ASTE

Astec Industries, Inc. (ASTE)

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Astec Industries (ASTE)

Q1 2013 Earnings Call

April 23, 2013 10:00 am ET

Executives

Stephen C. Anderson - Vice President of Administration, Director of Investor Relations and Secretary

David C. Silvious - Chief Financial Officer, Vice President and Treasurer

J. Don Brock - Chairman of The Board and Chairman of Executive Committee

Benjamin G. Brock - Chief Executive Officer and President

Analysts

Morris Ajzenman - Griffin Securities, Inc., Research Division

John F. Kasprzak - BB&T Capital Markets, Research Division

Richard Wesolowski - Sidoti & Company, LLC

Michael Laskin

Nicholas A. Coppola - Thompson Research Group, LLC

Brian Gary Rafn - Morgan Dempsey Capital Management, LLC

Presentation

Operator

Greetings, and welcome to the Astec Industries First Quarter 2013 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Steve Anderson. Thank you, Mr. Anderson. You may begin.

Stephen C. Anderson

Thank you, Bethania. Good morning, and welcome to the Astec Industries conference call for the first quarter ended March 31, 2013. And as Bethania said, my name is Steve Anderson, and I'm the Vice President of Administration and Director of Investor Relations for the company. Also on today's call are Dr. Don Brock, our Chairman and Chief Executive Officer; Norman Smith, President and Chief Operating Officer; David Silvious, our Chief Financial Officer; and Ben Brock, our Corporate Vice President over the Asphalt Group and also President of Astec, Inc., our largest subsidiary company. In just a moment, I'll turn the call over to David to summarize our financial results, and then to Don to review our business activity during the quarter.

Before we begin, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company, and that 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. Factors that can influence our results are highlighted in today's financial news release and others are contained in our annual report and our filings with the SEC.

At this point, I'll turn the call over to David to summarize our financial results for the first quarter. David?

David C. Silvious

All right. Thank you, Steve, and good morning to everyone. Thank you for joining us this morning. Let me preface my comments at this time by saying that you may recall that we sold American Augers in late 2012 during the fourth quarter. And therefore, they're shown as a discontinued operation in the financial statements that were sent out. And so my comments will address the line items as they're presented in these financial statements with American Augers removed out of these line items.

Sales for the quarter were $247.8 million versus $252 million in the first quarter of '12. That's a decrease of about 1.7% or $4.2 million. International sales for the quarter were $85.9 million compared to $96.9 million last year. That's a decrease of 11.4% or $11 million. Decrease in dollars for international sales were primarily in Australia, in Brazil, in the post-Soviet states, and these decreases were offset by increases in Europe, in Africa and in Russia during the quarter. International sales were 34.7% of revenues in the first quarter of '13 compared to 38.5% of revenue in the first quarter of '12. Quarter-to-date international sales decreased in each of the segments, except for the Aggregate and Mining Group.

Domestic sales for the first quarter of '13 were $161.9 million compared to $155.1 million in the first quarter of '12. That's a 4.4% increase or $6.8 million. Domestic sales were 65.3% of first quarter revenues this year compared to 61.5% first quarter revenues last year. Parts sales for the first quarter of '13 were $68 million compared to $72.8 million for the first quarter of '12. That's a $4.8 million or 6.6% decrease. Parts sales were 27.5% of revenues for the first quarter of '13 compared to 28.9% for the first quarter of '12. Segment revenues for the first quarter of '13 are attached to the press release as supplemental information. Also included with that segment supplemental information is the quarterly detail on the sales and earnings of American Augers for 2011 and 2012. And some folks had asked for that, and so we wanted to get that to you so you could use that information.

Gross profit for the quarter was $58.6 million compared to $58.6 million last year, relatively flat there on the gross profit dollar line. However, the gross profit percentage actually went up 30 basis points to 23.6% from 23.3% last year. SGA&E for the quarter is $40.4 million, which was -- represented 16.3% of sales compared to $40.1 million or 15.9% of sales. That's about a $300,000 increase in dollar terms and a 40-basis-point increase as a percent of sales. The increases were primarily concentrated in the payroll and benefits line items. Operating income for the first quarter of '13 was $18.2 million compared to $18.5 million for the first quarter of '12. That's about a $300,000 decrease or 1.6%. Again, income by segment is attached to your press release.

Income from continuing operations before income taxes was $18.9 million compared to $19.3 million in the first quarter of '12, that's a decrease of 2.1% or about $400,000. The effective tax rate was interesting this quarter. As we had previously discussed in other conference calls, the first quarter '13 tax rate was lower than the '12 tax rate, simply due to -- primarily due to the R&D tax credit. And you may recall, Congress did not enact the 2012 R&D credit legislation until early in January of '13. Therefore, the 2012 credit for the full year was included as a discrete item in our first quarter of '13 tax rate. In addition, the portion that was allocable to the first quarter of '13 for our projected '13 credit was also taken into consideration in the first quarter tax provision.

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