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Astec Industries, Inc. (ASTE)
Q3 2009 Earnings Call Transcript
October 20, 2009 10:00 am ET
Stephen Anderson – Corporate Secretary and Director, IR
McKamy Hall – VP, CFO and Treasurer
Don Brock – Chairman, President and CEO
Jack Kasprzak – BB&T Capital Markets
Arnie Ursaner – CJS Securities
Rich Wesolowski – Sidoti & Company
Tom Hayes – Piper Jaffray
David Wells – Thompson Research
Chris Weltzer – Robert W. Baird
Walt Liptak – Barrington Research
Kristine Kubacki – Avondale Partners
Morris Ajzenman – The Griffin Securities
Alan Brochstein – AB Analytical Services
Previous Statements by ASTE
» Astec Industries Inc Q4 2008 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, Steve Anderson, Director of Investor Relations for Astec Industries. Thank you, Mr. Anderson, you may now begin.
Thank you, Shane. Good morning and welcome to the Astec Industries conference call for the third quarter of 2009. As Shane mentioned my name is Steve Anderson. 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; McKamy Hall, Vice President and Chief Financial Officer; and David Silvious, our Corporate Controller.
In just a minute, I will turn the call over to McKamy to summarize our financial results, and then to Don to discuss our business operations and market environment. 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 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, 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 things over to McKamy to summarize our financial results. McKamy.
Thanks Steve. We appreciate each of you joining us this morning. The sales for the quarter were $166.1 million compared to $237.4 million in Q3 of 2008 for a decrease of 30%. The failure of Congress to renew the Highway Bill on a timely basis always makes the visibility more difficult.
International sales were $64.8 million versus $102.1 million in 2008 third quarter for a decrease of 36.5%. International sales for the quarter in 2009 were 39%. International sales in 2008 for the quarter were 43%. International sales are being assisted by approximately 25 stimulus programs in foreign countries. The decrease in dollars occurred in the Middle East, Africa, Asia, Central America, Australia, and Europe.
Domestic sales for third quarter were $101.3 million versus $135.3 million for a 25.1% decrease. Part sales for the third quarter were $46.1 million versus $54.9 million or a 16% decrease. Aggregate and mining had the largest decrease followed by the underground group. The asphalt group and mobile asphalt paving had slight increases.
The reduction in volume in some of these parts areas is indicative of some machinery not being repaired as it normally would be in better economic times. As far as the sales path, aggregate for the quarter provided 33.6% of the sales, asphalt 26.8% of the sales, mobile 22.2%, underground 10.2%.
For the year, year-to-date sales are $560.2 million versus $778.2 million for a decrease of 28%. International sales year-to-date are $197.8 million versus $287.7 million for a decrease of 31.2%. The decreases occurred in Central America, Europe, Canada, Middle East, South America, Asia, Australia, Africa and China.
International sales were 35.3% of net sales year-to-date compared to 37% for last year, so the international as held up as a percentage quite nicely.
The domestic sales year-to-date is $362.4 million versus $490.5 million, a decrease of 26.1%. Domestic sales were 64.7% of total sales in 2009 versus 63% in 2008, a slight increase in domestic as a percent of year-to-date sales. Parts sales year-to-date were $136.2 million versus $158 million for the prior year for a decrease of 13.8%. Parts year-to-date were 24.3% of total sales versus 20.3% of total sales in 2008. On the year-to-date path the asphalt segment provided 35.2% of the sales, aggregate and mining were 29.1%, mobile 18.8%, underground 9.7%.
Consolidated gross profit for the quarter was $34.7 million versus $58.8 million or a decrease of $24.1 million or 41%. The gross profit percentage decreased 390 basis points for the quarter to 20.9% for 2009 from 24.8% in 2008. The ranking of these segments by gross profit, Mobile Asphalt Paving was at 24.8%, asphalt at 24.2%, aggregate at 22.7%, underground at 4.6%. I think it is noteworthy that the Mobile Asphalt Paving had the only sales volume increase for the quarter and increased the gross margins by 1.4 points. It is also noteworthy that the aggregate segment had a quarterly sales decrease of 38.1%, but increased the gross margin 10 basis points.
The under-absorbed overhead increased in the quarter and as a reflection of the decreased sales and the under-utilization of capacity. Our manufacturing man-hours for the quarter actually declined approximately 33% from the same quarter last year. On the consolidated gross profit year-to-date, we were $121 million versus $191.3 million or a 36.7% decrease. We were at 21.6% versus 24.6% or a decrease of 300 basis points. On a pie basis, the aggregate group provided 25.3% of the margin, the margin of that amount, Mobile Asphalt Paving 23.3%, aggregate and mining 22.8%, and underground 7%.
Under-absorbed overhead increased approximately 200% as a reflection of the reduced volume. Our total manpower was down 18.8% and our manufacturing hours were down approximately 32% year-to-date.
On the SG&A, SG&A for the quarter was at $30.4 million versus $34.3 million, a decrease of $3.9 million and that is primarily in payroll, commissions, SERP [ph], with increases in R&D. These dollars certainly did not reduce as rapidly as our sales as mentioned in our press release. Therefore, the percentage that we have as a goal was not met for SG&A.