Astec Disappoints, Reports Losses – Analyst Blog

Astec Industries Inc. (ASTE) reported a net loss of 8 cents per share for the fourth quarter of 2009, compared to net earnings of 32 cents in the fourth quarter of 2008. The Zacks Consensus Estimate for the quarter was net earnings of 12 cents per share.

 

Quarterly revenue fell 9.0% to $177.9 million from $195.5 million a year ago. Domestic sales declined 20.9% to $103.1 million, primarily due to continued delay/postponement of several infrastructure projects stemming from the economic downturn. International sales increased 15.1% to $74.8 million. The growth in international sales came primarily from Canada, the Middle East, Australia and South America.

 

The Underground group, which primarily serves the energy and residential businesses, reported sales decline of 49.6% for the quarter. The Aggregate and Mining Group posted a sales decline of 27.6% during the quarter due to lower mining activity compared to the last year. The Asphalt Group sales improved 7.7%, while the Mobile Asphalt Paving Group reported a 54.8% increase in sales. Both the segments benefited from stimulus packages. Other sales were up 4.7% during the quarter.

 

As of December 31, 2009, the company’s backlog stood at $135.1 million, which is 30% lower than the prior-year level. International backlog declined 29% to $62.2 million, while domestic backlog fell 31% to $72.9 million.

 

The weakness in the domestic market was primarily due to the failure of the Congress to renew the highway bill on a timely basis, due to which customers are staying away from making large capital expenditure commitments. Astec does not see any drivers in the domestic market until Congress renews the Highway Bill.

 

Astec is witnessing a pick-up in its international sales. A significant recovery in the international markets along with a weak dollar could help the company offset most of the weakness in its domestic business.