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Astec (ASTE) Q4 Earnings Surpass Estimates, Improve Y/Y

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Zacks Equity Research
·5 min read
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Astec Industries, Inc.’s ASTE fourth-quarter 2020 adjusted earnings per share of 56 cents beat the Zacks Consensus Estimate of 42 cents by a margin of 33%. The bottom line also improved 56% from the prior-year quarter. The better-than-expected results were driven by the company’s transformation initiatives taken in 2019 and 2020, which offset the impact of lower revenues amid the coronavirus crisis.

Including one-time items, the company reported earnings per share of 67 cents in the quarter under review against a loss per share of 81 cents in the year-ago quarter.

Revenues & Backlog

Astec reported revenues of $239 million in the quarter, down 16% from the year-ago quarter’s figure of $283 million. However, the top line missed the Zacks Consensus Estimate of $273 million. Due to COVID-19-related disruptions, domestic and international sales declined 14% and 20%, respectively, on a year-over-year basis.

Astec Industries, Inc. Price, Consensus and EPS Surprise

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

Astec Industries, Inc. price-consensus-eps-surprise-chart | Astec Industries, Inc. Quote

At fourth quarter-end, the company’s total backlog was $360.5 million, reflecting an improvement of 37% year over year. While domestic backlog surged 44% year over year to $280.6 million, international backlog increased 15% to $79.9 million.

Operating Performance

Adjusted cost of sales plunged 19% year over year to $182 million. Adjusted gross profit was $57 million, down 5% from the year-ago quarter figure of $60 million. Gross margin, however, expanded 260 basis points to 23.8% in the quarter under review compared with 21.2% in the year-ago quarter.

Selling, general, administrative and engineering (SG&A) declined 21.5% year over year to around $41 million, due to reductions in consulting fees, travel and employee expenses. Adjusted operating profit for the quarter under review was $15.7 million, which improved a substantial 109% from the prior-year quarter. Adjusted operating margin was 6.6% compared with 2.6% in the prior-year quarter, courtesy of operational efficiencies that helped offset the impact of lower sales.

Adjusted EBITDA was $23.3 million in the reported quarter, up 69% from the year-ago quarter. Adjusted EBITDA margin was 9.8%, a 500 basis point expansion from the prior-year quarter. Despite lower sales, the company’s restructuring initiatives benefited margins in the quarter.

Segment Performance

Revenues for the Infrastructure Solutions segment decreased 13% to $167 million from the year-ago quarter. The segment reported an adjusted gross profit of $39.5 million compared with $41 million in the prior-year quarter.

Materials Solutions segment’s total revenues slumped 22% year over year to $72 million. The segment reported an adjusted gross profit of $17.7 million, reflecting year-over-year increase of 2%.

Financial Position

Astec’s cash and cash equivalents significantly improved to $159 million as of Dec 31, 2020 from $49 million as of Dec 31, 2019. As of 2020-end, the company’s total debt was $2 million. It has available liquidity of more than $312.4 million as of Dec 31, 2020.

2020 Results

Astec’s adjusted earnings per share in 2020 was $2.38, a 54% improvement from the prior-year’s figure of $1.55. The bottom line beat the Zacks Consensus Estimate of $1.87. Including one-time items, the company delivered an earnings per share of $2.05 in 2020 compared with 98 cents in 2019. Sales declined 12% year over year to $1.02 billion and missed the Zacks Consensus Estimate of $1.06 billion.

Share Price Performance

Astec’s shares have gained 83% in the past year, compared with the industry‘s rally of 72.4%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Deere & Company DE, AGCO Corporation AGCO and Avery Dennison Corporation AVY. While Deere flaunts a Zacks Rank #1 (Strong Buy), AGCO Corporation and Avery Dennison carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company has a projected earnings growth rate of 38.8% for fiscal 2021. Over the past year, the company’s shares have appreciated 119% over the past year.

AGCO Corporation has an estimated earnings growth rate of 42.7% for the ongoing year. The company’s shares have gained 107% in the past year.

Avery Dennison has an expected earnings growth rate of 13.7% for 2021. Over the past year, the stock has climbed 49%.

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