Astec Industries, Inc. had a 13 percent sales drop in the second quarter.
That is based on net sales of $265.3 million and is compared to $304.8 million for the second quarter of 2019. Domestic sales decreased $24.7 million or 10 percentand international sales decreased $14.8 million or 25.3 percent due to COVID-19 related business disruptions in the second quarter versus last year.
Excluding the impact of foreign currency, net sales decreased 11.4 percent.
Backlog as of June 30, 2020 of $182 million decreased by $64.1 million, or 26.1 percent compared to the backlog of $246.1 million a year ago driven by lower Materials and Infrastructure Solutions orders, which were down 17.3 percent and 30.9 percent, respectively. Domestic backlog decreased by 20.6 percent to $128.3 million while International backlog decreased by 36.6 percent to $53.6 million. Lower orders were driven by COVID-19 uncertainties.
Officials said, "Operating income of $10.9 million in the second quarter of 2020 decreased 64.4 percent compare to $30.5 million in the second quarter 2019. In relation to the company’s efforts to simplify the organization, the company incurred a $7.9 million pre-tax restructuring charge or $0.26 per share net of taxes related to asset impairment, inventory write-down, reduction in labor force and the closing of our Mequon, Wisconsin facility. Second quarter of 2020 adjusted operating income of $18.8 million, increased 77.8 percent compared to $10.5 million a year ago. Adjusted operating margin of 7.1 percent increased 340 basis points from 3.7 percent in second quarter 2019 largely driven by our transformation initiatives put in place beginning in late 2019. SG&A expenses declined 19 percent on a dollar basis driven by reductions in consulting fees, travel and employee expenses."
Adjusted EBITDA of $25.3 million increased 46.9 percent compared to $17.2 million a year ago. Adjusted EBITDA margin of 9.5 percent increased 350 basis points from six percent in second quarter 2019.
Excluding restructuring charges mentioned above, adjusted net income of $15.3 million increased 81.6 percent compared to the prior year period, while adjusted EPS of $0.67 increased 81.1 percent compared to $0.37 for second quarter 2019.
Barry Ruffalo, CEO of Astec, said, “During the second quarter, we continued to make significant progress against our initiatives to Simply, Focus and Grow our business. In the quarter, we announced the closure of our Mequon, Wisconsin location, which is where we built our Telsmith products. This closure will enable us to leverage our footprint more efficiently as these products are transferred to different Astec facilities. In addition, supporting our Grow strategic pillar, we recently announced the acquisition of two premier full-line concrete batch plant manufacturers, CON-E-CO and BMH, both of which will significantly strengthen our Infrastructure Solutions group and provide our customers with access to the most robust line of concrete products in the infrastructure industry. We continue to look for ways to grow regionally in attractive markets that build upon our strong foundational product lines.”
“Second quarter results also demonstrated traction on our strategic transformation with Adjusted EBITDA and 350 bps expansion in Adjusted EBITDA margin, despite the decrease in net sales, a direct result of the restructuring initiatives taken in 2019 and 2020. While we remain cautious given the global pandemic, we are well positioned to navigate the economic challenges ahead of us with a more efficient and streamlined organizational structure, a strong balance sheet and ample liquidity.”
Mr. Ruffalo continued, “I am very proud of how our team members have embraced and adapted to the COVID-19 situation as an organization and how we have managed through this challenging environment. At the onset of the pandemic, we immediately took proactive measures to ensure the safety and wellbeing of our employees, suppliers and customers, while we continued to execute on our strategy and drive profitable growth in the quarter. We remain well-positioned to navigate the economic challenges ahead of us with our more efficient and streamlined organizational structure, a strong balance sheet and ample liquidity. I am confident that we will come out of the COVID-19 pandemic a stronger and more resilient organization.”