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UPDATED and REVISED ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

UPDATED BY ASTEC INDUSTRIES, INC.

CHATTANOOGA, Tenn., March 17, 2020 (GLOBE NEWSWIRE) -- In the press release for the fourth quarter and full year 2019, gross profit, restructuring and impairment charges, income taxes, net income, earnings per share and certain balance sheet items, including inventory, have all been updated to reflect a change in the accounting treatment of our GEFCO business. In the earlier press release, GEFCO’s net assets were treated as “assets held for sale” and its net assets were reduced to their estimated fair value based upon early indications of interest from potential purchasers. Currently, the sale of the GEFCO business under the terms and timing contained in the early indications of interest is unlikely. As a result, the value of the GEFCO’s assets is now accounted for as “assets held and used.” The Company’s current plan is to exit the GEFCO oil and gas business and continue to operate and pursue an exit strategy for the GEFCO water and geothermal well business. The related oil and gas inventories on hand at December 31, 2019 have been reduced to their net realizable value considering the Company’s planned exit.

The updated and revised release reads:

ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Fourth Quarter 2019 Highlights (all comparisons are made to the prior year fourth quarter):

  • Net Sales decreased 10.7% to $283.2M

  • Gross profit of 9.7%; adjusted gross profit of 21.2% decreased 280 bps

  • EPS loss of $0.81; adjusted EPS of $0.36 decreased from $0.61 a year ago

  • Adjusted EBITDA of $13.7M decreased 51.0%; adjusted EBITDA margin of 4.9% declined 390bps

2019 Highlights (all comparisons are made to the prior year):

  • Net sales were relatively flat; adjusted net sales decreased 7.8% to $1.15B

  • Gross profit of 20.5%; adjusted gross profit of 21.9% decreased 190bps

  • EPS of $0.98; adjusted EPS of $1.55 decreased from $2.94 a year ago

  • Adjusted EBITDA of $67.1M decreased 42.3%; adjusted EBITDA margin of 5.8% declined 350bps

  • Began restructuring initiatives related to strategic pillars for profitable growth – Simplify, Focus and Grow

Fourth Quarter 2019 Results

Fourth quarter net sales of $283.2 million decreased 10.7% compared to $317.0 million for the fourth quarter of 2018. Domestic sales of $209.6 million decreased 15.5% from $248.2 million a year ago, while International sales of $73.6 million increased 7.0% from $68.8 million in the fourth quarter of 2018. Excluding the impact of foreign currency, net sales decreased 10.4%.

Backlog as of December 31, 2019 of $263.7 million decreased by $81.3 million, or 23.6% compared to the backlog of $344.9 million a year ago. Domestic backlog decreased by 25.4% to $194.5 million from $260.7 million in 2018. International backlog of $69.2 million decreased compared to $84.2 million last year. Although we experienced a decline in each segment, weakness was concentrated in the Aggregate and Mining Group as dealers had increased their inventory levels throughout 2018 to meet demand but then began to destock in 2019.

An operating loss of $26.9 million compared to a loss of $69.4 million in the fourth quarter 2018. In relation to the Company’s efforts to simplify the organization, the Company incurred a $1.8 million pre-tax restructuring charge, or $0.06 per diluted share for the fourth quarter. The restructuring items are related to the closure of our German operation, the transfer of the CEI products to Heatec and RexCon and the planned exit of GEFCO’s oil and gas product line. In the fourth quarter of 2019, after considering new management’s revised inventory control and working capital control objectives, the Company’s assessment of the age, quantities on hand, market acceptance of the equipment, the Company’s exit of the GEFCO oil and gas business and other related factors, it was determined that various specific equipment models in each of the Company’s business units and certain other inventories required additions to their net realizable value reserves. The fourth quarter results include a pre-tax inventory write-down of $32.6 million or $1.11 per diluted share. Fourth quarter adjusted operating income of $7.4 million decreased 65.0% compared to $21.2 million a year ago. Adjusted operating margin of 2.6% declined 410 basis points from 6.7% in fourth quarter 2018. Adjusted operating income declined primarily due to the lower volumes. SGA&E expenses declined 4.0% on a dollar basis but increased as a percent of sales 130 basis points to 18.6% from 17.3% in the fourth quarter of 2018 due to the decline in sales.

Adjusted EBITDA of $13.7 million decreased 51.0% compared to $28.0 million a year ago. Adjusted EBITDA margin of 4.9% declined 390 basis points from 8.8% in fourth quarter 2018.

Net loss of $18.4 million or $0.81 per diluted share, compared to a net loss of $47.0 million or $2.08 per diluted share for the fourth quarter of 2018. Excluding unusual items and restructuring charges mentioned above, adjusted net income of $8.3 million decreased 40.8% compared to the same period a year ago. Adjusted EPS of $0.36 decreased 41.0% compared to $0.61 last year.

“Fourth quarter results showed continued softness in North America that was partially offset by an increase in international sales. Despite the temporary headwinds, I am encouraged by the progress we are making towards our strategic initiatives to Simplify, Focus and Grow the organization,” stated Barry Ruffalo, CEO of Astec Industries, Inc. “As noted, we are exiting the GEFCO oil and gas product lines while continuing to operate and pursue an exit plan for the GEFCO water and geothermal well drilling business. This will further simplify the organization. Additionally, we have taken important steps to restructure the Company and streamline business units to increase internal transparency and improve the decision-making process. These collective actions are important in building the foundation for the future success of Astec Industries.”

Full Year 2019 Results

Net sales for 2019 were $1,169.6 million, or relatively flat when compared to 2018. Domestic sales decreased 0.8% to $908.5 million from $915.8 million a year ago, while International sales increased 2.1% to $261.1 million from $255.8 million in 2018. Excluding the impact of foreign currency, net sales increased 0.6%.

Operating income of $25.1 million compares to a loss of $86.4 million in 2018. The Company incurred a total of $35.8 million in pre-tax restructuring charges and inventory write-downs for 2019, or $1.24 per diluted share. Adjusted operating income of $40.9 million decreased 53.4% compared to $87.8 million in 2018. Adjusted operating margin of 3.6% declined 340 basis points from 7.0% in 2018. Adjusted operating income declined primarily because of a reduction in gross margin of 190 basis points to 21.9% from 23.8% in 2018.

Adjusted EBITDA of $67.1 million decreased 42.3% compared to $116.3 million in 2018. Adjusted EBITDA margin of 5.8% declined 350 basis points from 9.3% in 2018.

Net income of $22.3 million or $0.98 per diluted share, compared to a net loss of $60.4 million or $2.64 per diluted share in 2018. Adjusted net income of $35.2 million decreased 47.7% compared to 2018. Adjusted EPS of $1.55 decreased 47.3% compared to $2.94 last year.

The Company identified certain material weaknesses in its internal control over financial reporting. As a result, the Company needs additional time to complete the compilation of information and finalization of its assessment of the effectiveness of internal control over financial reporting for its consolidated financial statements and related disclosures to be filed as part of the 2019 Form 10-K. The Company has filed a Form 12b-25 with the Securities and Exchange Commission in order to extend the due date of its 2019 Annual Report on Form 10-K for 15 days, as permitted by Rule 12b-25 under the Securities Exchange Act.

About Astec Industries, Inc.

Astec Industries, Inc., (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building, aggregate processing and concrete production. Astec’s manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and a diversified portfolio of equipment used in various industries including energy-related markets (Energy Group).

Forward-Looking Statements
The information contained in this press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) restructuring initiatives, (ii) the potential sale of the GEFCO water and geothermal well business, (iii) increases in international demand, and (iv) product demand in North America. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements. These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated. Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements. Important factors that could cause future events or actual results to differ materially include: general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.

For Additional Information Contact:
Steve Anderson
Senior Vice President Administration, Investor Relations & Corporate Secretary
Phone: (423) 899-5898
Fax: (423) 899-4456
E-mail: sanderson@astecindustries.com

Astec Industries, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

Dec

Dec

2019

2018

Assets

Current assets

Cash and cash equivalents

$

48,857

$

25,821

Investments

1,547

1,946

Receivables and contract assets, net

124,847

133,978

Inventories

294,536

355,944

Prepaid expenses and other

36,517

43,302

Total current assets

506,304

560,991

Property and equipment, net

190,363

192,448

Other assets

103,831

102,018

Total assets

$

800,498

$

855,457

Liabilities and equity

Current liabilities

Accounts payable - trade

$

57,162

$

70,614

Other current liabilities

115,605

118,617

Total current liabilities

172,767

189,231

Long-term debt, less current maturities

690

59,709

Non-current liabilities

24,554

21,227

Total equity

602,487

585,290

Total liabilities and equity

$

800,498

$

855,457

Astec Industries, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended

Twelve Months Ended

Dec 31

Dec 31

2019

2018

2019

2018

Net sales

$

283,224

$

317,005

$

1,169,613

$

1,171,599

Cost of sales

255,843

318,636

930,205

1,035,833

Gross profit (loss)

27,381

(1,631

)

239,408

135,766

Selling, general, administrative & engineering expenses

52,554

54,732

211,148

209,127

Restructuring and asset impairment charges

1,773

13,060

3,204

13,060

Income (loss) from operations

(26,946

)

(69,423

)

25,056

(86,421

)

Interest expense

(68

)

(557

)

(1,367

)

(1,045

)

Other

250

11

1,629

1,783

Income (loss) before income taxes

(26,764

)

(69,969

)

25,318

(85,683

)

Income taxes

(8,409

)

(22,932

)

3,012

(25,234

)

Net income (loss) attributable to controlling interest

$

(18,355

)

$

(47,037

)

$

22,306

$

(60,449

)

Earnings (loss) per Common Share

Net income (loss) attributable to controlling interest

Basic

$

(0.81

)

$

(2.08

)

$

0.99

$

(2.64

)

Diluted

$

(0.81

)

$

(2.08

)

$

0.98

$

(2.64

)

Weighted average common shares outstanding

Basic

22,531

22,582

22,515

22,902

Diluted

22,531

22,582

22,674

22,902



Astec Industries, Inc.

Segment Revenues and Profits (Losses)

For the three months ended December 31, 2019 and 2018

(in thousands)

(unaudited)

Infrastructure Group

Aggregate and Mining Group

Energy Group

Corporate

Total

2019 Revenues

115,671

91,981

75,170

402

283,224

2018 Revenues

124,930

116,064

76,011

-

317,005

Change $

(9,259

)

(24,083

)

(841

)

402

(33,781

)

Change %

(7.4

%)

(20.7

%)

(1.1

%)

-

(10.7

%)

2019 Gross Profit

11,220

13,041

1,465

1,655

27,381

2019 Gross Profit %

9.7

%

14.2

%

1.9

%

411.7

%

9.7

%

2018 Gross Profit (Loss)

(41,462

)

30,347

9,375

109

(1,631

)

2018 Gross Profit (Loss) %

(33.2

%)

26.1

%

12.3

%

-

(0.5

%)

Change

52,682

(17,306

)

(7,910

)

1,546

29,012

2019 Loss

(3,158

)

(179

)

(11,069

)

(4,019

)

(18,425

)

2018 Profit (Loss)

(69,833

)

10,796

(13,336

)

22,015

(50,358

)

Change $

66,675

(10,975

)

2,267

(26,034

)

31,933

Change %

95.5

%

(101.7

%)

17.0

%

(118.3

%)

63.4

%

Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment

revenues. A reconciliation of total segment losses to the Company's net loss attributable to controlling interest is as follows (in thousands):

Three months ended December 31

2019

2018

Change $

Total loss for all segments

$

(18,425

)

$

(50,358

)

$

31,933

Recapture of intersegment profit

64

3,263

(3,199

)

Net loss attributable to non-controlling interest

6

58

(52

)

Net loss attributable to controlling interest

$

(18,355

)

$

(47,037

)

$

28,682

Astec Industries, Inc.

Segment Revenues and Profits (Losses)

For the year ended December 31, 2019 and 2018

(in thousands)

(unaudited)

Infrastructure Group

Aggregate and Mining Group

Energy Group

Corporate

Total

2019 Revenues

492,118

404,971

272,122

402

1,169,613

2018 Revenues

442,289

453,164

276,146

-

1,171,599

Change $

49,829

(48,193

)

(4,024

)

402

(1,986

)

Change %

11.3

%

(10.6

%)

(1.5

%)

-

(0.2

%)

2019 Gross Profit

105,012

84,917

47,673

1,806

239,408

2019 Gross Profit %

21.3

%

21.0

%

17.5

%

449.3

%

20.5

%

2018 Gross Profit (Loss)

(37,357

)

112,972

59,751

400

135,766

2018 Gross Profit (Loss) %

(8.4

%)

24.9

%

21.6

%

-

11.6

%

Change

142,369

(28,055

)

(12,078

)

1,406

103,642

2019 Profit (Loss)

36,106

22,790

556

(38,440

)

21,012

2018 Profit (Loss)

(112,954

)

45,464

3,070

1,586

(62,834

)

Change $

149,060

(22,674

)

(2,514

)

(40,026

)

83,846

Change %

132.0

%

(49.9

%)

(81.9

%)

(2523.7

%)

133.4

%

Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment

revenues. A reconciliation of total segment profits (losses) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands):

Twelve months ended December 31

2019

2018

Change $

Total profit (loss) for all segments

$

21,012

$

(62,834

)

$

83,846

Recapture of intersegment profit

1,162

2,090

(928

)

Net loss attributable to non-controlling interest

132

295

(163

)

Net income (loss) attributable to controlling interest

$

22,306

$

(60,449

)

$

82,755

Astec Industries, Inc.

Backlog by Segment

December 31, 2019 and 2018

(in thousands)

(unaudited)

Infrastructure Group

Aggregate and Mining Group

Energy Group

Total

2019 Backlog

139,081

74,127

50,497

263,705

2018 Backlog

149,437

130,691

64,834

344,962

Change $

(10,356

)

(56,564

)

(14,337

)

(81,257

)

Change %

(6.9

%)

(43.3

%)

(22.1

%)

(23.6

%)




Glossary

In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Nonetheless, this non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses.

The amounts described below are unaudited, reported in thousands of U.S. Dollars (Except Share data), and as of or for the periods indicated.

Q4 2019 GAAP to Non-GAAP Reconciliation Table

As Reported

Restructuring and

As Adjusted

(GAAP)

Unusual Charges

(Non-GAAP)

Consolidated

Net Sales

$

283,224

$

-

$

283,224

GP

27,381

32,605

59,986

GP%

9.7

%

21.2

%

Op Income (Loss)

(26,946

)

34,378

7,432

Income Tax (Benefit) Expense

(8,409

)

7,760

(649

)

Net Income (Loss)

(18,355

)

26,618

8,263

EPS

(0.81

)

1.17

0.36

EBITDA

(20,630

)

34,378

13,748

Free Cash Flow

22,870

1,892

24,762

Infrastructure

Net Sales

115,671

-

115,671

GP

11,220

12,098

23,318

GP%

9.7

%

20.2

%

EBITDA

(2,656

)

12,479

9,823

Aggregate and Mining

Net Sales

91,981

-

91,981

GP

13,041

4,260

17,301

GP%

14.2

%

18.8

%

EBITDA

97

4,511

4,608

Energy

Net Sales

75,170

-

75,170

GP

1,465

16,247

17,712

GP%

1.9

%

23.6

%

EBITDA

(9,180

)

17,388

8,208

Q4 2018 GAAP to Non-GAAP Reconciliation Table

As Reported

Restructuring and

As Adjusted

(GAAP)

Unusual Charges

(Non-GAAP)

Consolidated

Net Sales

$

317,005

$

-

$

317,005

GP

(1,631

)

77,574

75,943

GP%

(0.5

%)

24.0

%

Op Income (Loss)

(69,423

)

90,634

21,211

Income Tax (Benefit) Expense

(22,932

)

29,628

6,696

Net Income (Loss)

(47,037

)

61,005

13,968

EPS

(2.08

)

2.69

0.61

EBITDA

(62,603

)

90,634

28,031

Infrastructure

Net Sales

124,930

-

124,930

GP

(41,462

)

69,792

28,330

GP%

(33.2

%)

22.7

%

EBITDA

(63,515

)

71,663

8,148

Aggregate and Mining

Net Sales

116,064

-

116,064

GP

30,347

294

30,641

GP%

26.1

%

26.4

%

EBITDA

13,224

294

13,518

Energy

Net Sales

76,011

-

76,011

GP

9,375

7,487

16,862

GP%

12.3

%

22.2

%

EBITDA

(11,708

)

18,677

6,969

FYE 2019 GAAP to Non-GAAP Reconciliation Table

As Reported

Restructuring and

As Adjusted

(GAAP)

Unusual Charges

(Non-GAAP)

Consolidated

Net Sales

$

1,169,613

$

(20,000

)

$

1,149,613

Domestic Sales

908,466

(20,000

)

888,466

International Sales

261,147

-

261,147

GP

239,408

12,630

252,038

GP%

20.5

%

21.9

%

Op Income

25,056

15,833

40,889

Income Tax (Benefit) Expense

3,012

2,938

5,950

Net Income

22,306

12,895

35,201

EPS

0.98

0.57

1.55

EBITDA

51,306

15,833

67,139

Free Cash Flow

90,278

(14,380

)

75,898

FYE 2018 GAAP to Non-GAAP Reconciliation Table

As Reported

Restructuring and

As Adjusted

(GAAP)

Unusual Charges

(Non-GAAP)

Consolidated

Net Sales

$

1,171,599

$

74,778

$

1,246,377

Domestic Sales

915,814

74,778

990,592

International Sales

255,785

-

255,785

GP

135,766

161,185

296,951

GP%

11.6

%

23.8

%

Op Income (Loss)

(86,421

)

174,245

87,824

Income Tax (Benefit) Expense

(25,234

)

46,502

21,268

Net Income (Loss)

(60,449

)

127,744

67,295

EPS

(2.64

)

5.58

2.94

EBITDA

(57,897

)

174,245

116,348


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