Astec to close Loudon TN plant due to drop in oil drilling

Astec Industries

The drop in oil prices is taking its toll on a an East Tennessee plant that produces drilling equipment.

Despite higher sales and profits at most of its company lines, Astec Industries said today that it will close its facility in Loudon, Tenn., this spring and consolidate all of its GEFCO operations in Enid, Okla., due to the decline in oil exploration activity.

"Orders so far in 2015 have been steady with the exception of products targeted at the oil exploration industry due to the well-publicized decrease in the price of oil," Astec CEO Ben Brock said in a statement this morning. "As a result we have made the difficult decision to consolidate all GEFCO operations in Enid, Okla., and to close our Loudon, Tenn., effective May 31.

GEFCO is a world leader in the design and manufacture of portable drilling rigs and related equipment for the water well, environmental, groundwater monitoring, construction, mining and shallow oil and gas exploration and production industries.

Despite the drop in GEFCO orders, Astec overall boosted its boosted its fourth quarter earnings by 2.4 percent from a year ago on stronger sales.

The Chattanooga-based paving equipment maker said today it earned $8.5 million, or 37 cents per share, on sales of $239.5 million in the final three months of calendar 2014. In the same period a year earlier, Astec earned $8.3 million, or 36 cents per share, on sales of $223.9 million.

The earnings results for the quarter were 2 cents per share better than the average consensus of analysts.

Domestic sales increased 6.5 percent to $151.6 million and international sales were up 7.9 percent to $87.9 million in the fourth quarter.

For all of 2014, Astec earned $34.5 million, or $1.49 per share, on sales of $975.6 million.

"We were pleased with our bottom line results during the fourth quarter of 2014, especially given the continued instability in the federal highway funding," Brock said. "We are improving operationally and it is starting to show up in higher gross margins. This, along with our record $332.1 million backlog, has us optimistic on our first half of 2015."

Astec said its domestic backlog increased 10.8 percent to $222.4 million at the end of 2014.

The international backlog at December 31, 2014 was $109.7 million compared to $97.5 million a year earlier.