Astec Reports Third Quarter 2020 Results

Rhea-AI Summary

Astec Industries reported Q3 2020 results with net sales of $231.4M, a decrease of 9.5% year-over-year, attributed to COVID-19 impacts. The gross profit margin improved to 21.8%, up 150 bps. However, net income fell 45.2% to $1.6M, with adjusted net income rising 21.7% to $4.6M. The company closed two acquisitions in the Infrastructure Solutions segment and maintained a strong liquidity position with $108.5M in net cash and over $260M liquidity available. The backlog decreased 10.4% to $218.5M.

Positive

• Adjusted gross profit margin increased 260 bps.
• Adjusted net income rose 21.7% to $4.6M.
• Strong liquidity with $108.5M net cash and over $260M available.

Negative

• Net sales decreased 9.5% to $231.4M.
• Net income dropped 45.2% to $1.6M.
• Backlog decreased 10.4% to $218.5M.

Third Quarter 2020 Highlights (all comparisons are made to the prior year third quarter):

• Net Sales decreased 9.5% to $231.4M
• Gross Profit Margin of 21.8% increased 150 bps; adjusted Gross Profit Margin increased 260 bps
• Net Income decreased 45.2% to $1.6M; adjusted Net Income of $4.6M increased 21.7% from $3.8M
• EPS of $0.07 compared to $0.13; adjusted EPS of $0.20 increased from $0.17

CHATTANOOGA, Tenn., Nov. 04, 2020 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (Nasdaq: ASTE) announced today its financial results for third quarter 2020 ending September 30, 2020.

Third quarter of 2020 net sales of $231.4 million decreased 9.5% compared to $255.8 million for the third quarter of 2019. Domestic sales decreased $8.5 million or 4.5% and international sales decreased $15.9 million or 24.1% due mainly to COVID-19 related business disruptions in the third quarter versus last year. Excluding the impact of foreign currency, net sales decreased 8.5%.

Backlog as of September 30, 2020 of $218.5 million decreased $25.4 million, or 10.4% compared to the backlog of $243.9 million a year ago driven by lower Materials and Infrastructure Solutions orders, which were down 8.5% and 11.3%, respectively. Domestic backlog decreased by 4.3% to $151.3 million while international backlog decreased by 21.8% to $67.2 million. Lower orders were driven by COVID-19 uncertainties.

Operating loss of $0.8 million in the third quarter of 2020 decreased 124.2% compared to operating income of $3.3 million in the third quarter 2019. In relation to the company’s efforts to simplify the organization, the company incurred a $3.9 million pre-tax restructuring and other or $0.13 per share net of taxes related to asset impairment, inventory write-down, reduction in labor force and the closing of our Mequon, Wisconsin and Enid, Oklahoma facilities. Third quarter of 2020 adjusted operating income of $4.1 million, decreased 2.3% compared to $4.2 million a year ago. Adjusted operating margin of 1.8% increased 20 basis points from 1.6% in third quarter 2019 as operational efficiencies outpaced a decline in sales. SG&A expenses increased $1.2 million or 2.5% primarily due to the acquisitions of BMH Systems ("St. Bruno") and CON-E-CO ("Blair").

Net income of $1.6 million decreased 45.2% compared to $3.0 million a year ago, while EPS of $0.07 decreased 46.2% compared to $0.13 for third quarter 2019. Excluding restructuring charges mentioned above, adjusted net income of $4.6 million increased 21.7% compared to the prior year period, while adjusted EPS of $0.20 increased 17.6% compared to $0.17 for third quarter 2019. Adjusted EBITDA of $11.0 million increased 2.4% compared to $10.7 million a year ago. Adjusted EBITDA margin of 4.8% increased 60 basis points from 4.2% in third quarter 2019.

“I am pleased with our continued ability to execute against our strategic initiatives of Simplify, Focus and Grow. Furthermore, as a direct result of the initiatives taken since 2019 related to our strategic transformation and our continued focus on operational excellence, while net sales decreased, we achieved further adjusted gross and adjusted EBITDA margin expansion during the quarter. During the third quarter, we continued to drive operational excellence across the organization resulting in solid third quarter performance,” said Barry Ruffalo, CEO of Astec. “As previously communicated, we closed on the acquisitions of two premier full-line concrete batch plant manufacturers, Blair and St. Bruno, which strengthened our Infrastructure Solutions segment. The integration is going well and we are already beginning to benefit from purchasing synergies. We continue to focus on our Rock to Road strategy to build on our strong foundational product lines.”

COVID-19 Business Continuity and Operations Update
We continue to execute on COVID-19 measures in order to ensure the health and wellbeing of our employees, their families and communities in which we operate, while continuing to serve our customers’ critical needs.  Below is a COVID-related update by category:

Balance Sheet and Liquidity

The Company remains focused on liquidity and cash generation. We ended the quarter with a net cash position of $108.5 million with total debt of $0.9 million. The Company has available liquidity in excess of $260.0 million as of September 30, 2020.

Operations

All of our facilities are operational and able to meet current demand levels. We continue to manufacture our products for building and maintaining the infrastructure used to move goods to market, facilitate the transportation needs of communities and for public health and safety.

Supply Chain

We have not experienced any interruption to our supply chain and are able to source the necessary materials needed to meet our customers’ needs. We are closely monitoring our supply chain and are ready to take proactive actions as needed to mitigate any potential disruptions. We are in frequent communication with our suppliers and customers to ensure business continuity.

Cost Management

We have implemented additional actions to help mitigate the financial and operations impacts of COVID-19, including reducing expenses and conserving cash. These actions include:

• Overall headcount reduction of approximately 12% since third quarter of 2019
• Discretionary spending reductions
• Working capital management to ensure efficient accounts receivable processing with our customers

Mr. Ruffalo continued, “We remain cautiously optimistic given we are well positioned to navigate the economic challenges related to the global pandemic with a streamlined organizational structure, a strong balance sheet and ample liquidity. I want to thank all our team members for their hard work and dedication and continued focus on our core values to serve our customers as OneAstec. I am confident that we are becoming a stronger and more resilient organization as we continue to focus on operational excellence and enhancing long-term stakeholder value.”

Investor Conference Call and Web Simulcast
Astec will conduct a conference call and live webcast today, November 4, 2020, at 10:00 A.M. Eastern Time, to review its third quarter 2020 results as well as current business conditions. The number to call for this interactive teleconference is (877) 407-9210 (at least 10 minutes prior to the scheduled time for the call). International callers should dial (201) 689-8049. You may also access a live webcast of the call by visiting www.webcaster4.com/Webcast/Page/2146/36087. You will need to give your name and company affiliation and reference Astec Industries. An archived webcast will be available for ninety days at www.astecindustries.co

FAQ

What were Astec Industries' Q3 2020 net sales?

Astec Industries reported net sales of $231.4 million for Q3 2020, a decrease of 9.5% compared to Q3 2019.

How did adjusted net income change in Q3 2020 for ASTE?

In Q3 2020, adjusted net income for Astec Industries increased by 21.7% to $4.6 million.

What is the current backlog for Astec Industries as of Q3 2020?

As of September 30, 2020, Astec Industries' backlog stood at $218.5 million, down 10.4% from the previous year.

What was the impact of COVID-19 on Astec Industries' sales?

COVID-19 related disruptions led to a decrease in domestic sales by 4.5% and international sales by 24.1% in Q3 2020.

What is Astec Industries' adjusted EPS for Q3 2020?

Astec Industries reported an adjusted EPS of $0.20 for Q3 2020, an increase from $0.17 in the previous year.