ASTEC INDUSTRIES INC

Previous wording

•Income from operations was $20.5 million, an increase of 225.4%

Current wording

•Income from operations was $21.4 million, an increase of 300.0%

Previous wording

•Net income attributable to Astec was $14.3 million, an increase of 320.6%

Current wording

•Net income attributable to Astec was $16.7 million, an increase of 219.3%

Previous wording

•Diluted earnings per share was $0.62, an increase of 313.3%

Current wording

•Diluted earnings per share was $0.72, an increase of 218.0%

Previous wording

Strategic Transformation Program –Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized ERP system, which is replacing much of our existing disparate core financial systems. To date, we have launched the human capital resources module in our U.S. locations and converted the operations of three manufacturing sites along with Corporate. We expect the project to conclude in 2028 or 2029 with total approximate implementation costs anticipated to range from $180 to $200 million. Through the first quarter of 2025, we have incurred total implementation costs of approximately $140 million.

Current wording

Strategic Transformation Program –Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized ERP system, which is replacing much of our existing disparate core financial systems. To date, we have launched the human capital resources module in our U.S. locations and converted the operations of three manufacturing sites along with Corporate. We expect the project to conclude in 2028 or 2029 with total approximate implementation costs anticipated to range from $180 to $200 million. Through the second quarter of 2025, we have incurred total implementation costs of approximately $143 million.

Previous wording

Steel is a major component of our equipment. In reaction to new or increased tariffs imposed by the Trump Administration and reciprocal actions by foreign governments, steel prices increased in the first quarter 2025. We anticipate that steel prices will remain at elevated levels in conjunction with further tariff actions, marginal demand growth, domestic reshoring activities and a global focus on construction projects.

Current wording

Steel is a major component of our equipment. In reaction to new or increased tariffs imposed by the Trump Administration and reciprocal actions by foreign governments, steel prices remained elevated during the second quarter 2025. We anticipate that steel prices will remain at elevated levels in conjunction with ongoing tariff actions, stagnant demand growth, domestic reshoring activities and a global focus on construction projects.

Previous wording

Net sales for the first quarter of 2025 were $329.4 million compared to $309.2 million for the first quarter of 2024, an increase of $20.2 million, or 6.5%. The increase in net sales was primarily driven by net favorable pricing coupled with volume and mix that generated increases in (i) equipment sales of $20.4 million, (ii) used equipment sales of $2.3 million, (iii) freight revenue of $1.3 million and (iv) service and equipment installation revenue of $1.2 million. These increases were partially offset by a decrease in parts and component sales of $4.5 million. Sales reported by our foreign subsidiaries in U.S. dollars for the first quarter of 2025 would have been $1.6 million higher had foreign exchange rates been the same as 2024 rates.

Current wording

Net sales for the first six months of 2025 were $659.7 million compared to $654.7 million for the first six months of 2024, an increase of $5.0 million, or 0.8%. The increase in net sales was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increases in (i) used equipment sales of $2.2 million, (ii) service and equipment installation revenue of $2.0 million, (iii) freight revenue of $1.5 million and (iv) equipment sales of $0.9 million. These increases were partially offset by a decrease in parts and component sales of $1.9 million. Sales reported by our foreign subsidiaries in U.S. dollars for the first six months of 2025 would have been $2.3 million higher had the first six months of 2025 foreign exchange rates been the same as the first six months of 2024 rates.

Previous wording

Domestic sales for the first quarter of 2025 were $273.8 million, or 83.1% of consolidated net sales, compared to $243.2 million, or 78.7% of consolidated net sales, for the first quarter of 2024, an increase of $30.6 million, or 12.6%. Domestic sales increased primarily due to increases in (i) equipment sales of $28.4 million, (ii) used equipment sales $2.3 million, (iii) freight revenue of $1.1 million and (iv) service and equipment installation revenue of $1.0 million. These increases were partially offset by a decrease in parts and component sales of $1.8 million.

Current wording

Domestic sales for the first six months of 2025 were $535.8 million, or 81.2% of consolidated net sales, compared to $515.3 million, or 78.7% of consolidated net sales, for the first six months of 2024, an increase of $20.5 million, or 4.0%. Domestic sales increased primarily due to higher (i) equipment sales of $11.5 million, (ii) parts and component sales of $2.8 million, (iii) service and equipment installation revenue of $2.2 million, (iv) used equipment sales of $2.2 million and (v) freight revenue of $1.5 million.

Previous wording

International sales for the first quarter of 2025 were $55.6 million, or 16.9% of consolidated net sales, compared to $66.0 million, or 21.3% of consolidated net sales, for the first quarter of 2024, a decrease of $10.4 million, or 15.8%. International sales decreased primarily due to decreases in equipment and parts and component sales of $8.0 million and $2.7 million, respectively.

Current wording

International sales for the first six months of 2025 were $123.9 million, or 18.8% of consolidated net sales, compared to $139.4 million, or 21.3% of consolidated net sales, for the first six months of 2024, a decrease of $15.5 million, or 11.1%. International sales decreased primarily due to lower equipment sales of $10.6 million and parts and component sales of $4.7 million.

Previous wording

Gross profit for the first quarter of 2025 was $92.4 million, or 28.1% of net sales, as compared to $76.9 million, or 24.9% of net sales, for the first quarter of 2024, an increase of $15.5 million or 20.2%. The increase in gross profit was primarily driven by the impact of net favorable pricing coupled with favorable volume and mix which generated $16.0 million higher gross profit and manufacturing efficiencies of $3.7 million. These increases were partially offset by higher warranty program costs of $2.0 million and net unfavorable inventory adjustments of $1.5 million.

Current wording

Gross profit for the first six months of 2025 was $180.7 million, or 27.4% of net sales, as compared to $158.2 million, or 24.2% of net sales, for the first six months of 2024, an increase of $22.5 million, or 14.2%. The increase in gross profit was primarily driven by (i) the impact of net favorable pricing partially offset by net unfavorable volume and mix of $21.9 million, (ii) the favorable impact of changes in manufacturing input costs related to materials, labor and overhead of $3.1 million and (iii) manufacturing efficiencies of $1.7 million. These increases were partially offset by higher warranty program costs of $3.7 million.

Previous wording

Restructuring charges and the gain on sale of property and equipment, net for the three-month periods ended March 31, 2025 and 2024 are presented below:

Current wording

Restructuring charges and the gain on sale of property and equipment, net for the three and six months ended June 30, 2025 and 2024 are presented below:

Previous wording

Interest expense of $2.0 million was incurred in the three months ended March 31, 2025, as compared to $2.7 million in the three months ended March 31, 2024, primarily related to lower interest rates combined with lower average outstanding borrowings on the Credit Facility in the first quarter of 2025 as compared to the same period in 2024.

Current wording

Interest expense of $2.1 million and $4.1 million was incurred in the three and six months ended June 30, 2025, respectively, as compared to $3.1 million and $5.8 million in the three and six months ended June 30, 2024, respectively, primarily related to lower average outstanding borrowings on the 2022 Credit Facility combined with lower interest rates in the second quarter of 2025 as compared to the same period in 2024.

Previous wording

Our income tax expense for the first quarter of 2025 was $5.4 million compared to $1.4 million for the first quarter of 2024. Our effective income tax rate was 27.4% for the first quarter of 2025 compared to 29.8% for the first quarter of 2024. The income tax expense for three months ended March 31, 2025 was higher compared to the same period in 2024, primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss.

Current wording

Our income tax expense for the first six months of 2025 was $11.2 million compared to $1.7 million for the first six months of 2024. Our effective tax rate was 26.5% for the first six months of 2025 compared to (18.9)% for the first six months of 2024. The income tax expense for the six months ended June 30, 2025 was higher compared to the same period in 2024 primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net nondeductible goodwill impairment incurred in 2024.

Previous wording

The backlog of orders as of March 31, 2025 was $402.6 million compared to $559.8 million as of March 31, 2024, a decrease of $157.2 million, or 28.1%.

Current wording

The backlog of orders as of June 30, 2025 was $380.8 million compared to $531.1 million as of June 30, 2024, a decrease of $150.3 million, or 28.3%.

Previous wording

Our shorter production lead times and parts fill rates have allowed for customers to place orders closer to the desired delivery date. Additionally, we have experienced variability in the ordering patterns from our dealer customers as a result of macroeconomic factors such as higher inflation, including the impact of recently enacted or increased tariffs, and elevated interest rates, among other factors. These factors have influenced customer ordering patterns and are expected to continue.

Current wording

Our shorter production lead times and parts fill rates have allowed for customers to place orders closer to the desired delivery date. Additionally, we have experienced variability in the ordering patterns from our customers as a result of macroeconomic factors.

Previous wording

Sales in this segment were $93.4 million for the first quarter of 2025 compared to $107.0 million for the same period in 2024, a decrease of $13.6 million, or 12.7%. The decrease was primarily driven by net unfavorable volume and mix, partially offset by favorable pricing that generated decreased equipment sales and parts and component sales of $11.7 million and $1.2 million, respectively.

Current wording

Sales in this segment were $204.6 million for the second quarter of 2025 compared to $221.4 million for the same period in 2024, a decrease of $16.8 million, or 7.6%. The decrease was primarily driven by net unfavorable volume and mix partially offset by favorable pricing that generated decreased equipment sales of $23.6 million partially offset by increases in parts and component sales of $4.8 million and service and equipment installation revenue of $1.4 million.

Previous wording

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by the CEO, who is the CODM, to evaluate performance and allocate resources to the reportable segments. Segment Operating Adjusted EBITDA is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance. See Note 9, Operations by Industry Segment and Geographic Area, of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated income before income taxes.

Current wording

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our CEO, who is the CODM, to evaluate performance and allocate resources to the reportable segments. Segment Operating Adjusted EBITDA is defined as net income or loss before the impact of interest income or expense, income taxes, depreciation and amortization and certain other adjustments that are not considered by the CODM in the evaluation of ongoing operating performance. See Note 10, Operations by Industry Segment and Geographic Area, of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a reconciliation of Segment Operating Adjusted EBITDA to total consolidated income before taxes.

Previous wording

Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $12.9 million for the first quarter of 2025 compared to $12.0 million for the same period in 2024, an increase of $0.9 million, or 7.5%, primarily driven by transaction costs of $0.8 million and employee incentive compensation costs of $0.7 million.

Current wording

Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $12.7 million for the second quarter of 2025 compared to $9.8 million for the same period in 2024, an increase of $2.9 million, or 29.6%. The increase was primarily driven by higher personnel related costs of $2.4 million, largely driven by higher annual incentive compensation costs of $1.8 million, and transaction costs of $1.4 million attributable to the TerraSource acquisition completed in 2025.

Previous wording

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under the Credit Facility and cash flows from operations. As of March 31, 2025, our total liquidity was $238.9 million, consisting of $90.1 million of cash and cash equivalents available for operating purposes and $148.8 million available for additional borrowings under our revolving credit facility, to the extent our compliance with financial covenants permits such borrowings. Our foreign subsidiaries held $29.6 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.

Current wording

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under our credit facilities and cash flows from operations. As of June 30, 2025, our total liquidity was $247.6 million, consisting of $87.8 million of cash and cash equivalents available for operating purposes and $159.8 million available for additional borrowings

Previous wording

Our future cash requirements primarily include working capital needs, debt service obligations, capital expenditures, vendor-hosted software arrangements including the related implementation costs, unrecognized tax benefits and operating lease payments. In addition, our variable cash uses may include transformation initiatives, strategic acquisitions, dividend payments and share repurchases under our share repurchase authorization. We believe that our current working capital, cash flows generated from future operations and available capacity under the Credit Facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.

Current wording

Our future cash requirements primarily include working capital needs, debt service obligations, capital expenditures, vendor-hosted software arrangements including the related implementation costs, unrecognized tax benefits and operating lease payments. In addition, our variable cash uses may include transformation initiatives, strategic acquisitions, dividend payments and share repurchases under our share repurchase authorization. We believe that our current working capital, cash flows generated from future operations and available capacity under the 2025 Credit Facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.

Previous wording

On December 19, 2022, we entered into a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The Credit Agreement provides for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $125.0 million (the "Credit Facilities") and (iii) a maturity date of December 19, 2027. The Credit Agreement contains certain financial covenants, including requirements related to our Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio, each as defined in the agreement. Failure to satisfy these covenants could result in the accelerated repayment of our indebtedness. We were in compliance with all covenants of the Credit Facilities as of March 31, 2025.

Current wording

On December 19, 2022, we entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (the "2022 Credit Agreement"). The 2022 Credit Agreement provided for (i) a revolving credit facility (consisting of revolving credit loans and swingline loans) and a letter of credit facility, in an aggregate amount of up to $250.0 million, (ii) an incremental credit facility in an aggregate amount not to exceed $125.0 million and (iii) a maturity date of December 19, 2027. The 2022 Credit Agreement contains certain financial covenants, including requirements related to our Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio, each as defined in the agreement. Failure to satisfy these covenants could result in the accelerated repayment of our indebtedness. We were in compliance with all covenants of the 2022 Credit Facility as of June 30, 2025.

Previous wording

We had $96.0 million in outstanding borrowings under the Credit Facilities as of March 31, 2025. Our outstanding letters of credit totaling $5.2 million decreased borrowing availability to $148.8 million under the revolving credit facility as of March 31, 2025.

Current wording

We had $85.0 million in outstanding borrowings under the 2022 Credit Facility as of June 30, 2025. Our outstanding letters of credit totaling $5.2 million decreased borrowing availability to $159.8 million under the revolving credit facility as of June 30, 2025.

Previous wording

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of March 31, 2025, open purchase obligations totaled $134.7 million, of which $131.6 million are expected to be fulfilled within the remainder of 2025.

Current wording

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of June 30, 2025, open purchase obligations totaled $124.2 million, of which $117.1 million are expected to be fulfilled within the remainder of 2025.

Previous wording

We estimate that our capital expenditures will be between $35.0 million and $45.0 million for the year ending December 31, 2025, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.

Current wording

We estimate that our capital expenditures will be between $25.0 million and $35.0 million for the year ending December 31, 2025, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.

Previous wording

The following table summarizes cash flows during the three months ended March 31, 2025 and 2024, respectively:

Current wording

The following table summarizes cash flows during the six months ended June 30, 2025 and 2024, respectively:

Previous wording

Our operating activities provided net cash of $20.5 million for the three months ended March 31, 2025 as compared to a net use of $47.0 million for the three months ended March 31, 2024. This increase is primarily due to lower net cash usages for our operating assets and liabilities of $52.5 million coupled with increased cash inflows from net income reduced by non-cash charges of $15.0 million. The decreased net cash usage for our operating assets and liabilities were mainly driven the timing impacts of (i) collections on trade and other receivables of $35.2 million, which includes $13.7 million recorded in the first quarter of 2024 related to a subsequently finalized litigation settlement, (ii) inventory purchases of $19.7 million, (iii) payments of trade accounts payables of $10.1 million and (iv) lower employee-related payments of $7.8 million. The decreased net cash usage was partially offset by decreased customer deposits of $15.2 million associated with lower backlog and the timing impacts for accrued liabilities of $14.9 million, which includes $13.7 million recorded in the first quarter of 2024 related to a subsequently finalized litigation settlement.

Current wording

Our operating activities provided net cash of $33.4 million for the six months ended June 30, 2025 as compared to a net use of $36.1 million for the six months ended June 30, 2024. This increase is primarily due to lower net cash usages for our operating assets and liabilities of $39.8 million coupled with increased cash inflows from net income reduced by non-cash charges of $29.8 million. The decreased net cash usage for our operating assets and liabilities were mainly driven the timing impacts of (i) collections on trade and other receivables of $78.7 million, (ii) payments of trade accounts payables of $21.9 million and (iii) lower employee-related payments of $11.5 million. The decreased net cash usage was partially offset by (i) decreased customer deposits of $26.7 million associated with lower backlog, (ii) the timing impacts for accrued liabilities of $22.3 million and (iii) the timing of inventory purchases of $20.4 million.

Previous wording

Net cash used in investing activities was $4.2 million during the three months ended March 31, 2025 as compared to $5.9 million during the three months ended March 31, 2024, primarily due to decreased capital expenditures of $1.9 million.

Current wording

Net cash used in investing activities was $7.7 million during the six months ended June 30, 2025 as compared to $12.6 million during the six months ended June 30, 2024, primarily due to decreased capital expenditures of $5.6 million.

Previous wording

Our financing activities used net cash of $15.0 million during the three months ended March 31, 2025 as compared to providing net cash of $48.4 million during the three months ended March 31, 2024, primarily due to net repayments on our Credit Facilities in 2025 as compared to net borrowings in 2024.

Current wording

Our financing activities used net cash of $29.2 million during the six months ended June 30, 2025 as compared to providing net cash of $49.5 million during the six months ended June 30, 2024, primarily due to net debt repayments in 2025 as compared to net borrowings in 2024.

Previous wording

We paid quarterly dividends of $0.13 per common share to shareholders in the first quarter of both 2025 and 2024.

Current wording

We paid quarterly dividends of $0.13 per common share to shareholders in the second quarter of both 2025 and 2024.

Previous wording

Our total current assets increased to $737.2 million as of March 31, 2025 from $722.8 million as of December 31, 2024, an increase of $14.4 million, or 2.0%, due primarily to increases in (i) inventories of $12.2 million, (ii) trade and other receivables of $5.4 million and (iii) cash, cash equivalents and restricted cash of $1.8 million. These increases were partially offset by a decrease in prepaid and refundable income taxes of $4.6 million.

Current wording

Our total current assets increased to $746.0 million as of June 30, 2025 from $722.8 million as of December 31, 2024, an increase of $23.2 million, or 3.2%, due primarily to increases in inventories of $26.1 million and prepaid and refundable income taxes of $6.4 million. These increases were partially offset by decreases in trade and other receivables of $7.3 million and cash, cash equivalents and restricted cash of $2.1 million.

Previous wording

Our total current liabilities increased to $277.0 million as of March 31, 2025 from $271.7 million as of December 31, 2024. Increases of $12.4 million and $1.7 million in accounts payables and accrued product warranty, respectively, were partially offset by (i) decreases in customer deposits of $5.0 million, (ii) decreases in short term debt of $1.8 million and (iii) decreases in other current liabilities of $1.8 million.

Current wording

Our total current liabilities increased to $274.8 million as of June 30, 2025 from $271.7 million as of December 31, 2024, an increase of 1.1%, due primarily to increases in accounts payables of $9.9 million and accrued product warranty of $2.8 million. These increases were partially offset by decreases in customer deposits of $7.1 million and short term debt of $1.5 million.