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ASTEC INDUSTRIES INC (ASTE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered solid beats on both revenue and EPS: net sales $350.1M (+20.1% YoY) and adjusted EPS $0.47 vs S&P Global consensus $0.38; revenue beat consensus $330.9M as well. Management raised the FY25 adjusted EBITDA range lower bound to $132M from $123M (range now $132M–$142M) amid improving execution and TerraSource contribution . Estimates from S&P Global Capital IQ Data – see footnote.
  • GAAP loss of $(4.2)M (−$0.18/sh) driven by $8.3M transaction costs and $6.2M amortization of acquired intangibles tied to the TerraSource deal; adjusted EBITDA rose 55.7% YoY to $27.1M with margin +170 bps to 7.7% on operational efficiency and mix .
  • Infrastructure Solutions grew 17.1% on strong asphalt and concrete plant demand and 14.8% parts growth; Materials Solutions +24.1% on TerraSource, with MS margin −170 bps due to a one-time reserve release in 3Q24 comp .
  • Backlog ended at $449.5M (seq +$68.7M), with $64.1M from TerraSource; total liquidity $312.1M (cash $67.3M, revolver availability $244.8M). Q3 free cash flow was −$12.3M (seasonality and working capital) .

Estimates footnote: Values retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted profitability momentum: Adjusted EBITDA $27.1M (+55.7% YoY) and margin 7.7% (+170 bps YoY); adjusted EPS $0.47 (+31% YoY) as operational initiatives and mix improvement took hold . CEO: “operational advancements are gaining momentum, with manufacturing and procurement activities producing greater efficiencies” .
    • Infrastructure strength and parts: Infrastructure Solutions sales +17.1% on asphalt and concrete plant demand; parts sales +14.8% in the segment; company parts mix rose by 670 bps with TerraSource added .
    • TerraSource integration and guidance raise: Integration tracking well with synergy capture expected to show in 2026; raised FY25 adjusted EBITDA guidance lower bound to $132M (unchanged high end $142M) .

  • What Went Wrong

    • GAAP earnings impact from M&A: $(4.2)M net loss and $(0.18) diluted EPS on $8.3M transaction costs and $6.2M amortization of acquired intangibles tied to TerraSource .
    • Materials Solutions margin optics: Segment margin −170 bps YoY to 9.8% due to an unusually profitable 3Q24 comparison from a $1.9M litigation reserve release; underlying TerraSource margins accretive per management .
    • Cash flow softness: Operating cash flow −$8.1M and free cash flow −$12.3M in Q3, reflecting seasonal working capital build; capex $4.2M .

Financial Results

Headline metrics by quarter

MetricQ1 2025Q2 2025Q3 2025
Revenue ($M)$329.4 $330.3 $350.1
Diluted EPS (GAAP)$0.62 $0.72 $(0.18)
Adjusted EPS$0.88 $0.88 $0.47
Adjusted EBITDA ($M)$35.2 $33.7 $27.1
Adjusted EBITDA Margin10.7% 10.2% 7.7%

Q3 actuals vs S&P Global consensus

MetricActualConsensusSurprise
Revenue ($M)$350.1 $330.9+$19.2M / +5.8%
Adjusted EPS$0.47 $0.38+$0.09 / +23.7%

Estimates footnote: Values retrieved from S&P Global.

Segment breakdown – Q3 2025 vs Q3 2024

SegmentNet Sales Q3’25 ($M)Net Sales Q3’24 ($M)YoYSegment Operating Adj. EBITDA Q3’25 ($M)Q3’24 ($M)YoYAdj. EBITDA Margin Q3’25Q3’24Δ
Infrastructure Solutions193.2 165.0 +17.1% 23.9 15.6 +53.2% 12.4% 9.5% +290 bps
Materials Solutions156.9 126.4 +24.1% 15.4 14.5 +6.2% 9.8% 11.5% −170 bps
Total350.1 291.4 +20.1% ——————

KPIs and balance sheet/cash flow

KPIQ3 2025Prior/Context
Backlog (Total)$449.5M Seq +$68.7M; TerraSource contributed $64.1M
Liquidity$312.1M (Cash $67.3M; Revolver avail. $244.8M) —
Operating Cash Flow$(8.1)M —
Free Cash Flow$(12.3)M —
Capex$4.2M —
Dividend$0.13/sh declared for Nov. 26, 2025 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDAFY 2025$123M–$142M (post TerraSource inclusion) $132M–$142M Raised lower end
Effective Tax RateFY 2025—24%–27% New detail
Capital ExpendituresFY 2025—$25M–$35M New detail
Adjusted SG&AQ4 2025—$65M–$73M New detail
Depreciation & AmortizationQ4 2025—$37M–$42M New detail
DividendOngoing$0.13/sh prior $0.13/sh declared Oct 27 for Nov 26 payment Maintained

Note: Prior consolidated adjusted EBITDA guidance of $123M–$142M was established in Q2 with TerraSource expected to contribute $13M–$17M in 2H; Q3 raised the floor to $132M while keeping the high end unchanged .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q1)Current Period (Q3)Trend
Aftermarket/Parts mixStable in IS; MS dealer replenishment beginning; focus on driving parts IS parts +14.8%; company parts mix +670 bps with TerraSource Improving mix, durable tailwind
TerraSource integrationDeal closed 7/1; 2H contribution $13–$17M to adj. EBITDA; accretive margins expected Integration progressing; TerraSource margins accretive; majority of synergies in 2026 On track; synergy ramp 2026
Tariffs and pricingPricing/operational actions supporting margin in 1H Mitigation strategies neutralized tariff impacts; outlook embeds tariff assumptions Managed, but remains fluid
MS dealer inventory/demandFinancing constraints pressured MS Q1; inventory normalization signs in Q2 Dealer inventories healthy; initial restocking; MS implied orders stable Stabilizing to improving
Infrastructure plant demandStrong asphalt & concrete plants in Q1; healthy levels in Q2 Continued strength drove IS growth and margin expansion Sustained strength
Macro/IIJA/fundingIndustry funding supportive backdrop IIJA funds still flowing; rate cuts improving sentiment Supportive macro tailwind

Management Commentary

  • Strategic message: “Operational advancements are gaining momentum… producing greater efficiencies and higher net sales,” with TerraSource now contributing and guidance raised accordingly .
  • On TerraSource integration and synergies: “Our combined team is already… harvesting synergies… We expect most synergies to show up in 2026” . “TerraSource margins were accretive” .
  • On tariffs: “Mitigation strategies have neutralized tariff-related impacts on our margins… our revised full-year adjusted EBITDA guidance… reflects our current perspective… including the impact of tariffs” .
  • On demand and backlog: Backlog up sequentially with TerraSource; both segments posted book-to-bill >100% excluding TerraSource .

Q&A Highlights

  • Guidance raise rationale: Q4 capacity “filled in very nicely” since Q2; short lead times enable delivery of orders to hit the new range .
  • TerraSource profitability: Accretive margins; synergy capture already started; bulk to show through next year .
  • Parts growth drivers: Majority from execution to grow parts; pricing mainly inflation/tariff pass-through (~4–5% COGS effect) .
  • Tariffs: Complex but mitigated with pricing and sourcing; 2025/2026 planning embeds tariff impacts .
  • Growth vectors: Rare earth mining orders received; existing equipment suited without major redesign .

Estimates Context

  • Q3 results beat consensus: Adjusted EPS $0.47 vs $0.38, revenue $350.1M vs $330.9M; beat driven by IS strength, TerraSource contribution, and margin initiatives . Estimates from S&P Global.
  • Street models likely move up on higher FY adjusted EBITDA floor ($132M–$142M) and visibility on Q4 ranges for SG&A and D&A .

Estimates footnote: Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat and higher FY adjusted EBITDA floor underpin near-term sentiment; catalysts include continued IS strength and TerraSource accretion .
  • Mix shift toward higher-margin aftermarket continues (IS parts +14.8%; company parts mix +670 bps with TerraSource), supporting margin resiliency into 2026 .
  • MS margin optics should normalize as 3Q24’s one-time reserve release rolls off; TerraSource integration tracking to 2026 synergy ramp .
  • Watch cash conversion: Q3 FCF −$12.3M on seasonality/working capital; monitor Q4 working capital unwind given short lead times .
  • Balance sheet/liquidity robust ($312.1M), net leverage around ~2x adjusted EBITDA, preserving optionality for organic/inorganic growth .
  • Tariff environment remains fluid, but pricing/sourcing actions have offset impacts to date; risk appears managed within guidance .
  • Dividend maintained at $0.13; stable capital return while funding integration and targeted capex ($25M–$35M FY) .

Appendix: Additional Data

Condensed GAAP P&L (Q3 snapshot)

  • Revenue $350.1M; gross profit $84.2M; operating income $1.1M; interest expense $(7.3)M; net loss $(4.2)M; diluted EPS $(0.18) .

Non-GAAP bridges (Q3)

  • Adjusted operating income $20.6M (adds transformation $5.2M, amortization $6.2M, transaction costs $8.3M, etc.) .
  • Adjusted EPS $0.47 (adds back transformation $0.23, amortization $0.27, transaction $0.36; tax impact $(0.20)) .