Astec Industries (ASTE) Q4 2012 earnings summary

Executive summary

• FY12 net sales rose 3.0% YoY to $936.3M, while operating income fell to $50.1M and gross margin declined to 22.1%.

• Net income attributable to controlling interest was $40.2M, including $6.8M from discontinued operations; diluted EPS was $1.74, flat YoY.

• Strategy emphasized international expansion and energy and mining diversification alongside infrastructure markets; international sales represented 38.9% of revenue.

Financial highlights

• Net sales increased 3.0% to $936.3M; domestic sales rose 5.3% to $572.5M, while international sales declined 0.4% to $363.8M.

• Gross profit was $206.9M versus $210.5M; operating income fell to $50.1M from $57.4M; net income from continuing operations was $33.6M versus $39.8M.

• Net income attributable to controlling interest rose 0.7% to $40.2M; diluted EPS remained $1.74. Excluding discontinued operations, diluted EPS was $1.45 versus $1.73.

• Q4 sales were $227.6M versus $253.3M; Q4 net income attributable to controlling interest was $10.7M versus $8.0M, including $5.4M from discontinued operations.

• Operating cash flow was $28.6M; cash and equivalents ended FY12 at $80.9M, up from $57.5M.

Outlook and guidance

• 2013 outlook called for continued growth, but not tremendous growth; pent-up infrastructure demand and new product offerings were expected to support results.

• FY13 capital expenditures, excluding Brazil operations, were forecast at $31.5M; a Brazilian manufacturing facility was planned at an expected cost of $20.0M.

• Brazilian facility construction was planned for 2013, with manufacturing operations scheduled to start in January 2014; initial staffing at full maturity was expected to approach 120.

• Steel prices were expected to rise moderately as demand and mill lead times normalized; oil prices were expected to remain volatile through 2013.