UPDATED and REVISED ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Nachrichtenquelle: globenewswire
17.03.2020, 22:17  |  122   |   |   

UPDATED BY ASTEC INDUSTRIES, INC.

CHATTANOOGA, Tenn., March 17, 2020 (GLOBE NEWSWIRE) -- In the press release for the fourth quarter and full year 2019, gross profit, restructuring and impairment charges, income taxes, net income, earnings per share and certain balance sheet items, including inventory, have all been updated to reflect a change in the accounting treatment of our GEFCO business.  In the earlier press release, GEFCO’s net assets were treated as “assets held for sale” and its net assets were reduced to their estimated fair value based upon early indications of interest from potential purchasers. Currently, the sale of the GEFCO business under the terms and timing contained in the early indications of interest is unlikely.  As a result, the value of the GEFCO’s assets is now accounted for as “assets held and used.”  The Company’s current plan is to exit the GEFCO oil and gas business and continue to operate and pursue an exit strategy for the GEFCO water and geothermal well business. The related oil and gas inventories on hand at December 31, 2019 have been reduced to their net realizable value considering the Company’s planned exit. 

The updated and revised release reads:

ASTEC INDUSTRIES REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Fourth Quarter 2019 Highlights (all comparisons are made to the prior year fourth quarter):

  • Net Sales decreased 10.7% to $283.2M
  • Gross profit of 9.7%; adjusted gross profit of 21.2% decreased 280 bps
  • EPS loss of $0.81; adjusted EPS of $0.36 decreased from $0.61 a year ago
  • Adjusted EBITDA of $13.7M decreased 51.0%; adjusted EBITDA margin of 4.9% declined 390bps

2019 Highlights (all comparisons are made to the prior year):

  • Net sales were relatively flat; adjusted net sales decreased 7.8% to $1.15B
  • Gross profit of 20.5%; adjusted gross profit of 21.9% decreased 190bps
  • EPS of $0.98; adjusted EPS of $1.55 decreased from $2.94 a year ago
  • Adjusted EBITDA of $67.1M decreased 42.3%; adjusted EBITDA margin of 5.8% declined 350bps
  • Began restructuring initiatives related to strategic pillars for profitable growth – Simplify, Focus and Grow

Fourth Quarter 2019 Results

Fourth quarter net sales of $283.2 million decreased 10.7% compared to $317.0 million for the fourth quarter of 2018. Domestic sales of $209.6 million decreased 15.5% from $248.2 million a year ago, while International sales of $73.6 million increased 7.0% from $68.8 million in the fourth quarter of 2018. Excluding the impact of foreign currency, net sales decreased 10.4%.

Backlog as of December 31, 2019 of $263.7 million decreased by $81.3 million, or 23.6% compared to the backlog of $344.9 million a year ago. Domestic backlog decreased by 25.4% to $194.5 million from $260.7 million in 2018. International backlog of $69.2 million decreased compared to $84.2 million last year. Although we experienced a decline in each segment, weakness was concentrated in the Aggregate and Mining Group as dealers had increased their inventory levels throughout 2018 to meet demand but then began to destock in 2019.

An operating loss of $26.9 million compared to a loss of $69.4 million in the fourth quarter 2018.  In relation to the Company’s efforts to simplify the organization, the Company incurred a $1.8 million pre-tax restructuring charge, or $0.06 per diluted share for the fourth quarter. The restructuring items are related to the closure of our German operation, the transfer of the CEI products to Heatec and RexCon and the planned exit of GEFCO’s oil and gas product line. In the fourth quarter of 2019, after considering new management’s revised inventory control and working capital control objectives, the Company’s assessment of the age, quantities on hand, market acceptance of the equipment, the Company’s exit of the GEFCO oil and gas business and other related factors, it was determined that various specific equipment models in each of the Company’s business units and certain other inventories required additions to their net realizable value reserves. The fourth quarter results include a pre-tax inventory write-down of $32.6 million or $1.11 per diluted share. Fourth quarter adjusted operating income of $7.4 million decreased 65.0% compared to $21.2 million a year ago. Adjusted operating margin of 2.6% declined 410 basis points from 6.7% in fourth quarter 2018. Adjusted operating income declined primarily due to the lower volumes. SGA&E expenses declined 4.0% on a dollar basis but increased as a percent of sales 130 basis points to 18.6% from 17.3% in the fourth quarter of 2018 due to the decline in sales.

Adjusted EBITDA of $13.7 million decreased 51.0% compared to $28.0 million a year ago.  Adjusted EBITDA margin of 4.9% declined 390 basis points from 8.8% in fourth quarter 2018.

Net loss of $18.4 million or $0.81 per diluted share, compared to a net loss of $47.0 million or $2.08 per diluted share for the fourth quarter of 2018.  Excluding unusual items and restructuring charges mentioned above, adjusted net income of $8.3 million decreased 40.8% compared to the same period a year ago. Adjusted EPS of $0.36 decreased 41.0% compared to $0.61 last year. 

“Fourth quarter results showed continued softness in North America that was partially offset by an increase in international sales. Despite the temporary headwinds, I am encouraged by the progress we are making towards our strategic initiatives to Simplify, Focus and Grow the organization,” stated Barry Ruffalo, CEO of Astec Industries, Inc. “As noted, we are exiting the GEFCO oil and gas product lines while continuing to operate and pursue an exit plan for the GEFCO water and geothermal well drilling business. This will further simplify the organization.  Additionally, we have taken important steps to restructure the Company and streamline business units to increase internal transparency and improve the decision-making process. These collective actions are important in building the foundation for the future success of Astec Industries.”  

Full Year 2019 Results

Net sales for 2019 were $1,169.6 million, or relatively flat when compared to 2018.  Domestic sales decreased 0.8% to $908.5 million from $915.8 million a year ago, while International sales increased 2.1% to $261.1 million from $255.8 million in 2018.  Excluding the impact of foreign currency, net sales increased 0.6%.         

Operating income of $25.1 million compares to a loss of $86.4 million in 2018.  The Company incurred a total of $35.8 million in pre-tax restructuring charges and inventory write-downs for 2019, or $1.24 per diluted share.  Adjusted operating income of $40.9 million decreased 53.4% compared to $87.8 million in 2018.  Adjusted operating margin of 3.6% declined 340 basis points from 7.0% in 2018.  Adjusted operating income declined primarily because of a reduction in gross margin of 190 basis points to 21.9% from 23.8% in 2018.

Adjusted EBITDA of $67.1 million decreased 42.3% compared to $116.3 million in 2018.  Adjusted EBITDA margin of 5.8% declined 350 basis points from 9.3% in 2018.

Net income of $22.3 million or $0.98 per diluted share, compared to a net loss of $60.4 million or $2.64 per diluted share in 2018.  Adjusted net income of $35.2 million decreased 47.7% compared to 2018.  Adjusted EPS of $1.55 decreased 47.3% compared to $2.94 last year. 

The Company identified certain material weaknesses in its internal control over financial reporting. As a result, the Company needs additional time to complete the compilation of information and finalization of its assessment of the effectiveness of internal control over financial reporting for its consolidated financial statements and related disclosures to be filed as part of the 2019 Form 10-K. The Company has filed a Form 12b-25 with the Securities and Exchange Commission in order to extend the due date of its 2019 Annual Report on Form 10-K for 15 days, as permitted by Rule 12b-25 under the Securities Exchange Act.

About Astec Industries, Inc.

Astec Industries, Inc., (www.astecindustries.com), is a manufacturer of specialized equipment for asphalt road building, aggregate processing and concrete production. Astec’s manufacturing operations are divided into three primary business segments: road building, (Infrastructure Group); aggregate processing and mining equipment (Aggregate and Mining Group); and a diversified portfolio of equipment used in various industries including energy-related markets (Energy Group).

Forward-Looking Statements
The information contained in this press release contains “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the future performance of the Company, including statements about the effects on the Company from (i) restructuring initiatives, (ii) the potential sale of the GEFCO water and geothermal well business, (iii) increases in international demand, and (iv) product demand in North America. These forward-looking statements reflect management’s expectations and are based upon currently available information, and the Company undertakes no obligation to update or revise such statements.  These statements are not guarantees of performance and are inherently subject to risks and uncertainties, many of which cannot be predicted or anticipated.  Future events and actual results, financial or otherwise, could differ materially from those expressed in or implied by the forward-looking statements.  Important factors that could cause future events or actual results to differ materially include:  general uncertainty in the economy, oil, gas and liquid asphalt prices, rising steel prices, decreased funding for highway projects, the relative strength/weakness of the dollar to foreign currencies, production capacity, general business conditions in the industry, demand for the Company’s products, seasonality and cyclicality in operating results, seasonality of sales volumes or lower than expected sales volumes, lower than expected margins on custom equipment orders, competitive activity, tax rates and the impact of future legislation thereon, and those other factors listed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018.

For Additional Information Contact:
Steve Anderson 
Senior Vice President Administration, Investor Relations & Corporate Secretary 
Phone: (423) 899-5898 
Fax: (423) 899-4456 
E-mail: sanderson@astecindustries.com

Astec Industries, Inc.    
Condensed Consolidated Balance Sheets    
(in thousands)    
(unaudited)    
     
  Dec Dec    
    2019     2018      
Assets        
Current assets        
Cash and cash equivalents $ 48,857   $ 25,821      
Investments   1,547     1,946      
Receivables and contract assets, net   124,847     133,978      
Inventories   294,536     355,944      
Prepaid expenses and other   36,517     43,302      
Total current assets   506,304     560,991      
Property and equipment, net   190,363     192,448      
Other assets   103,831     102,018      
Total assets $ 800,498   $ 855,457      
Liabilities and equity        
Current liabilities        
Accounts payable - trade $ 57,162   $ 70,614      
Other current liabilities   115,605     118,617      
Total current liabilities   172,767     189,231      
Long-term debt, less current maturities   690     59,709      
Non-current liabilities   24,554     21,227      
Total equity   602,487     585,290      
Total liabilities and equity $ 800,498   $ 855,457      
         
         
         
 
Astec Industries, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
     
  Three Months Ended Twelve Months Ended
  Dec 31 Dec 31
    2019     2018     2019     2018  
Net sales $ 283,224   $ 317,005   $ 1,169,613   $ 1,171,599  
Cost of sales   255,843     318,636     930,205     1,035,833  
Gross profit (loss)   27,381     (1,631 )   239,408     135,766  
Selling, general, administrative & engineering expenses   52,554     54,732     211,148     209,127  
Restructuring and asset impairment charges   1,773     13,060     3,204     13,060  
Income (loss) from operations   (26,946 )   (69,423 )   25,056     (86,421 )
Interest expense   (68 )   (557 )   (1,367 )   (1,045 )
Other   250     11     1,629     1,783  
Income (loss) before income taxes   (26,764 )   (69,969 )   25,318     (85,683 )
Income taxes   (8,409 )   (22,932 )   3,012     (25,234 )
Net income (loss) attributable to controlling interest $ (18,355 ) $ (47,037 ) $ 22,306   $ (60,449 )
         
         
         
         
Earnings (loss) per Common Share        
Net income (loss) attributable to controlling interest        
  Basic $ (0.81 ) $ (2.08 ) $ 0.99   $ (2.64 )
  Diluted $ (0.81 ) $ (2.08 ) $ 0.98   $ (2.64 )
         
         
Weighted average common shares outstanding        
  Basic   22,531     22,582     22,515     22,902  
  Diluted   22,531     22,582     22,674     22,902  
         



Astec Industries, Inc.    
Segment Revenues and Profits (Losses)    
For the three months ended December 31, 2019 and 2018    
(in thousands)    
(unaudited)    
  Infrastructure Group Aggregate and Mining Group Energy Group Corporate Total    
2019 Revenues 115,671     91,981     75,170     402   283,224      
2018 Revenues 124,930     116,064     76,011     -   317,005      
Change $ (9,259 )   (24,083 )   (841 )   402   (33,781 )    
Change % (7.4 %)   (20.7 %)   (1.1 %)   -   (10.7 %)    
               
2019 Gross Profit 11,220     13,041     1,465     1,655   27,381      
2019 Gross Profit % 9.7 %   14.2 %   1.9 %   411.7 % 9.7 %    
2018 Gross Profit (Loss) (41,462 )   30,347     9,375     109   (1,631 )    
2018 Gross Profit (Loss) % (33.2 %)   26.1 %   12.3 %   -   (0.5 %)    
Change 52,682     (17,306 )   (7,910 )   1,546   29,012      
               
2019 Loss (3,158 )   (179 )   (11,069 )   (4,019 ) (18,425 )    
2018 Profit (Loss) (69,833 )   10,796     (13,336 )   22,015   (50,358 )    
Change $ 66,675     (10,975 )   2,267     (26,034 ) 31,933      
Change % 95.5 %   (101.7 %)   17.0 %   (118.3 %) 63.4 %    
               
               
Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment      
revenues. A reconciliation of total segment losses to the Company's net loss attributable to controlling interest is as follows (in thousands):    
               
    Three months ended December 31      
      2019     2018   Change $      
Total loss for all segments   $ (18,425 ) $ (50,358 ) $ 31,933        
Recapture of intersegment profit   64     3,263     (3,199 )      
Net loss attributable to non-controlling interest   6     58     (52 )      
Net loss attributable to controlling interest $ (18,355 ) $ (47,037 ) $ 28,682        
               
               
Astec Industries, Inc.    
Segment Revenues and Profits (Losses)    
For the year ended December 31, 2019 and 2018    
(in thousands)    
(unaudited)    
  Infrastructure Group Aggregate and Mining Group Energy Group Corporate Total    
2019 Revenues 492,118     404,971     272,122     402   1,169,613      
2018 Revenues 442,289     453,164     276,146     -   1,171,599      
Change $ 49,829     (48,193 )   (4,024 )   402   (1,986 )    
Change % 11.3 %   (10.6 %)   (1.5 %)   -   (0.2 %)    
               
2019 Gross Profit 105,012     84,917     47,673     1,806   239,408      
2019 Gross Profit % 21.3 %   21.0 %   17.5 %   449.3 % 20.5 %    
2018 Gross Profit (Loss) (37,357 )   112,972     59,751     400   135,766      
2018 Gross Profit (Loss) % (8.4 %)   24.9 %   21.6 %   -   11.6 %    
Change 142,369     (28,055 )   (12,078 )   1,406   103,642      
               
2019 Profit (Loss) 36,106     22,790     556     (38,440 ) 21,012      
2018 Profit (Loss) (112,954 )   45,464     3,070     1,586   (62,834 )    
Change $ 149,060     (22,674 )   (2,514 )   (40,026 ) 83,846      
Change % 132.0 %   (49.9 %)   (81.9 %)   (2523.7 %) 133.4 %    
               
               
Segment revenues are reported net of intersegment revenues. Segment gross profit (loss) is net of profit on intersegment      
revenues. A reconciliation of total segment profits (losses) to the Company's net income (loss) attributable to controlling interest is as follows (in thousands):  
               
    Twelve months ended December 31      
      2019     2018   Change $      
Total profit (loss) for all segments $ 21,012   $ (62,834 ) $ 83,846        
Recapture of intersegment profit   1,162     2,090     (928 )      
Net loss attributable to non-controlling interest   132     295     (163 )      
Net income (loss) attributable to controlling interest   $ 22,306   $ (60,449 ) $ 82,755        
               
               
Astec Industries, Inc.      
Backlog by Segment      
December 31, 2019 and 2018      
(in thousands)      
(unaudited)      
  Infrastructure Group Aggregate and Mining Group Energy Group Total      
2019 Backlog 139,081     74,127     50,497     263,705        
2018 Backlog 149,437     130,691     64,834     344,962        
Change $ (10,356 )   (56,564 )   (14,337 )   (81,257 )      
Change % (6.9 %)   (43.3 %)   (22.1 %)   (23.6 %)      
               




Glossary
In its earnings release, Astec refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Non-GAAP financial measures should be considered in addition to, and not in lieu of, GAAP financial measures. Nonetheless, this non-GAAP information can be useful in understanding the Company's operating results and the performance of its core businesses.
The amounts described below are unaudited, reported in thousands of U.S. Dollars (Except Share data), and as of or for the periods indicated.
       
Q4 2019 GAAP to Non-GAAP Reconciliation Table
       
  As Reported Restructuring and As Adjusted
  (GAAP) Unusual Charges (Non-GAAP)
Consolidated      
Net Sales $ 283,224   $ -   $ 283,224  
GP   27,381     32,605     59,986  
GP%   9.7 %     21.2 %
Op Income (Loss)   (26,946 )   34,378     7,432  
Income Tax (Benefit) Expense   (8,409 )   7,760     (649 )
Net Income (Loss)   (18,355 )   26,618     8,263  
EPS   (0.81 )   1.17     0.36  
EBITDA   (20,630 )   34,378     13,748  
Free Cash Flow   22,870     1,892     24,762  
       
       
Infrastructure      
Net Sales   115,671     -     115,671  
GP   11,220     12,098     23,318  
GP%   9.7 %     20.2 %
EBITDA   (2,656 )   12,479     9,823  
       
Aggregate and Mining      
Net Sales   91,981     -     91,981  
GP   13,041     4,260     17,301  
GP%   14.2 %     18.8 %
EBITDA   97     4,511     4,608  
       
Energy      
Net Sales   75,170     -     75,170  
GP   1,465     16,247     17,712  
GP%   1.9 %     23.6 %
EBITDA   (9,180 )   17,388     8,208  
       
       
Q4 2018 GAAP to Non-GAAP Reconciliation Table
  As Reported Restructuring and As Adjusted
  (GAAP) Unusual Charges (Non-GAAP)
Consolidated      
Net Sales $ 317,005   $ -   $ 317,005  
GP   (1,631 )   77,574     75,943  
GP%   (0.5 %)     24.0 %
Op Income (Loss)   (69,423 )   90,634     21,211  
Income Tax (Benefit) Expense   (22,932 )   29,628     6,696  
Net Income (Loss)   (47,037 )   61,005     13,968  
EPS   (2.08 )   2.69     0.61  
EBITDA   (62,603 )   90,634     28,031  
       
Infrastructure      
Net Sales   124,930     -     124,930  
GP   (41,462 )   69,792     28,330  
GP%   (33.2 %)     22.7 %
EBITDA   (63,515 )   71,663     8,148  
       
Aggregate and Mining      
Net Sales   116,064     -     116,064  
GP   30,347     294     30,641  
GP%   26.1 %     26.4 %
EBITDA   13,224     294     13,518  
       
Energy      
Net Sales   76,011     -     76,011  
GP   9,375     7,487     16,862  
GP%   12.3 %     22.2 %
EBITDA   (11,708 )   18,677     6,969  
       
       
       
       
FYE 2019 GAAP to Non-GAAP Reconciliation Table
       
  As Reported Restructuring and As Adjusted
  (GAAP) Unusual Charges (Non-GAAP)
Consolidated      
Net Sales $ 1,169,613   $ (20,000 ) $ 1,149,613  
Domestic Sales   908,466     (20,000 )   888,466  
International Sales   261,147     -     261,147  
GP   239,408     12,630     252,038  
GP%   20.5 %     21.9 %
Op Income   25,056     15,833     40,889  
Income Tax (Benefit) Expense   3,012     2,938     5,950  
Net Income   22,306     12,895     35,201  
EPS   0.98     0.57     1.55  
EBITDA   51,306     15,833     67,139  
Free Cash Flow   90,278     (14,380 )   75,898  
       
FYE 2018 GAAP to Non-GAAP Reconciliation Table
       
  As Reported Restructuring and As Adjusted
  (GAAP) Unusual Charges (Non-GAAP)
Consolidated      
Net Sales $ 1,171,599   $ 74,778   $ 1,246,377  
Domestic Sales   915,814     74,778     990,592  
International Sales   255,785     -     255,785  
GP   135,766     161,185     296,951  
GP%   11.6 %     23.8 %
Op Income (Loss)   (86,421 )   174,245     87,824  
Income Tax (Benefit) Expense   (25,234 )   46,502     21,268  
Net Income (Loss)   (60,449 )   127,744     67,295  
EPS   (2.64 )   5.58     2.94  
EBITDA   (57,897 )   174,245     116,348  


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