Shovel-ready investors pile into Astec for ride up
ASTE | Quote | Chart | News | PowerRating -- Shares of Astec Industries were up more than 18 percent to close at $24.53 on Tuesday in the wake of a conference call earlier in the day where there was talk about how the company could benefit from the national stimulus package.
Early Tuesday, the company had announced that it had lower profits and sales in the fourth quarter of 2008 than in the same quarter of the previous year.
The maker of road-building equipment reported sales of $195.4 million in the fourth quarter, down 13 percent from $220.8 million in the same period the year before. Astec's net income for the quarter was $8.5 million, or 38 cents per diluted share, compared to $11.3 million, or 50 cents per diluted share, in the same three-month period in 2007.
Chattanooga-based Astec was hurt in the fourth quarter by tight credit and an overall slowdown in the economy, said Dr. J. Don Brock, Astec's chairman and CEO.
"We had three quarters of growth, runaway inflation, uncontrollable costs, high oil prices and a weak dollar, which certainly helped our international growth," Dr. Brock said. "In the fourth quarter we saw a sudden change."
From October to December, credit dried up, the election occurred and talk of a stimulus packages actually brought fear and caution to many of Astec's domestic customers, he said.
Overall, the company expects the stimulus to boost its businesses, particularly the mobile paving business, Dr. Brock said.
"The stimulus will certainly help our business, and we are certainly one of the best positioned companies to take advantage of it," Dr. Brock said.
Analyst Bentley Offutt with Offutt Securities said the company's performance in the quarter was right in line with his expectations.
"The company seems to have a good balance sheet and no debt, so they're in a position to weather a storm," Mr. Offutt said.
During the year, Astec reduced its work force by 17 percent. The company also lowered its work force hours by about 30 percent in the year end in January.
Dr. Brock said he expects Astec to have a strong first quarter, and he said the company should see growth in areas such as international sales, green and sustainable equipment and its mining equipment.
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