Astec reports annual results, highlights pellet plant activities

By Anna Simet | February 24, 2016

Despite a challenging quarter that saw a 10 percent decrease in net sales, Astec Industries President and CEO Benjamin Brock said the future of Astec is bright, and highlighted pellet plant quoting as an active area in its business.

Comparing Q4 2015 to Q4 2014, net sales were down to $215 million from $239.5, domestic sales increased 5.7 percent to $160.3 million from $151.6 million, and international sales decreased 37.8 percent to $54.7 million from $87.9 million. Brock said that weak sales were caused by a slow-down in the aggregate and mining group and energy group. “These weak sales were caused by a slow-down in international mining operations due to a world-wide surplus of raw materials and a severe reduction in oil production and exploration brought on by the collapse of the price of oil,” he said. “Also, both of these segments depend on international markets that have been depressed by the strength of the U.S. dollar.

Though Astec was able to ship a $30 million pellet plant to Highland Pellets in Pine Bluff, Arkansas, during the quarter, the company had to defer the revenue for accounting purposes, Brock said, later in the call saying “the customer wasn’t ready…this significantly hurt our expectations for this quarter as it was $30 million in revenue, and our margin was in line with our estimate….if we could account this plant order, we would have been near our expectations for the quarter and up for the year as a whole versus 2014.”

Brock said Astec has been active on pellet plant inquiries and that the company is confident that some of the inquiries will turn into orders in the coming year; one from a previous customer is expected to be delivered in 2016. “We are optimistic that we will announce our next pellet plant order very soon,” he said. “The potential order is in the $115 million to $125 million range and it would ship this fiscal year. As a reminder, these builds are long and complicated to get across the line. While we are very optimistic this order will be announced in the coming weeks, it always could be longer than we anticipate.”

As in past quarterly earnings calls,  Brock reminded callers of a verbal agreement with the customer of the $60 million, Hazelhurst, Georgia, plant that it delivered, to allow more time before taking Astec out of financing. He said Astec expects the final payment in 2017.

Looking ahead to the first quarter of 2016 and the balance of the year, Brock said Astec is encouraged by its backlog of $348 million at the end of January, its opportunities on pellet plants, and strong infrastructure group sale activity, pointing to the sale of concrete plants, pellet plant quoting activity and wood chippers and grinders as bright spots.

He also mentioned that there have been some staff and work hour reductions at some divisions as the company works to manage the business to the market conditions.