UNITED STATES
|
||||
SECURITIES AND EXCHANGE COMMISSION
|
||||
Washington, D.C. 20549
|
||||
FORM 10-Q
|
||||
(Mark One)
|
||||
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||||
For the quarterly period ended September 30, 2016
|
||||
OR
|
||||
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
||||
For the transition period from to
|
||||
Commission File Number 001-11595
|
||||
Astec Industries, Inc.
|
||||
(Exact name of registrant as specified in its charter)
|
||||
Tennessee
|
62-0873631
|
|||
(State or other jurisdiction of
|
(I.R.S. Employer Identification No.)
|
|||
incorporation or organization)
|
||||
1725 Shepherd Road, Chattanooga, Tennessee
|
37421
|
|||
(Address of principal executive offices)
|
(Zip Code)
|
|||
(423) 899-5898
|
||||
(Registrant's telephone number, including area code)
|
||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
||||
YES ý
|
NO ☐
|
|||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
||||
YES ý
|
NO ☐
|
|||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
|
||||
Large Accelerated Filer ý
|
Accelerated Filer ☐
|
|||
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
|
Smaller Reporting Company ☐
|
|||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
||||
YES ☐
|
NO ý
|
|||
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
|
||||
Class
|
Outstanding at October 25, 2016
|
|||
Common Stock, par value $0.20
|
23,044,305
|
ASTEC INDUSTRIES, INC.
|
|||||
INDEX
|
|||||
|
|||||
(unaudited)
|
||||||||
September 30,
2016 |
December 31,
2015 |
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
52,474
|
$
|
25,062
|
||||
Investments
|
713
|
1,539
|
||||||
Trade receivables
|
108,436
|
98,865
|
||||||
Other receivables
|
3,317
|
3,132
|
||||||
Inventories
|
399,718
|
384,776
|
||||||
Prepaid expenses and other
|
25,909
|
28,423
|
||||||
Total current assets
|
590,567
|
541,797
|
||||||
Property and equipment, net
|
178,167
|
170,206
|
||||||
Investments
|
14,094
|
11,540
|
||||||
Goodwill
|
41,958
|
30,835
|
||||||
Other long-term assets
|
37,053
|
22,975
|
||||||
Total assets
|
$
|
861,839
|
$
|
777,353
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Current maturities of long-term debt
|
$
|
2,159
|
$
|
4,528
|
||||
Accounts payable
|
53,496
|
48,385
|
||||||
Accrued product warranty
|
11,507
|
9,100
|
||||||
Customer deposits
|
75,766
|
40,082
|
||||||
Accrued payroll and related liabilities
|
20,926
|
17,375
|
||||||
Accrued loss reserves
|
3,213
|
2,838
|
||||||
Accrued income taxes payable
|
513
|
103
|
||||||
Other current liabilities
|
22,626
|
19,601
|
||||||
Total current liabilities
|
190,206
|
142,012
|
||||||
Long-term debt
|
4,781
|
5,154
|
||||||
Deferred income tax liabilities
|
1,819
|
2,348
|
||||||
Other long-term liabilities
|
20,102
|
17,981
|
||||||
Total liabilities
|
216,908
|
167,495
|
||||||
Shareholders' equity
|
643,884
|
608,072
|
||||||
Non-controlling interest
|
1,047
|
1,786
|
||||||
Total equity
|
644,931
|
609,858
|
||||||
Total liabilities and equity
|
$
|
861,839
|
$
|
777,353
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net sales
|
$
|
247,752
|
$
|
211,350
|
$
|
820,868
|
$
|
768,141
|
||||||||
Cost of sales
|
192,363
|
166,212
|
620,071
|
594,724
|
||||||||||||
Gross profit
|
55,389
|
45,138
|
200,797
|
173,417
|
||||||||||||
Selling, general, administrative and engineering expenses
|
43,950
|
41,023
|
132,716
|
128,136
|
||||||||||||
Income from operations
|
11,439
|
4,115
|
68,081
|
45,281
|
||||||||||||
Interest expense
|
264
|
505
|
1,057
|
1,222
|
||||||||||||
Other income, net of expenses
|
505
|
510
|
1,324
|
2,543
|
||||||||||||
Income from operations before income taxes
|
11,680
|
4,120
|
68,348
|
46,602
|
||||||||||||
Income taxes
|
4,845
|
2,162
|
25,694
|
18,070
|
||||||||||||
Net income
|
6,835
|
1,958
|
42,654
|
28,532
|
||||||||||||
Net loss attributable to non-controlling interest
|
(3
|
)
|
(334
|
)
|
(119
|
)
|
(669
|
)
|
||||||||
Net income attributable to controlling interest
|
$
|
6,838
|
$
|
2,292
|
$
|
42,773
|
$
|
29,201
|
||||||||
Earnings per common share
|
||||||||||||||||
Net income attributable to controlling interest:
|
||||||||||||||||
Basic
|
$
|
0.30
|
$
|
0.10
|
$
|
1.86
|
$
|
1.27
|
||||||||
Diluted
|
$
|
0.30
|
$
|
0.10
|
$
|
1.85
|
$
|
1.26
|
||||||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic
|
23,001
|
22,943
|
22,989
|
22,930
|
||||||||||||
Diluted
|
23,145
|
23,121
|
23,138
|
23,118
|
||||||||||||
Dividends declared per common share
|
$
|
0.10
|
$
|
0.10
|
$
|
0.30
|
$
|
0.30
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net income
|
$
|
6,835
|
$
|
1,958
|
$
|
42,654
|
$
|
28,532
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Change in unrecognized pension and post-retirement
benefit costs |
--
|
--
|
--
|
28
|
||||||||||||
Income tax (provision) benefit on change in unrecognized pension
and post-retirement benefit costs |
111
|
(30
|
)
|
--
|
(21
|
)
|
||||||||||
Foreign currency translation adjustments
|
69
|
(7,003
|
)
|
(219
|
)
|
(10,721
|
)
|
|||||||||
Income tax (provision) benefit on foreign currency translation
adjustments |
(57
|
)
|
868
|
(783
|
)
|
808
|
||||||||||
Other comprehensive income (loss)
|
123
|
(6,165
|
)
|
(1,002
|
)
|
(9,906
|
)
|
|||||||||
Comprehensive income (loss)
|
6,958
|
(4,207
|
)
|
41,652
|
18,626
|
|||||||||||
Comprehensive loss attributable to non-controlling interest
|
(130
|
)
|
(607
|
)
|
(55
|
)
|
(1,285
|
)
|
||||||||
Comprehensive income (loss) attributable to controlling interest
|
$
|
7,088
|
$
|
(3,600
|
)
|
$
|
41,707
|
$
|
19,911
|
|||||||
Nine Months Ended
September 30, |
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
42,654
|
$
|
28,532
|
||||
Adjustments to reconcile net income to net cash provided
by operating activities: |
||||||||
Depreciation and amortization
|
18,118
|
18,042
|
||||||
Provision (benefit) for doubtful accounts
|
327
|
(161
|
)
|
|||||
Provision for warranties
|
13,135
|
11,723
|
||||||
Deferred compensation provision (benefit)
|
1,240
|
(206
|
)
|
|||||
Stock-based compensation
|
2,021
|
603
|
||||||
Deferred income tax benefit
|
(2,019
|
)
|
(3,959
|
)
|
||||
Gain on disposition of fixed assets
|
(322
|
)
|
(234
|
)
|
||||
Distributions to SERP participants
|
(525
|
)
|
(2,649
|
)
|
||||
Change in operating assets and liabilities:
|
||||||||
Sale (purchase) of trading securities, net
|
(1,545
|
)
|
(698
|
)
|
||||
Trade and other receivables
|
(5,224
|
)
|
2,504
|
|||||
Inventories
|
(8,120
|
)
|
3,628
|
|||||
Prepaid expenses and other assets
|
(3,132
|
)
|
3,833
|
|||||
Accounts payable
|
3,234
|
(14,581
|
)
|
|||||
Accrued product warranty
|
(11,011
|
)
|
(11,499
|
)
|
||||
Customer deposits
|
35,685
|
(12,523
|
)
|
|||||
Prepaid and income taxes payable, net
|
5,655
|
(1,792
|
)
|
|||||
Other
|
6,602
|
1,581
|
||||||
Net cash provided by operating activities
|
96,773
|
22,144
|
||||||
Cash flows from investing activities:
|
||||||||
Business acquisition, net of cash acquired
|
(39,613
|
)
|
178
|
|||||
Expenditures for property and equipment
|
(17,483
|
)
|
(15,483
|
)
|
||||
Proceeds from sale of property and equipment
|
577
|
378
|
||||||
Other
|
(174
|
)
|
529
|
|||||
Net cash used by investing activities
|
(56,693
|
)
|
(14,398
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payment of dividends
|
(6,912
|
)
|
(6,893
|
)
|
||||
Borrowings under bank loans
|
1,695
|
85,441
|
||||||
Repayments of bank loans
|
(5,570
|
)
|
(85,287
|
)
|
||||
Sale (purchase) of Company shares held by SERP, net
|
(99
|
)
|
2,053
|
|||||
Withholding tax paid upon vesting of restricted stock units
|
(1,024
|
)
|
(600
|
)
|
||||
Purchase of subsidiary's shares
|
(724
|
)
|
(653
|
)
|
||||
Other
|
--
|
420
|
||||||
Net cash used by financing activities
|
(12,634
|
)
|
(5,519
|
)
|
||||
Effect of exchange rates on cash
|
(34
|
)
|
(1,265
|
)
|
||||
Net increase in cash and cash equivalents
|
27,412
|
962
|
||||||
Cash and cash equivalents, beginning of period
|
25,062
|
13,023
|
||||||
Cash and cash equivalents, end of period
|
$
|
52,474
|
$
|
13,985
|
Condensed Consolidated Statement of Equity
|
||||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2016
|
||||||||||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||
Common
Stock Shares |
Common
Stock Amount |
Additional
Paid-in Capital |
Accum-
ulated Other Compre- hensive Loss |
Company
Shares Held by SERP |
Retained
Earnings |
Non-
controlling Interest |
Total
Equity |
|||||||||||||||||||||||||
Balance, December
31, 2015 |
22,988
|
$
|
4,598
|
$
|
137,883
|
$
|
(23,564
|
)
|
$
|
(1,778
|
)
|
$
|
490,933
|
$
|
1,786
|
$
|
609,858
|
|||||||||||||||
Net income (loss)
|
--
|
--
|
--
|
--
|
--
|
42,773
|
(119
|
)
|
42,654
|
|||||||||||||||||||||||
Other comprehensive
loss |
--
|
--
|
--
|
(1,002
|
)
|
--
|
--
|
--
|
(1,002
|
)
|
||||||||||||||||||||||
Dividends declared
|
--
|
--
|
7
|
--
|
--
|
(6,919
|
)
|
--
|
(6,912
|
)
|
||||||||||||||||||||||
Stock-based
compensation |
3
|
1
|
2,020
|
--
|
--
|
--
|
--
|
2,021
|
||||||||||||||||||||||||
Change in ownership
percent of subsidiary |
--
|
--
|
--
|
--
|
--
|
--
|
(1,310
|
)
|
(1,310
|
)
|
||||||||||||||||||||||
Stock issued under
incentive plans |
53
|
10
|
(10
|
)
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||||
Withholding tax
paid upon vesting of RSUs |
--
|
--
|
(1,024
|
)
|
--
|
--
|
--
|
--
|
(1,024
|
)
|
||||||||||||||||||||||
SERP transactions,
net |
--
|
--
|
27
|
--
|
(126
|
)
|
--
|
--
|
(99
|
)
|
||||||||||||||||||||||
Cumulative effect of
adopting ASU No. 2016-09 |
--
|
--
|
150
|
--
|
--
|
(95
|
)
|
--
|
55
|
|||||||||||||||||||||||
Other
|
--
|
--
|
--
|
--
|
--
|
--
|
690
|
690
|
||||||||||||||||||||||||
Balance, September
30, 2016 |
23,044
|
$
|
4,609
|
$
|
139,053
|
$
|
(24,566
|
)
|
$
|
(1,904
|
)
|
$
|
526,692
|
$
|
1,047
|
$
|
644,931
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net income attributable to controlling interest
|
$
|
6,838
|
$
|
2,292
|
$
|
42,773
|
$
|
29,201
|
||||||||
Denominator:
|
||||||||||||||||
Denominator for basic earnings per share
|
23,001
|
22,943
|
22,989
|
22,930
|
||||||||||||
Effect of dilutive securities:
|
||||||||||||||||
Employee stock options and restricted stock units
|
79
|
114
|
85
|
124
|
||||||||||||
Supplemental Executive Retirement Plan
|
65
|
64
|
64
|
64
|
||||||||||||
Denominator for diluted earnings per share
|
23,145
|
23,121
|
23,138
|
23,118
|
||||||||||||
September 30,
2016 |
December 31,
2015 |
|||||||
Raw materials and parts
|
$
|
143,882
|
$
|
141,967
|
||||
Work-in-process
|
149,258
|
113,859
|
||||||
Finished goods
|
82,656
|
104,879
|
||||||
Used equipment
|
23,922
|
24,071
|
||||||
Total
|
$
|
399,718
|
$
|
384,776
|
Level 1 -
|
Unadjusted quoted prices in active markets for identical assets or liabilities.
|
Level 2 -
|
Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted
quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability. |
Level 3 -
|
Inputs reflect management's best estimate of what market participants would use in pricing
the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. |
September 30, 2016
|
||||||||||||
Level 1
|
Level 2
|
Total
|
||||||||||
Financial Assets:
|
||||||||||||
Trading equity securities:
|
||||||||||||
SERP money market fund
|
$
|
90
|
$
|
--
|
$
|
90
|
||||||
SERP mutual funds
|
3,229
|
--
|
3,229
|
|||||||||
Preferred stocks
|
620
|
--
|
620
|
|||||||||
Trading debt securities:
|
||||||||||||
Corporate bonds
|
5,109
|
--
|
5,109
|
|||||||||
Municipal bonds
|
--
|
2,441
|
2,441
|
|||||||||
Floating rate notes
|
98
|
--
|
98
|
|||||||||
Asset backed securities
|
--
|
694
|
694
|
|||||||||
Other
|
--
|
2,526
|
2,526
|
|||||||||
Total financial assets
|
$
|
9,146
|
$
|
5,661
|
$
|
14,807
|
||||||
Financial Liabilities:
|
||||||||||||
SERP liabilities
|
$
|
--
|
$
|
7,218
|
$
|
7,218
|
||||||
Derivative financial instruments
|
--
|
592
|
592
|
|||||||||
Total financial liabilities
|
$
|
--
|
$
|
7,810
|
$
|
7,810
|
December 31, 2015
|
||||||||||||
Level 1
|
Level 2
|
Total
|
||||||||||
Financial Assets:
|
||||||||||||
Trading equity securities:
|
||||||||||||
SERP money market fund
|
$
|
445
|
$
|
--
|
$
|
445
|
||||||
SERP mutual funds
|
2,864
|
--
|
2,864
|
|||||||||
Preferred stocks
|
742
|
--
|
742
|
|||||||||
Trading debt securities:
|
||||||||||||
Corporate bonds
|
3,756
|
141
|
3,897
|
|||||||||
Municipal bonds
|
--
|
1,811
|
1,811
|
|||||||||
Floating rate notes
|
84
|
--
|
84
|
|||||||||
U.S. Treasury bills
|
404
|
--
|
404
|
|||||||||
Savings bonds
|
77
|
--
|
77
|
|||||||||
Other
|
--
|
2,755
|
2,755
|
|||||||||
Derivative financial instruments
|
--
|
1,265
|
1,265
|
|||||||||
Total financial assets
|
$
|
8,372
|
$
|
5,972
|
$
|
14,344
|
||||||
Financial Liabilities:
|
||||||||||||
SERP liabilities
|
$
|
--
|
$
|
5,869
|
$
|
5,869
|
||||||
Derivative financial instruments
|
--
|
22
|
22
|
|||||||||
Total financial liabilities
|
$
|
--
|
$
|
5,891
|
$
|
5,891
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Reserve balance, beginning of the period
|
$
|
11,858
|
$
|
10,761
|
$
|
9,100
|
$
|
10,032
|
||||||||
Warranty liabilities accrued
|
4,835
|
3,261
|
13,135
|
11,723
|
||||||||||||
Warranty liabilities settled
|
(5,442
|
)
|
(3,828
|
)
|
(11,011
|
)
|
(11,499
|
)
|
||||||||
Other
|
256
|
(130
|
)
|
283
|
(192
|
)
|
||||||||||
Reserve balance, end of the period
|
$
|
11,507
|
$
|
10,064
|
$
|
11,507
|
$
|
10,064
|
Three Months Ended September 30, 2016
|
||||||||||||||||||||
Infrastructure
Group |
Aggregate
and Mining Group |
Energy
Group |
Corporate
|
Total
|
||||||||||||||||
Net sales to external
customers |
$
|
109,227
|
$
|
85,819
|
$
|
52,706
|
$
|
--
|
$
|
247,752
|
||||||||||
Intersegment sales
|
5,324
|
10,063
|
4,108
|
--
|
19,495
|
|||||||||||||||
Gross profit
|
24,929
|
20,935
|
9,473
|
52
|
55,389
|
|||||||||||||||
Gross profit percent
|
22.8
|
%
|
24.4
|
%
|
18.0
|
%
|
--
|
22.4
|
%
|
|||||||||||
Segment profit (loss)
|
$
|
9,858
|
$
|
7,651
|
$
|
805
|
$
|
(11,610
|
)
|
$
|
6,704
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||||
Infrastructure
Group |
Aggregate
and Mining Group |
Energy
Group |
Corporate
|
Total
|
||||||||||||||||
Net sales to external
customers |
$
|
414,817
|
$
|
277,393
|
$
|
128,658
|
$
|
--
|
$
|
820,868
|
||||||||||
Intersegment sales
|
13,009
|
20,859
|
13,718
|
--
|
47,586
|
|||||||||||||||
Gross profit
|
101,349
|
72,224
|
27,069
|
155
|
200,797
|
|||||||||||||||
Gross profit percent
|
24.4
|
%
|
26.0
|
%
|
21.0
|
%
|
--
|
24.5
|
%
|
|||||||||||
Segment profit (loss)
|
$
|
51,394
|
$
|
28,135
|
$
|
3,237
|
$
|
(40,745
|
)
|
$
|
42,021
|
Three Months Ended September 30, 2015
|
||||||||||||||||||||
Infrastructure
Group |
Aggregate
and Mining Group |
Energy
Group |
Corporate
|
Total
|
||||||||||||||||
Net sales to external
customers |
$
|
85,625
|
$
|
80,549
|
$
|
45,176
|
$
|
--
|
$
|
211,350
|
||||||||||
Intersegment sales
|
5,839
|
4,604
|
1,122
|
--
|
11,565
|
|||||||||||||||
Gross profit
|
16,104
|
19,226
|
9,794
|
14
|
45,138
|
|||||||||||||||
Gross profit percent
|
18.8
|
%
|
23.9
|
%
|
21.7
|
%
|
--
|
21.4
|
%
|
|||||||||||
Segment profit (loss)
|
$
|
2,116
|
$
|
3,790
|
$
|
1,941
|
$
|
(6,853
|
)
|
$
|
994
|
Nine Months Ended September 30, 2015
|
||||||||||||||||||||
Infrastructure
Group |
Aggregate
and Mining Group |
Energy
Group |
Corporate
|
Total
|
||||||||||||||||
Net sales to external
customers |
$
|
336,768
|
$
|
285,790
|
$
|
145,583
|
$
|
--
|
$
|
768,141
|
||||||||||
Intersegment sales
|
17,633
|
19,223
|
13,965
|
--
|
50,821
|
|||||||||||||||
Gross profit
|
74,292
|
70,182
|
28,912
|
31
|
173,417
|
|||||||||||||||
Gross profit percent
|
22.1
|
%
|
24.6
|
%
|
19.9
|
%
|
--
|
22.6
|
%
|
|||||||||||
Segment profit (loss)
|
$
|
29,472
|
$
|
25,441
|
$
|
2,805
|
$
|
(29,154
|
)
|
$
|
28,564
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Total segment profits
|
$
|
6,704
|
$
|
994
|
$
|
42,021
|
$
|
28,564
|
||||||||
Recapture (elimination) of intersegment profit
|
131
|
964
|
633
|
(32
|
)
|
|||||||||||
Net income
|
6,835
|
1,958
|
42,654
|
28,532
|
||||||||||||
Net loss attributable to non-controlling
interest in subsidiaries |
(3
|
)
|
(334
|
)
|
(119
|
)
|
(669
|
)
|
||||||||
Net income attributable to controlling interest
|
$
|
6,838
|
$
|
2,292
|
$
|
42,773
|
$
|
29,201
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Interest income
|
$
|
178
|
$
|
128
|
$
|
621
|
$
|
392
|
||||||||
Income from life insurance policies
|
--
|
--
|
--
|
1,204
|
||||||||||||
Loss on investments
|
(26
|
)
|
(72
|
)
|
(41
|
)
|
(204
|
)
|
||||||||
License fee income
|
247
|
250
|
503
|
616
|
||||||||||||
Other
|
106
|
204
|
241
|
535
|
||||||||||||
Total
|
$
|
505
|
$
|
510
|
$
|
1,324
|
$
|
2,543
|
●
|
design, engineer, manufacture and market equipment that is used in each phase of road building, including quarrying and crushing the aggregate, mobile bulk and material handling solutions, producing asphalt or concrete, recycling old asphalt or concrete and applying the asphalt;
|
● |
design, engineer, manufacture and market additional equipment and components, including equipment for geothermal drilling, oil and natural gas drilling, industrial heat transfer, wood chipping and grinding, and wood pellet processing; and
|
●
|
manufacture and sell replacement parts for equipment in each of its product lines.
|
1.
|
Infrastructure Group – Astec, Inc., Roadtec, Inc., Carlson Paving Products, Inc., Astec Australia Pty Ltd and Astec Mobile Machinery GmbH.
|
2.
|
Aggregate and Mining Group – Telsmith, Inc., Kolberg-Pioneer, Inc., Johnson Crushers International, Inc., Osborn Engineered Products SA (Pty) Ltd, Breaker Technology, Inc., Astec Mobile Screens, Inc., Astec do Brasil Fabricacao de Equipamentos LTDA and Telestack Limited.
|
3.
|
Energy Group – Heatec, Inc., CEI Enterprises, Inc., GEFCO, Inc., Peterson Pacific Corp., Power Flame Incorporated (beginning in August 2016) and Astec Underground, Inc. (through May 2015)
|
Three Months Ended
September 30, |
||||||||||||||||
2016
|
2015
|
$ Change
|
% Change
|
|||||||||||||
Infrastructure Group
|
$
|
109,227
|
$
|
85,625
|
$
|
23,602
|
27.6
|
%
|
||||||||
Aggregate and Mining Group
|
85,819
|
80,549
|
5,270
|
6.5
|
%
|
|||||||||||
Energy Group
|
52,706
|
45,176
|
7,530
|
16.7
|
%
|
Nine Months Ended
September 30, |
||||||||||||||||
2016
|
2015
|
$ Change
|
% Change
|
|||||||||||||
Infrastructure Group
|
$
|
414,817
|
$
|
336,768
|
$
|
78,049
|
23.2
|
%
|
||||||||
Aggregate and Mining Group
|
277,393
|
285,790
|
(8,397
|
)
|
(2.9
|
%)
|
||||||||||
Energy Group
|
128,658
|
145,583
|
(16,925
|
)
|
(11.6
|
%)
|
Three Months Ended
September 30, |
||||||||||||||||
2016
|
2015
|
$ Change
|
% Change
|
|||||||||||||
Infrastructure Group
|
$
|
9,858
|
$
|
2,116
|
$
|
7,742
|
365.9
|
%
|
||||||||
Aggregate and Mining Group
|
7,651
|
3,790
|
3,861
|
101.9
|
%
|
|||||||||||
Energy Group
|
805
|
1,941
|
(1,136
|
)
|
(58.5
|
%)
|
||||||||||
Corporate
|
(11,610
|
)
|
(6,853
|
)
|
(4,757
|
)
|
(69.4
|
%)
|
||||||||
Nine Months Ended
September 30, |
||||||||||||||||
2016
|
2015
|
$ Change
|
% Change
|
|||||||||||||
Infrastructure Group
|
$
|
51,394
|
$
|
29,472
|
$
|
21,922
|
74.4
|
%
|
||||||||
Aggregate and Mining Group
|
28,135
|
25,441
|
2,694
|
10.6
|
%
|
|||||||||||
Energy Group
|
3,237
|
2,805
|
432
|
15.4
|
%
|
|||||||||||
Corporate
|
(40,745
|
)
|
(29,154
|
)
|
(11,591
|
)
|
(39.8
|
%)
|
||||||||
Nine Months Ended
September 30, |
||||||||||||
2016
|
2015
|
Change
|
||||||||||
Net income
|
$
|
42,654
|
$
|
28,532
|
$
|
14,122
|
||||||
Deferred income tax benefit
|
(2,019
|
)
|
(3,959
|
)
|
1,940
|
|||||||
Depreciation and amortization
|
18,118
|
18,042
|
76
|
|||||||||
Provision for warranties
|
13,135
|
11,723
|
1,412
|
|||||||||
Changes in working capital:
|
||||||||||||
(Increase) decrease in trade and other receivables
|
(5,224
|
)
|
2,504
|
(7,728
|
)
|
|||||||
(Increase) decrease in inventories
|
(8,120
|
)
|
3,628
|
(11,748
|
)
|
|||||||
Increase (decrease) in accounts payable
|
3,234
|
(14,581
|
)
|
17,815
|
||||||||
Decrease in accrued product warranty
|
(11,011
|
)
|
(11,499
|
)
|
488
|
|||||||
Increase (decrease) in customer deposits
|
35,685
|
(12,523
|
)
|
48,208
|
||||||||
Change in prepaid and income taxes payable, net
|
5,655
|
(1,792
|
)
|
7,447
|
||||||||
Other, net
|
4,666
|
2,069
|
2,597
|
|||||||||
Net cash provided by operating activities
|
$
|
96,773
|
$
|
22,144
|
$
|
74,629
|
Nine Months Ended
September 30, |
||||||||||||
2016
|
2015
|
Change
|
||||||||||
Expenditures for property and equipment
|
$
|
(17,483
|
)
|
$
|
(15,483
|
)
|
$
|
(2,000
|
)
|
|||
Business acquisitions, net of cash acquired
|
(39,613
|
)
|
178
|
(39,791
|
)
|
|||||||
Other
|
403
|
907
|
(504
|
)
|
||||||||
Net cash used by investing activities
|
$
|
(56,693
|
)
|
$
|
(14,398
|
)
|
$
|
(42,295
|
)
|
Nine Months Ended
September 30, |
||||||||||||
2016
|
2015
|
Change
|
||||||||||
Payment of dividends
|
$
|
(6,912
|
)
|
$
|
(6,893
|
)
|
$
|
(19
|
)
|
|||
Net change in borrowings from banks
|
(3,875
|
)
|
154
|
(4,029
|
)
|
|||||||
Sale (purchase) of Company shares held by SERP, net
|
(99
|
)
|
2,053
|
(2,152
|
)
|
|||||||
Other, net
|
(1,748
|
)
|
(833
|
)
|
(915
|
)
|
||||||
Net cash used by financing activities
|
$
|
(12,634
|
)
|
$
|
(5,519
|
)
|
$
|
(7,115
|
)
|
Exhibit No.
|
Description
|
10.1
|
Amendment to "Appendix A" of the Astec Industries, Inc. Supplemental Executive Retirement Plan, effective October 27, 2016.
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32*
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
ASTEC INDUSTRIES, INC.
(Registrant) |
|
Date: November 7, 2016
|
/s/ Benjamin G. Brock
|
Benjamin G. Brock
Chief Executive Officer (Principal Executive Officer) |
|
Date: November 7, 2016
|
/s/ David C. Silvious
|
David C. Silvious
Chief Financial Officer, Vice President, and Treasurer (Principal Financial and Accounting Officer) |
Exhibit Index
|
|
Exhibit No.
|
Description
|
10.1
|
Amendment to "Appendix A" of the Astec Industries, Inc. Supplemental Executive Retirement Plan, effective October 27, 2016.
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
Name of Participant
|
Effective Dates of Participation
|
|||
W. Norman Smith
|
January 1, 1995
|
|||
Richard Patek
|
January 1, 1995
|
|||
Jeff Elliott
|
January 1, 2002
|
|||
Tim Gonigam
|
August 1, 2000
|
|||
Richard Dorris
|
January 3, 2005
|
|||
Ben Brock
|
January 1, 2007
|
|||
Michael A. Bremmer
|
January 1, 2007
|
|||
Stephen C. Anderson
|
January 1, 2003
|
|||
Lawrence R. Cumming
|
January 1, 2008
|
|||
Neil Peterson
|
January 1, 2008
|
|||
David C. Silvious
|
July 1, 2005
|
|||
Joe Cline
|
February 1, 2008
|
|||
Chris Colwell
|
May 31, 2011
|
|||
Robin Leffew
|
August 1, 2011
|
|||
D. Aaron Harmon
|
November 1, 2011
|
|||
Matthew B. Haven
|
January 1, 2013
|
|||
Jeff May
|
October 1, 2013
|
|||
Malcolm Swanson
|
January 1, 2014
|
|||
Tom Wilkey
|
January 1, 2014
|
|||
Jeff Schwarz
|
July 1, 2014
|
|||
Steven L. Claude
|
August 24, 2015
|
|||
John Irvine
|
April 28, 2016
|
|||
Jaco Van Der Merwe
|
October 1, 2016
|
1. |
I have reviewed this quarterly report on Form 10-Q of Astec Industries, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
/s/Benjamin G. Brock
|
|
Benjamin G. Brock
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Astec Industries, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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/s/David C. Silvious
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David C. Silvious
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Chief Financial Officer, Vice President and Treasurer
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(Principal Financial Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 25, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ASTEC INDUSTRIES INC | |
Entity Central Index Key | 0000792987 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,044,305 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 |
Condensed Consolidated Statements of Income (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Condensed Consolidated Statements of Income (unaudited) [Abstract] | ||||
Net sales | $ 247,752 | $ 211,350 | $ 820,868 | $ 768,141 |
Cost of sales | 192,363 | 166,212 | 620,071 | 594,724 |
Gross profit | 55,389 | 45,138 | 200,797 | 173,417 |
Selling, general, administrative and engineering expenses | 43,950 | 41,023 | 132,716 | 128,136 |
Income from operations | 11,439 | 4,115 | 68,081 | 45,281 |
Interest expense | 264 | 505 | 1,057 | 1,222 |
Other income, net of expenses | 505 | 510 | 1,324 | 2,543 |
Income from operations before income taxes | 11,680 | 4,120 | 68,348 | 46,602 |
Income taxes | 4,845 | 2,162 | 25,694 | 18,070 |
Net income | 6,835 | 1,958 | 42,654 | 28,532 |
Net loss attributable to non-controlling interest | (3) | (334) | (119) | (669) |
Net income attributable to controlling interest | $ 6,838 | $ 2,292 | $ 42,773 | $ 29,201 |
Net income attributable to controlling interest: | ||||
Basic (in dollars per share) | $ 0.30 | $ 0.10 | $ 1.86 | $ 1.27 |
Diluted (in dollars per share) | $ 0.30 | $ 0.10 | $ 1.85 | $ 1.26 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 23,001 | 22,943 | 22,989 | 22,930 |
Diluted (in shares) | 23,145 | 23,121 | 23,138 | 23,118 |
Dividends declared per common share (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.30 | $ 0.30 |
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Condensed Consolidated Statements of Comprehensive Income (unaudited) [Abstract] | ||||
Net income | $ 6,835 | $ 1,958 | $ 42,654 | $ 28,532 |
Other comprehensive income (loss): | ||||
Change in unrecognized pension and post-retirement benefit costs | 0 | 0 | 0 | 28 |
Income tax (provision) benefit on change in unrecognized pension and post-retirement benefit costs | 111 | (30) | 0 | (21) |
Foreign currency translation adjustments | 69 | (7,003) | (219) | (10,721) |
Income tax (provision) benefit on foreign currency translation adjustments | (57) | 868 | (783) | 808 |
Other comprehensive income (loss) | 123 | (6,165) | (1,002) | (9,906) |
Comprehensive income (loss) | 6,958 | (4,207) | 41,652 | 18,626 |
Comprehensive loss attributable to non-controlling interest | (130) | (607) | (55) | (1,285) |
Comprehensive income (loss) attributable to controlling interest | $ 7,088 | $ (3,600) | $ 41,707 | $ 19,911 |
Condensed Consolidated Statement of Equity (unaudited) - 9 months ended Sep. 30, 2016 - USD ($) shares in Thousands, $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive Loss [Member] |
Company Shares Held by SERP [Member] |
Retained Earnings [Member] |
Non-controlling Interest [Member] |
Total |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2015 | $ 4,598 | $ 137,883 | $ (23,564) | $ (1,778) | $ 490,933 | $ 1,786 | $ 609,858 |
Balance (in shares) at Dec. 31, 2015 | 22,988 | ||||||
Net income (loss) | $ 0 | 0 | 0 | 0 | 42,773 | (119) | 42,654 |
Other comprehensive loss | 0 | 0 | (1,002) | 0 | 0 | 0 | (1,002) |
Dividends declared | 0 | 7 | 0 | 0 | (6,919) | 0 | (6,912) |
Stock-based compensation | $ 1 | 2,020 | 0 | 0 | 0 | 0 | 2,021 |
Stock-based compensation (in shares) | 3 | ||||||
Change in ownership percent of subsidiary | $ 0 | 0 | 0 | 0 | 0 | (1,310) | (1,310) |
Stock issued under incentive plans | $ 10 | (10) | 0 | 0 | 0 | 0 | 0 |
Stock issued under incentive plans (in shares) | 53 | ||||||
Withholding tax paid upon vesting of RSUs | $ 0 | (1,024) | 0 | 0 | 0 | 0 | (1,024) |
SERP transactions, net | 0 | 27 | 0 | (126) | 0 | 0 | (99) |
Cumulative effect of adopting ASU No. 2016-09 | 0 | 150 | 0 | 0 | (95) | 0 | 55 |
Other | 0 | 0 | 0 | 0 | 0 | 690 | 690 |
Balance at Sep. 30, 2016 | $ 4,609 | $ 139,053 | $ (24,566) | $ (1,904) | $ 526,692 | $ 1,047 | $ 644,931 |
Balance (in shares) at Sep. 30, 2016 | 23,044 |
Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 1. Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Astec Industries, Inc. Annual Report on Form 10-K for the year ended December 31, 2015. The unaudited condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Dollar and share amounts shown are in thousands, except per share amounts, unless otherwise specified. Certain amounts previously reported for 2015 have been reclassified to conform with current year presentation. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes existing revenue guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The implementation of this new standard will require companies to use more judgment and to make more estimates than under current guidance. The standard is effective for public companies for annual periods beginning after December 15, 2017. The Company plans to adopt the new standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory", which changes the measurement basis for inventory from the lower of cost or market to lower of cost and net realizable value and also eliminates the requirement for companies to consider replacement cost or net realizable value less an approximate normal profit margin when determining the recorded value of inventory. The standard is effective for public companies in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company expects to adopt the standard effective October 1, 2016. The Company does not expect the adoption of this new standard will have a material impact on its financial position or results of operations. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10)”, which requires, among other things, equity investments with readily determinable fair values, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. The standard is effective for public companies in fiscal years beginning after December 15, 2017, and the Company expects to adopt the standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which significantly changes the accounting for operating leases by lessees. The accounting applied by lessors is largely unchanged from that applied under previous guidance. The new guidance requires lessees to recognize lease assets and lease liabilities in the balance sheet, initially measured at the present value of the lease payments, for leases which were classified as operating leases under previous guidance. Lease cost included in the statement of income will be calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Lessees may make an accounting policy election to exclude leases with a term of 12 months or less from the requirement to record related assets and liabilities. The new standard is effective for public companies for fiscal years beginning after December 15, 2018. The Company plans to adopt the new standard effective January 1, 2019. The Company has not yet determined what impact the adoption of this new standard will have on the Company's financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606)”, which does not change the core principles of ASU No. 2014-09 discussed above, but rather clarifies the implementation guidance in order to eliminate the potential for diversity in practice arising from inconsistent application of the principal versus agent guidance. Under the new guidance, when an entity determines it is a principal in a transaction, the entity recognizes revenue in the gross amount of consideration; however in transactions where an entity determines it in an agent, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. The standard is effective for public companies for annual periods beginning after December 15, 2017. The Company plans to adopt the new standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718)”, as part of its Simplification Initiative. The standard’s provisions impact several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. The standard is effective for public companies for annual periods beginning after December 15, 2016, with early adoption permitted. The Company adopted the new standard effective January 1, 2016 and has recorded a cumulative effect adjustment in retained earnings as of January 1, 2016 of $95, net of tax, related to the adoption of the new provisions allowing for restricted stock unit forfeitures to be accounted for at the time they occur as opposed to being estimated during the vesting period. Additionally, income tax benefits of $209, which would have been recorded in additional paid-in capital under prior guidance, have been recorded in the first quarter of 2016 consolidated income statements related to excess tax benefits resulting from the vesting of restricted stock units in 2016. As allowed under the provision’s guidelines, amounts for 2015 have not been restated in the accompanying financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The standard changes how credit losses are measured for most financial assets and certain other instruments that currently are not measured through net income. The standard will require an expected loss model for instruments measured at amortized cost as opposed to the current incurred loss approach. In valuing available for sale debt securities, allowances will be required to be recorded, rather than the current approach of reducing the carrying amount, for other than temporary impairments. A cumulative adjustment to retained earnings is to be recorded as of the beginning of the period of adoption to reflect the impact of applying the provisions of the standard. The standard is effective for public companies for periods beginning after December 15, 2019 and the Company expects to adopt the new standard as of January 1, 2020. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) which clarifies how certain cash receipts and cash payments should be presented on the statement of cash flows. The statement also addresses how the predominance principle should be applied when cash payments have aspects of more than one class of cash flows. The standard is effective for public companies in fiscal years beginning after December 15, 2017, and the Company expects to adopt the standard effective January 1, 2018. The Company has not determined the impact, if any, the adoption of this new standard will have on the Company's statement of cash flows. |
Earnings per Share |
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Earnings per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Note 2. Earnings per Share Basic earnings per share are determined by dividing earnings by the weighted average number of common shares outstanding during each period. Diluted earnings per share include the potential dilutive effect of options, restricted stock units and shares held in the Company’s Supplemental Executive Retirement Plan. The following table sets forth the computation of net income attributable to controlling interest and the number of basic and diluted shares used in the computation of earnings per share:
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Receivables |
9 Months Ended |
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Sep. 30, 2016 | |
Receivables [Abstract] | |
Receivables | Note 3. Receivables Receivables are net of allowances for doubtful accounts of $1,573 and $1,837 as of September 30, 2016 and December 31, 2015, respectively. |
Inventories |
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Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Note 4. Inventories Inventories consist of the following:
Raw materials and parts inventory is comprised of purchased steel and other purchased items for use in the manufacturing process or held for sale in the Company’s after-market parts business. The category also includes the manufacturing cost of completed equipment sub-assemblies produced for either integration into equipment manufactured at a later date or for sale in the Company’s after-market parts business. Work-in-process inventory consists of the value of materials, labor and overhead incurred to date in the manufacturing of incomplete equipment or incomplete equipment sub-assemblies being produced. Finished goods inventory consists of completed equipment manufactured for sale to customers. Used inventory consists of equipment accepted in trade or purchased on the open market. The category also includes equipment rented to prospective customers on a short-term or month-to-month basis. Used equipment is valued at the lower of acquired or trade-in cost or market determined on each separate unit. Each unit of rental equipment is valued at its original manufacturing cost and is reduced by an appropriate reserve each month during the period of time the equipment is rented. Inventories are valued at the lower of cost (first-in, first-out) or market, which requires the Company to make specific estimates, assumptions and judgments in determining the amount, if any, of reductions in the valuation of inventories to their net realizable values. The net realizable values of the Company’s products are impacted by a number of factors, including changes in the price of steel, competitive sales pricing, quantities of inventories on hand, the age of the individual inventory items, market acceptance of the Company’s products, the Company’s normal gross margins, actions by the Company’s competitors, the condition of the Company’s used and rental inventory and general economic factors. Once an inventory item’s value has been deemed to be less than cost, a net realizable value allowance is calculated and a new “cost basis” for that item is effectively established. This new cost is retained for that item until such time as the item is disposed of or the Company determines that an additional write-down is necessary. Additional write-downs may be required in the future based upon changes in assumptions due to general economic downturns in the markets in which the Company operates, changes in competitor pricing, new product design or other technological advances introduced by the Company or its competitors and other factors unique to individual inventory items. The most significant component of the Company’s inventory is steel. A significant decline in the market price of steel could result in a decline in the market value of the equipment or parts the Company sells. During periods of significant declining steel prices, the Company reviews the valuation of its inventories to determine if reductions are needed in the recorded value of inventory on hand to its net realizable value. The Company reviews the individual items included in its finished goods, used equipment and rental equipment inventory on a model-by-model or unit-by-unit basis to determine if any item’s net realizable value is below its carrying value each quarter. This analysis is expanded to include items in work-in-process and raw material inventory if factors indicate those items may also be impacted. In performing this review, judgments are made and, in addition to the factors discussed above, additional consideration is given to the age of the specific items of used or rental inventory, prior sales offers or lack thereof, the physical condition of the specific items and general market conditions for the specific items. Additionally, an analysis of raw material inventory is performed each quarter to calculate any valuation write-downs needed for obsolete inventory based upon quantities of items on hand, the age of those items and their recent and expected future usage or sale. When the Company determines that the value of inventory has become impaired through damage, deterioration, obsolescence, changes in price levels, excessive levels of inventory or other causes, the Company reduces the carrying value to estimated market value based on estimates, assumptions and judgments made from the information available at that time. Abnormal amounts of idle facility expense, freight, handling cost and wasted materials are recognized as current period charges. |
Property and Equipment |
9 Months Ended |
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Sep. 30, 2016 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 5. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation of $216,588 and $203,471 as of September 30, 2016 and December 31, 2015, respectively. |
Fair Value Measurements |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 6. Fair Value Measurements The Company has various financial instruments that must be measured at fair value on a recurring basis, including marketable debt and equity securities held by Astec Insurance Company (“Astec Insurance”), the Company’s captive insurance company, and marketable equity securities held in an unqualified Supplemental Executive Retirement Plan (“SERP”). The obligations of the Company associated with the financial assets held in the SERP also constitute a liability of the Company for financial reporting purposes and are included in other long-term liabilities in the accompanying balance sheets. The Company’s subsidiaries also occasionally enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates. The carrying amount of cash and cash equivalents, trade receivables, other receivables, revolving debt, accounts payable and long-term debt approximates their fair value because of their short-term nature and/or interest rates associated with the instruments. Investments are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted prices exist, other observable inputs for the asset. The fair values of foreign currency exchange contracts are based on quotations from various banks for similar instruments using models with market based inputs. Financial assets and liabilities are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The inputs used to measure the fair value are identified in the following hierarchy:
As indicated in the tables below (which excludes the Company’s pension assets), the Company has determined that all of its financial assets and liabilities as of September 30, 2016 and December 31, 2015 are Level 1 and Level 2 in the fair value hierarchy as defined above:
The Company reevaluates the volume of trading activity for each of its investments at the end of each quarter and adjusts the level within the fair value hierarchy as needed. There were no investments that changed levels within the hierarchy during the quarter ended September 30, 2016. The trading equity investments noted above are valued at their fair value based on their quoted market prices, and the debt securities are valued based upon a mix of observable market prices and model driven prices derived from a matrix of observable market prices for assets with similar characteristics obtained with the assistance of a nationally recognized third party pricing service. Additionally, a significant portion of the SERP’s investments in trading equity securities are in money market and mutual funds. As these money market and mutual funds are held in a SERP, they are also included in the Company’s liability under its SERP. Trading debt securities are comprised of marketable debt securities held by Astec Insurance. Astec Insurance has an investment strategy that focuses on providing regular and predictable interest income from a diversified portfolio of high-quality fixed income securities. Net unrealized gains or losses incurred on investments held as of September 30, 2016 and December 31, 2015 amounted to a net gain of $94 and a net loss of $429, respectively. |
Debt |
9 Months Ended |
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Sep. 30, 2016 | |
Debt [Abstract] | |
Debt | Note 7. Debt On April 12, 2012, the Company and certain of its subsidiaries entered into an amended and restated credit agreement whereby Wells Fargo extended to the Company an unsecured line of credit of up to $100,000, including a sub-limit for letters of credit of up to $25,000. There were no borrowings outstanding under the agreement at any time during the nine-month period ended September 30, 2016. Letters of credit totaling $15,196, including $11,874 of letters of credit issued to banks in Brazil to secure the local debt of Astec do Brasil Fabricacao de Equipamentos Ltda. (“Astec Brazil”), were outstanding under the credit facility as of September 30, 2016, resulting in additional borrowing ability of $84,804 under the credit facility. The credit agreement has a five-year term expiring in April 2017. Borrowings under the agreement are subject to an interest rate equal to the daily one-month LIBOR rate plus a 0.75% margin, resulting in a rate of 1.29% as of September 30, 2016. The unused facility fee is 0.175%. Interest only payments are due monthly. The amended and restated credit agreement contains certain financial covenants, including provisions concerning required levels of annual net income, minimum tangible net worth and maximum allowed capital expenditures. The Company was in compliance with these covenants as of September 30, 2016. The Company’s South African subsidiary, Osborn Engineered Products SA (Pty) Ltd (“Osborn”), has a credit facility of $6,920 with a South African bank to finance short-term working capital needs, as well as to cover performance letters of credit, advance payment and retention guarantees. As of September 30, 2016, Osborn had $1,911 in performance, advance payment and retention guarantees outstanding under the facility. The facility has been guaranteed by Astec Industries, Inc., but is otherwise unsecured. A 0.75% unused facility fee is charged if less than 50% of the facility is utilized. As of September 30, 2016, Osborn had available credit under the facility of $5,009. The interest rate is 0.25% less than the South Africa prime rate, resulting in a rate of 10.5% as of September 30, 2016. The Company’s Brazilian subsidiary, Astec Brazil, has outstanding working capital loans totaling $5,639 from Brazilian banks with interest rates ranging from 10.4% to 11.0%. The loans’ maturity dates range from November 2018 to April 2024 and the debts are secured by Astec Brazil’s manufacturing facility. Additionally, Astec Brazil has various 5-year equipment financing loans outstanding with Brazilian banks in the aggregate of $1,301 as of September 30, 2016 that have interest rates ranging from 3.5% to 16.3%. These equipment loans have maturity dates ranging from September 2018 to April 2020. Astec Brazil’s loans are included in the accompanying balance sheets as current maturities of long-term debt ($2,159) and long-term debt ($4,781). A portion of the Astec Brazil debt is also secured by letters of credit totaling $11,874 issued by Astec Industries, Inc. |
Product Warranty Reserves |
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Product Warranty Reserves | Note 8. Product Warranty Reserves The Company warrants its products against manufacturing defects and performance to specified standards. The warranty period and performance standards vary by market and uses of its products, but generally range from three months to one year or up to a specified number of hours of operation. The Company estimates the costs that may be incurred under its warranties and records a liability at the time product sales are recorded. The product warranty liability is primarily based on historical claim rates, nature of claims and the associated cost. Changes in the Company’s product warranty liability for the three and nine-month periods ended September 30, 2016 and 2015 are as follows:
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Accrued Loss Reserves |
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Sep. 30, 2016 | |
Accrued Loss Reserves [Abstract] | |
Accrued Loss Reserves | Note 9. Accrued Loss Reserves The Company records reserves for losses related to known workers’ compensation and general liability claims that have been incurred but not yet paid or are estimated to have been incurred but not yet reported to the Company. The undiscounted reserves are actuarially determined based on the Company’s evaluation of the type and severity of individual claims and historical information, primarily its own claims experience, along with assumptions about future events. Changes in assumptions, as well as changes in actual experience, could cause these estimates to change in the future. Total accrued loss reserves were $8,514 as of September 30, 2016 and $7,663 as of December 31, 2015, of which $5,301 and $4,825 were included in other long-term liabilities as of September 30, 2016 and December 31, 2015, respectively. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | Note 10. Income Taxes The Company's combined effective income tax rates were 41.5% and 52.5% for the three-month periods ended September 30, 2016 and 2015, respectively. The Company's combined effective income tax rates were 37.6% and 38.8% for the nine-month periods ended September 30, 2016 and 2015, respectively. The Company's effective tax rates for the three and nine-month periods ended September 30, 2016 include the effect of state income taxes and other discrete items as well as a benefit for research and development credits. The Company's effective tax rates for the three and nine-month periods ended September 30, 2015 include the effect of state income taxes and other discrete items but does not include benefits for the research and development credits as legislation extending the research and development credit for 2015 was not enacted by Congress until the fourth quarter of 2015. The Company's recorded liability for uncertain tax positions as of September 30, 2016 has decreased by approximately $241 as compared to December 31, 2015 as the result of federal and state tax audit settlements related to tax years 2011 and 2012. |
Segment Information |
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Segment Information | Note 11. Segment Information The Company has three reportable segments, each of which is comprised of multiple business units that offer similar products and services and meet the requirements for aggregation. A brief description of each segment is as follows: Infrastructure Group - This segment consists of five business units, three of which design, engineer, manufacture and market a complete line of portable, stationary and relocatable hot-mix asphalt plants, wood pellet plants, asphalt pavers, material transfer vehicles, milling machines and paver screeds. The other two business units in this segment primarily operate as Company-owned dealers in the foreign countries in which they are domiciled. These two business units sell, service and install products produced by the manufacturing subsidiaries of the Company, and a majority of their sales are to customers in the infrastructure industry. The principal purchasers of the products produced by this group are asphalt producers, highway and heavy equipment contractors, wood pellet processors and foreign and domestic governmental agencies. Aggregate and Mining Group - This segment consists of eight business units that design, engineer, manufacture and market a complete line of jaw crushers, cone crushers, horizontal shaft impactors, vertical shaft impactors, material handling, roll rock crushers and stationary rockbreaker systems, vibrating feeders and high frequency vibrating screens, conveyors, inclined, vertical and horizontal screens and sand classifying and washing equipment. The principal purchasers of products produced by this group are distributors, open mine operators, quarry operators, port and inland terminal operators, highway and heavy equipment contractors and foreign and domestic governmental agencies. Energy Group - This segment consisted of five business units through May 2015, four from June 2015 through July 2016, and five thereafter, that design, engineer, manufacture and market a complete line of drilling rigs for the oil and gas, geothermal and water well industries, high pressure diesel pump trailers for fracking and cleaning oil and gas wells, a variety of industrial heaters to fit a broad range of applications including heating equipment for refineries, oil sands and energy related processing, heat transfer processing equipment, thermal fluid storage tanks, waste heat recovery equipment, whole-tree pulpwood, biomass chippers, horizontal grinders and beginning in August 2016, gas, oil and combination gas/oil burners and combustion control systems designed for commercial, industrial and process applications primarily sold to boiler manufacturers or related manufacturing representatives. The principal purchasers of products produced by this group are oil, gas and water well drilling industry contractors, processors of oil, gas and biomass for energy production and contractors in the construction and demolition recycling markets. Effective May 31, 2015, the Company’s Astec Underground, Inc. business unit in Loudon, Tennessee ceased operations and responsibility for its product lines was transferred to the Company’s GEFCO, Inc. subsidiary in Enid, Oklahoma. The Loudon facility was sold in October 2015. Effective August 1, 2016, the Company acquired substantially all of the assets and certain liabilities of Power Flame Incorporated based in Parsons, Kansas. See Note 16 for further information concerning this acquisition. Corporate - This category consists of business units that do not meet the requirements for separate disclosure as an operating segment or inclusion in one of the other reporting segments and includes the Company's parent company, Astec Industries, Inc., and Astec Insurance Company, a Company-owned captive insurance company. The Company evaluates performance and allocates resources to its operating segments based on profit or loss from operations before U.S. federal income taxes and corporate overhead and thus these costs are included in the Corporate category. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are valued at prices comparable to those for unrelated parties. Segment Information:
A reconciliation of total segment profits to the Company’s consolidated totals is as follows:
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Contingent Matters |
9 Months Ended |
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Sep. 30, 2016 | |
Contingent Matters [Abstract] | |
Contingent Matters | Note 12. Contingent Matters Certain customers have financed purchases of Company products through arrangements in which the Company is contingently liable for customer debt of $1,945 as of September 30, 2016. The maximum potential amount of future payments for which the Company would be liable was equal to $1,945 as of September 30, 2016. These arrangements also provide that the Company will receive the lender’s full security interest in the equipment financed if the Company is required to fulfill its contingent liability under these arrangements. The Company has recorded a liability of $153 related to these guarantees as of September 30, 2016. In addition, the Company is contingently liable under letters of credit issued by Wells Fargo totaling $15,196 as of September 30, 2016, including $11,874 of letters of credit that guarantee certain Astec Brazil bank debt. The outstanding letters of credit expire at various dates through March 2019. As of September 30, 2016, Osborn is contingently liable for a total of $1,911 in performance letters of credit, advance payments and retention guarantees. The maximum potential amount of future payments under these letters of credit and guarantees for which the Company could be liable is $17,107 as of September 30, 2016. The Company is currently a party to various claims and legal proceedings that have arisen in the ordinary course of business. If management believes that a loss arising from such claims and legal proceedings is probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated legal fees) or the minimum estimated liability when the loss is estimated using a range and no point within the range is more probable than another. As management becomes aware of additional information concerning such contingencies, any potential liability related to these matters is assessed and the estimates are revised, if necessary. If management believes that a loss arising from such claims and legal proceedings is either (i) probable but cannot be reasonably estimated or (ii) reasonably possible but not probable, the Company does not record the amount of the loss, but does make specific disclosure of such matter. Based upon currently available information and with the advice of counsel, management believes that the ultimate outcome of its current claims and legal proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. However, claims and legal proceedings are subject to inherent uncertainties and rulings unfavorable to the Company could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse effect on the Company’s financial position, cash flows or results of operations. During 2004, the Company received notice from the Environmental Protection Agency (“EPA”) that it may be responsible for a portion of the costs incurred in connection with an environmental cleanup in Illinois. The discharge of hazardous materials and associated cleanup relate to activities occurring prior to the Company’s acquisition of Barber-Greene in 1986. The Company believes that over 300 other parties have received similar notices. At this time, the Company cannot predict whether the EPA will seek to hold the Company liable for a portion of the cleanup costs or the amount of any such liability. The Company has not recorded a liability with respect to this matter because no estimate of the amount of any such liability can be made at this time. |
Shareholders' Equity |
9 Months Ended |
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Sep. 30, 2016 | |
Shareholders' Equity [Abstract] | |
Shareholders' Equity | Note 13. Shareholders’ Equity Under the Company’s long-term incentive plans, key members of management may be issued restricted stock units (“RSUs”) each year based upon the annual financial performance of the Company and its subsidiaries. The number of RSUs granted each year is determined based upon the performance of individual subsidiaries and consolidated annual financial performance. Generally, for RSUs granted through February 2016, each award will vest at the end of five years from the date of grant, or at the time a recipient retires after reaching age 65, if earlier. Future awards will vest at the end of three years from the date of grant or at the time a recipient retires after reaching age 65, if earlier. A total of 77 and 66 RSUs vested during the nine-month periods ended September 30, 2016 and 2015, respectively. The Company withheld 24 and 14 shares due to statutory payroll tax withholding requirements upon the vesting of the RSUs in the first nine months of 2016 and 2015, respectively, and used Company funds to remit the related required minimum withholding taxes to the various tax authorities. The vesting date fair value of the RSUs that vested during the first nine months of 2016 and 2015 was $3,289 and $2,785, respectively. Compensation expense of $769 and $38 was recorded in the three-month periods ended September 30, 2016 and 2015, respectively, to reflect the fair value of RSUs granted (or anticipated to be granted for 2016 performance) amortized over the portion of the vesting period occurring during the periods. Compensation expense of $1,697 and $778 was recorded in the nine-month periods ended September 30, 2016 and 2015, respectively, to reflect the fair value of RSUs granted (or anticipated to be granted for 2016 performance) amortized over the portion of the vesting period occurring during the periods. |
Other Income, Net of Expenses |
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Other Income, Net of Expenses | Note 14. Other Income, Net of Expenses Other income, net of expenses for the three and nine-month periods ended September 30, 2016 and 2015 is presented below:
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Derivative Financial Instruments |
9 Months Ended |
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Sep. 30, 2016 | |
Derivative Financial Instruments [Abstract] | |
Derivative Financial Instruments | Note 15. Derivative Financial Instruments The Company is exposed to certain risks related to its ongoing business operations. The primary risk managed by using derivative instruments is foreign currency risk. From time to time the Company’s foreign subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates. The fair value of the derivative financial instruments is recorded on the Company’s balance sheet and is adjusted to fair value at each measurement date. The changes in fair value are recognized in the consolidated statements of income in the current period. The Company does not engage in speculative transactions nor does it hold or issue financial instruments for trading purposes. The average U.S. dollar equivalent notional amount of outstanding foreign currency exchange contracts was $12,118 during the nine-month period ended September 30, 2016. The Company reported $592 of derivative liabilities in other current liabilities at September 30, 2016. At December 31, 2015, the Company reported $935 of derivative assets in other current assets, $330 of derivative assets in other long-term assets and $22 of derivative liabilities in other current liabilities. The Company recognized, as a component of cost of sales, a net loss of $383 and a net gain $419 on the changes in fair value of derivative financial instruments in the three-month periods ended September 30, 2016 and 2015, respectively. The Company recognized, as a component of cost of sales, a net loss of $897 and a net gain of $1,227 on the changes in fair value of derivative financial instruments in the nine-month periods ended September 30, 2016 and 2015, respectively. There were no derivatives that were designated as hedges at September 30, 2016. |
Business Acquisition |
9 Months Ended |
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Sep. 30, 2016 | |
Business Acquisition [Abstract] | |
Business Acquisition | Note 16. Business Acquisition In August 2016, the Company acquired substantially all of the assets and certain liabilities of Power Flame Incorporated (“PFI”) located in Parsons, Kansas. The Company paid a purchase price, after preliminary adjustments, of $39,614, which is subject to certain additional post-closing adjustments, from available cash balances in early August 2016. $5,000 of the purchase price will be held in escrow for up to two years pending the final resolution of any post-closing adjustments and any indemnification claims. The Company’s preliminary allocation of the purchase price resulted in the recognition of $13,076 of goodwill and $17,407 of other intangible assets consisting of technology (19 year life), trade name (15 year life) and customer relationships (18 year life). Approximately $159 of acquisition related costs have been expensed by the Company in the nine-month period ended September 30, 2016. The Company does not expect PFI’s revenues or profits to be material to the Company’s 2016 operating results. PFI, which began operations in 1948, manufactures and sells gas, oil and combination gas/oil burners and combustion control systems designed for commercial, industrial and process applications. |
Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Astec Industries, Inc. Annual Report on Form 10-K for the year ended December 31, 2015. The unaudited condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Dollar and share amounts shown are in thousands, except per share amounts, unless otherwise specified. Certain amounts previously reported for 2015 have been reclassified to conform with current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes existing revenue guidance under U.S. GAAP. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The implementation of this new standard will require companies to use more judgment and to make more estimates than under current guidance. The standard is effective for public companies for annual periods beginning after December 15, 2017. The Company plans to adopt the new standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory", which changes the measurement basis for inventory from the lower of cost or market to lower of cost and net realizable value and also eliminates the requirement for companies to consider replacement cost or net realizable value less an approximate normal profit margin when determining the recorded value of inventory. The standard is effective for public companies in fiscal years beginning after December 15, 2016, with early adoption permitted. The Company expects to adopt the standard effective October 1, 2016. The Company does not expect the adoption of this new standard will have a material impact on its financial position or results of operations. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10)”, which requires, among other things, equity investments with readily determinable fair values, except those accounted for under the equity method of accounting or those that result in consolidation of the investee, to be measured at fair value with changes in fair value recognized in net income. The standard is effective for public companies in fiscal years beginning after December 15, 2017, and the Company expects to adopt the standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which significantly changes the accounting for operating leases by lessees. The accounting applied by lessors is largely unchanged from that applied under previous guidance. The new guidance requires lessees to recognize lease assets and lease liabilities in the balance sheet, initially measured at the present value of the lease payments, for leases which were classified as operating leases under previous guidance. Lease cost included in the statement of income will be calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Lessees may make an accounting policy election to exclude leases with a term of 12 months or less from the requirement to record related assets and liabilities. The new standard is effective for public companies for fiscal years beginning after December 15, 2018. The Company plans to adopt the new standard effective January 1, 2019. The Company has not yet determined what impact the adoption of this new standard will have on the Company's financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606)”, which does not change the core principles of ASU No. 2014-09 discussed above, but rather clarifies the implementation guidance in order to eliminate the potential for diversity in practice arising from inconsistent application of the principal versus agent guidance. Under the new guidance, when an entity determines it is a principal in a transaction, the entity recognizes revenue in the gross amount of consideration; however in transactions where an entity determines it in an agent, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. The standard is effective for public companies for annual periods beginning after December 15, 2017. The Company plans to adopt the new standard effective January 1, 2018. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718)”, as part of its Simplification Initiative. The standard’s provisions impact several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. The standard is effective for public companies for annual periods beginning after December 15, 2016, with early adoption permitted. The Company adopted the new standard effective January 1, 2016 and has recorded a cumulative effect adjustment in retained earnings as of January 1, 2016 of $95, net of tax, related to the adoption of the new provisions allowing for restricted stock unit forfeitures to be accounted for at the time they occur as opposed to being estimated during the vesting period. Additionally, income tax benefits of $209, which would have been recorded in additional paid-in capital under prior guidance, have been recorded in the first quarter of 2016 consolidated income statements related to excess tax benefits resulting from the vesting of restricted stock units in 2016. As allowed under the provision’s guidelines, amounts for 2015 have not been restated in the accompanying financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The standard changes how credit losses are measured for most financial assets and certain other instruments that currently are not measured through net income. The standard will require an expected loss model for instruments measured at amortized cost as opposed to the current incurred loss approach. In valuing available for sale debt securities, allowances will be required to be recorded, rather than the current approach of reducing the carrying amount, for other than temporary impairments. A cumulative adjustment to retained earnings is to be recorded as of the beginning of the period of adoption to reflect the impact of applying the provisions of the standard. The standard is effective for public companies for periods beginning after December 15, 2019 and the Company expects to adopt the new standard as of January 1, 2020. The Company has not yet determined what impact, if any, the adoption of this new standard will have on the Company's financial position or results of operations. In August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) which clarifies how certain cash receipts and cash payments should be presented on the statement of cash flows. The statement also addresses how the predominance principle should be applied when cash payments have aspects of more than one class of cash flows. The standard is effective for public companies in fiscal years beginning after December 15, 2017, and the Company expects to adopt the standard effective January 1, 2018. The Company has not determined the impact, if any, the adoption of this new standard will have on the Company's statement of cash flows. |
Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of earnings per share | The following table sets forth the computation of net income attributable to controlling interest and the number of basic and diluted shares used in the computation of earnings per share:
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Inventories (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories consist of the following:
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Fair Value Measurements (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities, at fair value | As indicated in the tables below (which excludes the Company’s pension assets), the Company has determined that all of its financial assets and liabilities as of September 30, 2016 and December 31, 2015 are Level 1 and Level 2 in the fair value hierarchy as defined above:
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Product Warranty Reserves (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Reserves [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product warranty reserves | Changes in the Company’s product warranty liability for the three and nine-month periods ended September 30, 2016 and 2015 are as follows:
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Segment Information (Tables) |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information | The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Intersegment sales and transfers are valued at prices comparable to those for unrelated parties. Segment Information:
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Schedule of segment profits to the Company's consolidated totals | A reconciliation of total segment profits to the Company’s consolidated totals is as follows:
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Other Income, Net of Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income, Net of Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other income, net of expenses | Other income, net of expenses for the three and nine-month periods ended September 30, 2016 and 2015 is presented below:
|
Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect adjustment in retained earnings, net of tax | $ 55 | ||||
Income tax benefits | $ 4,845 | $ (209) | $ 2,162 | 25,694 | $ 18,070 |
Retained Earnings [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect adjustment in retained earnings, net of tax | $ (95) |
Earnings per Share (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Numerator [Abstract] | ||||
Net income attributable to controlling interest | $ 6,838 | $ 2,292 | $ 42,773 | $ 29,201 |
Denominator [Abstract] | ||||
Denominator for basic earnings per share (in shares) | 23,001 | 22,943 | 22,989 | 22,930 |
Effect of dilutive securities [Abstract] | ||||
Employee stock options and restricted stock units (in shares) | 79 | 114 | 85 | 124 |
Supplemental Executive Retirement Plan (in shares) | 65 | 64 | 64 | 64 |
Denominator for diluted earnings per share (in shares) | 23,145 | 23,121 | 23,138 | 23,118 |
Receivables (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Receivables [Abstract] | ||
Allowances for doubtful accounts | $ 1,573 | $ 1,837 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventories [Abstract] | ||
Raw materials and parts | $ 143,882 | $ 141,967 |
Work-in-process | 149,258 | 113,859 |
Finished goods | 82,656 | 104,879 |
Used equipment | 23,922 | 24,071 |
Total | $ 399,718 | $ 384,776 |
Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Property and Equipment [Abstract] | ||
Accumulated depreciation | $ 216,588 | $ 203,471 |
Product Warranty Reserves (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Product warranty reserves [Roll Forward] | ||||
Reserve balance, beginning of the period | $ 11,858 | $ 10,761 | $ 9,100 | $ 10,032 |
Warranty liabilities accrued | 4,835 | 3,261 | 13,135 | 11,723 |
Warranty liabilities settled | (5,442) | (3,828) | (11,011) | (11,499) |
Other | 256 | (130) | 283 | (192) |
Reserve balance, end of the period | $ 11,507 | $ 10,064 | $ 11,507 | $ 10,064 |
Minimum [Member] | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty reserve term | 3 months | |||
Maximum [Member] | ||||
Product Warranty Liability [Line Items] | ||||
Product warranty reserve term | 1 year |
Accrued Loss Reserves (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accrued Loss Reserves [Abstract] | ||
Total accrued loss reserves | $ 8,514 | $ 7,663 |
Accrued loss reserves included in other long-term liabilities | $ 5,301 | $ 4,825 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Taxes [Abstract] | ||||
Effective income tax rate | 41.50% | 52.50% | 37.60% | 38.80% |
Tax Years 2011 and 2012 [Member] | ||||
Income Tax Contingency [Line Items] | ||||
Decrease in liability for uncertain tax positions | $ (241) |
Segment Information, Reconciliation of Total Segment Profits to Consolidated Totals (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Reconciliation of total segment profits to the Company's consolidated totals [Abstract] | ||||
Net income | $ 6,835 | $ 1,958 | $ 42,654 | $ 28,532 |
Net loss attributable to non-controlling interest in subsidiaries | (3) | (334) | (119) | (669) |
Net income attributable to controlling interest | 6,838 | 2,292 | 42,773 | 29,201 |
Reportable Segments [Member] | ||||
Reconciliation of total segment profits to the Company's consolidated totals [Abstract] | ||||
Net income | 6,704 | 994 | 42,021 | 28,564 |
Intersegment Eliminations [Member] | ||||
Reconciliation of total segment profits to the Company's consolidated totals [Abstract] | ||||
Net income | $ 131 | $ 964 | $ 633 | $ (32) |
Shareholders' Equity (Details) - Restricted Stock Units (RSUs) [Member] - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Restricted stock units under the long-term Incentive Plans [Abstract] | ||||
Award vesting period for RSUs granted through February 2016 | 5 years | |||
Future award vesting period | 3 years | |||
Restricted stock units vested (in shares) | 77 | 66 | ||
Shares withheld upon vesting (in shares) | 24 | 14 | ||
Fair value of vested restricted stock units | $ 3,289 | $ 2,785 | ||
Compensation expense | $ 769 | $ 38 | $ 1,697 | $ 778 |
Other Income, Net of Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Other Income, Net of Expenses [Abstract] | ||||
Interest income | $ 178 | $ 128 | $ 621 | $ 392 |
Income from life insurance policies | 0 | 0 | 0 | 1,204 |
Loss on investments | (26) | (72) | (41) | (204) |
License fee income | 247 | 250 | 503 | 616 |
Other | 106 | 204 | 241 | 535 |
Total | $ 505 | $ 510 | $ 1,324 | $ 2,543 |
Derivative Financial Instruments (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 935 | |
Other Noncurrent Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 330 | |
Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 592 | $ 22 |
Foreign Exchange Contract [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Average notional amount | $ 12,118 |
Derivative Financial Instruments, Gain (Loss) recognized in income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Not Designated as Hedging Instrument [Member] | Foreign Exchange Contract [Member] | Cost of Sales [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) on derivative financial instruments recognized in income, net | $ (383) | $ 419 | $ (897) | $ 1,227 |
Business Acquisition (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | |
---|---|---|---|
Aug. 31, 2016 |
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 41,958 | $ 30,835 | |
Power Flame Incorporated [Member] | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 39,614 | ||
Amount held in escrow | 5,000 | ||
Goodwill | 13,076 | ||
Other intangible assets | $ 17,407 | ||
Acquisitions related costs | $ 159 | ||
Power Flame Incorporated [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Period of time for amount held in escrow | 2 years | ||
Power Flame Incorporated [Member] | Technology [Member] | |||
Business Acquisition [Line Items] | |||
Useful life of intangible assets | 19 years | ||
Power Flame Incorporated [Member] | Trade Name [Member] | |||
Business Acquisition [Line Items] | |||
Useful life of intangible assets | 15 years | ||
Power Flame Incorporated [Member] | Customer Relationships [Member] | |||
Business Acquisition [Line Items] | |||
Useful life of intangible assets | 18 years |
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