Astec Industries(ASTE) - 2025 Q2 - Quarterly Results

Executive Summary & Business Update Astec reported strong Q2 2025 results, driven by operational efficiencies and the TerraSource acquisition, leading to updated full-year guidance Second Quarter 2025 Overview Astec reported strong Q2 2025 results with increased net income, EBITDA, and EPS, bolstered by the TerraSource acquisition and updated full-year guidance - Astec reported a strong quarter with increased net income, EBITDA, and EPS, driven by operational and procurement efficiencies[4] - Completed the acquisition of TerraSource on July 1, 2025, an adjacent manufacturer with annual revenues exceeding $150 million, over 60% from aftermarket parts and services[4] Key Financial Highlights (Q2 2025 vs Q2 2024) | Metric | 2Q 2025 (GAAP) | 2Q 2024 (GAAP) | Change (%) | 2Q 2025 (Adjusted) | 2Q 2024 (Adjusted) | Change (%) | | :----------------------------------- | :------------- | :------------- | :--------- | :----------------- | :----------------- | :--------- | | Net sales (in millions) | $330.3 | $345.5 | (4.4)% | | | | | Income (loss) from operations (in millions) | $21.4 | $(10.7) | 300.0% | $26.1 | $21.4 | 22.0% | | Operating margin | 6.5% | (3.1)% | 960 bps | 7.9% | 6.2% | 170 bps | | Net income (loss) attributable to controlling interest (in millions) | $16.7 | $(14.0) | 219.3% | $20.3 | $14.0 | 45.0% | | Diluted EPS | $0.72 | $(0.61) | 218.0% | $0.88 | $0.61 | 44.3% | | EBITDA (in millions) | $29.0 | $(4.4) | 759.1% | $33.7 | $27.6 | 22.1% | | EBITDA margin | 8.8% | (1.3)% | 1,010 bps | 10.2% | 8.0% | 220 bps | Full Year Adjusted EBITDA Guidance Update | Category | Previous Guidance (in millions) | Updated Guidance (in millions) | | :--------- | :------------------------------ | :----------------------------- | | Core Business | $105 - $125 | $110 - $125 | | TerraSource Contribution | N/A | $13 - $17 | | Consolidated | N/A | $123 - $142 | Company Information Astec Industries manufactures specialized equipment for infrastructure and materials processing, structured into two primary business segments About Astec Astec Industries manufactures specialized equipment for asphalt road building, aggregate processing, and concrete production, organized into two main segments - Astec manufactures specialized equipment for asphalt road building, aggregate processing, and concrete production[13] - The company's manufacturing operations are divided into two primary business segments: Infrastructure Solutions and Materials Solutions[13] Business Segments Description Astec's two segments, Infrastructure Solutions and Materials Solutions, provide equipment for road building, aggregate processing, and related aftermarket parts - Infrastructure Solutions segment includes road building equipment, asphalt and concrete plants, thermal storage solutions, and related aftermarket parts[8] - Materials Solutions segment focuses on processing equipment to crush, screen, and convey aggregates, along with related aftermarket parts[9] Detailed Financial Results Astec's Q2 2025 financial results show a significant turnaround to net income, improved segment profitability, and positive operating cash flow Condensed Consolidated Statements of Operations Astec's Q2 2025 statements show a turnaround from net loss to net income, driven by improved operating income and no goodwill impairment Condensed Consolidated Statements of Operations (Q2 2025 vs Q2 2024) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | | Net sales | $330.3 | $345.5 | | Gross profit | $88.3 | $81.3 | | Income (loss) from operations | $21.4 | $(10.7) | | Net income (loss) attributable to controlling interest | $16.7 | $(14.0) | | Diluted EPS | $0.72 | $(0.61) | Condensed Consolidated Statements of Operations (Six Months Ended June 30, 2025 vs 2024) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net sales | $659.7 | $654.7 | | Gross profit | $180.7 | $158.2 | | Income (loss) from operations | $41.9 | $(4.4) | | Net income (loss) attributable to controlling interest | $31.0 | $(10.6) | | Diluted EPS | $1.35 | $(0.47) | - Goodwill impairment charges of $20.2 million in Q2 2024 were not present in Q2 2025, contributing to the improved operating income[22] Reportable Segment Net Sales and Operating Adjusted EBITDA Segment performance varied, with Infrastructure Solutions seeing decreased Q2 sales but increased EBITDA, while Materials Solutions showed slight sales growth and substantial EBITDA rise Three Months Ended June 30, 2025 Q2 2025 saw Infrastructure Solutions net sales decrease by 7.6% but EBITDA increase by 18.4%, while Materials Solutions net sales rose 1.3% and EBITDA surged 39.2% Segment Net Sales (Q2 2025 vs Q2 2024) | Segment | 2Q 2025 (in millions) | 2Q 2024 (in millions) | Change ($) | Change (%) | | :--------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Infrastructure Solutions | $204.6 | $221.4 | $(16.8) | (7.6)% | | Materials Solutions | $125.7 | $124.1 | $1.6 | 1.3% | | Total Net Sales | $330.3 | $345.5 | $(15.2)| (4.4)% | Segment Operating Adjusted EBITDA (Q2 2025 vs Q2 2024) | Segment | 2Q 2025 (in millions) | 2Q 2024 (in millions) | Change ($) | Change (%) | | :--------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Infrastructure Solutions | $32.2 | $27.2 | $5.0 | 18.4% | | Materials Solutions | $14.2 | $10.2 | $4.0 | 39.2% | | Total Segment Operating Adjusted EBITDA | $46.4 | $37.4 | | | Segment Operating Adjusted EBITDA Margin (Q2 2025 vs Q2 2024) | Segment | 2Q 2025 | 2Q 2024 | Change (bps) | | :--------------------- | :-------- | :-------- | :----------- | | Infrastructure Solutions | 15.7% | 12.3% | 340 bps | | Materials Solutions | 11.3% | 8.2% | 310 bps | Six Months Ended June 30, 2025 YTD 2025, Infrastructure Solutions net sales grew 4.0% and EBITDA 42.2%, while Materials Solutions net sales decreased 5.2% but EBITDA increased 25.2% Segment Net Sales (Six Months Ended June 30, 2025 vs 2024) | Segment | YTD 2025 (in millions) | YTD 2024 (in millions) | Change ($) | Change (%) | | :--------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Infrastructure Solutions | $440.6 | $423.6 | $17.0 | 4.0% | | Materials Solutions | $219.1 | $231.1 | $(12.0) | (5.2)% | | Total Net Sales | $659.7 | $654.7 | $5.0 | 0.8% | Segment Operating Adjusted EBITDA (Six Months Ended June 30, 2025 vs 2024) | Segment | YTD 2025 (in millions) | YTD 2024 (in millions) | Change ($) | Change (%) | | :--------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Infrastructure Solutions | $75.1 | $52.8 | $22.3 | 42.2% | | Materials Solutions | $19.4 | $15.5 | $3.9 | 25.2% | | Total Segment Operating Adjusted EBITDA | $94.5 | $68.3 | | | Segment Operating Adjusted EBITDA Margin (Six Months Ended June 30, 2025 vs 2024) | Segment | YTD 2025 | YTD 2024 | Change (bps) | | :--------------------- | :-------- | :-------- | :----------- | | Infrastructure Solutions | 17.0% | 12.5% | 450 bps | | Materials Solutions | 8.9% | 6.7% | 220 bps | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1,065.4 million, driven by inventories, with total equity also rising Condensed Consolidated Balance Sheets (June 30, 2025 vs December 31, 2024) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Cash, cash equivalents and restricted cash | $88.7 | $90.8 | | Inventories, net | $448.8 | $422.7 | | Total current assets | $746.0 | $722.8 | | Total assets | $1,065.4 | $1,043.6 | | Total current liabilities | $274.8 | $271.7 | | Long-term debt | $85.0 | $105.0 | | Total equity | $674.9 | $637.6 | | Total liabilities and equity | $1,065.4 | $1,043.6 | Condensed Consolidated Statements of Cash Flows Astec generated $33.4 million in operating cash flow for YTD Q2 2025, a significant improvement, with net cash outflow from financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, 2025 vs 2024) | Metric (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) |\n| Net cash used in investing activities | $(7.7) | $(12.6) |\n| Net cash (used in) provided by financing activities | $(29.2) | $49.5 |\n| Decrease in cash, cash equivalents and restricted cash | $(2.1) | $— |\n| Cash, cash equivalents and restricted cash, end of period | $88.7 | $63.2 | - Operating cash flow for Q2 2025 was $12.9 million, and free cash flow was $9.0 million[15] - Total liquidity was $247.6 million, comprising $87.8 million in cash and $159.8 million available under the revolving credit facility[15] Non-GAAP Financial Measures Astec utilizes non-GAAP measures to provide a clearer view of core business performance, adjusting for specific non-recurring and transformation-related costs Explanation of Non-GAAP Measures Astec uses non-GAAP measures to clarify core business performance by excluding specific costs like transformation, restructuring, and impairment charges - Non-GAAP measures are used to understand operating results and core business performance, excluding costs like transformation program, restructuring, goodwill impairment, asset impairment, asset sale gains/losses, and transaction costs[38][39] - Transformation program costs include personnel, consultant fees, duplicative systems, and accelerated depreciation related to strategic initiatives like ERP system implementation[39] GAAP vs Non-GAAP Adjusted Income from Operations Reconciliations Adjusted income from operations for Q2 2025 was $26.1 million, with a 7.9% margin, and YTD was $54.4 million, with an 8.2% margin Adjusted Income from Operations (Q2 2025 vs Q2 2024) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | | Income (loss) from operations | $21.4 | $(10.7) | | Adjustments | $4.7 | $32.1 | | Adjusted income from operations | $26.1 | $21.4 | | Adjusted operating margin | 7.9% | 6.2% | Adjusted Income from Operations (Six Months Ended June 30, 2025 vs 2024) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Income (loss) from operations | $41.9 | $(4.4) | | Adjustments | $12.5 | $37.8 | | Adjusted income from operations | $54.4 | $33.4 | | Adjusted operating margin | 8.2% | 5.1% | GAAP vs Non-GAAP Adjusted EPS Reconciliations Adjusted diluted EPS for Q2 2025 was $0.88, a 44.3% increase, and YTD was $1.76, reflecting adjustments for specific costs Adjusted EPS (Q2 2025 vs Q2 2024) | Metric (in millions, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) attributable to controlling interest | $16.7 | $(14.0) | | Adjusted net income attributable to controlling interest | $20.3 | $14.0 | | Diluted EPS | $0.72 | $(0.61) | | Adjusted EPS | $0.88 | $0.61 | Adjusted EPS (Six Months Ended June 30, 2025 vs 2024) | Metric (in millions, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to controlling interest | $31.0 | $(10.6) | | Adjusted net income attributable to controlling interest | $40.6 | $21.8 | | Diluted EPS | $1.35 | $(0.47) | | Adjusted EPS | $1.76 | $0.96 | EBITDA and Adjusted EBITDA Reconciliations Adjusted EBITDA for Q2 2025 increased 22.1% to $33.7 million with a 10.2% margin, and YTD reached $68.9 million with a 10.4% margin EBITDA and Adjusted EBITDA (Q2 2025 vs Q2 2024) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | | EBITDA | $29.0 | $(4.4) | | EBITDA margin | 8.8% | (1.3)% | | Adjusted EBITDA | $33.7 | $27.6 | | Adjusted EBITDA margin | 10.2% | 8.0% | EBITDA and Adjusted EBITDA (Six Months Ended June 30, 2025 vs 2024) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | EBITDA | $56.5 | $9.0 | | EBITDA margin | 8.6% | 1.4% | | Adjusted EBITDA | $68.9 | $46.5 | | Adjusted EBITDA margin | 10.4% | 7.1% | Free Cash Flow Reconciliation Free cash flow for Q2 2025 was $9.0 million, and YTD was $25.6 million, a substantial improvement from the prior year Free Cash Flow (Q2 2025 vs Q2 2024) | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | $12.9 | $10.9 | | Expenditures for property and equipment | $(3.9) | $(7.6) | | Free cash flow | $9.0 | $3.3 | Free Cash Flow (Six Months Ended June 30, 2025 vs 2024) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $33.4 | $(36.1) | | Expenditures for property and equipment | $(7.8) | $(13.4) | | Free cash flow | $25.6 | $(49.5) | Additional Information This section provides details on investor communications, forward-looking statement disclaimers, and contact information Investor Conference Call and Webcast Astec held a conference call and webcast on August 6, 2025, to discuss Q2 results, business conditions, and the TerraSource acquisition - Astec held a conference call and live webcast on August 6, 2025, to review Q2 financial results, business conditions, and the TerraSource acquisition[10] - A replay of the call is available until August 20, 2025, and a transcript will be posted on the Investor Relations section of Astec's website[12] Safe Harbor Statements This release contains forward-looking statements subject to risks and uncertainties detailed in SEC filings, potentially causing material differences in actual results - The news release includes forward-looking statements concerning income, earnings, cash flows, operational improvements, the TerraSource acquisition benefits, and economic conditions[14] - These statements are based on management's expectations and are subject to risks and uncertainties outlined in Astec's Form 10-K and 10-Q filings, which could lead to materially different actual results[14][18] For Additional Information Contact Contact Steve Anderson, Senior Vice President of Administration and Investor Relations, for further information - Contact Steve Anderson, Senior Vice President of Administration and Investor Relations, for additional information[19]