GlobeNewswire Inc | Nov 4, 2020 07:00AM EST

November 04, 2020

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 companys 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 UpdateWe 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 SimulcastAstec will conduct a conference call and live webcast today, November4, 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 visitingwww.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 atwww.astecindustries.com.

A replay of the conference call will be available through November 18, 2020 by dialing (877) 481-4010 or (919) 882-2331 for international callers, Conference ID # 36087.A transcript of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within five business days after the call.

About AstecAstec, (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building, aggregate processing and concrete production.Astecs manufacturing operations are divided into two primary business segments: Infrastructure Solutions that includes road building, asphalt and concrete plant, thermal and storage solutions; and Materials Solutions that include our aggregate processing and mining equipment.

Forward-Looking StatementsCertain statements contained in this press release relate to future events and expectations and are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company. Words such as "believe," "estimate," "will be," "will," "would," may, "expect," "anticipate," "plan," "project," "intend," "could," "should" or other similar words or expressions often identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. All statements other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future performance and speak only as of the date they are made, and we do not undertake to update our forward-looking statements.

Because forward-looking statements involve risks and uncertainties, actual results could differ materially. Such risks and uncertainties, many of which are beyond the control of the Company, include among others: the impact of the COVID-19 pandemic on the global demand for the Companys products; the impacts of the COVID-19 pandemic on the Companys financial condition and business operations; general uncertainty in the economy; pricing, demand and availability of steel, oil and liquid asphalt; decreased funding for highway projects; the relative strength/weakness of the dollar to foreign currencies; production capacity; general business conditions in the industry; demand for the Companys products; seasonality and cyclicality in operating results; seasonality of sales volumes or lower than expected sales volumes; lower than expected margins on custom equipment orders; competitive activity; tax rates and the impact of future legislation thereon; and those other factors, risks and uncertainties that are more specifically set forth from time to time in the Companys reports filed with the Securities and Exchange Commission, including but not limited to the Companys annual report on Form 10-K for the year ended December31, 2019.

NON-GAAP FINANCIAL MEASURESIn an effort to provide investors with additional information regarding the Companys results, the Company refers to various 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 are unlikely to 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 Companys financial performance against such budgets and targets.

For Additional Information Contact: Steve AndersonSenior Vice President of Administration and Investor Relations, SecretaryPhone: (423) 899-5898Fax: (423) 899-4456E-mail:sanderson@astecindustries.com

Astec Industries Inc.Condensed Consolidated Statements of Income(In millions, except shares in thousands and per share amounts; unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net sales $ 231.4 $ 255.8 $ 785.6 $ 886.4 Cost of sales 181.0 203.9 601.5 674.4 Gross profit 50.4 51.9 184.1 212.0 Operating expenses: Selling, general and 48.8 47.6 147.8 158.6 administrativeRestructuring and asset 2.4 0.9 11.1 1.4 impairment chargesTotal operating expenses 51.2 48.5 158.9 160.0 Operating income (loss) (0.8 ) 3.4 25.2 52.0 Other income (expense): Interest expense (0.1 ) (0.2 ) (0.3 ) (1.3 ) Other income, net of 1.3 0.4 2.1 1.3 expensesIncome before income 0.4 3.6 27.0 52.0 taxesProvision (benefit) from (1.2 ) 0.6 (4.5 ) 11.4 income taxesNet income 1.6 3.0 31.5 40.6 Net loss attributable to ? ? 0.1 0.1 non-controlling interestNet income attributable $ 1.6 $ 3.0 $ 31.6 $ 40.7 to controlling interest Earnings per common share Basic $ 0.07 $ 0.13 $ 1.40 $ 1.81 Diluted 0.07 0.13 1.38 1.79 Weighted-average shares outstandingBasic 22,615 22,523 22,593 22,510 Diluted 22,946 22,684 22,838 22,666 EPS * $ 0.07 $ 0.13 $ 1.38 $ 1.79 Restructuring and unusual 0.17 0.04 0.56 (0.81 ) Goodwill impairment ? ? 0.07 ? Benefit (provision) from (0.04 ) ? (0.15 ) 0.20 income taxesAdjusted EPS * $ 0.20 $ 0.17 $ 1.86 $ 1.18 * Diluted EPS

Astec Industries Inc.Segment Net Sales and Profits(In thousands; unaudited)

Three Months Ended September 30 Nine Months Ended September 30 Infrastructure Material Corporate Total Infrastructure Material Corporate Total Solutions Solutions Solutions Solutions 2020 Net sales $ 151,096 $ 80,308 $ ? $ 231,404 $ 535,565 $ 249,986 $ ? $ 785,551 2019 Net sales 156,190 99,617 ? 255,807 573,404 312,985 ? 886,389 Change $ (5,094 ) (19,309 ) ? (24,403 ) (37,839 ) (62,999 ) ? (100,838 ) Change % (3.3 )% (19.4 ) ? % (9.5 ) (6.6 )% (20.1 ) ? % (11.4 ) % % % % 2020 Gross 29,645 20,692 100 50,437 120,857 62,911 305 184,073 profit2020 Gross 19.6 % 25.8 % ? % 21.8 % 22.6 % 25.2 % ? % 23.4 % profit %2019 Gross 30,952 20,837 71 51,860 140,004 71,876 147 212,027 profit2019 Gross 19.8 % 20.9 % ? % 20.3 % 24.4 % 23.0 % ? % 23.9 % profit %Change $ (1,307 ) (145 ) 29 (1,423 ) (19,147 ) (8,965 ) 158 (27,954 ) 2020 Profit / 6,266 7,205 (11,712 ) 1,759 37,701 21,709 (28,240 ) 31,170 (loss)2019 Profit / 3,889 5,803 (6,947 ) 2,745 48,885 22,969 (32,418 ) 39,436 (loss)Change $ 2,377 1,402 (4,765 ) (986 ) (11,184 ) (1,260 ) 4,178 (8,266 ) Change % 61.1 % 24.2 % (68.6 )% (35.9 ) (22.9 )% (5.5 ) 12.9 % (21.0 ) % % % Segment net sales are reported net of intersegment sales. Segment gross profitis net of profit on intersegment sales. A reconciliation of total segmentprofits to the Company's net income attributable to controlling interest is asfollows (in thousands; unaudited): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 Change $ 2020 2019 Change $Total profitfor all $ 1,759 $ 2,745 $ (986 ) $ 31,170 $ 39,436 $ (8,266 ) segmentsRecapture(elimination) (72 ) 210 (282 ) 305 1,099 (794 ) of intersegmentprofitNet income(loss)attributable to (39 ) 55 (94 ) 75 127 (52 ) non-controllinginterestNet incomeattributable to $ 1,648 $ 3,010 $ (1,362 ) $ 31,550 $ 40,662 $ (9,112 ) controllinginterest

Astec Industries Inc.Condensed Consolidated Balance Sheets(In millions; unaudited)

September 30, December 31, 2020 2019Assets Current assets: Cash and cash equivalents $ 108.5 $ 48.9 Investments 3.8 1.5 Receivables, net 132.8 124.9 Inventories, net 261.5 294.5 Other current assets 26.6 36.5 Total current assets 533.2 506.3 Property, plant and equipment, net 182.8 190.4 Other long-term assets 103.7 103.8 Total assets $ 819.7 $ 800.5 Liabilities Current liabilities: Accounts payable $ 53.1 $ 57.2 Other current liabilities 108.1 115.6 Total current liabilities 161.2 172.8 Long-term debt 0.4 0.7 Other long-term liabilities 34.8 24.5 Total equity 623.3 602.5 Total liabilities and equity $ 819.7 $ 800.5

Astec Industries Inc. Condensed Consolidated Statements of Cash Flows (In thousands; unaudited)

Nine Months Ended September 30, 2020 2019Cash flows from operating activities: Net income $ 31,475 $ 40,535 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 19,370 19,698 Provision for doubtful accounts 559 1,086 Provision for warranties 7,094 7,020 Deferred compensation expense 503 74 Stock-based compensation 4,814 2,118 Deferred income tax provision 14,012 9,193 (Gain) loss on disposition of fixed assets (826 ) 309 Asset impairment charge 4,146 ? Distributions to SERP participants (1,234 ) (2,067 ) Change in operating assets and liabilities, net of effects of acquisitions:(Purchase) sale of trading securities, net (534 ) 883 Trade and other receivables (1,964 ) 18,150 Inventories 43,170 (1,261 ) Prepaid expenses and other assets 5,805 849 Accounts payable (7,952 ) (8,899 ) Accrued payroll and related expenses 1,009 ? Accrued product warranty (7,328 ) (8,004 ) Customer deposits (17,966 ) (4,247 ) Prepaid and income taxes payable, net 8,604 8,964 Other 553 (226 ) Net cash provided by operating activities 103,310 84,175 Cash flows from investing activities: Business acquisitions, net of cash acquired (28,252 ) ? Expenditures for property and equipment (10,934 ) (17,924 ) Proceeds from sale of property and equipment 2,881 268 Proceeds from sale of assets held for sale 3,084 ? Other 285 1,407 Net cash used by investing activities (32,936 ) (16,249 ) Cash flows from financing activities: Payment of dividends (7,457 ) (7,436 ) Borrowings under bank loans 175 164,850 Repayments of bank loans (518 ) (223,984 ) Sale of Company shares held by SERP 214 176 Withholding tax paid upon vesting of restricted (739 ) (312 ) stock unitsNet cash used by financing activities (8,325 ) (66,706 ) Effect of exchange rates on cash (2,377 ) (752 ) Net change in cash and cash equivalents 59,672 468 Cash and cash equivalents, beginning of period 48,857 25,821 Cash and cash equivalents at end of period $ 108,529 $ 26,289

Appendix

In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Nonetheless, this non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses. 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.

The amounts described below are unaudited, reported in thousands of U.S. Dollars (Except per share data), and as of or for the periods indicated.

3Q 2020 GAAP to Non-GAAP Reconciliation Table As Reported Restructuring As Adjusted (GAAP) Charges and (Non-GAAP) OtherConsolidated Net sales $ 231,404 $ ? $ 231,404 GP 50,437 2,507 52,944 GP% 21.8 % 22.9 % Operating income (loss) (808 ) 4,924 4,116 Benefit from income taxes (1,242 ) 953 (289 ) Net income attributable to 1,648 2,921 4,569 controlling interestEPS 0.07 0.13 0.20 Infrastructure Solutions Net sales 151,096 ? 151,096 GP 29,645 2,507 32,152 GP% 19.6 % 21.3 % Materials Solutions Net sales 80,308 ? 80,308 GP 20,692 ? 20,692 GP% 25.8 % 25.8 % 3Q YTD 2020 GAAP to Non-GAAP Reconciliation Table As Reported Restructuring As Adjusted (GAAP) Charges and (Non-GAAP) OtherConsolidated Net sales $ 785,551 $ ? $ 785,551 GP 184,073 4,416 188,489 GP% 23.4 % 24.0 % Operating income 25,194 15,538 40,732 Benefit from income taxes (4,517 ) 3,498 (1,019 ) Net income attributable to 31,550 10,990 42,540 controlling interestEPS 1.38 0.48 1.86 Infrastructure Solutions Net sales 535,565 ? 535,565 GP 120,857 4,416 125,273 GP% 22.6 % 23.4 % Materials Solutions Net sales 249,986 ? 249,986 GP 62,911 ? 62,911 GP% 25.2 % 25.2 %

3Q 2019 GAAP to Non-GAAP Reconciliation Table As Reported Restructuring As Adjusted (GAAP) Charges and (Non-GAAP) OtherConsolidated Net sales $ 255,807 $ ? $ 255,807 GP 51,860 ? 51,860 GP% 20.3 % 20.3 %Operating income 3,342 875 4,217 Provision from income taxes 632 132 764 Net income attributable to 3,010 743 3,753 controlling interestEPS 0.13 0.04 0.17 Infrastructure Solutions Net sales 156,190 ? 156,190 GP 30,952 ? 30,952 GP% 19.8 % 19.8 % Materials Solutions Net sales 99,617 ? 99,617 GP 20,837 ? 20,837 GP% 20.9 % 20.9 % 3Q YTD 2019 GAAP to Non-GAAP Reconciliation Table As Reported Restructuring As Adjusted (GAAP) Charges (Non-GAAP) and OtherConsolidated Net sales $ 886,389 $ (20,000 ) $ 866,389 GP 212,027 (20,000 ) 192,027 GP% 23.9 % 22.2 %Operating income 52,002 (18,569 ) 33,433 Provision from income taxes 11,420 (4,598 ) 6,822 Net income attributable to 40,662 (13,971 ) 26,691 controlling interestEPS 1.79 (0.61 ) 1.18 Infrastructure Solutions Net sales 573,404 (20,000 ) 553,404 GP 140,004 (20,000 ) 120,004 GP% 24.4 % 21.7 % Materials Solutions Net sales 312,985 ? 312,985 GP 71,876 ? 71,876 GP% 23.0 % 23.0 %

Astec Industries Inc.GAAP vs Non-GAAP Adj. EPS Reconciliations(In thousands, except share and per share amounts; unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net income attributable $ 1,648 $ 3,010 $ 31,550 $ 40,662 to controlling interestPlus: Restructuring and 3,874 875 12,842 (18,569 ) otherPlus: Goodwill ? ? 1,646 ? impairmentLess: Benefit(provision) from income (953 ) (132 ) (3,498 ) 4,598 taxesAdjusted net incomeattributable to $ 4,569 $ 3,753 $ 42,540 $ 26,691 controlling interest Diluted EPS $ 0.07 $ 0.13 $ 1.38 $ 1.79 Plus: Restructuring and 0.17 0.04 0.56 (0.81 ) otherPlus: Goodwill ? ? 0.07 ? impairmentLess: Benefit(provision) from income (0.04 ) ? (0.15 ) 0.20 taxesAdjusted EPS $ 0.20 $ 0.17 $ 1.86 $ 1.18

Astec Industries Inc.GAAP vs Non-GAAP EBITDA and Adj. EBITDA Reconciliations(In thousands, except share and per share amounts; unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net incomeattributableto $ 1,648 $ 3,010 $ 31,550 $ 40,662 controllinginterestInterestincome (99 ) (202 ) (360 ) 155 (expense) andotherDepreciationand 6,823 6,429 19,370 19,698 amortizationProvisionfrom income (1,242 ) 632 (4,517 ) 11,420 taxesEBITDA 7,130 9,869 46,043 71,935 Restructuring 3,874 875 14,488 (18,569 ) and otherAdjusted $ 11,004 $ 10,744 $ 60,531 $ 53,366 EBITDA