Astec Industries Inc (NASDAQ:ASTE) Q1 2019 Earnings Conference Call Transcript
Apr 23, 2019 • 10:00 am ET
Greetings. Welcome to Astec Industries' First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) Please note that this conference is being recorded.
I'll now turn the conference over to your host, Steve Anderson, Vice President and Director of Investor Relations. Mr. Anderson, you may begin.
All right. Thank you, Rob. Good morning and welcome to the Astec Industries' conference call for the first quarter that ended March 31st, 2019. As Rob said, I'm Steve Anderson and also on today's call is David Silvious, our Chief Financial Officer. Unfortunately, Rick Dorris, our Interim CEO, is unable to be on the call today as he is attending his father's funeral, so our thoughts and prayers are with Rick and the Dorris family in their time of loss.
I'm going to step in to provide the high-level overview of results this quarter and David will discuss the financial results in more detail afterwards. But before I do that, I will remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the Company, and these statements are intended to qualify for the Safe Harbor liability established by the Private Securities Litigation Reform Act.
Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's financial news release and others are contained in our annual report and our filings with the Securities and Exchange Commission.
While we have a unique set of circumstances for this call, I'd like to give you a broad overview of some of the drivers that shaked our financial results. Our performance for the quarter did not meet our expectations, however, we have continued to take steps to support our long-term goals of increasing operational efficiency, reducing cost, and improving profitability.
As you've seen our sales were flat year-over-year. And March is typically a strong month, but that was not the case this year, unusually harsh weather has been a factor in the United States. A lot of the equipment that we manufacture is used in the field and can operate -- excuse me in excessively muddy conditions.
As an example, the North Carolina Department of Transportation has given contractors time extensions beyond the contemplated standard specifications. And in January 2019 memorandum, they provided for a 180-day extension to the overall contract time and applied to many highway-related projects.
Rent fleet utilizations in the market where low as well. Some estimates indicate utilization rates to be as low as 56%. Even though we do not rent directly, many of the dealers we sell to, do rent. Their rentals often turn into sales and sales into restocking orders. Additionally, 2018 was a strong year, which provides tough comps.
Many dealers have larger inventories than in the past years and with interest rates climbing their desire or ability to increase capital expenditures can be impacted. In our gross margin, under-absorption