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ASTEC INDUSTRIES INC (ASTE)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered margin expansion and strong profitability despite lower net sales: Adjusted EPS $0.88 vs prior year $0.61 and GAAP EPS $0.72 vs prior year $(0.61); Adjusted EBITDA $33.7M (+22% YoY) on net sales of $330.3M (−4.4% YoY) .
  • Versus S&P Global consensus, Astec significantly beat EPS ($0.88 vs $0.555*) and EBITDA ($33.7M vs $25.0M*), while revenue missed ($330.3M vs $354.2M*)—a mix/price-led margin story despite softer demand in mobile paving and forestry equipment .
  • Guidance raised: Core FY2025 adjusted EBITDA lower bound increased to $110M (from $105M), and consolidated FY2025 adjusted EBITDA now $123–$142M with TerraSource expected to contribute $13–$17M in H2; dividend maintained at $0.13/share .
  • Strategic catalyst: TerraSource closed July 1, adding a high-aftermarket, accretive business (approx. 60%+ aftermarket revenue, 80%+ gross margin) and enhancing parts/service recurring profile; new $600M credit facility provides ample liquidity .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted profitability inflected: Adjusted EPS $0.88 (+44% YoY) and Adjusted EBITDA $33.7M (+22% YoY), with adjusted operating margin up 170 bps to 7.9% on pricing/mix and procurement/OpEx initiatives .
    • Segment execution: Infrastructure Solutions adjusted EBITDA margin up 340 bps to 15.7%; Materials Solutions adjusted EBITDA margin up 310 bps to 11.3% on pricing and operational excellence .
    • Strategic acquisition closed: “TerraSource… presents a unique opportunity… accretive from day one with aftermarket part sales ~63% of revenue and ~80% of gross margin,” driving recurring parts focus and synergy capture in H2 2025 .

  • What Went Wrong

    • Top-line softness: Net sales down 4.4% YoY to $330.3M; Infrastructure Solutions net sales −7.6% amid challenging mobile paving and forestry demand, while Materials Solutions grew only 1.3% .
    • Backlog declined: Consolidated backlog fell to $380.8M (−28% YoY), reflecting shorter lead times and dealer ordering closer to shipment, plus weakness in mobile paving/forestry .
    • Macro headwinds: Elevated interest rates constrained dealers/contractors, tariffs required continuous mitigation, and unusually wet weather disrupted aggregates/construction schedules, increasing uncertainty despite healthy U.S. funding backdrop .

Financial Results

Consolidated performance vs prior quarters (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$359.0 $329.4 $330.3
Diluted EPS ($USD)$0.92 $0.62 $0.72
Adjusted EPS ($USD)$1.19 $0.88 $0.88
Operating Margin % (GAAP)9.7% 6.2% 6.5%
Adjusted Operating Margin %11.9% 8.6% 7.9%
EBITDA ($USD Millions, GAAP)$40.0 $27.5 $29.0
Adjusted EBITDA ($USD Millions)$47.9 $35.2 $33.7
EBITDA Margin % (GAAP)11.1% 8.3% 8.8%
Adjusted EBITDA Margin %13.3% 10.7% 10.2%
Operating Cash Flow ($USD Millions)$36.6 $20.5 $12.9
Free Cash Flow ($USD Millions)$32.1 $16.6 $9.0

YoY snapshot: Q2 2025 vs Q2 2024

MetricQ2 2024Q2 2025
Net Sales ($USD Millions)$345.5 $330.3
Diluted EPS ($USD)$(0.61) $0.72
Adjusted EPS ($USD)$0.61 $0.88
EBITDA ($USD Millions, GAAP)$(4.4) $29.0
Adjusted EBITDA ($USD Millions)$27.6 $33.7
Operating Margin % (GAAP)(3.1)% 6.5%
Adjusted Operating Margin %6.2% 7.9%
Backlog ($USD Millions)$531.1 $380.8

Segment breakdown (net sales and adjusted EBITDA)

Infrastructure Solutions

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$248.8 $236.0 $204.6
Segment Operating Adjusted EBITDA ($USD Millions)$53.1 $42.9 $32.2
Segment Operating Adjusted EBITDA Margin %21.3% 18.2% 15.7%

Materials Solutions

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$110.2 $93.4 $125.7
Segment Operating Adjusted EBITDA ($USD Millions)$7.2 $5.2 $14.2
Segment Operating Adjusted EBITDA Margin %6.5% 5.6% 11.3%

KPIs and balance sheet

KPIQ4 2024Q1 2025Q2 2025
Backlog ($USD Millions)$419.6 $402.6 $380.8
Liquidity ($USD Millions)$228.1 $238.9 $247.6
Cash & Equivalents ($USD Millions)$88.3 $90.1 $88.7
Revolver Availability ($USD Millions)$139.8 $148.8 $159.8
Free Cash Flow ($USD Millions)$32.1 $16.6 $9.0
Capex ($USD Millions)$4.5 $3.9 $3.9
Dividend per Share ($USD)$0.13 $0.13 $0.13

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (Core)FY2025$105M–$125M $110M–$125M Raised lower end
Adjusted EBITDA (Consolidated incl. TerraSource)FY2025N/A$123M–$142M New range including TerraSource
TerraSource Adjusted EBITDAH2 2025N/A$13M–$17M New contribution
Dividend per ShareQ2 2025$0.13 $0.13 Maintained
Credit facility capacityEffective July 1, 2025Prior revolver onlyNew $600M facilities + $150M incremental capacity Increased funding flexibility

Earnings Call Themes & Trends

TopicQ4 2024 (Prev–2)Q1 2025 (Prev–1)Q2 2025 (Current)Trend
Procurement & OpEx executionOneASTEC procurement/OpEx driving record adj. margins Continued margin lift; reiterates guidance Pricing/mix and procurement offset tariffs; margin expansion persists Improving
Tariffs & inflationMitigation strategies in place Ongoing mitigation 2–3% cost impact offset; dual sourcing, pricing actions Managed/Stable
Interest rates impactDealer/contractor financing constraints in MS MS domestic declines on finance capacity Persistent headwind to mobile paving/forestry; dealers cautious Softening demand
Backlog & orders cadenceBacklog down; healthy plant demand Backlog down; plant demand strong Backlog down; implied orders >$300M 4/5 quarters; shorter lead times shift ordering Mixed: cadence normalizing
Aftermarket parts focusEmphasis on recurring parts Parts growth TerraSource ~63% aftermarket; parts fill rates improving Strengthening
Government funding backdropHealthy U.S. infrastructure demand SameMultiyear contract awards ↑9%; IIJA funds flowing; reauthorization optimism Supportive
Data center construction——Large projects as materials demand opportunity Emerging tailwind
Weather impact——Unusually wet May disrupted aggregates/construction Transitory headwind

Management Commentary

  • “Astec reported another strong quarter… manufacturing and procurement efforts are driving enhanced efficiencies and increases were achieved in net income, EBITDA and earnings per share. On July 1, 2025, we completed the acquisition of TerraSource…” — Jaco van der Merwe, CEO .
  • “We were pleased to generate net income of $16.7 million and an adjusted EBITDA of $33.7 million… We are updating the lower end of our full year guidance from $105 million to $110 million on our core business… We expect TerraSource to provide adjusted EBITDA in the $13 million to $17 million range…” — Brian Harris, CFO .
  • “TerraSource… accretive from day one with aftermarket part sales representing approximately 63% of total revenue and 80% of gross margin.” — Jaco van der Merwe .
  • “We ended the quarter with cash and cash equivalents of $87.8 million, available credit of $159.8 million for total liquidity of $247.6 million… expect net leverage below two times at the end of 2025 on a pro forma basis.” — Brian Harris .

Q&A Highlights

  • Margin expansion drivers: Pricing, procurement (One Astec team), and operational excellence—management highlighted successful mitigation of inflation and tariff pressures; no specific EPS drag from tariffs quantified as effects mitigated .
  • Demand split: Healthy asphalt/concrete plant demand vs weaker mobile paving/forestry due to dealer inventory and rate environment; shorter lead times shift ordering closer to delivery dates, normalizing backlog cadence .
  • Working capital and FCF: Strong cash conversion with room to reduce inventories into year-end; receivables/payables in best shape “in a long time” to fund inorganic growth; continued focus on cash .

Estimates Context

  • Q2 2025 vs consensus: Adjusted EPS actual $0.88 vs consensus $0.555*; Revenue actual $330.3M vs consensus $354.2M*; EBITDA actual $33.7M (Adjusted) vs consensus $25.0M* .
  • Forward consensus: Q3 2025 EPS $0.38* and Revenue $330.9M*; Q4 2025 EPS $0.83* and Revenue $374.2M*—implies seasonally stronger Q4 and moderate near-term top-line [Values retrieved from S&P Global].
  • Implications: Street likely to revise models to reflect stronger margin execution and TerraSource H2 uplift while tempering mobile paving/forestry volume assumptions; revenue cadence may reflect shorter lead times and order timing rather than demand erosion .
    Note: *Values retrieved from S&P Global.

Q2 2025 actuals vs S&P Global consensus

MetricActualConsensus
Revenue ($USD Millions)$330.3 $354.2*
Primary EPS ($USD)$0.88 $0.555*
EBITDA ($USD Millions)$33.7 (Adjusted) $25.0*

Note: Consensus EBITDA definitions may differ from company “Adjusted EBITDA” presentation. *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Margin story intact: Pricing/mix and procurement/OpEx execution delivered double-digit adjusted EBITDA margin despite revenue softness; sustainment looks credible given parts/service focus and TerraSource accretion .
  • Guidance up and de-risked by H2 TerraSource: FY2025 adjusted EBITDA lower bound raised to $110M; consolidated $123–$142M including TerraSource contribution, adding recurring, higher-margin aftermarket content .
  • Order cadence shifting: Shorter lead times normalize backlog and move orders closer to delivery—watch implied orders and book-to-bill as better demand proxies than headline backlog .
  • Segment divergence: Track mobile paving/forestry headwinds vs healthy asphalt/concrete plant demand; Materials Solutions momentum improving with dealer inventory replenishment and rental utilization strength .
  • Liquidity optionality: New $600M facility plus $150M incremental and sub-2x pro forma net leverage target support further inorganic growth and parts/service investments .
  • Macro watch items: Rates and tariffs remain swing factors; funding backdrop supportive (contract awards +9% through April 2025; IIJA spend progressing) .
  • Trading setup: Mixed print (EPS/EBITDA beat, revenue miss) with raised guidance and accretive M&A bias—stock narrative likely driven by confidence in margin durability and parts-led resilience against rate-sensitive equipment cycles .