ASTE Astec Industries Inc

Astec Industries, Inc. Reports Third Quarter 2004 Results CHATTANOOGA, Tenn., Oct. 20 /PRNewswire-FirstCall/ -- Astec Industries, Inc. (NASDAQ:ASTE) today reported results for the third quarter ended September 30, 2004. Net sales for the third quarter of 2004 were $111.7 million compared to $101.1 million for the third quarter of 2003. Domestic sales accounted for 73.2% and international sales 26.8% of the third quarter revenues of 2004 compared to 75.9% for domestic sales and 24.1% for international sales of the third quarter revenues for 2003. The net income for the third quarter of 2004 was $.4 million, or $.04 per diluted share. The net loss for the third quarter of 2003 was $0.8 million, or $.04 per share. Net sales for the nine months ended September 30, 2004 were $393.4 million compared with $319.6 million in the same period in 2003. The net income for the nine months ended September 30, 2004 was $18.8 million, or $0.93 per diluted share, compared to a net loss of $4.8 million, or $0.25 per share, for the same period in 2003. The results from discontinued operations are presented in the income from discontinued operations line and are excluded from all other lines on the statement of operations. Condensed consolidated financial statements for the third quarter and the first nine months of 2004 and 2003, and additional information related to segment revenues and profits are attached to this press release. Astec's backlog at September 30, 2004 was $66.7 million compared with $40.8 million at September 30, 2003. Comments Concerning the Fourth Quarter of 2004: The following discussion is a compilation of "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those anticipated as of the date of this press release. Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief Executive Officer, stated, "The sales increase of 10.5% in the third quarter over the prior year was less favorable than the first and second quarterly improvements as we continue to operate in an industry which prefers to make large capital expenditure commitments with the positive visibility that a six-year highway bill provides. The sales volume in the third quarter compared to the prior year generated increased manufacturing overhead absorption which positively impacted our gross margin while increased steel costs had an estimated negative impact of 3%-4%. Compared to the third quarter of the prior year, our selling, general, administrative and engineering expenses increased in the areas of health insurance, research and development, recruitment and relocation, and costs associated with Sarbanes-Oxley compliance. The fourth quarter market conditions should benefit from the current opportunity to accelerate depreciation which will expire on December 31, 2004, and we expect improved market conditions in 2005. Since the federal highway funding extension thru May 31, 2005, has now been passed, we expect that long-term legislation will be passed next spring which will provide a more positive environment for larger capital expenditures by our customer base. Another positive factor is our open order backlog, which is 64% ahead of last year at this time." Investor Conference Call and Web Simulcast Astec will conduct a conference call on October 20, 2004 at 10:00 A.M. Eastern Time to review its third quarter results as well as current business conditions. The number to call for this interactive teleconference is (800) 938-0653; international participants should dial (973) 935-2408. 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: 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 Saturday, October 23, 2004, by dialing (877) 519-4471 or (973) 341-3080 - Confirmation/Conference ID # 5283600. A transcription of the conference call will be made available under the Investor Relations section of the Astec Industries, Inc. website within 5 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 the future generally, the amounts of future highway funding, the effects of increased highway funding and changes in the tax laws on the capital expenditures of the Company's customers, and persistent challenging market conditions. These forward-looking statements reflect management's expectations that 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, further downturns in the economy or delays in any upturns in the economy, rising oil and liquid asphalt prices, a failure to comply with covenants in the Company's credit facility, rising interest rates, decreased funding for highway projects, the timing of large contracts, production capacity, general business conditions in the industry, demand for the Company's products, seasonality and cyclicality in operating results, seasonality of sales volumes, 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, 2003. Astec Industries, Inc. and Subsidiaries Consolidated Balance Sheets (In thousands) September 30 September 30 2004 2003 Assets Current Assets Cash and cash equivalents $ 11,562 $ 12,610 Receivables, net 48,391 59,496 Inventories 114,343 108,932 Prepaid expenses and other 9,017 19,594 Total current assets 183,313 200,632 Property and equipment, net 94,989 112,969 Other assets 28,046 42,038 Total assets $ 306,348 $ 355,639 Liabilities and shareholders' equity Current liabilities Revolving credit loan $ -- $ 39,641 Notes payable 656 548 Current maturities of long-term debt 3,310 5,861 Accounts payable - trade 35,640 28,948 Other accrued liabilities 46,486 36,869 Total current liabilities 86,092 111,867 Long-term debt, less current maturities 26,560 41,041 Other non-current liabilities 4,107 10,645 Minority interest in consolidated subsidiary 443 475 Total shareholders' equity 189,146 191,611 Total liabilities and shareholders' equity $ 306,348 $ 355,639 Astec Industries, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands) Three Months Ended Nine Months Ended September 30 September 30 2004 2003 2004 2003 Net sales $ 111,718 $ 101,090 $ 393,383 $ 319,612 Cost of sales 89,294 84,287 311,493 266,179 Gross profit 22,424 16,803 81,890 53,433 Selling, general, administrative & engineering expenses 20,705 16,985 60,491 54,969 Income (loss) from operations 1,719 (182) 21,399 (1,536) Interest expense 877 1,544 3,028 5,979 Other income, net of expense 303 (66) 963 992 Senior note termination expense -- -- -- (3,837) Income (loss) from continuing operations before income taxes 1,145 (1,792) 19,334 (10,360) Income taxes on continuing operations 413 (698) 7,428 (4,011) Minority interest in earnings 1 7 47 39 Income (loss) from continuing operations 731 (1,101) 11,859 (6,388) Income from discontinued operations -- 513 2,307 2,530 Income taxes on discontinued operations -- 197 888 971 Gain on disposal of discontinued operations (net of tax of $4,970) -- -- 5,507 -- Net income (loss) $ 731 $ (785) $ 18,785 $ (4,829) Earnings per Common Share Income (loss) from continuing operations: Basic $0.04 $(0.06) $0.60 $(0.32) Diluted $0.04 $(0.06) $0.59 $(0.32) Income from discontinued operations: Basic $ -- $ 0.02 $0.35 $ 0.08 Diluted $ -- $ 0.02 $0.34 $ 0.08 Net income (loss): Basic $0.04 $(0.04) $0.95 $(0.25) Diluted $0.04 $(0.04) $0.93 $(0.25) Weighted average common shares outstanding Basic 19,763,373 19,698,817 19,698,731 19,687,774 Diluted 20,247,798 19,698,817 20,121,283 19,687,774 Astec Industries, Inc. and Subsidiaries Segment Revenues and Profits For the three months ended September 30, 2004 and 2003 (in thousands) (Unaudited) Aggregate Mobile and Asphalt Under Asphalt Mining Paving ground Group Group Group Group All Others Total 2004 Revenues 26,873 47,448 18,971 18,426 -- 111,718 2003 Revenues 26,578 38,453 19,691 15,290 1,078 101,090 Change $ 295 8,995 (720) 3,136 (1,078) 10,628 Change % 1.1% 23.4% (3.7%) 20.5% (100.0%) 10.5% 2004 Gross Profit 4,710 10,758 3,693 3,693 (430) 22,424 2004 Gross Profit % 17.5% 22.7% 19.5% 20.0% -- 20.1% 2003 Gross Profit 4,104 7,362 4,311 999 27 16,803 2003 Gross Profit % 15.4% 19.1% 21.9% 6.5% 2.5% 16.6% Change 606 3,396 (618) 2,694 (457) 5,621 2004 Profit (Loss) 772 2,904 370 477 (3,865) 658 2003 Profit (Loss) 203 433 1,340 (1,670) (1,411) (1,105) Change $ 569 2,471 (970) 2,147 (2,454) 1,763 Change % 280.3% 570.7% (72.4%) 128.6% (173.9%) 159.5% Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on intersegment revenues. A reconciliation of total segment profits (losses) to the Company's consolidated net income (loss) is as follows: For the three months ended September 30 2004 2003 Total profit (loss) for all segments 658 (1,105) Minority interest in earnings of subsidiary (1) (7) Recapture of intersegment profit 74 11 Consolidated net income (loss) from continuing operations 731 (1,101) Profit from discontinued operations, net of tax -- 316 Consolidated net income (loss) 731 (785) Astec Industries, Inc. and Subsidiaries Segment Revenues and Profits For the nine months ended September 30, 2004 and 2003 (in thousands) (Unaudited) Aggregate Mobile and Asphalt Under Asphalt Mining Paving ground Group Group Group Group All Others Total 2004 Revenues 114,461 154,780 69,621 54,476 45 393,383 2003 Revenues 101,633 115,454 60,950 39,730 1,845 319,612 Change $ 12,828 39,326 8,671 14,746 (1,800) 73,771 Change % 12.6% 34.1% 14.2% 37.1% (97.6%) 23.1% 2004 Gross Profit 22,678 36,078 15,852 8,754 (1,472) 81,890 2004 Gross Profit % 19.8% 23.3% 22.8% 16.1% (3271.1%) 20.8% 2003 Gross Profit 14,224 23,167 13,020 2,762 260 53,433 2003 Gross Profit % 14.0% 20.1% 21.4% 7.0% 14.1% 16.7% Change 8,454 12,911 2,832 5,992 (1,732) 28,457 2004 Profit (Loss) 10,035 14,180 5,878 395 (18,550) 11,938 2003 Profit (Loss) 1,775 2,295 3,474 (5,820) (8,559) (6,835) Change $ 8,260 11,885 2,404 6,215 (9,991) 18,773 Change % 465.4% 517.9% 69.2% 106.8% (116.7%) 274.7% Segment revenues are reported net of intersegment revenues. Segment gross profit is net of profit on intersegment revenues. A reconciliation of total segment profits (losses) to the Company's consolidated net income (loss) is as follows: For the nine months ended September 30 2004 2003 Total profit (loss) for all segments 11,938 (6,835) Minority interest in earnings of subsidiary (47) (39) Recapture (elimination) of intersegment profit (32) 486 Consolidated net income (loss) from continuing operations 11,859 (6,388) Profit from discontinued operations, net of tax 1,419 1,559 Gain on sale of discontinued operations, net of tax 5,507 -- Consolidated net income (loss) 18,785 (4,829) DATASOURCE: Astec Industries, Inc. CONTACT: J. Don Brock, Chairman of the Board & C.E.O., +1-423-867-4210, Fax: +1-423-867-4127, , F. McKamy Hall, Vice President and Chief Financial Officer, +1-423-899-5898, Fax: +1-423-899-4456, , or Stephen C. Anderson, Director of Investor Relations, +1-423-899-5898, Fax: +1-423-899-4456, , all of Astec Industries, Inc. Web site: http://www.astecindustries.com/

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