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Astec Industries Reports Third Quarter 2014 Results

CHATTANOOGA, Tenn., Oct. 21, 2014 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (Nasdaq:ASTE) today reported results for their third quarter ended September 30, 2014. Net sales for the third quarter of 2014 were $220.2 million compared to $213.2million for the third quarter of 2013, a 3% increase. Earnings for the third quarter of 2014 were $1.9 million or $0.08 per diluted share compared to $6.5 million or $0.28 per diluted share in the third quarter of 2013, a decrease of 71%.

Domestic sales increased 8% to $142.6 million for the third quarter of 2014 compared to $132.4 million for the third quarter of 2013. International sales decreased 4% to $77.6 million for the third quarter of 2014 compared to $80.8 million for the third quarter of 2013.

Net sales for the first nine months of 2014 were $736.1 million compared to $709.1million for the first nine months of 2013, a 4% increase. Earnings for the first nine months of 2014 were $26.0 million or $1.12 per diluted share compared to $30.8 million or $1.33 per diluted share in the first nine months of 2013, a 16% decrease.

Domestic sales increased 10% to $502.7 million for the first nine months of 2014 compared to $456.6 million for the first nine months of 2013. International sales were $233.4 million for the first nine months of 2014 compared to $252.5 million for the first nine months of 2013, an 8% decrease.

The Company's gross profit for the third quarter of 2014 was $43.3 million or 19.7% compared to $45.8 million or 21.5% for the third quarter of 2013, a decrease of $2.5 million or 180 basis points. The decrease in gross profit is attributable to the Infrastructure Group with the Aggregate and Mining Group and the Energy Group meeting or exceeding third quarter of 2013 gross profit levels. The Infrastructure Group's gross profit was negatively impacted by a reduction in sales volume combined with pricing pressures in the infrastructure market.

The Company's effective income tax rate increased from 34.6% for the third quarter of 2013 to 64.0% for the third quarter of 2014. The effective tax rate for the first nine months of 2014 was 37.9% compared to 33.4% for the first nine months of 2013. This increase was due to net operating losses in certain foreign jurisdictions that could not be utilized to offset taxable income in the United States, adjustments to the Company's tax reserves and the continued delay in passage of a research and development credit in 2014.

The Company's domestic backlog increased 42%, from $132.9 million at September 30, 2013 to $189.3 million at September 30, 2014. The international backlog at September 30, 2014 was $105.7 million compared to $98.1 million at September 30, 2013 for an increase of 8%. Total backlog increased 28% to $295.0 million at September 30, 2014 from $231.0 million at September 30, 2013.

Consolidated financial information for the quarter and nine months ended September 30, 2014 and additional information related to segment revenues and profits are attached as addenda to this press release.

Commenting on the announcement of quarterly results, Benjamin G. Brock, President and Chief Executive Officer, stated, "We are disappointed in our net income for the third quarter. Our Energy and our Aggregate and Mining Groups performed okay while our Infrastructure Group lagged due primarily to the lack of a federal highway bill, pricing pressure as a result, and product mix. As we've previously reported, we are still unable to recognize the revenue associated with our new $60 million pellet plant. This lack of recognition continues to hamper the Infrastructure Group's 2014 operating results. A 64% tax rate for the quarter was another challenge to our earnings in the quarter."

Mr. Brock continued, "Despite our third quarter results, we are encouraged about our overall business prospects for the remainder of the year and 2015. Our backlog is up 28% versus last year with increases in both domestic and international markets. Also, our higher margin parts sales have recovered and are ahead of last year's pace. These developments, along with our focus on lean initiatives, lead us to feel optimistic about both sales growth and margin improvement."

Investor Conference Call and Web Simulcast

Astec will conduct a conference call on October 21, 2014, at 10:00 A.M. Eastern Time to review its September 30, 2014 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 4, 2014 by dialing (877) 660-6853, or (201) 612-7415 for international callers, Account #286, Conference ID# 13593054. 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. 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 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 its backlog, anticipated tax rates/credits, equipment and parts sales, federal infrastructure spending and pricing pressures. 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, rising oil and liquid asphalt prices, rising steel prices, the effect of any future federal stimulus package, 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, 2013.

Astec Industries, Inc.
Consolidated Balance Sheets
(in thousands)
(unaudited)
Sept 30 Sept 30
2014 2013
Assets
Current assets
Cash and cash equivalents $ 13,820 $ 46,342
Investments 1,903 16,342
Receivables, net 108,844 97,347
Inventories 370,436 339,826
Prepaid expenses and other 36,629 21,701
Total current assets 531,632 521,558
Property and equipment, net 190,395 186,546
Other assets 66,554 41,959
Total assets $ 788,581 $ 750,063
Liabilities and equity
Current liabilities
Accounts payable - trade $ 53,034 $ 48,492
Other current liabilities 97,059 95,083
Total current liabilities 150,093 143,575
Non-current liabilities 40,139 32,903
Total equity 598,349 573,585
Total liabilities and equity $ 788,581 $ 750,063
Astec Industries, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
Sept 30 Sept 30
2014 2013 2014 2013
Net sales $ 220,157 $ 213,177 $ 736,086 $ 709,136
Cost of sales 176,896 167,390 573,890 549,341
Gross profit 43,261 45,787 162,196 159,795
Selling, general, administrative & engineering expenses 38,867 36,635 122,539 114,797
Income from operations 4,394 9,152 39,657 44,998
Interest expense 193 269 375 417
Other 860 1,087 2,410 1,731
Income before income taxes 5,061 9,970 41,692 46,312
Income taxes 3,145 3,456 15,734 15,536
Net income attributable to controlling interest $ 1,916 $ 6,514 $ 25,958 $ 30,776
Earnings per Common Share
Net income attributable to controlling interest
Basic $ 0.08 $ 0.29 $ 1.14 $ 1.35
Diluted $ 0.08 $ 0.28 $ 1.12 $ 1.33
Weighted average common shares outstanding
Basic 22,830 22,756 22,813 22,744
Diluted 23,109 23,082 23,103 23,077
Astec Industries, Inc.
Segment Revenues and Profits
For the three months ended September 30, 2014 and 2013
(in thousands)
(unaudited)
Infrastructure
Group
Aggregate
and Mining Group
Energy
Group
Corporate Total
2014 Revenues 78,698 88,177 53,282 -- 220,157
2013 Revenues 83,319 79,792 50,066 -- 213,177
Change $ (4,621) 8,385 3,216 -- 6,980
Change % (5.5%) 10.5% 6.4% -- 3.3%
2014 Gross Profit 11,367 21,604 10,277 13 43,261
2014 Gross Profit % 14.4% 24.5% 19.3% -- 19.7%
2013 Gross Profit 18,552 19,584 7,667 (16) 45,787
2013 Gross Profit % 22.3% 24.5% 15.3% -- 21.5%
Change (7,185) 2,020 2,610 29 (2,526)
2014 Profit (Loss) 520 6,806 2,789 (7,137) 2,978
2013 Profit (Loss) 5,919 6,765 456 (5,935) 7,205
Change $ (5,399) 41 2,333 (1,202) (4,227)
Change % (91.2%) 0.6% 511.6% (20.3%) (58.7%)
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):
Three months ended September 30
2014 2013 Change $
Total profit for all segments $ 2,978 $ 7,205 $ (4,227)
Elimination of intersegment profit (1,212) (678) (534)
Net (income) loss attributable to non-controlling interest 150 (13) 163
Net income attributable to controlling interest $ 1,916 $ 6,514 $ (4,598)
Astec Industries, Inc.
Segment Revenues and Profits
For the nine months ended September 30, 2014 and 2013
(in thousands)
(unaudited)
Infrastructure
Group
Aggregate
and Mining Group
Energy
Group
Corporate Total
2014 Revenues 296,074 287,976 152,036 -- 736,086
2013 Revenues 296,393 270,438 142,305 -- 709,136
Change $ (319) 17,538 9,731 -- 26,950
Change % (0.1%) 6.5% 6.8% -- 3.8%
2014 Gross Profit 59,135 70,722 32,309 30 162,196
2014 Gross Profit % 20.0% 24.6% 21.3% -- 22.0%
2013 Gross Profit 64,752 68,239 26,821 (17) 159,795
2013 Gross Profit % 21.8% 25.2% 18.8% -- 22.5%
Change (5,617) 2,483 5,488 47 2,401
2014 Profit (Loss) 21,124 27,065 7,659 (27,578) 28,270
2013 Profit (Loss) 24,900 26,963 3,882 (23,387) 32,358
Change $ (3,776) 102 3,777 (4,191) (4,088)
Change % (15.2%) 0.4% 97.3% (17.9%) (12.6%)
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
2014 2013 Change $
Total profit for all segments $ 28,270 $ 32,358 $ (4,088)
Elimination of intersegment profit (2,468) (1,428) (1,040)
Net (income) loss attributable to non-controlling interest 156 (154) 310
Net income attributable to controlling interest $ 25,958 $ 30,776 $ (4,818)
Astec Industries, Inc.
Backlog by Segment
September 30, 2014 and 2013
(in thousands)
(Unaudited)
Infrastructure
Group
Aggregate
and Mining Group
Energy
Group
Total
2014 Backlog 135,895 80,978 78,156 295,029
2013 Backlog 114,137 72,000 44,815 230,952
Change $ 21,758 8,978 33,341 64,077
Change % 19.1% 12.5% 74.4% 27.7%

CONTACT: For Additional Information Contact: Benjamin G. Brock President & 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.comSource:Astec Industries, Inc.