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Astec Industries Reports Third Quarter 2017 Results

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 30Sept 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 EndedNine Months Ended
Sept 30Sept 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
CorporateTotal
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
CorporateTotal
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%)


Source:Astec Industries, Inc.