Astec Industries Buys RexCon; Invests in Upgrades to Pellet Plants

Astec Industries (ASTE) said Monday it has acquired substantially all of the assets and liabilities of RexCon LLC, a full-line concrete batch plant manufacturer, for $26 million, funded through cash on hand.

Separately, the company said it has initiated significant design upgrades to its customers’ Georgia and Arkansas wood pellet plants to meet full production rates. The additional investment is expected to negatively impact the company’s Q3 earnings by $0.54 to $0.58 per share.

The company said that its Georgia plant, a five-ton per hour prototype pellet plant needs to run at full capacity utilizing wood as its fuel source following improvement in market conditions. It had previously been run with natural gas as the fuel source and was not run at full capacity due to headwinds in the market.

Astec also cited “significant design issues” at its Highland Pellets plant in Arkansas, which were identified as production has increased. The construction-related cost issue is no longer impacting the company’s performance and is unrelated to the recently identified design issues.

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