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UPDATE 2-Astec Industries Q1 beats; shares hit 18-month high
April 20, 2010 / 11:59 AM / 7 years ago

UPDATE 2-Astec Industries Q1 beats; shares hit 18-month high

* Q1 EPS $0.39 vs est $0.21

* Revenue down 6 pct

* Shares jump to 18-month high (Recasts; adds analyst comments, updates share movement)

By Divya Sharma

BANGALORE, April 20 (Reuters) - Road construction equipment maker Astec Industries Inc (ASTE.O) posted better-than-expected first-quarter results, helped by higher margins, sending its shares up 15 percent to an 18-month high.

Astec also said it has reached the bottom of the economic cycle and hopes to see modest improvements in the remainder of the year, helped by increased parts sales and international sales.

International sales contributed 33 percent of first-quarter revenue at the company, which makes equipment for asphalt road building, pipeline and utility trenching.

Astec has been globally competitive because of a relatively weak dollar and international demand will come from emerging economies, CJS Securities analyst Jason Ursaner said.

The company, however said that it is experiencing weak volumes in most of its segments.

“Customers continue to be reluctant to make large expenditures partly due to the uncertainty regarding state and federal taxes, healthcare reform, and federal highway spending,” Chief Executive Don Brock said in a statement.

“I believe volumes will pick up in the second half of the year if the highway bill is passed,” analyst Ursaner said.

Ambitious plans for overhauling the highway bill, one of the richest and most popular legislative undertakings for states, are on hold ahead of congressional elections later this year.

The company said pent-up demand, especially in its mobile asphalt group, is driving backlog, which stood at $134.8 million on March 31.

Gross profit margins were 24 percent in the latest quarter, compared with 21 percent last year, Astec said.

“Gross margins were primarily driven by a greater percentage of sales from the parts business,” Ursaner said.

For the first quarter, net income was $8.8 million, or 39 cents a share, compared with $7.4 million, or 33 cents a share a year ago.

Revenue fell 6 percent to $193.5 million. However, aggregate and mining group revenue rose 14 percent, while asphalt paving group revenue rose 34 percent.

Analysts on average had expected earnings of 21 cents a share, before special items, on revenue of $192.2 million, according to Thomson Reuters I/B/E/S.

Shares of the Chattanooga, Tennessee-based company were trading up 13 percent at $35.58 Tuesday afternoon on Nasdaq. They touched a high of $36.39 earlier in the day. (Reporting by Divya Sharma; Editing by Roshni Menon, Unnikrishnan Nair)

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