ASTE - Astec Industries Reports Third Quarter 2019 Results

October, 29 2019 07:00 AM Astec Industries Inc.

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

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

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