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Astec Industries Reports Third Quarter 2017 Results

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CHATTANOOGA, Tenn., Oct. 24, 2017 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (NASDAQ:ASTE) today reported results for their third quarter and nine months ended September 30, 2017. 

Net sales for the third quarter of 2017 were $252.1 million compared to $247.8 million for the third quarter of 2016, a 1.7% increase. Domestic sales decreased 1.7% to $196.5 million for the third quarter of 2017 from $199.9 million for the third quarter of 2016.  International sales were $55.6 million for the third quarter of 2017 compared to $47.9 million for the third quarter of 2016, an increase of 16.0%.     

The net loss for the third quarter of 2017 was $2.7 million, or $0.12 per share, compared to earnings of $6.8 million, or $0.30 per diluted share, for the third quarter of 2016, a decrease of 140.0% per diluted share.  As previously announced, the company initiated significant design upgrades to its customers' Georgia and Arkansas wood pellet plants to meet full production rates, which negatively impacted earnings per share by approximately $0.59 during the third quarter of 2017. 

Net sales for the first nine months of 2017 were $872.4 million compared to $820.9 million for the first nine months of 2016, a 6.3% increase.  Domestic sales increased 1.6% to $686.9 million for the first nine months of 2017 from $676.3 million for the first nine months of 2016.  International sales were $185.5 million for the first nine months of 2017 compared to $144.6 million for the first nine months of 2016, an increase of 28.3%.     

Earnings for the first nine months of 2017 were $26.9 million, or $1.16 per diluted share, compared to $42.8 million, or $1.85 per diluted share, for the first nine months of 2016, a decrease of 37.3% per diluted share. 

The Company's backlog at September 30, 2017 was $385.5 million compared to $389.3 million at September 30, 2016, a decrease of $3.8 million or 1.0%.  Domestic backlog decreased 4.9% to $309.5 million at September 30, 2017 from $325.6 million at September 30, 2016.  The international backlog at September 30, 2017 was $76.0 million compared to $63.7 million at September 30, 2016, an increase of 19.3%.  Excluding pellet plant backlogs, the Company's September 30, 2017 backlog increased $61.1 million, or 24.8%, compared to September 30, 2016. 

Consolidated financial information for the third quarter and nine months ended September 30, 2017 and additional information related to segment revenues and profits are attached as addenda to this press release.

Commenting on the announcement, Benjamin G. Brock, Chief Executive Officer, stated, "During the quarter, we executed well across the business driving earnings in line with our expectations, and adjusting for the previously announced pellet plant investment costs, improved gross margin performance year-over-year. Our backlog increased $61.1 million, again excluding the impact of the wood pellet plant investment, versus last year, which witnessed growth both domestically and internationally.  Domestically, we continue to experience a good market for our products primarily due to the federal highway bill and other state and local level funding mechanisms.  Internationally, our strategy of keeping our sales and service structure in place has allowed us to earn orders driven by pent up demand as global market conditions improve."

Mr. Brock concluded, "While we exited the third quarter with a strong backlog, product mix and contracted delivery schedules have tempered our expectations for the fourth quarter.  We believe that we still have a good opportunity to drive slight year-over-year sales growth for 2017; however, our originally anticipated uptick in sales and earnings growth during the fourth quarter will be pushed into 2018.  Sequentially, we expect earnings in the fourth quarter of 2017 will be slightly below this quarter's earnings, adjusting for the wood pellet investment.  As we look to 2018, we are very optimistic on our outlook given our backlog, quote activity and conversations with our customers."

Investor Conference Call and Web Simulcast

Astec will conduct a conference call on Tuesday, October 24, 2017 at 10:00 A.M. Eastern Time to review its third quarter 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 midnight on Tuesday, November 7, 2017 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Conference ID #21299.  A transcript 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. is a manufacturer of specialized equipment for asphalt road building; aggregate processing; oil, gas and water well drilling; and wood processing.  Astec's manufacturing operations are divided into three primary business segments:  road building, wood pellet production and related equipment (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and equipment for the extraction and production of fuels, biomass production, 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 the federal highway bill, its backlog, the strong U.S. Dollar and global market conditions.  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, 2016. 

For Additional Information Contact:
Benjamin G. Brock
Chief Executive Officer
Phone: (423) 867-4210
Fax: (423) 867-4127
E-mail: bbrock@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)    
     
  Sept 30 Sept 30    
    2017     2016    
Assets        
Current assets        
Cash and cash equivalents $   66,379  $   52,474    
Investments     1,655      713    
Receivables, net     109,693      111,753    
Inventories     399,346      399,718    
Prepaid expenses and other     32,825      25,909    
Total current assets     609,898      590,567    
Property and equipment, net     180,703      178,167    
Other assets     86,411      93,105    
Total assets $   877,012  $   861,839    
Liabilities and equity        
Current liabilities        
Accounts payable - trade $   60,107  $   53,496    
Other current liabilities     117,129      136,710    
Total current liabilities     177,236      190,206    
Non-current liabilities     24,574      26,702    
Total equity     675,202      644,931    
Total liabilities and equity $   877,012  $   861,839    
         
         
         
         
Astec Industries, Inc.    
Condensed Consolidated Statements of Income    
(in thousands, except per share data)    
(unaudited)    
     
  Three Months Ended Nine Months Ended
  Sept 30 Sept 30
    2017   2016   2017  2016
Net sales $   252,054  $   247,752 $   872,364 $   820,868
Cost of sales     212,970      192,363     691,985     620,071
Gross profit     39,084      55,389     180,379     200,797
Selling, general, administrative & engineering expenses     45,494      43,950     142,836     132,716
Income (loss) from operations     (6,410)     11,439     37,543     68,081
Interest expense     188      264     638     1,057
Other     1,149      508     2,023     1,443
Income (loss) before income taxes     (5,449)     11,683     38,928     68,467
Income taxes     (2,782)     4,845     12,055     25,694
Net income (loss) attributable to controlling interest  $   (2,667) $   6,838 $   26,873 $   42,773
         
         
Earnings per Common Share        
Net income (loss) attributable to controlling interest        
        Basic $   (0.12 ) $   0.30 $   1.17 $   1.86
        Diluted $   (0.12 ) $   0.30 $   1.16 $   1.85
         
         
Weighted average common shares outstanding        
        Basic     23,029       23,001     23,023     22,989
        Diluted     23,029       23,145     23,180     23,138
         

 

Astec Industries, Inc.    
Segment Revenues and Profits    
For the three months ended September 30, 2017 and 2016    
(in thousands)    
(unaudited)    
  Infrastructure
Group
Aggregate and
Mining Group
Energy
Group
Corporate Total    
2017 Revenues   98,676      99,474      53,904      -        252,054     
2016 Revenues   109,227      85,819      52,706      -        247,752     
Change $   (10,551)     13,655      1,198      -        4,302     
Change % (9.7%)   15.9%   2.3%     -      1.7%    
               
2017 Gross Profit   1,773      23,838      13,422      51    39,084     
2017 Gross Profit % 1.8%   24.0%   24.9%     -      15.5%    
2016 Gross Profit   24,929      20,935      9,473      52    55,389     
2016 Gross Profit % 22.8%   24.4%   18.0%     -      22.4%    
Change   (23,156)     2,903      3,949      (1)   (16,305)    
               
2017 Profit (Loss)   (12,529)     9,565      4,460      (2,975)   (1,479)    
2016 Profit (Loss)   9,858      7,651      805      (11,610)   6,704     
Change $   (22,387)     1,914      3,655      8,635    (8,183)    
Change % (227.1%)   25.0%   454.0%   74.4% (122.1%)    
               
               
Segment revenues are reported net of intersegment revenues.  Segment gross profit is net of profit on intersegment      
revenues.  A reconciliation of total segment profits (losses) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands):  
               
    Three months ended September 30      
     2017   2016  Change $      
Total profit (loss) for all segments $   (1,479) $   6,704  $   (8,183)      
Recapture (elimination) of intersegment profit     (1,224)     131      (1,355)      
Net loss attributable to non-controlling interest     36      3      33       
Net income (loss) attributable to controlling interest  $   (2,667) $   6,838  $   (9,505)      
               
               
Astec Industries, Inc.    
Segment Revenues and Profits    
For the nine months ended September 30, 2017 and 2016    
(in thousands)    
(unaudited)    
  Infrastructure
Group
Aggregate and
Mining Group
Energy
Group
Corporate Total    
2017 Revenues   407,025      307,205      158,134      -        872,364     
2016 Revenues   414,817      277,393      128,658      -        820,868     
Change $   (7,792)     29,812      29,476      -        51,496     
Change % (1.9%)   10.7%   22.9%     -      6.3%    
               
2017 Gross Profit   66,394      74,652      39,173      160    180,379     
2017 Gross Profit % 16.3%   24.3%   24.8%     -      20.7%    
2016 Gross Profit   101,349      72,224      27,069      155    200,797     
2016 Gross Profit % 24.4%   26.0%   21.0%     -      24.5%    
Change   (34,955)     2,428      12,104      5    (20,418)    
               
2017 Profit (Loss)   15,545      29,360      10,355      (27,666)   27,594     
2016 Profit (Loss)   51,394      28,135      3,237      (40,745)   42,021     
Change $   (35,849)     1,225      7,118      13,079    (14,427)    
Change % (69.8%)   4.4%   219.9%   32.1% (34.3%)    
               
               
Segment revenues are reported net of intersegment revenues.  Segment gross profit is net of profit on intersegment      
revenues.  A reconciliation of total segment profits to the Company's net income attributable to controlling interest is as follows (in thousands):    
               
    Nine months ended September 30      
     2017   2016  Change $      
Total profit for all segments $   27,594  $   42,021  $   (14,427)      
Recapture (elimination) of intersegment profit     (858)     633      (1,491)      
Net loss attributable to non-controlling interest     137      119      18       
Net income attributable to controlling interest  $   26,873  $   42,773  $   (15,900)      
               
               
Astec Industries, Inc.      
Backlog by Segment      
September 30, 2017 and 2016      
(in thousands)      
(unaudited)      
  Infrastructure
Group
Aggregate and
Mining Group
Energy
Group
Total      
2017 Backlog   248,893      74,625      61,936      385,454       
2016 Backlog   286,895      61,409      40,956      389,260       
Change $   (38,002)     13,216      20,980      (3,806)      
Change % (13.2%)   21.5%   51.2%   (1.0%)      


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