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UPDATE 2-Astec posts surprise Q4 loss
February 23, 2010 / 12:50 PM / 8 years ago

UPDATE 2-Astec posts surprise Q4 loss

* Q4 adj loss/shr $0.08 vs est EPS $0.12

* Q4 sales fall 9 pct

* Shares down as much as 9 pct (Recasts; Adds analyst comments, updates share movement)

By Divya Sharma

BANGALORE, Feb 23 (Reuters) - Road construction equipment maker Astec Industries Inc (ASTE.O) posted a surprise quarterly loss, hurt by lower margins, and said its customers are deferring purchases due to limited visibility, sending it shares down 9 percent.

The continuing indecision on a new Highway Bill and the timing of the funding of additional stimulus package for roads make customers reluctant to purchase equipment until markets improve, Chief Executive Don Brock said in a statement.

“The lack of expenditures is creating a pent-up demand, which should be very beneficial whenever a new Highway Bill is passed,” the CEO 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. [ID:nN01285429]

Since the general expectation is that a Highway Bill will not be passed until very late this year, Astec probably won’t see any meaningful pickup in its business till late 2011, CJS Securities analyst Jason Ursaner said.

The company said it expects continuing improvement in its international business, which was 42 percent of fourth-quarter revenue.

Astec’s international business may prove more challenging next year as a strengthening dollar will make them less competitive globally, said analyst Ursaner, who has a “market perform” rating on the stock.


For the fourth quarter, the company lost $15.5 million, or 69 cents a share, compared with a net income of $8.0 million or 38 cents a share a year ago.

Excluding impairment charges, it lost 8 cents per share.

Sales fell 9 percent to $177.9 million, while domestic sales fell 21 percent.

Analysts on average had expected earnings of 12 cents a share, before special items, on revenue of $161.4 million according to Thomson Reuters I/B/E/S.

Disappointing gross margins, especially in the underground and utility verticals, hurt results, Ursaner said.

“We think there will be ongoing margin pressure in the upcoming year and the company will be challenged to even show positive trends year over year,” he added.

Shares of the Chattanooga, Tennessee-based company were trading down 5 percent at $24.77 Tuesday afternoon on Nasdaq. They touched a low of $23.86 earlier in the session. (Reporting by Divya Sharma; Editing by Gopakumar Warrier and Unnikrishnan Nair)

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