Updated at 12:55 a.m. on Wednesday, Oct. 30, 2019, with more information.
Astec Industries, Inc., facing what its new CEO says is "a challenging environment," reported a 57% drop in third quarter net income on relatively flat sales this summer.
The Chattanooga-based road-building and construction equipment maker said Tuesday its net income attributable to controlling interest totaled $3 million, or 13 cents per diluted share, on sales of $255.8 million in the three months ended Sept. 30. In the same period a year earlier, the comparable net income totaled $7 million, or 30 cents per share, on sales of $256.6 million.
The third quarter profits were 11 cents per share below the average forecast by analysts who follow Astec and sales were also slightly below industry expectations. The company also disclosed that its backlog of orders at the end of the quarter was down 21% from a year ago.
Nonetheless, Astec's stock rose 58 cents per share, or 1.75%, to close Tuesday at $33.76 per share in trading on the Nasdaq Exchange.
"We are actively aligning the business to meet the current demand," Astec CEO Barry Ruffalo said. "Despite margin compression due to softer market conditions, I am confident we are taking the steps necessary to align production with demand and position ourselves for profitable growth over the long-term."
Astec has cut its staff 9% so far this year, including plant closings in Germany and the Southwest United States, and the new CEO said his intent is to realize another $25 million in savings next year.
Ruffalo, who took over as CEO of Astec in August after the departure of former CEO Ben Brock in January, said he has met with employees, customers and investors during his first two months on the job to prepare a new strategic plan for the global company started in Chattanooga by the late J. Don Brock in 1972.
"While we are still in the process of developing the details of our strategic path forward, I am excited to introduce the pillars of our aligned strategy for profitable growth – Simplify, Focus and Grow," Ruffalo said. "Our results for the quarter highlight our ability to navigate effectively through a challenging environment."
Ruffalo said "a softer North America market was offset by growth in international sales" in the past three months and road builders and contractors, while busy, "have more recently held-off on capital equipment buying decisions."