Shares of Astec Industries plunged by more than 14.2% Wednesday after the Chattanooga-based asphalt and paving equipment maker reported first-quarter earnings less than half of what analysts had expected.
Astec said Wednesday its adjusted operating profits in the first three months of the year totaled $10.9 million, or 35.1% less than the same period a year ago. Net sales for Astec were down 1.5% to $288.8, primarily due to lower domestic sales this year.
Astec reported adjusted quarterly earnings of 41 cents per share, or less than half the consensus forecast of 86 cents per share for the first quarter. A year ago, Astec had adjusted earnings of $1 per share.
Net income totaled $8.7 million, or 57.8% less than a year ago.
Despite the drop in profits and sales, the company said its backlog of orders rose 71.5% to $420.8 million and company CEO Barry Ruffalo said Astec is improving margins and operations through its "rock to road" strategy designed to simplify and grow the business.
"In 2020, we continued to execute our plan to transform our company despite the headwinds of the COVID-19 pandemic," he said. "Thus far in 2021, we have experienced a ramp up in demand, accompanied by commodity inflation and a tight labor market. We continued to position our business to adjust to these evolving market dynamics, while continuing to execute our transformation strategy."
Astec announced in January it will close its plant in Tacoma, Washington and transfer production to other Astec sites.
Ruffalo said Astec is " still in the early innings of our transformation," which he said should strengthen the company and improve its margins.
Astec should benefit by efforts in Washington D.C. to boost highway and infrastructure spending, but Ruffalo said the company continues to be challenged by higher steel prices. So far, Ruffalo said Astec has had "only minor interruptions to our supply chain" because of the pandemic.
Shares of Astec fell Wednesday by $11.11 per share to close at $65.95 per share in trading on the Nasdaq exchange. Despite the drop, shares of Astec are still up so far in 2021.
We remain excited about our future and continue to see near-term and long-term opportunities in the Rock-to-Road value chain we serve," Ruffalo said.
- Compiled by Dave Flessner