Astec Industries (ASTE) 8-K Astec Industries Reports Third Quarter 2016 Results

Astec Industries, Inc.

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

News Release

ASTEC INDUSTRIES REPORTS THIRD QUARTER 2016 RESULTS

CHATTANOOGA, Tenn. (October 25, 2016) - Astec Industries, Inc. (Nasdaq:  ASTE) today reported results for their third quarter and year to date ended September 30, 2016.

Net sales for the third quarter of 2016 were $247.8 million compared to $211.4million for the third quarter of 2015, a 17% increase.  Earnings for the third quarter of 2016 were $6.8 million or $0.30 per diluted share compared to $2.3 million or $0.10 per diluted share in the third quarter of 2015, an increase of 200%.

Domestic sales increased 28% to $199.9 million for the third quarter of 2016 compared to $156.3 million for the third quarter of 2015.  International sales decreased 13% to $47.9 million for the third quarter of 2016 compared to $55.1 million for the third quarter of 2015.

Net sales for the first nine months of 2016 were $820.9 million compared to $768.1million for the first nine months of 2015, a 7% increase.  Earnings for the first nine months of 2016 were $42.8 million or $1.85 per diluted share compared to $29.2 million or $1.26 per diluted share for the first nine months of 2015, a 47% increase.

Domestic sales increased 20% to $676.3 million for the first nine months of 2016 compared to $562.0 million for the first nine months of 2015.  International sales were $144.6 million for the first nine months of 2016 compared to $206.1 million for the first nine months of 2015, a 30% decrease.

The Company's domestic backlog increased 69% to $325.6 million at September 30, 2016 from $193.1 million at September 30, 2015.  The international backlog at September 30, 2016 was $63.7 million compared to $58.7 million at September 30, 2015, an increase of 9%.  Total backlog increased 55% to $389.3 million at September 30, 2016 from $251.8 million at September 30, 2015.

Consolidated financial information for the quarter and nine months ended September 30, 2016 and additional information related to segment revenues and profits are attached as addenda to this press release.

Commenting on the announcement, Benjamin G. Brock, President and Chief Executive Officer, stated, "We were pleased to improve our earnings by 200% in the third quarter versus the third quarter of last year.  We were able to secure and ship orders at a more profitable rate during the quarter mainly due to favorable infrastructure and wood pellet equipment activity."

Mr. Brock continued, "Despite our strong overall performance, we still face several challenges.  Low oil and natural gas prices have hurt our Energy Group sales.  The mining slowdown has hurt our Aggregate and Mining Group sales.  The strong U.S. Dollar continues to affect our ability to export from our U.S. based operations.  Nonetheless, our year-to-date revenues are up 7% and our year-to-date earnings are up 47% versus last year.  These positive results are mainly due to good domestic markets for our equipment targeted at the infrastructure and wood pellet industries and execution of our margin improvement plans at our operating subsidiaries. Finally, we are also pleased to report that our backlog is up 55% versus last year indicating continued strong demand for our products."

Investor Conference Call and Web Simulcast

Astec will conduct a conference call on October 25, 2016, at 10:00 A.M. Eastern Time to review its September 30, 2016 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/conferencecalls. 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 Tuesday, November 8, 2016 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Account #286, Conference ID# 10099.  A transcription of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 business days after the call.

Astec Industries, Inc. is a manufacturer of specialized equipment for asphalt road building; aggregate processing; oil, gas and water well drilling; and wood processing.  Astec's manufacturing operations are divided into three primary business segments:  road building and related equipment (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and equipment for the extraction, production and combustion of fuels, biomass production, and water drilling equipment (Energy Group).

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 effects on the Company from strong domestic demand, low oil prices, the global mining slow down, and the strong U.S. Dollar.  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, oil and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company's products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, 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, 2015.

For Additional Information Contact:Benjamin G. BrockChief Executive OfficerPhone: (423) 867-4210Fax: (423) 867-4127E-mail: bbrock@astecindustries.comor

David C. SilviousVice President and Chief Financial Officer

Phone: (423) 899-5898

Fax: (423) 899-4456E-mail: dsilvious@astecindustries.com

or

Stephen C. Anderson

Vice President, Director of Investor Relations & Corporate Secretary

Phone: (423) 899-5898

Fax: (423) 899-4456

E-mail: sanderson@astecindustries.com

Astec Industries, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	Sept 30		Sept 30
	2016		2015
Assets
Current assets
Cash and cash equivalents	$	52,474	$	13,985
Investments		713		1,834
Receivables, net		111,753		105,226
Inventories		399,718		384,531
Prepaid expenses and other		25,909		50,398
Total current assets		590,567		555,974
Property and equipment, net		178,167		170,508
Other assets		93,105		60,805
Total assets	$	861,839	$	787,287
Liabilities and equity
Current liabilities
Accounts payable - trade	$	53,496	$	46,406
Other current liabilities		136,710		91,568
Total current liabilities		190,206		137,974
Non-current liabilities		26,702		36,919
Total equity		644,931		612,394
Total liabilities and equity	$	861,839	$	787,287

Astec Industries, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
	Three Months Ended				Nine Months Ended
	Sept 30		Sept 30		Sept 30		Sept 30
	2016		2015		2016		2015
Net sales	$	247,752	$	211,350	$	820,868	$	768,141
Cost of sales		192,363		166,212		620,071		594,724
Gross profit		55,389		45,138		200,797		173,417
Selling, general, administrative & engineering expenses		43,950		41,023		132,716		128,136
Income from operations		11,439		4,115		68,081		45,281
Interest expense		264		505		1,057		1,222
Other		508		844		1,443		3,212
Income before income taxes		11,683		4,454		68,467		47,271
Income taxes		4,845		2,162		25,694		18,070
Net income attributable to controlling interest	$	6,838	$	2,292	$	42,773	$	29,201
Earnings per Common Share
Net income attributable to controlling interest
Basic	$	0.30	$	0.10	$	1.86	$	1.27
Diluted	$	0.30	$	0.10	$	1.85	$	1.26
Weighted average common shares outstanding
Basic		23,001		22,943		22,989		22,930
Diluted		23,145		23,121		23,138		23,118

Astec Industries, Inc.
Segment Revenues and Profits
For the three months ended September 30, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Corporate			Total
2016 Revenues		109,227			85,819			52,706			-			247,752
2015 Revenues		85,625			80,549			45,176			-			211,350
Change $		23,602			5,270			7,530			-			36,402
Change %		27.6	%		6.5	%		16.7	%		-			17.2	%
2016 Gross Profit		24,929			20,935			9,473			52			55,389
2016 Gross Profit %		22.8	%		24.4	%		18.0	%		-			22.4	%
2015 Gross Profit		16,104			19,226			9,794			14			45,138
2015 Gross Profit %		18.8	%		23.9	%		21.7	%		-			21.4	%
Change		8,825			1,709			(321	)		38			10,251
2016 Profit (Loss)		9,858			7,651			805			(11,610	)		6,704
2015 Profit (Loss)		2,116			3,790			1,941			(6,853	)		994
Change $		7,742			3,861			(1,136	)		(4,757	)		5,710
Change %		365.9	%		101.9	%		(58.5	%)		(69.4	%)		574.4	%

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 net income attributable to controlling interest is as follows (in thousands):

	Three months ended September 30
	2016		2015		Change $
Total profit for all segments	$	6,704	$	994	$	5,710
Recapture of intersegment profit		131		964		(833	)
Net loss attributable to non-controlling interest		3		334		(331	)
Net income attributable to controlling interest	$	6,838	$	2,292	$	4,546

Astec Industries, Inc.
Segment Revenues and Profits
For the nine months ended September 30, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Corporate			Total
2016 Revenues		414,817			277,393			128,658			-			820,868
2015 Revenues		336,768			285,790			145,583			-			768,141
Change $		78,049			(8,397	)		(16,925	)		-			52,727
Change %		23.2	%		(2.9	%)		(11.6	%)		-			6.9	%
2016 Gross Profit		101,349			72,224			27,069			155			200,797
2016 Gross Profit %		24.4	%		26.0	%		21.0	%		-			24.5	%
2015 Gross Profit		74,292			70,182			28,912			31			173,417
2015 Gross Profit %		22.1	%		24.6	%		19.9	%		-			22.6	%
Change		27,057			2,042			(1,843	)		124			27,380
2016 Profit (Loss)		51,394			28,135			3,237			(40,745	)		42,021
2015 Profit (Loss)		29,472			25,441			2,805			(29,154	)		28,564
Change $		21,922			2,694			432			(11,591	)		13,457
Change %		74.4	%		10.6	%		15.4	%		(39.8	%)		47.1	%

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 net income attributable to controlling interest is as follows (in thousands):

	Nine months ended September 30
	2016		2015			Change $
Total profit for all segments	$	42,021	$	28,564		$	13,457
Recapture (elimination) of intersegment profit		633		(32	)		665
Net loss attributable to non-controlling interest		119		669			(550	)
Net income attributable to controlling interest	$	42,773	$	29,201		$	13,572

Astec Industries, Inc.
Backlog by Segment
September 30, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Total
2016 Backlog		286,895			61,409			40,956			389,260
2015 Backlog		145,073			68,110			38,592			251,775
Change $		141,822			(6,701	)		2,364			137,485
Change %		97.8	%		(9.8	%)		6.1	%		54.6	%