Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was $27.1 million, an increase of $9.7 million or 55.7% from Q3 2024 [4] - Adjusted EBITDA margins increased to 7.7%, a gain of 170 basis points [4] - Adjusted earnings per share reached $0.47, reflecting a year-over-year increase of 30.6% [4][16] - Net sales increased by 20.1% in Q3 2025, driven by strong demand for asphalt and concrete plants and the inclusion of PeraSource [15][16] Business Line Data and Key Metrics Changes - Infrastructure solutions segment saw a 17.1% increase in net sales compared to Q3 2024, with strong demand for asphalt and concrete plants [16][17] - Material solutions segment, now including PeraSource, reported a net sales increase of $30.5 million or 24.1% [17] - Part sales for the infrastructure solutions segment increased by 14.8% quarter-over-quarter [5] Market Data and Key Metrics Changes - Backlog at quarter end was $449.5 million, a sequential increase of $68.7 million, with $64.1 million attributed to PeraSource [5] - Approximately $230 billion, or 66%, of Infrastructure Investment and Jobs Act funds have been committed as of August 30, 2025 [9] - Federal transportation leaders remain optimistic about passing a new transportation bill next year, which is promising for the company [10] Company Strategy and Development Direction - The company is focused on inorganic growth, as demonstrated by the acquisition of PeraSource [8] - Ongoing infrastructure upgrades are expected to fuel stable, long-term demand for capital equipment, aftermarket parts, and digital solutions [10][22] - The company is actively managing tariff impacts through procurement strategies and pricing measures [11] Management's Comments on Operating Environment and Future Outlook - Management raised the lower end of full-year guidance from $123 million to $132 million, maintaining the upper range at $142 million [7] - Improved customer sentiment is noted due to recent interest rate movements [6] - The company anticipates growing demand for material solutions products in upcoming quarters [14] Other Important Information - The company maintains a strong balance sheet with $67.3 million in cash and cash equivalents and $244.8 million in available credit, totaling $312.1 million in liquidity [18] - Adjusted ROIC for the quarter was reported at 12.3% [6] Q&A Session Summary Question: What led to the raising of the lower end of guidance? - Management noted that gaps in capacity to fill were filled nicely, allowing for confidence in Q4 sales [23] Question: Was there a change in order rates compared to previous years? - Management observed a different booking process from customers, with a reduction in uncertainty around tariffs contributing to decision-making [24] Question: Were PeraSource margins accretive in Q3? - Management confirmed that PeraSource margins were accretive and expressed optimism about future synergy realization [25][26] Question: What is the current percentage of parts revenue per segment? - The parts sales mix increased by 670 basis points, with overall company parts revenue now around 32% [28] Question: How is the company managing tariff uncertainties? - Management stated that proactive pricing and alternative sourcing strategies have positioned the company well to mitigate tariff impacts [29] Question: Can you provide insights on parts growth within the infrastructure segment? - Management highlighted that efforts to drive parts business have started to pay off, contributing significantly to growth [30] Question: What is the status of dealer inventory for the material solutions segment? - Management indicated that dealer inventory levels are healthy, with some dealer stocking observed [32] Question: How are fill rates for PeraSource expected to improve? - Management expects PeraSource fill rates to improve significantly within the next 12 months, aligning closer to core Astec levels [35] Question: Have there been any orders related to rare earth mining? - Management confirmed receiving orders related to rare earth mining, indicating real demand and ongoing investments [37]

Financial Performance - Net sales for Q3 2025 were $350.1 million[8], a 20.1% increase compared to $291.4 million in Q3 2024[44] - Adjusted EBITDA for Q3 2025 was $27.1 million[8], a 55.7% increase compared to $17.4 million in Q3 2024[44] - Adjusted EBITDA margin increased by 170 basis points to 7.7% in Q3 2025[8] - Adjusted EPS for Q3 2025 was $0.47[8], compared to $0.36 in Q3 2024[44] - The company is raising its 2025 fiscal year adjusted EBITDA outlook to a range of $132 million to $142 million[12] Segment Performance - Infrastructure Solutions net sales increased by 17.1% to $193.3 million in Q3 2025[47] - Materials Solutions net sales increased by 24.1% to $156.9 million in Q3 2025[50] Backlog and Orders - The backlog level is $449.5 million[8] - Consolidated implied orders for Q3 2025 were $314 million[35], representing a 102% book-to-bill ratio[35] Liquidity and Capital Resources - Total available liquidity as of September 30, 2025, was $312.1 million, including $67.3 million in cash and cash equivalents and $244.8 million in available credit[53]

Financial Performance - Net sales for Q3 2025 reached $350.1 million, a 20.1% increase compared to $291.4 million in Q3 2024[3] - Adjusted EBITDA grew by 55.7% to $27.1 million, up from $17.4 million in the same quarter last year[4] - The company reported a net loss of $4.2 million, an improvement from a net loss of $6.2 million in Q3 2024[4] - Diluted EPS improved to $(0.18) from $(0.27) year-over-year, reflecting a 33.3% reduction in losses[4] - Adjusted income from operations for Q3 2025 was $20.6 million, compared to $11.0 million in Q3 2024, reflecting an increase of 87.3%[45] - Adjusted net income attributable to controlling interest for Q3 2025 was $10.8 million, compared to $8.1 million in Q3 2024, marking a 33.3% increase[48] - Adjusted EPS for Q3 2025 was $0.47, up from $0.36 in Q3 2024, representing a 30.6% increase[48] Revenue Segments - The acquisition of TerraSource Holdings contributed to a 24.1% increase in Material Solutions net sales, totaling $156.9 million[15] - Infrastructure Solutions net sales increased by 17.1% to $193.2 million, driven by strong demand for asphalt and concrete plants[15] - Materials Solutions segment revenue increased by $30.5 million or 24.1%, reaching $156.9 million compared to $126.4 million in 2024[28] - Infrastructure Solutions segment revenue rose to $193.2 million, up $28.2 million or 17.1% from $165.0 million in the prior year[28] Cash Flow and Liquidity - Total liquidity stood at $312.1 million, including $67.3 million in cash and cash equivalents[15] - Operating cash flow for the quarter was negative $8.1 million, and free cash flow was negative $12.3 million[15] - Free cash flow for Q3 2025 was negative at $(12.3) million, compared to positive $19.9 million in Q3 2024[54] Guidance and Future Outlook - The company updated its full-year adjusted EBITDA guidance, raising the lower end from $123 million to $132 million, while maintaining the upper end at $142 million[4] Assets and Liabilities - The total assets of the company as of September 30, 2025, were $1,349.0 million, an increase from $1,043.6 million at the end of 2024[34] - Long-term debt increased significantly to $323.6 million from $105.0 million at the end of 2024[34] - Cash, cash equivalents, and restricted cash decreased to $69.3 million from $90.8 million at the end of 2024[37] Operational Efficiency - Segment Operating Adjusted EBITDA for Infrastructure Solutions improved to $23.9 million, a $8.3 million increase or 53.2% from $15.6 million[28] - The Infrastructure Solutions segment's Operating Adjusted EBITDA margin improved to 15.6%, a 400 basis points increase from 11.6% in 2024[32] Capital Expenditures - Capital expenditures for the quarter amounted to $4.2 million, with a dividend payment of $0.13 per share[15] - The company incurred $5.2 million in transformation program costs in Q3 2025, down from $8.4 million in Q3 2024[51] - The company incurred $248.5 million in cash outflows for acquisitions during the nine months ended September 30, 2025[38] EBITDA Analysis - EBITDA for Q3 2025 was $13.8 million, significantly up from $0.6 million in Q3 2024[51] - Adjusted EBITDA for Q3 2025 was $27.1 million, compared to $17.4 million in Q3 2024, an increase of 55.5%[51]

Core Insights - Astec Industries, Inc. reported strong financial results for Q3 2025, with net sales increasing by 20.1% to $350.1 million compared to $291.4 million in Q3 2024, driven by operational efficiencies and the acquisition of TerraSource Holdings, LLC [2][10][32] - The company updated its full-year adjusted EBITDA guidance, raising the lower end from $123 million to $132 million while maintaining the upper end at $142 million [2][10] - Adjusted EBITDA for Q3 2025 grew by 55.7% to $27.1 million, up from $17.4 million in the same quarter last year [2][10][32] Financial Performance - Net sales for the Infrastructure Solutions segment reached $193.2 million, a 17.1% increase, while the Materials Solutions segment saw net sales of $156.9 million, a 24.1% increase [10][18] - The company reported a net loss of $4.2 million for Q3 2025, an improvement from a net loss of $6.2 million in Q3 2024 [2][10][32] - The operating margin improved to 0.3% from a loss of 2.5% in the prior year, reflecting operational advancements [2][10][32] Segment Analysis - Infrastructure Solutions segment's adjusted EBITDA increased by 53.2% to $23.9 million, with an adjusted EBITDA margin of 12.4%, up 290 basis points [10][20] - Materials Solutions segment's adjusted EBITDA rose by 6.2% to $15.4 million, with an adjusted EBITDA margin of 9.8%, down 170 basis points due to prior year litigation reserve releases [10][20] - The total backlog decreased by 5.5% to $449.5 million, with Infrastructure Solutions backlog down 26.1% while Materials Solutions backlog increased by 52.4% [10][18] Liquidity and Cash Flow - Total liquidity stood at $312.1 million, comprising $67.3 million in cash and cash equivalents and $244.8 million available for additional borrowings [10][24] - Operating cash flow for the quarter was negative $8.1 million, and free cash flow was negative $12.3 million [10][33] - Capital expenditures for the quarter amounted to $4.2 million, and the company paid a dividend of $0.13 per share [10][24]

Core Points - Astec Industries, Inc. will hold a conference call to discuss its third quarter 2025 financial results on November 5, 2025 [1] - The call will be hosted by key executives including the President and CEO, CFO, and Senior VP of Administration and Investor Relations [2] - A live webcast of the call will be available, and an archived version will be accessible for ninety days [2][3] Company Overview - Astec is a manufacturer specializing in equipment and aftermarket parts for asphalt road building, aggregate processing, concrete production, and related markets [4] - The company's operations are divided into two main segments: Infrastructure Solutions and Materials Solutions [4] - Infrastructure Solutions includes road building, asphalt and concrete plants, and thermal and storage solutions, while Materials Solutions covers aggregate processing, civil construction, energy, mining, hydro-electric, recycling, and bulk material handling [4]

Core Points - Astec Industries, Inc. will hold a conference call to discuss its third quarter 2025 financial results on November 5, 2025 [1] - The call will be hosted by key executives including the President and CEO, CFO, and Senior VP of Administration and Investor Relations [2] - A live webcast of the call will be available, and an archived version will be accessible for ninety days [2][3] Company Overview - Astec is a manufacturer specializing in equipment and aftermarket parts for asphalt road building, aggregate processing, concrete production, and related markets [4] - The company's operations are divided into two main segments: Infrastructure Solutions and Materials Solutions [4] - Infrastructure Solutions includes road building, asphalt and concrete plants, and thermal and storage solutions, while Materials Solutions covers aggregate processing, civil construction, energy, mining, hydro-electric, recycling, and bulk material handling [4]

Core Insights - Crude Value Insights provides an investment service and community focused on the oil and natural gas sector, emphasizing cash flow and the companies that generate it [1] - The service includes access to a 50+ stock model account, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Offerings - Subscribers can take advantage of a two-week free trial to explore the services related to oil and gas investments [2]

Group 1 - Crude Value Insights provides an investing service and community focused on oil and natural gas, emphasizing cash flow and companies that generate it [1] - The service offers a model account with over 50 stocks, in-depth cash flow analyses of exploration and production (E&P) firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas sector [2]

Group 1 - Astec Industries, Inc. will participate in the Sidoti Small Cap Conference on September 17, 2025, with key executives attending virtual 1x1 meetings [1] - The conference is organized by Sidoti Events, LLC, which focuses on small and microcap companies, leveraging Sidoti & Company’s 25 years of experience in independent securities research [3] - Astec operates in two primary business segments: Infrastructure Solutions, which includes road building and asphalt plants, and Materials Solutions, which focuses on aggregate processing equipment [4] Group 2 - Sidoti Events hosts eight investor conferences annually, providing corporate access and facilitating interactions between small and microcap issuers and investors [3] - The company’s coverage universe includes approximately 160 equities, with 50% participating in the Company Sponsored Research program [3] - Astec Industries specializes in manufacturing equipment for asphalt road building, aggregate processing, and concrete production [4]

PART I - FINANCIAL INFORMATION This section presents Astec Industries, Inc.'s unaudited consolidated financial information, including statements, notes, and management's analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Astec Industries, Inc.'s unaudited consolidated financial statements for Q2 2025, including balance sheets, operations, cash flows, equity, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | ASSETS (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Cash, cash equivalents and restricted cash | $88.7 | $90.8 | | Inventories | $448.8 | $422.7 | | Total current assets | $746.0 | $722.8 | | Total assets | $1,065.4 | $1,043.6 | | LIABILITIES AND EQUITY (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Short-term debt | $11.8 | $13.3 | | Accounts payable | $89.1 | $79.2 | | Total current liabilities | $274.8 | $271.7 | | Long-term debt | $85.0 | $105.0 | | Total liabilities | $390.5 | $406.0 | | Total equity | $674.9 | $637.6 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, including net sales, gross profit, and net income | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $330.3 | $345.5 | $659.7 | $654.7 | | Gross profit | $88.3 | $81.3 | $180.7 | $158.2 | | Income (loss) from operations | $21.4 | $(10.7) | $41.9 | $(4.4) | | Net income (loss) attributable to controlling interest | $16.7 | $(14.0) | $31.0 | $(10.6) | | Earnings (loss) per common share - Basic | $0.73 | $(0.61) | $1.36 | $(0.47) | | Earnings (loss) per common share - Diluted | $0.72 | $(0.61) | $1.35 | $(0.47) | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) This section details the company's comprehensive income or loss, including net income and other comprehensive income items | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $16.8 | $(14.0) | $31.1 | $(10.7) | | Foreign currency translation adjustments | $6.4 | $(1.4) | $9.5 | $(5.8) | | Comprehensive income (loss) attributable to controlling interest | $23.1 | $(15.2) | $40.4 | $(16.2) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities for the period | (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $33.4 | $(36.1) | | Net cash used in investing activities | $(7.7) | $(12.6) | | Net cash (used in) provided by financing activities | $(29.2) | $49.5 | | Decrease in cash, cash equivalents and restricted cash | $(2.1) | $— | | Cash, cash equivalents and restricted cash, end of period | $88.7 | $63.2 | [Consolidated Statements of Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Equity) This section details changes in the company's equity, including common stock, retained earnings, and accumulated other comprehensive loss | (in millions) | Balance, December 31, 2024 | Balance, June 30, 2025 | | :----------------------------------- | :------------------------- | :--------------------- | | Common Stock (shares) | 22,803,976 | 22,874,713 | | Common Stock (amount) | $4.6 | $4.6 | | Additional Paid-in Capital | $142.9 | $145.5 | | Accumulated Other Comprehensive Loss | $(51.1) | $(41.7) | | Retained Earnings | $541.7 | $566.7 | | Total Equity | $637.6 | $674.9 | - Total equity increased by **$37.3 million** from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income, partially offset by dividend payments[22](index=22&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited consolidated financial statements [Note 1. Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines the company's business, financial statement preparation, and key accounting policies - Astec Industries, Inc. designs, engineers, manufactures, markets, and services equipment and components for asphalt and concrete road building, mining, quarrying, construction, demolition, land clearing, recycling, and port/rail yard operations, operating in Infrastructure Solutions and Materials Solutions segments[25](index=25&type=chunk)[26](index=26&type=chunk) - Financial statements adhere to U.S. GAAP, with management making estimates for inventory, warranty, goodwill, and income taxes[28](index=28&type=chunk)[30](index=30&type=chunk) - The company adopted ASU 2023-07 and is evaluating ASU 2023-09 and ASU 2024-03, with no expected material impact on financial results[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 2. Inventories](index=11&type=section&id=Note%202.%20Inventories) This note details the composition and changes in the company's inventory balances | (in millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Raw materials and parts | $276.7 | $275.4 | | Work-in-process | $84.0 | $60.9 | | Finished goods | $81.1 | $83.5 | | Used equipment | $7.0 | $2.9 | | Total | $448.8 | $422.7 | - Total inventories increased by **$26.1 million** from December 31, 2024, to June 30, 2025, primarily due to increases in work-in-process and used equipment[38](index=38&type=chunk) [Note 3. Fair Value Measurements](index=11&type=section&id=Note%203.%20Fair%20Value%20Measurements) This note describes the fair value measurement of financial instruments, categorized by hierarchy levels - The company measures marketable debt and equity securities at fair value, categorizing all financial assets and liabilities as Level 1 or Level 2[39](index=39&type=chunk)[41](index=41&type=chunk) | Financial assets (in millions) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Total financial assets | $23.3 | $21.9 | | Total financial liabilities | $6.5 | $6.1 | [Note 4. Goodwill](index=13&type=section&id=Note%204.%20Goodwill) This note explains the goodwill impairment charge recognized during the period - A **$20.2 million** pre-tax non-cash goodwill impairment charge was recognized in Q2 2024 for the Materials Solutions reporting unit due to macroeconomic conditions and lower operating results[44](index=44&type=chunk)[46](index=46&type=chunk) [Note 5. Product Warranty Reserves](index=13&type=section&id=Note%205.%20Product%20Warranty%20Reserves) This note details the changes in the company's product warranty reserve balances | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Reserve balance, beginning of the period | $17.8 | $16.2 | $16.1 | $16.5 | | Warranty liabilities accrued | $6.1 | $4.5 | $12.3 | $8.7 | | Warranty liabilities settled | $(5.1) | $(5.2) | $(9.7) | $(9.7) | | Reserve balance, end of the period | $18.9 | $15.4 | $18.9 | $15.4 | - The product warranty reserve increased from **$16.1 million** to **$18.9 million** for the six months ended June 30, 2025, as accrued liabilities exceeded settled liabilities[49](index=49&type=chunk) [Note 6. Accrued Loss Reserves](index=14&type=section&id=Note%206.%20Accrued%20Loss%20Reserves) This note provides information on the company's accrued loss reserves for workers' compensation and general liability claims - Total accrued loss reserves for workers' compensation and general liability claims were **$6.4 million** as of June 30, 2025, a slight increase from **$6.3 million** at December 31, 2024[50](index=50&type=chunk) [Note 7. Income Taxes](index=14&type=section&id=Note%207.%20Income%20Taxes) This note explains the company's income tax expense, effective tax rate, and uncertain tax positions | Income Tax (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $5.8 | $0.3 | $11.2 | $1.7 | | Effective tax rate | 25.7% | (2.2)% | 26.5% | (18.9)% | - Income tax expense and the effective tax rate increased for both periods ended June 30, 2025, due to higher pretax book income and jurisdictional income/loss weighting changes[51](index=51&type=chunk)[52](index=52&type=chunk) - The liability for uncertain tax positions increased to **$17.3 million** as of June 30, 2025, due to incremental reserves for a research and development credit[53](index=53&type=chunk) - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, but had no financial statement impact as of June 30, 2025[55](index=55&type=chunk) [Note 8. Commitments and Contingencies](index=15&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note discloses the company's contingent liabilities, letters of credit, and property purchase commitments - Astec is contingently liable for **$1.3 million** in customer debt guarantees, with a recorded liability of **$0.2 million** as of June 30, 2025[56](index=56&type=chunk) - Outstanding letters of credit totaled **$5.2 million** under the **$250.0 million** revolving credit facility, with **$24.8 million** unused, plus **$5.3 million** in foreign performance guarantees[58](index=58&type=chunk) - The company has a commitment to purchase a property for **$2.8 million** in Q1 2026[59](index=59&type=chunk) - Management believes current claims and legal proceedings will not materially adversely affect the company's financial position, cash flows, or results of operations[61](index=61&type=chunk) [Note 9. Revenue Recognition](index=16&type=section&id=Note%209.%20Revenue%20Recognition) This note provides a breakdown of net sales by geographic area and industry segment | (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total net sales | $330.3 | $345.5 | $659.7 | $654.7 | | Domestic revenue | $262.0 | $272.1 | $535.8 | $515.3 | | International revenue | $68.3 | $73.4 | $123.9 | $139.4 | | Infrastructure Solutions (3 months) | $204.6 | $221.4 | | | | Materials Solutions (3 months) | $125.7 | $124.1 | | | | Infrastructure Solutions (6 months) | | | $440.6 | $423.6 | | Materials Solutions (6 months) | | | $219.1 | $231.1 | - For Q2 2025, total net sales decreased by **4.4%** YoY due to lower domestic equipment sales, while for the six months, sales increased by **0.8%** YoY due to favorable pricing and increased used equipment, service, and freight revenue[65](index=65&type=chunk)[66](index=66&type=chunk) [Note 10. Operations by Industry Segment and Geographic Area](index=17&type=section&id=Note%2010.%20Operations%20by%20Industry%20Segment%20and%20Geographic%20Area) This note details financial performance by the Infrastructure Solutions and Materials Solutions segments and geographic regions - Astec operates in Infrastructure Solutions and Materials Solutions segments, with the CEO using Segment Operating Adjusted EBITDA to evaluate performance and allocate resources[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) | Segment Operating Adjusted EBITDA (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Infrastructure Solutions | $32.2 | $27.2 | $75.1 | $52.8 | | Materials Solutions | $14.2 | $10.2 | $19.4 | $15.5 | | Total Reportable Segments | $46.4 | $37.4 | $94.5 | $68.3 | - Infrastructure Solutions segment revenues decreased by **7.6%** for the three months ended June 30, 2025, but increased by **4.0%** for the six months ended June 30, 2025, compared to the prior year periods[73](index=73&type=chunk)[74](index=74&type=chunk) - Materials Solutions segment revenues increased by **1.3%** for the three months ended June 30, 2025, but decreased by **5.2%** for the six months ended June 30, 2025, compared to the prior year periods[73](index=73&type=chunk)[74](index=74&type=chunk) | Net Sales by Geographic Region (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $262.0 | $272.1 | $535.8 | $515.3 | | Total foreign | $68.3 | $73.4 | $123.9 | $139.4 | | Total net sales | $330.3 | $345.5 | $659.7 | $654.7 | [Note 11. Strategic Transformation, Restructuring and Other Asset Gains, net](index=21&type=section&id=Note%2011.%20Strategic%20Transformation%2C%20Restructuring%20and%20Other%20Asset%20Gains%2C%20net) This note outlines costs related to the ERP system implementation and restructuring charges - Astec's multi-year ERP system implementation has incurred approximately **$143 million** through Q2 2025, out of an estimated **$180 million to $200 million** total cost, expected to conclude in 2028 or 2029[97](index=97&type=chunk) | Strategic Transformation Costs (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total costs related to strategic transformation initiatives | $3.4 | $11.2 | $10.4 | $17.7 | | Amortization of capitalized implementation costs | $1.0 | $1.0 | $1.9 | $1.7 | | Restructuring and Other Asset Gains, net (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total restructuring related charges | $— | $0.9 | $— | $1.0 | | Total gain on sale of property and equipment, net | $(0.1) | $(0.2) | $(0.1) | $(1.1) | | Restructuring and other asset gains, net | $(0.1) | $0.7 | $(0.1) | $(0.1) | - Workforce reductions in Q2 2024 resulted in **$0.9 million** in charges, with no restructuring charges incurred in Q2 or the six months ended June 30, 2025[80](index=80&type=chunk)[79](index=79&type=chunk) [Note 12. Earnings (Loss) Per Common Share](index=23&type=section&id=Note%2012.%20Earnings%20%28Loss%29%20Per%20Common%20Share) This note provides the basic and diluted earnings per common share calculations | Shares Outstanding | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Denominator for basic EPS | 22,877,075 | 22,796,729 | 22,855,304 | 22,779,414 | | Denominator for diluted EPS | 23,074,780 | 22,796,729 | 23,025,924 | 22,779,414 | - Diluted EPS for Q2 2025 was **$0.72**, a significant increase from **$(0.61)** in Q2 2024, and **$1.35** for the six months, up from **$(0.47)** in the prior year[11](index=11&type=chunk) [Note 13. Subsequent Events](index=23&type=section&id=Note%2013.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, including an acquisition and new credit agreement - On July 1, 2025, Astec acquired TerraSource Holdings, LLC for **$245.0 million** cash, expanding into adjacent material processing equipment markets[84](index=84&type=chunk) - A new **$600.0 million** credit agreement was entered into, with proceeds used to finance the TerraSource acquisition and repay existing debt[85](index=85&type=chunk) - The new credit agreement includes financial covenants and restrictions, with the acquisition and financing expected to materially impact future financial results[90](index=90&type=chunk)[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Astec's financial condition, operations, and cash flows for Q2 2025, covering performance, business conditions, and liquidity [Executive Summary](index=25&type=section&id=Executive%20Summary) This section provides a high-level overview of the company's strategic initiatives and key financial performance highlights - Astec's multi-year ERP implementation has incurred approximately **$143 million** through Q2 2025, out of an estimated **$180-$200 million** total cost, expected to conclude in 2028 or 2029[97](index=97&type=chunk) | Financial Highlights (Three Months Ended June 30) | 2025 | 2024 | Change (%) | | :------------------------------------------------ | :----------- | :----------- | :--------- | | Net sales | $330.3 million | $345.5 million | -4.4% | | Gross profit | $88.3 million | $81.3 million | +8.6% | | Income from operations | $21.4 million | $(10.7) million | +300.0% | | Net income attributable to Astec | $16.7 million | $(14.0) million | +219.3% | | Diluted earnings per share | $0.72 | $(0.61) | +218.0% | | Backlog | $380.9 million | $531.1 million | -28.3% | [Business Conditions and Trends](index=25&type=section&id=Business%20Conditions%20and%20Trends) This section discusses external factors influencing the company's operations, including commodity prices and geopolitical risks - Steel prices remained elevated in Q2 2025 due to tariffs, stagnant demand, domestic reshoring, and global construction focus, while oil prices are expected to fluctuate moderately[100](index=100&type=chunk)[101](index=101&type=chunk) - Geopolitical conflicts are monitored for potential downturns, oil price increases, or distribution disruptions, with the company attempting to offset production costs through price adjustments[102](index=102&type=chunk)[103](index=103&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including sales, profit, expenses, and segment results | Metric (in millions) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :------------------- | :----------- | :----------- | :--------- | :--------- | | Net Sales | $330.3 | $345.5 | $(15.2) | -4.4% | | Gross Profit | $88.3 | $81.3 | $7.0 | +8.6% | | SG&A Expenses | $67.0 | $71.1 | $(4.1) | -5.8% | | Interest Expense | $2.1 | $3.1 | $(1.0) | -32.3% | | Income Tax Expense | $5.8 | $0.3 | $5.5 | +1833.3% | - Net sales decreased in Q2 2025 primarily due to unfavorable volume and mix, partially offset by favorable pricing. Gross profit increased due to favorable pricing, manufacturing input cost changes, and inventory adjustments, despite manufacturing inefficiencies and higher warranty costs[104](index=104&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - SG&A expenses decreased due to lower strategic transformation costs, professional services, technology support, bad debt, and depreciation, but were partially offset by higher personnel-related costs and TerraSource acquisition transaction costs[113](index=113&type=chunk) - Interest expense decreased due to lower average outstanding borrowings and interest rates. Income tax expense increased significantly due to higher pretax book income and changes in jurisdictional income/loss weighting[116](index=116&type=chunk)[117](index=117&type=chunk) | Backlog (in millions) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :------------ | :--------- | :--------- | | Total Backlog | $380.8 | $531.1 | $(150.3) | -28.3% | | Domestic Backlog | $308.1 | $417.2 | $(109.1) | -26.2% | | International Backlog | $72.7 | $113.9 | $(41.2) | -36.2% | - The decrease in backlog is attributed to shorter production lead times, improved parts fill rates allowing customers to order closer to delivery, and variability in customer ordering patterns due to macroeconomic factors[121](index=121&type=chunk) | Segment Net Sales (Q2, in millions) | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------- | :------ | :------ | :--------- | :--------- | | Infrastructure Solutions | $204.6 | $221.4 | $(16.8) | -7.6% | | Materials Solutions | $125.7 | $124.1 | $1.6 | +1.3% | | Segment Net Sales (6 Months, in millions) | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------------- | :------ | :------ | :--------- | :--------- | | Infrastructure Solutions | $440.6 | $423.6 | $17.0 | +4.0% |\ | Materials Solutions | $219.1 | $231.1 | $(12.0) | -5.2% | | Segment Operating Adjusted EBITDA (Q2, in millions) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------------------------- | :------ | :------ | :--------- | :--------- | | Infrastructure Solutions | $32.2 | $27.2 | $5.0 | +18.4% | | Materials Solutions | $14.2 | $10.2 | $4.0 | +39.2% | | Segment Operating Adjusted EBITDA (6 Months, in millions) | 2025 | 2024 | Change ($) | Change (%) | | :-------------------------------------------------------- | :------ | :------ | :--------- | :--------- | | Infrastructure Solutions | $75.1 | $52.8 | $22.3 | +42.2% | | Materials Solutions | $19.4 | $15.5 | $3.9 | +25.2% | - Corporate and Other operations experienced increased net expenses for both the three and six months ended June 30, 2025, primarily due to higher personnel-related costs and transaction costs related to the TerraSource acquisition[143](index=143&type=chunk)[144](index=144&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet financial obligations and fund operations, detailing cash, credit facilities, and future requirements - As of June 30, 2025, total liquidity was **$247.6 million**, comprising **$87.8 million** in cash and **$159.8 million** available under the 2022 Credit Facility, with **$29.2 million** cash held by foreign subsidiaries[145](index=145&type=chunk)[146](index=146&type=chunk) - On July 1, 2025, Astec entered a new **$600.0 million** 2025 Credit Agreement, borrowing **$350.0 million** for the TerraSource acquisition and debt repayment, leaving **$244.8 million** available[150](index=150&type=chunk) - Future cash requirements include working capital, debt service, capital expenditures, software implementation, and operating lease payments, with variable uses for transformation, acquisitions, dividends, and share repurchases[147](index=147&type=chunk) - Capital expenditures are estimated to be between **$25.0 million** and **$35.0 million** for the year ending December 31, 2025[153](index=153&type=chunk) | Cash Flows (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $33.4 | $(36.1) | | Net cash used in investing activities | $(7.7) | $(12.6) | | Net cash (used in) provided by financing activities | $(29.2) | $49.5 | - Operating activities provided **$33.4 million** in cash for the six months ended June 30, 2025, a significant improvement from a **$36.1 million** use in the prior year, driven by lower net cash usages for operating assets and liabilities and increased cash inflows from net income[156](index=156&type=chunk) - Investing activities used less cash (**$7.7 million** vs. **$12.6 million**) due to decreased capital expenditures, while financing activities used **$29.2 million** (vs. providing **$49.5 million**) due to net debt repayments in 2025 versus net borrowings in 2024[157](index=157&type=chunk)[158](index=158&type=chunk) - Total current assets increased by **$23.2 million** to **$746.0 million**, mainly due to higher inventories and prepaid income taxes, partially offset by decreases in receivables and cash. Total current liabilities increased by **$3.1 million** to **$274.8 million**, driven by higher accounts payable and accrued product warranty, offset by lower customer deposits and short-term debt[160](index=160&type=chunk)[161](index=161&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates market risk disclosures by reference from the 2024 10-K, noting no material changes to these exposures - The Company's market risk exposures have not materially changed since the Annual Report on Form 10-K for the year ended December 31, 2024, was filed[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of Astec's disclosure controls and internal control over financial reporting, anticipating future changes from ERP implementation - As of June 30, 2025, the Company's CEO and CFO concluded that disclosure controls and procedures were effective[165](index=165&type=chunk) - No material changes occurred in internal control over financial reporting during the three months ended June 30, 2025. However, a significant multi-year ERP implementation is underway, which is expected to result in changes to processes and internal controls, aiming to strengthen them through automation and standardization[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) PART II - OTHER INFORMATION This section provides additional information not covered in financial statements, including legal, risk factors, and other disclosures [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms Astec's involvement in ordinary legal actions, with management believing no pending litigation will materially affect financial results - Management believes that current legal proceedings will not have a material adverse effect on the Company's financial position, cash flows, or results of operations[170](index=170&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on challenges and impacts from the TerraSource acquisition and increased indebtedness - The success of the TerraSource acquisition, completed July 1, 2025, depends on successful integration, which is complex, costly, and time-consuming. Challenges include retaining customers/personnel, integrating systems, achieving synergies, and managing expanded operations, any of which could adversely affect financial results[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - The Company's new **$350.0 million** outstanding principal indebtedness under the 2025 Credit Facilities could adversely affect financial health by requiring a substantial portion of cash flow for debt service, limiting additional financing, increasing vulnerability to economic conditions, and potentially placing the company at a competitive disadvantage[179](index=179&type=chunk)[180](index=180&type=chunk) - Failure to comply with financial covenants in debt instruments could lead to an event of default or acceleration of debt[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds occurred during the period[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item reports no defaults upon senior securities during the period - No defaults upon senior securities occurred during the period[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item reports no mine safety disclosures - No mine safety disclosures are reported[185](index=185&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This item states no officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[186](index=186&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the TerraSource acquisition agreement, new Credit Agreement, and certifications - Key exhibits include the Membership Interest Purchase Agreement for TerraSource Holdings, LLC (dated April 28, 2025), the Credit Agreement for the 2025 Credit Facilities (dated July 1, 2025), and certifications from the CEO and CFO[188](index=188&type=chunk)