Astec Industries(ASTE) - 2025 Q1 - Quarterly Results

Astec First Quarter 2025 Results and TerraSource Acquisition First Quarter 2025 Financial Highlights Astec reported strong Q1 2025 results, with net sales increasing 6.5% and net income surging 320.6% Q1 2025 Key Financial Metrics (GAAP vs. Adjusted) | Metric (in millions, except per share) | 1Q 2025 (GAAP) | 1Q 2024 (GAAP) | % Change | 1Q 2025 (Adjusted) | 1Q 2024 (Adjusted) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $329.4 | $309.2 | 6.5% | - | - | - | | Income from Operations | $20.5 | $6.3 | 225.4% | $28.3 | $12.0 | 135.8% | | Net Income | $14.3 | $3.4 | 320.6% | $20.3 | $7.8 | 160.3% | | Diluted EPS | $0.62 | $0.15 | 313.3% | $0.88 | $0.34 | 158.8% | | EBITDA | $27.5 | $13.4 | 105.2% | $35.2 | $18.9 | 86.2% | | Backlog | $402.6 | $559.8 | (28.1)% | - | - | - | - CEO Jaco van der Merwe attributed the strong quarter to operational execution, delivering increases in net sales, EBITDA, net income, and EPS[3] - The company reiterated its full-year adjusted EBITDA guidance range of $105 million to $125 million, excluding the pending TerraSource acquisition[3] Acquisition of TerraSource Holdings, LLC Astec will acquire TerraSource Holdings for $245 million in cash, expecting accretion, margin expansion, and $10 million in synergies - Astec will acquire TerraSource for $245.0 million in cash, financed through existing cash and new committed financing[9] - The transaction is expected to close in the early third quarter of 2025, subject to regulatory approvals[9] - Strategic benefits of the acquisition include: - Increases aftermarket revenue, with TerraSource's 2024 aftermarket sales comprising ~60% of total revenue and 80% of gross profit - Adds scale and expands global market presence - Expected to be accretive to gross profit margins, adjusted EBITDA margins, and EPS - Enables approximately $10 million in run-rate cost synergies, primarily from procurement savings[14] Segment Performance Infrastructure Solutions net sales grew 16.7% while Materials Solutions declined 12.7%, reflecting varied market demand Q1 2025 Segment Performance vs. Q1 2024 | Segment | Net Sales (Q1 2025, in millions) | % Change YoY | Segment Operating Adjusted EBITDA (Q1 2025, in millions) | % Change YoY | Segment Operating Adjusted EBITDA Margin (Q1 2025) | | :--- | :--- | :--- | :--- | :--- | :--- | | Infrastructure Solutions | $236.0M | 16.7% | $42.9M | 67.6% | 18.2% | | Materials Solutions | $93.4M | (12.7)% | $5.2M | (1.9)% | 5.6% | Infrastructure Solutions Infrastructure Solutions net sales increased 16.7% to $236 million, with Adjusted EBITDA surging 67.6% - Net sales increased 16.7% to $236.0 million due to strong demand for asphalt and concrete plants, despite some softness in mobile paving and forestry[13] - Segment Operating Adjusted EBITDA increased 67.6% to $42.9 million, and the margin improved by 550 basis points to 18.2%[13][25] Materials Solutions Materials Solutions net sales decreased 12.7% to $93.4 million due to domestic equipment sales declines, with stable EBITDA - Net sales decreased 12.7% to $93.4 million, mainly due to lower domestic equipment sales linked to financing constraints for contractors and dealers[13] - Segment Operating Adjusted EBITDA decreased by 1.9% to $5.2 million, while the margin improved by 60 basis points to 5.6%[13][25] Liquidity and Cash Flow Astec reported $238.9 million in liquidity, generating $20.5 million in operating cash flow and $16.6 million in free cash flow - Total liquidity stood at $238.9 million, comprising $90.1 million in cash and $148.8 million available under its revolving credit facility[13] Q1 2025 Cash Flow Summary (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Cash Flow | $20.5 | $(47.0) | | Capital Expenditures | $(3.9) | $(5.8) | | Free Cash Flow | $16.6 | $(52.8) | - The company paid a dividend of $0.13 per share during the quarter[13] Consolidated Financial Statements Astec's Q1 2025 consolidated statements show net sales of $329.4 million and net income of $14.3 million Condensed Consolidated Statements of Operations Q1 2025 net sales reached $329.4 million, with gross profit at $92.4 million and net income at $14.3 million Q1 2025 Statement of Operations (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $329.4 | $309.2 | | Gross profit | $92.4 | $76.9 | | Income from operations | $20.5 | $6.3 | | Net income attributable to controlling interest | $14.3 | $3.4 | | Diluted EPS | $0.62 | $0.15 | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $1,056 million, with total equity at $653.1 million and cash at $92.6 million Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $737.2 | $722.8 | | Total assets | $1,056.0 | $1,043.6 | | Total current liabilities | $277.0 | $271.7 | | Long-term debt | $96.0 | $105.0 | | Total equity | $653.1 | $637.6 | Condensed Consolidated Statements of Cash Flows Q1 2025 operating cash flow was $20.5 million, a significant improvement from a $47 million use in Q1 2024 Q1 Cash Flow Summary (in millions) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $20.5 | $(47.0) | | Net cash used in investing activities | $(4.2) | $(5.9) | | Net cash (used in) provided by financing activities | $(15.0) | $48.4 | | Increase (decrease) in cash | $1.8 | $(5.1) | | Cash, end of period | $92.6 | $58.1 | Non-GAAP Financial Measures and Reconciliations Astec presents non-GAAP measures, including Adjusted Income from Operations of $28.3 million and Adjusted EBITDA of $35.2 million Explanation of Non-GAAP Measures Non-GAAP measures exclude non-core operational costs like transformation program expenses, restructuring charges, and acquisition transaction costs - Non-GAAP measures exclude costs related to: - Transformation program (e.g., ERP implementation) - Restructuring and other related charges - Goodwill and asset impairments - Gains or losses on sale of property and equipment - Transaction costs for acquisitions[34] Reconciliation of Adjusted Income from Operations Adjusted income from operations for Q1 2025 was $28.3 million, primarily adjusted for transformation program and transaction costs GAAP to Non-GAAP Adjusted Income from Operations (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Income from operations (GAAP) | $20.5 | $6.3 | | Transformation program | $7.0 | $6.5 | | Transaction costs | $0.8 | - | | Other adjustments | - | $(0.8) | | Adjusted income from operations (Non-GAAP) | $28.3 | $12.0 | | Adjusted operating margin | 8.6% | 3.9% | Reconciliation of Adjusted EPS Adjusted EPS for Q1 2025 was $0.88, derived from adjusted net income of $20.3 million after specific exclusions GAAP to Non-GAAP Adjusted EPS | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.62 | $0.15 | | Transformation program adjustment | $0.31 | $0.29 | | Transaction costs adjustment | $0.03 | - | | Other adjustments | - | $(0.04) | | Income tax impact of adjustments | $(0.08) | $(0.06) | | Adjusted EPS (Non-GAAP) | $0.88 | $0.34 | Reconciliation of EBITDA and Adjusted EBITDA Adjusted EBITDA for Q1 2025 reached $35.2 million, reflecting a 10.7% margin after non-core operational adjustments EBITDA and Adjusted EBITDA Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to controlling interest | $14.3 | $3.4 | | EBITDA | $27.5 | $13.4 | | EBITDA margin | 8.3% | 4.3% | | Adjusted EBITDA | $35.2 | $18.9 | | Adjusted EBITDA margin | 10.7% | 6.1% | Reconciliation of Free Cash Flow Free cash flow for Q1 2025 was $16.6 million, a significant improvement from a negative $52.8 million in Q1 2024 Free Cash Flow Reconciliation (in millions) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $20.5 | $(47.0) | | Expenditures for property and equipment | $(3.9) | $(5.8) | | Free cash flow | $16.6 | $(52.8) |