Astec Industries Reports Fourth Quarter and 2006 Results With Historical Highs in Revenues and Net Income
CHATTANOOGA, Tenn. Astec Industries,
Inc. (Nasdaq: ASTE) today reported results for the fourth quarter and for the
year ended December 31, 2006. Revenues for 2006 were $710.6 million and net
income for 2006 was $39.6 million, each of which is an historical high for the
Company. Net income was $1.81 per diluted share for 2006 compared to $1.34
per diluted share for 2005, for an increase of $0.47, or 35.1% per diluted
share.
Revenues for 2006 were $710.6 million compared with $616.1 million for
2005, for an increase of 15.3%. Domestic sales were $518.5 million for 2006,
or 73.0% of 2006 revenues, compared to domestic sales of $499.8 million for
2005, or 81.1% of 2005 revenues. International sales were $192.1 million for
2006, a 65.3% increase over 2005, or 27.0% of 2006 revenues, compared to
international sales of $116.2 million for 2005, or 18.9% of 2005 revenues.
Gross margins for 2006 compared to 2005 increased 210 basis points. The
Company reported net income of $39.6 million, or $1.81 per diluted share, for
2006 compared with a net income of $28.1 million, or $1.34 per diluted share
for 2005, resulting in a 35.1% increase in diluted earnings per share.
Excluding the unusual items in 2005 (gain on the sale of the Grapevine
real estate, impairment charges, and charge-off of prepaid loan fees, as
exhibited and reconciled on the attached schedule), income from operations has
increased from $40.3 million in 2005 to $60.3 million in 2006, for a 49.8%
increase. Revenues for the fourth quarter of 2006 were $162.2 million compared with
$134.5 million for the fourth quarter of 2005, for an increase of 20.6%.
Domestic sales were $113.6 million for the fourth quarter of 2006, or 70.0% of
2006 fourth quarter revenues, compared to domestic sales of $108.8 million for
the fourth quarter of 2005, or 80.9% of 2005 fourth quarter revenues.
International sales were $48.6 million for the fourth quarter of 2006, or
30.0% of 2006 fourth quarter revenues, compared to international sales of
$25.7 million for the fourth quarter of 2005, or 19.1% of 2005 fourth quarter
revenues. The Company reported net income of $6.3 million, or $0.29 per
diluted share, for the fourth quarter of 2006 compared with net income of $1.0
million, or $0.05 per diluted share, for the fourth quarter of 2005, resulting
in a 480.0% increase in diluted earnings per share. The Company's previous
historical high for fourth quarter earnings was also $0.29 per diluted share
in 1998. Consolidated financial statements for the fourth quarter and year ended
December 31, 2006 and additional information related to segment revenues and
profits are attached as addenda to this press release. The Company's backlog at December 31, 2006 was $242.5 million compared to
$127.7 million at December 31, 2005, for a $114.8 million increase. The
Company's backlog at January 31, 2007 was $261.6 million compared to $161.0
million at January 31, 2006, for a $100.6 million increase. Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief
Executive Officer, stated, "We are very pleased with our 2006 results. We are
starting 2007 with historically high backlogs exceeding the prior year by
$114.8 million. We will continue to focus on improving our gross margins
through more efficient design and manufacturing concepts. We also expect to
see moderate inflationary pressure on material costs. We will focus on
controlling these costs through the combined purchasing power of our
subsidiaries while eliminating waste. We are pleased to have increased our
gross margins by 210 basis points in 2006." Dr. Brock added, "With a record backlog, good economy, highway funding
legislation in place, our efficiency initiatives and a strong balance sheet,
we are excited about what can be accomplished in growing the business in both
revenues and profits in 2007." Investor Conference Call and Web Simulcast Astec will conduct a conference call on February 27, 2007, at 10:00 a.m.
EST to review its fourth quarter and fiscal 2006 financial results as well as
its near term general outlook for 2007. The number to call for this
interactive teleconference is (877) 407-9210. Please reference Astec
Industries. The Company will also provide an online Web simulcast and rebroadcast of
the conference call. The live broadcast of Astec's conference call will be
available online at the Company's website at:
www.astecindustries.com/investors/corporate_info/conference_calls/default.htm
An archived webcast will be available for 90 days at www.astecindustries.com. A replay of the conference call will be available through midnight on
Tuesday, March 6, 2007, by dialing (877) 660-6853; Account #: 286; Conference
ID #: 232442. A transcription of the conference call will be made available
under the investor relations section of the Astec Industries, Inc. website
within seven days after the call. Astec Industries, Inc. is a manufacturer of specialized equipment for
building and restoring the world's infrastructure. Astec's manufacturing
operations are divided into four business segments: aggregate processing and
mining equipment; asphalt production equipment; mobile asphalt paving
equipment; and underground boring, directional drilling and trenching
equipment. The information contained in this press release contains "forward-looking
statements" (within the meaning of the Private Securities Litigation Reform
Act of 1995) regarding the future performance of the Company, including
statements about the Company's financial performance for 2007, the effects on
the Company from its backlog, the effects of highway funding legislation, the
effects of improvements in the economy, the effects of a strong balance sheet,
and the effects of our efficiency initiatives. These forward-looking
statements reflect management's expectations and are based upon currently
available information, and the Company undertakes no obligation to update or
revise such statements. These statements are not guarantees of performance
and are inherently subject to risks and uncertainties, many of which cannot be
predicted or anticipated. Future events and actual results, financial or
otherwise, could differ materially from those expressed in or implied by the
forward-looking statements. Important factors that could cause future events
or actual results to differ materially include: general uncertainty in the
economy, future downturns in the economy, rising oil and liquid asphalt
prices, rising steel prices, a failure to comply in the future with covenants
in the Company's credit facility or to obtain waivers thereof, rising interest
rates, decreased funding for highway projects, production capacity, general
business conditions in the industry, demand for the Company's products,
seasonality and cyclicality in operating results, seasonality of sales volumes
or lower than expected sales volumes, lower than expected margins on custom
equipment orders, competitive activity and those other factors listed from
time to time in the Company's reports filed with the Securities and Exchange
Commission, including but not limited to the Company's annual report on Form
10-K for the year ended December 31, 2005 and the Company's quarterly reports
on Forms 10-Q for the quarters ended March 31, June 30 and September 30, 2006.
The Company plans to file its Form 10-K timely by March 16, 2007.
Astec Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31 December 31
2006 2005
Assets
Current assets
Cash and cash equivalents $44,878 $22,598
Receivables, net 66,673 53,395
Inventories 157,835 135,503
Prepaid expenses and other 13,631 14,532
Total current assets 283,017 226,028
Property and equipment, net 113,914 96,114
Other assets 24,931 24,441
Total assets $421,862 $346,583
Liabilities and shareholders' equity
Current liabilities
Accounts payable - trade $42,561 $39,775
Other accrued liabilities 62,308 45,044
Total current liabilities 104,869 84,819
Other non-current liabilities 20,128 18,430
Minority interest in consolidated
subsidiary 699 592
Total shareholders' equity 296,166 242,742
Total liabilities and shareholders' equity $421,862 $346,583
Astec Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
2006 2005 2006 2005
Net sales $162,151 $134,516 $710,607 $616,068
Cost of sales 127,485 108,749 542,320 482,850
Gross profit 34,666 25,767 168,287 133,218
Selling, general,
administrative &
engineering expenses 27,707 24,522 107,944 93,447
Gain on sale of real estate,
net of real estate
impairment charge - - - 6,531
Income from operations 6,959 1,245 60,343 46,302
Interest expense 404 691 1,672 4,209
Other income, net of expense 716 692 1,637 854
Income before income taxes 7,271 1,246 60,308 42,947
Income taxes 972 207 20,638 14,748
Minority interest in earnings - 17 82 105
Net income $6,299 $1,022 $39,588 $28,094
Earnings per Common Share
Net income:
Basic $0.29 $0.05 $1.85 $1.38
Diluted $0.29 $0.05 $1.81 $1.34
Weighted average common
shares outstanding:
Basic 21,561,820 20,890,737 21,428,738 20,333,894
Diluted 21,786,613 21,504,590 21,917,123 20,976,966
Certain amounts for 2005 have been reclassified to conform with the 2006
presentation.
Astec Industries, Inc. and Subsidiaries
Segment Revenues and Profits
For the three months ended December 31, 2006 and 2005
(in thousands)
(Unaudited)
Aggregate Mobile
and Asphalt Under-
Asphalt Mining Paving ground All
Group Group Group Group Others Total
2006 Revenues 37,631 71,528 26,187 26,805 - 162,151
2005 Revenues 33,919 56,238 21,563 22,796 - 134,516
Change $ 3,712 15,290 4,624 4,009 - 27,635
Change % 10.9% 27.2% 21.4% 17.6% - 20.5%
2006 Gross Profit 8,450 17,656 5,336 3,520 (296) 34,666
2006 Gross Profit % 22.5% 24.7% 20.4% 13.1% - 21.4%
2005 Gross Profit 6,647 12,212 4,886 2,075 (53) 25,767
2005 Gross Profit % 19.6% 21.7% 22.7% 9.1% - 19.2%
Change 1,803 5,444 450 1,445 (243) 8,899
2006 Profit (Loss) 3,664 8,535 2,243 (461) (7,093) 6,888
2005 Profit (Loss) 1,837 3,508 1,964 (2,142) (3,880) 1,287
Change $ 1,827 5,027 279 1,681 (3,213) 5,601
Change % 99.5% 143.3% 14.2% 78.5% (82.8%) 435.2%
Certain amounts for 2005 have been reclassified to conform with the 2006
presentation.
Segment revenues are reported net of intersegment revenues. Segment gross
profit is net of profit on intersegment revenues. A reconciliation of
total segment profits to the Company's consolidated net income is as
follows:
For the three months ended December 31
2006 2005
Total profit for all segments 6,888 1,287
Minority interest in earnings of subsidiary - (17)
Elimination of intersegment profit (589) (248)
Consolidated net income 6,299 1,022
Astec Industries, Inc. and Subsidiaries
Segment Revenues and Profits
For the twelve months ended December 31, 2006 and 2005
(in thousands)
(Unaudited)
Aggregate Mobile
and Asphalt
Asphalt Mining Paving Underground All
Group Group Group Group Others Total
2006 Revenues 186,657 289,471 129,385 105,094 - 710,607
2005 Revenues 170,205 242,515 112,947 90,401 - 616,068
Change $ 16,452 46,956 16,438 14,693 - 94,539
Change % 9.7% 19.4% 14.6% 16.3% - 15.3%
2006 Gross Profit 46,447 70,878 29,995 21,303 (336) 168,287
2006 Gross Profit % 24.9% 24.5% 23.2% 20.3% - 23.7%
2005 Gross Profit 36,254 57,077 25,951 14,052 (116) 133,218
2005 Gross Profit % 21.3% 23.5% 23.0% 15.5% - 21.6%
Change 10,193 13,801 4,044 7,251 (220) 35,069
2006 Profit (Loss) 24,387 33,263 14,369 4,866 (36,439) 40,446
2005 Profit (Loss) 16,099 22,554 12,291 6,301 (28,820) 28,425
Change $ 8,288 10,709 2,078 (1,435) (7,619) 12,021
Change % 51.5% 47.5% 16.9% (22.8%) (26.4%) 42.3%
Unusual Items by
Segment
2006 Profit (Loss) 24,387 33,263 14,369 4,866 (36,439) 40,446
2005 Profit (Loss) 16,099 22,554 12,291 6,301 (28,820) 28,425
Gain on Sale of
Grapevine - - - (7,714) 2,978 (4,736)
Real Estate
Impairment Charge 1,183 - - - (457) 726
Chargeoff of Prepaid
Loan Fees - - - - 319 319
2005 Profit (Loss)
Less Unusual Items 17,282 22,554 12,291 (1,413) (25,980) 24,734
Change $ 7,105 10,709 2,078 6,279 (10,459) 15,712
Change % 41.1% 47.5% 16.9% 444.4% (40.3%) 63.5%
Certain amounts for 2005 have been reclassified to conform with the 2006
presentation.
The gain on the sale of the Grapevine facility is included in the
Underground Group in 2005. The real estate impairment charge is
included in the Asphalt Group in 2005. The chargeoff of prepaid loan
fees is included in the "All Others" segment in 2005. Taxes related
to these items are included in the "All Others" segment in 2005.
Segment revenues are reported net of intersegment revenues. Segment
gross profit is net of profit on intersegment revenues. A reconciliation
of total segment profits to the Company's consolidated net income is as
follows:
For the twelve months ended December 31
2006 2005
Total profit for all segments 40,446 28,425
Minority interest in earnings of subsidiary (82) (105)
Elimination of intersegment profit (776) (226)
Consolidated net income 39,588 28,094
Astec Industries, Inc. and Subsidiaries
Backlog by Segment
December 31, 2006 and 2005
(in thousands)
(Unaudited)
Aggregate Mobile
and Asphalt Under-
Asphalt Mining Paving ground All
Group Group Group Group Others Total
2006 Backlog 111,053 109,370 12,404 9,709 - 242,536
2005 Backlog 37,426 76,991 7,519 5,758 - 127,694
Change $ 73,627 32,379 4,885 3,951 - 114,842
Change % 196.7% 42.1% 65.0% 68.6% - 89.9%
Astec Industries, Inc. and Subsidiaries
Reconciliation of Income from Operations to Income from Operations Before
Unusual Items
(In Thousands)
(Unaudited)
Twelve Months Twelve Months
Ended Ended
December 31 December 31
2006 2005
Income from operations $60,343 $46,302
Unusual Items
Gain on sale of Grapevine facility - 7,714
Real estate impairment charge - (1,183)
Chargeoff of prepaid loan fees - (520)
Operating income from unusual items - 6,011
Income from operations before unusual items $60,343 $40,291
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