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CST: 19/11/2019 08:52:17   

Astec Industries Reports Third Quarter 2019 Results

21 Days ago

Highlights:

  • Net sales of $255.8M consistent with Q3 2018
  • Gross margin decreased 240 bps to 20.3%, due to softer market conditions
  • Q3 EPS $0.13; $0.17 as adjusted compares to $0.30 a year ago
  • Introduced aligned strategy for profitable growth – Simplify, Focus and Grow

CHATTANOOGA, Tenn., Oct. 29, 2019 (GLOBE NEWSWIRE) -- Astec Industries, Inc. (Nasdaq: ASTE) today reported results for its third quarter ended September 30, 2019.

Net sales were relatively flat at $255.8 million compared to $256.6 million for the third quarter of 2018. Domestic sales decreased 2.3% to $189.8 million from $194.2 million a year ago while international sales increased 5.7% to $66.0 million from $62.4 million in the third quarter of 2018.

Net income attributable to controlling interest was $3.0 million or $0.13 per diluted share, compared to net income attributable to controlling interest of $7.0 million or $0.30 per diluted share for the third quarter of 2018, a decrease of 57.0%.

Commenting on the quarterly results, Barry Ruffalo, Chief Executive Officer, stated, “Our results for the quarter highlight our ability to navigate effectively through a challenging environment.  Despite margin compression due to softer market conditions, I am confident we are taking the steps necessary to align production with demand and position ourselves for profitable growth over the long-term. I had the opportunity to meet with our regional leaders, facilities managers, and many of our employees and customers around the world during the quarter, and am excited about the opportunities that lie ahead of us.  While we are still in the process of developing the details of our strategic path forward, I am excited to introduce the pillars of our aligned strategy for profitable growth – Simplify, Focus and Grow.  I look forward to sharing further details of our new strategy in subsequent communications.”

Backlog as of September 30, 2019 was $243.9 million, a decrease of $64.7 million or 21.0% compared to the September 30, 2018 backlog of $308.6 million.  Domestic backlog decreased 29.2% to $158.0 million at September 30, 2019 from $223.2 million at September 30, 2018. International backlog at September 30, 2019 remained relatively flat at $85.8 million compared to $85.4 million at September 30, 2018. 

Commenting on backlog at quarter end, Mr. Ruffalo continued, “We are actively aligning the business to meet the current demand.  The implementation of our Sales and Operations Planning process will help us navigate changing markets and our international strategy will expand our opportunities to accelerate revenue growth.”

Consolidated financial information for the third quarter and nine months ended September 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 and live webcast today, October 29, 2019, at 10:00 A.M. Eastern Time, to review its third quarter and nine-month results as well as current business conditions. The number to call for this interactive teleconference is (877) 407-9210 (at least 10 minutes prior to the scheduled time for the call). International callers should dial (201) 689-8049.  You may also access a live webcast of the call by visiting https://www.investornetwork.com/event/presentation/54354.  You will need to give your name and company affiliation and reference Astec Industries.  An archived webcast will be available for ninety days at www.astecindustries.com.

A replay of the conference call will be available through November 11, 2019 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Conference ID #54354. 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., (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) market conditions, (ii) efforts to align production with demand, (iii) implementing a Sales and Operations Planning process, 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:

Steve 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)    
     
  September 30 September 30    
    2019     2018      
Assets        
Current assets        
Cash and cash equivalents $ 26,289   $ 25,674      
Investments   1,103     2,432      
Receivables, net   114,073     127,523      
Inventories   356,889     429,220      
Prepaid expenses and other   31,530     39,513      
Total current assets   529,884     624,362      
Property and equipment, net   190,545     187,903      
Other assets   95,240     91,199      
Total assets $ 815,669   $ 903,464      
Liabilities and equity        
Current liabilities        
Accounts payable - trade $ 59,886   $ 74,419      
Other current liabilities   113,195     132,534      
Total current liabilities   173,081     206,953      
Long-term debt, less current maturities   717     26,506      
Non-current liabilities   24,287     23,731      
Total equity   617,584     646,274      
Total liabilities and equity $ 815,669   $ 903,464      
         
 
Astec Industries, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
     
  Three Months Ended Nine Months Ended
  September 30 September 30
    2019     2018     2019     2018  
Net sales $ 255,807   $ 256,613   $ 886,389   $ 854,595  
Cost of sales   203,947     198,329     674,362     717,197  
Gross profit   51,860     58,284     212,027     137,398  
Selling, general, administrative & engineering expenses   47,643     51,054     158,594     154,396  
Restructuring charges   875     -     1,431     -  
Income (loss) from operations   3,342     7,230     52,002     (16,998 )
Interest expense   (167 )   (170 )   (1,299 )   (488 )
Other   467     115     1,379     1,774  
Income (loss) before income taxes   3,642     7,175     52,082     (15,712 )
Income tax expense (benefit)   632     180     11,420     (2,301 )
Net income (loss) attributable to controlling interest $ 3,010   $ 6,995   $ 40,662   $ (13,411 )
         
         
Earnings (loss) per Common Share        
Net income (loss) attributable to controlling interest        
  Basic $ 0.13   $ 0.31   $ 1.81   $ (0.58 )
  Diluted $ 0.13   $ 0.30   $ 1.79   $ (0.58 )
         
         
Weighted average common shares outstanding        
  Basic   22,523     22,923     22,510     23,009  
  Diluted   22,685     23,084     22,666     23,009  
         


Astec Industries, Inc.    
Segment Revenues and Profit (Loss)    
For the three months ended September 30, 2019 and 2018    
(in thousands)    
(unaudited)    
  Infrastructure Group Aggregate and Mining Group Energy Group Corporate Total    
2019 Revenues 88,219     99,617     67,971     -   255,807      
2018 Revenues 87,063     101,735     67,815     -   256,613      
Change $ 1,156     (2,118 )   156     -   (806 )    
Change % 1.3%     (2.1% )   0.2%     -   (0.3% )    
               
2019 Gross Profit 15,406     20,837     15,541     76   51,860      
2019 Gross Profit % 17.5%     20.9%     22.9%     -   20.3%      
2018 Gross Profit 18,642     24,294     15,282     66   58,284      
2018 Gross Profit % 21.4%     23.9%     22.5%     -   22.7%      
Change (3,236 )   (3,457 )   259     10   (6,424 )    
               
2019 Profit (Loss) (419 )   5,803     5,093     (7,732 ) 2,745      
2018 Profit (Loss) 4,761     9,011     3,318     (9,778 ) 7,312      
Change $ (5,180 )   (3,208 )   1,775     2,046   (4,567 )    
Change % (108.8% )   (35.6% )   53.5%     20.9%   (62.5% )    
               
               
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 September 30      
      2019     2018   Change $      
Total profit for all segments $ 2,745   $ 7,312   $ (4,567 )      
Recapture (elimination) of intersegment profit   211     (410 )   621        
Net loss attributable to non-controlling interest   54     93     (39 )      
Net income attributable to controlling interest $ 3,010   $ 6,995   $ (3,985 )      
               
               
Astec Industries, Inc.    
Segment Revenues and Profit (Loss)    
For the nine months ended September 30, 2019 and 2018    
(in thousands)    
(unaudited)    
  Infrastructure Group Aggregate and Mining Group Energy Group Corporate Total    
2019 Revenues 376,448     312,985     196,956     -   886,389      
2018 Revenues 317,359     337,100     200,136     -   854,595      
Change $ 59,089     (24,115 )   (3,180 )   -   31,794      
Change % 18.6%     (7.2% )   (1.6% )   -   3.7%      
               
2019 Gross Profit 93,792     71,876     46,207     152   212,027      
2019 Gross Profit % 24.9%     23.0%     23.5%     -   23.9%      
2018 Gross Profit 4,105     82,625     50,376     292   137,398      
2018 Gross Profit % 1.3%     24.5%     25.2%     -   16.1%      
Change 89,687     (10,749 )   (4,169 )   (140 ) 74,629      
               
2019 Profit (Loss) 39,264     22,969     11,625     (34,422 ) 39,436      
2018 Profit (Loss) (43,121 )   34,669     16,406     (20,428 ) (12,474 )    
Change $ 82,385     (11,700 )   (4,781 )   (13,994 ) 51,910      
Change % 191.1%     (33.7% )   (29.1% )   (68.5% ) 416.1%      
               
               
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):  
               
    Nine months ended September 30      
      2019     2018   Change $      
Total profit (loss) for all segments $ 39,436   $ (12,474 ) $ 51,910        
Recapture (elimination) of intersegment profit   1,099     (1,174 )   2,273        
Net loss attributable to non-controlling interest   127     237     (110 )      
Net income (loss) attributable to controlling interest   $ 40,662   $ (13,411 ) $ 54,073        
               
               
Astec Industries, Inc.    
Backlog by Segment    
September 30, 2019 and 2018    
(in thousands)    
(unaudited)    
  Infrastructure Group Aggregate and Mining Group Energy Group Total      
2019 Backlog 114,980     76,129     52,779     243,888        
2018 Backlog 130,257     103,790     74,535     308,582        
Change $ (15,277 )   (27,661 )   (21,756 )   (64,694 )      
Change % (11.7% )   (26.7% )   (29.2% )   (21.0% )      
               

 

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.

Q3 2019 As Reported (GAAP) Sale of Pellet Plant (1) Restructuring Charges As Adjusted  (Non-GAAP)
Net Sales 255,807   - -   255,807
Domestic Sales 189,783   - -   189,783
GM 51,860   - -   51,860
GM% 20.3 %   - -   20.3 %
Op Income (Loss) 3,342   - (875 ) 4,217
Income Tax Expense (Benefit) (2) 632   - (132 ) 764
Net (Loss) Income 3,010   - (743 ) 3,753
EPS 0.13   - (0.04 ) 0.17
EBITDA 9,869   - (875 ) 10,744
         
Q3 YTD 2019        
Net Sales 886,389   20,000 -   866,389
Domestic Sales 698,825   20,000 -   678,825
GM 212,027   20,000 -   192,027
GM% 23.9 %   - -   22.2 %
Op Income (Loss) 52,002   20,000 (1,431 ) 33,433
Income Tax Expense (Benefit)  (2) 11,421   4,731 (132 ) 6,822
Net Income (Loss) 40,662   15,269 (1,299 ) 26,692
EPS 1.79   0.67 (0.06 ) 1.18
EBITDA 71,936   20,000 (1,431 ) 53,367

(1) Georgia pellet plant written down to zero value at 12/31/18 was ultimately sold in 2019

(2) Tax effect on adjustments is calculated using the applicable jurisdictional blended tax rate

Q3 2018 As Reported (GAAP) Pellet Plant Activity Restructuring Charges As Adjusted  (Non-GAAP)
Net Sales 256,613   -   - 256,613
Domestic Sales 194,166   -   - 194,166
GM 58,284   -   - 58,284
GM% 22.7 %   -   - 22.7 %
Op Income 7,230   -   - 7,230
Income Tax Expense (Benefit) (1) 180   -   - 180
Net  Income 6,995   -   - 6,995
EPS 0.30   -   - 0.30
EBITDA 13,918   -   - 13,918
         
Q3 YTD 2018        
Net Sales 854,595   (74,778 ) - 929,373
Domestic Sales 667,630   (74,778 ) - 742,408
GM 137,398   (83,611 ) - 221,009
GM% 16.1 %   (111.8% ) - 23.8 %
Op Income (Loss) (16,998 ) (83,611 ) - 66,613
Income Tax (Benefit) Expense (1) (2,301 ) (17,605 ) - 15,304
Net (Loss) Income (13,411 ) (66,735 ) - 53,324
EPS (0.58 ) (2.88 ) - 2.30
EBITDA 4,705   (83,611 ) - 88,316
         
   

 (1) Tax effect on adjustments is calculated using the applicable jurisdictional blended tax rate

 

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