Astec Industries Inc. reported lower than expected earnings in the fourth quarter, but the company’s stock still rose to its highest level since early January on expectations of improved performance in 2016.
The Chattanooga-based manufacturing firm on Tuesday reported net income of $3.6 million, or 16 cents per share. The results were less than half of the average estimates of 36 cents per share among six analysts surveyed by Zacks Investment Research and were 57.6 percent below the $8.5 million, or 37 cents per share, earned in the in the fourth quarter of 2014.
The maker of equipment for building, paving and mining posted revenue of $215 million in the period, which also fell short of Street forecasts. Five analysts surveyed by Zacks expected $244.4 million. A year ago, Astec generated revenues of $239.5 million for the fourth quarter.
Astec CEO Benjamin G. Brock said Tuesday the fourth quarter “proved to be a challenge,” primarily due to weakness in mining equipment sales due the plunge in oil prices and the rise of the U.S. dollar over the past couple of years.
But Brock said backlogs for new orders rose by the end of January to a record $348 million following the passage of a long-term highway bill in December, which he said has generated strong orders in Astec’s infrastructure group.
“In spite of a challenging fourth quarter, our future is bright,” Brock said in the company’s fourth quarter earnings report. “We have also been very active on pellet plant inquiries and we’re confident that some of these inquires will turn into orders in the coming year.”
Brock said Astec is “poised to take advantage of strong domestic demand.
“We’ll be able to be opportunistic when we find the right acquisition target,” Brock said.
For the year, the company reported profit of $32.8 million, or $1.42 per share, on revenues of $983.2 million. In 2014, Astec earned $34.5 million, or $1.49 per share, on sales of $975.6 million.
Despite the drop in profits, investors were encouraged by Astec’s higher order backlog and optimistic outlook for asphalt equipment sales. Although the overall market traded lower Tuesday, shares of Astec rose by 94 cents per share, or nearly 2.5 percent, to close at $39.25 on Tuesday – its highest price since early January.
Astec Industries shares had fallen almost 6 percent since the beginning of the year prior to Tuesday’s market gains.