Astec weighs in on strong year, future wood pellet projects
Astec Inc. reported a solid year in 2016, having grown both revenue and net income quarter-over- quarter and year-over-year, on top of an end-of-year record backlog and a larger-than-anticipated number for pellet plant revenue.
Net sales for the fourth quarter of 2016 were $326.6 million, compared to $215.0 million for Q4 2015, 2015, a 52 percent increase. Earnings for the Q4 2016 were $12.4 million or $0.53 per diluted share, compared to $3.6 million or $0.16 per diluted share in Q4 2015, an increase in earnings per share of 231 percent.
In a Feb. 21 earnings call presenting Astec’s quarterly and annual results, CEO Benjamin Brock opened his comments by commending the company on a “very good year,” pointing to a record $1.15 billion in sales, strong EBITA of $112.7 million and a new record backlog at the end of December and January, a 13 percent increase over 2015, or from $315.9 million to $357.4 million.
On operations and thoughts moving forward, Brock said the higher-than-anticipated pellet plant revenue was because its 600,000-metric-ton Highland Pellets project in Pine Bluff, Arkansas, was ahead of anticipations. “We were pleased to be on schedule all year long, and have recognized $122.5 million of a total order of $152 million,” he said.
The Highlands project is currently undergoing commissioning, expecting to be producing pellets at full capacity by the end of the year. It is Astec’s second major wood pellet plant project, as the firm previously built a $60 million, 500,000 metric-ton plant in Hazelhurst, Georgia, for Fram Renewable Fuels. Brock said that Astec, which chose to finance the Hazelhurst plant as a new product, gave the facility a loan repayment extension to December 2018 rather than July 2017, the main reason for which was “a temporary lull for pellet demand, which is widely expected to recover late this year.”
On ongoing pellet plant quoting activity, Brock said there is potential for new projects this year. Though Astec had anticipated having a new, large order late last year early this year for delivery in 2017, he said the order has not yet been made. “We believe an order will be coming in 2017; however, we’re unsure of the timing…we believe next sizable order will be made in second half of this year.”
Brock added that Astec is working on other pellet plant projects in the $75 million to $100 million range, but that they aren’t expected to come to fruition until late this year at the earliest. “Wood pellet plant deals are long and complicated to get across the line, and while we’re optimistic a new project will happen in the timeframe mentioned, it could be longer than we anticipate,” he said.