Astec Industries Inc. (ASTE) reported second-quarter 2013 earnings of 48 cents per share, up 17% from 41 cents in the year-earlier quarter. The results missed the Zacks Consensus Estimate of 55 cents.
Total revenue increased 4% to $248.1 million from $238.3 million in the year-ago quarter but missed the Zacks Consensus Estimate of $256 million. Domestic sales increased 5% year over year to $162.3 million. International sales were also up 2% year over year at $85.8 million.
Cost of sales increased 4% to $192.6 million from $185 million in the prior-year quarter. Gross profit was $55 million, up 4% from $53 million in the year-ago quarter. Gross margin remained flat year over year at 23%.
Selling, general, administrative & engineering expenses were $37.8 million in the reported quarter compared with $38 million in the year-ago quarter. Income from operations increased 20.8% year over year to $17.6 million. Operating margin expanded 100 basis points to 7.1% from 6.1% in the second quarter of 2012.
Revenues in the Asphalt Group segment grew 6.3% to $63 million from $59 million in the year-ago quarter. Segment profit went up 4% to $4 million from $3.9 million in the prior-year quarter due to a negative impact from the absorption variance.
Total revenue for the Aggregate and Mining Group segment went up 5.3% to $99.8 million in the quarter from $94.8 million in the prior-year quarter. Segment profit was $11.1 million versus $11.5 million in the prior-year quarter, down 3.7%.
Mobile Asphalt Paving Group segment’s total revenue increased 1.3% to $45.7 million from $45 million in the year-ago quarter. Segment profit rose 12.9% to $4.6 million from $4 million in the year-earlier quarter.
Underground Group reported revenues of $17 million versus $19 million in the year-ago quarter. The segment reported a loss of $0.77 million compared with a loss of $0.87 million a year ago.
All Others reported total revenue of $22 million, up 13.5% from $19.6 million in the year-earlier quarter. Segment loss was $7.7 million, narrower than the year-ago quarter’s loss of $8.2 million.
Cash and cash equivalents amounted to $41 million as of Jun 30, 2013, up from $35.9 million as of Jun 30, 2012. The company has no debt on its balance sheet. Astec’s domestic backlog decreased 5% to $140.3 million as of Jun 30, 2013 from $147.1 million as of Jun 30, 2012. The international backlog also declined 7% to $100.3 million as of Jun 30, 2013 from $107.7 million as of Jun 30, 2012.
Astec will benefit from the pick-up in construction as well as the new 27-month highway bill. Product launches, new facility in Brazil and orders in the Asphalt segment will help in driving the company’s long-term growth. The approval of tax credit by the U.K. Parliament for utilities to burn wood pellets as a source of fuel opens up a sizeable opportunity for Astec for further growth in the wood pellet plant business.
During the first half of 2013, strong dollar value and adverse weather conditions affected international sales. Astec, however, is optimistic about improvement in residential and commercial work. Earnings were also hurt by higher health care cost, higher taxes for its Canadian subsidiary and from the GEFCO acquisition.
Astec’s strategic program including the merger of Astec Underground into GEFCO to create an energy group and remove the Underground group will drive long-term growth. The company is also expected to expand its energy business with a new pellet plant, high tech drill rigs, pump trailers, water heaters and gas processing heaters.
Chattanooga, TN-based Astec is a manufacturer of specialized equipment for building and restoring the world's infrastructure. Astec currently maintains a Zacks Rank #3 (Hold). Astec’s peers such as The Manitowoc Company, Inc. (MTW), Caterpillar Inc. (CAT) and Joy Global, Inc. (JOY) are yet to announce their quarterly results.
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