mig, you.

and on forward, that, COVID-related, continue points think Going will call to benefit, just it, activities that That's basis some probably, then changes marketing we market us some consulting the we that some front. exhibits, SGA&E will way space or not go-to there's stick. go people, to give to shows want there some in tied and and really XXX to the that is in

think stick, change transformation are that will quarters. those that the within efforts step we kind that remaining continue throughout So and our see teams moves we'll of our

Barry Ruffalo

I'll And Becky. maybe also Yeah. add,

right-sizing the On well. Mig, look year-over-year from say, the we from side improvement it million at absorption $X had COGS as an of a it and we piece, perspective,

Becky Weyenberg

Correct.

Mig Dobre

XX% second that transformation the gave part the of being rather savings headcount this I'm bucket, Is Right. that, wondering the us year-over-year. down initiatives. guess because number than presuming cost And organization that correct? I'm and I you right-sizing

Barry Ruffalo

Correct.

Becky Weyenberg

correct. That's

Mig Dobre

question Understood. then me. for And last

you wondering year. the given And sort standpoint, the expect just the down inventory wondering capital that that basis thinking take of how come to good have quite very bit, of guess your a of inventories a item. back about on front, from in you're your On half production own sort year-over-year production I I'm do much I'm out how progress more of there. working a

Becky Weyenberg

our pretty inventory for [indiscernible]. overall. attempt But we opportunity We're see is Yeah. I an on pleased and take can used goods finished future Mig, where at the equipment that. with quarters

fast the we enough. couldn't you hit, approximately million in we off know COVID pipeline inventory, when shut and had So $XXX

with that that have the in will through So burned get space quarter's production. we next do surplus some

in So try at we forward. organization certainly our out the the more them reductions our I terms not expectations yet, going for acceptable but the looking half inventory right we're some line our seeing many across see of level. be of back get quite We're think sites year an are to that we'll with to as in as there we

Mig Dobre

is what a I'm saying on But That's you're what good that here. in side, goods finished pretty you're understanding shape.

Becky Weyenberg

That's correct.

Mig Dobre

I'm asking performance the because the frankly, question margin much looks, more then there different. that

much You some had as was your trying peers have you of absorption to than maybe have progression haven't that as I have. cost had the very point inventory different was make. That

for the thank it. So Appreciate you clarification.

Barry Ruffalo

on Yeah. dealers. XXXX, both our a Hey, answers, to the we, our and made and know, of as follow-up just push statement at end goods sites finished as Mig, at your also a big Becky's at you inventories

relative we teams' very, right close get to us we're point. the pleased believe that and we're to finished to very so now efforts And very goods, market with the to

progress far, to work know to I yeah, but as this Becky working to that's got capital efficiently flow cash made a of so teams more to, alluded a focus make great so we that the effectively. of turns is and free all credit do, and we've to that Astec, drive lot sure think and And you a really

Mig Dobre

thank Great, you guys.

Barry Ruffalo

Mig. Thanks,

Operator

very you much. Thank

is from Stifel. Stanley Please question next Our ahead. of go Elliott

Barry Ruffalo

Stanley. Hey,

Stanley Elliott

I that heard taking thank the savings? SG&A guys just everybody. correctly. sure morning we cost that on back Can you for to Congratulations and go good question. You make that Hi, know

points $XX is will let's basis like comp and idea that? of back as of and up the XXX just know or, about more incentive that permanent comes points, out you is XXX that basis million, other kind that of of that say, of kind back end creeping things kind half the So half

Barry Ruffalo

markets of than Stanley, take to our to in that part Yeah. we more months, maybe as expect six And the - continue probably we the start in say open some as suspect have of as to as XXX the that we done - correct. as know or we know much a we're they you to past up travel and much commissions that basis let that pay a keep That's SG&A continue actually sales salespeople have in should But from to we've across more actions will that as can. board one, is we five you come in and that taking so I it points I'll the Becky I'll - shot than at want they afterwards. would last of jump believe certainly, they side. commissions, certainly, meaning And well. well back. And obviously

So yeah, is that your correct. think Is pretty assessment I fair, Becky?

Becky Weyenberg

fair. That's

Barry Ruffalo

Yeah.

Stanley Elliott

I is anything And for Grow is you the players? regional phase. these interesting Would congratulations acquisition more moving on can You are describe, to and the from know a there would us within you all market, in you batch ultimately kind tell you the guess, of you profit revenue where the standpoint know plant or and see how fit US helpful. be maybe

Barry Ruffalo

Yeah.

on into bringing let and Let say, teams the Astec's family. BMH really we're about CON-E-CO me first me by excited say,

through We're products about group to process, other perspective, accessory the As of that Obviously, the produce. within renowned really really excited to that know of as concrete it. gotten great types general a I've plant they're an entrepreneurial space people. to lines and great, add product product lot and them and and plant, going believe an engineering from just in line, concrete our group innovative - from Astec general. they We infrastructure

will And not also this. portfolio they look dry today, market. on. in has fact in solutions. the concrete as really you the you from better, with from on excited that line stronger you you So then, we, plants, have adds because the give know, as to customers can plant batch that know It most know in today, really diversifying addition, area is that's well, see the of But broader only that space. in business might we're you portrays products our much getting about Canada. folks And that within footprint brings know as or And we being have they're that brands CON-E-CO they're what pick from the that actually perspective, think up RexCon, then when a together, slide a the really portfolio. asphalt But obviously, product BMH, that that here we're three may also great products a I and we also we an very not get what past. the concrete participated like us operators position plants a their you And at but grown bringing shows in up owners. of BMH the this

excited being CON-E-CO as Astec now as the other end to talking we both part brand have brands, some from of of best-in-class reputation, so they're that we these of their asphalt or And a Astec service. well they that products and from started users about have we BMH, customers plants that great because recognize find we the

so better we and at regards Canada products other how in the order there perspective in well. from cross-selling opportunities we to presence BMH that have as in presence asphalt the a to look leverage And plants with

In some market the the they addition, of today in will in American actually help have that products market. us Latin

effectively portfolio well. the other us us regions more world And it so a product into that of lets as gives expand

Stanley Elliott

sort plants? do Perfect. the can't same remember cross-selling of as sales And I network, asphalt the well these with opportunities of top agree to Yeah. concrete the my customers. off head, the on with the get same the sold you as I distribution, And

Barry Ruffalo

Yeah. That's a great question.

with dealer RexCon networks very so some have model. you CON-E-CO to What done everything been brings and know us direct selling well. today, And as historically through strong a we've plants that is asphalt both

believe to value dealers there's bring they great markets. met CON-E-CO. And We that so some that with we've the of

leverage we the something with working relationships so come what do markets forward move through our up of as as And well and customers. pick best worlds leverage their best them we do to to sense those forward we know leverage and makes they both look best, and you direct direct, what presence their even more that within to and with for

Stanley Elliott

then lastly information. And Perfect. me, thanks historical for for the

talking basis? that of Or the housekeeping on adjusted the gross you're referencing go-forward there, is, kind that Just profit we're gross about that is profit that was GAAP? a

Becky Weyenberg

Adjusted.

Barry Ruffalo

Adjusted.

Stanley Elliott

the much Perfect. Thanks very appreciate luck. Best of time.

Barry Ruffalo

thank Yeah, you.

Operator

Sidoti The next ahead. of from & Mondillo Company. Please question you. Thank Joe is go

Barry Ruffalo

Joe. Good morning,

Joe Mondillo

Hi, good well. morning. you're Hope doing

delivered made be backlog you year? that you've of how backlog, in, comments sequential know third the And say, first that April improvement as was of that of the since July shutdown? So month is you much your to the as sort the seen of far orders, quarter far as or as that the on expected sort a half second the

Barry Ruffalo

Yes.

So many you work as forward, the up clean we've of backlog. done we know last over lot a look to months the

that the see within So much improvement be the in will that expect majority we of actually we very delivered XXXX. today the we that backlog and report that July,

with of capital start equipment up customers namely in beginning XXXX. We on are locking to already plants, asphalt we're larger commitments of you the engaged the know some purchases,

get of think As a to the through you know, many some longer these like of We backlog. of permitting the types clean. probably, so it's bit little engineering, that it very takes But Joe, products we require and level generally, process.

soft can expect backlog We what a it but obviously, in And XXXX. our conditions, as you and relatively with gone reported market bit perspective, moved up. to deliver I that's us. expect Relative pretty to question, feel improvement we around Mig's quarter the for is as know this good with that earlier, a a most has some typically you of from sequential of there, little here it's

so good improvement feel see pretty month-over-month And a we on we about. basis, any

Joe Mondillo

Okay. just framed fact you we And sort I we with since and wondering be in these are where we changes? done that fact, the the I the company? had? the you've strategy structurally, of sort to lot this than a arrival. Where you've of of are been acquisitions, just still regarding and sort and the anticipated sort your make are restructuring with at the of the everything structural quickly made more starting cost, even doing, with the structural to that that. Just changes are And Or there is done given that more acquisitions. you two

Barry Ruffalo

Yeah. I perspective, baseball a from inning. we're you in third know the would say, probably terminology

organization. a think of I lot I'll credit the give that changes, and made we've to

did we really the on You two structure had think that is ourselves know historically the was met you you job, of know the reporting to around, ourselves and driven been coming organization. opportunity segments, that there have the leaders group by really decentralization things and lot and I with I know about as a quarters one talked we many ago, traveled I first probably of

teams Astec And so and with to that I'm really within drive have the the the company pleased pace taken transformation. this

well. with customers it their have see know I from as very support perspective. They they pleased been that, You it. mean to understand benefit our

And so we're looking know always the of new we're and improvements excited you organization, making ourselves about that. that's part within We, at culture. I driving better. And think our

line, our believe able product You we're on, to rock-to-road. know focus from we now

you fit forward. know that that So within fit strategy chain don't moving value things the don't

that BMH - and decisions And so and strategy, and allows about us make decisions it make adding about CON-E-CO and strategy, unfortunately, fit the piece, do. clearly CON-E-CO because BMH and GEFCO GEFCO is our the therefore, to doesn't rock-the-road the to

both go good what as two to to We good through feel we time that the internally strategy structured in have be the feel about we we're with a as company, regards we're to good segments. regards reporting a So way going rock-to-road. we in

make And capital pretty so that to allocating decisions allows on us effectively.

Joe Mondillo

the in it sort expiring sure pushed Okay. believe was September, And then just lastly, construction - I is. just that I'm bill highway if with of not

Barry Ruffalo

That's right.

Joe Mondillo

it's don't Forward overall are a next get the not on that? to not? that what's resolved, But and are I so it thoughts your yet just it what maybe will road push positive? negative, not it with was. there? going just or a thoughts your year down what Or think Is on

Barry Ruffalo

question, Great Yeah. Joe.

arm in the past Act be September. point you're - as in reauthorization And of FAST shot as going certainly, organization to Act some customers there's right. us spending and we move actually we FAST an a know time. our in have be You that to confidence to the The nice a would that ends

Joe, and news as and of You House both Senate think great and around know others, I the dialogue probably there's from you recently infrastructure lot Republicans. the a know the bills, is, and Democrats

You Democrats $X.X proposal. know you trillion are know about talking infrastructure The a House and identified

in driving you FAST looks level spending like that advantage good support from of of news So international lot lot the good with get needs is just to road world Act. infrastructure of lot to the around you as the to know a out we down there's and ultimately looks it's right being Obviously, US order a a footprint. dialogue you I to happen to the is ourselves, that investments know sides, just that conversations, to know the of that us. it we build a both lot health. me, there's in around there's us what - the past said, from And take our all all continue we're able And of of think which like that know it for support has

and know those not soon. line I a a going it's or strong before we expect And I put of, now, more a don't matter because in of not driver when. on matter to so to me, that for right it's probably I'm when. a not know know. election as that probably if But happens conversations. you something and long-term of it's it's know a I'm of a medium to time you after, happen that it's we not really it us, matter I think believe you necessarily the certainly said, matter if And short, whether

Joe Mondillo

year sort know of timeframe, slow local to and to construction? know there of given know time the do six a particularly with you to the is slows guess, just a bit period spending parts know so risk And out in maybe month you in, budget What the election, in a after and of other the constraints budget with state the level, think If that. much especially that not pushed and gets nine you you and it of next say, Okay. spending, you I local - that? for deal sort or may a state at follow-on

Barry Ruffalo

No.

it. knew I good I I think wish a question. it's a great answer to

the for I really be know that us but about you either necessarily that as in is started think agility I And point we you revenue that efforts anything. to that talked able spending. to - it's transportation give in we're that XXXX way. perspective And directly declined, our transformation tied from is think obviously, think I to the prepared states respond know has we

up to So think feel determined, I whether that Joe. that little really or I swings where bit of good But back at stays it's I a be it's today. we're prepared for think

it, I apologize. feel where do great I I But about So don't we're positioned. have answer I a for think good

Joe Mondillo

I and No, appreciate the regardless. color, understand

a thanks and for day. Thanks a have taking questions good So lot. my

Barry Ruffalo

Yeah.

of I to that. more think one add just piece

they're bottom and deliver it we transformation. with strides working with did. know and you think we The I our putting pace, that efforts very know QX, good that when drop pleased in line, shows the making are you the our in the to look You that you hard. revenue at know working we're at They're that the right teams performance in the on just reported in I'm results improvement

Operator

Thank you very much sir.

of Sponheimer is Please ahead. Our next question Funds. from Brian go Gabelli

Barry Ruffalo

Hey, Brian.

Brian Sponheimer

Yes, how are you Barry?

Barry Ruffalo

Good, how are you doing?

Brian Sponheimer

X in like? grow? yeah you are okay what [indiscernible] really or the opportunities about either at your look And being what does you look your nationally that portfolio, and like standpoint, if X you mentioned their regionally, two looks from when one you when Yeah to know you to a where thinking or product or get to product be, you're size categories want that

Barry Ruffalo

Yeah.

I Brian. think it's question, good a

many the two know what of many certain we or we product product lines are There in today. You we obviously where are are not. of we lines one have -

we market rest give much gaps planning too because, much point give speak know this You to strategic we I at need that through where own year, or of gaps strategize are lot in you where know move things to and are. this as to I'm around developing going doing those time information And that acquisition. not attack those on through products we're specifically want to our wouldn't then to And the you or obviously, them want too the a through anyway. information decide whether those on of we are probably

room long-term we if to this you through And just you hard which of right our want be to now certainly, the any it and opportunities about putting a analysis we're to work them a going where know at we time value have we lot there put to in leverage always you strategic identified. to point our accretive And - year at gap-filling XXXX. rest to from And EBITDA relative together to a going of there's know improvement. types we're I metrics is have are they're those acquisition, help you understand if know that chain into business. So still the put to want know achieve. we determine, look now perspective, the move sure from and through - aspiring financial debt. as team of and for excited have to those areas we where We're address there make we've the We we through filters, we

determining to disciplined approach enter so And opportunities. will gap-filling should shouldn't very have a things to or into force we whether us all those

Brian Sponheimer

Yeah.

sheet is you're that if chunky of to great and about shape, interested thinking in? you be And that, where that sheet? first obviously, all, in as the would something balance So outflow an [technical fit you'd be, want keep as acquisition within difficulty] the be balance

Barry Ruffalo

point, your They're different we I going know a to that deals. you going what at all of larger to definitely And on. just sizes no we're be opportunities. than think be actually and, are Yeah, did looking there to transaction chunkier

you top want grow about disciplined we we to with I obviously, has sure then talked just to count if more do know line. make larger We're generation, actually actually want not the we a very be to as I deal, the So we that see than you sales. out, comfortable a deals anything bottom that to we make our certainly shareholders. but the And We to that deal grow we have we value do know want going to grew that filters. wouldn't good sure line we can deliver cash the forward

so be to know that. you to the X.X EBITDA to, going times debt, established, when we're know we that's the range. to much like we've there's times now, going And know that be X.X range And below you

we're of that, the that's on but above times You or regular be when expect the going to be know operate size deals that to basis. to we going regardless the range in - there's a of

Brian Sponheimer

look of and the luck of the difficulty]. for balance forward [technical best Well Thanks year. to Understood.

Barry Ruffalo

this Brian. Appreciate forward. Thanks,

Operator

the call to in you. to closing no are like Thank questions further back remarks. hand Steve the There I'd queue. some for Anderson

Steve Anderson

thank your you in we right. you, appreciate conference your And Chris. participation for on All Thank interest call this Astec. and

available has release section be X available Investor news recorded. As be will The XX within August XXXX, XXth, will transcript next Relations an Astec will replay of indicates, conference days. today's through this the the for today's be days. call webcast call available the A archived under of website been and Industries

information that morning. call. concludes news in of is we This this our contained the All release that sent out

with some of all you thank you So week. questions to look and a Have the connecting forward with later. follow-up good

Operator

your gentlemen teleconference. and participation. does you for conclude Thank today's that Ladies

You lines disconnect may now have your and a wonderful day.

Astec Industries (ASTE) 9 Aug 202020 Q2 Earnings call transcript