Transcript of
Astec Industries, Inc. (ASTE)
First
Quarter 2012 Earnings Conference Call
April 24, 2012
J. Don Brock,
Chairman and Chief Executive Officer
David C. Silvious, Vice
President and Chief Financial Officer
Stephen C. Anderson, Vice
President of Administration and Director of Investor Relations
Operator
Greetings and welcome
to the Astec Industries' First Quarter 2012 Earnings Conference Call. At this
time, all participants are on a listen-only mode. A brief question-and-answer
session will follow the formal presentation. If anyone should require operator
assistance during the conference, please press *0 on your telephone keypad. As
a reminder, this conference is being recorded.
It is now my pleasure
to introduce your host, Mr. Steve Anderson. Thank you, Mr. Anderson, you may
begin.
Stephen C. Anderson –
Astec Industries, Inc. – Vice President of Administration and Director
of Investor Relations
Thank you, Lewis.
Good morning and
welcome to the Astec Industries' conference call for the first quarter ended
March 31, 2012. As Lewis mentioned, my name is Steve Anderson and I'm Vice President
of Administration and Director of Investor Relations for the company. Also on
today's call are Dr. J. Don Brock, our Chairman and Chief Executive Officer;
and David Silvious, our Chief Financial Officer.
In just a moment, I
will turn the call over to David to summarize our financial results and then to
Don to review our business activity during the first quarter.
Before we begin, I'll
remind you that our discussion this morning may contain forward-looking
statements that relate to the future performance of the company and these
statements are intended to qualify for the Safe Harbor liability established by
the Private Securities Litigation Reform Act. Any such statements are not
guarantees of future performance and are subject to certain risks, uncertainties,
and assumptions.
At this point, I'll
turn things over to David to summarize the financial results for the first
quarter of 2012. David?
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
All right. Thanks,
Steve, and good morning to everyone. We appreciate you being with us this
morning.
I'll run through the
financials quickly.
Net sales for the
quarter were $266.6 million in 2012 versus $230.2 million in 2011. That's a
16% increase or $36.4 million increase.
International sales
were $105.2 million of that in 2012 compared to $82.7 million in 2011. That's
a 27% increase, $22.5 million increase, and that represented 40% of the Q1 2012
sales. In 2011, international sales were 36% of Q1 2011 sales. The increase
in the international sales for Q1 2012 versus Q1 of 2011 occurred primarily in
Australia, in Brazil, in the post Soviet states and Russia, in Asia and the
Middle East, and in Mexico.
Domestic sales for
the first quarter of 2012 were $161.4 million. That compares to $147.5 million
in the first quarter of 2011 or a 9% increase or $13.9 million increase.
Domestic sales then represented 60% of the Q1 2012 sales versus 64% in Q1 of
2011.
Part sales for the
first quarter of 2012 were $76 million and that compares to $57.3 million for
the first quarter of 2011. That's a 33% increase in part sales, or $18.7
million. Part sales were 29% of the quarterly sales in 2012 compared to 25% in
2011.
The segment revenues
are attached to your press release. I won't read those to you here. They're
given to you in detail there for the first quarter of 2011 and 2012.
The gross profit for
the quarter was $60.6 million compared to the prior year of $54.7 million.
That's an increase of $5.9 million or an 11% increase in dollars. The gross
profit percentage on a consolidated basis decreased 110 basis points for the
quarter from 23.8% last year to 22.7% this year. Gross margin by segment is
also attached to your press release and we won't cover those in my comments.
SGA&E for the
quarter was $41.9 million compared to $39.5 million in Q1 of 2011. It was
15.7% of sales this year versus 17.2% of sales last year. That's an increase
of $2.4 million but a decrease of 150 basis points when it comes to as a percent
of sales. The primary area where there were decreases was ConExpo. If you
remember then in 2011, we had ConExpo, which is every three years. We had
increases this year in health insurance and some payroll and related travel
expenses in SGA&E.
Operating income
increased from $15.2 million in Q1 of 2011 to $18.8 million in Q1 of 2012.
That's an increase of $3.6 million or 24% increase in the operating income.
Income by segments is also included in the press release.
The tax rate was
37.3% on an effective basis for the quarter. That compares to 34.8% in the
prior year and that increase is primarily due to the R&D tax credit being
in effect for 2011 but not in effect for 2012 yet. We are hopeful that Congress
will pass that R&D tax credit during 2012 and it will be retroactively
effective back to January 1, 2012 but being that they have not passed that
R&D tax credit yet, we certainly cannot consider that when calculating the
effective rate on our earnings so the rate is 37.3%.
Net income
attributable to controlling interest is $12.2 million in the first quarter of
2012 compared to $10.1 million in the first quarter of 2011. That is a 21%
increase in earnings there or $10.1 million.
Earnings per share
per fully diluted share for the quarter is $0.53. That compares to $0.44 per
diluted share in Q1 of 2011. That's a 20% increase in our earnings for the
quarter.
The backlog at March
31 2012 was $285.6 million compared to $264.7 million at the same time last
year. That's a $20.9 million increase or 8% increase in the total backlog and
that backlog for 2011 was adjusted to reflect those acquisitions that occurred,
primarily GEFCO that occurred late in 2011. The international backlog at March
31 2012 was $122.8 million compared to $139.9 million last year for a decrease
of $17.1 million or a 12% decrease in the international backlog. However, the
domestic backlog increased from $124.8 million at March 31, 2011 to $162.8
million at March 31, 2012. That's a $38 million increase or a 30% increase in
the domestic backlog. The backlog by segment is also attached to your press
release.
We look at the
balance sheet. Our balance sheet remains very strong. Receivables are $113.6
million this year, March 31, compared to $100.2 million last year. That's a
$13.4 million increase and the days outstanding actually reduced by one day
from 39.1 last year to 38.1 this year.
Our inventory is up
to $313.4 million this year versus $272.7 million last year at March 31. That's
a $40.7 million increase. That increase is partially due to the acquisition of
GEFCO, which makes it about $22.6 million of that inventory increase.
Inventories turning
in 2012 at 2.6 turns versus 2.5 turns last year so the turns have slightly
improved.
We owe nothing on our
$100 million credit facility. We have $41.6 million in cash and cash
equivalents on the balance sheet right now. Letters of credit outstanding are
$13.5 million against that credit facility so our borrowing availability is
$86.5 million under that facility. We did renew that facility. Many of you
may know that it was going to expire in April and we did renew that $100
million credit facility with Wells Fargo and you may have seen the 8-K file on
that. It is a five-year deal on substantially the same terms as our previous
five-year credit agreement with Wells Fargo.
Capital expenditures
for the quarter were $5.4 million. We're budgeted to spend about $37.5 million
for 2012. Depreciation for the first quarter was $5.4 million and we have
budgeted about $22.5 million depreciation for the year 2012.
That concludes my
prepared remarks on the financial details and certainly will be available to
answer any questions you may have later in the call.
Stephen C. Anderson –
Astec Industries, Inc. – Vice President of Administration and Director
of Investor Relations
Okay. Thank you,
David. Don Brock is now going to provide some comments regarding our first
quarter of this year's operations. Don?
J. Don Brock – Astec
Industries, Inc. – Chairman and Chief Executive Officer
Thank you, Steve.
As David had said,
our revenues were up from $267 million versus $230 last year or an increase of
16%. Our pretax profit was $19.5 million versus $15.5 million or a 26%
increase while after tax was $12.2 million versus $10 million or a 21%
increase. The difference, as David said was due to the difference in the tax
rate of 34.8% versus 37.3% due to the expiration of the R&D tax credit.
This affected our earnings per share of about $0.02. Our EPS was $0.53 versus
$0.44 for an increase of 20.8.
We continue to
struggle with our equipment margins during the quarter. In the mobile
equipment, the change from Tier 3 to Tier 4 required major redesigns in each
equipment model that we build. We not only experienced higher engine costs in
doing this, but saw man hours increased due to the first of these new models
being built. We were also hurt by our foreign competitors who are also able to
bring in Tier 3 engines due to models being built before they were able to
stock pile engines in advance. US manufacturers were not allowed to stock pile
at the end of 2010. This has led us to a very tough pricing competition
particularly in the paver side of the market. We've also experienced higher
costs on our other new and first up products that we're building. We have a
number of these due to our aggressive product development program over the last
two years. However, these products will be what will grow our company in the
future and it seems to be a price that we have to pay on all new products.
Although our margins improved 150 basis points from the low of Q4 of last year,
we remained 110 basis points below quarter 1 of 2011. This difference equates
to about $0.08 a share.
On the real positive
side, we saw our part sales continue to grow. As David mentioned, we have a
33% increase from $57 million to $76 million. Basically, most of our gross
profit was totally due to growth in parts. We're pleased to see the efforts
that we've put forth in the last couple of years of growing our parts business,
increasing our parts sales begin to pay off. However, it should be pointed out
with a weak market, you expect your parts, particularly here in the United
States, we see people buying more parts, doing repairs in lieu of buying new
equipment. We expect to see our margins gradually recover during the year, as
we've mentioned in the past, but we think this will be a slow recovery as we
gradually build more of the machines and work our man hours and our costs down.
Looking forward to
the second quarter and the rest of the year, I guess first, if we look at the
equipment for the infrastructure, we remain without a highway bill with a ninth
extension in place. Volume for our customers remains weak. Highway lettings
are off 14% year-over-year. We do not believe that we'll see a highway bill personally.
I don't believe that we'll see it before 2013 due to the election. With this
backdrop, we expect domestic sales to remain weak and very competitive.
International sales continue to grow but not as rapid a pace as we've seen in
the last two years.
However, with all of
these negatives, let's say that we believe that we will be able to back fill
this weakness with equipment from the energy and mining sector. We continue to
grow our drill businesses. We are building water heaters that are used for
fracking, pump trailers for well service and fracking, larger chippers and
flails that are used for producing wood chips. Our new concrete plant is
beginning to sell. Surface miners and wood pellet plants are also being
developed and we are beginning to receive our first orders.
This wide variety of
products creates many opportunities for us but it also creates many
challenges. As the US economy improves and the volume of our core products
return to normal, our growth will be driven by these present low margin products
that we're birthing today.
At the end of the
quarter, our backlog was $285 million versus $264 million for last year, up
8%. Domestically, we believe that the uncertainty of no highway bill, the
delay in the keystone pipeline, the environmental resistance to fracking will
prevail throughout this year keeping our customers cautious and somewhat
paralyzed, buying only what they have to buy. The expiration of 100%
depreciation credit has also slowed the buying of our strong private customers
who generally buy on a more consistent basis regardless of the economy.
However, with all of
this said, we continue to believe that we will continue to grow our business at
approximately 15% per year. Typically, at this rate of growth, you will see
improvements in the incremental margins. However, based on the number of new
products, the competitiveness of the market, we think our profits will grow
along with our revenues and basically, we will not see incremental improvements
as we have in the past.
Our balance sheet
remains strong and we continue to look at bolt-on acquisitions that will be
accretive and synergistic.
I'll be glad to
answer any questions that you have at this point.
Operator
We will now be
conducting a question-and-answer session. If you would like to ask a question,
please press *1 on your telephone keypad. A confirmation tone will indicate
your line is in the question queue. You may press *2 if you would like to
remove your question from the queue. For participants using speaker equipment,
it may be necessary to pick up your handset before pressing the * keys. One
moment please while we poll for questions.
Our first question
comes from Jack Kasprzak of BB&T. Please proceed with your questions.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Jack.
Jack Kasprzak – BB&T Capital Markets
Good morning, Don.
Good morning, everyone. First question is with regard to Q1 asphalt sales.
Asphalt group sales were down and mobile sales are down in the quarter so is
that just due to the lack of a highway bill and the uncertainty you underscored,
Don, or is there anything else going on?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
No, I think that's
pretty well it. Jack, there are a lot of the states that just stopped the
lettings because they fooled around until the last week of March before they
extended the bill and as a result, a lot of lettings were just stopped and
continued what we are selling domestically on asphalt plants, they all have
wheels on them, the people generally are low on volume of work and if there are
large jobs, they're more prone to move and so we're selling a number of
portable plants. We have an order for seven plants from the US Army. The
first one we built was not profitable; the others will gradually be, so another
one of the new products. They have a few special things that they require on
it that required re-engineering. In the paver side of it, we have been hurt by
the fact that one of our competitors stock piled a large number of Tier 3
engines and he's now bringing them into the States and very aggressive on
pricing and that's certainly for us to meet that price, again, hurt our margins
on top of the fact that we're having to put the Tier 4 in ours and our margins
have gone down on that. I'd say we have seen that improved but I don't see a
lot of revenue pick up in both of these areas other than from the international
until we get some stability or some certainty about what kind of highway bill
we're going to have.
Jack Kasprzak – BB&T Capital
Markets
Are you feeling less
optimistic about the domestic sales opportunities you have right now than you
were three or six months ago?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I guess it's pretty
frustrating to answer your question on what they might do with the highway
bill. On the positive side, I do see commercial work slowly coming back, not
greatly. The homebuilding as you know was up slightly, a long way from where
it needs to be, but we're seeing a gradual return to the commercial work, which
helps our customers. But the highway work remains slow and I'll have to say, I'm
still negative of getting anything done before – we have to have more revenues and
Republicans don't want to do anything to raise it and the Democrats' definition
of infrastructure is a lot different from roads and bridges. So, it's not a
very positive thing. There are a number of people in the industry that have
the opinion that maybe with these conferences that they will convene, we might
end up with a three-year highway bill. And even though it would be probably a
flat bill, they will still have to come up with some funding. That wouldn't be
all bad. At least it lets a little bit of certainty into the market but right
now, people are just somewhat paralyzed by the unknown of what's going to
happen related to it.
Jack Kasprzak – BB&T Capital
Markets
And where do you
think guys are in the transition from the Tier 3 to Tier 4 engines in terms of
your retooling of your equipment?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Well, our biggest
area was at Roadtec, and I'd say they are 80% through with all that and we have
all of the new models designed there. There are some of our other businesses, Peterson,
the chipper business, is just getting started in it. They have larger engines
and they have more time on that. But I would say on the whole of our mobile
equipment, we're probably 70% there.
Jack Kasprzak – BB&T Capital
Markets
Okay. That does it
for me. Thank you very much.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Thank you.
Operator
Our next question
comes from Robert McCarthy of Robert W. Baird. Please proceed with your
questions.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Rob.
Robert McCarthy – Robert W. Baird
& Company, Inc.
Good morning, Don.
That's Baird, of course. As you would expect from me, I've got some number
oriented questions.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Okay.
Robert McCarthy – Robert W. Baird
& Company, Inc.
First, I want to make
sure that I understand the backlog adjustment that we're making. We've added
about 20 million to last year's backlog for comparability purposes. That's GEFCO
I gather.
David Silvious –
Astec Industries, Inc. – Chief Financial Officer
That's correct.
Robert McCarthy – Robert W. Baird
Okay. And then the
thing that sorts of surprises me in like this question of ignorance. It looks
like about two-thirds or three-quarters of that backlog was international.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, GEFCO, before we
bought them last year, had about $19 million backlog at the end of first
quarter and $10 million of it was a large order to Egypt that our core of
engineers paid for. So it was an unusual size order for that company and that
doesn't exist this year, so that was kind of an anomaly. That order shipped
before we bought the company.
Robert McCarthy – Robert W. Baird
Yeah. So their
business today, is it mostly domestic which was I had assumed?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
No, I would say,
again, it's about half international. The good part of it, they had a very
good first quarter and I might say, I'm very pleased with the people there and
with that acquisition. They're very excited about us upgrading their plant and
putting in more equipment but one of the things, they had been very cautious
and held back for a number of years and we have doubled the number of people
they have in the parts area. So their parts business is about 42% to 43% of
their business. They have such a string of products out in the field. And we're
growing that business. Their new equipment, we're redesigning some of it and
growing it. It was exciting; I was out there last week and we started their
focus groups about three months ago and I've never seen a group so excited
about how much savings that they can take out of what they're doing. So we're
very pleased with that. I think it's going to be a great company for us.
Robert McCarthy – Robert W. Baird
Can you tell us what GEFCO
contributed in revenue in the quarter?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
It was around 14, 15
million range.
Robert McCarthy – Robert W. Baird
Okay. And last
question, more broadly, looking at the international and domestic order
comparisons, like driving that from backlog, it looks like your international order
activity was roughly flat year on year, Don. Is that some surprise to you? Is
there an element in last year's number that made it a more difficult comp or
can you just talk about what you're seeing here?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
It's a mix, Rob,
between the companies. Canada and Australia continues to be good for asphalt.
The thing that's been a little surprising as we've done our quarterly reviews
is that the domestic business in the aggregate side of the business for the
first time in about three years has begun to pick up a little bit which was a
little bit surprising to me while on the domestic side of the asphalt business
it's a struggle. But the mix between international and domestic has switched
over and it's about half and half now in the aggregate side and tells me there
was about 70% international last year. So we are seeing an improvement. I
might add, a part of that on our track-mounted machines, there are a lot of
those going out to dealers who are renting them. The rental business is just a
part of the uncertainty and people are doing a lot more renting than they are
buying and the machinery that we have in that area has been doing better
because of that.
Robert McCarthy – Robert W. Baird
Okay. Thank you.
I'll get back in queue.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Okay.
Operator
Our next question
comes from Rich Wesolowski of Sidoti & Company. Please proceed with your
questions.
Richard Wesolowski –
Sidoti & Company LLC
Thank you. Good
morning.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Rich.
Richard Wesolowski –
Sidoti & Company LLC
Don, over the last
couple of calls, you voiced optimism that the company can reap operating
leverage under 15% sales growth both in the gross margin and in the SG&A
and today, it seems the reverse and you're calling for earnings expanding in
line with sales. Could you discuss what changed that?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
It's mainly in the
mobile side due to the redesign of the equipment for the Tier 4 and the cost of
the engines in the Tier 4 and the new products. What we are selling to
backfill are brand new products and, without any question, the margins on those
have been disappointingly low. It's like one of our presidents said, you know,
I'm embarrassed that we lost money on this first sale but he said we're going
to up the price and we're going to cut our cost and we'll get the margins back
in shape and we are going through that process. Our margins on our equipment were
down about 2% year over year but what saved us was the parts business...
Richard Wesolowski –
Sidoti & Company LLC
Right.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
...and the growth of
that. But we're disappointed that the margins that we're not getting the
incremental benefit. I believe we will. It may take another quarter or two to
do that. I don't know whether anybody else can, but we can't design a brand new
product or a new model and not have to do some rework, not to have to have some
warranty, not to have excess man hours on it. It seems to happen and I know
from over the years, we've seen our man hour cost go to 40% of what the first
unit was so this is not unusual what we're seeing here today.
Richard Wesolowski –
Sidoti & Company LLC
Am I correct to
assuming that the bulk of the 1Q sales were for products that did not have the
late 2011 price increase but that the great majority of the sales in 2Q and
beyond would benefit from the price increase?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, that's correct.
Richard Wesolowski –
Sidoti & Company LLC
Okay. Then lastly,
even without GEFCO's contribution, your parts business was about $70 million
and you've never even cracked $60 million in the past. What was the big change
from 1Q versus 2011?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I think there are two
things. One, we are being very aggressive about selling our parts. As I've
mentioned in other calls, we continue to add PSRs or parts service
representatives out in the field and the people who buy the parts are not the
people that buy the new equipment. I'm a little embarrassed that we hadn't
recognized that in the past more. We've been more order takers on parts and
now, we're aggressively trying to sell them. We're reverse engineering some of
our competitors' parts and some of our competitors that have gone out of
business. But I think the second thing that's probably equally as important is
that in the uncertainty of the economy, there are two major things out and
people are at least on asphalt plants, they're buying used asphalt plants
versus new if they can find them and number two, particularly in the mobile
stuff, they will rent before they buy. It's really just a process in my
opinion, Rich, in delaying a decision. It's not that they don't need it but
with the uncertainty and not being able to have much visibility out, they will
pay a higher price to rent.
Richard Wesolowski –
Sidoti & Company LLC
Great. I appreciate
it. Best of luck.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Oh, thank you.
Operator
Our next question
comes from Nick Coppola of Thompson Research Group. Please proceed with your
questions.
Nicholas Coppola –
Thompson Research Group, LLC
Hi. Good morning.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Nick.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Good morning.
Nicholas Coppola –
Thompson Research Group, LLC
If you were to look
across segments and divide it into infrastructure, mining, and energy, what was
the performance like in each of those buckets? Any quantitative or qualitative
comments would be appreciated.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes. If I understand
your question I guess if we look at the asphalt side of the business. It is
still very strong infrastructure; probably 75% of what they do is
infrastructure, maybe 80%. The one company there that has done very well in diversifying
more in energy is Heatec, the Heatec operation. I know where half of their
business is going to heaters for processing natural gas, for fracking for hot
water. So they've done a very good job. Astec still sells some soil
remediation plants. Astec has invested a lot of money in this wood pellet
plant and it could be a substantial part of its business in the future. We
have two plants that, as I've said earlier, we think we'll sell this year the
larger of the two. I got an email from our customer yesterday that said they
hope to sign the contract on the off take agreement by the end of this month or
by the end of May, I should say, and would be proceeding with the plan. So
we've got a firm verbal, so to speak, on about a $40 million pellet plant.
That will be a part of that business.
In the aggregate side
of it, the predominant amount of their business is going to infrastructure and
mining with probably 30% of it now going to mining.
In the underground
side, it's predominantly going to energy or drilling. Our drill rigs are going
quite well and the directional drills are pretty well, a large part of it being
sold internationally but, again, that's for pipelines and things like that.
The mobile side of
the business is predominantly infrastructure and really has not diversified a
lot out of that.
Nicholas Coppola –
Thompson Research Group, LLC
Okay. All right.
Well, that's helpful. Then I guess talking about the wood pellet plant, I
think the last time that we spoke, I guess there were still some technological
or there was some functionality issues being ironed out. Where are you on
that?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We have continued to
struggle with the pellet press. The first plant we sold will be using ring
dyes, the more conventional type units that we will purchase. That amounts to
about 10% of the cost of the total plant. The drying and burning up of the
VOCs and the torifying of the wood has worked very successful through the
tube-type dryer we've tested and all our test did come out very well and we're
pretty excited we've got a great product there. Torification is still kind of a
new process that will be a while probably before the utilities buy into it.
The economics of it at this point don't work as well as just the regular wood
pellets and many of the European utilities are set up just to handle the wood
pellets but we think we're ahead of the game on that and we think we have the
ability. The test we run, most pellet plants that run southern pine without an
afterburner or RTO on the plant, you can't run over about 120,000 tons a year.
With the system we have, we can run up to over 600,000 and 700,000 tons a year
without an afterburner so we have some real advantages and we're pretty excited
that we're getting close to having all the bugs out of it.
Nicholas Coppola –
Thompson Research Group, LLC
Okay. That's great.
Thanks. Then one last question. I guess of the 15.8% increase in revenue, how
much of that was acquired revenue?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We're making a
comparison of year-over-year basically. Their backlog and everything, it has
it included. Of the revenue, it's about $15 million but as a comparison of year
over year, we had GEFCO's last years in there...
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
No.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
...but we had it in our
backlogs...
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
In the backlog but
not in the revenue, so it's about $15 million.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
About $15 million in
the revenues but it is in their backlog in comparison.
Nicholas Coppola –
Thompson Research Group, LLC
Got you. Okay.
Thank you.
Operator
Our next question
comes from Jason Ursaner of CJS Securities. Please proceed with your
questions.
Jason Ursaner – CJS
Securities
Good morning.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Jason.
Jason Ursaner – CJS
Securities
A quick followup on
Jack's original question about the contract with the US Army, what was the
revenue content that's actually shipped through the quarter on that first one
and what do you have in backlog now from that?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Basically, the total
contract is $89 million to $90 million. We have only put in backlog $21
million – about $21 million of it. We have firm orders for seven plants. We
did not actually ship the plant. The first plant will be shipping in the second
quarter. We had a lot of expenses related to it.
Jason Ursaner – CJS
Securities
Okay. You won't have
ConExpo this year and I know last year, you had a very strong showing there at
the end of March. In terms of the top line impact of that, I think most of the
shipments went out in Q2 but were the orders already in backlog by the time Q1
ended last year?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
No, I think we sold
everything that was out at ConExpo but I would say probably most of the benefit
of that stretches out over nine months and you ask a question that's hard for
us to analyze. I struggled with whether we get the benefit of that as our
salespeople think we do but we had just finished the show last week at Intermat
in France and, again, you don't spend there what you do at ConExpo but we were
successful in picking up some orders there. But I think the answer to your
question, most of that showed up in the second quarter if it shipped out of
what was at the show and then other orders would have been in the second or
third quarter of last year.
Jason Ursaner – CJS
Securities
But those wouldn't
have been in backlog. It sort of was an immediate order from the show?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Some of those were in
backlog. Some of those I would say half of what went to the show, we already
had sold, Jason.
Jason Ursaner – CJS
Securities
Okay. In terms of
hitting the annual revenue growth target, I see the acquisition growth is in
hand but listening to your commentary and I guess the backlog figures, I'm a little
confused where the volume growth is going to come from. You're still showing
growth but the quarterly comparisons are getting a little tougher from here on
out. So just if you could I guess give any more color on that.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Well, I guess we see
the 15% growth as still being very achievable. It will probably, in the second
half, switch more to being international. I guess domestically on
infrastructure, I think you'll see a continued slight improvement in
residential and commercial type building just a slow improvement. I think
highway work is going to be flat and as I said earlier, it's already down like
14%. We're getting a lot of our growth or will get more of it out of the energy
business. We have a number of orders for pump trailers for oil service and
fracking. We have about 30 some orders for hot water heaters for fracking. We
have a year's backlog for thermal oil heaters going on gas platforms. With the
pellet plants, we hope will start to fill in the fourth quarter. So, we have a
variety of diversified products that should continue to back fill, and that's
what we're banking on.
Jason Ursaner – CJS
Securities
Okay. Great. I
appreciate the context.
Operator
Our next question
comes from the line of Ted Grace of Susquehanna. Please proceed with your
questions.
Ted Grace –
Susquehanna Financial Group
Hi, guys. How are
you doing?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
All right, Ted.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Good.
Ted Grace –
Susquehanna Financial Group
The first thing I was
hoping to come at is the orders by end market and so if you could just dissect,
you know, when we look at the year-over-year change in your quarters, it's not
backlog but orders, how much of that came from infrastructure versus energy
versus mining?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
My best estimate of
it, Ted, would be probably 20% mining, 15% to 20% in energy, and about 60% to
65% infrastructure.
Ted Grace –
Susquehanna Financial Group
Okay. But that's
orders, not revenue.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
That's correct.
Ted Grace –
Susquehanna Financial Group
Okay. Just for
clarification sake, I know you gave kind of an apples-to-apples comparison on
the backlog, could you give us the orders from the first quarter adjusting for GEFCO
and whatever other adjustments you think are appropriate?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I'm not sure I
understand what your question is there. I mean GEFCO is about $15 million in
revenues and their backlog is comparable to that. They have about a month – about
a quarter's backlog. The way the accounting is David and I knock heads
sometimes over this but he wins. He's bigger than I am. In presenting our
backlog, we have to compare what backlog GEFCO had last year and they had $19
million last year versus about, I believe, its $15 million this year in
backlogs. They had that one large order. Even though we didn't own them and
even though we did an asset purchase, we have to make that comparison. So it
was an asset purchase for the revenues, we add their revenues without a
comparison to last year.
Ted Grace –
Susquehanna Financial Group
Okay. So maybe said
otherwise, if I just look at your orders on an apples-to-apples basis dollar
wise, they're up what? $30 million year over year?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
That's pretty close,
yes.
Ted Grace –
Susquehanna Financial Group
What you're saying is
two-thirds of that came from infrastructure despite the headwinds and only 20%
was mining, only 20% was energy?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
That's right.
Ted Grace –
Susquehanna Financial Group
Okay. That was what
I was trying to get at. In terms of the April lettings on the contract on the
highway side, any sense for how that's going? Have you seen an uptick or an
improvement given that you did get a CR?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I know in Georgia,
for example, they canceled all the lettings in March until June but they
reinstated them and they had a pretty good letting in April and in May,
likewise in Mississippi, likewise in most states. What all of this has done
though is it's tended to delay the start of the construction season for the
contractors. Due to good weather, they used up their backlog and as a result,
they're getting somewhat of a late start and then you still continue with
uncertainty what's going to go on after June. In one respect, it's like we've
had for the last 2-1/2 years the type of work they can let is primarily asphalt
jobs. The bigger jobs that require a year or so of design, you're not going to
see any of that done until you get a multiple year highway bill. There is an
opportunity in this conference committee that we might see maybe a compromise
of a three-year bill. There's been some discussion of that at about flat
funding as I said earlier and I would think that's probably got a 50/50 chance
of getting done.
Ted Grace –
Susquehanna Financial Group
So if you look at
the...
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
With that, it would
probably change the back end of our year a little bit.
Ted Grace –
Susquehanna Financial Group
Okay. But if you
look at the highway lettings, they're down five months before March so they're
down six months in a row and seven out of eight by an average of 25%. You
think that can reverse itself in the, call it, the spring season?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
It will a little bit
but it won't make it up to 25%.
Ted Grace –
Susquehanna Financial Group
Okay. The last thing
I was just hoping is to get a little more color on Brazil in the quarter, kind
of where the strength was, and how you're thinking about Brazil for the rest of
the year?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
David, you've been
down there. We've been slowed by just the legalities of it. The plant is
beginning to be started.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
There's a lot of
bureaucracy that you have to wade through in Brazil to do just about anything
but we are making progress. We have blueprints and such and we're getting ready
to break ground and we still project that by the end of the year of 2012,
probably first quarter of 2013, we'll begin production in Brazil. Again,
there's a lot to wade through so we have a lot of the administration and back
office operation underway so it's looking pretty good.
Ted Grace –
Susquehanna Financial Group
I guess more
specifically I was trying to get a sense for sales, not operations. So when
David went through international sales results, the second listed region and so
I didn't know if we should infer that it was force [PH] ranked by Australia
then Brazil then CIS or – I was trying to get a little bit of flavor for how
your business did in the first quarter this year.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Those were sales out
of the US into Brazil and we believe that certainly Brazil will move up the
ladder once we start selling in Brazil. I mean there are a lot of incentives
for people to buy from Brazilian manufacturers.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
The main reason we're
going to Brazil is we have to do this and we've taken products in there that's
extremely high.
Ted Grace –
Susquehanna Financial Group
Yes.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
And it's not to build
there and export out of there. It's to build there and sell in Brazil to be
competitive with our competitors that are there.
Ted Grace –
Susquehanna Financial Group
Got it. Okay. Good
luck, guys.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Thank you.
Operator
Our next question
comes from the line of Walt Liptak of Barrington Research. Please proceed with
your questions.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Hi, Walt.
Walter Liptak –
Barrington Research Associates
Hi. Thanks. Good
morning, guys. I wanted to ask another one on this Tier 3, Tier 4 transition.
You mentioned foreign competitors that are allowed to bring in Tier 3 engines,
are those transition engines and when does that come to an end because that
might alleviate some of the margin pressure?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Walt, we don't know
how many they stockpiled but we were unable legally to stockpile engines, Tier
3s. We do have a flex program where depending on the amount of number of
engines that you build, you get a percentage of that as a transition period.
The foreign competitors were able to stockpile as many as they wanted to and in
addition to that, they have the flex program available after that. So it's
kind of a typical bureaucratic – it really puts the American manufacturer at a
major disadvantage and kind of frustrating for us but I think they'll blow
through that this year.
Walter Liptak –
Barrington Research Associates
Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
The other thing that
will help us too, and we're already seeing it, our margins are coming back up
on the new models as we get the jigs and fixtures and the things for those. So
I think we will probably be ahead of them and also in the warranty problems
that you have with new machines, we'll certainly be ahead of them on that. But
right now, they have probably a nine-month advantage on us.
Walter Liptak –
Barrington Research Associates
Okay. The margin
pressure that you saw in asphalt, was that because of that sole army related
plant?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes. The first one
or two of those are not going to have much in them. The biggest thing that
we're seeing on that is just a lack of good volume. We're selling a lot of
components. We're selling a lot of parts in the asphalt side but – in our
quarterly review with the Astec subsidiary, our sales manager said that they
had been in the last 12 months, 14 of what I would call our double barrels, our
relocatable type plants – 14 of those out on the market. About six of them
have been sold and the problem with that is that it just takes away new
business. We sell parts to the people that buy the plants but it takes away
the new side of the business. So what they are buying, they're either fixing
up what they have or buying a portable because they're moving out of the area
they normally work...
Walter Liptak –
Barrington Research Associates
Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
...or they have the
ability to go look for a used one.
Walter Liptak –
Barrington Research Associates
Okay. All right.
Let me just switch gears but I guess still talking about margins, the price
cost. A lot of commodity costs have been moderating, maybe some contracting,
wouldn't that help your second quarter and your back half of the year if some
of your material prices come in?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, that would be a
real help. We've seen steel moderate a little bit but it's still probably 25%
above where it was a couple of years ago. It went up maybe 40% and then back
down but it hadn't moderated like it did in 2009. It's still probably 20% or
better above what it was at the beginning of last year.
Walter Liptak –
Barrington Research Associates
Okay. But at this
point, you're not seeing the relief come through from raw materials?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Not a lot.
Walter Liptak –
Barrington Research Associates
Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We've seen the rate
of increase moderating but not necessarily in falling back on them.
Walter Liptak –
Barrington Research Associates
Okay. Then the last
one I want to ask is the businesses that continued to do well, you know, the
backlogs and Underground group and aggregate mining, and you talked about how
the commodities area is still going to be good but we've seen commodity prices
come in. At what point should be worry a little bit about too much capacity
being out there for commodities process and just the prices are coming down or
you're just not seeing a robust market?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We're not seeing the
market as being really robust at this point.
Walter Liptak –
Barrington Research Associates
Okay. But your
backlogs continue to grow?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes. I guess our
expectations and if I sound disappointed – my disappointment with the growth in
revenues I think will have that. My disappointment is that we didn't do better
on our margins.
Walter Liptak –
Barrington Research Associates
Profit. Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes. That's mine,
Walt. Maybe my expectation was a little too high but that's been
disappointing. I think it's an opportunity there for us to improve and I think
we will do that.
Walter Liptak –
Barrington Research Associates
Okay. Okay. Thanks
very much.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Thank you.
Operator
Our next question
comes from the line of Todd Vencil of Sterne Agee. Please proceed with your
questions.
Todd Vencil – Sterne
Agee
Thanks a lot. Good
morning, guys.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Good morning.
Todd Vencil – Sterne
Agee
Most of my questions
have been knocked out but I'd like to drill down on a couple of things. One
is, Don, when you talked about margins sort of recovering slowly and you're not
really looking for incremental improvements from volumes but you are looking for,
I guess, a recovery from some of the things that hit you during the first
quarter. So are we thinking about kind of recovery up to the 24% gross margin
level that you saw in 2007 and 2008? Is that kind of the level you're thinking
about?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
That's where I'd like
to see us get to but it will be probably 12 months before we get back to that.
Todd Vencil – Sterne
Agee
Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I think we'll just
see a gradual improvement.
Todd Vencil – Sterne
Agee
Okay. Then you had
mentioned the domestic – that you were not looking for a lot of domestic growth
certainly on the asphalt and mobile side given what's going on here with the
highway bill or lack thereof. For those two businesses, asphalt and mobile
asphalt paving, what is the domestic and international split?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
They are generally in
the 25% to 30% international.
Todd Vencil – Sterne
Agee
Got it. Okay.
That's what I've got. Thanks a lot.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good. Thank you.
Operator
Our next question
comes from Robert McCarthy of Robert W. Baird. Please proceed with your
questions.
Robert McCarthy –
Robert W. Baird
Thanks for taking
another question.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Sure.
Robert McCarthy –
Robert W. Baird
They are a couple.
David, just to be perfectly clear on tax rate expectations that we should just
use 37% for the balance of the year is the best guess right now?
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Best guess if Congress
will pass the R&D tax credit? It should revert to our historical norm
which is about 35%.
Robert McCarthy –
Robert W. Baird
Right.
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
I hate to count on Congress
to do much of anything these days.
Robert McCarthy –
Robert W. Baird
Got it. The
corporate expense, unallocated corporate expense, if you net out things like
interest expense and taxes, et cetera, that number was down something like 50%
year on year, that's cut in half. Was there something unusual that contributed
a positive offset in there?
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
No. There was
nothing unusual.
Robert McCarthy –
Robert W. Baird
So expense levels
last year then were elevated?
David C. Silvious –
Astec Industries, Inc. – Vice President and Chief Financial Officer
Yes. They were
slightly elevated last year.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I think last year we
had on like ConExpo in there, Rob.
Robert McCarthy –
Robert W. Baird
Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We see our SG&A
and engineering as being pretty well flat the rest of the year and as a
percentage of total revenue, we see it getting more back in line where it
should be.
Robert McCarthy –
Robert W. Baird
Okay. The only other
question I had was in the asphalt group, typically, Don, you'd see a
measureable revenue decline in the second quarter from the first quarter. Is
that what you also expect to see this year?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
No. Normally, the
decline, Rob, would be in the third or fourth quarter. The second, generally,
is equal to the first and always has been and sometimes – second has
historically been our best quarter for the whole company and generally, Astec
pretty well parallels that.
Robert McCarthy –
Robert W. Baird
I don't mean to be
argumentative, Don, but the last three years, the second quarter asphalt
revenues declined by at least $5 million from the prior quarter.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We don't expect that
this year.
Robert McCarthy –
Robert W. Baird
Okay. That's fair
enough. Thank you, Don.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
All right.
Operator
Our next question
comes from Rich Wesolowski of Sidoti & Company. Please proceed with your
questions.
Richard Wesolowski –
Sidoti & Company LLC
Hi. Thank you for
circling back.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Sure.
Richard Wesolowski –
Sidoti & Company LLC
Don, did you mention
that you have a firm order for a $40 million pellet plant or group of plants?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I had a second word,
a firm verbal.
Richard Wesolowski –
Sidoti & Company LLC
Firm verbal, okay,
that's the one I missed. Okay.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We had a number of
meetings with this particular customer. They run two pellet plants in Georgia.
They're building a third large one. We have agreed on the numbers. We have
agreed on everything except they are in Europe as we speak. Hopefully, we'll get
a contract signed for all other phases by the end of May. The one thing that
has everything a little bit in limbo over there is the British government has a
very aggressive program to give tax credits for burning biomass type fuels and
replacing their coal-fired power plants with it and that law is supposed to
take effect I think the first of May and they hope to have their contract in
place. So our order is contingent on that contract getting in place.
Richard Wesolowski –
Sidoti & Company LLC
Would you mind
discussing the order outlook for that product line beyond this one prospect?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We have a very good prospect
for this prototype plant that we have and frankly, we have prospects for
probably three or four more of the big plants. We want to digest this big one
and get it running and make sure that we have no other problems with it but I
would say that we should start to see more substantial orders in 2013 for the
plants, but we're not ready to take multiple orders till we get this first one
in and operating.
Richard Wesolowski –
Sidoti & Company LLC
Right. Lastly, would
you remind of the range of sizes of the pellet plants and the price tags that
can go on this?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Typically, the lines
that we're building, we're building a modular type plant and they will operate
at 15 tons per hour guaranteed production and we hope they'll do 20 tons an
hour; it's our expectation. That's very dependent on how wet the wood is but
the one in Georgia we're talking about will have three lines, three identical
lines. So it will do 45 to 60 tons an hour. The first line with the auxiliary
equipment that goes with it is probably a $16 million plant and the other lines
would be like $13 million a piece.
Richard Wesolowski –
Sidoti & Company LLC
Great. I appreciate
it.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, sir.
Operator
Our next question
comes from Jason Ursaner of CJS Securities. Please proceed with your
questions.
Jason Ursaner – CJS
Securities
Thanks for taking the
followup, Don.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, sir.
Jason Ursaner – CJS
Securities
Just what was the
revenue on the small trencher business you sold to Toro and is that still going
to be a drag on that segment earnings until you finish out sort of the contract
manufacturing agreement or will you be able to list it as a discontinued op?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We will not list it
as a discontinued op. The revenues were around $17 million to $18 million a
year and that includes the parts related to it. There was about $4 million to
$5 million of that being parts. We will continue to manufacture for them until
the fourth quarter. It will be – I'd like to say it will be a breakeven but it
may be a slight loss till the fourth quarter. It is just consuming man hours
in that plant as we reload it with these other products.
Jason Ursaner – CJS
Securities
Okay. So if I think
about the GEFCO contribution though it's probably, on a gross margin percentage,
it's a bit higher than that consolidated?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes. The Underground
is still a drag on us there. We expect that to improve considerably as the
fracking trailers go out and we have orders for those and we have started to
get orders for the larger trenchers again, which is a pleasant surprise.
Jason Ursaner – CJS
Securities
Okay. Great. I
appreciate it. Thanks.
Operator
Our next question
comes from the line of Larry DeMaria of William Blair. Please proceed with
your questions.
Larry DeMaria – William
Blair
Hi. Good morning.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Good morning, Larry.
Larry DeMaria –
William Blair
Most of the things
have obviously been answered but two quick questions. If you get the two
orders for the wood pellet plants, when would you anticipate shipping? Would
it be third or fourth quarter? That's the first question.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
We would anticipate
that the first line of the big plant going in the fourth quarter and the other
two lines going in the first quarter of next year. The small prototype plant
we have here probably in the fourth quarter.
Larry DeMaria –
William Blair
Okay. Thank you. And
then with regard to Intermat, any more color you could give us in terms of how
orders shaped up and are they staying in western Europe or they mostly going to
eastern Europe or elsewhere? Just the overall sense you guys got for Intermat
would be helpful. Thanks.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
The prospect is kind
of jump all over the place but we sold one plant and it's going to France. The
other prospects are kind of scattered all over but I would say more eastern
Europe than anywhere else. I was quickly looking on my BlackBerry and my son
sent me a list of all the different ones from the different areas and there are
some of them in the Middle East, some Africa. Mainly, I would say eastern
Europe.
Larry DeMaria –
William Blair
Okay. That's helpful.
Do you guys feel better or worse about coming out of Intermat than you did
going in I guess since what's going on in the world?
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
I guess I've always
been the negative one on Intermat. The times I've been it wasn't much but he
was saying leads out of France, Italy, Belgium, Kazakhstan, Czechoslovakia,
Qatar, South Africa, Finland, Angola, Ireland, and Poland.
Larry DeMaria –
William Blair
That covers a lot
now.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, it covers a lot.
Larry DeMaria –
William Blair
Okay. Thanks.
J. Don Brock – Astec Industries, Inc.
– Chairman and Chief Executive Officer
Yes, sir.
Operator
There are no further
questions at this time. I'd like to hand the floor back over to management for
closing comments.
Stephen C. Anderson –
Astec Industries, Inc. – Vice President of Administration and Director
of Investor Relations
All right. Thank
you, Lewis. We appreciate your participation on this first quarter conference
call and thank you for your interest in Astec. As our news release indicates, today's
conference call has been recorded. A replay of the conference call will be
available through May 8, 2012 and an archived webcast will be available for 90
days. A transcript will be available under the Investor Relations section of
the Astec Industries website within the next seven days. Again, all of that
information is contained in the news release today. This concludes our call.
Thank you and have a good week.
Operator
This concludes today's
teleconference. You may disconnect your lines at this time. Thank you for your
participation.
