Congressional approval last year of a long-delayed highway spending bill paved the way for improved domestic sales and profits for Astec Industries, which said Tuesday it is looking for additional acquisitions to further grow its business.
Despite a plunge in international sales due to currency changes and lower oil and commodity prices, Astec Industries Inc. boosted its first quarter earnings by 18.5 percent and beat Wall Street expectations in the first three months of the year.
Ben Brock
Astec makes pellet production plants that produce wood pellets used for fuel. Astec said it sold a $122.5 million pellet processing plant in the first quarter.The Chattanooga-based asphalt equipment maker said Tuesday it earned $17.7 million, or 77 cents per share, on net sales of $278.7 million in the first three months of 2016. In the same period a year ago, Astec earned $15.1 million, or 65 cents per share, on sales of $288.7 million.
The earnings results were 6 cents per share ahead of what analysts had forecast for Astec in the first quarter, although revenues were below expectations.
Wall Street welcomed the better-than-expected results and boosted shares of Astec by nearly 2.2 percent, or $1 per share, to $47 per share. Astec shares are up a strong 15.7 percent so far this year.
Buoyed by its improved results and share price, Astec's CEO, Ben Brock, said the company wants to acquire at least one new business in 2016.
"Acquisitions will remain a key part of our growth strategy along with organic growth," he said.
Astec's domestic sales increased 11 percent in the first quarter to $234.2 million, but international sales plunged by 42.7 percent to only $44.5 million.
Brock said he was pleased with the first quarter results, noting that the company's backlog increased 48.7 percent from a year ago to a record high $432.8 million as of March 31.
"As our sales and backlog reflect, our domestic business is very good," Brock told industry analysts during a conference call Tuesday. "This is primarily attributable to the passage of a new federal highway bill and continuing good private market activity."
Astec sales were bolstered this winter by the $122.5 million pellet plant order announced during the quarter. Brock said he expects another pellet plant to be sold later this year.
With mining activity and oil drilling down, however, Brock said international sales "will remain challenged for at least the rest of this year.
But overall, Brock said he "is optimistic we will end 2016 ahead of 2015."
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.