Astec Industries (ASTE) Q4 2002 earnings summary

Executive summary

• 2002 net sales rose 5.4% to $480.6M, but results swung to a $4.7M net loss from $2.0M net income in 2001.

• Results were pressured by lower margins, lender fees and higher interest, the Trencor relocation, and weak demand in underground markets.

Financial highlights

• Gross profit fell to $83.9M, or 17.5% of sales, from $90.9M, or 20.0%; operating income was $0.6M versus $11.8M.

• Interest expense increased to $10.5M from $9.4M; net loss was $4.7M, or $(0.24) per diluted share, versus net income of $2.0M, or $0.10 per diluted share.

• Operating cash flow reached $32.8M versus $1.5M, mainly from lower inventory and receivables and higher payables and accrued liabilities.

• Adjusted for $3.3M of relocation and start-up expenses, reported operating income was $0.6M; no adjusted earnings figure was stated.

Outlook and guidance

• Expense-reduction measures began in Q4 2002; the full benefit was expected after Q2 2003.

• 2003 capital expenditures were budgeted at a maintenance level of $7.3M; management expected available working capital, operating cash flow and remaining credit capacity to meet 2003 needs.

• Management expected improvement in 2003 and growth in 2004, while citing uncertainty around the economy, Iraq, oil markets and highway funding.