ASTE Astec Industries Inc

CHATTANOOGA, Tenn., Feb. 27 /PRNewswire-FirstCall/ -- 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: 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 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 DATASOURCE: Astec Industries, Inc. CONTACT: J. Don Brock, Chairman of the Board & C.E.O., +1-423-867-4210, Fax, +1-423-867-4127, or , or F. McKamy Hall, Vice President and Chief Financial Officer, +1-423-899-5898, Fax, +1-423-899-4456, or , or Stephen C. Anderson, Director of Investor Relations, +1-423-899-5898, Fax, +1-423-899-4456, or , all of Astec Industries, Inc. Web site: http://www.astecindustries.com/

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