Astec provides update on wood pellet plant business

By Erin Voegele | February 23, 2018

Astec Industries recently released fourth quarter 2017 financial results, providing an update of ongoing pellet plant activities in Georgia and Arkansas and discussing the company’s future plans as an equipment supplier to the pellet industry.

Astec reported net sales of $312.4 million, down from $326.6 million during the fourth quarter of 2016. Domestic sales dropped 7.4 percent, from $2.65 million during the final quarter of 2016 to $245.4 million during the same period of last year. International sales, however, increased 8.7 percent from $61.6 million during the fourth quarter of 2016 to $67 million during the fourth quarter of 2017.

Earnings for the fourth quarter reached $10.9 million, or 47 cents per share, compared to $12.4 million, or 53 per diluted share, during the same period of 2016.

Net sales for the full year 2017 reached $1.185 billion, up 3.3 percent from $1.147 billion in 2016. Domestic sales were down 1 percent, decrease from $941.3 million in 2016 to $932.3 million in 2017. International sales were up 22.5 percent, from $206.2 million in 2016 to $252.4 million in 2017.

Earnings for 2017 reached $37.8 million, or $1.63 per diluted share, compared to $55.2 million, or $2.38 per diluted share in 2016. Astec said that it initiated significant design upgrades to its customers’ Georgia and Arkansas wood pellet plants to meet full production rates, which negatively impacted earnings per share by approximately 59 cents during the third quarter of last year.

During an investor call, David Silvious, chief financial officer of Astec, said that fourth quarter pellet plant revenues reached $5.6 million, down from $70.6 million during the fourth quarter of 2016. For the full year, he said pellet plant revenues were $8 million, down from $135.2 million in 2016.

Benjamin Brock, CEO of Astec, called 2017 an extremely challenging year for the company with regard to the Georgia and Arkansas wood pellet plants, noting the company took significant charges related to getting the two facilities installed, up to speed and producing. The company is making good progress at both sites, he added.

According to Brock, Astec has additional pellet projects in the pipeline, but stressed the company will not sign a new pellet plant order until it has finished activities at the Georgia and Arkansas sites. Given progress at the two sites, he said the company believes it will be in position to add an order for a new pellet plant in time to deliver one in 2019. He also stressed that if Astec does get an order for another pellet plant, it will act only as a supplier of equipment in accordance with the company’s traditional equipment parts and service offerings.