Q3 2006 NET INCOME UP 57.4% OVER Q3 2005 NET INCOME BEFORE 2005 UNUSUAL ITEMS
CHATTANOOGA, Tenn. (October 23, 2006) - Astec Industries, Inc. (Nasdaq: ASTE) today reported results for the third quarter ended September 30, 2006.
Net sales for the third quarter of 2006 were $171.5 million compared to $149.1 million for the third quarter of 2005, for an increase of 15.0%. Domestic sales accounted for 65.8% and international sales 34.2% of the third quarter revenues of 2006 compared to 80.5% for domestic sales and 19.5% for international sales of the third quarter revenues for 2005. Net income for the third quarter of 2006 was $10.0 million, or $0.46 per diluted share.
Net income for the third quarter of 2005 was $10.0 million, or $0.47 per diluted share. Net income for the third quarter of 2005 included a gain on the sale of the Grapevine, Texas property, a real estate impairment charge and the charge-off of prepaid loan fees. Net income for the third quarter of 2006 was $10.0 million, or $0.46 per diluted share compared to net income excluding unusual items of $6.4 million for the third quarter of 2005, or $0.30 per diluted share, for a 57.4% increase in net income. These unusual items are presented in the attached reconciliation. The gain on the sale of real estate, offset by the impairment charge, is presented on a separate line on the 2005 income statement and the charge-off of prepaid loan fees is included in interest expense set forth therein.
Net sales for the nine months ended September 30, 2006 were $548.5 million compared with $481.6 million in the same period in 2005. Net income for the nine months ended September 30, 2006 was $33.3 million, or $1.52 per diluted share, compared to net income of $27.1 million, or $1.30 per diluted share for the same period in 2005. For the nine months ended September 30, 2005, excluding the unusual items mentioned above, net income was $23.4 million, or $1.12 per diluted share. Net income was $33.3 million for the nine months ended September 30, 2006 compared to net income of $23.4 million excluding unusual items in 2005, for a 42.4% increase.
Condensed consolidated financial statements for the third quarter and the first nine months of 2006 and 2005, and additional information related to segment revenues and profits are attached to this press release.
Astec's backlog at September 30, 2006 was $125.3 million compared with $72.2 million at September 30, 2005, for a 73% increase.
Comments Concerning the Fourth Quarter of 2006:The following discussion is a compilation of "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those anticipated as of the date of this press release.
Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief Executive Officer, stated, "We are pleased with the 15% increase in sales and 160 basis points improvement in gross margin for the third quarter of 2006 over the third quarter of 2005. All segments had increased sales for the quarter and are starting the fourth quarter with greatly improved backlogs totaling $125,000,000.
Customers in general are busy and oil prices have moderated from their high in the second quarter. Legislation to confirm federal funding for 2007 seems to be firming up pending the return of Congress from recess. State tax receipts seem to be doing well. Interest rates appear to be stabilizing. We are pleased with the business climate as we enter the fourth quarter and prepare for opportunities in 2007. Our backlogs give us confidence regarding continued growth through next year."
Investor Conference Call and Web Simulcast
Astec will conduct a conference call on October 23, 2006 at 10:00 A.M. Eastern Time to review its third quarter results as well as current business conditions. The number to call for this interactive teleconference is (877) 407-9210. International participants should dial (201) 689-8049. Please reference Astec Industries, Inc.
The company will also provide an online Web simulcast and rebroadcast of the conference call. The live broadcast of Astec's conference call will be available online at the Company's website: www.astecindustries.com/investors/corporateinfo/conferencecalls/default.htm. An archived webcast will be available for 90 days at www.astecindustries.com.
A replay of the conference call will be available through midnight on Monday, October 30, 2006, by dialing (877) 660-6853 or (201) 612-7415 - Account #286, Conference ID # 217560. A transcription of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within five business days after the call.
Astec Industries, Inc. is a manufacturer of specialized equipment for building and restoring the world's infrastructure. Astec's manufacturing operations are divided into four business segments: aggregate processing and mining equipment; asphalt production equipment; mobile asphalt paving equipment; and underground boring, directional drilling and trenching equipment.
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 Company's financial performance for the future generally, the amounts of future highway funding, the effects of increased highway funding and changes in the tax laws on the capital expenditures of the Company's customers, and persistent challenging market conditions. These forward-looking statements reflect management's expectations that 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, further downturns in the economy or delays in any upturns in the economy, rising oil and liquid asphalt prices, a failure to comply with covenants in the Company's credit facility, rising interest rates, decreased funding for highway projects, the timing of large contracts, production capacity, general business conditions in the industry, demand for the Company's products, seasonality and cyclicality in operating results, seasonality of sales volumes, competitive activity 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, 2005.
For Additional Information Contact:
J. Don Brock
Chairman of the Board & C.E.O.
Phone: (423) 867-4210
Fax: (423) 867-4127
E-mail: dbrock@astecindustries.comor
F. McKamy Hall
Vice President and Chief Financial Officer
Phone: (423) 899-5898
Fax: (423) 899-4456
E-mail: mhall@astecindustries.comor
Stephen C. Anderson
Director of Investor Relations
Phone: (423) 899-5898
Fax: (423) 899-4456
E-mail: sanderson@astecindustries.com
Astec Industries, Inc. and Subsidiaries | ||
Consolidated Balance Sheets | ||
(In thousands) | ||
(Unaudited) | ||
September 30 | September 30 | |
2006 | 2005 | |
Assets | ||
Current Assets | ||
Cash and cash equivalents | $ 34,299 | $ 21,215 |
Receivables, net | 68,720 | 60,334 |
Inventories | 151,437 | 129,867 |
Prepaid expenses and other | 11,718 | 13,393 |
Total current assets | 266,174 | 224,809 |
Property and equipment, net | 109,401 | 96,514 |
Other assets | 25,273 | 24,239 |
Total assets | $ 400,848 | $ 345,562 |
Liabilities and shareholders' equity | ||
Current liabilities | ||
Current maturities of long-term debt | $ - | $ 9,700 |
Accounts payable - trade | 39,343 | 36,358 |
Other accrued liabilities | 58,408 | 47,544 |
Total current liabilities | 97,751 | 93,602 |
Other non-current liabilities | 15,064 | 15,228 |
Minority interest in consolidated subsidiary | 635 | 574 |
Total shareholders' equity | 287,398 | 236,158 |
Total liabilities and shareholders' equity | $ 400,848 | $ 345,562 |
Astec Industries, Inc. and Subsidiaries | ||||
Consolidated Statements of Operations | ||||
(In thousands) | ||||
(Unaudited) | ||||
Three Months Ended | Nine Months Ended | |||
2006 | 2005 | 2006 | 2005 | |
Net sales | $ 171,470 | $ 149,103 | $ 548,455 | $ 481,551 |
Cost of sales | 130,453 | 115,911 | 414,896 | 374,034 |
Gross profit | 41,017 | 33,192 | 133,559 | 107,517 |
Selling, general, administrative & engineering | 25,295 | 23,400 | 80,307 | 69,020 |
Gain on sale of real estate, net of real estate | - | 6,531 | - | 6,531 |
Income from operations | 15,722 | 16,323 | 53,252 | 45,028 |
Interest expense | 421 | 1,353 | 1,268 | 3,518 |
Other income, net | 570 | 56 | 1,052 | 191 |
Income before income taxes and | 15,871 | 15,026 | 53,036 | 41,701 |
Income taxes | 5,807 | 4,938 | 19,666 | 14,541 |
Minority interest in earnings | 38 | 29 | 82 | 88 |
Net income | $ 10,026 | $ 10,059 | $ 33,288 | $ 27,072 |
Earnings per Common Share | ||||
Net income: | ||||
Basic | $ 0.47 | $ 0.49 | $ 1.56 | $ 1.34 |
Diluted | $ 0.46 | $ 0.47 | $ 1.52 | $ 1.30 |
Weighted average common shares outstanding | ||||
Basic | 21,520,512 | 20,523,622 | 21,383,889 | 20,146,240 |
Diluted | 21,927,051 | 21,239,420 | 21,960,133 | 20,799,050 |
Astec Industries, Inc. and Subsidiaries | ||||||
Segment Revenues and Profits | ||||||
For the three months ended September 30, 2006 and 2005 | ||||||
(Dollars in thousands) | ||||||
(Unaudited) | ||||||
Asphalt | Aggregate and Mining | Mobile | Underground | All Others | Total | |
2006 Revenues | 45,076 | 69,083 | 28,961 | 28,350 | - | 171,470 |
2005 Revenues | 34,962 | 63,262 | 27,964 | 22,915 | - | 149,103 |
Change $ | 10,114 | 5,821 | 997 | 5,435 | - | 22,367 |
Change % | 28.9% | 9.2% | 3.6% | 23.7% | - | 15.0% |
2006 Gross Profit | 11,160 | 16,688 | 5,989 | 7,200 | (20) | 41,017 |
2006 Gross Profit % | 24.8% | 24.2% | 20.7% | 25.4% | - | 23.9% |
2005 Gross Profit | 7,749 | 15,278 | 6,380 | 3,809 | (24) | 33,192 |
2005 Gross Profit % | 22.2% | 24.2% | 22.8% | 16.6% | - | 22.3% |
Change | 3,411 | 1,410 | (391) | 3,391 | 4 | 7,825 |
2006 Profit (Loss) | 5,939 | 7,562 | 2,029 | 2,889 | (8,188) | 10,231 |
2005 Profit (Loss) | 2,223 | 6,361 | 3,235 | 7,538 | (9,303) | 10,054 |
Change $ | 3,716 | 1,201 | (1,206) | (4,649) | 1,115 | 177 |
Change % | 167.2% | 18.9% | (37.3%) | (61.7%) | 12.0% | 1.8% |
The gain on the sale of the Grapevine facility during 2005 is included in the Underground Group. The real | ||||||
Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on | ||||||
For the three months ended | ||||||
2006 | 2005 | |||||
Total profit for all segments | $ 10,231 | $ 10,054 | ||||
Minority interest earnings of subsidiary | (38) | (29) | ||||
Recapture (Elimination) of intersegment profit | (167) | 34 | ||||
Consolidated net income | $ 10,026 | $ 10,059 | ||||
Astec Industries, Inc. and Subsidiaries | ||||||
Segment Revenues and Profits | ||||||
For the nine months ended September 30, 2006 and 2005 | ||||||
(Dollars in thousands) | ||||||
(Unaudited) | ||||||
Asphalt | Aggregate and Mining | Mobile | Underground | All Others | Total | |
2006 Revenues | 149,026 | 217,942 | 103,199 | 78,288 | - | 548,455 |
2005 Revenues | 136,286 | 186,277 | 91,384 | 67,604 | - | 481,551 |
Change $ | 12,740 | 31,665 | 11,815 | 10,684 | - | 66,904 |
Change % | 9.3% | 17.0% | 12.9% | 15.8% | - | 13.9% |
2006 Gross Profit | 37,981 | 53,292 | 24,641 | 17,687 | (41) | 133,560 |
2006 Gross Profit % | 25.5% | 24.5% | 23.9% | 22.6% | - | 24.4% |
2005 Gross Profit | 29,592 | 44,952 | 21,062 | 11,974 | (63) | 107,517 |
2005 Gross Profit % | 21.7% | 24.1% | 23.0% | 17.7% | - | 22.3% |
Change | 8,389 | 8,340 | 3,579 | 5,713 | 22 | 26,043 |
2006 Profit (Loss) | 20,722 | 24,729 | 12,125 | 5,328 | (29,347) | 33,557 |
2005 Profit (Loss) | 14,262 | 19,046 | 10,328 | 8,442 | (24,940) | 27,138 |
Change $ | 6,460 | 5,683 | 1,797 | (3,114) | (4,407) | 6,419 |
Change % | 45.3% | 29.8% | 17.4% | (36.9%) | (17.7%) | 23.7% |
The gain on the sale of the Grapevine facility during 2005 is included in the Underground Group. The real estate impairment charge during 2005 is included in the Asphalt Group. The charge off of prepaid loan fees during 2005 is included in the "All Others" segment. | ||||||
Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on intersegment revenues. A reconciliation of total segment profits (losses) to the Company's consolidated net income is as follows: | ||||||
For the nine months ended | ||||||
2006 | 2005 | |||||
Total profit for all segments | $ 33,557 | $ 27,138 | ||||
Minority interest in earnings of subsidiary | (82) | (88) | ||||
Recapture (elimination) of intersegment profit | (187) | 22 | ||||
Consolidated net income | $ 33,288 | $ 27,072 | ||||
Astec Industries, Inc. and Subsidiaries | ||||||
Backlog by Segment | ||||||
September 30, 2006 and 2005 | ||||||
(Dollars in thousands) | ||||||
(Unaudited) | ||||||
Asphalt | Aggregate and Mining | Mobile | Underground | All Others | Total | |
2006 Backlog | 45,872 | 58,759 | 3,569 | 17,079 | - | 125,279 |
2005 Backlog | 25,108 | 40,621 | 1,748 | 4,756 | - | 72,233 |
Change $ | 20,764 | 18,138 | 1,821 | 12,323 | - | 53,046 |
Change % | 82.7% | 44.7% | 104.2% | 259.1% | - | 73.4% |
Astec Industries, Inc. and Subsidiaries | ||
Reconciliation of Net Income to Net Income Before Unusual Items | ||
(In thousands) | ||
(Unaudited) | ||
Three Months Ended | Nine Months Ended | |
Net income | $ 10,059 | $ 27,072 |
Unusual Items net of tax at the statutory rate of 38.6%: | ||
Gain on sale of Grapevine facility | 4,736 | 4,736 |
Real estate impairment charge | (726) | (726) |
Charge off of prepaid loan fees | (319) | (319) |
Net income from unusual items | 3,691 | 3,691 |
Net income before unusual items | $ 6,368 | $ 23,381 |
Earnings per Common Share | ||
Net income: | ||
Basic | $ 0.49 | $ 1.34 |
Diluted | $ 0.47 | $ 1.30 |
Net income from unusual items: | ||
Basic | $ 0.18 | $ 0.18 |
Diluted | $ 0.17 | $ 0.18 |
Net income before unusual items: | ||
Basic | $ 0.31 | $ 1.16 |
Diluted | $ 0.30 | $ 1.12 |
Weighted average common shares outstanding | ||
Basic | 20,523,622 | 20,146,240 |
Diluted | 21,239,420 | 20,799,050 |