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ASTEC INDUSTRIES INC (ASTE)·Q1 2025 Earnings Summary

Executive Summary

  • Strong Q1: net sales $329.4M (+6.5% y/y), GAAP diluted EPS $0.62, adjusted EPS $0.88, adjusted EBITDA $35.2M with adjusted EBITDA margin 10.7% (+460 bps y/y) .
  • Beat versus consensus: EPS $0.88 vs $0.46*, revenue $329.4M vs $320.4M*, and adjusted EBITDA $35.2M vs $22.0M*; sequentially, revenue softened from Q4’s $359.0M high while margins remained healthy .
  • Guidance maintained: FY25 adjusted EBITDA $105–$125M (ex-TerraSource; reiterated) and management confirmed the range excludes tariff impacts; dividend maintained at $0.13/share .
  • Strategic catalyst: definitive agreement to acquire TerraSource for $245M; expected accretive to margins/EPS, aftermarket-heavy mix (~60% of 2024 revenue) and $10M run‑rate synergies by end of year two, closing targeted early Q3 2025 .

Values retrieved from S&P Global for consensus estimates (*)

What Went Well and What Went Wrong

What Went Well

  • Infrastructure Solutions delivered net sales of $236.0M (+16.7% y/y) and segment operating adjusted EBITDA margin 18.2% (+550 bps), driven by strong plant demand and solid aftermarket .
  • Profitability and cash generation improved: adjusted EPS $0.88, adjusted EBITDA $35.2M, and free cash flow $16.6M (116% of net income) on disciplined working capital management .
  • Strategic M&A announced: “TerraSource adds significant growth and value creation opportunities including new markets, aftermarket parts and accretive margins” — CEO Jaco van der Merwe .

What Went Wrong

  • Materials Solutions net sales fell to $93.4M (‑12.7% y/y) amid contractor/dealer financing constraints and fewer conversions; adjusted EBITDA dollars were flat and margins only modestly higher (5.6%) .
  • Backlog contracted to $402.6M (‑28.1% y/y) with Infrastructure down to $276.4M and Materials to $126.2M, reflecting industry normalization and order timing .
  • Tariffs present margin risk: management sized potential COGS exposure at 4%–10% if no actions taken, cannot reprice backlog, and will rely on pricing/procurement levers to mitigate .

Financial Results

Quarter-over-Quarter Trend (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Net Sales ($USD Millions)$291.4 $359.0 $329.4
Diluted EPS (GAAP) ($)($0.27) $0.92 $0.62
Adjusted EPS ($)$0.31 $1.19 $0.88
Income from Operations ($USD Millions, GAAP)($7.2) $34.8 $20.5
Operating Margin (GAAP, %)(2.5)% 9.7% 6.2%
Adjusted Operating Margin (%)3.4% 11.9% 8.6%
EBITDA ($USD Millions, GAAP)$0.6 $40.0 $27.5
EBITDA Margin (GAAP, %)0.2% 11.1% 8.3%
Adjusted EBITDA ($USD Millions)$17.4 $47.9 $35.2
Adjusted EBITDA Margin (%)6.0% 13.3% 10.7%

Year-over-Year (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Net Sales ($USD Millions)$309.2 $329.4
Diluted EPS (GAAP) ($)$0.15 $0.62
Adjusted EPS ($)$0.34 $0.88
Income from Operations ($USD Millions, GAAP)$6.3 $20.5
Operating Margin (GAAP, %)2.0% 6.2%
Adjusted Operating Margin (%)3.9% 8.6%
EBITDA ($USD Millions, GAAP)$13.4 $27.5
EBITDA Margin (GAAP, %)4.3% 8.3%
Adjusted EBITDA ($USD Millions)$18.9 $35.2
Adjusted EBITDA Margin (%)6.1% 10.7%

Consensus vs Actual (Q1 2025)

MetricConsensus*Actual
Revenue ($USD Millions)320.4*329.4
Primary EPS ($)0.46*0.88 (adjusted), 0.62 (GAAP)
EBITDA ($USD Millions)22.0*35.2 (adjusted), 27.5 (GAAP)
EPS - # of Estimates2*—
Revenue - # of Estimates2*—

Values retrieved from S&P Global for consensus estimates (*)

Segment Breakdown (Net Sales and Adj. EBITDA Margin)

Segment MetricQ3 2024Q4 2024Q1 2025
Infrastructure Solutions Net Sales ($M)$165.0 $248.8 $236.0
Infrastructure Solutions Adj. EBITDA Margin (%)9.5% 21.3% 18.2%
Materials Solutions Net Sales ($M)$126.4 $110.2 $93.4
Materials Solutions Adj. EBITDA Margin (%)11.5% 6.5% 5.6%

KPIs

KPIQ3 2024Q4 2024Q1 2025
Backlog Total ($M)$475.8 $419.6 $402.6
Backlog – Infrastructure ($M)$351.1 $305.5 $276.4
Backlog – Materials ($M)$124.7 $114.1 $126.2
Operating Cash Flow ($M)$22.5 $36.6 $20.5
Free Cash Flow ($M)$19.9 $32.1 $16.6
Liquidity ($M)$195.1 $228.1 $238.9
Capital Expenditures ($M)$2.6 $4.5 $3.9
Dividend per Share ($)$0.13 $0.13 $0.13 (declared Apr 28)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)FY 2025$105–$125 (Feb 26, 2025) $105–$125 (Apr 29, 2025) — excludes TerraSource and tariff impacts Maintained
Dividend per Share ($)Q2 2025 payout$0.13 (Feb 24/26 disclosures) $0.13 declared for May 30, 2025 Maintained
TerraSource Synergies/AccretionN/AN/A~$10M run-rate synergies by end of year two; accretive to margins/EPS; aftermarket ~60% of 2024 revenue; closing early Q3 2025 New (transaction)
LeveragePost-closingN/AInitial net leverage ~2x, 1–1.5x by end of 2026 New (transaction)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroNo tariff focus; macro mixed with Materials pressure and legal settlement charge Explicit tariff mitigation plan; potential 4%–10% COGS exposure if no actions; guidance excludes tariffs Elevated risk, proactive mitigation
Materials Solutions DemandQ3: weak equipment demand from financing constraints; margins improved via cost actions Sales down 12.7% y/y; backlog sequentially improved; expectation of H2 restocking Early signs of stabilization
Aftermarket PartsQ4: emphasized aftermarket growth and mix improvements Infra aftermarket healthy; TerraSource adds aftermarket-heavy mix (~60% of revenue, 80% of GP) Strengthening recurring revenue
Operational Excellence/ProcurementOneAstec procurement and manufacturing efficiencies benefited margins (Q4) Continued margin gains from pricing/mix; proactive pricing and dual sourcing Ongoing execution, margin support
Backlog/OrdersQ3–Q4: backlog normalization; Infra strong, Materials weaker Backlog $402.6M; implied orders and book-to-bill improving, especially in Materials (113%) Improving order momentum

Management Commentary

  • CEO: “Strong operational execution delivered increases in net sales, EBITDA, net income and earnings per share… TerraSource adds significant growth and value creation opportunities including new markets, aftermarket parts and accretive margins.” .
  • CFO: “Excluding the pending acquisition, we reiterate our adjusted EBITDA full year guidance range of $105 million to $125 million.” .
  • CEO on tariffs: “We’ve modeled that there could be anything between 4% and 10% impact… it’s our ambition to make that neutral” via pricing, procurement and sourcing actions; backlog cannot be repriced .
  • On TerraSource strategic fit: complementary portfolio, aftermarket-heavy, global footprint; accretive EBITDA and FCF; initial net leverage ~2x post-close .

Q&A Highlights

  • Guidance decision: Despite strong implied orders and margin performance, management chose not to raise FY guidance due to tariff uncertainty; will reassess after Q2 if strength persists .
  • Tariffs impact sizing: Potential 4%–10% COGS exposure by product if no actions; immediate pass-through for parts; proactive pricing and forward steel buying already executed; cannot reprice backlog .
  • TerraSource performance and rationale: Less exposed to mobile crushing/rental cycles; aftermarket ~60% of revenue and ~80% of gross profit; stronger fit with Astec’s Materials Solutions, expected to perform well under Astec ownership .
  • Guidance scope: Explicit confirmation that FY25 adjusted EBITDA guidance excludes tariff impacts .

Estimates Context

  • Q1 2025 beat: Adjusted EPS $0.88 vs consensus $0.46*, revenue $329.4M vs $320.4M*, and adjusted EBITDA $35.2M vs $22.0M* .
  • Coverage breadth was limited (two estimates for EPS and revenue); consensus target price stood at $56.5 ahead of the print.
  • Model updates: Street likely to raise margin assumptions (pricing/mix, OneAstec procurement) and incorporate TerraSource accretion post-close; watch for tariff pass‑through cadence and Materials restocking in H2 .

Values retrieved from S&P Global for consensus estimates (*)

Key Takeaways for Investors

  • Quality beat with broad-based margin expansion: adjusted operating margin 8.6% and adjusted EBITDA margin 10.7% despite sequential revenue normalization; margin levers (pricing/mix/procurement) are working .
  • Infra momentum intact; Materials near inflection: Infra sales +16.7% y/y with 18.2% adj. EBITDA margin, while Materials sales declined but backlog/implied orders improved and H2 restocking is expected .
  • TerraSource is strategically accretive: aftermarket-heavy, synergy potential ~$10M run-rate, accretive to margins/EPS, and enhances global reach; closing targeted early Q3 2025 .
  • Tariffs are the swing factor: quantified 4%–10% COGS exposure if no actions; mitigation underway (pricing, dual sourcing, forward buys), but inability to reprice backlog creates near-term execution risk .
  • Cash generation and liquidity support optionality: FCF $16.6M; liquidity $238.9M; dividend maintained; provides capacity to absorb TerraSource and pursue further organic/inorganic initiatives .
  • Guidance discipline: FY25 adjusted EBITDA $105–$125M maintained (ex-TerraSource, excludes tariffs); potential update post-Q2 if strength continues and tariff visibility improves .
  • Trading lens: Near-term stock moves likely tied to tariff headlines and sequential order momentum in Materials; medium-term thesis hinges on margin durability (OneAstec) and aftermarket growth augmented by TerraSource .