Astec Reports Second Quarter 2024 Results
Astec Industries (Nasdaq: ASTE) reported Q2 2024 results with net sales of $345.5 million, down 1.3% year-over-year. The company saw a 5.9% sequential increase in implied orders from Q1. Infrastructure Solutions segment sales grew 11.0%, while Materials Solutions declined. Diluted EPS was $(0.61), including an $0.89 per share goodwill impairment impact, compared to $0.58 in Q2 2023. Adjusted EPS was $0.61 versus $0.87 last year. Backlog stood at $531.1 million as of June 30, 2024. The company noted that only ~20% of federal highway bill funds have been disbursed, with 38% committed. Astec expects market dynamics to improve in the latter half of the year and anticipates benefits from transformation programs in future operating results.
Astec Industries (Nasdaq: ASTE) ha riportato i risultati del secondo trimestre 2024 con vendite nette di 345,5 milioni di dollari, in calo dell'1,3% rispetto all'anno precedente. L'azienda ha registrato un aumento sequenziale del 5,9% negli ordini impliciti rispetto al primo trimestre. Le vendite del segmento Soluzioni per le Infrastrutture sono aumentate dell'11,0%, mentre quelle delle Soluzioni per i Materiali sono diminuite. L'EPS diluito è stato di $(0,61), inclusi gli effetti di un'impairement del goodwill di $0,89 per azione, rispetto a $0,58 nel secondo trimestre 2023. L'EPS rettificato è stato di $0,61 rispetto a $0,87 dell'anno scorso. L'arretrato si attestava a 531,1 milioni di dollari al 30 giugno 2024. L'azienda ha osservato che solo ~20% dei fondi del bilancio federale per le autostrade è stato distribuito, con il 38% già impegnato. Astec prevede un miglioramento delle dinamiche di mercato nella seconda metà dell'anno e si aspetta benefici dai programmi di trasformazione nei futuri risultati operativi.
Astec Industries (Nasdaq: ASTE) reportó los resultados del segundo trimestre de 2024 con ventas netas de 345,5 millones de dólares, una disminución del 1,3% en comparación con el año anterior. La compañía observó un aumento secuencial del 5,9% en pedidos implícitos desde el primer trimestre. Las ventas del segmento de Soluciones de Infraestructura crecieron un 11,0%, mientras que las Soluciones de Materiales disminuyeron. El EPS diluido fue de $(0,61), incluyendo un impacto por deterioro de goodwill de $0,89 por acción, en comparación con $0,58 en el segundo trimestre de 2023. El EPS ajustado fue de $0,61 frente a $0,87 del año pasado. La cartera de pedidos se situó en 531,1 millones de dólares al 30 de junio de 2024. La compañía indicó que solo ~20% de los fondos del proyecto de ley de autopistas federales se han distribuido, con un 38% ya comprometido. Astec espera que las dinámicas del mercado mejoren en la segunda mitad del año y anticipa beneficios de los programas de transformación en los resultados operativos futuros.
Astec Industries (Nasdaq: ASTE)는 2024년 2분기 결과를 보고하며 순매출이 3억 4,550만 달러로 작년 대비 1.3% 감소했다고 발표했습니다. 회사는 1분기 대비 주문 증가가 5.9% 기록되었습니다. 인프라 솔루션 부문의 매출은 11.0% 증가한 반면, 자재 솔루션 부문은 감소했습니다. 희석 EPS는 $(0.61)로, 이에는 주당 $0.89의 영업권 손상 영향이 포함되며, 2023년 2분기에는 $0.58이었습니다. 조정된 EPS는 $0.61로, 지난해의 $0.87과 비교됩니다. 2024년 6월 30일 기준, 미수금은 5억 3,110만 달러에 달했습니다. 회사는 연방 고속도로 법안의 자금 중 약 20%만이 배분되었고, 38%가 약정되었다고 언급했습니다. Astec은 올해 후반기 시장 상황이 개선될 것으로 기대하며, 향후 운영 결과에서 전환 프로그램의 혜택을 예상하고 있습니다.
Astec Industries (Nasdaq: ASTE) a annoncé les résultats du deuxième trimestre 2024 avec un chiffre d'affaires net de 345,5 millions de dollars, en baisse de 1,3 % par rapport à l'année précédente. L'entreprise a constaté une augmentation séquentielle de 5,9 % des commandes implicites par rapport au premier trimestre. Les ventes du segment Solutions Infrastructures ont augmenté de 11,0 %, tandis que celles des Solutions Matériaux ont diminué. Le BPA dilué était de $(0,61), y compris un impact d'amortissement de goodwill de 0,89 $ par action, contre 0,58 $ au deuxième trimestre 2023. Le BPA ajusté était de 0,61 $ contre 0,87 $ l'année dernière. L'arriéré s'élevait à 531,1 millions de dollars au 30 juin 2024. L'entreprise a noté que seulement ~20 % des fonds du projet de loi fédéral sur les autoroutes ont été distribués, avec 38 % déjà engagés. Astec s'attend à une amélioration des dynamiques de marché dans la seconde moitié de l'année et anticipe des bénéfices résultant des programmes de transformation dans les résultats opérationnels futurs.
Astec Industries (Nasdaq: ASTE) hat die Ergebnisse des zweiten Quartals 2024 veröffentlicht, mit Nettoumsatz von 345,5 Millionen Dollar, was einem Rückgang von 1,3% im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete einen sequentiellen Anstieg der impliziten Bestellungen um 5,9% im Vergleich zum ersten Quartal. Die Umsätze im Geschäftsbereich Infrastruktur-Lösungen sind um 11,0% gestiegen, während die Bereiche Materiallösungen gesunken sind. Der verwässerte EPS betrug $(0,61), einschließlich eines Impairment-Effekts des goodwill von 0,89 Dollar pro Aktie, im Vergleich zu 0,58 Dollar im zweiten Quartal 2023. Der angepasste EPS betrug 0,61 Dollar gegenüber 0,87 Dollar im letzten Jahr. Der Auftragsbestand belief sich zum 30. Juni 2024 auf 531,1 Millionen Dollar. Das Unternehmen stellte fest, dass nur etwa 20% der Mittel aus dem bundesstaatlichen Autobahngesetz ausgezahlt wurden, während 38% bereits gebunden sind. Astec erwartet, dass sich die Marktdynamik in der zweiten Jahreshälfte verbessern wird, und sieht Vorteile aus den Transformationsprogrammen in den zukünftigen Betriebsergebnissen voraus.
- 5.9% sequential increase in implied orders from Q1 2024
- Infrastructure Solutions segment sales grew 11.0% year-over-year
- International sales increased 15.4% year-over-year to $73.4 million
- Total state budgets up 12% year-over-year in fiscal year 2024
- $28.7 million sequential reduction in inventory from Q1 2024
- Net sales decreased 1.3% year-over-year to $345.5 million
- Diluted EPS of $(0.61) compared to $0.58 in Q2 2023
- Adjusted EPS declined to $0.61 from $0.87 in Q2 2023
- Backlog decreased 22.9% year-over-year to $531.1 million
- $20.2 million pre-tax non-cash goodwill impairment charge in Materials Solutions segment
- Materials Solutions segment sales decreased 17.7% year-over-year
Astec's Q2 2024 results present a mixed picture. While net sales decreased
The divergence between segments is notable. Infrastructure Solutions saw an
Positively, international sales grew
The market dynamics for Astec are complex but potentially favorable. The federal highway bill spending is in its early stages, with only
State budgets are also promising, with a
However, the Materials Solutions segment faces headwinds due to finance capacity constraints with contractors and dealers, leading to longer product conversions. This highlights the importance of economic conditions and credit availability in the industry. The anticipated improvement in market dynamics in the latter half of the year could be important for this segment's recovery.
Astec's ongoing ERP implementation is a significant technological undertaking. The company has already launched the human capital resources module in the U.S. and converted operations at three manufacturing sites. This standardization across the global organization should enhance operational efficiency and data management.
However, the decision to reduce the scope to exclude sites outside North America indicates potential challenges in the global rollout. The extended timeline to 2027 and increased cost estimate of
While the short-term costs are substantial, peaking at
Second Quarter 2024 Overview (all comparisons are made to the corresponding prior year second quarter unless otherwise specified):
- Net sales of
$345.5 million decreased1.3% from the record sales in the prior year. - Implied orders increased
5.9% sequentially from the first quarter. - Inventory initiatives drove
$28.7 million sequential reduction from the first quarter. - Diluted EPS of
$(0.61) , which included an$0.89 per share impact related to goodwill impairment, compared to$0.58 ; Adjusted EPS of$0.61 compared to$0.87 . - Backlog of
$531.1 million as of June 30, 2024. - Federal highway bill spending in the early stages of deployment, with only ~
20% funds disbursed and38% committed. Total state budgets are up12% year-over-year in fiscal year 2024 following an11% increase in fiscal year 2023.
CHATTANOOGA, Tenn., Aug. 07, 2024 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (Nasdaq: ASTE) announced today its financial results for the second quarter ended June 30, 2024.
"We are pleased with the trajectory of our second quarter performance, specifically, the overall
Mr. van der Merwe continued, "Looking ahead, we are encouraged by the outlook for both interest rates and in the domestic road building market. Further, we are taking proactive steps to drive further cost efficiencies and these actions, coupled with pricing and operational enhancements, will support our continued focus on margin improvement."
GAAP | Adjusted | ||||||||||||||||
(in millions, except per share and percentage data) | 2Q 2024 | 2Q 2023 | Change | 2Q 2024 | 2Q 2023 | Change | |||||||||||
Net sales | $ | 345.5 | $ | 350.0 | (1.3) % | ||||||||||||
Domestic sales | 272.1 | 286.4 | (5.0) % | ||||||||||||||
International sales | 73.4 | 63.6 | 15.4 % | ||||||||||||||
Backlog | 531.1 | 688.8 | (22.9) % | ||||||||||||||
Domestic backlog | 417.2 | 588.2 | (29.1) % | ||||||||||||||
International backlog | 113.9 | 100.6 | 13.2 % | ||||||||||||||
(Loss) income from operations | (10.7 | ) | 17.3 | (161.8) % | 21.4 | 26.2 | (18.3) % | ||||||||||
Operating margin | (3.1 | )% | 4.9 | % | (800) bps | 6.2 | % | 7.5 | % | (130) bps | |||||||
Effective tax rate | (2.2 | )% | 17.0 | % | (1,920) bps | 23.9 | % | 19.4 | % | 450 bps | |||||||
Net (loss) income attributable to controlling interest | (14.0 | ) | 13.1 | (206.9) % | 14.0 | 19.9 | (29.6) % | ||||||||||
Diluted EPS | (0.61 | ) | 0.58 | (205.2) % | 0.61 | 0.87 | (29.9) % | ||||||||||
Adjusted EBITDA | 27.6 | 32.2 | (14.3) % | ||||||||||||||
Adjusted EBITDA margin | 8.0 | % | 9.2 | % | (120) bps |
All comparisons are made to the prior year second quarter:
- Net sales decreased primarily due to softness in Materials Solutions this quarter, which saw lower equipment sales, attributable to finance capacity constraints with contractors and dealers, as well as longer product conversions.
- International sales saw a strong increase of
$9.8 million , up15.4% year-over-year, given heightened activity in Canada, Mexico, Africa and Europe, partially offset by declines in Australia and Brazil. - Backlog continues to stabilize and approach our historical range, supported by strong performance in Infrastructure Solutions.
- During the second quarter of 2024, we performed a quantitative goodwill impairment test on the Materials Solutions reporting unit. Based on that test, we recognized a pre-tax non-cash goodwill impairment charge of
$20.2 million to fully impair the goodwill allocated to the Materials Solutions reporting unit, which was a significant contributor to the$10.7 million loss from operations. - Operating margin decreased 800 basis points due to the pre-tax non-cash goodwill impairment charge and higher selling, general and administrative expenses. Increased selling, general and administrative costs were largely driven by increased in technology support and certain professional service costs and higher provision for a credit loss partially offset by lower customer concessions and dealer commissions.
- Adjusted net income of
$14.0 million and Adjusted EPS of$0.61 exclude$28.0 million and$1.22 , respectively, of incremental costs, net of tax, primarily driven by goodwill impairment, and transformation program costs.
Segments Results
Our two reportable segments are comprised of sites based upon the nature of the products or services produced, the type of customer for the products, the similarity of economic characteristics, the manner in which management reviews results and the nature of the production process, among other considerations. Based on a review of these factors, our Australia and LatAm sites, which were previously reported in the Infrastructure Solutions segment have moved to the Materials Solutions segment and Astec Digital, which was previously included in the Corporate and Other category has moved to the Infrastructure Solutions segment, each beginning January 1, 2024. Prior periods have been revised to reflect the changes for the segment composition for comparability.
Infrastructure Solutions - Road building equipment, asphalt and concrete plants, thermal storage solutions and related aftermarket parts.
- Net sales of
$221.4 million increased11.0% as the infrastructure construction market remains strong with healthy demand for asphalt and concrete plant deliveries anticipated through the beginning of 2025. - Segment Operating Adjusted EBITDA of
$27.2 million compared to$25.7 million for the same period in the prior year. Segment Operating Adjusted EBITDA margin of12.3% decreased 60 basis points, reflecting manufacturing inefficiencies at select sites. This, and higher selling, general and administrative costs, partially offset positive net volume, mix and pricing net of inflation as well as favorable other period costs.
Materials Solutions - Processing equipment to crush, screen and convey aggregates and related aftermarket parts.
- Net sales of
$124.1 million decreased by17.7% primarily due to lower equipment sales attributable to finance capacity constraints with contractors and dealers resulting in fewer product conversions. Dealer quoting remains solid for future bookings and sales. - Segment Operating Adjusted EBITDA of
$10.2 million decreased44.3% and Segment Operating Adjusted EBITDA margin of8.2% decreased 390 basis points, due to lower net volume and mix, manufacturing inefficiencies, and higher selling, general and administrative costs that were partially offset by pricing net of inflation and other period costs.
Balance Sheet, Cash Flow and Liquidity
- Our total liquidity was
$175.8 million , consisting of$60.6 million of cash and cash equivalents available for operating purposes and$115.2 million available for additional borrowings under our revolving credit facility. - Net cash used by operating activities for the six months ended June 30, 2024 was
$36.1 million to support the timing of collections of trade receivables and the payment of accounts payable. - Net cash consumed by investing activities for the six months ended June 30, 2024 was
$12.6 million as compared to providing net cash of$2.6 million during the six months ended June 30, 2023, which included$20.1 million of proceeds from the sale of property and equipment. Capital expenditures decreased$3.7 million during the three months ended June 30, 2024, as compared to the same period in 2023. - Net cash provided by financing activities for the six months ended June 30, 2024 was
$49.5 million primarily due to higher net borrowings on our outstanding debt obligations.
Second Quarter Capital Allocation
- Capital expenditure investments, primarily related to efficiency improvements, were
$7.6 million . - Dividend payment of
$0.13 per share.
Strategic Transformation Initiative Update
We are undergoing a multi-year phased implementation of a standardized ERP system across our global organization, which is replacing much of our existing disparate core financial systems. To date, we have launched the human capital resources module in our locations in the United States and converted the operations of three manufacturing sites along with Corporate, two of which occurred during the second quarter of 2024. We are changing the pace of deployment of future site conversions in order to improve efficiencies and reduce business disruptions at each manufacturing site, which will have the effect of reducing the scope to exclude sites outside North America. With these modifications, we expect the project to conclude in 2027 with total approximate implementation costs anticipated to range from
Investor Conference Call and Webcast
Astec will conduct a conference call and live webcast today, August 7, 2024, at 8:30 A.M. Eastern Time, to review its second quarter financial results as well as current business conditions.
To access the call, dial (888) 440-4118 on Wednesday, August 7, 2024 at least 10 minutes prior to the scheduled time for the call. International callers should dial (646) 960-0833.
You may also access a live webcast of the call at: https://events.q4inc.com/attendee/619109367
You will need to give your name and company affiliation and reference Astec. An archived webcast will be available for ninety days at www.astecindustries.com.
A replay of the call can be accessed until August 21, 2024 by dialing (800) 770-2030, or (609) 800-9909 for international callers, Conference ID# 8741406. A transcript of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 business days after the call.
About Astec
Astec, (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building, aggregate processing and concrete production. Astec's manufacturing operations are divided into two primary business segments: Infrastructure Solutions that includes road building, asphalt and concrete plants, thermal and storage solutions; and Materials Solutions that include our aggregate processing equipment. Astec also operates a line of controls and automation products designed to deliver enhanced productivity through improved equipment performance.
Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995
This News Release contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the United States and global economies. Statements in this News Release that are not historical are hereby identified as "forward-looking statements" and may be indicated by words or phrases such as "anticipates," "supports," "plans," "projects," "expects," "believes," "should," "would," "could," "forecast," "management is of the opinion," use of the future tense and similar words or phrases. These forward-looking statements are based largely on management's expectations, which are subject to a number of known and unknown risks, uncertainties and other factors discussed and described in our most recent Annual Report on Form 10-K, including those risks described in Part I, Item 1A. Risk Factors thereof, and in other reports filed subsequently by us with the Securities and Exchange Commission, which may cause actual results, financial or otherwise, to be materially different from those anticipated, expressed or implied by the forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.
Non-GAAP Financial Measures
In an effort to provide investors with additional information regarding the Company's results, the Company refers to various U.S. GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures which management believes provides useful information to investors. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to the calculation of similar measures for other companies. Management of the Company does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. Nonetheless, this non-GAAP information can be useful in understanding the Company's operating results and the performance of its core business. Management of the Company uses both GAAP and non-GAAP financial measures to establish internal budgets and targets and to evaluate the Company's financial performance against such budgets and targets. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in this News Release.
For Additional Information Contact:
Steve Anderson
Senior Vice President of Administration and Investor Relations
Phone: (423) 899-5898
E-mail: sanderson@astecindustries.com
Certain reclassifications have been made to the prior period financial information included in this News Release to conform to the presentation used in the financial statements for the three months ended June 30, 2024.
Astec Industries Inc. Condensed Consolidated Statements of Operations (In millions, except shares in thousands and per share amounts; unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Net sales | $ | 345.5 | $ | 350.0 | $ | 654.7 | $ | 697.9 | ||||||||
Cost of sales | 264.2 | 267.1 | 496.5 | 525.8 | ||||||||||||
Gross profit | 81.3 | 82.9 | 158.2 | 172.1 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 71.1 | 64.5 | 142.5 | 132.4 | ||||||||||||
Goodwill impairment | 20.2 | — | 20.2 | — | ||||||||||||
Restructuring, other impairment and asset charges, net | 0.7 | 1.1 | (0.1 | ) | 4.8 | |||||||||||
Total operating expenses | 92.0 | 65.6 | 162.6 | 137.2 | ||||||||||||
(Loss) income from operations | (10.7 | ) | 17.3 | (4.4 | ) | 34.9 | ||||||||||
Other expenses, net: | ||||||||||||||||
Interest expense | (3.1 | ) | (2.0 | ) | (5.8 | ) | (4.0 | ) | ||||||||
Other income, net | 0.1 | 0.6 | 1.2 | 1.5 | ||||||||||||
(Loss) income before income taxes | (13.7 | ) | 15.9 | (9.0 | ) | 32.4 | ||||||||||
Income tax provision | 0.3 | 2.7 | 1.7 | 7.1 | ||||||||||||
Net (loss) income | (14.0 | ) | 13.2 | (10.7 | ) | 25.3 | ||||||||||
Net (income) loss attributable to noncontrolling interest | — | (0.1 | ) | 0.1 | (0.1 | ) | ||||||||||
Net (loss) income attributable to controlling interest | $ | (14.0 | ) | $ | 13.1 | $ | (10.6 | ) | $ | 25.2 | ||||||
Earnings per common share | ||||||||||||||||
Basic | $ | (0.61 | ) | $ | 0.58 | $ | (0.47 | ) | $ | 1.11 | ||||||
Diluted | (0.61 | ) | 0.58 | (0.47 | ) | 1.11 | ||||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 22,797 | 22,724 | 22,779 | 22,690 | ||||||||||||
Diluted | 22,797 | 22,769 | 22,779 | 22,772 |
Astec Industries Inc. Segment Net Sales and Operating Adjusted EBITDA (In millions, except percentage data; unaudited) | |||||||||||||
Segment net sales are reported net of intersegment sales. | |||||||||||||
Three Months Ended June 30, | |||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||
Revenues from external customers | |||||||||||||
Infrastructure Solutions | 221.4 | 199.4 | 22.0 | 11.0 | % | ||||||||
Materials Solutions | 124.1 | 150.8 | (26.7 | ) | (17.7)% | ||||||||
Revenues from external customers - reportable segments | 345.5 | 350.2 | |||||||||||
Corporate and Other | — | (0.2 | ) | ||||||||||
Net sales | 345.5 | 350.0 | (4.5 | ) | (1.3)% | ||||||||
Segment Operating Adjusted EBITDA | |||||||||||||
Infrastructure Solutions | 27.2 | 25.7 | 1.5 | 5.8 | % | ||||||||
Materials Solutions | 10.2 | 18.3 | (8.1 | ) | (44.3)% | ||||||||
Segment Operating Adjusted EBITDA - reportable segments | 37.4 | 44.0 | |||||||||||
Reconciliation of Segment Operating Adjusted EBITDA to "(Loss) income before income taxes" | |||||||||||||
Corporate and Other | (9.8 | ) | (11.8 | ) | |||||||||
Transformation program | (11.1 | ) | (7.6 | ) | |||||||||
Restructuring and other related charges | (0.9 | ) | (0.4 | ) | |||||||||
Goodwill impairment | (20.2 | ) | — | ||||||||||
Other impairment charges | — | (0.8 | ) | ||||||||||
Gain on sale of property and equipment, net | 0.2 | 0.1 | |||||||||||
Interest expense, net | (2.7 | ) | (1.5 | ) | |||||||||
Depreciation and amortization | (6.6 | ) | (6.2 | ) | |||||||||
Net income attributable to noncontrolling interest | — | 0.1 | |||||||||||
(Loss) income before income taxes | $ | (13.7 | ) | $ | 15.9 | ||||||||
Segment Operating Adjusted EBITDA Margin | 2024 | 2023 | Change | ||||||||||
Infrastructure Solutions | 12.3 | % | 12.9 | % | (60) bps | ||||||||
Materials Solutions | 8.2 | % | 12.1 | % | (390) bps |
(Continued)
Astec Industries Inc. Segment Net Sales and Operating Adjusted EBITDA (Continued) (In millions, except percentage data; unaudited) | |||||||||||||
Six Months Ended June 30, | |||||||||||||
2024 | 2023 | $ Change | % Change | ||||||||||
Revenues from external customers | |||||||||||||
Infrastructure Solutions | 423.6 | 414.9 | 8.7 | 2.1 | % | ||||||||
Materials Solutions | 231.1 | 283.0 | (51.9 | ) | (18.3)% | ||||||||
Net sales | 654.7 | 697.9 | (43.2 | ) | (6.2)% | ||||||||
Segment Operating Adjusted EBITDA | |||||||||||||
Infrastructure Solutions | 52.8 | 54.2 | (1.4 | ) | (2.6)% | ||||||||
Materials Solutions | 15.5 | 32.9 | (17.4 | ) | (52.9)% | ||||||||
Segment Operating Adjusted EBITDA - reportable segments | 68.3 | 87.1 | |||||||||||
Reconciliation of Segment Operating Adjusted EBITDA to "(Loss) income before income taxes" | |||||||||||||
Corporate and Other | (21.8 | ) | (19.7 | ) | |||||||||
Transformation program | (17.4 | ) | (14.8 | ) | |||||||||
Restructuring and other related charges | (1.0 | ) | (7.5 | ) | |||||||||
Goodwill impairment | (20.2 | ) | — | ||||||||||
Other impairment charges | — | (0.8 | ) | ||||||||||
Gain on sale of property and equipment, net | 1.1 | 3.5 | |||||||||||
Interest expense, net | (4.8 | ) | (3.0 | ) | |||||||||
Depreciation and amortization | (13.1 | ) | (12.5 | ) | |||||||||
Net income (loss) attributable to noncontrolling interest | (0.1 | ) | 0.1 | ||||||||||
(Loss) income before income taxes | $ | (9.0 | ) | $ | 32.4 | ||||||||
Segment Operating Adjusted EBITDA Margin | 2024 | 2023 | Change | ||||||||||
Infrastructure Solutions | 12.5 | % | 13.1 | % | (60) bps | ||||||||
Materials Solutions | 6.7 | % | 11.6 | % | (490) bps |
Astec Industries Inc. Condensed Consolidated Balance Sheets (In millions; unaudited) | |||||
June 30, 2024 | December 31, 2023 | ||||
Assets | |||||
Current assets: | |||||
Cash, cash equivalents and restricted cash | $ | 63.2 | $ | 63.2 | |
Investments | 5.2 | 5.7 | |||
Trade receivables, contract assets and other receivables, net | 218.2 | 152.7 | |||
Inventories, net | 455.3 | 455.6 | |||
Other current assets, net | 36.9 | 42.3 | |||
Total current assets | 778.8 | 719.5 | |||
Property, plant and equipment, net | 186.9 | 187.6 | |||
Other long-term assets | 141.3 | 152.2 | |||
Total assets | $ | 1,107.0 | $ | 1,059.3 | |
Liabilities | |||||
Current liabilities: | |||||
Accounts payable | $ | 102.6 | $ | 116.9 | |
Customer deposits | 89.1 | 70.2 | |||
Other current liabilities | 119.5 | 111.9 | |||
Total current liabilities | 311.2 | 299.0 | |||
Long-term debt | 125.0 | 72.0 | |||
Other long-term liabilities | 37.5 | 34.6 | |||
Total equity | 633.3 | 653.7 | |||
Total liabilities and equity | $ | 1,107.0 | $ | 1,059.3 |
Astec Industries Inc. Condensed Consolidated Statements of Cash Flows (In millions; unaudited) | |||||||
Six Months Ended June 30, | |||||||
2024 | 2023 | ||||||
Cash flows from operating activities: | |||||||
Net (loss) income | $ | (10.7 | ) | $ | 25.3 | ||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | |||||||
Depreciation and amortization | 13.1 | 12.5 | |||||
Provision for credit losses | 1.9 | 0.2 | |||||
Provision for warranties | 8.7 | 10.6 | |||||
Deferred compensation (benefit) expense | (0.2 | ) | 0.1 | ||||
Share-based compensation | 2.3 | 2.2 | |||||
Deferred tax benefit | (5.3 | ) | (4.7 | ) | |||
Gain on disposition of property and equipment, net | (1.1 | ) | (3.5 | ) | |||
Goodwill impairment | 20.2 | — | |||||
Other impairment charges | — | 0.8 | |||||
Amortization of debt issuance costs | 0.2 | 0.2 | |||||
Distributions to deferred compensation programs' participants | (0.5 | ) | (0.4 | ) | |||
Change in operating assets and liabilities: | |||||||
Purchase of trading securities, net | (2.3 | ) | (1.1 | ) | |||
Receivables and other contract assets | (68.6 | ) | 9.7 | ||||
Inventories | (1.7 | ) | (37.2 | ) | |||
Prepaid expenses | 3.2 | 5.7 | |||||
Other assets | (3.2 | ) | (8.3 | ) | |||
Accounts payable | (12.8 | ) | 1.3 | ||||
Accrued loss reserves | (0.1 | ) | 0.6 | ||||
Accrued employee related liabilities | (12.0 | ) | 1.6 | ||||
Other accrued liabilities | 20.4 | (7.4 | ) | ||||
Accrued product warranty | (9.7 | ) | (6.0 | ) | |||
Customer deposits | 19.0 | (11.4 | ) | ||||
Income taxes payable/prepaid | 3.1 | 6.7 | |||||
Net cash used in operating activities | (36.1 | ) | (2.5 | ) | |||
Cash flows from investing activities: | |||||||
Expenditures for property and equipment | (13.4 | ) | (17.1 | ) | |||
Proceeds from sale of property and equipment | 1.1 | 20.1 | |||||
Purchase of investments | (0.7 | ) | (0.5 | ) | |||
Sale of investments | 0.4 | 0.1 | |||||
Net cash (used in) provided by investing activities | (12.6 | ) | 2.6 |
(Continued)
Astec Industries Inc. Condensed Consolidated Statements of Cash Flows (Continued) (In millions; unaudited) | |||||||
Six Months Ended June 30, | |||||||
2024 | 2023 | ||||||
Cash flows from financing activities: | |||||||
Payment of dividends | (5.9 | ) | (5.9 | ) | |||
Proceeds from borrowings on credit facilities and bank loans | 107.2 | 113.6 | |||||
Repayments of borrowings on credit facilities and bank loans | (51.4 | ) | (128.1 | ) | |||
Withholding tax paid upon vesting of share-based compensation awards | (0.5 | ) | (1.6 | ) | |||
Net cash provided by (used in) financing activities | 49.5 | (22.0 | ) | ||||
Effect of exchange rates on cash | (0.8 | ) | 0.4 | ||||
(Decrease) increase in cash, cash equivalents and restricted cash | — | (21.5 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 63.2 | 66.0 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 63.2 | $ | 44.5 |
We present certain non-GAAP information that can be useful in understanding our operating results and the performance of our core business. We use both GAAP and non-GAAP financial measures to establish internal budgets and targets and to evaluate financial performance against such budgets and targets. We exclude the costs and related tax effects, which are based on the statutory tax rate applicable to each respective item unless otherwise noted below, of the following items as we do not believe they are indicative of our core business operations:
- Transformation program - Incremental costs related to the execution of our ongoing strategic transformation initiatives which may include personnel costs, third-party consultant costs, duplicative systems usage fees, administrative costs, accelerated depreciation and amortization on certain long-lived assets and other similar type charges. Transformation program initiatives include our multi-year phased implementation of a standardized enterprise resource planning system across the global organization and a lean manufacturing initiative at one of our largest manufacturing sites that was largely completed during 2023 with certain capital investments finalized in early 2024. Transformation program costs for the lean manufacturing initiative ceased at the end of 2023. These costs are included in "Cost of sales" and "Selling, general and administrative expenses", as appropriate, in the Consolidated Statements of Operations.
- Restructuring and other related charges - Charges related to restructuring activities which primarily include personnel termination actions and reorganization efforts to simplify and consolidate our operations. These activities include the workforce reductions effected in the second quarter of 2024, the termination of our previous Chief Executive Officer, the limited overhead restructuring action implemented in February 2023 and ongoing litigation costs for our exited Enid location. These costs are recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations.
- Goodwill impairment - Goodwill impairment charges, to the extent that they are experienced, are recorded in "Goodwill impairment" in the Consolidated Statements of Operations. These charges are associated with the impairment of the goodwill allocated to the Materials Solutions reporting unit during the second quarter of 2024. The goodwill impairment is largely nondeductible for tax purposes and, as such, the tax impact applied reflects the actual tax impact by jurisdiction.
- Other impairment charges - Asset impairment charges, to the extent that they are experienced, are recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations. These include charges associated with abandoned in-process internally developed software that was determined to be impaired during the second quarter of 2023.
- Gain on sale of property and equipment, net - Gains or losses recognized on the disposal of property and equipment that are recorded in "Restructuring, impairment and other asset charges, net" in the Consolidated Statements of Operations. We may sell or dispose of assets in the normal course of our business operations as they are no longer needed or used.
Astec Industries Inc. GAAP vs Non-GAAP Adjusted Income from Operations Reconciliations (In millions, except percentage data; unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net sales | $ | 345.5 | $ | 350.0 | $ | 654.7 | $ | 697.9 | |||||||
(Loss) income from operations | $ | (10.7 | ) | $ | 17.3 | $ | (4.4 | ) | $ | 34.9 | |||||
Adjustments: | |||||||||||||||
Transformation program | 11.2 | 7.8 | 17.7 | 15.0 | |||||||||||
Restructuring and other related charges | 0.9 | 0.4 | 1.0 | 7.5 | |||||||||||
Goodwill impairment | 20.2 | — | 20.2 | — | |||||||||||
Other impairment charges | — | 0.8 | — | 0.8 | |||||||||||
Gain on sale of property and equipment, net | (0.2 | ) | (0.1 | ) | (1.1 | ) | (3.5 | ) | |||||||
Adjusted income from operations | $ | 21.4 | $ | 26.2 | $ | 33.4 | $ | 54.7 | |||||||
Adjusted operating margin | 6.2 | % | 7.5 | % | 5.1 | % | 7.8 | % |
Astec Industries Inc. GAAP vs Non-GAAP Adjusted EPS Reconciliations (In millions, except per share amounts; unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net (loss) income attributable to controlling interest | $ | (14.0 | ) | $ | 13.1 | $ | (10.6 | ) | $ | 25.2 | |||||
Adjustments: | |||||||||||||||
Transformation program | 11.2 | 7.8 | 17.7 | 15.0 | |||||||||||
Restructuring and other related charges | 0.9 | 0.4 | 1.0 | 7.5 | |||||||||||
Goodwill impairment | 20.2 | — | 20.2 | — | |||||||||||
Other impairment charges | — | 0.8 | — | 0.8 | |||||||||||
Gain on sale of property and equipment, net | (0.2 | ) | (0.1 | ) | (1.1 | ) | (3.5 | ) | |||||||
Income tax impact of adjustments | (4.1 | ) | (2.1 | ) | (5.4 | ) | (4.6 | ) | |||||||
Adjusted net income attributable to controlling interest | $ | 14.0 | $ | 19.9 | $ | 21.8 | $ | 40.4 | |||||||
Diluted EPS | $ | (0.61 | ) | $ | 0.58 | $ | (0.47 | ) | $ | 1.11 | |||||
Adjustments: | |||||||||||||||
Transformation program | 0.49 | 0.34 | 0.78 | 0.66 | |||||||||||
Restructuring and other related charges (a) | 0.03 | 0.01 | 0.05 | 0.32 | |||||||||||
Goodwill impairment | 0.89 | — | 0.89 | — | |||||||||||
Asset impairment (a) | — | 0.03 | — | 0.03 | |||||||||||
Gain on sale of property and equipment, net | (0.01 | ) | — | (0.05 | ) | (0.15 | ) | ||||||||
Income tax impact of adjustments | (0.18 | ) | (0.09 | ) | (0.24 | ) | (0.20 | ) | |||||||
Adjusted EPS | $ | 0.61 | $ | 0.87 | $ | 0.96 | $ | 1.77 | |||||||
(a) Calculation includes the impact of a rounding adjustment |
Astec Industries Inc. EBITDA and Adjusted EBITDA Reconciliations (In millions, except percentage data; unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net sales | $ | 345.5 | $ | 350.0 | $ | 654.7 | $ | 697.9 | |||||||
Net (loss) income attributable to controlling interest | $ | (14.0 | ) | $ | 13.1 | $ | (10.6 | ) | $ | 25.2 | |||||
Interest expense, net | 2.7 | 1.5 | 4.8 | 3.0 | |||||||||||
Depreciation and amortization | 6.6 | 6.2 | 13.1 | 12.5 | |||||||||||
Income tax provision | 0.3 | 2.7 | 1.7 | 7.1 | |||||||||||
EBITDA | (4.4 | ) | 23.5 | 9.0 | 47.8 | ||||||||||
EBITDA margin | (1.3) % | 6.7 | % | 1.4 | % | 6.8 | % | ||||||||
Adjustments: | |||||||||||||||
Transformation program | 11.1 | 7.6 | 17.4 | 14.8 | |||||||||||
Restructuring and other related charges | 0.9 | 0.4 | 1.0 | 7.5 | |||||||||||
Goodwill impairment | 20.2 | — | 20.2 | — | |||||||||||
Other impairment charges | — | 0.8 | — | 0.8 | |||||||||||
Gain on sale of property and equipment, net | (0.2 | ) | (0.1 | ) | (1.1 | ) | (3.5 | ) | |||||||
Adjusted EBITDA | $ | 27.6 | $ | 32.2 | $ | 46.5 | $ | 67.4 | |||||||
Adjusted EBITDA margin | 8.0 | % | 9.2 | % | 7.1 | % | 9.7 | % |
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