Astec Industries (ASTE) Q4 2001 earnings summary

Executive summary

• Recession, delayed customer capital spending and post-September 11 order disruption weakened 2001 results; revenue fell 12.5% and net income fell 92.4% YoY.

• Profitability remained positive for the year, but both Q3 and Q4 were loss-making; Q4 net sales were $83.1M and net loss was $6.9M.

Financial highlights

• FY 2001 net sales were $455.8M, down 12.5%; excluding acquisitions, sales declined 16.8% to $433.3M.

• Net income was $2.0M, or $0.10 diluted EPS, versus $26.3M and $1.33 in 2000; operating income was $11.8M versus $47.1M.

• Gross profit was $90.9M, or 20.0% of sales, versus $122.9M, or 23.6%; lower volume, capacity underutilization and price pressure reduced margins across segments.

• Operating cash flow was $1.5M versus $23.3M in 2000; working capital was $161.9M at year-end.

• Q4 sales were $83.1M and gross profit $13.0M; net loss was $6.9M and diluted EPS was -$0.35, versus Q4 2000 net income of $1.5M and EPS of $0.08.

Outlook and guidance

• Management expected a gradual economic recovery in 2002 to support significantly better financial performance.

• 2002 capital expenditures for plant expansion and manufacturing modernization were expected to be $6.6M, funded through revolver capacity and internally generated funds.

• Management anticipated meeting revised debt covenant ratios for the next four quarters; liquidity sufficiency through 2002 was subject to covenant compliance or further waivers.

• Backlog at Dec. 31, 2001 was $64.9M versus $89.6M a year earlier, reflecting customer reluctance to commit to capital equipment purchases.