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UPDATE 3-Astec Industries Q2 profit beats Street; shares rise
July 20, 2010 / 12:09 PM / 7 years ago

UPDATE 3-Astec Industries Q2 profit beats Street; shares rise

* Q2 EPS $0.45 vs est $0.39

* Q2 revenue up 11 pct to $209.2 mln, beats est

* CEO: Inaction by Congress on highway bill a concern

* Shares rise as much as 9 pct (Adds analysts comments, updates share movement)

By Rachel Chitra

BANGALORE, July 20 (Reuters) - Road construction equipment maker Astec Industries Inc (ASTE.O) posted better-than-expected quarterly results as its international sales rose 34 percent, sending its shares up 9 percent.

Astec expects its key international segment to perform well in the second half of the year, driven by increased infrastructure and construction activity. However, it said it was “less optimistic” about the domestic segment.

“The company has a more optimistic outlook on international sales as other economies are spending on a more aggressive front. But here, domestically, everyone is on hold,” analyst Morris Ajzenman of Griffin Securities Inc said.

In the United States, weak construction markets and lack of resolution on the highway bill will likely weigh on the company’s results going forward, analyst Lawrence De Maria of Sterne, Agee & Leach said by phone.

Astec, which makes equipment for asphalt road building, pipeline and utility trenching, said it was concerned about the lack of action by the U.S. Congress on a new six-year highway bill, which authorizes federal funding for state highway projects.

“The highway bill is not a priority in Washington right now. They have to sort out the energy bill, sort out mid-term elections... As a result, there is not much of a demand for highways or highway-building equipment,” analyst De Maria said.

With the $286 billion highway bill -- one of the richest and most popular legislative undertakings for states -- on hold, fewer states are putting out projects to bid, which has led to intense competition and margin pressure.

“Our customers will remain cautious and reluctant to make major capital expenditure commitments until a bill is passed in Washington,” Astec Chief Executive Don Brock said in a statement.


International sales, which accounted for 38 percent of total revenue, rose to $80 million in the second quarter. Total revenue rose 11 percent to $209.2 million.

Astec Industries reported quarterly earnings of $10.3 million, or 45 cents a share, compared with $7.7 million, or 34 cents a share, in the year-ago quarter.

Analysts on average were expecting the company to post earnings of 39 cents a share, before items, on revenue of $197.6 million, according to Thomson Reuters I/B/E/S.

Backlog for Astec, which competes with companies such as Granite Construction (GVA.N), URS Corp URS.N and Jacobs Engineering Group (JEC.N), grew 5 percent to $139.7 million as on June 30.

Shares of Chattanooga, Tennessee-based Astec were trading up 7 percent at $28.42 Tuesday afternoon on Nasdaq. (Reported by Rachel Chitra and Bijoy Koyitty in Bangalore; Editing by Anne Pallivathuckal, Roshni Menon)

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