ASTE - Earnings call transcript Q1 2021

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Operator

Hello, and welcome to the Astec Industries Incorporated First Quarter Earnings Call.

As a reminder, this conference call is being recorded. It is my pleasure to introduce your host, Steve Anderson, Senior Vice President of Administration and Investor Relations. Thank you Mr. Anderson you may begin.

Steve Anderson

to first welcome call. earnings and you the quarter Astec conference Thank Becky Financial name joining our Barry and and Steve Chief our on Officer My Anderson, are me is Officer. today's call Executive Weinberg, Chief Ruffalo, In financial Barry then provide to call to moment just summarize comments our I'll a will the over turn Becky results. and

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

factors. yourself various targets. comparable for these GAAP to As and substitute to be usual, performance the to the evaluate the financial refers items similar we Management internal the measures. those GAAP both information company additional investors and be targets measures isolation company's and ask effort familiarize the intend not such as results, regarding which for that to with financial provide with a related uses to budgets to against In you establish are an non-GAAP of GAAP to Generally the measures the meaning calculation and Accounting GAAP of financial These considered measures, unlikely Accepted non-GAAP have budgets and management company measures company's does other companies. company provides and Management or US in useful to investors. prescribed U.S. no believes by therefore are standardized non-GAAP information which Principles financial

are earnings to a news also Investor And of are All Relations our in will over results which including I the related in Barry. tabs. should we'll at call website the to our included to on today's release. made our presentation non-GAAP posted GAAP call, www.astecindustries.com, turn during comments materials and presentation, refer reconciliation under note, You results now is non-GAAP

Barry Ruffalo

Steve. discuss during market. this quarter and I out marked everyone first a for earnings the quarter to want hard morning entire dedication morning ramp in up you, and their thank by labor joining us busy our call to Astec results. on a the Thank Good work team for tight thanking significant by and demand start you

the and One model were improvement. quarter, team excellence operational challenged across through our drive our While this organization Astec our our customers results to business continue serve continuous for

As employees, we through to of safety pandemic our be continue top suppliers well-being and the to and our priority. health, the customers continues navigate

today, and Becky an remarks terms in of drivers on the will turning operations. my provide chain to I details discuss I also for before discussing financial highlights our will then our the demand key our and call begin During quarter on we're from by over what results. update seeing in supply

improvement this will and in achieving XX% we products our as address significant demand the continue Slide open we year-over-year. in and our start leverage flow see labor grow strategic taken a a market company. the X, focus backlog with to on messages restructuring year, We call and will simplify, to had transformation facilities as commodity Q&A. detail experienced Positively, today's highlight on Starting tight key and part which later topic in seeing challenging here Becky our made for actions then the ability our we we more through transformation orders call. the first, to hampered of inflation record progress are the up for to the

our remains our to Second, positive are customers demand. order sentiment increasing seeing and XXXX. up many Customer meet of into strong position customer fill books and to business continue through we XXXX

are We Road support to to solutions our our value and technology providing customers Rock industry-leading Initiatives. deliver with focused on

are we well-positioned with liquidity. our organizational future ample growth Third, balance streamlined for structure, sheet and strong

excellence quarter, our operational transformation Fourth, We business. we the during and execute continue simplify, grow the against first to across commercial continue strategy and organization. focus to drive the to

grow As during growth inorganic mentioned we organic will prioritize our earnings call, I last the both and in the focus XXXX for the strategic pillar on opportunities.

details a initiatives number growth to you more call. of excited organic share during with We underway, I'm and our later have

growth XXXX, allow foundation. into strong to on us as upon our increased Lastly, we our build will forward move focus

to here our It's have We business ahead stakeholder creation. Astec drive long focus exciting are a transforming we a value with growth and to runway time of and at an long-term profitable excellence us. operational on continue

breakdown. X, Turning business segment Slide this is our to

mix Our quarter Under and Road Materials XX% this value Rock serve Solutions. XX% the we structure, Infrastructure Solutions revenue during the to was chain.

disruption, to reduce on Our manage One leveraging footprint. business enabled on pandemic cost little our X, to has is excellence operational within demand. times while we Astec capacity Slide and Further, flexing operations our are the current and meet spike we are our model global in lead factories our with to focus operate revenue throughout of our the all optimizing

Lastly, significant supply experienced disruptions chain any not to-date. have we

However, and we being the supply suppliers risks. are our maintaining mitigate with we chain identify ongoing these are to caused not recent That in disruptions said, surge oil discussions from immune by constantly demand.

in of forward. depth chain multiple our of anticipation also tightness with We sources supply the potential expanded a have going supply

Slide we hearing and Turning from dynamics that XX, highlight are what industry to some we're will seeing customers. our I

is build and construction. this infrastructure as to increased for come. innings in in for tailwind non-residential in Optimism cycle real strong for we our a favorable businesses, the are We as demand residential industry U.S. by early We across dynamics business driven America we from up provide an typically by prevalent see demand demand North years spike is and will estate an support spending in there approved pent-up believe our bipartisan pandemic. if of seeing are followed gains XXXX, to a the infrastructure

labor During inflation. we the saw first quarter, shortages and

XXXX. through headwinds We to expect these continue

starting the inflation contracts steel taking improvement XXXX products the of see we're early and ensure impact and of utilizing are from advanced front, strategies to of to the facilities. On actions purchases include steel volatility. the price and forward impact improve we minimize To to supply flow our through labor mitigate

As pricing are markets, actions as a in we our leader taking needed. many of

on to working where X, moving our across Now ESG are them the initiatives drive highlight we our elevate Slide to we some organization. of and initiatives,

a responsibly energy, We ethically of conserve drive have with business to a long products on sustainable conducting history efficiency, resources. and focus

internal We diversity the and on our and workplace. which where to Further, pledge, get is operate we within back. diversity footprint to reducing of carbon facilities. the and action our support commitment that team empower products inclusion we employees advance to CEO I inclusion am and proud the for have our signed willing I recently our an live. focus communities evidences

continue and is our gain traction customer you engaged were forward look ESG We first tight initiatives during to progress. this inflation summary, on the and results excited a company-wide We focus. to labor on markets our In demand. throughout challenged and by for team organization updating strong period quarter our of

issues help taken factors basis. quarter, to year While we some have actions these will to the a on full these continue mitigate second of

sentiment. as fourth demonstrated quarters. As demand believe third factors we products remains evidence typically balance customer and in these Also some seasonality, of we our the by of and previously positive I will mentioned our note, resilient the backlog, record for

customers, strong We continuing a strategy months serve over excellence executing and employees XX organization. also customer over by are and and foundation last this our our to will put in The run. commercial environment, pay to across build and driving to the new long company our adapting operational shareholders while to the team effort our the throughout dividends

I While an change effort the a transformation, are pleased best call to financial we over to pace position leverage will results. now the Becky, the With turn in market. we early of innings are we earn place in ourselves our still we good to possible to that drove from detailed what at discuss our in that

Becky Weyenberg

prior join Thank morning Slide year am quarter year you, the to call. on decreased I decreased compared on to decreased while Equipment Starting quarter. parts $XXX good X.X% today's X% prior first the to to XX, and period. revenues slightly sales you compared million sales Barry pleased everyone.

are Excluding compared quarter up used sales quarter. year the prior equipment sales, our slightly to first

to momentum initiatives Our by to XXXX. at and nearly higher excellence demonstrating The which XX% bring $XXX up backlog driven Infrastructure The build were Rock and start strong impressive growth in XX% teams COVID-XX one by to is also pent-up million cost efforts. Materials driven including sales leveraging the quarter, by that Solutions organic XX% to after backlog demand customers. were orders driven continues by uncertainty orders, cross-selling an we value Road Astec increased our Higher commercial our respectively.

a adjusted million were $X.X by of during sales X.X% show primarily $X.X lower businesses to $X.X the fell decreases EBITDA million period. $X.X expenses. decline costs the on associated Materials sales strategic of $XX rationalization continued to primarily points restrictions. million $X and transformation XXXX, million adjusted of increases targeted The increased travel prior of $X.X markets. quarter basis, increased related First basis decreased promotional licensing Establishing and for pressure driven cost a accelerated year year to expense merger the million expenses chain mix expenses million closed initiatives certain and compared in recorded price and incremental of quarter higher for compared efforts then $XX.X out on this reduced lower a to of and X% the assets. in intangible costs EBITDA amortization incurred will the unfavorable of offset dollar by of future. and first to Solutions softness period million associated partially offset XXX was to to XXX,XXX primarily prior due XXXX of and expenses Infrastructure quarter to global result margin the centralization locations for to due a by penetrate expenses travel of period amortization more infrastructure with XX% our higher margin These with including our Solutions to due decision as footprint software trade our fourth in acquired in order Adjusted competitively supply SG&A million

to adjusted $X.XX share million QX note, quarter Adjusted in will in Act. of per include $X.XX XXXX. first XXXX benefit earnings costs, the XX% Of compared a Our repeat period CARES of the quarter included $X.X in $X.XX quarter share the XXXX. per in earnings from results first that to not decreased

Excluding this declined XXXX share first approximately benefit, per XX% quarter year-over-year. earnings

X.X% by stock effective tax quarter Our adjusted for tax rate driven the deductions. net was compensation

XXXX for full rate tax in expectations Our XX% the the XX% to year are range.

Mequon EBITDA Turning of In benefits to year-over-year, from in realized QX, contraction adjusted XXX margin half we closure the highlight we the XXXX. of our key drivers the Slide of facility basis XX, points. second

sales offset was manufacturing variances. and this mix by However,

than lower product we normal where what are mix, Regarding margins the international we some or sales on more realized realized domestically. our products

earlier and As due a impact will locations global grow from mentioned chain during efforts as the we manufacturing variances progresses. improvement to new margin international of mainly the proofing The ramp influx month quarter. part The from build margins, new to Further during improve and we that the a lines up business. new as is this receiving come continue off supply employees saw month these showed to our training with on moves. taper product significant of same our the efficiencies the quarter, negative year over process product labor will in

higher as we completed to of costs three during related XXXX. automation, as mentioned, acquisitions by the were the corporate previously investments driven integration As well

to on XX. Slide Moving

by in compared XX.X% million Our grew lower to basis strong $XXX.X partially in period. the XXX a to Infrastructure to prior decreased used and This decreased Solutions revenue sales $XX.X the during primarily X% was decreased domestic the profit driven than which and XXXX. quarter sales to equipment international year million normal due margin by international levels. inflation business commodity by points offset gross reduction Gross sales, to driven strategic slightly XX% larger

a revenues XX, We Mequon support our seeing during Materials and of country. million building customers product business this primarily to ago, construction we our year other On Highway time, demand are strong compared X.X% decreased to the to transition Solutions period continue our products Astec same by sites. driven as Slide road increasing the $XX.X for the and lines to across

Solutions, absorption we of the the year-over-year period, backlog, under which compared facility. restocking to to increased Materials results new market mentioned, driven Despite million, well products. previously the efficiencies as XX basis declined Mequon closure driven with points the improving profit as to softer strong the $XX manufacturing prior-year by nearly are the XX%, and decreased as X.X% to by force volumes As and work gross related Gross margin while XX% lower strong saw by dealer activity. increased gains experience

As as mentioned are in market rebuilding of see companies inventories did. to previous process just now in as them calls, they protect our balance many dealers the throughout the They pandemic their strong reduced their demand. the sheets,

to sheet maintain million. over strong to the Turning of we Slide position debt balance a cash continue XX, with net $XXX minimal

Given the focused current withstand of have remain debt of March million only market strong to total on of liquidity periods available $XXX liquidity with as sustained uncertainty. XX, $X.X nearly environment, and million we including cash Overall cash-on-hand in XXXX. preservation of million we $XXX

leveraged X.X at range, X.X not we in there will debt-to-EBITDA. but long-term will are basis, will future, this to We today, times, be operate a between so know on the strive all be we and that to leveraged we times over

of this variety will a economic balance if As us Barry strong with remain needed. liquidity withstand that and ample situations, to focused and maintaining flexible a believe enable sheet noted, we on

just on deployment shared. a our capital what Slide which we Now previously framework on reminder have consistent XX, just

Our avenues deployment, consider in in context flows do the capital so and we revenue maximize earnings our order in and shareholder the capital value. current of the strategic When cash of objectives related unchanged to priorities environment. remain allocation we various long-term

shares the support committed we to dividend, M&A, disciplined repurchased flexibility. our On the in not not to do and our expect and remain funding do Grow strategic XX, Slide we XXXX so have term to financial to since Importantly, near we our approach pillar. which helps summarize preserve any

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

supply customer we to as look we for markets. gaps in strategy that our to fill within grow regionally chain, Our attractive see is M&A

Barry to comments. or also one back closing We have, position our investment in we in will us two the his it accelerate is lines that believe M&A and maintain seek the mechanism a to number to will now With turn product technology that we over that innovation. I for allow

Barry Ruffalo

Thanks Becky.

pillars a overview the Grow. provide moving Focus of I'll Now on our Simplify Slide and quick for Growth, XX, Strategy three of Profitable

first that and product quarter XXXX. XXXX First and and Simplify, taken the have from consolidate to during we during footprint actions organization rationalize our benefited portfolio

As these increased help actions, operations to leverage footprint customer a demand. our able result of global meet and to flex we were

we continue and our commercial approach excellence is driving processes culture. streamlining doing strengthen Second to customer-centric Focus, performance-based a

us we Grow, to capitalize year. global pillar well to this Finally remains positioned on area in in XXXX opportunities this growth remain focus for key

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

company throughout team For execute opportunities focused the our quarter we continue confident had growth. opportunities we XX, growth first able challenges are to I be our continue key highlight in with to some simplify our to growth its the business businesses. like on on and I would opportunities, organic to for will position across am strategy Slide economic Continue our cycles. seeing the

they're execute Our on with is target that long-term to from growth in that of Astec highlighted which areas opportunity This of multiple about all X% expect power is another to these impact year-over-year organic one areas opportunities revenue we these one we driven this is each really What I model. like by twined these the slide. of get other, or as the business overall. the we be

we in front. our business organic traction for demonstrate are see on international First, gaining opportunities results this and first growth international we quarter

product development, businesses. growth in continue new remain on expansion dealer focused with we Secondly, drive see to our services parts network. We opportunities our and see to

opportunity to opportunities driving to plants mentioned organic past, we reality XX% our in plan own our of cross-selling are is as have both growth operate now example concrete But Another starting we and and growth. see turning of types. the customers across over of were asphalt selling this

with on our relationships enhancing focused Lastly, accounts. strategic we are

transformational in the markets, As to-date. drive on focused the earlier new milestones, remarks, in our against made to executing some on in particularly customers partnerships our these we've outlines, when been are with we've mentioned my I accounts, traction you growth are international we Slide major in XX, future. gaining in of we them progress journey expect

optimize other on to first locations as pillar, quarter, by Simplify we products our sites. made Mequon Astec the relocating we from progress our continue During our footprint to

drive are Astec products in one of across further to Astec expect and We other late the to Under relocation the Focus, focused organization driving on through sites consolidation our through Tacoma we excellence business operational our of facilities XXXX. simplification our model.

progress see excellence our to the initiatives operational continue on across We organization.

of I provide to to with customers For by example, growth initiatives. value to support remain number and providing committed mapping mentioned have to stream a used was our our our optimize times and one Grow, Under across sites Rock we product industry-leading as businesses. our technology flow of cycle solutions value Road XX%. opportunities by organic reduce previously, We

our growth businesses. particularly technology telematics opportunities confident across and organic are future innovation will We support the

Vice from we are role drive Corporate pillar businesses XX, being the The quarter, value. in taken the Senior to This I'll shareholder with growth of reinvested our the growth Strategy. and profitable conclude a our highlights. Slide transformation to President help During hired strategy. maximize drive will of Development investment on our savings key actions cost

The first inflation in ramp-up by quarter labor market. by of XXXX tight commodity demand, a was accompanied and marked

XX% as continue markets. strategy. market position to with proud continue to the open of XX% can remain strength am our foundation. our while We the ourselves will any future. our ability our we the we better our we're customer due well capital committed margin to evolving do to organization the now December dynamics in for accomplished confident and to Astec for in I but call leadership invested than I growth, to the that operator, future work team build in in executing XXXX niche to questions. With the greater service, and about strong position ready excited and and upon and for a culture Investor We superior of our the businesses improvement. We XX% And continue continuous a highlighted positioned attractive positions return of remain Day. market optimistic EBITDA these adjust targets to XXXX to am

Operator

Our Mig proceed Instructions] line Dobre your [Operator from first the Baird. question. of question Please with with Robert comes W.

Mig Dobre

mix points start sales million us a like figure I'm And to talk of XX. to you that we beyond about my I are sense A type a maybe is, from today, on get Slide math? clearly where on would material of the bridge. in a for that basis on this talk backlog that's headwind. of can more some the perspective So in that to expect is little right but elements bit a bridge Maybe international pretty this about erosion about curious I based can terms on lot provided QX more and in I'm we now. with XXX the guess, What here you little importantly, in the $X.X quarter, all on and for a should give transpired similar what's maybe

Barry Ruffalo

the for good This Mig, at and then thanks pick Hey question. and Becky then Barry. leftovers is take morning bridge can I'll up. and this

the as think to references sellers see asphalt marketplace. as as international biggest the to XXXX. Slide on about in, the some we we type go relative seeing is savings. sales XX, there are manufacturing we that efforts to we the to with looked put we as in can actually news the, through the at grow, of across we So expect Relative that favorable have continue related and Relative type one XXXX that to see, plant good opportunities, sales, when you and we the impact headcount efficiencies

re-occurrence year and presence. much significant the not throughout forward are our forward the do we we what certainly we've quarter as our trying really In Mig, to pricing the penetration. pockets in grow move realized XXXX, leader in necessarily have we targeted for nice sales, managing where in first look were where this see around the the we rest a and of for looked as through job States a we those a deep don't this of increase we and of year. in we was backlog, inflation course of United type space, which And of world the the we of there a As are types even done

as kind this just in we to at with bump unfortunately, shareholders, realized one QX. that not transparent the we're with, you a look but that's be of what I So, our pleased rest very in

might So say you taken of sales. types those we why, would have

the I debt the it part plant-type said, some future, in that deepen of is to asphalt strategy revenues. sales markets. lot we is to our based before, realize to penetration mentioned find go think reference. more on of ways As these really really allows which our we our important us moving of as we equipment And other an are in customer grow It back a continue also and forward out parts I as of part parts the sales

our parts healthy. imagine, you As are can margins revenues obviously on quite,

actually are in unfortunately reasons took those one actions in material those So those made all realized results way a decisions the we've and really quarter. that that in

in in of past I'll see an QX do impact sales again product comment it type Now through It XXXX, not deepen across so move and also the more we have we our I'll try what from penetration we ongoing not of new perspective that an all And XXXX. for forward that are where of was that a we strategy used our types materially revenue the reiterate in just these lines. of on than is basis. obviously markets – to would normally as a that go realized of us. course This certain and happens out

Mig Dobre

Okay, I the appreciate there. context

But QX? highlighted you're but out a to help of and believe, have would you cost up inflationary have that neutral, on progresses. number like you're in pricing labor about our also we to the essentially a price should year year that I better talked a better goes be saying be headwinds So the what of be maybe term? since maybe about you're headwind if me dynamic near other to going you full a imply some to you half, you'd than heard and back bit I get neutral obviously can versus Becky about QX, these on you be for thinking expecting how expectation QX as for that away. XXX say parse bps challenge, make you the to context be headwinds can have a with this us about deal talked for steel, of backlog elements provide to You potentially talked to positive sense was

Barry Ruffalo

Yes no, I and job items to thanks of have that Mig, can perspective and that. specifically the on the really teams and your a appreciate I with alluded the group what's in nice we've as going type on the steel. done company past, you tell staying abreast of inflationary

as so the active of this. a nice And early feel on organization taking good and job been XXXX actions, that moved we've has of we've really done still parts past I pricing the much as for well we haven't that. of cancellations or can quite that's we to actually customers. us. To-date, a our seen push And to this back on relative of as gone lot

haven't They've obviously economic strong. on our much pricing I years for at too record made inflation one of of of we side, see and We’ve and order those retail up dealers. every price which for stocking And backlog one solution – problem there are specifically stock far order it mature we've is on are taking those so backlog a think actually the order general in to passing we actually customers to look what's took on. even gone for dealer. orders of are as going determine which in some wise aspect they understand had had and enough a our

be the we're not per even trying as protecting really find not se ways in just, passing backlog, proactive So we're to that along to well. we're

across So the we year. we – move as forward

in only think we I the exposure typically that really see QX. would is

– there material, shows exposure our QX about and and is about while feel not Mig. good better we pricing significantly so, perspective certainly feel it's good a that that Although some from we even that analysis generally QX

some And – hope you questions on to interest. answered around your that so your more color I give

Mig Dobre

gross in frame margin I'm QX. infer it to to quarters some is then subsequent put aware there me that So your relative here improves we gross comments margin sort on would based that need if that? you fair the of. looking you that up How QX, to seasonality of in at be Is for is

Barry Ruffalo

things you about. Mig, look really Great two unfortunately, impacted in margin QX question know that targeted market the the and that we've as already our forward talked was gross revenue we

a In addition, production XXXX take made Wisconsin close to we restructuring action do. Mig Mequon, the the facility absolutely gross a you in as to know, other from down worth that's sites. that margin thing Astec into our location and speaking impact that still That was decision to move really and to right other

we've that as market labor receiving tighter As action, the the unfortunately was anticipated. move ran product we what we into the have locations was made would what much in than we

can come of And as go there hard well. we a to obviously time go with trying you move to that type had to so type therefore and to find and training, is which those imagine inherent people work in inefficiencies in types things of

our we've in the and opening April March in to from in sites. improvement and sites, stated part into February call our regards January seen the as to our So to performance receiving of and the Mig, improvement and absorption

that So we as track. through through QX. work on go feel we are like the We'll right we

we better of more that volume effectively. intent the again, QX we get really But QX will to about QX leverage and With into did that results. as for able QX we be feel than

think heading direction right all Mig. in I so, And the that's

Mig Dobre

be Thank you. right, back in have questions, queue All on more and back I'll maybe follow-ups. the but do I come

Barry Ruffalo

Thanks Mig.

Operator

question. the with your Instructions] with next comes Please [Operator Our question Elliott Stifel. proceed Stanley of line from

Stanley Elliott

highway you there out just any it on how characterize sort color focus what curious? projects or Is guys businesses. residential of focus, backlog provide mentioned XXXX. would You maybe you Is projecting those more of lines

Barry Ruffalo

I'd XXXX. in And what's with the pandemic had growth. backlog the Yes, question before record another our about driving Even customers talked that primarily I so think XXXX. in year your year is record as say, had we've a Stanley,

keep forward and without they've as current fill had mind in for forward this full year, some And and basically XXXX obviously books XXXX order we're and in they starting so their good all of my bill. look an to them with is look the conversations Stanley, this infrastructure for and XXXX years - are they into

So missed very an in move and is went think our supports, give people be be uncertainty of pandemic believe time, at One we sheets. this year that, market about into point us through really the and rest as leverage XXXX. a shouldn't we balance to element that to think with company will the dealer protect Stanley as that the through you and comes that companies we when really healthy volume opportunity other in we're other that actions that that pandemic, the from the I

we what was action to to our inventories dealers of in sheets. a all not reduce their took if saw balance XXXX, try their and our that so lot of protect dealers, And

to those into and inventory. in XXXX so already convert of the order a orders as at the their what drove restocking the them is and the orders a continue shift. before of drove retail We've were the the in as markets And increase, many inventories more what's went sentiment of for really end really our that's orders in of that And interesting stocking seen part we the activity about large realize the XXXX. we placed as of and been backlog,

XXXX. business, strong So backlog comments the orders support we, a customers those starting see asphalt go of on and want into to one other about plant guess things already that to and side are even the talk all me I we're to

activity, a of lot our which a on we all business, supporting backlogs. market So lot is increase in our of think I of workflow obviously fronts really and see

Stanley Elliott

seen in where still inventory year, the more is QX Which that kind orders of big would last or dealer how in construction this up to we that there now. level. we've lean Russian a And you QX, back part our at them kind kind this and season here then given get will level of were say normal

Becky Weyenberg

A market get to that's on us. them that and great lean is tell there before question. to which - to for level to a - up for the try get order expect at good the driver re-order orders they that they activity, the is and I obviously fleets orders their convert to mentioned continue you retail, would stocking there put really those going still receive to even to as pressure as just product,

Stanley Elliott

then you at higher it to bid the international kind kind some costs. And also price way door. all margin. should just business go get these into it of a in release a were There logistics really to lastly logistics the mentioned lower Was back lower that is products

could you between differences parse two. Just the out curious those kind if of

Barry Ruffalo

a pricing still identify when in markets most we take So you these premium if our as them just reiterate the pricing products order sell of all a of in are because leader, I States. honestly, We're pricing targeted of we outside quite Stanley we win have some a go to action United price that all even we leader. markets, premium, of these that's not in that as North Certainly have And we America. position will kind deal.

see in get regards transactions Stanley. market We the perspective through. have flow do to price When of those more how to of we types that we

then in the of on ship of am become shipment. these cost and to goes speaking type that with products can logistics because of that a high, world, some in that to lot United and imagine plant-type in I States products, You space product quite there's the types build place specifically asphalt

So those compression a in the really that that orders it. that all block things larger normal came are margin contribute with the of really to elements than

in globally, types continue as These of closer to we've regards supply both that to as customers. chain we are, to investments markets markets. important customers, made references I to is in those get, out have these now to future be in pay us selling these allows in it for of mentioned, times the dividends those build products which comes which when more will We us that the these in been family to allows reduced our lead we

margins the and the rear that Now a and revenues client revenue also parts those there also from of high comes of sales. would were come types

So we saw fact as like QX we the for that well much opportunity. we us as with that future disappointed do earnings the impact are in positions

Operator

the Our Steve next question. with question from your of Please comes proceed line with Ferazani Sidoti.

Steve Ferazani

containment quarter. job good the pretty a, great I and last see with really uptick the through to We SG&A, such did did think did over walking year the a job this you impact last want Just of you a cost half. year Barry a

Can sales of with continue sort on is us about trend you our time of higher SG&A? lower sort sense we forward. Just how to revenue think one much a of, moving with should the of that of cost, give trying SG&A obviously just rates can and how a run basic trend of sort you get of

Barry Ruffalo

is Barry. Steve. This at to that over first Hi shot I'm Becky. going take turn to a and I'll it

off XXXX the we are SG&A we rate into So SG&A, run it? had there dollars of how look in you when adders that XXXX. move at we and to that we here's about think build If

we've in said invested grow we've Steve, and years it's parts to feel all order make our investments we that. able to build in under important to off continue that be in order our As to there's of of those many foundation for business to along,

in that you our move had not have have for travel performance recharge and the as incentive commissions been into see seen better some back. to the XXXX. we AIP come XXXX, QX entertainment we of seen we So costs plan areas did We XXXX commissions, the in higher really in obviously as annual sales we we've expect results and starting do than our averages to

we're start of we portion as year XXXX. back to, going coming what not that yes through all in a we go to like those, factored much will it I'd the we're of factoring realizing not Now traveling those certainly certainly see don't maybe costs, as as probably all in and we of necessarily

in to products in listen sell like customer customers. are, I'd type and developments closer our develop voice an where management our to capability, put that customers product, we made about become in the product investment have that also of as we actually We've can product we'd our revenue can lead backlog long investments. those like, customers margin our products very generate that to types of developed our and of a in are to actually product is than appropriate listen testament strong in way, just lot in longer times very from you we when a a launched X,XXX, We we've is to we've the product it understand new that

is that around one I'll more XXXX. one some maybe in, we an one we've move we what on it, then in made had is that Astec another comment into So as things brand the last NPG And doing probably XXXX, initiatives. we investment we've are than

flow that is And a expense product we so mentioned so loss see there a lot there some type some is reduction I that would of the a of spend, from as well.

really really by from those the this in Becky impact. to the alluded earnings a SG&A offset rate the higher XXXX, us through in are So million one-time that that obviously $X.X take to of XXXX around script what spend run in areas

So that you as lot. I kind of net

the the those I bit to think sense through you of much want that with we Anything a working forward-looking basis. costs a that is as as can you what expect gives little go reduce to whole XXXX of to team understanding a as add hard we on Becky.

Steve Ferazani

great. That's That's guys. very you, helpful. Thank

I sense some like customers, some supply of projects, terms your delayed be? stickiness having of Just add chain how, and stretched if question, terms some equipment in to would the delayed orders getting have, - go on what's layer back of the what's get another reaction in of of out these you of is these but and to these to obviously backlog everyone issues, was backlog the your

Becky Weyenberg

Yes.

our And really sticky. with cancellations, times. and Steve question. very we that long great you the haven't I'd much any great is that tell So, even is of lead backlog what's seen

long whether really customer upon in. process. a them obviously wait though support I is the the or But are initial sale. to they just quoting for even is for leader see realize our would But And have we on the times that's lead think where value we that that probably impact willing of the industry lot the not service and of products. and the

see and really found, it's, get That into currently. our think we So that a order. once now I good backlog, it's we we

questions that's your so I'd helpful? that maybe how is And answer

Operator

is follow-up proceed a Robert Mig your with Dobre question with question. W. Please next Our from Baird.

Mig Dobre

Thank a confused for little bit Becky. you follow-up. I'm taking a

understanding maybe So of were straight about you're the QX in line, you aggregate costs of SG&A am incurred are that here, was me million can I $X.X on talking my that set correct there? that QX specific in an sort of

Becky Weyenberg

That correct. was SG&A. that's Yes,

Mig Dobre

Okay.

things talking Barry, 'XX, So about QX of be of pretty the what all you savings QX you're of temporary obviously in change SG&A that lower this I know were item in and one-time will you SG&A some of $XX of QX we're investments, in COVID excluding the that maybe and know kind ex through add-ons highlighted but starting being terms of you million with you've of $XX done that with some things the, happening sort not. also year-over-year. know extraordinary Yet. there year XXXX some

help it to the we're asked using trying as here for we're to that the understand back that $XXX we million. of outcomes And million appropriate $X we about? on guys inflation think go potential you that? $XX us number where of call and full full question going year figure. kind an top at in maybe for So to was year a How XXXX, prior understand, what the here were the XXXX? SG&A you sort do looking factor it of is or back of Can million Do

Barry Ruffalo

the are know, investments. I elements giving spent of I've tell through you types remainder of without you would these, that they already I year, ran that the Yes, run the ones you the SG&A of sizes think at when major those that the projected look out dollar close. And pretty in cost you're in our on one-time you you QX. rest probably rate know for take

to well. mentioned as that make we where do and investments to Now the be you there to to in imagine, need puts there's continue as the we takes through under-invested. go Realizing that can. year as company, we've as We're going low going still some as been as can earlier we drive I

year. and value that to close get pretty should that expect as we So the we I updated that $X keep you on through to of we think course certainly you will continue the would move

Mig Dobre

Okay.

in million annual item you're here saying rate The be $XXX clear, So, will run what $X be million. Barry excluding QX. that to this is essentially

where are you were annualizing in you above XXXX. So

and Given, all investments. costs incremental these

final That's a gross for of sort my question. I is you comfort So you standpoint, outline to order you. able that margin given, have generate be full do Thank question here. lift guess you this, in can my to margin generate the year what expansion enough from

Barry Ruffalo

Mig. That's a great question

compression I analysis generally as SG&A off. growth generated we improving XX, relative far the XXXX think we in not margin I we just actions to QX, I expect don't close taken call even margin take out. a year-to-date. activities. we in the that major as you all let's SG&A of through relative move you're guidance larger up the would certainly spend we'll gross regards that committing it have know, with very the is think of given gross talked XXXX. challenged And make about you targeted call in second see, the rest XX% to Thank margin do just generally we've actually impacts and a And in want above margins to two haven't your you, a realized but is We if XXXX. that on sales, the as then restructuring and margins, just to to I the compression and in we mind, even Mig, that the than QX normal Without the

to customers quarter You effectively our efficiently as - is first product through possible. tails have to XXXX know we really the in their Astec get have the the and and worked order off of teammates employees that

to So and as put the get did margin forward compression didn't to as time certainly over our we're a service go disappointed work the the more some I to come with point that of, regards that, be with hard we it that has to couldn't pleased much without lot well. with organization us support efforts

want the in call. Astec employees just to who the listening to take the I thank chance So all that

Operator

it back you, Anderson ladies turn Steve now gentlemen. to closing like Thank comments. would for and I to

Steve Anderson

your in this Astec. you. participation you call, appreciate All right, your interest thank We thank for conference

Astec of the next indicates all business Relations May out concludes this will replay morning. in news call. This recorded. five from be the calls within available will transcript XXXX. the Investor Industries has The A available contained conference sent our today's information today's days. be XX, release conference the been is website As that section release this of under Again, call news

Glad as questions we progressed to always. much. have quarter. provisional the So, as very thank calls you throughout follow-up and Thanks

Operator

this teleconference. gentlemen, today's and you, ladies Thank concludes

You may disconnect Thank time. participation. your you your for lines at this

Astec Industries (ASTE) 5 May 212021 Q1 Earnings call transcript