Astec Industries shed nearly 21 percent of its market value Tuesday after the Chattanooga-based equipment maker said it was scaling back investments in its wood pellet business and re-evaluating its approach to capital investments.
Shares of Astec plunged by $12.59 a share, dropping by more than 20.7 percent – one of the biggest losers on Wall Street in an otherwise generally positive market Tuesday. The market value of Astec fell by more than $290 million Tuesday after the company announced its strategic exit from a partnership with wood pellet plant customer Highland in Arkansas.
Astec said that because of “mechanical issues that would not allow us to meet our obligations,” the company determined to part ways with its partner on the Highland project and pay $68 million in cash over the next 120 days and forgive roughly $7 million in receivables.
Astec CEO Ben Brock said his company will no longer pursue its own development and engineering for such plants.
Astec’s net sales in the second quarter dropped 9.7 percent from a year ago, translating to a net loss of $40.7 million, or $1.76 per share. In the same period a year earlier, Astec reported net income of $14.4 million, or 62 cents per share, on sales of $301.9 million.