Astec Misses on Both Lines - Analyst Blog
October 30 2012 - 10:15AM
Zacks
Astec Industries
Inc. (ASTE) has reported its third-quarter 2012 results,
with earnings of 30 cents per share falling well short of the Zacks
Consensus Estimate of 42 cents as well as 34 cents in the
year-earlier quarter.
Total revenue increased 5.8% to
$227 million from $214.6 million in the year-ago quarter but missed
the Zacks Consensus Estimate of $243 million.
Domestic sales of the company
improved 10% year over year to $139.5 million in the quarter from
$127.3 million. International sales remained flat year over year at
$87.6 million.
Costs and
Margins
Cost of sales increased 6% to
$177.6 million in the quarter from $168.2 million in the prior-year
quarter. Gross profit jumped 7% to $49.4 million from $46.4 million
in the year-ago quarter. Consequently, gross margin escalated 20
basis points year over year to 21.8% in the quarter.
Selling, general, administrative
& engineering expenses rose 7% to $40 million in the reported
quarter from $37.4 million in the year-earlier quarter. Income from
operations increased 4% to $9.4 million from $9 million in the
year-ago quarter. Operating margins remained flat at 4.2% in the
quarter.
Segment
Performance
Revenues in the Asphalt Group
segment decreased 7% to $46.8 million from $50.4 million in the
year-ago quarter. Gross profit increased 12% to $9.6 million from
$8.5 million in the prior-year quarter.
Total revenue of the Aggregate
and Mining Group segment increased 10% to $91.9 million in the
quarter from $83.2 million in the previous-year quarter. Gross
profit was $23 million in the quarter versus $20.7 million in the
prior-year quarter.
Mobile Asphalt Paving Group
segment’s total revenue decreased 6% to $36.6 million from $39
million in the year-ago quarter. Gross profit during the quarter
dropped to $8 million from $10 million in the year-earlier
quarter.
Underground Group reported
revenues of $29 million versus $23.7 million in the year-ago
quarter. Gross profit increased to $4.9 million from $4.1 million a
year ago.
All Others reported total revenue
of $22.6 million, improving from $18 million in the year-earlier
quarter. Gross profit increased to $4.4 million from $3 million in
the previous-year quarter.
Financial Position
Cash and cash equivalents
amounted to $36 million at the end of the third quarter, flat on a
sequential basis. The company has a no debt on its balance sheet.
Astec’s backlog increased to $240 million at the end of the third
quarter of 2012 from $232 million at the end of third quarter of
2011.
Our Take
Astec’s customers depend on
government funding for the construction and maintenance of the
infrastructural projects. However, customers have tightened their
budgets owing to the delay in passage of the Federal highway bill
and the economic uncertainties.
Astec invested significantly in
manufacturing new products and upgrading the existing products,
which will benefit the company moving forward. Astec will benefit
from a recovery in the economy and the pent up demand for
equipment. Margin headwinds remains a concern in the next quarters
owing to escalating costs related to transition of Tier 4i
engines.
Astec competes
with Caterpillar Inc. (CAT) and
Gencor Industries Inc. (GENC). The company
currently has a Zacks #5 Rank (short-term Strong Sell rating) on
its stock.
ASTEC INDS INC (ASTE): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis Report
(GENC): ETF Research Reports
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