We maintain our Neutral recommendation on Astec Industries with a
target price of $44.00. Astec's first-quarter 2013 earnings
declined 28% year over year to $0.41 per share. The reported figure
fell short of the Zacks Consensus Estimate of $0.57. Total revenue
decreased 4% to $238.7 million, way short of the Zacks Consensus
Estimate. Astec continues to witness decline in international sales
due to strong U.S dollar and weakness in certain markets like
Canada and Australia. However, Astec will benefit from new product
offerings, capacity expansion, new products, growth in the wood
pellet business and Telestack acquisition.
Chattanooga, Tenn.-based Astec Industries Inc. (ASTE) is a
leading manufacturer and marketer of road building equipment. The
company sells equipment used in each phase of road building, from
quarrying and crushing the aggregate to applying the asphalt. Also,
the company sells equipment and components unrelated to road
construction, such as trenching, auger boring, directional
drilling, industrial heat transfer equipment, whole-tree pulpwood
chippers, horizontal grinders and blower trucks. In addition to
equipment sales, Astec manufactures and sells replacement parts for
equipment in each of its product lines and replacement parts for
some of its competitors' equipment. Astec has 15 manufacturing
subsidiaries, 14 of which fall under the four reportable segments
The Aggregate and Mining Group (37% of total revenue in
third-quarter 2013) is made up of six business units called
Telesmith, Kolberg-Pioneer, Astec Mobile Screens, Johnson Crushers
International, Breaker Technology and Osborn Engineered Products.
These units manufacture equipment such as jaw, cone, or impact
crushers for aggregate, metallic mining and recycling markets.
The Asphalt Group (22%) is made up of four business units called
Astec Inc., Dillman Equipment Heatec Inc., and CEI Enterprises Inc.
These units manufacture a complete line of asphalt plants, heat
transfer processing equipment and storage tanks for asphalt paving
and other non-related industries.
The Mobile Asphalt Group (17%) is made up of two business units
called Roadtec and Carlson Paving Products. These units manufacture
asphalt pavers, material transfer vehicles, milling machines,
stabilizers and screeds. Also, the Carlson unit manufactures
Windrow pickup machines that transfer hot mix asphalt from the road
bed into the paver's hopper.
The Underground Group (13%) is made up of three business units
Astec Underground, American Augers and GEFCO, Inc. These units
manufacture a complete line of underground construction equipment
and accessories. Astec Underground produces heavy-duty Trencor
trenchers, utility trenchers, vibratory plows and compact
horizontal directional drills. American Augers manufactures large
horizontal, directional drills and auger boring machines and
down-hole tooling to support these units for the underground
The company also has an 'Other category , which includes the
business units that do not meet the requirements of separate
disclosures as an operating segment. The business units in the
Other category consist of Peterson Pacific Corp. and Astec
Australia Pty Ltd. Peterson, acquired in Jul 2007, designs,
manufactures and markets whole-tree pulpwood chippers, horizontal
grinders and blower trucks. Astec Australia was formed to acquire
certain assets of Q-Pave Pty Ltd ("Q-Pave") in Oct 2008. Astec
Australia sells, installs, services and provides parts support for
certain products produced by the company's Asphalt, Mobile Asphalt
Paving and Underground groups. Revenues for this category comprised
the remaining 11% in third-quarter 2013.
Astec Industries, Inc. (ASTE): Read the Full
ASTEC INDS INC (ASTE): Free Stock Analysis
To read this article on Zacks.com click here.