Astec Industries, Inc. third quarter sales fell 9.5% from a year ago due to COVID-19 related business disruptions and business changes around the globe, which has led the Chattanooga-based asphalt equipment maker to cut its staff by 12% in the past year and close facilities in Wisconsin and Oklahoma.
Astec reported Wednesday net income of $1.6 million, or 7 cents per share, on net sales of $231.4 million in the third quarter of 2020. In the same period a year ago, Astec reported net income of $3 million, or 13 cents per share, a year ago, on net sales of $255.8 million.
"I am pleased with our continued ability to execute against our strategic initiatives of Simplify, Focus and Grow," Astec CEO Barry Ruffalo said in the quarterly earnings report. "As a direct result of the initiatives taken since 2019 related to our strategic transformation and our continued focus on operational excellence, while net sales decreased, we achieved further adjusted gross and adjusted EBITDA margin expansion during the quarter."
While shrinking some of its business lines over the past year, Astec said it completed acquisitions in the third quarter of two full-line concrete batch plant manufacturers, Blair and St. Bruno. The company said Wednesday it all bought Rockwell Automation to support the company's technology leadership for its "Rock to Road" continuum.
Rockwell Automation has been an Astec partner for 10 years and developed the guardian system for Roadtec equipment, as well as a job site management system that will benefit our customers and has connected equipment under Telematics platforms.
"The integration is going well and we are already beginning to benefit from purchasing synergies,"Ruffalo said. "We continue to focus on our Rock to Road strategy to build on our strong foundational product lines."
Astec's backlog of orders as of Sept. 30 was down 10.4% from a year ago to $218.5 million, primarily due to lower sales in its Materials and Infrastructure Solutions divisions.
But Ruffalo said demand for Astec equipment remains strong.
"My recent conversation with some of our key customers confirmed that while they continue to deal with near-term uncertainties, they also continue to demand Astec solutions and will continue to support them to remain vigilant as we help them navigate through the ongoing pandemic," he said.
In relation to the company's efforts to simplify the organization, Astec incurred a $3.9 million pre-tax restructuring charge related to asset impairment, inventory write-down, reduction in labor force and the closing of our Mequon, Wisconsin and Enid, Oklahoma facilities. "
Astec said all of its facilities are operational and able to meet current demand levels without any interruption to its supply chain.
"We remain cautiously optimistic given we are well positioned to navigate the economic challenges related to the global pandemic with a streamlined organizational structure, a strong balance sheet and ample liquidity," Ruffalo said.
Astec's earnings per share of 7 cents were 4 cents per share below analysts projections, although the company's revenues were ahead of what analysts had projected.
Shares of Astec stock have increased nearly 32% so far this year, but the company's stock fell nearly 11.6% on Wednesday after the earnings announcement.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.