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Astec (ASTE) Q3 Earnings & Revenues Beat Estimates, Up Y/Y

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  • ASTE

Astec Industries, Inc. ASTE reported third-quarter 2021 adjusted earnings per share of 50 cents, which beat the Zacks Consensus Estimate of 33 cents. The bottom line improved 163% from 19 cents reported in the prior-year quarter. The company benefited from pricing initiatives, higher sales and manufacturing efficiencies that helped offset inflation, supply chain disruptions and labor challenges.

Including one-time items, the company reported earnings per share of 41 cents in the quarter under review, compared with 7 cents in the year-ago quarter.

Revenues & Backlog

Astec’s revenues increased 15% year over year to $267 million in the quarter under review and also marked a third-quarter record. The top line surpassed the Zacks Consensus Estimate of $266 million. Domestic sales were up 11.4% year over year on pricing initiatives, stronger asphalt plant sales, and incremental concrete plant sales from acquired businesses and improved aftermarket parts sales. This was partially offset by lower sales from the exit of its oil and gas drilling product lines. International sales surged 30% in the third quarter, courtesy of increased activity in Canada, Australia, Brazil and Asia.

At the third quarter 2021-end, the company’s total backlog was a record $620.5 million, reflecting a significant improvement of 184% year over year. Domestic backlog soared 236% year over year to $508.6 million, while international backlog increased 66.5% to $111.9 million.

Operating Performance

Adjusted cost of sales climbed 14.5% year over year to $205 million in the third quarter. Adjusted gross profit was $62 million, up 18% from the year-ago quarter. Adjusted gross margin expanded 50 basis points to 23.3% from the year-ago quarter.

Astec Industries, Inc. Price, Consensus and EPS Surprise

Astec Industries, Inc. Price, Consensus and EPS Surprise
Astec Industries, Inc. Price, Consensus and EPS Surprise

Astec Industries, Inc. price-consensus-eps-surprise-chart | Astec Industries, Inc. Quote

Selling, general, administrative and engineering (SG&A) increased 13% year over year to around $55 million. Adjusted operating profit for the quarter under review was $9.4 million, reflecting an improvement of 147% from the prior-year quarter.

Adjusted operating margin was 3.5% compared with 1.6% in the prior-year quarter. The 180 basis point expansion stemmed from higher sales and gross profit that helped offset higher costs related to centralization and infrastructure efforts associated with the company’s ongoing transformation initiatives.

Adjusted EBITDA was $16.8 million in the reported quarter, up 58% from the year-ago quarter. Adjusted EBITDA margin was 6.3%, reflecting a 170 basis point expansion from the prior-year quarter. The improvement was driven by pricing realization and improved sales volumes/mix, and manufacturing efficiencies, partially offset by cost inflation and increased SG&A expenses.

Segment Performance

Revenues for the Infrastructure Solutions segment were up 17% to $176 million from the year-ago quarter. The segment’s adjusted gross profit was around $40 million, up 25% from the prior-year quarter.

Materials Solutions segment’s total revenues were $91 million in the quarter under review, reflecting an increase of 13% year over year. The segment’s adjusted gross profit was $22.4 million, reflecting year-over-year increase of 9%.

Financial Position

Astec’s cash and cash equivalents improved to $164.6 million as of Sep 30, 2021 from $158.6 million as of Dec 31, 2020. As of the third quarter end, the company’s total debt was $0.2 million, compared with $0.4 million as of Dec 31, 2020.

So far, the company has been witnessing a ramp up in demand as evident from its record backlog. Steel prices have been trending higher so far this year, and are expected to remain so for the balance of the year. A tight labor market and supply chain headwinds remain concerns. These factors will impact the company’s margins this year.

Share Price Performance

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Zacks Investment Research

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Astec’s shares have gained 23.2% in the past year, compared with the industry‘s rally of 26.8%.

Zacks Rank & Stocks to Consider

Astec currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector include The Manitowoc Company, Inc. MTW, Encore Wire Corporation WIRE and Heritage-Crystal Clean, Inc. HCCI. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Manitowoc has an anticipated earnings growth rate of 340% for fiscal 2021. The company’s shares have soared around 126% in a year.

Encore Wire has an estimated earnings growth rate of 491% for the ongoing fiscal year. The company’s shares have appreciated 184% in the past year.

Heritage-Crystal Clean has a projected earnings growth rate of 553% for the current year. The stock has appreciated around 93% in a year’s time.

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