Astec boosts earnings but falls short of expectations
Despite a drop in international sales, domestic highway spending and wood pellet sales paved the way for higher sales and profits in the third quarter for Astec Industries Inc.
But results for the Chattanooga-based asphalt and heavy equipment maker released Tuesday were still below analysts’ expectations, driving the company’s stock down by nearly 9 percent Tuesday in trading on the Nasdaq exchange.
Astec reported third quarter earnings Tuesday of $6.8 million, or 30 cents per share, on sales of $247.8 million. In the same period a year ago, Astec earned $2.3 million, or 10 cents per share, on sales of $211.4 million.
The results fell short of Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 37 cents per share.
“Despite our strong overall performance, we still face several challenges,” Astec CEO Ben Brock said Tuesday. “Low oil and natural gas prices have hurt our Energy Group sales and the mining slowdown
has hurt our Aggregate and Mining Group sales.”
Brock said the strong U.S. dollar translated into a $9.5 million negative impact on foreign exports.
But overall, Astec revenues are up 7 percent and year-to-date earnings are up 47 percent over last year. Brock credited the gains to stronger domestic paving equipment sales and global sales of wood pellet equipment. Astec said its backlog is up 55 percent from a year ago. Astec projects full year revenue in 2016 will be up between 6 and 9 percent over last year and Brock said the company is still looking for more acquisitions.
“Taking all that together, we will have the opportunity to successfully grow and operationally improve our company for the fourth year in the raw in 2017,” he said. “Acquisitions remain a key piece of our growth strategy along with it organic growth; we are still diligently working on potential acquisitions.”
Prior to Tuesday’s stock selloff, Astec Industries shares were up 48 percent since the beginning of the year and the stock was up 89 percent from a year ago.