Astec Industries(US:ASTE)2020-03-17 21:17Facilities and Operations - The company owns significant properties including a 543,200 square foot facility in Chattanooga, Tennessee, used for offices, manufacturing, and training[152] - The company has a manufacturing facility in Yankton, South Dakota, with an approximate square footage of 314,100 and an acreage of 50[153] - The company operates a 350,000 square foot facility in Enid, Oklahoma, dedicated to offices and manufacturing[154] - The company has a leased distribution center in West Columbia, South Carolina, with a square footage of 20,400[154] - The company has a manufacturing site in Johannesburg, South Africa, covering 229,000 square feet and occupying 21 acres[153] - The company has a total of 91,600 square feet of office and manufacturing space in Parsons, Kansas[154] - The company has a leased sales office and warehouse in Cape Town, South Africa, with a square footage of 1,100[153] - The company has a corporate office in Chattanooga, Tennessee, occupying 10,000 square feet[154] - The company has a manufacturing facility in Tacoma, Washington, with a square footage of 95,300[152] - The company has a total of 135,100 square feet of office and manufacturing space in Chattanooga, Tennessee, for its Heatec segment[153] Financial Performance - Astec Industries reported a revenue of $XXX million for the fiscal year ended December 31, 2019, representing a Y% increase compared to the previous year[200] - The company achieved a net income of $XX million, which is a Z% increase year-over-year[200] - Net sales for 2019 were $1,169,613, a slight decrease from $1,171,599 in 2018, representing a 0.2% decline[201] - Gross profit increased to $239,408 in 2019, with a gross profit margin of 20.5%, compared to 11.6% in 2018[201] - Net income for 2019 was $22,174, a significant recovery from a net loss of $60,744 in 2018[201] - Basic earnings per share for 2019 were $0.99, compared to a loss of $2.64 in 2018[201] - Total assets decreased to $800,498 in 2019 from $855,457 in 2018, indicating a decline of approximately 6.4%[201] - Working capital was $333,537 in 2019, down from $371,760 in 2018, reflecting a decrease of about 10.3%[201] - The backlog of orders decreased by $81,257 or 23.6% to $263,705 at December 31, 2019, with significant decreases in both domestic and international backlogs[259] Shareholder Information - The Company paid a cash dividend of $1.00 per share in Q4 2012 and increased the quarterly cash dividend to $0.11 per share starting Q3 2018[173] - As of December 31, 2019, the maximum dollar value of shares available for repurchase under the stock repurchase program is approximately $126 million[174] - The high and low sales prices of the Company's Common Stock in Q4 2019 were $43.92 and $28.63 respectively[175] - As of December 31, 2019, there were 218,220 securities to be issued upon exercise of outstanding options, warrants, rights, and RSUs[187] - The Company has 511,867 securities remaining available for future issuance under equity compensation plans[187] Internal Control and Compliance - The Company reported material weaknesses in internal control over financial reporting as of December 31, 2019[180] - KPMG LLP expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting[331] - Control deficiencies related to goodwill impairment and income taxes were identified, indicating a reasonable possibility of material misstatement[320][322] - The Company did not design effective controls over revenue recognition, leading to deficiencies in understanding ASC 606 requirements[326] - Insufficient controls over inventory accuracy and valuation were noted, impacting financial reporting processes[327] - The Company failed to implement effective controls over manual and automated journal entries, resulting in potential misstatements[328][329] - The company has identified material weaknesses in internal control over financial reporting, including insufficient trained resources and ineffective management review controls[338] - Management has implemented a remediation plan that includes hiring additional resources and enhancing controls over various financial reporting processes[335] Strategic Initiatives and Market Outlook - The company is focusing on new product development, with plans to launch E new products in the upcoming year[200] - Astec Industries is expanding its market presence, targeting F new regions for growth[200] - Management highlighted the successful implementation of new technologies that improved production efficiency by H%[200] - Astec Industries is adopting new strategies to enhance customer engagement, aiming for an increase in customer satisfaction scores by I%[200] - The Company has implemented a new business strategy focused on "Simplify, Focus, and Grow," aiming to enhance customer relationships and operational excellence[230] - The Company is transitioning to a matrix organization to improve decision-making speed and strategic focus, with Group Presidents managing multiple manufacturing sites[231] Legal and Regulatory Matters - The Company is involved in a putative shareholder class action lawsuit alleging violations of the Securities Exchange Act, with claims for monetary damages on behalf of shareholders who purchased shares between July 26, 2016, and October 22, 2018[288] - GEFCO, a subsidiary of the Company, is facing a lawsuit regarding equipment sold in 2013, with the original purchase price of approximately $8,500, seeking rescission and damages[289] Economic and Industry Factors - Federal funding for highways and public transportation is crucial, with the FAST Act approving $305 billion for the five-year period ending September 30, 2020[217] - The Company anticipates that the multi-year highway program, such as the FAST Act, will significantly impact the road construction industry, although future federal highway funding remains uncertain[218] - The Company believes that the funding required for road, bridge, and mass transit improvements is significantly greater than current approved amounts, suggesting an increase in the federal usage fee per gallon of gasoline may be necessary[219] - Steel prices are expected to weaken in the latter part of 2020 due to seasonality and increased supply coming online in 2021[224] Cost Management and Efficiency - The company reported a significant reduction in operational costs by J% due to improved supply chain management[200] - Selling, general and administrative expenses increased by $3,140 or 1.7% to $183,935 in 2019, primarily due to higher employee incentive pay and costs associated with management transitions[251] - Corporate net expenses increased by $40,026 from 2018, primarily due to a $30,412 rise in income taxes and various compensation and operational costs[268] Inventory and Revenue Recognition - The Company values inventories at the lower of first-in first-out cost or net realizable value, with steel being the most significant component, subject to market price volatility[291] - Revenue is recognized when performance obligations are satisfied, with significant down payments required on many equipment orders, typically allowing payment shortly after shipment[293] - The Company has certain sales with multiple performance obligations, recognizing revenue for products upon shipment and for services when performed[296]