Astec Industries Appoints New President and Chief Executive Officer and Reports Second Quarter 2019 Results

CHATTANOOGA, Tenn., July 23, 2019 (GLOBE NEWSWIRE) -- Astec Industries, Inc. ASTE announced today the appointment of Mr. Barry Ruffalo as its President and Chief Executive Officer to be effective on August 12, 2019. Mr. Ruffalo has also been elected to the Board of Directors. Mr. Ruffalo will join the Board of Directors as a Class I director and will stand for re-election at the Company's 2020 annual meeting. On the effective date of Mr. Ruffalo's appointment, Richard Dorris, Interim Chief Executive Officer, will resume his role as Chief Operating Officer. 

Prior to his appointment, Mr. Ruffalo was employed by Valmont Industries, a publicly-traded diversified global producer of highly-engineered fabricated metal products, where he served in Group President roles since 2016, having previously served as its Executive Vice President, Operational Excellence beginning in 2015. Prior to his work with Valmont Industries, Mr. Ruffalo was employed by Lindsay Corporation, a publicly-traded global leader in proprietary water management and road infrastructure products and services.

"After a comprehensive search that included a number of highly qualified candidates, we are excited to hire Mr. Ruffalo," said Bill Gehl, Chairman of Astec. "Barry brings a wealth of experience to Astec. He is a leader that has driven change, understands infrastructure and will add tremendous value."

"I am excited to join Astec as its CEO and a member of the Board of Directors, said Mr. Ruffalo. "I look forward to moving forward with measures to make Astec more profitable and agile while building on the strength of its world-class products." 

In addition, the Company reported results for its second quarter ended June 30, 2019.

Net sales for the second quarter of 2019 were $304.8 million compared to $272.5 million for the second quarter of 2018, an 11.8% increase. Domestic sales increased 21.1% to $246.2 million for the second quarter of 2019 from $203.4 million for the second quarter of 2018. International sales decreased 15.3% to $58.6 million for the second quarter of 2019 from $69.1 million for the second quarter of 2018. During the quarter, the Company recognized $20.0 million of pre-tax profit on the sale of its Hazlehurst, Georgia wood pellet plant.

Net income for the second quarter of 2019 was $23.4 million or $1.03 per diluted share, compared to a net loss of $40.7 million or $1.76 per diluted share for the second quarter of 2018.

Net sales for the first half of 2019 were $630.6 million compared to $598.0 million for the first half of 2018, an increase of 5.5%. Domestic sales increased 7.5% to $509.0 million for the first half of 2019 from $473.5 million for the first half of 2018. International sales decreased 2.4% to $121.5 million for the first half of 2019 from $124.5 million for the first half of 2018.

Net income for the first half of 2019 was $37.7 million or $1.66 per diluted share, compared to a net loss of $20.4 million or $0.89 per diluted share for the first half of 2018.

The following financial information for the second quarter and first half of 2019 and 2018 excludes all of the impact of wood pellet plant activity on the Company's results during those periods. International sales were not impacted by wood pellet plant activity in any period.

Net sales for the second quarter of 2019 were $284.8 million compared to $347.1 million for the second quarter of 2018, a decrease of $62.3 million or 17.9%. Domestic sales decreased 18.6% to $226.2 million for the second quarter of 2019 from $277.9 million for the second quarter of 2018.

Earnings for the second quarter of 2019 were $8.1 million or $0.36 per diluted share, compared to $24.0 million or $1.03 per diluted share for the second quarter of 2018, a decrease in earnings per share of 65.0%.

Net sales for the first half of 2019 were $610.6 million compared to $672.8 million for the first half of 2018, a decrease of $62.2 million or 9.2%. Domestic sales decreased 10.8% to $489.0 million for the first half of 2019 from $548.2 million for the first half of 2018. 

Earnings for the first half of 2019 were $22.4 million or $0.99 per diluted share, compared to $46.9 million or $2.02 per diluted share for the first half of 2018, a decrease in earnings per share of 51.0%.

Commenting on the quarterly results, Richard Dorris, Interim Chief Executive Officer, stated, "We are pleased the sale of the Hazlehurst, Georgia wood pellet plant completely ended our involvement in the wood pellet plant business. Our EPS, less the payment received for the wood pellet plant, however, was $0.36 and below our expectations. The lower than expected earnings are a result of lower than projected volume and under absorption of production costs."

The Company's backlog at June 30, 2019 was $246.1 million, a decrease of $56.8 million or 18.8% compared to the June 30, 2018 backlog of $302.9 million. The June 30, 2019 backlog was up 4.1% or $9.6 million compared to the March 31, 2019 backlog of $236.5 million. Domestic backlog decreased 25.8% to $161.6 million at June 30, 2019 from $217.9 million at June 30, 2018. The international backlog at June 30, 2019 was $84.5 million compared to $85.0 million at June 30, 2018, remaining flat. 

Mr. Dorris concluded, "We have experienced reduced demand in the first half of this year, but our ongoing strategic procurement and operational excellence initiatives along with manpower reductions at our most affected subsidiaries will help us maintain and improve profitability even if market conditions do not improve in the short term."

Consolidated financial information for the second quarter and six months ended June 30, 2019 and additional information related to segment revenues and profits are attached as addenda to this press release.

Investor Conference Call and Web Simulcast

Astec will conduct a conference call today, July 23, 2019, at 10:00 A.M. Eastern Time, to review its second quarter and six-month results as well as current business conditions. The number to call for this interactive teleconference is (877) 407-9210. International callers should dial (201) 689-8049. Please reference Astec Industries.

The Company will also provide an online Web simulcast and rebroadcast of the conference call. The live broadcast of Astec's conference call will be available online at the Company's website: www.astecindustries.com/conferencecalls. An archived webcast will be available for 90 days at www.astecindustries.com.

A replay of the conference call will be available through August 6, 2019 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Replay ID #50107. A transcription of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 business days after the call.

Astec Industries, Inc., (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building; aggregate processing; oil, gas and water well drilling and concrete production. Astec's manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and equipment for the extraction and production of fuels and water drilling equipment (Energy Group).

The information contained in this press release contains "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) product demand, (ii) the effect of its strategic procurement and operational excellence initiatives, (iii) efforts to adjust manpower, and (iv) its backlog activity. These forward-looking statements reflect management's expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, 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 Company's 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 listed from time to time in the Company's reports filed with the Securities and Exchange Commission, including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2018. 

For Additional Information Contact:

Richard J. Dorris

Interim Chief Executive Officer & Chief Operating Officer

Phone: (423) 867-4210

Fax: (423) 867-4127

E-mail: rdorris@astecindustries.com

or

David C. Silvious

Vice President and Chief Financial Officer

Phone: (423) 899-5898

Fax: (423) 899-4456

E-mail: dsilvious@astecindustries.com

or

Stephen C. Anderson

Vice President, Director of Investor Relations & Corporate Secretary

Phone: (423) 899-5898

Fax: (423) 899-4456

E-mail: sanderson@astecindustries.com

     
Astec Industries, Inc.  
Condensed Consolidated Balance Sheets  
(in thousands)  
(unaudited)  
   
 June 30June 30  
  2019  2018   
Assets    
Current assets    
Cash and cash equivalents$24,905 $65,206   
Investments 1,211  1,972   
Receivables, net 139,196  144,205   
Inventories 360,883  394,789   
Prepaid expenses and other 31,340  36,044   
Total current assets 557,535  642,216   
Property and equipment, net 191,854  185,455   
Other assets 99,166  96,165   
Total assets$848,555 $923,836   
Liabilities and equity    
Current liabilities    
Accounts payable - trade$70,338 $64,702   
Other current liabilities 103,598  177,978   
Total current liabilities 173,936  242,680   
Long-term debt, less current maturities 28,891  1,062   
Non-current liabilities 25,120  23,113   
Total equity 620,608  656,981   
Total liabilities and equity$848,555 $923,836   
     
     
Astec Industries, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
   
 Three Months EndedSix Months Ended
 June 30June 30
  2019  2018  2019  2018 
Net sales$304,802 $272,528 $630,582 $597,981 
Cost of sales 221,352  271,420  470,606  518,868 
Gross profit 83,450  1,108  159,976  79,113 
Selling, general, administrative & engineering expenses 52,968  51,263  111,316  103,341 
Income (loss) from operations 30,482  (50,155) 48,660  (24,228)
Interest expense (484) (168) (1,131) (318)
Other 387  1,146  911  1,658 
Income (loss) before income taxes 30,385  (49,177) 48,440  (22,888)
Income tax expense (benefit) 7,008  (8,503) 10,789  (2,481)
Net income (loss) attributable to controlling interest$23,377 $(40,674)$37,651 $(20,407)
     
     
Earnings (loss) per Common Share    
Net income (loss) attributable to controlling interest    
Basic$1.04 $(1.76)$1.67 $(0.89)
Diluted$1.03 $(1.76)$1.66 $(0.89)
     
     
Weighted average common shares outstanding    
Basic 22,509  23,061  22,503  23,053 
Diluted 22,667  23,061  22,656  23,053 



Astec Industries, Inc.
Segment Revenues and Profit (Loss)
For the three months ended June 30, 2019 and 2018
(in thousands)
(unaudited)
 
 Infrastructure

Group
Aggregate and Mining GroupEnergy

Group
CorporateTotal
2019 Revenues133,235  106,837  64,730  - 304,802 
2018 Revenues83,202  116,297  73,029  - 272,528 
Change $50,033  (9,460) (8,299) - 32,274 
Change %60.1% (8.1%) (11.4%) - 11.8%
      
2019 Gross Profit42,689  25,493  15,187  81 83,450 
2019 Gross Profit %32.0% 23.9% 23.5% - 27.4%
2018 Gross Profit (Loss)(47,817) 29,042  19,808  75 1,108 
2018 Gross Profit (Loss)%(57.5%) 25.0% 27.1% - 0.4%
Change90,506  (3,549) (4,621) 6 82,342 
      
2019 Profit (Loss)24,445  8,489  3,138  (13,220)22,852 
2018 Profit (Loss)(62,734) 12,548  8,477  596 (41,113)
Change $87,179  (4,059) (5,339) (13,816)63,965 
Change %139.0% (32.3%) (63.0%) (2318.1%)155.6%
      
      
Segment revenues are reported net of intersegment revenues.  Segment gross profit (loss) is net of profit on intersegment
revenues.  A reconciliation of total segment profit (loss) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands):
      
  Three months ended June 30 
   2019  2018 Change $ 
Total profit (loss) for all segments $22,852 $(41,113)$63,965  
Recapture of intersegment profit  509  345  164  
Net loss attributable to non-controlling interest 16  94  (78) 
Net income (loss) attributable to controlling interest$23,377 $(40,674)$64,051  
      
      
Astec Industries, Inc.
Segment Revenues and Profit (Loss)
For the six months ended June 30, 2019 and 2018
(in thousands)
(unaudited)
 
 Infrastructure

Group
Aggregate and Mining GroupEnergy

Group
CorporateTotal
2019 Revenues288,229  213,368  128,985  - 630,582 
2018 Revenues230,296  235,364  132,321  - 597,981 
Change $57,933  (21,996) (3,336) - 32,601 
Change %25.2% (9.3%) (2.5%) - 5.5%
      
2019 Gross Profit78,196  51,038  30,666  76 159,976 
2019 Gross Profit %27.1% 23.9% 23.8% - 25.4%
2018 Gross Profit (Loss)(14,536) 58,331  35,095  223 79,113 
2018 Gross Profit (Loss)%(6.3%) 24.8% 26.5% - 13.2%
Change92,732  (7,293) (4,429) (147)80,863 
      
2019 Profit (Loss)39,683  17,166  6,532  (26,690)36,691 
2018 Profit (Loss)(47,882) 25,658  13,088  (10,652)(19,788)
Change $87,565  (8,492) (6,556) (16,038)56,479 
Change %182.9% (33.1%) (50.1%) (150.6%)285.4%
      
      
Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment

revenues. A reconciliation of total segment profit (loss) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands):
      
  Six months ended June 30 
   2019  2018 Change $ 
Total profit (loss) for all segments $36,691 $(19,788)$56,479  
Recapture (elimination) of intersegment profit 888  (764) 1,651  
Net loss attributable to non-controlling interest 72  145  (72) 
Net income (loss) attributable to controlling interest$37,651 $(20,407)$58,058  
      
      
Astec Industries, Inc. 
Backlog by Segment 
June 30, 2019 and 2018 
(in thousands) 
(unaudited) 
  
 Infrastructure

Group
Aggregate and Mining GroupEnergy

Group
Total 
2019 Backlog94,855  87,904  63,333  246,092  
2018 Backlog105,888  128,342  68,662  302,892  
Change $(11,033) (40,438) (5,329) (56,800) 
Change %(10.4%) (31.5%) (7.8%) (18.8%) 
      

GLOSSARY

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.

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

 
Second Quarter 2019As Reported (GAAP)Impact of Pellet PlantsAs Adjusted (Non-GAAP)
Net Sales304,802 20,000 284,802 
Domestic Sales246,213 20,000 226,213 
GM83,450 20,000 63,450 
GM%27.4%100.0%22.3%
Income Tax Expense (1)7,008 4,731 2,277 
Net Income23,377 15,269 8,108 
EPS1.03 0.67 0.36 
    
Year to Date

June 30, 2019
   
Net Sales630,582 20,000 610,582 
Domestic Sales509,042 20,000 489,042 
GM159,976 20,000 139,976 
GM%25.4%100.0%22.9%
Income Tax Expense (1)10,789 4,731 6,058 
Net Income37,651 15,269 22,382 
EPS1.66 0.67 0.99 
    
(1) Tax effect on adjustments is calculated using the applicable jurisdictional blended tax rate
    
    
Second Quarter 2018As Reported (GAAP)Impact of Pellet PlantsAs Adjusted (Non-GAAP)
Net Sales272,528 (74,522)347,050 
Domestic Sales203,388 (74,522)277,910 
GM1,108 (80,923)82,031 
GM%0.4% 23.6%
Income Tax (Benefit) Expense (1)(8,503)(16,258)7,755 
Net Income (Loss)(40,674)(64,665)23,991 
EPS(1.76)(2.80)1.03 
    
Year to Date

June 30, 2018
   
Net Sales597,981 (74,778)672,759 
Domestic Sales473,464 (74,778)548,242 
GM79,113 (84,341)163,454 
GM%13.2% 24.3%
Income Tax (Benefit) Expense (1)(2,481)(17,011)14,530 
Net Income (Loss)(20,407)(67,330)46,923 
EPS(0.89)(2.92)2.02 
    
(1) Tax effect on adjustments is calculated using the applicable jurisdictional blended tax rate
 

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