Astec Industries (ASTE) 8-K Astec Industries Reports Second Quarter Results

Astec Industries, Inc.

News Release

   1725 Shepherd Road  |  Chattanooga, TN  37421  |  Phone (423) 899-5898  |  Fax 899-4456

ASTEC INDUSTRIES REPORTS SECOND QUARTER RESULTS

CHATTANOOGA, Tenn. (July 21, 2008) – Astec Industries, Inc. (Nasdaq:  ASTE) today reported results for their second quarter ended June 30, 2008.

Net income for the second quarter of 2008 was $0.93 per diluted share compared to $0.83 per diluted share for the second quarter of 2007 for a 12.0% increase.

Revenues for the second quarter of 2008 were $277.7 million compared with $226.4 million for the second quarter of 2007 for a 22.7% increase.  Excluding revenues attributable to Peterson Pacific Corp., which was acquiredin July, 2007, revenues for the second quarter were $256.0 million for a 13.1% increase.  Domestic sales accounted for $184.7 million during the second quarter of 2008 compared to $156.6 million during the second quarter of 2007.  International sales accounted for $93.0 million of revenues during the second quarter of 2008 compared to $69.8 million during the second quarter of 2007.  The Company reported net income of $21.1 million for the second quarter of 2008 compared to net income of $18.5 million for the second quarter of 2007 for an increase of 14.1%.  The Company’s backlog at June 30, 2008 was $264.6 million compared to $235.4 million at June 30, 2007 (including backlog attributable to Peterson) for a 12.4% increase.

Consolidated financial statements for the second quarter ended June 30, 2008 and additional information related to segment revenues and profits are attached as addenda to this press release.

Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief Executive Officer, stated, “We are pleased with the Company’s second quarter earnings.  International sales continue to be strong, accounting for 33.5% of the second quarter volume.  Gross margin for the quarter declined from 26.0% for the second quarter of 2007 to 23.9% for the second quarter of 2008.  Rapid increases in the costs of steel and components were the primary reasons for the decline in gross margin.  Year-to-date gross margin for 2008 has only declined 1.1% compared to the first half of 2007.  We anticipate that inflation will continue to be a challenge during the second half of 2008.  Some of our subsidiaries have implemented two price increases this year and are reviewing the need for additional increases to maintain or improve gross margins. We will continue our other initiatives to deal with inflation.  We look forward to the second half of 2008 with a backlog at June 30, 2008 of $264.6 million compared to $263.0 million at March 31, 2008.  Some of the deliveries in the backlog extend beyond the third quarter of 2008.  The cost of oil and asphalt continues to cause states to increase the percentage of recycled materials used for highway paving.  Asphalt equipment sales have improved and should continue to benefit from recycle related equipment sales.”

Investor Conference Call and Web Simulcast

Astec will conduct a conference call on July 21, 2008 at 10:00 A.M. Eastern Time to review its second quarter results as well as current business conditions.  The number to call for this interactive teleconference is (877) 407-9210.  International callers should dial (201) 689-8049.   Please reference Astec Industries.

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/www/docs/100, Conference Calls Section.  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, July 28, 2008 by dialing (877) 660-6853, or (201) 612-7415 for international callers, Account #286, Conference ID# 291359.  A transcription of the conference call will be made available under the Investor Relation section of the Astec Industries, Inc. website within 5 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.  Astec also has a company engaged in the wood chipping and grinding industry.

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 third and fourth quarters and future generally, the ability to maintain or improve margins, the economy, inflation and our initiatives regarding inflation, the increase in sales of recycling equipment and international sales.  These forward-looking statements reflect management’s expectations and 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, downturns in the general economy or the commercial construction industry, the cyclical nature of the commercial, construction industry and the customization of the equipment the Company sells,  increases in the price of oil or decreases in the availability of oil, increases in the price of raw materials, a failure to comply with covenants in the Company’s credit agreement, contingent liability for certain customer debt, rising interest rates, rising steel and steel component pricing, delayed or decreased funding for highway construction and maintenance, increased government regulation, managing and expanding in international markets, the timing of large contracts, the costs of introducing new equipment systems, the Company’s production capacity,  demand for the Company’s products, 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, 2007.

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.com

or

F. McKamy Hall

Vice President and Chief Financial Officer

Phone:  (423) 899-5898

Fax:  (423) 899-4456

E-mail: mhall@astecindustries.com

or

Stephen C. Anderson

Secretary / 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)
	June 30,		June 30,
	2008		2007
Assets
Current assets
Cash and cash equivalents	$	39,491	$	72,166
Receivables, net		107,853		81,984
Inventories		234,175		166,663
Prepaid expenses and other		16,925		14,073
Total current assets		398,444		334,886
Property and equipment, net		147,039		121,426
Other assets		51,916		31,527
Total assets	$	597,399	$	487,839
Liabilities and shareholders' equity
Current liabilities
Accounts payable - trade	$	63,470	$	47,679
Other accrued liabilities		94,541		73,129
Total current liabilities		158,011		120,808
Other non-current liabilities		22,620		20,673
Minority interest in consolidated subsidiary		825		778
Total shareholders' equity		415,943		345,580
Total liabilities and shareholders' equity	$	597,399	$	487,839

Astec Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands)
(Unaudited)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2008			2007		2008		2007
Net sales	$	277,703		$	226,414	$	540,775	$	441,976
Cost of sales		211,414			167,471		408,266		328,660
Gross profit		66,289			58,943		132,509		113,316
Selling, general, administrative & engineering expenses		33,589			30,318		72,369		60,848
Income from operations		32,700			28,625		60,140		52,468
Interest expense		120			201		252		616
Other income, net of expenses		412			714		839		1,400
Income before income taxes and minority interest		32,992			29,138		60,727		53,252
Income taxes		11,921			10,584		22,080		19,330
Minority interest in earnings (loss) of subsidiary		(1	)		49		56		83
Net income	$	21,072		$	18,505	$	38,591	$	33,839
Earnings per Common Share
Net income
Basic	$	0.95		$	0.85	$	1.73	$	1.55
Diluted	$	0.93		$	0.83	$	1.71	$	1.52
Weighted average common shares outstanding
Basic		22,283,071			21,879,134		22,260,085		21,762,265
Diluted		22,633,760			22,400,284		22,592,148		22,298,140

Astec Industries, Inc. and Subsidiaries
Segment Revenues and Profits
For the three months ended June 30, 2008 and 2007
(in thousands)
(Unaudited)
	Asphalt Group			Aggregate and Mining Group			Mobile Asphalt Paving Group			Underground Group			All Others			Total
2008 Revenues		72,329			92,395			55,055			36,211			21,713			277,703
2007 Revenues		66,638			88,993			40,390			30,393			-			226,414
Change $		5,691			3,402			14,665			5,818			21,713			51,289
Change %		8.5	%		3.8	%		36.3	%		19.1	%		-			22.7	%
2008 Gross Profit		18,001			22,528			13,557			8,307			3,897			66,290
2008 Gross Profit %		24.9	%		24.4	%		24.6	%		22.9	%		17.9	%		23.9	%
2007 Gross Profit (Loss)		18,056			22,866			10,721			7,315			(15	)		58,943
2007 Gross Profit %		27.1	%		25.7	%		26.5	%		24.1	%		-			26.0	%
Change		(55	)		(338	)		2,836			992			3,912			7,347
2008 Profit (Loss)		11,445			11,910			8,037			3,544			(14,051	)		20,885
2007 Profit (Loss)		11,718			12,330			5,748			2,279			(13,630	)		18,445
Change $		(273	)		(420	)		2,289			1,265			(421	)		2,440
Change %		(2.3	%)		(3.4	%)		39.8	%		55.5	%		(3.1	%)		13.2	%

Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on intersegment revenues. A reconciliation of total segment profits to the Company's consolidated net income is as follows:

	For the three months ended June 30,
	2008		2007
Total profit for all segments	$	20,885	$	18,445
Minority interest in loss (earnings) of subsidiary		1		(49	)
Recapture of intersegment profit		186		109
Consolidated net income	$	21,072	$	18,505

Astec Industries, Inc. and Subsidiaries
Segment Revenues and Profits
For the six months ended June 30, 2008 and 2007
(in thousands)
(Unaudited)
	Asphalt Group			Aggregate and Mining Group			Mobile Asphalt Paving Group			Underground Group			All Others			Total
2008 Revenues		143,914			183,484			102,186			68,854			42,337			540,775
2007 Revenues		131,647			171,337			84,339			54,653			-			441,976
Change $		12,267			12,147			17,847			14,201			42,337			98,799
Change %		9.3	%		7.1	%		21.2	%		26.0	%		-			22.4	%
2008 Gross Profit		37,607			45,685			26,149			15,409			7,658			132,508
2008 Gross Profit %		26.1	%		24.9	%		25.6	%		22.4	%		18.1	%		24.5	%
2007 Gross Profit (Loss)		35,983			43,745			20,902			12,711			(25	)		113,316
2007 Gross Profit %		27.3	%		25.5	%		24.8	%		23.3	%		-			25.6	%
Change		1,624			1,940			5,247			2,698			7,683			19,192
2008 Profit (Loss)		23,289			22,169			14,565			5,389			(26,776	)		38,636
2007 Profit (Loss)		23,171			22,705			11,225			3,292			(26,740	)		33,653
Change $		118			(536	)		3,340			2,097			(36	)		4,983
Change %		0.5	%		(2.4	%)		29.8	%		63.7	%		(0.1	%)		14.8	%

Segment revenues are reported net of intersegment revenues.  Segment gross profit is net of profit on intersegment revenues.  A reconciliation of total segment profits to the Company's consolidated net income is as follows:

		For the six months ended June 30,
		2008		2007
Total profit for all segments	$	38,636	$	33,653
Minority interest in earnings of subsidiary		(56)		(83)
Recapture of intersegment profit		11		269
Consolidated net income	$	38,591	$	33,839

Astec Industries, Inc. and Subsidiaries
Backlog by Segment
June 30, 2008 and 2007
(in thousands)
(Unaudited)
	Asphalt Group			Aggregate and Mining Group			Mobile Asphalt Paving Group			Underground Group			All Others			Total
2008 Backlog		123,273			104,852			5,373			18,443			12,683			264,624
2007 Backlog		101,373			100,892			11,856			14,730			6,530			235,381
Change $		21,900			3,960			(6,483	)		3,713			6,153			29,243
Change %		21.6	%		3.9	%		(54.7	%)		25.2	%		94.2	%		12.4	%