ASTE - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to Astec Industries 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. Anderson, you may begin.

Stephen C. Anderson

to Second welcome Conference XXXX and Call. you, the Quarter Astec Earnings Thank

today's and and Financial are Jaco me Jaco results. I'll call Joining on over call President will In a Merwe; to summarize our turn financial the Jonker. provide van and Chief Heinrich Interim Heinrich Chief comments, Officer, to just moment, then der Officer, Executive our

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

that investors. These tabs. with the measures, over related prescribed for our earnings release Investor non-GAAP posted which As intend turn refers isolation the GAAP therefore, information Jaco. under GAAP call financial to U.S. non-GAAP website we www.astecindustries.com results that those presentation. substitute and to earnings believes in the as the various familiarize provide And our A company meaning appendix note U.S. I'll included All on to no related and our items reconciliation also these non-GAAP ask have are are, now of companies. be to management to useful the measures Relations in GAAP and is considered measures. calculation and does Presentation to financial at be a comparable the similar materials of to or of not standardized unlikely of GAAP, usual, other I'll U.S. by factors. company you yourself measures The

Jaco van der Merwe

us. joining you morning, and Good Thank you, everyone, thank for Steve.

Before hard and begin, provide employees It I for their on their I thank we solutions. industry-changing effort our and to dedication focused engagement. our and through work stay would like is customers

X. Our are second quarter on summarized highlights Slide

While second trajectory headwinds impacted performance. are that some our the of encouraged we to continue by quarter we our face industry results,

segment infrastructure performance and in the anticipated due construction Solutions to is continued in beginning an demand plants. asphalt saw implied Infrastructure market increase Our Strength of with solid high the in quarter through for concrete XXXX. the orders

quarter confident to solid current the We the also sales. future bookings conversions performance products. in saw anticipate are year. backlog more demand the half latter quoting our with for and ability solid stabilize, dealer first we to our continuing We in our in improvement for Solutions from future meet and Material of With and

the Additionally, $XX.X X.X% versus we've been on management by million inventory quarter and XXXX. or of our focusing reduced inventory first

results. our second of to margin X.X% we the XX.X%. sequentially. million We've headline up sales Moving delivered implied gross quarter, $XXX.X and In in orders consolidated net

were impacted helped Despite by this, interest results buy infrastructure I capacity Material continued the orders current up rate drive conversions were for Material to sequentially. with rental due up Solutions in As healthy X.X% implied solutions longer the to and to and demand asphalt concrete deliveries environment. plant implied positive Solutions constraints for XX.X%. product from orders mentioned, finance

second view performance in at Infrastructure the in half. Our solid for backlog million to performance stabilize and levels continue continued to due our Solutions $XXX.X support

on X. update to give We road an our Turning map. Slide strategic

to we this our to focus we company, execute we empowered, embraced and recall, has we framework core been all working and the you see together framework engaged on employees I've the industry-changing innovation. been customer quarter enabled pillars: As X last organization's strategic by employees, aligned new believe track strategic requires will long-term why are focus time, across in this on pleased introduced same define progress the The accountability, that our as across have which gives to and growth. to the towards pillars. that the pillars. these several past quarters over execute we've ability key confidence we next our us progress metrics to X is achieving step improvements on operational the our taken goals At made X

to look Slide Turning now We at X current Infrastructure dynamics. business with Solutions. to start

segment million, of cost confident strength year-over-year. in are focused reduction. XX% control sales strong and We the on $XXX.X driving are saw We the inventory an of increase overall ensuring efficiency, net and of

mentioned to performance strong. the from construction I remains while increase actions equipment taken market and earlier, As strong due infrastructure we've this sales was pricing

also basis segment to net manufacturing SG&A decreased of positive partially costs by volume offset of and inefficiencies higher and due pricing EBITDA and adjusted were margin We XX.X%, XX which net mix operating inflation. saw points, primarily that

On longer million, reflects the contractors we conversions net reported sales Solutions equipment This due decreased to product of which continued year-over-year. sales dealers. side, Material $XXX.X lower finance with capacity XX.X% and constraints and

X.X% of inflation other lower basis points. by manufacturing partially of margin EBITDA Results volume and mix, were impacted adjusted SG&A and and net costs. higher by inefficiencies operating XXX net segment pricing decreased period costs, Our offset

domestic to to building, building are our update market. increased foundational year-over-year, total With We a road a brief also business. element seeing state XX% budgets we wanted provide on road activity in up domestic the

orders. and supporting in implied demand production We strength building equipment for concrete forward, asphalt road we strong are expect seeing moving continued

to with to consistent Slide million allocation $XXX X.X% provides the steady and momentum and continued both orders year the into for orders $XX million last at are million in of expectations $XXX stability Solutions implied up and $XXX saw increases comparison totaled rest Looking billion states. in Materials highway implied will capitalize $XXX the you funding an comparison Solutions level, increase to On Material we the quarter. our billion funding sequentially our our reimbursed last industry, XXXX to $XX.X for versus million see date aligns this continued sequentially billion quarter. million $XXX sequentially total Solutions $XXX.X funds at and We quarter, are our saw saw Solutions. in $XXX allocations Infrastructure This We million XXXX. for funding XX.X% last X, Infrastructure believe a by of confident X.X% on for federal to with of to in and to ability macro increased achieving through committed spending.

We by and future bookings our X sales. for Slide solid historical quoting dealer are shows encouraged backlog range.

are range. of seeing historical Total $XXX is performance We returning as Solutions. backlog XX, supported to by in strong million XXXX, Infrastructure stabilizing, backlog the of June

sales of Our XX% million, million. for and a Material backlog was our for of net a strong Solutions at decrease $XXX was decrease Infrastructure $XXX.X while Solutions year-over-year, XX.X% were year-over-year, backlog million, $XXX

the remain in customers and showcases our half earlier, increased delivering We year. largest exhibition. construction both I at for Hillhead X recycling Slide consolidated conversions As focused stated on were implied presence orders and the quarrying, expect back in up the U.K.'s XXXX, Astec's segments. of

XX excited innovation During On the and and Astec and market product the of showcased the to the we of display, strategy. across products before component current to show attendees, we XX-year presence more a made were to and is X our new potential with show, exhibitions this history. audience present at At our live central had XX,XXX and development with event, spend significant of opportunity showcase meaningful how live do over new front a on in number a statement We display. time to the customers. Visitors ever Astec our than demonstrations unveiled new highlight products products the and products. record

had will week, our now visit of over this, products the will and complement last Brazil our enthusiasm being instrumental success and employees discuss and detailed Just To our to skill the Heinrich financial Chile. displayed and the by turn results. regions. encouraged call Hillhead with I interact am they that, service With for to I I to how our The customers. in opportunity these our sites at new be in

Heinrich Jonker

after in you, million the slightly a X.X% numbers good into morning, sales everyone. and Thank Slide the Net XX. in record second quarter on $XXX.X Jaco, XXXX. by to Diving decreased quarter

shared we region, of continue were plants and Material By domestic strong both earlier, Infrastructure concrete asphalt for and Jaco our and million in $XX.X orders Solutions. to across markets, net X%. see increase decrease with down a As for or implied an sales demand

As Europe. an sales, or of to $X.X in increased primarily activity increase international for million Canada, due and Africa we saw XX.X%, Mexico,

XX% the our U.S. As about of reminder, a consolidated sales. represents

million sales they X.X% or million half compared X.X% XXXX in of to while $X.X year-over-year, or are the the decreased XXXX. of up $X.X first Additionally, part half first

quarter second sites points cost or is $XX.X year, quarter. transformation with a in XX.X%. X.X% at costs. basis select to EBITDA Both higher compared related to prior EBITDA respectively. margin decrease decreased of to XXX due EBITDA Adjusted X%, the year, and $X.XX $X.XX the equipment a goodwill excludes manufacturing was Adjusted to impairment. Adjusted and other million adjusted increased the EPS in of $X.XX and sales adjusted $XX.X SG&A XX.X% million and decrease in to Finally, lower a $X.XX of quarter decrease margin declined the of in EPS which efficiencies this of

adjusted partly XX.X%, and was and down increased and mentioned, international actions. sales SG&A adjusted to while Our sales, X.X% in decreased which equipment higher Net highlight primarily inflation a period of manufacturing of XX.X%. by rate and Infrastructure We to to positive Segment XX I I were operating increased strong EBITDA costs, million, operating pricing X.X%. saw XX, tax Solutions. respectively, result On sales, were performance specifics and as margin XX.X% sales effective adjusted of and offset X.X%, inefficiencies volume part net to million, increased strong Slide equipment other segment $XXX.X points XX.X%, costs. sales from mix, which $XX.X domestic sales EBITDA which, was performance XX% pricing basis net due and

to with were sales equipment fewer margin were to partly adjusted XX. Slide contractors pricing and continued segment X.X%, EBITDA adjusted due lower constraints decreased Materials by to to were offset Moving manufacturing down and XX.X% XX.X%, capacity inefficiencies basis attributable by driven operating up $XXX.X lower costs, finance period and costs. net lower and Segment XXX mix, and XX.X%. and points operating XX.X% and volume higher sales part primarily conversions decreased product dealers. decreased other which from SG&A to million, EBITDA while $XX.X sales international and XX.X% inflation Solutions volumes net to equipment respectively, X.X%, of sales, Domestic million, net

Turning adjusted Slide on to bridge our XX. EBITDA

manufacturing million X%. from EBITDA manufacturing decline million XX.X% The and XXX million saw of basis mix costs of points period inefficiencies, and before, cash million, with $X.X $XX.X with EBITDA compared pricing offset volumes of partly impact pricing available inflation available higher to and impact million a offset with equivalents costs. adjusted $XX.X liquidity $X.X adjusted impact quarter other said volume, and margin to partly As efficiencies a we can as had our total other a SG&A, in see and at We benefit adjusted of XXXX. select is XX% from to On SG&A. and to net inflation which the we from $XXX.X cash EBITDA I you $XXX.X of in decline December $X.X a in period from margin lower which million with due Slide decrease sites XX, million ended of of and affected XX, credit million, of $XX.X decreased and

source $X.X deployment to framework. We Our the million Slide operating $XX.X efficiency. and in a a capital quarter, $X.XX per shows were second issuing our second to cash expenditure we million execution returned the capacity the improve cash spent quarter. by XX capital of of shareholders and dividend activities on of share for increase balanced

share million closely M&A remaining growth $XXX Our to program. align overall repurchase our approach to authorized have continues and strategy, in our to we

to I to turn Turning call the Slide over Jaco. back XX. will

Jaco van der Merwe

Thanks, Heinrich.

market challenges, as we market conditions business to present are dynamics confident ability in continue improve. our on capitalize fundamentals the to our of opportunities various While and

customers program efforts, are the We infrastructure in The are strong, Infrastructure to address on results further for Solutions remains a the today. of support market these across inefficiencies cost our during to drive segment implemented the across efficiencies. the highlighted our manufacturing focused restructuring construction underscored and by segments working In that demand delivering consistent healthy quarter organization. we we

face Solutions continue to As noted headwinds. near-term earlier, Material

encouraging to due increased demonstrating implied solid bookings orders, outlook for sales. However, interest our is dealer future QX and long-term

pricing improvements margin drive actions. efficiencies to through continue cost will We and

positive, year full to expect digits single As implied versus QX flat be backlog further low orders stabilized XX. we turned Concluding during XXXX. and with or sales grow Slide

am as provide trusted we be us I and dedication before, solutions of work high-quality employees recognized enable for mentioned the of customers. Astec. our efforts I hard of the Their the to to As source proud

government federal As funding foundational know, shareholders. construction domestic and our Consistent resilience you strength provide is for company, to road and our model. customers continues highway state and business to

stretching Over trade the spent future. XXXX visiting into past and strong about several lot customers the time attending facilities shows. months, have I've their backlog a They positive and by of with remain

in their quarter improved major growth aftermarket Our I'm our rate orders efforts. business transformational encouraged of parts by year-to-date also sentiment. supports our this and

the business to We conversions each of are enhancements at site future pace reduce disruptions deployment changing add and of manufacturing site.

now we CEO. XXXX expect offerings after I'm any excited especially expense to initiated to modifications, with the completed these XXXX be my the annual decrease about and months during implementations With of first resources. XX product role new the internal in after

the the to no I come. doubt celebrate anniversary week, take is happy to but have will XXnd questions. We we yet Astec of With best that, are your this

Operator

of first go line Mircea We'll to with the Dobre Baird.

Mircea Dobre

up million specifically, the $XXX all here appreciate you're Material at we're looking to how back you question. viewing figure? put think quarter, the in color revenue relative do half, Quick able about of but that terms in I second Solutions what the to if were how you

Jaco van der Merwe

our moment. level the as mean, the I need so still have sales this $XX at in Material by or upside, orders good call, in had we in million mind activity we year. million low convert year about quoting some the is don't supplemented in the to that into here year coming Keep Material per the July we backlog side to But activity as activity less everything the far the we reach us to order well Solutions sites. Mircea. same on in do -- that us mentioned more Solutions beginning strong of reach our line really from we the about last even parts and so maybe on with what level, nice and to Yes, see and that quarter, international and some we've We for activity in to port $XX side already. really seen on single-digit or for

Mircea Dobre

just to saying the are on sorry, be that revenues second to the are second quarter? to going similar half you that I'm clear to the first I'm similar sure So make half this, or

Jaco van der Merwe

did what that for million level reach we $XXX first Let's Solutions and and to about quarter, in had see have HX. do $XXX in quarter... to We million the the second second Material in us need

we're that quarters. So next couple we comfortable for of be that the range Mircea, will in fairly

Mircea Dobre

on these there rate about that half different margins inefficiencies about think second going the of thinking of million X% specific in a delivered able we we're to think be as margin segment. levels you're are And Is Okay. in a north the quarter $XXX good if wind back this little revenue, here, of the second that achieve run you as EBITDA and revenues? you to some Or the you down have looking margins in half?

Jaco van der Merwe

Yes. have the if of job actually under-absorption in good a Materials Solutions the side our at you our guys factories. our minimize really look done business, Actually, to

QX. be the So rest what we the outlook feel that for will with confident HX seen of in we've in margin line

that and sites. asphalt have Solutions We for business, available the are also we're in certain doing our business well, utilizing is using really plant components of to we some Material of that capacity manufacture as mentioned, that the we facilities

Mircea Dobre

in time a helpful. these would even generate a it savings should you drag then yes, And that point And I'm what bit about hand in it. when terms to Is sort XX. at see question what you EBITDA Can kind on inefficiencies and are XXXX included to on this thinking presented start from beyond try to last in of maybe here sense of Does SG&A. you $X.X we're on offset the a that drags? to little that? Got of normalization? curious, some us doing drag be give Slide of of holding also million So stray we bridge event?

Jaco van der Merwe

we put transformation quarter. of of And about here, One, restructuring Mircea, $X.X that about. about the actually that talked our this from we the million Yes. the run company. of doing savings can talk And rate a in. across to that our absolutely. major one coming there's a we million we $X.X majority are in will then is us things facilities No, efforts X That give

we a is also that up into bit was here way while the coming taking couple be when years quarter past been contributing in now, these manpower by at a So And feel does that equipment be That combined challenge by our on we that something in We've invested we combine for been of us. this announced although instead will equipment. the sites, manpower brought is this to we where obviously, facilities, facility a in and that will new money moment. made just lines close to inefficiencies quite bringing ago. of there, get adjustments equipment. us the manufacturing a the a execution overcome X to it detracting the of a It's XXXX, We real HX the some together. it's of utilization

Operator

from with next is Stephen Ferazani Your Sidoti. question

Steve Ferazani

wanted gross the the in range XX% margin because follow the I margin you on to be indicating to up for question had year. XX.X% been should

You're middle tracking that in year. to but the target? you're want year than of lower this first of last clearly through year, that range last Do you half adjust the

Jaco van der Merwe

actually the will position million and We've was dive XX.X% XX% to a XX% in in that obviously between We capital get work still range about I parts. And comfortable shift that, parts this at And range. feel in a shift to good in time, in there a teams to deep QX. year-end. lot $XX by mean us or we of that point total, capital big range in have we that the to here done and Yes. mix really keep had that a Steve. feel

still get comfortable level. to we can we So that that feel

Steve Ferazani

So primarily? lower-than-target mix margins the it's

Jaco van der Merwe

Yes.

what $XX we about had million million in had For sales QX, in about $XX at -- definitely. you sales part about higher capital QX. look if and lower million was I it QX, we mean, $XX

Steve Ferazani

know because -- reported there believe it issues I of concrete you either pushed some much that was are of, a I when to How QX QX, plants that Okay. couple of was And into components. that it time, that resolved? that could traditionally as would is. indicated also electronic at as push seasonally not be it QX Was maybe with QX such you some orders also into weak asphalt

Jaco van der Merwe

Yes.

So talked in resolved. deliveries will much in indicated we largely we over it I affect push And to didn't any We electronic will about don't forward. QX we that the say as think component going QX QX. issue is

Steve Ferazani

So you traditionally soft expect more seasonally would of a QX?

Jaco van der Merwe

QX other that will you the this Yes. year. can far I say be quarters than softer so mean, X

we growth for you to strong we said, year, if the sales about low Although think fairly expect single-digit HX. flat what do a

Steve Ferazani

QX really Yes, have because then would massive is QX. if have get that number, seasonally you to have to soft, you to a would

Jaco van der Merwe

Yes. Absolutely.

bolt will ready it customers just plants, is is to for outlook are right when deliveries. thing our we So see just obviously, and is The the on customer depends we in that one now, cannot highly sites quarter. thing dependent everything to HX. take exactly X when that remember One take

So to the strong even well. third outlook, say, -- pretty manufacturing strong in the be deliver we will as let's third us have the might will in quarter soft be actually because seasonally quarter, though, for production pretty sales

Steve Ferazani

assuming don't want necessarily right? people I'm in deliveries Fair? of plants QX,

Jaco van der Merwe

that's I the No. mean season. peak

depending are disrupt right productions. greenfield -- Our the we obviously but -- doesn't to they disrupt running, because customers and in will customers year goes where on run sites, it doesn't deliveries QX some planned it all through into it some when country, and especially the are have

Steve Ferazani

Okay.

clear times the want You mentioned a I on reference a and to call, get point. of couple just

business, healthy a and being about for sort QX Can us concrete really of how like. that your down visibility? about specifically, demand of can is talked you looking? strong expected your out break backlog you out market break that some And how and business demand far asphalt sort You what Can and bit for of little 'XX. into how how you have that's core strong business leadership that is,

Jaco van der Merwe

Yes, absolutely.

we business, outlook So we our the that to hand that at the part backlog of have the for in sales HX. deliver have

in our view. what outlook full it's So for included we

have the lines already. certain product into side, well of our concrete we that On XXXX we

guys side, asphalt of are filling the busy On year. QX next up the

our from say view, guys further has it's we in. be our product of part mentioned that lines. a I position facilities improve good our So of also capabilities as in job a that really manufacturing to our or for output. line of capacity Solutions point done and we're And good improve will the product really those Material to business to using earlier, -- some also for a

Steve Ferazani

of Jaco, the now that a you concrete stages that and Would concern, right, infrastructure the just the clarity that lot bill? you say have come case? really early that that's was the the was going plant in couple to of asphalt demand Because spending was not of first

Jaco van der Merwe

Yes.

Asphalt some and status will are And say, basically. we you -- great at if the we X I where middle, on we ago, on the in get So we're at National of were right where we've look bill, Association spending. funding weeks updates the got Paving the

from actual the federal funding money, it's of matching. is view, in point So third of with flow the And states second are an year maybe year. following the a from in maybe then probably their

be So still side concrete should strong. asphalt relatively XXXX and on that believe the we

Although line year we from this be point view. the funding spending think a of in will year that federal with next

Operator

further There call remarks. the the this are I closing back at would questions Anderson to no hand for Steve like time. to in queue

Stephen C. Anderson

you Astec. participation our and conference Tamika. All in We on for thank you, appreciate call, interest right. your Thank your

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

distributed that in news release morning. this of we information All contained is the

all you said, as have this your our you day. so we of a on. call, any with good And concludes later happy and for time, to I'm And thank connect

Operator

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

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

Astec Industries (ASTE) 7 Aug 242024 Q2 Earnings call transcript