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Astec (ASTE) Incurs Q3 Loss Due to Pellet Plant Charges
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Astec Industries, Inc. (ASTE - Free Report) posted a net loss of 12 cents per share in third-quarter 2017, against an earnings of 30 cents in the prior-year quarter. However, the reported loss came in line with the Zacks Consensus Estimate. As previously announced, the quarter bore the impact of additional investment to make significant design upgrades to its customers’ Georgia and Arkansas wood pellet plants.
The company reported total revenues of $252 million, rising 1.5% from $248 million reported in the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $262 million.
Astec’s domestic sales dipped 1.7% year over year to $197 million. However, international sales increased 16% year over year to $56 million. Cost of sales escalated 10.7% year over year to $213 million. Gross profit was at $39.1 million, a 29% decline from $55 million reported in the year-ago quarter. Gross margin contracted 690 basis points (bps) year over year to 15.5%.
Selling, general, administrative and engineering expenses went up 4% year over year to $45.5 million. The company reported operating loss of $6.87 million compared with operating profit of $11 million in the prior-year quarter.
Astec Industries, Inc. Price, Consensus and EPS Surprise
Revenues for the Infrastructure Group segment fell 9.7% to $99 million from $109 million in the year-ago quarter. The segment reported an operating loss of $12.5 million compared with an operating profit of $9.9 million in the year ago quarter.
Total revenues for the Aggregate and Mining Group segment increased 16% year over year to $99.5 million. Profit improved 25% year over year to $9.6 million.
The Energy Group segment’s total revenues inched up 2% year over year to $53.9 million. The segment reported operating profit of $4.5 million, up from $0.8 million in the year-ago quarter.
Financial Position
Astec reported cash and cash equivalents of $66.4 million at the end of third-quarter 2017, up from $54 million at year-ago quarter end. Receivables decreased to $110 million as of Sep 30, 2017, from $112 million as of Sep 30, 2016. Inventories were at $399 million as of Sep 30, 2017, compared with $399.7 million as of Sep 30, 2016.
The company’s total backlog dipped 1% to $386 million at the end of the third quarter from $389 million at third-quarter 2016 end. Backlog improved 21.5% and 51.2% in the Aggregate and Mining Group and Energy group, respectively. However, backlog in the Infrastructure Group declined 13.2%. Domestic backlog slumped 5% year over year to $310 million as of Sep 30, 2017 while international backlog improved 19% year over year to $76 million at the end of the quarter.
Outlook
For fourth-quarter 2017, the company expects revenues to be lower on a sequential adjusting for the wood pellet investment. However, the company expects slight year-over-year sales growth for 2017. The outlook for 2018 remains bright given the backlog and quote activity.
Astec’s shares have significantly underperformed the industry with respect to price performance in the past year. The stock has declined 6.2%, as against 65.4% growth registered by the industry.
Zacks Rank & Stocks to Consider
Currently, Astec carries a Zacks Rank #5 (Strong Sell).
Caterpillar has an expected long-term earnings growth rate of 9.5%.
Komatsu has an expected long-term earnings growth rate of 12.7%.
China National Materials has an expected long-term earnings growth rate of 20%.
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Astec (ASTE) Incurs Q3 Loss Due to Pellet Plant Charges
Astec Industries, Inc. (ASTE - Free Report) posted a net loss of 12 cents per share in third-quarter 2017, against an earnings of 30 cents in the prior-year quarter. However, the reported loss came in line with the Zacks Consensus Estimate. As previously announced, the quarter bore the impact of additional investment to make significant design upgrades to its customers’ Georgia and Arkansas wood pellet plants.
The company reported total revenues of $252 million, rising 1.5% from $248 million reported in the year-ago quarter. However, revenues missed the Zacks Consensus Estimate of $262 million.
Astec’s domestic sales dipped 1.7% year over year to $197 million. However, international sales increased 16% year over year to $56 million. Cost of sales escalated 10.7% year over year to $213 million. Gross profit was at $39.1 million, a 29% decline from $55 million reported in the year-ago quarter. Gross margin contracted 690 basis points (bps) year over year to 15.5%.
Selling, general, administrative and engineering expenses went up 4% year over year to $45.5 million. The company reported operating loss of $6.87 million compared with operating profit of $11 million in the prior-year quarter.
Astec Industries, Inc. Price, Consensus and EPS Surprise
Astec Industries, Inc. Price, Consensus and EPS Surprise | Astec Industries, Inc. Quote
Segment Performance
Revenues for the Infrastructure Group segment fell 9.7% to $99 million from $109 million in the year-ago quarter. The segment reported an operating loss of $12.5 million compared with an operating profit of $9.9 million in the year ago quarter.
Total revenues for the Aggregate and Mining Group segment increased 16% year over year to $99.5 million. Profit improved 25% year over year to $9.6 million.
The Energy Group segment’s total revenues inched up 2% year over year to $53.9 million. The segment reported operating profit of $4.5 million, up from $0.8 million in the year-ago quarter.
Financial Position
Astec reported cash and cash equivalents of $66.4 million at the end of third-quarter 2017, up from $54 million at year-ago quarter end. Receivables decreased to $110 million as of Sep 30, 2017, from $112 million as of Sep 30, 2016. Inventories were at $399 million as of Sep 30, 2017, compared with $399.7 million as of Sep 30, 2016.
The company’s total backlog dipped 1% to $386 million at the end of the third quarter from $389 million at third-quarter 2016 end. Backlog improved 21.5% and 51.2% in the Aggregate and Mining Group and Energy group, respectively. However, backlog in the Infrastructure Group declined 13.2%. Domestic backlog slumped 5% year over year to $310 million as of Sep 30, 2017 while international backlog improved 19% year over year to $76 million at the end of the quarter.
Outlook
For fourth-quarter 2017, the company expects revenues to be lower on a sequential adjusting for the wood pellet investment. However, the company expects slight year-over-year sales growth for 2017. The outlook for 2018 remains bright given the backlog and quote activity.
Astec’s shares have significantly underperformed the industry with respect to price performance in the past year. The stock has declined 6.2%, as against 65.4% growth registered by the industry.
Zacks Rank & Stocks to Consider
Currently, Astec carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks in the same include Caterpillar Inc. (CAT - Free Report) , Komatsu Ltd. (KMTUY - Free Report) and China National Materials Company Limited . All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has an expected long-term earnings growth rate of 9.5%.
Komatsu has an expected long-term earnings growth rate of 12.7%.
China National Materials has an expected long-term earnings growth rate of 20%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>