Astec Industries adjusted profits fell in the first quarter from a year ago due to higher costs and supply chain challenges, but the Chattanooga-based road-building equipment maker said Wednesday it expects improved road conditions ahead with a record backlog of orders.
Astec said Wednesday that its non-GAAP earnings per share were down from a year ago to the equivalent of 41 cents per share, but that was well above the industry forecasts for 29 cents per share. Company CEO Barry Ruffalo said he expects sales and profits will improve in 2022, helping to boost shares of Astec Wednesday by more than 3.8%, or $1.57 per share, to close at $42.57 per share in trading on the Nasdaq exchange.
“I think we are set up for steadily improving performance for the balance of the year,” Ruffalo told industry analysts after reporting its first-quarter results. “Demand remained robust and backlog continued to reach record levels in the first quarter of 2022. Customer sentiment remains positive for 2022 and the multi-year federal Infrastructure Investment and Jobs Act is a long-term tailwind for the road construction industry.”
First quarter net sales this year totaled $291.2 million, up 2.4% from the $284.4 million of sales for the first quarter of 2021. Net income of $4.1 million decreased from $8.5 million in the first quarter of 2021.
Astec Industries shares have lost about 40.8% of their value since the beginning of the year, or more than three times the S&P 500’s decline of 12.4%.
But with most of its supplies coming from the U.S., Astec expects supply chains to improve through the rest of 2022 to help address its record high order backlog. The federal highway bill also should continue to propel stronger road building sales.
Astec is looking to expand its staff and hire workers in Chattanooga, where Ruffalo said “we’re finding success” in hiring workers and boosting overall employment to nearly 2,000 workers in the area.
But in its earnings release, Astec said in some of its locations, “we have experienced a shortage of necessary production personnel and increasing labor costs to attract staff in our manufacturing operations resulting in a variety of challenges in running our operations efficiently to meet strong customer demand.”
Astec said it is adjusting its production schedules as a result.
— Compiled by Dave Flessner
