Astec Industries Inc.
) reported first-quarter 2014 earnings per share of 41 cents, a
28% year-over-year decline from 57 cents in the year-earlier
quarter and also short of the Zacks Consensus Estimate of 57
Total revenue decreased 4% to $238.7 million from $247.8 million
in the year-ago quarter, falling way short of the Zacks Consensus
Estimate of $261 million. An 18% year-over-year increase in
domestic sales to $175.5 million was offset by a 26% decline in
international sales to $63.2 million. Increase in sales in the
Aggregate and Mining Group segment was offset by a decline in the
other two segments - Infrastructure Group and Energy Group.
Cost of sales fell 4% year over year to $181.9 million. Gross
profit was $57 million, down 3% from $59 million in the year-ago
quarter. However, despite lower sales, gross margin expanded 20
basis points (bps) year over year to 23.8% attributed to benefits
from the company's focus on lean manufacturing and cost
Selling, general, administrative and engineering expenses were
$43.4 million in the reported quarter versus $40.4 million in the
year-ago quarter. Income from operations decreased 27% year over
year to $13.3 million. Consequently, operating margin contracted
170 bps year over year to 5.6%.
Revenues in the Infrastructure Group segment declined 9.6% to
$98.8 million from $109.3 million in the year-ago quarter.
Segment profit also fell over 32% to $8.8 million from $12.9
million in the prior-year quarter.
Total revenue for the Aggregate and Mining Group segment went up
2.6% year over year to $93 million. Segment profit was flat at
$9.1 million compared with the prior-year quarter.
The Energy Group segment's total revenue decreased 2% to $46.8
million from $47.7 million in the year-ago quarter. However,
segment profit increased 61% year over year to $1.9 million.
Astec ended the quarter with cash and cash equivalents of $45
million, down from $73 million as of 2013-end. Astec has no debt
on its balance sheet. The company's domestic backlog increased 8%
to $300 million as of Mar 31, 2014 from $276 million as of Dec
31, 2013. The domestic backlog increased 18% year over year to
$197 million while international backlog dipped 6% to $103
million at the quarter end .
Astec continues to invest significantly in increasing its
capacity, manufacturing new products as well as upgrading its
existing products. Introduction of products such as stabilizers,
new models at Roadtec, larger crushers at Telsmith, pump trailers
and vertical drilling rigs will effectively contribute to sales
growth. The revealing of 37 new products at ConExpo, the premier
construction equipment trade show, will also boost sales.
The U.K. parliament has approved a tax credit for utilities to
burn wood pellets as a source of fuel and switch from coal-fired
plants to wood plants. This opens up a sizeable opportunity for
Astec as the company is a supplier of all equipments used in wood
pellet plants. Astec continues to receive new orders in addition
to existing ones for wood pellet plants and these are expected to
be significant contributors to its top line.
Astec's recent acquisition of Omagh, Northern Ireland-based
Telestack will help Astec grow in the infrastructure, mining and
energy industries and also increase its global presence given
that it sells equipment to six continents. The addition of
Telestack will help boost Astec's product portfolio in all of the
above-mentioned industries as well as material handling at
ports across the globe. The acquisition is expected to be
immediately accretive to earnings.
However, Astec continues to witness decline in international
sales due to strong U.S dollar and weakness in certain
markets like Canada and Australia.
Astec currently holds a Zacks Rank #3 (Hold). Some better-ranked
stocks in the sector include
Hyster-Yale Materials Handling, Inc.
Columbus McKinnon Corp.
). While Komatsu holds a Zacks Rank #1 (Strong Buy), Hyster-Yale
Materials Handling and Columbus McKinnon hold a Zacks Rank #2
ASTEC INDS INC (ASTE): Free Stock Analysis
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KOMATSU LTD ADR (KMTUY): Get Free Report
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