Astec reports solid quarter, expects new pellet plant order

By Anna Simet | July 27, 2016

Astec Inc. reported a solid second quarter with a 9.9 percent increase in net sales in Q2 2016 compared to Q2 2015, a change of direction from last quarter’s 3.5 percent decrease in net sales in Q1 2016 compared to  from Q1 2015.

On financials, the company reported net sales for Q2 2016 as $294.4 million, compared to $268 million in Q2 2015; an increase of 54.9 percent per diluted share, or $0.79 per diluted share in Q2 2016 compared to  $0.51 per diluted share in Q2 2015; a 24.5 percent increase in domestic sales and a decrease of 28.9 percent in international sales  in Q1 2016 compared to Q2 2015; and a backlog increase of 58.8 percent from $229.5 million from June 30 of last year to June 30 of this year.

Despite lower oil and natural gas prices, as well as a global mining slowdown and a strong U.S. dollar, CEO Ben Brock said Astec is pleased with this quarter’s results and attributed performance largely to the passage of a U.S. Highway Bill. As he did the previous quarter, Brock pointed to pellet plant quoting activity as “a bright spot,” as well as wood chipper and grinder quoting activity and sales.

Brock said final payment of Astec’s first pellet plant order, a Hazlehurst, Georgia, facility, is expected in 2017. As announced in the previous quarter, Astec’s $30 million Highland Pellet plant in Pine Bluff, Arkansas, has added on to its existing order, a $122.5 million increase, bringing the total project to $155.2 million. Brock said final payment for the facility would be recognized in 2017 as site work, installation and startup are completed. He added that Astec expects to announce a new pellet plant order late this year, in the range of $80 million. “These deals are long and complicated to get across the line, but we’re optimistic a new project could happen before the end of the year,” he said.

When asked about any impact on the company resulting from the United Kingdom’s recent vote to leave the European Union, or Brexit, Brock said Astec “hasn’t seen any impact at all…We are keeping an eye on the labor side, and for our Telestack group in Northern Ireland….the other concern for us when that happened was the pellet business, because that’s most of the driver for that business right now in the U.K. Talking with our customers who are doing business there, they do not think that will affect what they are doing.”