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Astec Industries Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
10qk

10qk

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Astec Industries Inc. (ASTE) filed Quarterly Report for the period ended 2010-03-31.

Astec Industries Inc. has a market cap of $666.47 million; its shares were traded at around $29.55 with a P/E ratio of 36.94 and P/S ratio of 0.9. ASTE is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

Domestic sales for the first quarter of 2010 were $129,451,000 or 66.9% of consolidated net sales compared to $131,931,000 or 64.3% of consolidated net sales for the first quarter of 2009, a decrease of $2,480,000 or 1.9%. International sales for the first quarter of 2010 were $64,003,000 or 33.1% of consolidated net sales compared to $73,373,000 or 35.7% of consolidated net sales for the first quarter of 2009, a decrease of $9,370,000 or 12.8%. The overall decrease in international sales for the first quarter of 2010 compared to the first quarter of 2009 is due to weak economic conditions in the international markets the company serves as well as strengthening of the U.S. dollar during 2010.

Selling, general, administrative and engineering expenses for the three months ending March 31, 2010 were $32,718,000, or 16.9% of net sales, compared to $31,426,000, or 15.3% of net sales, for the first three months of 2009, an increase of $1,292,000, or 4.1%. The increase was primarily due increases in SERP expense of $563,000 and expenses related to restricted stock units of $561,000, both of which increased due to an increase in the Company s stock price from December 31, 2009 to March 31, 2010 as compared to stock price decreases during the same period in the prior year. In addition, profit sharing expense increased $617,000 due to improved performance at certain subsidiaries which determines this formula-driven amount. Also, travel expenses increased $498,000 and health insurance expense increased $344,000; however, these increases were offset by decreases in payroll and related expenses of $725,000, exhibit expense of $456,000 and insurance expense of $430,000.

The Company had net income attributable to controlling interest of $8,794,000 for the three months ending March 31, 2010 compared to $7,431,000 in the first three months of 2009, an increase of $1,363,000, or 18.3%. Earnings per diluted share were $0.39 in the first quarter of 2010 compared to $0.33 in the first quarter of 2009, an increase of $0.06 or 18.2%. Diluted shares outstanding at March 31, 2010 and 2009 were 22,767,460 and 22,663,415, respectively. The increase in shares outstanding is primarily due to the exercise of stock options by employees of the Company.

The backlog of orders at March 31, 2010 was $134,838,000 compared to $140,099,000 at March 31, 2009, a decrease of $5,261,000, or 3.8%. The decrease in the backlog of orders was split between a decrease in domestic backlog of $1,539,000 or 2.0% and a decrease in international backlog of $3,722,000 or 6.1%. The decrease in backlog occurred in each of the Company s segments except for the Mobile Asphalt Paving Group which experienced an increase in backlog of $11,721,000 or 655.5%. The Company is unable to determine whether the decline in backlogs was experienced by the industry as a whole; however, the Company believes the decreased backlog reflects the current economic conditions the industry is experiencing.

Aggregate and Mining Group: Segment profit for this group increased $1,050,000 or 59.3%, from $1,772,000 for the first quarter of 2009 to $2,822,000 for the first quarter of 2010. This group had an increase of $2,044,000 in gross profit during the first quarter of 2010 compared to the same quarter in 2009 primarily provided by the 14.2% increase in sales, combined with a decrease in unabsorbed overhead of $580,000 during the first quarter of 2010 compared to the first quarter of 2009.

Other Group: The Other Group had a segment loss of $7,510,000 in the first quarter of 2010 compared to a loss of $6,835,000 in the first quarter of 2009 for a loss increase of $675,000 or 9.9%. The primary reason for the increased loss is an increase in selling, general and administrative (“SG&A”) expenses of $1,989,000 for the first quarter of 2010 compared to the same period in 2009. The increased SG&A expense was primarily due increases in SERP expense of $563,000 and expenses related to restricted stock units of $561,000, both of which increased due to an increase in the Company s stock price from December 31, 2009 to March 31, 2010 as compared to stock price decreases during the same period in the prior year. In addition, profit sharing expense increased $617,000 due to improved performance at certain subsidiaries which determines this formula-driven amount. These amounts were offset by a decrease in federal income tax expense of $841,000. These expenses are carried on the books of the parent company, Astec Industries, Inc., which is included in the Other Group.

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