Astec Industries, Inc. (ASTE)

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Astec Industries, Inc. (ASTE)

Q3 2008 Earnings Call

October 21, 2008 10:00 am ET


Stephen Anderson - Director of Investor Relations

J. Don Brock - Chairman and Chief Executive Officer

McKamy Hall - Vice President and Chief Financial Officer


Arnie Ursaner - CJS Securities

Mike Cox - Piper Jaffray

Jack Kasprzak - BB&T

Rich Wesolowski - Sidoti & Company

Chris Weltzer - Robert Baird

[David Foundry - Partline Funds]



Greetings, ladies and gentlemen and welcome to the Astec Industries’ Third Quarter 2008 Results. At this time all participants are in a listen-only mode, a brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Steve Anderson, Director of Investor Relations for Astec Industries. Thank you Mr. Anderson, you may begin.

Stephen Anderson - Director of Investor Relations

Thank you, Rob. Good morning and welcome to the Astec Industries conference call for the third quarter of 2008. As Rob mentioned, my name is Steve Anderson and I am the Corporate Secretary and Director of Investor Relations for the company. Also on today’s call are Dr. J. Don Brock, our Chairman and Chief Executive Officer, and McKamy Hall, Vice President and Chief Financial Officer.

In just a moment I will turn the call over to McKamy to summarize our financial results and then to Don to discuss our business environment and business operations.

In the way of disclosures I’ll note this morning, that our discussion may contain forward-looking statements that relate to the future performance of the company. And these statements are intended to qualify for the Safe Harbor liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions, and other factors, some of which are beyond the company’s control. Some of those factors that could influence our results are highlighted in today’s financial news release and others are contained in our Annual Report and our quarterly and annual filings with the SEC. As usual, we urge you to familiarize yourself with those factors.

At this point, I’ll turn the call over to McKamy to summarize our financial results.

McKamy Hall - Vice President and Chief Financial Officer

Thanks, Steve. We appreciate each of you joining us this morning. The company generated a 37.9% improvement in net income and we look forward to starting the fourth quarter (technical difficulty) of 255.7 million, net sales for the quarter were 237.4 million for an increase of 15.1%, international sales increased 37% and were 43% of the third quarter sales, increases internationally came in the Middle East, Central America, Asia, South America Africa, Europe and Canada.

Domestic sales were up 2.7% for the quarter, parts sales were at 49.2 million or an 11.6% increase and composed 23.1% of the quarterly sales in 2008.

The breakdown of our sales as far as looking at the pie concept is concerned, Aggregate sales were 38%, asphalt sales are at 23.9% of the pie, Underground is at 17% of the pie and Mobile is 11.8% of the pie with other at 9.3% and those breakdowns are attached to your press release for your convenience.

The consolidated gross profit for the quarter was at 58.8 million up from 48.6 million, a 10.2 million increase or 21.1%. The gross profit percentage increased to 130 basis points for the quarter to 24.8% from 23.5%. And, we are certainly very pleased to accomplish this with all of the cost increases that we have incurred over this year.

SG&A and engineering was at 34.3 million or 14.4% versus 15.5% of sales last year. Income from operations was at 24.5 million versus 16.6 million that’s an increase of 7.9 million over the prior year. Income by segment is also attached to your press release for your convenience.

The net income is at 16 million that is versus 11.6 million for the quarter last year, that’s an increase of 37.9%. The diluted earnings per share are at $0.71 per share versus $0.51 per share or an increase of 39.2% increase in the earnings per share. The backlog which is also attached to our release for your convenience is at 255.7 million or up 6.6% and that backlog is broken down for your reference by segment.

The balance sheet is very strong our receivables are at 36.4 days versus 37.4 last year. Our inventory returns are at 3.2 turns versus 3.5 turns last year. We currently owe nothing on our Wachovia credit facility of $100 million. We are utilizing that for $10.1 million of letters of credit.

Our capital expenditures for the quarter are at 5.4 million, we expect those to approach 42 million for the year. Our depreciation for the quarter is 4.4 million and our depreciation for the year to be around 18.5 million. The cash flow will be attached to the 10-Q filing and we will discuss 2009 expectations during our upcoming year-end conference call.

That concludes my prepared remarks on the financials. Now certainly, I’ll be glad to answer any questions you have later. Thank you and we appreciate your interest in Astec.

Stephen Anderson - Director of Investor Relations

Thank you, McKamy. Dr. Don Brock will now discuss Astec’s business operations for the third quarter of 2008. Don?

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