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

July, 23 2019 07:00 AM Astec Industries Inc.

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

David C. Silvious
Vice President and Chief Financial Officer
Phone: (423) 899-5898
Fax: (423) 899-4456
E-mail: dsilvious@astecindustries.com

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

Company Name:	Astec Industries Inc.
Stock Symbol:	ASTE
Market:	NASDAQ
Website:	astecindustries.com

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