Astec CEO J. Don Brock says economy stagnant

Astec CEO J. Don Brock says economy stagnant

October 27th, 2012 by Ellis Smith in Business Around the Region

J. Don Brock

J. Don Brock


2012 Astec earnings, third quarter:

* Net sales: $227 million, up 6 percent

* Earnings: $6.9 million, or 30 cents per share, down 12 percent

2011 Astec earnings, third quarter:

* Net sales: $214.6 million

* Earnings: $7.7 million

First nine months of 2012:

* Net sales: $747.6 million, up 8 percent

* Earnings: $29.5 million, or $1.28 per share, down 8 percent

First nine months of 2011:

* Net sales: $692.6 million

* Earnings: $32 million

Source: Astec

Astec Industries chief J. Don Brock said Friday that the U.S. economy remains stalled with no end in sight, despite some national gains in employment and GDP growth.

"I've never seen as many customers who are as negative about this market as we've seen this year," Brock said.

The chairman and CEO of Chattanooga-based Astec said continued uncertainty from Washington, D.C., over the coming fiscal cliff has forced his business customers to pinch pennies.

"When you don't know, you don't buy," he said.

The comments came during a conference call with analysts of third-quarter earnings, in which Astec missed analysts' expectations by 12 cents per share even as revenue rose 6 percent during the quarter to $227 million from $214.6 million in 2011.

Brock occupies a pivotal position at the intersection of commerce and government as Astec produces the giant machines used in infrastructure work, such as road building and mining.

Astec's fortunes rise and fall with the needs of the world economy for raw materials and transportation, as it sells to large mining companies, governments and road builders.

About double the normal number of customers have delayed delivery of their orders during the quarter, he said. Many of them put in orders for new equipment earlier in the year, but don't want the machines in the current economy.

"A lot of our competitors, like one of the largest outfits in the business, they have about 20 percent of their plants mothballed right now," he said. "Most of our customers are telling us that they are running volumes that are significantly lower than in the past."

The delayed and deferred maintenance is beginning to take a toll on U.S. roads, Brock argued.

"There's going to be a good highway program here at some point -- there's got to be, or we're not going to be moving any goods and services," Brock said. "If we don't do something, we're just going to be gridlocked."

For the year, Astec increased net sales to $747.6 million from $692.6 million during the first nine months of 2011, the company reported. Astec also increased its backlog a few percentage points, but margins remained basically flat, Brock said.

"If they [Congress] don't do anything and we go over this fiscal cliff, it's going to be exciting," Brock said. "It's going to be tough."