ASTE Astec Industries Inc

CHATTANOOGA, Tenn., Feb. 28 /PRNewswire-FirstCall/ -- Astec Industries, Inc. (NASDAQ:ASTE) today reported results for the fourth quarter and year ended December 31, 2005. Income from continuing operations was $1.34 per diluted share for 2005 compared to $0.62 per diluted share for 2004 for an increase of $0.72 per diluted share for a 116.1% increase. As of December 31, 2005, the company had achieved its goal of paying off all outstanding obligations under its credit facilities. Revenues for 2005 were $616.1 million compared with $504.6 million for 2004 for an increase of 22.1%. Domestic sales were $499.8 million for 2005, or 81.1% of 2005 revenues, compared to domestic sales of $382.0 million for 2004, or 75.7% of 2004 revenues. International sales were $116.3 million for 2005, 18.9% of 2005 revenues, compared to international sales of $122.6 million for 2004, or 24.3% of 2004 revenues. The Company reported a net income of $28.1 million, or $1.34 per diluted share, for 2005 compared with a net income of $19.1 million, or $0.95 per diluted share, for the prior year. Revenues for the fourth quarter of 2005 were $134.5 million compared with $111.2 million for the fourth quarter of 2004 for an increase of 21.0%. Domestic sales were $108.8 million for the fourth quarter of 2005, or 80.9% of 2005 fourth quarter revenues, compared to domestic sales of $85.4 million for the fourth quarter of 2004, or 76.8% of 2004 fourth quarter revenues. International sales were $25.7 million for the fourth quarter of 2005, or 19.1% of 2005 fourth quarter revenues, compared to international sales of $25.8 million for the fourth quarter of 2004, or 23.2% of 2004 fourth quarter revenues. The Company reported a net income of $1.0 million, or $0.05 per diluted share, for the fourth quarter of 2005 compared with a net income of $0.3 million, or $0.01 per diluted share, for the fourth quarter of 2004. The Company sold substantially all of the assets and liabilities of Superior Industries of Morris, Inc. on June 30, 2004. The results from discontinued operations are presented in the income from discontinued operations line and the gain on disposal of discontinued operations (net of tax) and are excluded from all other lines on the consolidated statement of operations. Consolidated financial statements for the fourth quarter and year ended December 31, 2005 and additional information related to segment revenues and profits are attached as addenda to this press release. Astec's backlog at December 31, 2005 was $127.7 million compared to $93.5 million for 2004 for $34.2 million increase or 36.6% increase. Astec's backlog at January 31, 2006, was $161.0 million compared with $114.4 million at January 31, 2005 for a $46.6 million increase or 40.7% increase. Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief Executive Officer, stated, "We are pleased with our revenues and profits for 2005. The fourth quarter was seasonably weak, but remained profitable. We were disappointed in the fourth quarter results for the Underground Group. We continue to develop our dealer distribution network for the Underground Group, but our underabsorbed overhead was significant in the fourth quarter." "We are starting 2006 with strong backlogs. We will continue to focus on efficient manufacturing and design concepts, production costs, and raw material costs as we strive to improve our gross margins." Dr. Brock added, "With our backlog up significantly, an improving 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." During the course of the annual audit, management, and the independent auditors, identified significant deficiencies in internal controls primarily related to the adequacy of inventory controls, accounting system access controls, journal entry authorization, and monitoring controls related to Astec Underground, Inc. When aggregated, these deficiencies represent a material weakness in the Company's internal controls over financial reporting. The Audit Committee has discussed these matters with management and the Company's independent auditors, and at the direction of the Audit Committee, management has initiated several actions to remedy these significant deficiencies. Commenting on the identified material weakness, Dr. Brock said, "We have addressed the deficiencies in the internal control procedures at Astec Underground and are taking appropriate action. Despite the material weakness identified in the course of the audit, we remain confident in the reliability of the financial reporting and our preparation of the Company's financial statements." Investor Conference Call and Web Simulcast Astec will conduct a conference call on February 28, 2006, at 11:00 a.m. EST to review its fourth quarter and fiscal 2005 financial results as well as its near term general outlook for 2006. 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: http://www.astecindustries.com/investors/corporate_info/conference_calls/default.htm An archived webcast will be available for 90 days at http://www.astecindustries.com/. A replay of the conference call will be available through midnight on Tuesday, March 7, 2006, by dialing (877) 660-6853; account number: 286; conference ID number: 193940. 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 2006, the effects on the Company from its backlog, the renewal of the highway bill, the effects of improvements in the economy on our customers, the effects of a debt-free 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, 2004 and the Company's quarterly reports on Forms 10-Q for the quarters ended March 31, June 30 and September 30, 2005. The Company plans to file its Form 10-K timely by March 16, 2006. Astec Industries, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands) (unaudited) December 31 December 31 2005 2004 Assets Current Assets Cash and cash equivalents $22,598 $8,349 Receivables, net 53,395 45,289 Inventories 135,503 126,970 Prepaid expenses and other 14,532 17,877 Total current assets 226,028 198,485 Property and equipment, net 96,114 96,526 Other assets 24,441 29,807 Total assets $346,583 $324,818 Liabilities and shareholders' equity Current liabilities Revolving credit loan $- $8,517 Current maturities of long-term debt - 3,310 Accounts payable - trade 39,775 35,451 Other accrued liabilities 48,273 44,718 Total current liabilities 88,048 91,996 Long-term debt, less current maturities - 25,857 Other non-current liabilities 15,201 15,134 Minority interest in consolidated subsidiary 592 575 Total shareholders' equity 242,742 191,256 Total liabilities and shareholders' equity $346,583 $324,818 Astec Industries, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands) (unaudited) Three Months Ended Twelve Months Ended December 31 December 31 2005 2004 2005 2004 Net sales $134,516 $111,171 $616,068 $504,554 Cost of sales 108,726 90,786 482,760 401,482 Gross profit 25,790 20,385 133,308 103,072 Selling, general, administrative & engineering expenses 24,558 19,034 93,579 78,739 Gain on sale of real estate, net of real estate impairment charge - - 6,531 - Income (loss) from operations 1,232 1,351 46,260 24,333 Interest expense 691 1,142 4,209 5,033 Other income, net of expense 705 87 896 314 Income (loss) from continuing operations before income taxes 1,246 296 42,947 19,614 Income taxes on continuing operations 207 (391) 14,748 7,021 Minority interest in earnings 17 64 105 111 Income (loss) from continuing operations 1,022 623 28,094 12,482 Income from discontinued operations - 13 - 2,320 Income taxes on discontinued operations - (267) - (1,155) Gain on disposal of discontinued operations (net of tax of $5,071) - (101) - 5,406 Net income (loss) $1,022 $268 $28,094 $19,053 Earnings (Loss) per Common Share Income (loss) from continuing operations: Basic $0.05 $0.03 $1.38 $0.63 Diluted $0.05 $0.03 $1.34 $0.62 Income from discontinued operations: Basic $- $(0.02) $- $0.33 Diluted $- $(0.02) $- $0.33 Net income (loss): Basic $0.05 $0.01 $1.38 $0.96 Diluted $0.05 $0.01 $1.34 $0.95 Weighted average common shares outstanding Basic 20,890,737 19,865,688 20,333,894 19,740,699 Diluted 21,504,590 20,271,167 20,976,966 20,079,349 Astec Industries, Inc. and Subsidiaries Segment Revenues and Profits For the three months ended December 31, 2005 and 2004 (in thousands) (Unaudited) Aggregate Mobile and Asphalt Under- Asphalt Mining Paving ground All Group Group* Group Group Others Total 2005 Revenues 33,919 56,238 21,563 22,796 - 134,516 2004 Revenues 26,590 52,617 21,769 9,910 285 111,171 Change $ 7,329 3,621 (206) 12,886 (285) 23,345 Change % 27.6% 6.9% (0.9%) 130.0% (100.0%) 21.0% 2005 Gross Profit 6,643 12,243 4,881 2,076 (53) 25,790 2005 Gross Profit % 19.6% 21.8% 22.6% 9.1% - 19.2% 2004 Gross Profit 2,605 13,579 4,709 380 (888) 20,385 2004 Gross Profit % 9.8% 25.8% 21.6% 3.8% (311.6%) 18.3% Change 4,038 (1,336) 172 1,696 835 5,405 2005 Profit (Loss) 1,837 3,508 1,964 (2,142) (3,880) 1,287 2004 Profit (Loss) (1,925) 5,548 1,676 (2,047) (2,699) 553 Change $ 3,762 (2,040) 288 (95) (1,181) 734 Change % 195.4% (36.8%) 17.2% (4.6%) (43.8%) 132.7% * The segment data for 2004 has been adjusted to reflect the sale of Superior Industries of Morris, Inc. 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 2005 2004 Total profit for all segments 1,287 553 Minority interest in earnings of subsidiary (17) (64) Recapture (elimination) of intersegment profit (248) 134 Consolidated net income from continuing operations 1,022 623 Loss from discontinued operations, net of tax - (254) Loss on sale of discontinued operations, net of tax - (101) Consolidated net income 1,022 268 Astec Industries, Inc. and Subsidiaries Segment Revenues and Profits For the twelve months ended December 31, 2005 and 2004 (in thousands) (Unaudited) Aggregate Mobile Asphalt and Mining Asphalt Group Group* Paving Group 2005 Revenues 170,205 242,515 112,947 2004 Revenues 141,050 207,397 91,390 Change $ 29,155 35,118 21,557 Change % 20.7% 16.9% 23.6% 2005 Gross Profit 36,236 57,195 25,943 2005 Gross Profit % 21.3% 23.6% 23.0% 2004 Gross Profit 25,332 49,695 20,565 2004 Gross Profit % 18.0% 24.0% 22.5% Change 10,904 7,500 5,378 2005 Profit (Loss) 16,099 22,554 12,291 2004 Profit (Loss) 8,109 19,685 7,554 Change $ 7,990 2,869 4,737 Change % 98.5% 14.6% 62.7% Unusual items by segment 2005 Profit (Loss) 16,099 22,554 12,291 Gain on Sale of Grapevine - - - Real estate impairment Charge 1,183 - - Chargeoff of prepaid loan fees - - - 2005 Profit (Loss) Less Unusual Items 17,282 22,554 12,291 2004 Profit (Loss) 8,109 19,685 7,554 Change $ 9,173 2,869 4,737 Change % 113.1% 14.6% 62.7% Astec Industries, Inc. and Subsidiaries Segment Revenues and Profits For the twelve months ended December 31, 2005 and 2004 (in thousands) (Unaudited) Underground Group All Others Total 2005 Revenues 90,401 - 616,068 2004 Revenues 64,386 331 504,554 Change $ 26,015 (331) 111,514 Change % 40.4% (100.0%) 22.1% 2005 Gross Profit 14,050 (116) 133,308 2005 Gross Profit % 15.5% - 21.6% 2004 Gross Profit 9,127 (1,647) 103,072 2004 Gross Profit % 14.2% (497.6%) 20.4% Change 4,923 1,531 30,236 2005 Profit (Loss) 6,301 (28,820) 28,425 2004 Profit (Loss) (1,653) (21,205) 12,490 Change $ 7,954 (7,615) 15,935 Change % 481.2% (35.9%) 127.6% Unusual items by segment 2005 Profit (Loss) 6,301 (28,820) 28,425 Gain on Sale of Grapevine (7,714) 2,978 (4,736) Real estate impairment Charge - (457) 726 Chargeoff of prepaid loan fees - 319 319 2005 Profit (Loss) Less Unusual Items (1,413) (25,980) 24,734 2004 Profit (Loss) (1,653) (21,205) 12,490 Change $ 240 (4,775) 12,244 Change % 14.5% (22.5%) 98.0% * The segment data for 2004 has been adjusted to reflect the sale of Superior Industries of Morris, Inc. The gain on the sale of the Grapevine facility is included in the Underground Group. The real estate impairment charge is included in the Asphalt Group. The chargeoff of prepaid loan fees is included in the "All Others" segment. 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 2005 2004 Total profit for all segments 28,425 12,490 Minority interest in earnings of subsidiary (105) (111) Recapture (elimination) of intersegment profit (226) 103 Consolidated net income from continuing operations 28,094 12,482 Income from discontinued operations, net of tax - 1,165 Gain on sale of discontinued operations, net of tax - 5,406 Consolidated net income 28,094 19,053 Astec Industries, Inc. and Subsidiaries Backlog by Segment December 31, 2005 and 2004 (in thousands) (Unaudited) Aggregate Mobile and Asphalt Under- Asphalt Mining Paving ground All Group Group* Group Group Others Total 2005 Backlog 37,426 76,991 7,519 5,758 - 127,694 2004 Backlog 35,647 47,311 5,363 5,222 - 93,543 Change $ 1,779 29,680 2,156 536 - 34,151 Change % 5.0% 62.7% 40.2% 10.3% - 36.5% First Call Analyst: FCMN Contact: DATASOURCE: Astec Industries, Inc. CONTACT: J. Don Brock, Chairman of the Board & C.E.O., +1-423-867-4210, or fax, +1-423-867-4127, or , or F. McKamy Hall, Vice President and Chief Financial Officer, +1-423-899-5898, or fax, +1-423-899-4456, or , or Stephen C. Anderson, Director of Investor Relations, +1-423-899-5898, or fax, +1-423-899-4456, or , all of Astec Industries, Inc. Web site: http://www.astecindustries.com/

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