Chattanooga-based Astec Industries Inc. on Monday posted higher first quarter earnings and a sizable business backlog, but its chief said he's not expecting much help from a federal highway bill this year.
"We see a lack of direction in Washington on highway funding, energy policy and deficit control - any and all creating uncertainty for our customers," said J. Don Brock, CEO of the company that makes equipment for building, paving and mining.
International business is strong, Brock said.
"We are adopting strategies to grow internationally, serve other expanding markets and succeed without the support of a federal highway bill," he said.
Astec reported net income grew 14.8 percent to $10.1 million for the quarter compared to $8.8 million earned a year ago. Earnings per share for the quarter were 44 cents versus 39 cents a year ago - a 12.8 percent increase.
Revenues for the first quarter were $230.2 million compared with $193.5 million a year ago, a 19 percent increase.
The production of asphalt equipment is a key part of Astec's business, but a top U.S. senator said recently that Congress may have to consider a much smaller highway-funding bill than initially planned because of a steep drop in federal gasoline tax revenues.
Senate Finance Committee Chairman Max Baucus said lawmakers may have to draft a bill covering two years of funding instead of six. That would effectively freeze funding for highway construction or even lead to a drop.
The Obama administration has called for a six-year, $556 billion transportation bill to create jobs and spur the economy.
Brock said international markets were 36 percent of Astec revenues in the quarter. The company's backlog is 51 percent international, he told analysts during a conference call Monday.
"Growth in international distribution fills weakness in domestic markets," Brock said, citing new steps the company is taking in Europe and South Africa.
He said Canada and Australia are good markets and Astec officials see improvements in Russia and South America.
Analyst Bentley Offutt of Offutt Securities said the backlog of $244 million is up significantly from $134 million a year ago.
"It's a huge increase," he said.
Offutt said Astec also showed a strong gain in international sales in the quarter, growing 29.2 percent compared to a year ago.
Astec shares closed Monday at $37.96, down $1.08, or 2.77 percent. Shares on Thursday hit a 52-week high of $39.04.
Contact Mike Pare at firstname.lastname@example.org or 423-757-6318.