Astec reports quarterly loss from cost of wood pellet plant upgrades
The cost of fixing the design of wood pellet plants in Georgia and Arkansas generated a net loss of $2.7 million, or 12 cents per share, for Astec Industries Inc. in the third quarter.
Astec disclosed the problems earlier this month and the third quarter results announced Tuesday were in line with Wall Street expectations, according to the average estimate of five analysts surveyed by Zacks Investment Research.
“During the quarter, we executed well across the business driving earnings in line with our expectations, and adjusting for the previously announced pellet plant investment costs, improved gross margin performance year-over-year,” Astec CEO Ben Brock said in the earnings announcement Tuesday.
The wood pellet plant problems cost the equivalent of 59 cents per share in the quarter, however.
Despite such losses, Brock said he remains confident in the business.
“We will have invested approximately $31 million over seven years to get into a $100 million per year business,” Brock said. “We believe that the investment is a good one for our company.”
Astec said its backlog of orders as of Sept. 30 was
up 1 percent over a year ago to $389.3 million. But Brock said he expects fourth quarter results likely will be below year ago levels.
“While we exited the third quarter with a strong backlog, product mix and contracted delivery schedules have tempered our expectations for the fourth quarter,” he said.
The revenues in the third quarter for the Chattanooga-based maker of equipment for building, paving and mining were below analysts’ expectations, however, helping to lower the company’s stock by 3.9 percent in trading Tuesday, closing at $50.17 per share, down $2.02 per share.
Brock said the company “still has a good opportunity to drive slight yearover-year sales growth for 2017,” but the originally anticipated uptick in sales and earnings growth during the fourth quarter “will be pushed into 2018 ” and fourth quarter earnings will be below a year ago., adjusting for the wood pellet investment.
“As we look to 2018, we are very optimistic on our outlook given our backlog, quote activity and conversations with our customers,” Brock said.
Astec Industries shares have declined 23 percent since the beginning of the year. The stock has fallen 12 percent in the last 12 months.
Contact Dave Flessner at dflessner @timesfreepress.com or at 757-6340