Astec Industries(US:ASTE)2024-02-28 21:16Business Segments and Operations - The company operates in the Infrastructure Solutions and Materials Solutions segments, focusing on asphalt and concrete road building equipment and related services[25]. - The Materials Solutions segment focuses on heavy rock processing equipment and services for the aggregate, mining, recycling, ports, and bulk handling markets[45]. - The Infrastructure Solutions segment includes a complete line of asphalt and concrete plants, with products designed for high production capacity and reduced emissions[30]. - The company operates multiple manufacturing sites globally, including locations in South Africa, Brazil, the United States, Canada, and the United Kingdom[46]. Financial Performance - Astec Industries reported net sales of $1,338.2 million for 2023, an increase of 5.0% from $1,274.5 million in 2022[261]. - The company's gross profit for 2023 was $330.8 million, up from $264.1 million in 2022, reflecting a significant improvement in profitability[261]. - Net income attributable to controlling interest for 2023 was $33.5 million, compared to a loss of $0.1 million in 2022, indicating a strong turnaround in financial performance[261]. - Earnings per share (EPS) for 2023 was $1.47, compared to a loss per share in the previous year, showcasing improved earnings generation[261]. - Total assets increased to $1,059.3 million in 2023 from $1,014.4 million in 2022, indicating growth in the company's asset base[259]. - Total liabilities rose to $405.6 million in 2023, up from $387.5 million in 2022, reflecting increased financial obligations[259]. - The company reported a comprehensive income of $35.5 million for 2023, a significant recovery from a comprehensive loss of $7.8 million in 2022[264]. - Net income for 2023 was $33.7 million, a significant improvement from a net loss of $0.6 million in 2022[267]. Sustainability and Environmental Initiatives - The company aims to achieve net zero carbon emissions during asphalt production and construction by 2050, participating in initiatives like The Road Forward and the U.S. Department of Energy's Better Plants program[40]. - The company emphasizes sustainability by manufacturing equipment that meets EPA Tier 4 Final and European Stage V emissions standards, compatible with hydrotreated vegetable oil fuels[53]. - The company’s product offerings include asphalt plants with up to 70% recycled material capabilities, emphasizing sustainability in production processes[40]. - The company has introduced a patented water injection warm mix asphalt system, allowing for lower temperature asphalt preparation and significant emissions reduction[32]. Research and Development - The company has a strong focus on research and development, dedicating substantial resources to enhance product functionality and reliability[66]. - The company incurred $22.0 million, $31.5 million, and $26.5 million in research and development costs during 2023, 2022, and 2021, respectively[325]. - The company holds 116 U.S. patents and 128 foreign patents, with additional applications pending[65]. Customer Relations and Market Strategy - The company is focused on enhancing customer experience through the development of the Astec Digital Ecosystem, leveraging technology and digital connectivity[21]. - The company’s strategic objectives include strengthening customer relationships and expanding into attractive new markets through strategic acquisitions and partnerships[20]. - The company aims to connect all products in the "Rock to Road" value chain through its Astec Digital Ecosystem, enhancing customer efficiency and productivity[58]. Backlog and Orders - The backlog for the Infrastructure Solutions segment decreased from approximately $567.1 million in 2022 to $404.6 million in 2023[44]. - The backlog for the Materials Solutions segment also declined from approximately $341.2 million in 2022 to $162.7 million in 2023[56]. - Total backlog for the company decreased from approximately $912.7 million in 2022 to $569.8 million in 2023, with a significant portion of the decline attributed to domestic customer orders[68]. Employee and Labor Relations - As of December 31, 2023, the company employed 4,322 individuals, with 3,650 located in the U.S. and Canada, and 2,869 engaged in manufacturing[73]. - Approximately 78 U.S. employees are covered by a collective bargaining agreement expiring on December 11, 2025[74]. - The company has implemented parental leave, providing paid time off for new mothers and fathers[75]. - The company plans to increase its 401(k) employer match beginning in 2024 to support employees' retirement[75]. Financial Risks and Management - A hypothetical 100 basis point increase in interest rates would have a $0.7 million impact on annualized interest expense based on an outstanding balance of $72.0 million as of December 31, 2023[232]. - The company does not hedge variable interest rates, exposing it to interest rate risk from its credit facilities[232]. - The company utilizes strategies including forward-looking contracts to manage commodity price volatility, particularly for steel[235]. Inventory and Asset Management - The Company reported total inventories of $455.6 million as of December 31, 2023, an increase from $393.4 million in 2022, with raw materials and parts at $298.6 million[347]. - The Company reviews its inventory, including finished goods, used equipment, and rental equipment, on a model-by-model basis to assess if any item's net realizable value is below its carrying value[293]. - The Company’s inventory is valued at the lower of cost or net realizable value, requiring estimates and judgments regarding potential reductions[291]. Acquisitions and Investments - The Company completed the acquisition of MINDS Automation Group, Inc. for a purchase price of $19.3 million, resulting in $9.3 million of goodwill and $9.3 million of intangible assets[343]. - Total assets acquired from MINDS included cash of $1.5 million, trade receivables of $2.7 million, and inventories of $0.7 million, totaling $24.6 million[345]. Financial Reporting and Compliance - The Company is evaluating the impact of recently issued accounting standards, including ASU 2023-07 and ASU 2023-09, which will affect segment reporting and income tax disclosures, respectively[340][341]. - The fair value of the Company’s financial assets and liabilities is categorized as Level 1 and Level 2, with total financial assets at $19.5 million and total financial liabilities at $5.6 million as of December 31, 2023[352].