ASTE - Earnings call transcript Q2 2021

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Operator

Hello, and welcome to the Astec Industries Inc.

Second 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. Mr. begin. may you Anderson,

Steve Anderson

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

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

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

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

Barry Ruffalo

start pressures morning, call team Thank execution discuss our this the thank our Steve. a against backdrop with I'll in you, quarter customers results. of by evolving joining inflationary on Good in drivers I our market Becky as of we Q&A. chain I to quarter disruptive superior strategic earnings continue our everyone, our a us open discuss another supply morning operations by solutions. strong and for also to in demand the will and call details innovative our we're Then an and we seeing service provide on then highlight progress Today, of and financial over key what turning of chain. in will will results. before technology transformation for to and for call demand, tight supply labor their by dynamics, current highlights and performance our second customer terms dynamics begin market. industry-leading on provide made you impressed acknowledging the market discussing and including for the increasing update on ability dedication I be

and X% second XXXX. approximately profit quarter performance Slide adjusted nearly up compared sales quarter to Turning X. solid X% to of the second gross with up We had

pricing in We headwinds up we quarter through remain to XXX% these also backlog, talent results focused record place. addressing were year-over-year. which initiatives these on second was embarked and of while have another We The many the able achieve period headwinds. mitigating

from Rock with value through Second, our customers to solutions Road. technology we our approach industry-leading continue to OneASTEC deliver provide to

meet to and solutions remains We strong are through customer and delivering demand increasing XXXX. positive into sentiment and on XXXX differentiated focused

sheet. future balance positioned and structure we strong streamlined for growth Third, our with organization are

through transformation across simplify, Our are situations driving now focus and across reduce also of strategic testament and growth excellence a productivity economic goals journey The the and improve organization. continuous complexity, ability the continues to improvement commercial embed operational company. with digitizing this to program, built in our Fourth, which variety focus is foundation primary of program includes execute our a to on and we processes to Astec. have our the

our under foundation A share strong way, under business. and will grow Looking forward, growth more to these initiatives have of I we details we about in later and are pillars focus simplify will leverage our the built number further call. organic the

executing on culture turn, sustainable strategy driving value. in stakeholder profitable focused will long-term create growth. operational remain we and This, of of a Lastly, our excellence

We are early journey the innings still of of and have transformational opportunities ahead us. many in this

Moving on to Slide X.

business rebranding As many you our the dealers do we unify during to initiative of quarter, with launched and Astec. make know, it to easier a for customers and organization

enables than It to under Our being one look. purpose name connect. us together more is strength a rebrand to common just of and build built

simplify, our them Astec is in a value rebrand and way. strategy line with Our in as focus more we provide grow initiative effectively service and to with our more customers sustainable

X. Our rebranding coincides our model, which OneASTEC we with Astec show business Slide initiative on

value from a advantage, strong business Rock is provide Our to to us Road. serving model a proposition, customers competitive our enabling

to in forward. suppliers these global we are we by of our supply anticipation maintain leveraging in going for caused have chain footprint, and to revenues manage to with continue lead constraints surge immune and and operations global sources actively in flexible our efforts, reduce further to We our Despite demand. times and supply ongoing risks. recent multiple conversations We disruptions tightness to adapt volatility not identify within are to long-term demand, manage the optimizing changes capacity

business Moving on to hearing we from what customers. will Slide key we X. are the discuss some and of our dynamics our I seeing impacting industry are

by creates customers roads, for being build strengthening North in followed which opportunity economy often to America. the be in Strong upcycle more nonresidential and demand As we continue estate to construction, real our parking an bridges, is areas. the residential indicates, in the

pandemic. continue bill. to sentiment see Customer infrastructure driven US see increased optimism demand by the our the positive of from growing We for We through spending, for dynamics, support and a multi-year demand remains recent products, XXXX. infrastructure strong industry XXXX given the including favorable into for bipartisan remainder pent-up

While we a inorganic infrastructure see place demand bill products, to near-term as passed. provide a company to tailwind We we will to our before, drive initiatives waiting a business, for organic not be our growth. in significant are for and have mentioned around and I've that's bill

enacted retain and front Though the As expected, labor attract initiatives during persisted challenging, have on and made numerous pressures to employees. have and quarter. shortages progress second we our inflationary labor

to organization are core Astec, make in is team our pay here will Our to our we the and investments who dividends stakeholders. and people we at we know our

programs continue drive we price higher inflation, excellence costs, our steel operational particularly continue in impact increases strategically necessary. we to pass Regarding steel commodity inflation, mitigate on to and when logistics. see To of and the

Turning to Slide X.

Here, Directors. social, and we continues with across environmental, prominence the several initiatives. have of highlight our top at Astec, governance our continued key beginning to Board of from ESG support

with of continued we we've tight headwinds of summary, excited still the journey, quarter, In along to I'm of we strong see to progress made inflation demand, our While early markets. days labor in the during customer in date. the and second proud are the

the we to as positive and the backlog. I demand am We expect encouraged sentiment persist through have by XXXX. taken for headwinds, our by actions our the which our to record showcased customers resilient of mitigate products

changing We to market positioned continue remain to the as OneASTEC. serve to to adapt situation our customers

to team's to of our early stages With I I of in of financial our the profitable provide long-term future the that, to proud Becky we and turn transformation, results. our While continue stakeholder accomplishments will as am to discuss now growth over look forward the and call value. Astec

Becky Weyenberg

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

quarter. and quarter the million revenues to Mexico, year segment, Canada, Materials sales and was sales X.X%, to to primarily by period. parts sales compared increased while international with Europe, Solutions year activity increased driven $XXX in the higher sales compared increased XX.X% Australia. prior increased increase Equipment parts the Second in equipment X.X% The prior

declined Infrastructure backlog to costs, were strong primarily was $XX.X internationally. million Higher basis orders both points EBITDA increased demand, XXX% to period, by prior by margin and Adjusted million X.X% $XXX and XX%, offset and end, partially XXX% XXX initiatives, impressive to XX.X% higher decline personnel an in which up year compared by Our at transformation to the the orders, and were increases Materials decreased over manufacturing driven compared were respectively. EBITDA adjusted prior $XX.X in travel, Solutions million commissions, margin quarter domestically year and to The driven driven efficiencies. period. which by

the earnings quarter costs the an with adjusted second initiatives. the EBITDA. $X.XX per we XX.X% interest, XX.X% associated second $X.XX costs, XXXX. Adjusted share to of operations. dollar the basis, transformation release transformation and of personnel, initiative decreased adjusted earnings We've in costs presentation remove morning, XXXX, compared noted quarter As adopted to due simplify, and not $X.XX second restructuring, Adjusted grow adjusted associated certain with of with our news our share that controlling $X.X will costs transformation, this focus are ongoing tax ongoing of to of net million our on per in representative other The or net of share, $X.X earnings million and quarter this to increased travel, SG&A adjusted primarily increase in per from in including expenses a attributable change exclude income commissions, program. quarter included to of the and beginning

for $X.XX per negative the XX.X%, Our in rate resulted adjusted effective tax of net by our driven the which impact credits, was a share. tax to quarter timing earnings

of XX% the Our are contraction we full rate of year-over-year XX% basis points. XXXX key the XX, Slide in adjusted range. year XXX tax expectations to the On for margin drivers detail in EBITDA our

adjusted EBITDA primarily and was margin efforts. by centralization, mentioned As transformation previously, inflation, driven contraction

offset increases earlier, offset price inflation. mentioned have we price through rising Barry implemented further increases the to XXXX We to of As impact anticipate help continue costs. to

Moving on to XX. Slide

Our and in decreased the road increased Gross decreased to a due margin benefit the demand profit from products. Infrastructure to revenue added inflation. mostly $XXX.X Solutions for XX.X% see million mainly points XX%, quarter decreased $XX.X Backlog strong manufacturing X.X% end to international the and basis mix increase by sales highway by XX This in year's was and of to as offset million $XXX.X the gross million construction at challenges. building slightly to driven continue to and primarily acquisitions. commodity last quarter, business we product XX%

Slide to Turning XX.

momentum profit increased million business but operating by the revenues were $XX.X Solutions Gross results very for as with built XXX% XX% compared XX.X% the increased the by regions, I margin driven pleased to second to $XX.X gross driven and end $XXX.X domestic We sales million, quarter increased across versus increased international as Materials a this reference. up lines basis driven and Slide to improved over details, group provide by points year-to-date quarter product with strong absorption. to Our sales Backlog same XXX the XX%, at factory of we OneASTEC. X% to the the period by and the XX, won't XX.X% up XXXX. go increased ago, of demand some of year performance million, and on highlight your and And volumes activity. market the color quarter they

to on XX. Moving Slide

strong have minimal a balance debt. sheet We with

XXXX. generate have $X.X XX, position of of $XXX with million a Overall, million $XXX debt to and cash only operations in cash continue We from we million. total net positive of flow liquidity have as June available over

today, When will the below enable on capital a in maintaining leveraged a reminder, us on is situations. flows value. to in capital context our cash will deployment, that and avenues strong we ample consider X.Xx focused while and and a XX a or related of will in shareholder and this times X.Xx of revenue, could there with withstand of remain We framework. the debt-to-EBITDA reminder to variety earnings various the a objectives strive so we believe be this our Slide sheet maximize long-term do basis, As be over leveraged on order not economic to we of and deployment long-term are strategic to balance range. we flexible liquidity range when we operate

for Importantly, to financial filters we on pillar. Slide to comments. dividend. turn remain back an over provided. On with remain committed Barry and is grow focused overview With our the approach of now that XX, We align to it and closing acquisitions disciplined criteria support I'll our M&A strategic our that, funding to strategic his

Barry Ruffalo

the On Becky. X Thanks, highlight for we simplify, focus Slide profitable pillars our of XX, and growth, strategy grow.

to value operations past X significant our the leverage enabled do increasing focus help we as needed our Over unify easier to our actions for footprint, customers simplify global us with on us, have and years, and business made flex organization, meet to our business creation. it progress have demand. These to make

taken drive Second, the us to performance-based instill have and the we commercial culture. our enabled a focus streamline actions excellence, business strengthen have to processes, customer-centric approach,

the We are strong to and grow we simplify have pillars foundation focus the built leveraging on business. the

We growth our continue enhance XX, reinvigorate to are on global across opportunities to business. positioned grow opportunities with on organic growth pillar synergies and innovation technology and unlock see Continuing Slide some experience. internal customer as to capitalize our we leverage we key we highlight the

will as We growth business growth X% over term. evidenced approximately drive opportunities expect gain international organic up in continue our the our We international by sales opportunities see year-over-year initiatives for XX% these to traction and year-over-year. long organic

our growth drive to parts Secondly, and we services business. opportunities see in

progress up with sales demonstrated Our parts second our year-over-year. results XX% quarter

new to growth. product drive organic focused We are development on

bring We expanding for have success, include effective customers. new cross-selling development. Shuttle team's the strategic market and launches, dealer shown enhancing relationships that our organic value great confident distribution, examples Other have growth streamlined to opportunities our accounts. a I'm products, Recent process such add vision product around Buggy products with in of product the our clear and as to our XXXX

executing we with relationships journey these expand highlights have some milestones of will date. major Road We proposition. against made value XX and to we're OneASTEC our progress our the transformational our to in Rock Slide

make operational position help previously, doing quarter launched our for presented Astec and organization. on us grow I easier customers. our our inflation mentioned market, moving focus, will and rebrand growth and initiatives Under labor during results the we headwinds with we This excellence As of a dealers progress business simplified second challenging pillar forward. as for a by made mitigate in

have grow number As our continue of I organic business. a we opportunities mentioned previously, to to

that value. innovation driving progress provide our Significant to with been our strategy. industry-leading are customers solutions made We on has technology provide and technology transformation

stages forward you conclude highlights. early in I'll still of our move look as are journey. our with I forward. XX investment Slide we However, we to updating on key

results during of midst quarter our and am evolving second the Astec to of I team's entire solid and our proud the testament are market Our quarter of adaptability a in the dedication team. accomplishments dynamics.

our execute strategy. We continue to

our positions improvement future culture a As business markets, focused growth, customer we industry-leading our well attractive to service, superior niche providing opportunities. solutions on remain us value. our position transform and leadership customers growth for we unparalleled within capture Further, continuous position and deliver to of

at Lastly, than Investor XX% stakeholder remain we XX% growth continue long-term on that, any the as open of for ready our XXXX to committed we future invested call Astec we're now to of excited targets as Day. return for operator, and XX% to EBITDA December to XXXX margin driving highlighted focus With profitable greater I'm capital, value. our the and questions.

Operator

take We'll with Instructions] from question Dobre [Operator our Mig first Baird.

Mig Dobre

maybe half I'm of inflationary Slide Are You of environment, or various progresses about pertains back spent looking as as getting chain. in nearly the you challenging adjusted you and guess into time And basis called bit. supply for that's margin the a I terms getting back in of bit going XXX forward the the Are how quite more talking see the it XX, and worse? points how the bridge, curious developing the context this some they in half things year 'XX? things I'm of better? quite challenges you the Obviously, a think year. inflation. of to EBITDA obviously, in out to

Barry Ruffalo

supply chain us rougher I looking certainly QX forward, would for mean, QX. perspective than from say I was a

XXXX of and that I There's -- to a is like would moving I I think you the QX entered times. and that be starting yet tell we've really bit we've we've quite in helped think and group, looks because in that's a that little QX us what level, into put is determined. into XXXX what procurement -- it in as strengthened professional these bit

forward, the news operations the some them. that have. procurement the I mean, to team cases, day-to-day adding as on that components. partners engaged our I we a to is looking making applaud much of a where group suppliers basis staying and we're necessary the us redundant type I results allowing in in for So the and view think procurement a and in sure getting good it's really But obviously, chain supply we're partners, we're and fight long-term with critical get in folks

that -- but I what's confident So has have our real team I visibility, and ball I'm able a good don't be happen moving convinced, to forward, crystal level explain to of got going a think good to am our opens be to of and we're world I demand through well. Hopefully, as the think I as it more going ability. up part as best of to components managing for the the there's or

into inflation the Steel of putting they're logistics I not big We're like think disruptions, I transportation but and -- components. in and about We're effort that everybody else related. the but it. and with related we're the then -- steel piece, right majority in to the So think but and immune really When of spot. is dealing Mig, proud it. team the I other am

quite happens with And XXXX does way obviously, don't And like some that a today. read that sentiment Mig, demand, I reports changing that there you in but Obviously, can of what a the potential then see we way so with maybe steel and other off see you necessarily do infrastructure is drops steel that's for soon. the then. bill, what do, and that anytime

we within of lot stay really witnessed pricing. excellence through obviously, manage facilities half, a continue to as to got do that will that, and our our over we need more I think our to cost manage become drive And at to our we've levels. already that the structure. to continue underway. to quarter, And continue and drive Solutions I the efficient profitable projects And to the a ultimately, last and in ways if programs. we right operational to they last can think, We Materials group this continue year find do need

focused of mitigate and so visibility and our in have what keeping level is we're offset. team action on, And to the right and that's good plans place

Mig Dobre

But out you on impacting I sales. manufacturing have XX, challenges mean, because call do -- Slide infrastructure you

right? based in dynamic trying this or into Is people? things impacting are your Is component into to actually hear convert chain shortages this from if your to and dynamic your getting that like worse like backlog are I'm you understand So deliver, there the supply ability on not? what revenue QX

Barry Ruffalo

at our than it's this on Mig, impact, not say point converting and us more constraint would time. we've I And our to backlog our we're It's conversations had different the to in to into on biggest Mig, an type having, biggest topic our improvement but necessarily still that's margin in supply bigger from labor. are in the revenue. talking a but it QX, continues our probably the on right has constraint. revenue does Yes, we backlog It is chain about something items. meetings be produce more constrained it now ability QX convert of profile

Our facilities really to revenue product to is the constrained by through our labor. ability get due

Mig Dobre

you're obviously, which deal it's then, having and to called you that said that kind the of inflation, availability sort with. So out labor material of raw

pricing at looking of it's it's And at just mix. provide if points between and inflation. kind kind pricing going adjusted that's maybe there On curious because, far from point, commentary -- not two this I'm in you thinking this a of little of bit year. there. the margin EBITDA still have as to price are what mean, XXX differences you and how there's lagging this about bridge, forward you've can you're segments done again, pricing the thus side, I volume basis

about at caught you you point are thinking you're be in going inflation? to going how So forward? with up what do think time And this

Barry Ruffalo

of volume When volume column I I it's look pricing, would say equally pricing. at split between that and pretty and

speak it's structure, go ahead And this it anybody for up I've you an know, mean, to steel, said -- But if we in think we're I'll certainly, fast. so increase. hard a see our as I us, and when to about it's cost of get I it's for spiked. not when example, that worried that spikes gradual before,

quoting pretty we're we material on the backlog to catching where steel. up. at. and about about with we're I protect make and processes. smart regular about pricing our try basis, actually steel our and have To trying and to obviously, So so that We a built buy we're how have feel into sure be margins good we talk our we and through

And are that offset pretty in we're to try feel place pricing regards earlier, said as that. from course, the driving cost Mig, we the perspective. good to a excellence, like I lot with And continuous right operational of now, help we gap have of so I a and and improvement

Mig Dobre

year to do to flexible this, expect Is you just the that? year. more dynamic So it sooner just your dynamic mean, this the than happens of I are clear press and caught be than how the do sorry you to when that? -- up? have I'm as you beginning not at you XXXX on through one but price or increase is pricing

Barry Ruffalo

a there that, at price Materials there different looking lot price building twist a dealer than situation, Solutions, Solutions Solutions And increases their the increases on through regards at and all to Infrastructure is Materials you obviously, yards fleets more also a a we the and look and bit dealer. is little pricing out to five their dynamics I of from their inventories done retail. manage how We've year-to-date. Mig. in In when they're think a having We're

even we've customer adamant anything it, orders, well. have on a of have types pretty we've did that prices So customer's those that doesn't up taken done names we've been some that as name on

to in our Mig, the pretty there with to dynamic, we've Infrastructure are as to to well list at everything done of big what really able So continue we've structures pass-through. But dynamic. been dynamic. regards surcharges, changes, passing is the successful sales. be on direct more component as will say We're same a And think if that of side, managing I and Solutions of price no be that well. would our And we're pricing helps pretty we through we're discount time. color And also as that going I

Operator

Our comes Sidoti. Ferazani from next question Steve with

Steve Ferazani

in I I want can specific hard a previous know is revenue the question, labor. little of you this catch follow have do because quarter to to up is future? what higher bit you one to quantify orders? think up the do I'm some your going generate that But you front, at to once all didn't generate the on be answer. comments the you simply fulfill how a to on labor through to And Because trying what in can to revenue to much simply quarterly that didn't

Barry Ruffalo

That were to would time, within mean we to incrementally that up difficult because by one If answer. ships whole example, able ten a on, a at be it's different. tough for a that's X, us for go to put department, if answer. is Steve, I able we're one heads

driving we're So that on one the to obviously, backlog. can you love our that converted we'd rather other on hand, backlog have it's difficult customer's into hands. I'd I tell one. -- But hand, a the have

us than offset some much only States lead capacities United And we effectively and operating and the we today resources that have. honestly, the the helped is just can long as to Steve, effectively think that that's And structure OneASTEC us, I of we've one -- and share so in efficiently to not try happen striving and helped thing that's now we're but as by times. think I quite business we gone And more model, make globally.

that teams. better as so tremendously. moving get that ago, now we're sites between helped XX and proud Steve. It And it's And think capacities companies. moving independent I'm And we the long material really well, that fact were people, only sharing the us of wasn't I will and

So we I kind as of that for model. build positives us OneASTEC operating some think good out there's continue to

Steve Ferazani

can board. recruitment, that now as If Are them? train how able obviously, we're people through and labor, through in terms months get them to walk retention door? you the process hearing you three you across because, a Getting any this you little But are versus ago? the and keep just of bit easier

Barry Ruffalo

on So we're QX up a people about basis, QX, XXX Steve. to year-over-year

some is So hire say, people. higher people. you as also, hard It to the success. I is would turnover to know, retain we'd we've had like. There's, And than hard it's

up. making So labor. in to progress. We're it trying also I necessarily structure on think our What ways that stay trying cost do we're we're change doesn't to

incentives So and retaining bonuses people. is and attracting most through for of that

you whether in, can't this I more it's them expense give through way wages. on and forever versus other it that today. But should anyway, where going we detail we're at to that, our to we're lot onetime advertise, attract we know different pay point regards of way a So using methods but the cash way people that's bring the in time at be, in with something and live salaries in to we're the

even away, the work. I idea go together. they As there some the back of Republican and Democrat some when -- with of a And conversation I other both just people will was progressional talk to that the is as different a had obviously, goes CEOs and different members to the mean, of members Congress, -- that day agree I stimulus

looking to force invest ready is really is the labor forward to So now Steve. get of kind and can spotty, to that time work. when we're to it trying we And

So we've to got backlog sites than able a one sites hire some But significant where we're of our more others. today. have every

continue train as try order working come we Astec start of and We're build as to to that folks and got schools out a going to start want in under school. sites they regulated we and high find many to career can. at to we people programs of as pushing try as get to So many can, into as keep our all people high

in can locally So of we we're everything doing and workforce. people retain local as and part -- that things with the to order attract our train

Operator

William comes Our Maria next from Larry De question Blair. with

Larry De Maria

the wanted on I in costs. check to ERP

the think it's $X.X I year. for to million up

little that's think a higher I expected. than

idea us the to to an to the then -- Or SG&A $XX of million what were really, is just run lower multi-year is journey. rate this you can expecting? think $XX million expect this year? And XXXX So that, into And you that the for related originally to for give frankly, should back a million $XX back I think half? revert new we I that's because

Becky Weyenberg

we in overall the see $X.X this be be of This out. rolled year-to-date our multiple out in that and will is will expectations, We're line rolled should putting million program actually totality around with very much our the over waves. years that arms grow. the

for number that that have are ERP. There's don't today, we enhancements but that just than more in it's So the multiple you program.

to infrastructure continue expect centralization the and we continue create efforts, remain run will our rate so as that the which we efficiencies. range should And will at current

So to of create sites we're able coming online. each with scale the

said, we're happened I each and very being has As thoughtful bring site. in in we as loss waves, this

so we're as soon structure in the have sure making it we place as And possible. manpower make to and right

Larry De Maria

two quarter to of backlog, but good it prices growing you exposed half, I or you through give obviously are or know Mequon the mostly you pricing then question facility, risk in? it are that, didn't we to backlog, about issues us the exposed ones overhang? color, can you here. about that broadly. but I about want how some three is sorted original the feel then pricing I which you quarters significantly. the we is -- went on labor And talked is mention a obviously on and there's a just hear that other an the we're to handle The locked out Is Mequon -- there's And Is of which still fluctuating understand backlog?

Barry Ruffalo

production yes, actually the that of site. We've Mequon locations. to we've site. the two sold been out We've different restructuring, three or moved the On

the not little us to bit in demand As labor. on Larry, reference, move having in and we and we such QX, that as a material mentioned was drag of

I So business. up obviously that our in Solutions feel Materials shows

And Materials performance, about QX so our we Solutions. good feel

has certainly so QX that a done team And leverage the QX to best think I into possible. job, phenomenal really from as as

was So that relative that QX, than say to I'd in which were much now transition facility better we're great. shape in we

cases, and some long. On we're the is our out pricing pretty year. backlog, In backlog a

and out our but as buying covered, much to initiatives to we're that using fully not as every then and we're material increase so price we cover and at can we're sure that still using of possible. try And the go right price make mechanisms

But some to half that. year be some we've of you. think done as is good transparent through the of there's there been there a well. very managing I first And honestly, exposure the with exposure job quite So

Larry De Maria

up then. if just and get highway When we and it goes demand at some the reupping get strong right? Astec could forward, If -- next follow bill, point, will at year, into If strong, this get that of that your I surcharge revisit obviously, stuff is should all, for you backlog presumably, and going infrastructure market on the we that not pricing? build, you

Barry Ruffalo

directions. really they're been a with I both We them, mean, have lot wise. And long-term think I history we're -- our customers. obviously. a of respect very sensitive, customers great and We've got

the want continue. environment money, think that expect I to So I would us But we that that been far. that same. want we've they just be And they're would successful well, continue to to in and profitable make explained, obviously, so the and them you doing be too.

forward. And through So I effectively. moving those I that's been conversations continue do tough think to to pretty we're work what Larry, mentioned, we've going to as able

Operator

Baird. return with [Operator Dobre to Instructions] Mig I'll

Mig Dobre

year-over-year, Can bit second up a though, true. is XXXX. X% little mean, demand? we the at bit implied really at relative looking of quarter sequentially orders, yes, a up I'm talk about And If about that's backlog I'm looking look, to down orders. and your quite infrastructure I only your

infrastructure, relative So give this sense something really, prior Is you quarter? how Is bill volatility here. FAST and customers I terms lumpiness? of in Act might at where decline demand be to sense to is this this hesitation that seeing point? surrounding seeing on -- or enough going there would us Why a simply for the you're uncertainty or surrounding evolving sequential your that the we're there back sequential else some this question

Barry Ruffalo

So I would customer say very is positive. sentiment

is Our positive. dealer very sentiment

the Mig, what typically well. some line basis of some us order equates guess, Typically, of saw implied see And bit was lower we seasonality historically, as -- for into quarter, being sequentially. revenue QX a little as you'll in little on QX which, around that a a in bit I really softness

of what customers done does them get the last weeks, a -- bit was on. customers they're many And starts talking over couple my everything and put rain Not but is are it's not And with on I all in rain. raining. trying them I talked so visits going I there's mean, that, as busy. to little customers that that of only our they that when to to about they're it can pressure to

there's heightened in in of process. level projects a completed So regards the to activity market in the now right getting

and in order not be time. I period a it I'm is very to expect implied healthy of strong, rate So The QX. about a for sentiment worried lower

infrastructure it when businesses. -- generational the mean, these customers they're think I comes bill, I to Mig,

to and XXXX. bills. had said been customers and had XXXX they in a doing and they've long been well 'XX, times XXXX, back of going so record pandemic, the record know they're of Mig, of And top with couple And as part and I -- we've now, a think our around enough a forth in infrastructure on

they're to chain, screening the to crushing the equipment. it from accessory we're then construction So all with the aspects we well. value Rock road the and capital. that Road with spend equipment And to And all continue well-positioned participate plants -- in obviously, our to as and get of

So we're well-positioned.

Mig Dobre

more better mean, year-end. in a here is to that implied to I before time a at comments me timing expect orders of point your get in issue. you So from --

Barry Ruffalo

I'm worried I will out be the in point take good this will not orders to mean, in they at order infrastructure, that a -- shape. it the in think I time. the QX decline in blip I think about flow, continue

Mig Dobre

would infrastructure revenue sequentially perhaps You in a in be bit mentioned that down QX.

do little more backlog. there, because -- you I'm perspective sort a maybe a how of QX as QX, good amount provide you're revenue So curious have thinking to of

here of and talked earlier. labor So help thinking conversion on just out kind you you're some how issues of Can presumably, you us the it's about about about revenue?

Barry Ruffalo

us product and and would look putting which also road equipment, really throughput capability or dealer little And about depending comes couple but to it availability that's bit the and look throughput. becomes ways that's around our course, not facilities, to with construction plants, whether I facilities there's the comes of same. of through because very or it a this, the Solutions has really parts hands. customer's to when network, product just When side it a it to sites. to readiness, the way, and it that's customers different When different it much the on at the dealer's and our do business. Mig, our our line to of story Mig, that's through -- Materials to permitting which our at resource just this the getting when through product comes It's on comes the that

And a a we're can't ready they're to to a so drum not plant do replacement, just to we ready little our not receive or ship If with them. then bit they're handcuffed customers.

so what happened about. and again I that QX in a because QX But a QX, to along that's pick up is little bit softer QX, plant in quarter said. of installations of doing And issues forward would for not a start us QX, revenue equipment from we certainly QX. the talked plant with when you and of in perspective, in That interested just in what throughput They're into QX. typically look

still Mig, side, the a type much as of we'll as little a we but would year on think may seasonality, in I bit especially backlog. that have see do it we legacy that because plant be in not -- So

in be And of we more makes sense. some produce that maybe years, of than that will previous would if that ship and able to we'll

Mig Dobre

No, I does. it think

follow-up on appreciate the aware not onetime of and good there. that be to level terms be of final I to quarter in if this would quite then contribution color really here on needs back of gross And good gross that's is, items be anything in margin margin Anything Is called the that this anything me. of nature, in year? is the it Materials onetime there's helped there in revenue XX%, that mix? quarter. need Solutions margin My growth. that's the have the sustainable half out question we that So for because might

Barry Ruffalo

have in. I'll you if start add, jump can and Becky, anything you then, to

First, very within our that we've part decentralized organization. a up want tough to to and a time a team until make this of really is -- applaud ago, take our business. part this because to our a And half was I this had year of decisions some

reasons. to And and so operating I part probably really had the in drive to is our model. to continue business to the really I this applaud than regards that of more their different a mean, do effort OneASTEC And that's teams others, for

and sharing starts place sharing bit of in I up all what we great of to excellence and done they've really programs to so to of what operational start little of sharing the that actions on have a that roll think the of value a pricing that. capability top job And backlog, demand, is And resources. show

relative you transformation to are and get a of I'm run rewards it the company the of proud types can I So commit some organization, it work an unknowns we're those going year? many and show because has to to things. been to starting fact they've rest and when to there's we going together. from that the of margins that to starts our I'm as XX% adjustment buy-in. for that for hard Are some and not the to the But comes going the that but adopted it lags see and turnover too back efforts of the it labor supply chain think really through the

So commit on I'm EBITDA we've opportunity XXXX. excited really represents that short-term about that and on margin to goal in that helps long-term ready to us that get what but a basis I'm a XX% not really to towards basis, XX% put

Becky Weyenberg

add plan for -- color on to a fluctuations have they want piece They there. of do just quarter-to-quarter volume. based I

was some the gross record from a quarter. the them the gave for month profit really of lag extra and what a that was volume So first

noise that, quarter-to-quarter. So expect on And look at in you very QX QX, they're in QX, our year and some could line in much when be obviously, with with basis, we expectations. to full our they're expectations. going together, see QX right But we line a

Mig Dobre

generate of XX% there's clarify, equal? should is, margin to volume unusual close nothing else this to Then million in sorts you be revenue, these call gross all margins, $XXX if of able it, to

Becky Weyenberg

being yes. else all equal, Yes,

Operator

Sidoti. with Ferazani to Steve turn Our or question next

Steve Ferazani

international and it market. you're you sort as Last the to I expand those on was or a margin market negative stabilize international wanted up of some orders on and had projects in We the forward? about ask thinking how lower-margin sort to moving backlog highlighted had you quarter. you front. of quarter, sales those because saw enter impact those of margins Did terms international this new the in orders see about that new of try

Barry Ruffalo

talked the really impact I Yes, QX, onetime I about we as as on that event. mean, saw

sure we have and the our specification QX, both side very business in for backlog the you performance to mean, of part And we're happy our to right customers with see there, product creation it, that revenues, in team's growth but also are from business. is care drive going attractive happy can we of that we of and international value good really of making chain to there the I continue the and us, our our and supply some a as take part in grow as so that see international business,

Steve Ferazani

in. last get to one just And one

you where there In sort is you based a prioritization any plant components at on terms the or purely have of where is time, of the a backlog, of have customer how importance or prioritizing you margins of think certain the matter get of the can where they order is orders? about it out

Barry Ruffalo

there's delivery is foremost agreement with and and say date, priority. drives what a order sign don't first really when typically typically that's from that. I customer, And a our would our and we purchase the we sway an expected

that in to generally, I get an order at needs. to that But can to some think we is point in know take in or they limited. that come obviously, do up have our type urgent capacity hold our care recognize replacing sure that our plants for they're slots things we get in, interested now the that equipment yes, customers if slot. orders of make this time customers And

lot in will of types availability on and based always things. our around they job that But move far to to we moving regards of there, don't optimize our as to so And sure that's do plant as that generally, see doing guys But make Obviously, that parts of about those a there's go and prioritization. things we're with may what kind customers that do we them prioritization. out. we far a try good of need as communicating any or as in

of of I you're be. material with assumptions typically, give perspective, that kind I project just steel, we've some when a equipment, quoting steel think is to other to or what cost more some or cost a the you made piece on mean, you've one in plant comment, or inflation going seen a of that

So we certainly, with it behooves that to us that the use. steel price actually with shipped get unit --

want to upside get the line And moving were down pricing, get to which should us -- quickly we regards out so don't we pretty material of in if and to to extents. stuff around pricing great

Operator

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

Steve Anderson

Astec. participation in call thank in conference you Thank and your you, interest for your We appreciate Karen. this

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

questions is you Have good additional Thank This the a our morning. earlier in happy information have I'm that news of with this distributed All contained going forward. release all. concludes to you connect call, if day. but you

Operator

you again conclude today's does for this your gentlemen, and participation. Ladies teleconference. Thank

a You wonderful may your and day. have time, at disconnect lines this

Astec Industries (ASTE) 8 Aug 212021 Q2 Earnings call transcript