Astec Industries Inc. (ASTE)
Q4 2008 Earnings Call
February 24, 2009; 10:00 am ET
Dr. J. Don Brock - Chairman & Chief Executive Officer
McKamy Hall - Chief Financial Officer
Steve Anderson - Director of Investor Relations
Arnie Ursaner - CJS Securities
Rich Wesolowski - Sidoti & Co.
Adam Thalhimer - BB&T Capital Markets
Robert McCarthy - Robert W. Baird
Eric Prouty - Canaccord Adams
Steven Pedian - SAP Capital Management
Previous Statements by ASTE
» Astec Industries, Inc. Q3 2009 Earnings Call Transcript
» Astec Industries, Inc. Q3 2008 Earnings Call Transcript
» Astec Industries Inc. Q2 2008 Earnings Call Transcript
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.
Thank you, Melissa. Good morning and welcome to the Astec Industries conference call for the fourth quarter and fiscal year ended December 31, 2008. My name is Steve Anderson as Melissa mentioned, and I’m 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, our Chief Financial Officer. In just a moment I’ll turn the call over to McKamy to summarize our financial results and then to Don to review our business activity in 2008 and also to provide some comments on 2009.
In the way of disclosures this morning I’ll note, that our comments 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 and assumptions.
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 ask you to familiarize yourself with those factors.
At this point I’ll turn the call over to McKamy to summarize our financial results for the fourth quarter and for the year of 2008.
Thanks Steve. Good morning. We appreciate you joining us. The net sales for the quarter were $195 million versus $221 million in Q4 2007, for a decrease of 12%. The international sales were $65 million in the Q4 2008 quarter versus $85 million in Q4 2007, for a decrease of 24% or $20 million.
Our international sales were 33% of Q4 2008 sales, compared to 38% of Q4 2007 sales. The international sales increased in the Aggregate and Mining Group in the quarter with a 26% increase. Our domestic sales for Q4 2008 were $130 million or 67% of total sales versus $136 million or 62% of total sales for Q4 2007, for a 4% decrease in sales dollars.
Parts sales for ‘08 versus ‘07 for the quarter were $47 million versus $49 million or a 4% decrease. Part sales were 23% of the quarterly sales in 2008 versus 22% in 2007. The Underground segment was the only segment with an increase of parts sales in the quarter. We did have decreases in revenues in all segments, except the Asphalt which was flat for the quarter and that information was attached to your press release by segment.
For the year, sales were at $974 million versus $869 million for an increase of 12% or $105 million. International sales were $353 million for the year versus $278 million for 2007, for an increase of 27% or $75 million. These increases occurred mainly in Asia, Canada, Africa and South America and international sales for the year were 36% of our total sales compared to 32% for 2007.
Domestic sales for 2008 were $621 million versus $591 million for 2007. Domestic sales were 64% of our total sales versus 68% of our total sales in 2007. Parts sales for 2008 were $203 million versus $186 million for an increase of 9% and Parts sales provided 21% of our sales.
In the gross margin area or gross profit area, our gross profit for the quarter was $43 million versus 2007 of $48 million, a decrease of $5 million or 10%. The gross profit percentage remained flat for the quarter.
Looking at the year-to-date gross profit, 2008 was $234 million versus $210 million or a 11% increase or $24 million. For 2008 it was 24%, for 2007 24.1%, basically flat. I think, in light of all the conditions and everything that we went through during this year to achieve that 24%, was quite a miracle.
On the SG&A, in the fourth quarter it was $35 million or 18% versus 2007, $30 million or 14%. In the fourth quarter, the sales did drop off quite unexpectedly and in that quarter, just some of the highlights of the SG&A increase.
We had an increase in our general product liability insurance. This is the result of an actuarial calculation that was provided for our self-insured insurance company, and that was a twofold switch. It was an increase from the product liability side but a decrease from the workers comp side. The workers comp portion of it, because most of it does relate to gross margin, had a positive impact on the gross margin, a negative impact on the product liability, which is in the SG&A part.
Also we have discussed on previous conversations how we have to book surp expense related to the price of our stock. In 2007 there was a $20 swing in the price of the stock downward and at the end of 2008 stock price was up $0.50, so on the P&L it created a $1.8 million of surp expense. That was a non-cash expense. We had about $0.5 million increase in health insurance. We also had about almost $1 million related to the Astec Australian Dillman acquisitions. Other than that, the primary factors were commissions, salaries and fringe benefits.