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Astec Industries Reports Third Quarter 2019 Results
Globe Newswire 29-Oct-2019 7:00 AM
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
