Chattanooga-based Astec Industries Inc. reported a net loss of $15.5 million for the fourth quarter of 2009, or 69 cents a share.
But most of the loss is attributed to an intangible impairment charge of $13.6 million after tax, or 61 cents per diluted share.
Without the charge, net loss for the asphalt equipment manufacturing company was 8 cents per share, or $1.8 million. In the fourth quarter of 2008, Astec had net income of $8 million or 38 cents per diluted share.
Astec stock on Tuesday closed at $25.07 a share, down 4.24 percent from the previous day’s close.
For the quarter, Astec had sales of $177 million, down from $195 million the year before.
“It’s be nice to find a way to make the fourth quarter in 2009 look good, but there’s no way,” said Chairman and CEO J. Don Brock. “Fortunantely we entered the downturn with a strong balance sheet and no debt.”
To combat price competition and weak demand, the company slashed employment from 4,300 people to 3,100 through early retirement and buyouts, costing the company $10 million to $15 million, Mr. Brock said.
“A lot of our senior people were close to retirement and we encouraged some of that . . . we think that we’re downsized to where we need to be,” he said.
Mr. Brock said last year’s stimulus bill helped the company, but he was critical of what he sees as congressional inaction on highway legislation and the cap and trade bill.
“The uncertainty surrounding the direction of the cap and trade bills causes a paralysis in many of our customers,” Mr. Brock said. “The privately held companies with excess cash are ready to spend but they want to see a direction before they turn the money loose.”
For the full year, Astec had net sales of $738 million as compared to $974 million in 2008. Net income in 2009 amounted to $3 million, or 14 cents per diluted share, versus $63 million, or $2.80 a diluted share, the previous year.
Mr. Brock said he anticipates 2010 will be a steadier year than 2009, due to increases in higher-margin parts sales and international orders.
“There’s a buildup of pent-up demand that’s occurring, so when everything does turn loose we’ll be well positioned when the dam breaks,” Mr. Brock said.
Astec CFO F. McKamy Hall agreed, saying that while he is disappointed with the results, the company took tough steps during the recession to prepare for growth.
“The gross margin on parts is certainly much better than equipment, so the reduced gross margin on parts volume heavily impacted our 2009 results,” he said.
But he noted there is an upside. “International sales are being assisted by stimulus packages in other countries which are more focused on roads than our stimulus programs,” he said.
David Wells, senior research analyst at the Thompson Research Group, said that federal legislation will be the key to unlocking long-term demand for Astec.
“If you look at the materials producers, they will see the benefit of stimulus dollars that flow in 2010, but for the average purchaser of asphalt equipment, you need that longer-term certainty that comes with a highway bill,” Mr. Wells said.