Astec Industries(US:ASTE)2025-04-29 20:26PART I - FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited Q1 2025 financial statements reflect increased assets, significant net income growth, and positive operating cash flow Consolidated Balance Sheets Total assets increased to $1,056.0 million as of March 31, 2025, primarily due to higher inventories and receivables Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $737.2 | $722.8 | | Inventories | $434.9 | $422.7 | | Total Assets | $1,056.0 | $1,043.6 | | Total Current Liabilities | $277.0 | $271.7 | | Long-term debt | $96.0 | $105.0 | | Total Liabilities | $402.9 | $406.0 | | Total Equity | $653.1 | $637.6 | Consolidated Statements of Operations Q1 2025 saw a 6.5% increase in net sales to $329.4 million, with gross profit up 20.2% and diluted EPS rising to $0.62 Q1 2025 vs. Q1 2024 Performance (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $329.4 | $309.2 | +6.5% | | Gross profit | $92.4 | $76.9 | +20.2% | | Income from operations | $20.5 | $6.3 | +225.4% | | Net income attributable to controlling interest | $14.3 | $3.4 | +320.6% | | Diluted EPS | $0.62 | $0.15 | +313.3% | Consolidated Statements of Comprehensive Income (Loss) Comprehensive income attributable to controlling interest was $17.3 million for Q1 2025, a significant turnaround from a prior-year loss Comprehensive Income (Loss) (in millions) | Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $14.3 | $3.3 | | Foreign currency translation adjustments | $3.1 | $(4.4) | | Comprehensive income (loss) attributable to controlling interest | $17.3 | $(1.0) | Consolidated Statements of Cash Flows Net cash provided by operating activities was $20.5 million in Q1 2025, a substantial improvement from a prior-year use of cash Cash Flow Summary (in millions) | 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) | Notes to Unaudited Consolidated Financial Statements Notes detail segment operations, inventory increases, ERP costs, and the planned $245.0 million TerraSource acquisition - The company operates in two reportable segments: Infrastructure Solutions and Materials Solutions, primarily serving the road building, construction, and mining industries2627 - Total inventories increased to $434.9 million as of March 31, 2025, up from $422.7 million at the end of 2024, with work-in-process showing the largest increase39 - The company's strategic ERP implementation has resulted in net capitalized costs of $31.0 million as of March 31, 20256869 - On April 28, 2025, the company agreed to acquire TerraSource Holdings, LLC for $245.0 million in cash, with the transaction expected to close in Q3 202574 - To fund the TerraSource acquisition and refinance existing debt, the company has secured a commitment for a new $500.0 million senior secured credit facility75 Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 net sales increased 6.5% to $329.4 million, driven by pricing and equipment sales, while backlog decreased 28.1% Q1 2025 Financial Highlights vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net sales | $329.4M | $309.2M | +6.5% | | Gross profit | $92.4M | $76.9M | +20.2% | | Income from operations | $20.5M | $6.3M | +225.4% | | Diluted EPS | $0.62 | $0.15 | +313.3% | | Backlog (as of Mar 31) | $402.6M | $559.8M | -28.1% | - The ongoing multi-year ERP implementation is expected to cost between $180 to $200 million, with approximately $140 million incurred through Q1 202580 - The increase in gross profit was primarily driven by net favorable pricing, favorable volume/mix ($16.0 million), and manufacturing efficiencies ($3.7 million)90 Results of Operations Net sales for Q1 2025 increased 6.5% to $329.4 million, with gross profit margin expanding to 28.1% due to favorable pricing - Domestic sales increased 12.6% to $273.8 million, while international sales decreased 15.8% to $55.6 million8889 - The decrease in backlog is attributed to shorter production lead times allowing customers to order closer to delivery dates and variability in dealer ordering patterns due to inflation and interest rates96 Backlog by Segment (in millions) | Segment | March 31, 2025 | March 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Infrastructure Solutions | $276.4 | $372.7 | (25.8)% | | Materials Solutions | $126.2 | $187.1 | (32.5)% | | Total Backlog | $402.6 | $559.8 | (28.1)% | Segment Analysis Infrastructure Solutions sales rose 16.7% with strong EBITDA growth, while Materials Solutions sales declined 12.7% Net Sales by Segment (in millions) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Infrastructure Solutions | $236.0 | $202.2 | +16.7% | | Materials Solutions | $93.4 | $107.0 | (12.7)% | Segment Operating Adjusted EBITDA (in millions) | Segment | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Infrastructure Solutions | $42.9 | $25.6 | +67.6% | | Materials Solutions | $5.2 | $5.3 | (1.9)% | - Infrastructure Solutions' growth was driven by net favorable pricing and volume, leading to a $19.0 million increase in gross profit and $4.9 million in manufacturing efficiencies106 - Materials Solutions' performance was impacted by unfavorable volume and mix, resulting in a $3.0 million lower gross profit107108 Liquidity and Capital Resources Total liquidity was $238.9 million as of March 31, 2025, with 2025 capital expenditures projected at $35.0 million to $45.0 million - Total liquidity as of March 31, 2025 was $238.9 million, consisting of $90.1 million in cash and $148.8 million in borrowing availability110 - The company was in compliance with all financial covenants for its Credit Facilities as of March 31, 2025112 - Estimated capital expenditures for the full year 2025 are projected to be between $35.0 million and $45.0 million116 Cash Flows Operating cash flow significantly improved to $20.5 million in Q1 2025, driven by higher net income and better working capital management - The improvement in operating cash flow was driven by a $52.5 million favorable change in operating assets and liabilities and a $15.0 million increase in cash inflows from net income adjusted for non-cash items118 - Financing activities used $15.0 million in Q1 2025, a reversal from providing $48.4 million in Q1 2024, mainly due to net repayments on credit facilities in 2025 versus net borrowings in 2024120 Quantitative and Qualitative Disclosures About Market Risk Market risk exposures have not materially changed since the 2024 Annual Report on Form 10-K filing - Market risk exposures have not materially changed since the Annual Report on Form 10-K for the year ended December 31, 2024 was filed125 Controls and Procedures Disclosure controls were effective as of March 31, 2025, with ongoing ERP implementation expected to change internal controls - The CEO and CFO concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective126 - The company is undergoing a significant multi-year global ERP implementation, which is expected to result in changes to internal control over financial reporting127128 PART II - OTHER INFORMATION Legal Proceedings Management believes current legal proceedings will not materially affect the company's financial position or results - Management believes the ultimate outcome of current legal proceedings will not materially affect the company's business, financial position, cash flows, or results of operations131 Risk Factors No material changes to risk factors, except for new risks associated with the pending TerraSource acquisition and related indebtedness - A new risk factor has been added concerning the acquisition of TerraSource Holdings, LLC134 - Risks related to the TerraSource acquisition include failure to complete the deal, integration challenges, failure to realize anticipated benefits, and the impact of incurring significant new debt135136137 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None137 Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None138 Mine Safety Disclosures No mine safety disclosures were reported for the period - None140 Other Information 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 a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter141 Exhibits The report includes CEO and CFO certifications pursuant to Sarbanes-Oxley Act and XBRL documents - Exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL documents (101 series)142