Astec Industries, Inc.
ROBBINS GELLER RUDMAN & DOWD LLP FILES CLASS ACTION SUIT AGAINST ASTEC INDUSTRIES, INC.
San Diego – February 1, 2019 – Robbins Geller Rudman & Dowd LLP (http://www.rgrdlaw.com/cases/astec/) today announced that a class action has been commenced by an institutional investor on behalf of purchasers of Astec Industries, Inc. (NASDAQ:ASTE) stock during the period between July 26, 2016 and October 22, 2018 (the “Class Period”). This action was filed in the Eastern District of Tennessee and is captioned City of Taylor General Employees Retirement System v. Astec Industries, Inc., et al., No. 19-cv-00024.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Astec stock during the Class Period to seek appointment as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Darren Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. You can view a copy of the complaint as filed at http://www.rgrdlaw.com/cases/astec/.
The complaint charges Astec and certain of its officers and/or directors with violations of the Securities Exchange Act of 1934. Astec designs, engineers, manufactures, markets, and finances equipment and components, including aggregate crushers, pavers, asphalt plants, wood pellet plants, and related components. The Company comprises three segments: the Infrastructure Group; the Aggregate and Mining Group; and the Energy Group.
The Company’s Infrastructure Group has been involved in the wood pellet plant business since approximately 2013, when Astec began commercial production and marketing of wood pellet plants to potential customers that supply wood pellets to the utility and home-use industries. Prior to the start of the Class Period, the Company announced the sale of two wood pellet plants, one in partnership with Highland Pellets, LLC, located in Arkansas, and one to Hazlehurst Pellets, located in Georgia.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Astec’s business, operations and prospects, including that its wood pellet plants suffered from significant and costly problems that prevented them from running at their promised production capacity, posing a threat to the Company’s pellet plant business, its overall financial performance, and its financial outlook. As a result of this information being withheld from the market, the price of Astec stock was artificially inflated to a high of nearly $70 per share during the Class Period.
News regarding the problems with Astec’s pellet plant projects reached the market through several partial disclosures. On July 25, 2017, defendants revealed “lower than expected” margins for Astec’s wood pellet plant due to underestimated installation costs, but Astec refused to disclose the amount of the underestimated cost, causing the price of Astec stock to decline by approximately 8%. On July 24, 2018, defendants reported disappointing financial results for Astec’s second quarter of 2018 and announced that the Company would substantially limit its wood pellet business, that it was giving up on its plans to engineer and develop the Highland wood pellet plant in Arkansas, and that it was limiting its participation in the development of other new pellet plants. In response to these disclosures, the price of Astec stock fell significantly, dropping 20%, or $12.59 per share, to close at $48.21 per share on July 24, 2018.
Then, before the market opened on October 23, 2018, the Company reported third quarter 2018 results that fell well short of the low end of the Company’s guidance and the market’s expectations. The Company reported a 1.2% decrease in domestic sales and a 20.2% decrease in backlog, with domestic backlog contracting by 28.1%, which was being dragged down by the Company’s pellet business. For 2018, the Company cut its core revenue growth forecast to 1% to 3%, down substantially from 7% to 12%. The Company also reported earnings per share of $0.30 for the quarter, widely missing the consensus estimate of $0.59. Revenue came in light as well, with Astec reporting $256.6 million, below analysts’ expectations of $276.8 million. On this news, the price of Astec stock fell $11.76 per share, or nearly 25%, to close at $35.51 per share on October 23, 2018.
Plaintiff seeks to recover damages on behalf of all purchasers of Astec stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 10 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For five consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Please visit http://www.rgrdlaw.com for more information.