Astec Industries Inc. (ASTE) has reported its third-quarter 2012 results, with earnings of 30 cents per share falling well short of the Zacks Consensus Estimate of 42 cents as well as 34 cents in the year-earlier quarter.
Total revenue increased 5.8% to $227 million from $214.6 million in the year-ago quarter but missed the Zacks Consensus Estimate of $243 million.
Domestic sales of the company improved 10% year over year to $139.5 million in the quarter from $127.3 million. International sales remained flat year over year at $87.6 million.
Costs and Margins
Cost of sales increased 6% to $177.6 million in the quarter from $168.2 million in the prior-year quarter. Gross profit jumped 7% to $49.4 million from $46.4 million in the year-ago quarter. Consequently, gross margin escalated 20 basis points year over year to 21.8% in the quarter.
Selling, general, administrative & engineering expenses rose 7% to $40 million in the reported quarter from $37.4 million in the year-earlier quarter. Income from operations increased 4% to $9.4 million from $9 million in the year-ago quarter. Operating margins remained flat at 4.2% in the quarter.
Revenues in the Asphalt Group segment decreased 7% to $46.8 million from $50.4 million in the year-ago quarter. Gross profit increased 12% to $9.6 million from $8.5 million in the prior-year quarter.
Total revenue of the Aggregate and Mining Group segment increased 10% to $91.9 million in the quarter from $83.2 million in the previous-year quarter. Gross profit was $23 million in the quarter versus $20.7 million in the prior-year quarter.
Mobile Asphalt Paving Group segment's total revenue decreased 6% to $36.6 million from $39 million in the year-ago quarter. Gross profit during the quarter dropped to $8 million from $10 million in the year-earlier quarter.
Underground Group reported revenues of $29 million versus $23.7 million in the year-ago quarter. Gross profit increased to $4.9 million from $4.1 million a year ago.
All Others reported total revenue of $22.6 million, improving from $18 million in the year-earlier quarter. Gross profit increased to $4.4 million from $3 million in the previous-year quarter.
Cash and cash equivalents amounted to $36 million at the end of the third quarter, flat on a sequential basis. The company has a no debt on its balance sheet. Astec's backlog increased to $240 million at the end of the third quarter of 2012 from $232 million at the end of third quarter of 2011.
Astec's customers depend on government funding for the construction and maintenance of the infrastructural projects. However, customers have tightened their budgets owing to the delay in passage of the Federal highway bill and the economic uncertainties.
Astec invested significantly in manufacturing new products and upgrading the existing products, which will benefit the company moving forward. Astec will benefit from a recovery in the economy and the pent up demand for equipment. Margin headwinds remains a concern in the next quarters owing to escalating costs related to transition of Tier 4i engines.