Astec Industries Inc. (ASTE)
Q2 2008 Earnings Call
July 21 2008 10:00 am ET
J. Don Brock - Chairman and CEO
F. McKamy Hall - VP and CFO
Steve Anderson - Director of Investor Relations and Corporate Secretary
Arnold Ursaner - CJS securities
Jack Kasprzak - BB&T
Robert McCarthy - Robert W. Baird.
Michael Cox - Piper Jaffray
Rich Wesolowski - Sidoti & Company
Scott Mac - aAD Capital Management
Previous Statements by ASTE
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» Astec Industries, Inc. Q3 2008 Earnings Call Transcript
It is now my pleasure to introduce your host, Mr. Steve Anderson with Astec Industries. Thank you, sir. You may begin.
Thank you, Ryan. Good morning and welcome to the Astec Industries conference call for the second quarter of 2008. As Ryan mentioned, my name is Steve Anderson, I am the Director of Investor Relations and Corporate Secretary. 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. Don is in Idaho today and traveling on business, so he is dialed-in remotely. In just a moment, I will turn the call over to McKamy to summarize our financial results, and then to Don to discuss our operations and business environment.
In the way of disclosure this morning, I will note that our call may contain forward-looking statements that relate to the future performance of the company. 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 will turn the call over to McKamy to summarize our financial results. McKamy?
F. McKamy Hall
Thanks, Steve. We appreciate each of you joining us this morning. We are pleased to report to you on the most profitable second quarter in the company's history. The company generated a 14.1% improvement in net income and we look forward to continuing 2008 with a backlog of $264.6 million and reaching our sales goal of $1 billion for 2008.
This morning, we will discuss the quarter. We were at $277.7 million in sales versus $226.4 million or an increase of 22.7%. International sales were $93 million versus $69 million for the same quarter last year for an increase of 33.2% or $23.2 million. International sales composed 33.5% of the second quarter sales. These increases occurred in Canada, Europe, South America, Africa, Asia and Central America.
Domestic sales for Q2, 2008 were $184.7 million or 66.5% of total sales versus the $156.6 million or 69.2% of total sales for Q2, 2007 for a 17.9% increase in sales volume domestically.
Part sales for Q2 are $50.5 million versus 2007 of $45.0 million or a 12.2% increase. All segments in the part sales section had increases. Sales in total increased in all segments as well, and those are attached to your press release for your convenience and reference.
Consolidated gross profit for Q2 is at $66.3 million versus $58.9 million for the prior year, an increase of $7.4 million or 12.6%. The gross profit percentage actually decreased 210 basis points for the quarter to 23.9% from 26%. That decrease was in all segments.
Maintaining the margin, and Don will have more to comment on this later, but maintaining the margin is our greatest challenge right now. We have had multiple price increases. Some companies we are continuing to realize good benefits from our focus groups. We are continuing the production initiatives and techniques. We are also continuing to utilize consolidated purchasing and many other actions, to help offset the cost increases that we are seeing in steel and components.
In the SG&A area, our expenses were at 12.1% for 2008 versus 13.4% as they stay for 2007. Income from operations for 2008 were $32.7 million, versus $20.8 million for an increase of $4.1 million or 14.3%.
The income by segment again is attached to your press release for your convenience. Net income is 21.1 million versus 18.5 million or a 14.1% increase. For the quarter the diluted earnings per share were $0.93 versus prior year of $0.83 or a 12% increase in earnings per share.
Our backlog is at $264.6 million versus 2007 and that is a restated number of $235.4 restated to include the 2007 acquisition of Peterson, although that did not occur until effective July 1 last year. In order to be comparative, we have to add that backlog in across the whole of last year to compare to this year's backlogs.
I would also note that the backlog is $264.6 million, compared to $263 million at the end of March, and this backlog also slightly exceed March's backlog after a record sales quarter. It is certainly a nice backlog to begin the third quarter with.