Astec Industries boosted its first quarter earnings by 33.8 percent from a year ago as the Chattanooga-based maker of paving equipment and heavy machinery improved both its sales and profit margins in the first three months of the year.
Astec said today its net income in the quarter rose to $20.3 million, or 87 cents per share, on sales of $325.5 million. In the same period a year earlier, Astec earned $15.1 million, or 65 cents per share, on sales of $318.4 million.
The profit results were slightly better than what most analysts had forecast even though sales were not as strong as what Wall Street had expected. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 86 cents per share. Four analysts surveyed by Zacks expected sales in the quarter to total $339.1 million.
Astec CEO Benjamin Brock said he was pleased with the first quarter performance and the increased backlog, which rose by 17.8 percent in the past year to $444.9 million as of March 31.
"While we have a good start to the year, we have opportunities to improve," Brock said in today's earnings release.. "Our gross margin for the quarter was 24 percent which puts us on our way toward our goal to exit 2018 at a 25 percent gross margin. Our $444.9 million backlog is reflective of strong private and public work environments for our customers. Given our backlog and customer feedback on their markets, we are optimistic for 2018 as a whole."
Zacks Equity Research said Astec and other industrial and mining machinery companies are faring better this year with increased spending by governments around the globe and the lower tax rates on businesses in the United States.
"After being straddled by soft commodity prices, reduced investment in the energy sector, dismal economic conditions in some developed and developing nations in the last few years, the Industrial Products sector seems to have regained its footing last year.," Zacks reported in an investment note on Monday. "The turnaround in its performance is primarily due to increased infrastructure spending and other growth-friendly policies of the new administration. Rise in manufacturing and mining activity also played a crucial role."
Despite such improvements, Astec Industries shares have decreased 2 percent since the beginning of the year. But Astec's stock has decreased 7 percent in the last 12 months.