Back to top

Image: Bigstock

Astec (ASTE) Q3 Earnings and Revenues Surpass Estimates

Read MoreHide Full Article

Astec Industries, Inc.’s (ASTE - Free Report) third-quarter 2020 adjusted earnings per share of 20 cents beat the Zacks Consensus Estimate of 11 cents by margin of 82%. The bottom line also improved 18% 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 7 cents in the quarter under review, down 46% from 13 cents in the year-ago quarter.

Revenues & Backlog

Astec reported revenues of $231 million in the quarter, down 9.5% from the year-ago quarter’s figure of $256 million. However, the top line surpassed the Zacks Consensus Estimate of $228 million. Net sales decreased 8.5%, excluding the impact of foreign currency. Owing to COVID-19-related disruptions, domestic and international sales declined 4.5% and 24%, respectively, on a year-over-year basis.

At third quarter-end, the company’s total backlog was $218.5 million, reflecting a decline of 10% year over year thanks to the impact of the COVID-19 pandemic. Orders in both Materials and Infrastructure Solutions segments were down 8.5% and 11.3%, respectively. While domestic backlog dipped 4% year over year to $151.3 million, international backlog plunged 22% to $67.2 million.

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

Operating Performance

Adjusted cost of sales declined 12.5% year over year to $178 million. Adjusted gross profit was $53 million, up 2% from the year-ago quarter figure of $52 million. Gross margin expanded 260 basis points year over year to 22.9% in the reported quarter.

Selling, general, administrative and engineering (SG&A) increased 2.5% year over year to around $49 million, due to the acquisitions of BMH Systems and CON-E-CO. Adjusted operating profit for the quarter under review was $4.1 million, which declined around 2% from the prior-year quarter. Adjusted operating margin was 1.8% compared with 1.6% in the prior-year quarter courtesy of operational efficiencies that helped offset the impact of lower sales.
Adjusted EBITDA was $11 million in the reported quarter, up 2% from the year ago quarter.  Adjusted EBITDA margin was 4.8%, a 60 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 3% to $151 million from the year-ago quarter. The segment reported an adjusted gross profit of $32 million compared with $31 million in the prior-year quarter.

Materials Solutions segment’s total revenues decreased 19% year over year to $80 million. The segment reported an adjusted gross profit of around $21 million, reflecting a year-over-year decrease of 1%.

Financial Position

Astec’s cash and cash equivalents were around $109 million as of Sep 30, 2020, up from $49 million as of Dec 31, 2019. As of third-quarter 2020-end, the company’s long-term debt was $1.4 million. It has available liquidity of more than $260 million as of Sep 30, 2020.

The company acquired two premier full-line concrete batch plant manufacturers — CON-E-CO and BMH in the reported quarter. Both the buyouts will significantly strengthen the Infrastructure Solutions group portfolio and provide customers with access to the most robust line of concrete products in the infrastructure industry.

Astec is undertaking initiatives to counter the financial and operational impacts of COVID-19. These steps include reducing expenses, conserving cash, suspending hiring except for critical positions, cutting down discretionary spending and overall headcount reduction.

Share Price Performance

Astec’s shares have declined 4.6% in the three months, against the industry‘s rally of 24.6%.

Zacks Rank & Stocks to Consider

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

Some better ranked stocks in the Industrial Products sector are Crown Holdings, Inc. (CCK - Free Report) , iRobot Corporation (IRBT - Free Report) and Worthington Industries, Inc. (WOR - Free Report) . All of these stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past year, the company’s shares have appreciated 25% over the past three months.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. The company’s shares have gained 11% in the past three months.

Worthington has an expected earnings growth rate of 19.2% for 2020. Over the past three months, the stock has climbed 20%.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>