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

Astec Industries, Inc.

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

News Release

ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND 2016 RESULTS

CHATTANOOGA, Tenn. (February 21, 2017) - Astec Industries, Inc. (Nasdaq:  ASTE) today reported results for their fourth quarter and year ended December 31, 2016.

Net sales for the fourth quarter of 2016 were $326.6 million compared to $215.0million for the fourth quarter of 2015, a 52% increase.  Earnings for the fourth quarter of 2016 were $12.4 million or $0.53 per diluted share compared to $3.6 million or $0.16 per diluted share in the fourth quarter of 2015, an increase in earnings per share of 231%.

Domestic sales increased 65% to $265.0 million for the fourth quarter of 2016 from $160.3 million for the fourth quarter of 2015.  International sales increased 13% to $61.6 million for the fourth quarter of 2016 from $54.7 million for the fourth quarter of 2015.

Net sales for 2016 were $1.147 billion compared to $983.2million for 2015, a 17% increase.  Earnings for 2016 were $55.2 million or $2.38 per diluted share compared to $32.8 million or $1.42 per diluted share for 2015, a 68% increase in earnings per share.

Domestic sales increased 30% to $941.3 million for 2016 from $722.3 million for 2015.  International sales were $206.2 million for 2016 compared to $260.9 million for 2015, a 21% decrease.

The Company's domestic backlog increased 13% to $294.8 million at December 31, 2016 from $261.8 million at December 31, 2015.  The international backlog at December 31, 2016 was $62.6 million compared to $54.1 million at December 31, 2015, an increase of 16%.  Total backlog increased 13% to a year-end record of $357.4 million at December 31, 2016 from $315.9 million at December 31, 2015.

Consolidated financial information for the quarter and year ended December 31, 2016 and additional information related to segment revenues and profits are attached as addenda to this press release.

Commenting on the announcement of quarterly and annual results, Benjamin G. Brock, Chief Executive Officer, stated "We were pleased with our results for the fourth quarter and for the year.  We were able to grow revenues and net income both quarter over quarter and year over year.  At the same time, we were able to grow our backlog at December 31, 2016 to $357.4 million, a December record."

Mr. Brock continued, "The domestic market was strong for our Infrastructure Group's products targeted at the road construction industry and the group also recognized better than expected wood pellet plant revenues.  Our Aggregate and Mining group started to see an improvement in the domestic market for products targeted at traditional rock quarries while the mining market continued to be slow.  Our Energy Group products targeted at specialized industrial markets saw an increase during the quarter, while we experienced a slight increase in quote and order activity in the oil and gas markets."

Mr. Brock concluded, "Given these positive developments, and our order activity in January, we are optimistic about 2017.  Our backlog at January 31, 2017 was $386.3 million, a record high for January.  Some of these orders are for new equipment designs that have the potential to carry lower margin and/or higher than normal warranty expense in the first half of this year.  However, the introduction of new products is essential for our future.  While the increase in order activity is a good sign for the year ahead, we still face significant challenges on U.S. exports given the continued strength of the U.S. dollar."

Investor Conference Call and Web Simulcast

Astec will conduct a conference call on February 21, 2017, at 10:00 A.M. Eastern Time to review its December 31, 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, March 7, 2017 by dialing (877) 481-4010, or (919) 882-2331 for international callers, Replay ID# 10240.  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 low oil prices, the global mining slow down, the strong U.S. Dollar, and the impact of a long-term highway bill in the United States.  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.
Consolidated Balance Sheets
(in thousands)
(unaudited)
	Dec 31		Dec 31
	2016		2015
Assets
Current assets
Cash and cash equivalents	$	82,371	$	25,062
Investments		1,024		1,539
Receivables, net		110,673		101,997
Inventories		360,404		384,776
Prepaid expenses and other		22,361		28,423
Total current assets		576,833		541,797
Property and equipment, net		180,538		170,206
Other assets		86,230		65,350
Total assets	$	843,601	$	777,353
Liabilities and equity
Current liabilities
Accounts payable - trade	$	57,297	$	48,385
Other current liabilities		111,564		93,627
Total current liabilities		168,861		142,012
Non-current liabilities		25,899		25,483
Total equity		648,841		609,858
Total liabilities and equity	$	843,601	$	777,353

Astec Industries, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
	Three Months Ended Dec 31				Twelve Months Ended Dec 31
	2016		2015		2016		2015
Net sales	$	326,563	$	215,017	$	1,147,431	$	983,157
Cost of sales		262,091		169,590		882,162		764,314
Gross profit		64,472		45,427		265,269		218,843
Selling, general, administrative & engineering expenses		45,398		40,722		178,115		168,856
Income from operations		19,074		4,705		87,154		49,987
Interest expense		338		389		1,395		1,611
Other		63		1,216		1,507		4,428
Income before income taxes		18,799		5,532		87,266		52,804
Income taxes		6,413		1,937		32,107		20,007
Net income attributable to controlling interest	$	12,386	$	3,595	$	55,159	$	32,797
Earnings per Common Share
Net income attributable to controlling interest
Basic	$	0.54	$	0.16	$	2.40	$	1.43
Diluted	$	0.53	$	0.16	$	2.38	$	1.42
Weighted average common shares outstanding
Basic		23,002		22,947		22,992		22,934
Diluted		23,154		23,124		23,142		23,120

Astec Industries, Inc.
Segment Revenues and Profits
For the three months ended December 31, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Corporate			Total
2016 Revenues	$	194,090		$	82,367		$	50,106		$	-		$	326,563
2015 Revenues		91,969			85,023			38,025			-			215,017
Change $		102,121			(2,656	)		12,081			-			111,546
Change %		111.0	%		(3.1	%)		31.8	%		-			51.9	%
2016 Gross Profit		34,498			19,128			10,752			94			64,472
2016 Gross Profit %		17.8	%		23.2	%		21.5	%		-			19.7	%
2015 Gross Profit		18,672			19,319			6,831			605			45,427
2015 Gross Profit %		20.3	%		22.7	%		18.0	%		-			21.1	%
Change		15,826			(191	)		3,921			(511	)		19,045
2016 Profit (Loss)		20,088			6,742			908			(15,247	)		12,491
2015 Profit (Loss)		4,418			5,249			804			(7,470	)		3,001
Change $		15,670			1,493			104			(7,777	)		9,490
Change %		354.7	%		28.4	%		12.9	%		(104.1	%)		316.2	%
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 net income attributable to controlling interest is as follows (in thousands):

	Three months ended December 31
	2016			2015		Change $
Total profit for all segments	$	12,491		$	3,001	$	9,490
Recapture (elimination) of intersegment profit		(157	)		432		(589	)
Net  loss attributable to non-controlling interest		52			162		(110	)
Net income attributable to controlling interest	$	12,386		$	3,595	$	8,791

Astec Industries, Inc.
Segment Revenues and Profits
For the twelve months ended December 31, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Corporate			Total
2016 Revenues	$	608,908		$	359,760		$	178,763		$	-		$	1,147,431
2015 Revenues		428,737			370,813			183,607			-			983,157
Change $		180,171			(11,053	)		(4,844	)		-			164,274
Change %		42.0	%		(3.0	%)		(2.6	%)		-			16.7	%
2016 Gross Profit		135,848			91,352			37,820			249			265,269
2016 Gross Profit %		22.3	%		25.4	%		21.2	%		-			23.1	%
2015 Gross Profit		92,964			89,501			35,743			635			218,843
2015 Gross Profit %		21.7	%		24.1	%		19.5	%		-			22.3	%
Change		42,884			1,851			2,077			(386	)		46,426
2016 Profit (Loss)		71,482			34,877			4,145			(55,992	)		54,512
2015 Profit (Loss)		33,890			30,690			3,609			(36,623	)		31,566
Change $		37,592			4,187			536			(19,369	)		22,946
Change %		110.9	%		13.6	%		14.9	%		(52.9	%)		72.7	%
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):

	Twelve months ended December 31
	2016		2015		Change $
Total profit for all segments	$	54,512	$	31,566	$	22,946
Recapture of intersegment profit		476		400		76
Net loss attributable to non-controlling interest		171		831		(660	)
Net income attributable to controlling interest	$	55,159	$	32,797	$	22,362

Astec Industries, Inc.
Backlog by Segment
December 31, 2016 and 2015
(in thousands)
(unaudited)
	Infrastructure Group			Aggregate and Mining Group			Energy Group			Total
2016 Backlog	$	232,224		$	88,951		$	36,192		$	357,367
2015 Backlog		203,830			74,484			37,596			315,910
Change $		28,394			14,467			(1,404	)		41,457
Change %		13.9	%		19.4	%		(3.7	%)		13.1	%