Astec Industries, Inc. Announces Substantial Design Upgrades to Pellet Plants to Achieve Full Production
October 02 2017 - 6:30AM
Astec Industries, Inc. (Nasdaq:ASTE) today announced it initiated
significant design upgrades to its customers’ Georgia and Arkansas
wood pellet plants to meet full production rates. The additional
investment is expected to negatively impact Astec’s third quarter
earnings by $0.54 to $0.58 per share.
“In the last 45-days, we identified significant
design issues at our customers’ Georgia and Arkansas wood pellet
plants driven by the need for both facilities to achieve full
production rates. Upon learning of these design flaws, which were
different at each plant, we identified a clear path to success. In
addition, this past Friday, we completed an updated analysis of the
necessary all-inclusive investment needed to deliver on our
commitments to our customers with regard to production rates,”
commented Benjamin G. Brock, Chief Executive Officer of Astec
Industries, Inc. “While we are very disappointed to be announcing
this added investment to achieve full production in Georgia and
Arkansas, one of our core values is delivering superior service to
our customers.”
Mr. Brock concluded, “We remain very confident
in the near-term and long-term outlook for the wood pellet business
and believe it has been a good investment for our company. In
total, we will have invested approximately $31 million over seven
years to open up an opportunity for a $100 million per year
business. During that time, Astec has remained profitable, acquired
six companies, added capacity at several subsidiaries, had a most
successful ConExpo show with 33 new products, and grown our cash on
hand, all while remaining debt-free. Our success at these sites
will put us in a strong leadership position for orders as we move
ahead and drive value for our shareholders over the long-term.
Despite this setback, our balance sheet remains strong and we
believe the remaining segments of our business remain on track to
deliver improved performance going forward.”
Georgia PlantIn December 2010,
Astec, Inc., a subsidiary of Astec Industries, opened a work order
to design, build, erect and operationally run a 5 ton per hour
prototype pellet plant. The prototype plant, which ran at Astec,
Inc. from September 2011 through May 2012, supported the company’s
entry into the market and ushered in its largest order at the time,
with Hazlehurst Wood Pellets in Georgia. While the last segment of
that order was received on January 30, 2014, due to market
conditions the plant had been run with natural gas as the fuel
source and was not run at full capacity. Market conditions
have since improved, and as a result, the plant needs to run at
full capacity utilizing wood as its fuel source. This led to the
identification of the aforementioned design flaws that will need to
be corrected.
Arkansas PlantSignificant
design issues at the company’s Highland Pellets plant in Arkansas
were also recently identified as production has increased. As
communicated during Astec Industries’ second quarter 2017 earnings
conference call, the construction-related cost issue is no longer
impacting the company’s performance and is unrelated to the
recently identified design issues.
Investor Conference Call and Web
SimulcastAstec will conduct a conference call on Monday,
October 2, 2017, at 9:00 A.M. Eastern Time to review and to provide
additional detail regarding this announcement, as well as the
RexCon acquisition, also announced this morning. The number to call
for this interactive teleconference is (877) 407-9210.
International callers should dial (201) 689-8049. Please reference
Astec Industries.
The Company will also provide an online Web
simulcast and rebroadcast of the conference call. The live
broadcast of Astec’s conference call will be available online at
the Company’s website: www.astecindustries.com/conferencecalls. An
archived webcast will be available for 90 days at
www.astecindustries.com.
A replay of the conference call will be
available through midnight on Monday, October 16, 2017 by dialing
(877) 481-4010, or (919) 882-2331 for international callers,
Conference ID #20494. A transcript of the conference call will be
made available under the Investor Relations section of the Astec
Industries, Inc. website within 5 business days after the call.
About Astec Industries,
Inc.Astec Industries, Inc. is a manufacturer of
specialized equipment for asphalt road building; aggregate
processing; oil, gas and water well drilling; and wood processing.
Astec’s manufacturing operations are divided into three primary
business segments: road building and related equipment
(Infrastructure Group); aggregate processing and mining equipment
(Aggregate and Mining Group); and equipment for the extraction,
production and combustion of fuels, biomass production, and water
drilling equipment (Energy Group).
Forward-Looking StatementsThe
information contained in this press release contains
“forward-looking statements” (within the meaning of the Private
Securities Litigation Reform Act of 1995) regarding the future
performance of the Company, including statements about the effects
on the Company from the performance of its pellet plants, the
industrial pellet market in general, low oil prices, the global
mining slow down, the strong U.S. Dollar, and the impact of a
long-term highway bill in the United States. These forward-looking
statements reflect management’s expectations and are based upon
currently available information, and the Company undertakes no
obligation to update or revise such statements. These statements
are not guarantees of performance and are inherently subject to
risks and uncertainties, many of which cannot be predicted or
anticipated. Future events and actual results, financial or
otherwise, could differ materially from those expressed in or
implied by the forward-looking statements. Important factors that
could cause future events or actual results to differ materially
include: factors listed from time to time in the Company’s reports
filed with the Securities and Exchange Commission, including but
not limited to the Company’s annual report on Form 10-K for the
year ended December 31, 2016.
For Additional Information Contact: Benjamin G.
Brock Chief Executive Officer Phone: (423) 867-4210 Fax: (423)
867-4127 E-mail: bbrock@astecindustries.com orDavid C. Silvious
Vice President and Chief Financial OfficerPhone: (423) 899-5898Fax:
(423) 899-4456 E-mail: dsilvious@astecindustries.comor Stephen C.
AndersonVice President, Director of Investor Relations &
Corporate SecretaryPhone: (423) 899-5898Fax: (423) 899-4456E-mail:
sanderson@astecindustries.com
Astec Industries (NASDAQ:ASTE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Astec Industries (NASDAQ:ASTE)
Historical Stock Chart
From Sep 2023 to Sep 2024