The congressional delay this spring in approving more federal money for road projects cut second-quarter earnings for Astec Industries Inc. and pushed shares of the Chattanooga-based asphalt equipment maker down by more than 6.1 percent.
Astec said Tuesday it earned $10.4 million, or 45 cents per share, during the three months ended June 30. The company's earnings were down 26 percent from a year ago and were 22 cents per share below what analysts had expected.
Astec shares fell by $1.79 Tuesday to close at $27.52.
Federal highway funding bills were repeatedly delayed over the past year before Congress adopted a $120 billion, 27-month transportation plan last month just days before funding was about to run out. Astec officials said uncertainty over project funding slowed and stalled orders for Astec in the second quarter.
"There were deals that absolutely did not happen because of the extensions," said Ben Brock, Astec's president, on a conference call Tuesday morning. "It will take some time for that to come back."
Astec Chairman and CEO Don Brock said he expects the recently approved transportation plan will help U.S. asphalt equipment sales in the second half of the year, although European sales could suffer from the economic slowdown in Europe.
"Although we don't expect to overcome this shortfall this year, the new 27-month highway bill should help demand return to a more normalized level during the second half of the year," Don Brock said in a statement.
Astec expects help from a slowly returning private sector and the passage of the highway funding bill, but it is difficult to determine how the company will be affected by the upcoming presidential election and weakness of European markets.
"In general, the third and fourth quarter, we just don't have good visibility," said Norman Smith, corporate vice president.
In the next quarter, Astec will focus on research and development of new products and uses for existing products. The company also will look to increase its energy and mining markets while pushing international sales and marketing.
International sales dropped 15 percent over the second quarter of 2011 to $92.4 million. The international backlog also slipped, dropping 19 percent to $109.6 million.
Net sales grew 2 percent to $253.9 million, but net income fell to $10.4 million from $114.1 million a year earlier.
Contact Carey O'Neil at email@example.com or 423-757-6525. Follow him at twitter.com/careyoneil.