Astec Falls Short of Estimates - Analyst Blog

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Astec Industries Inc . ( ASTE ) has reported first quarter results, delivering an EPS of 53 cents versus 44 cents in the year-earlier quarter, a 20% increase but falling short of the Zacks Consensus Estimate of 61 cents.

Total revenue increased 16% to $266.6 million from $230.2 million in the year-ago quarter. Total revenue missed the Zacks Consensus Estimate of $273 million.

Domestic sales of the company amounted to $161.4 million in the quarter compared with $147.5 million in the year-earlier quarter. International sales increased 27% to $105.2 million from $82.7 million in the year-ago quarter.

Costs and Margins

Cost of sales increased 17% to $206 million in the quarter from $175 million in the prior-year quarter. Gross profit increased 11% to $60.6 million from $54.7 million in the year-ago quarter. However, gross margins decreased 110 basis points year over year to 22.7% in the quarter.

Selling, general, administrative & engineering expenses rose to $41.9 million in the reported quarter from $39.5 million in the year-earlier quarter. Income from operations increased 23% to $18.7 million from $15.2 million in the year-ago quarter. Consequently, operating margins increased 40 basis points year over year to 7%.

Segment Performance

Total revenue in the Asphalt Group segment amounted to $68.7 million, down from $73.7 million in the year-ago quarter. Gross profit decreased to $16.4 million from $19.2 million in the prior-year quarter.

Net sales of Aggregate and Mining Group segment were $91.3 million in the quarter, up from $78.8 million in the previous-year quarter. Gross profit also increased to $23.7 million in the quarter from $18.7 million in the prior-year quarter.

Mobile Asphalt Paving Group segment reported total revenue of $42 million versus $50 million in the year-ago quarter. Gross profit during the quarter dropped to $10.6 million from $13.4 million in the year-earlier quarter.

Underground Group reported net sales of $36.7 million versus $11.7 million in the year-over-year quarter. Gross profit increased to $5.1 million from $0.12 million in the previous-year quarter.

All Others segment reported total revenue of $27.9 million, improving from $16 million in the year-earlier quarter. Gross profit increased to $4.8 million from $3.2 million in the year-ago quarter.

Financial Position         

As of March 31, 2012, cash and cash equivalents amounted to $41.6 million, a decline from $57.5 million as of December 31, 2011 and $80.2 million as of March 31, 2011. The company has a zero debt balance sheet. Astec's backlog increased to $285.6 million at the end of first quarter of 2012 from $264.7 million at the end of first quarter of 2011.

Our Take

The acquisitions of GEFCO and STECO will help Astec to focus on higher growth industries. Astec will continue to seek acquisition opportunities and focus its attention to improve its gross margins and refining its manufacturing processes on new products.

A large number of Astec's customers depend substantially on government funding for highway construction and maintenance, along with other infrastructure projects. With no progress in the reauthorization of the Highway Bill, the outlook for domestic sales looks bleak.

The company currently has a Zacks #3 Rank (short-term Hold recommendation) on its stock.

Chattanooga, Tennessee-based Astec Industries is a leading manufacturer and marketer of road building equipment. The company sells equipment used in all phases of road building, from quarrying and crushing the aggregate to applying the asphalt. The company also sells equipment and components unrelated to road construction.

Operating through four segments like Aggregate and Mining Group, Asphalt Group, Mobile Asphalt Group and Underground Group., Astec competes with Caterpillar Inc. ( CAT ), Gencor Industries Inc. ( GENC ) and privately held CMI Terex Corporation.


 
ASTEC INDS INC ( ASTE ): Free Stock Analysis Report
 
CATERPILLAR INC ( CAT ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ASTE , CAT

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