Astec Industries Reports Third Quarter 2018 Results
CHATTANOOGA, Tenn. (October 23, 2018) – Astec Industries, Inc. (Nasdaq: ASTE) today reported results for its third quarter ended September 30, 2018.
Net sales for the third quarter of 2018 were $256.6 million compared to $252.1 million for the third quarter of 2017, a 1.8% increase. Domestic sales decreased 1.2% to $194.2 million for the third quarter of 2018 from $196.5 million for the third quarter of 2017. International sales increased 12.2% to $62.4 million for the third quarter of 2018 from $55.6 million for the third quarter of 2017.
Net income for the third quarter of 2018 was $7.0 million or $0.30 per diluted share, compared to a loss of $2.7 million or $0.12 per share for the third quarter of 2017.
Net sales for the nine months ending September 30, 2018 were $854.6 million compared to $872.4 million for 2017, a decrease of 2.0%. Domestic sales decreased 2.8% to $667.6 million for the nine months ending September 30, 2018 from $686.9 million for the same period in 2017. International sales increased 0.8% to $187.0 million for the nine months ending September 30, 2018 from $185.5 million for the same period in 2017.
The net loss for the nine months ending September 30, 2018 was $13.4 million or $0.58 per share, compared to earnings of $26.9 million or $1.16 per diluted share for the same period in 2017.
The following financial information for the third quarter and nine months ending September 30, 2018 and 2017 excludes all of the impact of wood pellet plant activity on the Company’s results during those periods:
Net sales for the third quarter of 2018 were $256.6 million compared to $265.5 million for the third quarter of 2017, a 3.4% decrease. Domestic sales decreased 7.5% to $194.2 million for the third quarter of 2018 from $209.9 million for the third quarter of 2017.
Net income for the third quarter of 2018 was $7.0 million or $0.30 per diluted share, compared to net income of $12.1 million or $0.52 per diluted share for the third quarter of 2017, a decrease in earnings per share of 42.3%.
Net sales for the nine months ending September 30, 2018 were $929.4 million compared to $870.0 million for 2017, an increase of 6.8%. Domestic sales increased 8.5% to $742.4 million for the nine months ending September 30, 2018 from $684.5 million for the same period in 2017.
Net income for the nine months ending September 30, 2018 was $53.9 million or $2.33 per diluted share, compared to net income of $44.5 million or $1.93 per diluted share for the same period in 2017, an increase in earnings per share of 20.7%.
Commenting on the quarterly results, Benjamin G. Brock, Chief Executive Officer, stated, “Our earnings per share for the third quarter this year was our best in the last six years. While the earnings were below our own expectation, we were pleased to earn our best reported third quarter result since 2012.”
The Company’s backlog at September 30, 2018 was $308.6 million, a decrease of $77.9 million or 20.2% compared to the September 30, 2017 backlog of $386.5 million. Domestic backlog decreased 28.1% to $223.2 million at September 30, 2018 from $310.4 million at September 30, 2017. The international backlog at September 30, 2018 was $85.4 million compared to $76.0 million at September 30, 2017, an increase of 12.4%. Excluding wood pellet plant backlogs, the Company’s September 30, 2018 backlog decreased $2.3 million or 0.7% compared to September 30, 2017. Prior year backlogs have been recast to include the backlog of RexCon, Inc., acquired during the fourth quarter of 2017.
Commenting on the backlog at quarter end, Mr. Brock stated, “Our backlog, disregarding pellets, was flat year over year, reflecting continued stability in the industries we serve. As anticipated, our customers remained focused on work during the quarter which led to a slower order intake as the normal buying season started. Order activity since September 30 has been strong, especially for our products targeted at our infrastructure customers. Our backlog and recent order intake has us optimistic on our outlook for the fourth quarter and the first half of 2019.”
Mr. Brock continued, “Regarding capital allocation, as previously announced, we began our stock repurchase program. During the quarter, we repurchased approximately 297,000 shares of our common stock for an aggregate purchase price of approximately $14 million. We believe our stock price is undervalued and that buying our stock back is a good investment and creates value for our shareholders.”
Continuing on the outlook for 2019, Mr. Brock commented, “As previously announced, we have engaged Maine Pointe to help us analyze opportunities to improve our Company. Specifically, we analyzed opportunities to improve strategic sourcing and inventory management. At the completion of Phase One of the engagement, it was obvious we had opportunities for improvement. We started Phase Two with Maine Pointe during the quarter. We anticipate the savings through strategic sourcing improvement will add approximately 2% to our gross margin in 2019 and generate a one-time cash release of approximately $25 million as a result of better inventory management. In addition to the Maine Pointe effort, we are analyzing all areas of our business for opportunities of operational improvement.”
Consolidated financial information for the third quarter and nine months ended September 30, 2018 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, October 23, 2018, 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. 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 November 6, 2018 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Replay ID #37816. 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) product demand and pricing pressure, (ii) the effect of its strategic sourcing project (iii) efforts to adjust manufacturing capacity, 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:
David C. Silvious
Vice President and Chief Financial Officer
Phone: (423) 899-5898
Fax: (423) 899-4456
Stephen C. Anderson
Vice President, Director of Investor Relations & Corporate Secretary
Phone: (423) 899-5898
Fax: (423) 899-4456