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Astec (ASTE) Lags Earnings, Tops Revenue Estimates in Q4

Astec Industries, Inc.ASTE posted earnings of 53 cents per share in fourth-quarter 2016, soaring 231% year over year but fell short of the Zacks Consensus Estimate of 54 cents.

The maker of building, paving and mining equipment Astec, posted total revenue of $327 million, rising 52% from the $215 million reported in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $274 million.

Astec's domestic sales jumped 65% year over year to $265 million. International sales also increased 13% year over year to $62 million.

Astec Industries, Inc. Price, Consensus and EPS Surprise

Astec Industries, Inc. Price, Consensus and EPS Surprise | Astec Industries, Inc. Quote

Cost of sales was up 54% year over year to $262 million. Gross profit of $64.5 million increased from $45 million reported in the year-ago quarter. Gross margin decreased 130 basis points (bps) year over year to 19.7%.

Selling, general, administrative and engineering expenses went up 11.5% year over year to $45.4 million. Income from operations soared 305% year over year to $19 million. Operating margin expanded 360 bps year over year to 5.8%.

Segment Performance

Revenues for the Infrastructure Group segment advanced 111% to $194 million from $91.9 million in the year-ago quarter. Segment profit improved an impressive 354.7% year over year to $20 million.

Total revenue for the Aggregate and Mining Group segment declined 3% year over year to $82.4 million. Profit improved 28% year over year to $6.7 million.

The Energy Group segment's total revenue increased 31.8% to $50 million from $38 million in fourth-quarter 2015. The segment reported operating profit of $0.9 million, up from $0.8 million in the year-ago quarter.

Financial Position

Astec reported cash and cash equivalents of $82.4 million at the end of 2016, up from $25 million as of Dec 31, 2015. Receivables increased to $110.7 million as of Dec 31, 2016, from $102 million as of Dec 31, 2015. Inventories went down to $360 million as of Dec 31, 2016, from $384.8 million as of Dec 31, 2015.

Astec's total backlog increased 13% to $357.4 million at the end of 2016 from $315.9 million at 2015 end. Domestic backlog went up 13% year over year to $294.8 million as of Dec 31, 2015 and international backlog improved 16% year over year to $62.6 million at the end of 2016.

2016 Performance

Astec posted earnings of $2.38 per share for 2016, up 68% year over year. Earnings missed the Zacks Consensus Estimate of $2.40. Revenues for full-year 2016 increased 17% year over year to $1.15 billion. Revenues beat the Zacks Consensus Estimate of $1.1 billion.

Outlook

Astec's Aggregate and Mining group is expected to improve in the domestic market for products targeted at traditional rock quarries while the mining market continued to be slow. In Energy group the company experienced an increase in quote and order activity in the oil and gas markets.

Given these positive developments, and order activity in January, Astec remains optimistic about 2017. While the increase in order activity is a good sign for the year ahead, the company still faces significant challenges on U.S. exports given the continued strength of the U.S. dollar.

Share Price Performance

In the last one year, Astec has outperformed the Zacks classified Machinery-Construction/Mining sub-industry with respect to price performance. The stock gained around 77%, while the industry rose 48% over the same time frame.

Zacks Rank & Key Picks

Astec currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector include Kennametal Inc. KMT , Chart Industries, Inc. GTLS and II-VI Incorporated IIVI . All of the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Kennametal has an earnings ESP of 9.90% in the trailing four quarters. Chart Industries reported an impressive average earnings surprise of 548.51% inthe last four quarters, while II-VI Incorporated reported an average earnings surprise of 59.23% in the past four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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