This story was updated Tuesday, July 23, 2019, at 9:15 p.m. with more information.
Astec Industries Inc. has hired a veteran manager of the fabricated metal products producer Valmont Industries and the road infrastructure supplier Lindsay Corp. as its next CEO.
The Chattanooga-based asphalt and heavy equipment maker announced Tuesday that Barry Ruffalo will become president and chief executive on Aug. 12. Ruffalo, who has served as a group vice president at the $2.5 billion-a-year Valmont Industries for the past 13 years, fills the vacancy created in January when former CEO Ben Brock, the son of company founder J. Don Brock, resigned after heading Astec for five years.
When Ruffalo assumes leadership of Astec, the company's interim CEO, Richard Dorris, will resume his former role as chief operating officer. In a statement, Ruffalo said he plans to "move forward with measures to make Astec more profitable and agile" while building on its legacy of asphalt-making equipment.
"Barry brings a wealth of experience to Astec," said Bill Gehl, chairman of the Astec board. "He is a leader that has driven change, understands infrastructure and will add tremendous value."
While Astec has hired a new CEO, it has cut its staff by 402 employees over the past year, including 161 jobs cut this spring in a quarter that the company said fell short of expectations.
Astec said Tuesday that its second quarter sales and profitability improved from a year ago, but earnings from ongoing operations were still below Wall Street estimates for the quarter.
Astec said it earned $23.4 million, or $1.03 per share, on sales of $304.8 million. In the same period a year earlier, Astec reported a net loss of $40.7 million, or $1.76 per share, on sales of $272.5 million.
During the second quarter of this year, Astec's income swelled by the $20 million profit on the sale of its Hazlehurst, Georgia, wood pellet plant.
Earnings for the second
quarter of 2019, excluding the impact of wood pellet plant activity, totaled $8.1 million, or 36 cents per share, compared to $24 million or $1.03 per share for the second quarter of 2018.
The Zacks Consensus Estimate for second quarter earnings was 42 cents per share.
"We are pleased the sale of the Hazlehurst, Georgia wood pellet plant completely ended our involvement in the wood pellet plant business," Dorris said, noting that Astec had struggled for years to turn a profit on its wood pellet machines. "Our earnings per share, less the payment received for the wood pellet plant, however, was below our expectations. The lower than expected earnings are a result of lower than projected volume and under absorption of production costs."
Company officials blamed much of the slowdown in business on Mother Nature in the United States where Astec derives 80% of its sales.
"We believe the late start to the construction season has caused some customers to use existing equipment for the remainder of the construction season," Dorris told analyst during a conference call Tuesday. "The nearly drought-free conditions across the country have also reduced demand for water well drilling equipment and low oil prices have reduced demand for high pressure pump trailers and process seeders used in oil and gas production."
Astec's backlog at June 30, 2019 was $246.1 million, a decrease of $56.8 million, or 18.8%, compared to a year earlier.
"We have experienced reduced demand in the first half of this year, but our ongoing strategic procurement and operational excellence initiatives along with manpower reductions at our most affected subsidiaries will help us maintain and improve profitability even if market conditions do not improve in the short term," Doris said.
Despite less-than-expected earnings in the quarter, investors bid up the price of Astec Tuesday by more than 3.4 %, or $1.07 per share, to close Tuesday at $32.23 per share.
Contact Dave Flessner at email@example.com or at 757-6340.