Astec Rises on Q4 Earnings Beat - Analyst Blog

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Shares of Astec Industries Inc. ( ASTE ) gained over 10% after the company reported solid fourth-quarter 2013 earnings on Feb 25. Earnings improved 50% to 36 cents per share from 24 cents in the year-earlier quarter. Moreover, the reported figure beat the Zacks Consensus Estimate of 31 cents.

The stock price rose to a new 52-week high of $41.47 and closed at $40.81 on Feb 26, exceeding the previous high of $40.37 on Jan 21, 2014.

The year-over-year growth was driven by successful operation of the new wood pellet plant in Georgia and strong performance of the aggregate processing equipment businesses.

Operational Update

Total revenue decreased 2% to $223.9 million from $227.6 million in the year-ago quarter, thereby missing the Zacks Consensus Estimate of $227 million. The year-over-year decline was primarily due to lower demand in the Underground Group.

Domestic sales rose 10% year over year to $142 million. International sales were $81.5 million, down 17% year over year due to decreased sales, primarily in Mexico, Australia, Africa, Asia, India and the Middle East. This was somewhat offset by higher sales in the former-Soviet Union states.

Cost of sales fell 1.6% year over year to $176.5 million. Gross profit was $47 million, down 2% from $48 million in the year-ago quarter. Gross margin contracted 10 basis points (bps) year over year to 21.1%.

Selling, general, administrative and engineering expenses were $36.6 million in the reported quarter against $39.8 million in the year-ago quarter. Income from operations increased 26% year over year to $10.7 million. Consequently, operating margin expanded 100 bps year over year to 4.7%.

Segment Performance

Revenues in the Asphalt Group segment declined 5.8% to $56.2 million from $59.7 million in the year-ago quarter. Segment profit also fell over 10% to $6.9 million from $7.7 million in the prior-year quarter.

Total revenue for the Aggregate and Mining Group segment went up 3.5% year over year to $80 million. Segment profit grew 25% to $6 million from $4.8 million in the prior-year quarter.

Mobile Asphalt Paving Group segment's total revenue increased 16% to $39.9 million from $34 million in the year-ago quarter. However, segment profit fell 19% year over year to $0.8 million.

Underground Group reported total revenue of $14 million, down 33% from $20.9 million in the year-earlier quarter. The segment reported a loss of $0.9 million, compared with the loss of $1 million a year ago.

All Others reported revenues of $33.6 million versus $35.2 million in the year-ago quarter. Segment loss was $5.8 million, narrower than the year-ago quarter loss of $7.5 million.

Financial Position

Astec ended 2013 with cash and cash equivalents of $35.6 million, down from $80.9 million as of 2012-end. Astec has no debt on its balance sheet. The company's domestic backlog increased 28% to $200.5 million as of Dec 31, 2013 from $156.6 million as of Dec 31, 2012. Conversely, the company's international backlog declined 16% to $89.7 million as of Dec 31, 2013 from $107.2 million as of Dec 31, 2012.

Fiscal 2013 Performance

For full-year 2013, Astec reported earnings per share of $1.69, up 15% from $1.48 in 2012. However, the results fell short of the Zacks Consensus Estimate of $1.76.

Revenues for the year 2013 decreased to $933 million from $936 million in 2012. Moreover, the reported figure lagged the Zacks Consensus Estimate of $981 million.

Our Take

Astec will benefit from new product offerings and growth in the oil and gas business. The company continues to expand with a new pellet plant, high tech drill rigs, pump trailers, water heaters and gas processing heaters. In addition, Astec's consistent endeavors to pursue acquisitions will help to expand its product range and gain market share.

However, lack of clarity on the future of highway funding has made customers cautious about spending on major equipment purchases. This will likely affect the company's performance. Moreover, adverse weather conditions, rising competition and the prevalent economic uncertainties remain headwinds, going forward.

Chattanooga, Tennessee-based Astec is a manufacturer of specialized equipment for infrastructural building and restoration.

Astec currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include The Manitowoc Company, Inc. ( MTW ), Joy Global, Inc. ( JOY ) and Komatsu Ltd. ( KMTUY ). While Manitowoc sports a Zacks Rank #1 (Strong Buy), Joy Global and Komatsu carry a Zacks Rank #2 (Buy).



ASTEC INDS INC (ASTE): Free Stock Analysis Report

JOY GLOBAL INC (JOY): Free Stock Analysis Report

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MANITOWOC INC (MTW): 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 , Earnings , Stocks

Referenced Stocks: ASTE , JOY , KMTUY , MTW

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