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CST: 08/12/2019 12:17:13   

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

138 Days ago

CHATTANOOGA, Tenn., July 23, 2019 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (Nasdaq: 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 30 June 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 Ended Six Months Ended
  June 30 June 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 Group Energy
Group
Corporate Total
2019 Revenues 133,235     106,837     64,730     -   304,802  
2018 Revenues 83,202     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 Profit 42,689     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 %
Change 90,506     (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 Group Energy
Group
Corporate Total
2019 Revenues 288,229     213,368     128,985     -   630,582  
2018 Revenues 230,296     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 Profit 78,196     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 %
Change 92,732     (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 Group Energy
Group
Total  
2019 Backlog 94,855     87,904     63,333     246,092    
2018 Backlog 105,888     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 2019 As Reported (GAAP) Impact of Pellet Plants As Adjusted (Non-GAAP)
Net Sales 304,802   20,000   284,802  
Domestic Sales 246,213   20,000   226,213  
GM 83,450   20,000   63,450  
GM% 27.4 % 100.0 % 22.3 %
Income Tax Expense (1) 7,008   4,731   2,277  
Net Income 23,377   15,269   8,108  
EPS 1.03   0.67   0.36  
       
Year to Date
June 30, 2019
     
Net Sales 630,582   20,000   610,582  
Domestic Sales 509,042   20,000   489,042  
GM 159,976   20,000   139,976  
GM% 25.4 % 100.0 % 22.9 %
Income Tax Expense (1) 10,789   4,731   6,058  
Net Income 37,651   15,269   22,382  
EPS 1.66   0.67   0.99  
       
(1) Tax effect on adjustments is calculated using the applicable jurisdictional blended tax rate
       
       
Second Quarter 2018 As Reported (GAAP) Impact of Pellet Plants As Adjusted (Non-GAAP)
Net Sales 272,528   (74,522 ) 347,050  
Domestic Sales 203,388   (74,522 ) 277,910  
GM 1,108   (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 Sales 597,981   (74,778 ) 672,759  
Domestic Sales 473,464   (74,778 ) 548,242  
GM 79,113   (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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