Astec studies weakened demand, will get increase from plant sale in Q2 report
Astec Industries’ second-quarter monetary report was bolstered by a $20 million sale of its wooden pellet plant in Hazlehurst, Georgia.
With out the sale, nonetheless, the outcomes have been disappointing for the corporate, which reported weakened demand throughout all of its product segments, together with its Roadtec and Carlson Paving manufacturers and its aggregates, crushing and screening merchandise, based on Rick Dorris, interim CEO.
Throughout an earnings report convention name July 23, Dorris pointed to unusually moist climate within the first quarter of the 12 months resulting in delays on highway building tasks across the nation. And although some delayed tasks have gotten underway, Dorris mentioned, many highway contractors are making do with current tools fairly than shopping for new tools halfway via the season.
“We hear from our prospects that they’re busy, they usually have been busy, nevertheless it simply hasn’t transformed to orders,” Dorris mentioned.
That weakened demand has additionally led the corporate to face extra intense worth competitors, inflicting it to chop costs on its merchandise, as rivals additionally reply to the weaker market. Astec has additionally laid off 402 staff over the previous 12 months – 161 of whom have been through the second quarter – to scale back prices, Dorris mentioned.
$20 million sale
A brilliant spot for the corporate was the $20 million pretax revenue on the sale of the wooden pellet plant. Meaning the corporate is now utterly out of the wooden pellet enterprise, permitting it to give attention to its conventional companies and enhance efficiency, Dorris mentioned. The plant sale additionally boosted gross sales and earnings figures:
Internet gross sales for the second quarter of 2019 have been $304.eight million, in comparison with $272.5 million for the second quarter of 2018 – an 11.eight% enhance.
Internet revenue was $23.4 million or $1.03 per diluted share, in comparison with a internet lack of $40.7 million or $1.76 per diluted share for 2Q 2018.
Internet gross sales for the primary half of 2019 have been $630.6 million, in comparison with $598 million for the primary half of 2018 – a rise of 5.5%.
Internet revenue for the primary half of 2019 was $37.7 million or $1.66 per diluted share, in comparison with a internet lack of $20.4 million or $zero.89 per diluted share for the primary half of 2018.
Weakened demand hurts gross sales, revenue
When eradicating the plant’s sale from the corporate’s second-quarter outcomes, Astec reported the next:
Internet gross sales for the second quarter have been $284.eight million, in comparison with $347.1 million for 2Q 2018 – a lower of 17.9%.
Earnings have been $eight.1 million or $zero.36 per diluted share, in comparison with $24 million or $1.03 per diluted share for 2Q 2018 – a lower in earnings per share of 65%.
Internet gross sales for the primary half have been $610.6 million, in comparison with $672.eight million for the primary half of 2018 – a lower of 9.2%.
Earnings have been $22.4 million or $zero.99 per diluted share, in comparison with $46.9 million or $2.02 per diluted share for the primary half of 2018 – a lower in earnings per share of 51%.
New methods, new merchandise
Dorris mentioned outcomes for the rest of the 12 months are anticipated to comply with an analogous sample. However he pointed to new strategic procurement and gross sales procedures and different cost-cutting measures which are anticipated to spice up revenues and lower bills.
“Now we have skilled lowered demand within the first half of this 12 months, however our ongoing strategic procurement and operational excellence initiatives together with manpower reductions at our most affected subsidiaries will assist us preserve and enhance profitability even when market circumstances don’t enhance within the brief time period,” he mentioned.
The corporate additionally plans to introduce new or improved merchandise earlier than the top of the 12 months for all of its market segments.
“Among the merchandise will fill gaps in our portfolio; some will make us extra aggressive internationally, and a few will make us extra aggressive domestically,” Dorris mentioned.
Dorris additionally pointed to the number of the corporate’s new CEO. (Dorris will serve in his present function till Barry Ruffalo turns into the brand new CEO on August 12.)
“We imagine that our present initiatives in addition to the attitude of a brand new CEO will make us a stronger and extra worthwhile firm going ahead,” Dorris mentioned.