ASTEC INDUSTRIES INC Q3 FY2024 earnings call

• Welcomed Brian Harris as the new Chief Financial Officer, who brings significant experience. - Third quarter had mixed results, with $291.4 million in net sales, cash flow positive with $19.9 million free cash flow. - Infrastructure Solutions benefited from strong infrastructure construction market, while Material Solutions faced challenges from dealer inventory and higher interest rates. - Strategic roadmap includes fostering employees, focusing on customers, and innovation. - New product development progress, such as the Astec ReMix Cold Central Plant Recycle system. - Adjusted EBITDA increased due to positive net volume, mix in pricing, lower SG&A costs, offset by manufacturing inefficiencies.

In the third quarter, net sales were $291.4 million, down 3.9% year-over-year. Domestic sales accounted for approximately 72% of consolidated net sales, international 28%. Infrastructure Solutions net sales increased 1.1% year-over-year to $165 million, with equipment sales up $8.4 million but part sales down $7.7 million. Material Solutions net sales decreased 9.6% to $126.4 million, driven by lower domestic equipment sales. Adjusted EBITDA increased 74%, adjusted EPS was $0.31, and adjusted EBITDA margin improved 270 basis points.

• Full-year sales expected to be broadly flat compared to prior year. - Gross margin expected to be at the lower end of the range 24% to 25.5% in Q4. - Quarterly SG&A expected to be in the range of $59 million to $62 million. - CapEx for the full year expected to be in the $20 million to $25 million range.

Q: What attracted Brian to Astec?

A: Brian was attracted by the growth drivers like products, parts revenue growth, new product pipeline, infrastructure funding, and international opportunities.

Q: Clarification on legal settlement impact?

A: Last year Q3 had a $6.4 million litigation charge, and in Q3 2024, about $2 million was released from a legal settlement.

Q: Impact of dealer destocking on Material Solutions?

A: Dealer destocking has seen about 4%-5% reduction quarter-over-quarter, with positive quoting activity and cautious optimism for next year.

Q: Manufacturing efficiencies and CapEx?

A: Teams are working on moving production between facilities, CapEx next year expected to be in a similar range as this year with investments in operations and international expansion.