ASTEC INDUSTRIES INC

Previous wording

•Income from operations was $9.0 million, a decrease of 56.1%

Current wording

•Income from operations was $20.4 million, a decrease of 4.7%

Previous wording

•Net income attributable to Astec was $1.3 million, a decrease of 90.9%

Current wording

•Net income attributable to Astec was $10.5 million, a decrease of 37.1%

Previous wording

•Diluted income per share was $0.06, a decrease of 90.3%

Current wording

•Diluted income per share was $0.45, a decrease of 37.5%

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 worldwide 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 2026, we have incurred total implementation costs of approximately $154 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 worldwide 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 2026, we have incurred total implementation costs of approximately $158 million.

Previous wording

See Note 11, Strategic Transformation and Other Operating Gains, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of the costs related to these strategic initiatives.

Current wording

See Note 11, Strategic Transformation, Restructuring Charges and Other Operating Gains, net of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional discussion of the costs related to these strategic initiatives.

Previous wording

Steel is a major component of our equipment. Fluctuations in steel prices throughout 2025 resulted in a relatively stable average price for the year overall. However, continued low levels of steel imports, rising steel demand in certain markets and elevated freight and energy costs have driven increased steel prices in the first quarter of 2026. We anticipate that steel prices will remain elevated during 2026.

Current wording

Steel is a major component of our equipment. Increased steel demand in certain markets and elevated freight and energy costs have driven increased steel prices in the first half of 2026. We anticipate that steel prices will remain elevated during the remainder of 2026.

Previous wording

Additionally, significant portions of our revenues from the Infrastructure Solutions segment relate to the sale of equipment involved in the production, handling, recycling or application of asphalt mix. Liquid asphalt is a by-product of oil refining, and changes in the price of oil impact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products. Oil prices have routinely fluctuated in recent years and have experienced a significant rise in the first quarter of 2026 due to the conflict in the Middle East. We anticipate that these high prices will persist in the short term.

Current wording

Additionally, significant portions of our revenues from the Infrastructure Solutions segment relate to the sale of equipment involved in the production, handling, recycling or application of asphalt mix. Liquid asphalt is a by-product of oil refining, and changes in the price of oil impact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products. Oil prices have routinely fluctuated in recent years and have experienced a significant rise in the first half of 2026 due to the conflict in the Middle East. We anticipate that these high prices will persist in the short term.

Previous wording

Net sales for the first quarter of 2026 were $396.3 million compared to $329.4 million for the first quarter of 2025, an increase of $66.9 million, or 20.3%. The increase in net sales was primarily driven by net favorable volume and mix coupled with favorable pricing from both organic and inorganic contributions that generated increases in (i) equipment sales of $42.9 million, (ii) parts and component sales of $20.0 million and (iii) service and equipment installation revenue of $4.0 million. These increases were partially offset by decreased other revenues of $1.0 million. Sales reported by our foreign subsidiaries in U.S. dollars for the first quarter of 2026 would have been $4.5 million lower had foreign exchange rates been the same as 2025 rates.

Current wording

Net sales for the second quarter of 2026 were $408.1 million compared to $330.3 million for the second quarter of 2025, an increase of $77.8 million, or 23.6%. The increase in net sales was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in equipment sales of $42.6 million and parts and service revenues of $35.0 million. Included in the net increase is $48.6 million of incremental net sales from acquired businesses. Sales reported by our foreign subsidiaries in U.S. dollars for the second quarter of 2026 would have been $4.0 million lower had second quarter 2026 foreign exchange rates been the same as second quarter 2025 rates.

Previous wording

Gross profit for the first quarter of 2026 was $99.1 million, or 25.0% of net sales, as compared to $92.4 million, or 28.1% of net sales, for the first quarter of 2025, an increase of $6.7 million or 7.3%. The increase in gross profit was primarily driven by (i) the impact of net favorable volume and mix coupled with favorable pricing of $25.3 million, (ii) lower warranty program costs of $3.2 million and (iii) net favorable inventory adjustments of $1.6 million. These increases were partially offset by (i) the impacts of manufacturing variances partially due to freight, duties and tariffs of $16.1 million, (ii) the impact of inflation on materials, labor and overhead of $6.2 million and (iii) the amortization of acquisition-related inventory fair value step-up of $1.4 million.

Current wording

Gross profit for the second quarter of 2026 was $106.8 million, or 26.2% of net sales, as compared to $88.3 million, or 26.7% of net sales, for the second quarter of 2025, an increase of $18.5 million, or 21.0%. The increase in gross profit was primarily driven by the impact of net favorable volume and mix coupled with favorable pricing of $41.0 million and lower warranty program costs of $1.0 million. This increase was partially offset by (i) manufacturing inefficiencies, inclusive of freight, duties and tariffs, of $8.6 million, (ii) the impact of inflation on materials, labor and overhead of $8.4 million and (iii) net unfavorable inventory adjustments of $6.4 million.

Previous wording

Selling, general and administrative expenses were $90.2 million, or 22.8% of net sales, for the first quarter of 2026, compared to $71.9 million, or 21.8% of net sales, for the first quarter of 2025, an increase of $18.3 million, or 25.5%, primarily due to (i) increased personnel-related costs of $7.8 million, (ii) increased intangible asset amortization expense of $7.2 million, (iii) increased exhibit and promotional costs of $3.0 million primarily due to the ConExpo industry trade show held once every three years, (iv) increased travel expense of $1.1 million and (v) increased acquisition and integration costs of $0.7 million. These increases were partially offset by lower costs related to our strategic transformation program of $3.1 million.

Current wording

Selling, general and administrative expenses were $175.7 million, or 21.8% of net sales, for the first six months of 2026, compared to $138.9 million, or 21.1% of net sales, for the first six months of 2025, an increase of $36.8 million, or 26.5%, primarily due to (i) increased intangible asset amortization expense of $14.4 million, (ii) increased personnel-related costs of $13.1 million, (iii) increased exhibit and promotional costs of $3.6 million primarily due to the ConExpo industry trade show held once every three years, (iv) increased technology support costs of $1.8 million and (v) increased dealer commissions of $1.7 million. These increases were partially offset by lower costs related to our strategic transformation program of $1.9 million.

Previous wording

Interest expense of $7.4 million was incurred in the three months ended March 31, 2026, as compared to $2.0 million in the three months ended March 31, 2025, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit Facilities as compared to our previous credit facilities, which were replaced by the 2025 Credit Facilities.

Current wording

Interest expense of $7.1 million and $14.5 million was incurred in the three and six months ended June 30, 2026, respectively, as compared to $2.1 million and $4.1 million in the three and six months ended June 30, 2025, respectively, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit Facility as compared to our previous credit facility.

Previous wording

Our income tax expense for the first quarter of 2026 was $1.5 million compared to $5.4 million for the first quarter of 2025. Our effective income tax rate was 53.6% for the first quarter of 2026 compared to 27.4% for the first quarter of 2025. The income tax expense for three months ended March 31, 2026 was lower compared to the same period in 2025, primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

Current wording

Our income tax expense for the second quarter of 2026 was $4.5 million compared to $5.8 million for the second quarter of 2025. Our effective income tax rate was 30.0% for the second quarter of 2026 compared to 25.7% for the second quarter of 2025. The income tax expense for the three months ended June 30, 2026 was lower compared to the same period in 2025 primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

Previous wording

Uncertainty driven by macroeconomic factors, such as changing interest rates, global tariff policies and geopolitical conflicts, as well as seasonality, have historically had an impact on our backlog. The backlog of orders as of March 31, 2026 was $549.2 million compared to $402.6 million as of March 31, 2025, an increase of $146.6 million, or 36.4%. The increases in backlog are driven by organic growth due to increased demand in the aggregates business, partially attributable to large data center projects, and inorganic contributions.

Current wording

The backlog of orders as of June 30, 2026 was $601.1 million compared to $380.8 million as of June 30, 2025, an increase of $220.3 million, or 57.9%. The increases in backlog are driven by organic growth due to increased demand in the aggregates business, partially attributable to large data center projects, and inorganic contributions. Uncertainty driven by macroeconomic factors, such as changing interest rates, global tariff policies and geopolitical conflicts, as well as seasonality, have historically had an impact on our backlog.

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 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 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 $13.4 million for the first quarter of 2026 compared to $12.9 million for the same period in 2025, an increase of $0.5 million, or 3.9%.

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 $12.4 million for the second quarter of 2026 compared to $12.7 million for the same period in 2025, a decrease of $0.3 million, or 2.4%.

Previous wording

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under our 2025 Credit Facilities and cash flows from operations. As of March 31, 2026, our total liquidity was $267.5 million, consisting of $73.4 million of cash and cash equivalents available for operating purposes and $194.1 million available for additional borrowings under the 2025 Revolving Credit Facility, to the extent our compliance with financial covenants permits such borrowings. Our foreign subsidiaries held $38.8 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 2025 Credit Facilities and cash flows from operations. As of June 30, 2026, our total liquidity was $265.8 million, consisting of $75.7 million of cash and cash equivalents available for operating purposes and $190.1 million available for additional borrowings under the 2025 Revolving Credit Facility, to the extent our compliance with financial covenants permits such borrowings. Our foreign subsidiaries held $36.5 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.

Previous wording

On July 1, 2025, we entered into the 2025 Credit Agreement that provides for (i) the 2025 Revolving Credit Facility, a term loan facility, a swingline facility and a letter of credit facility, in an initial aggregate amount of up to $600.0 million and (ii) an incremental facilities limit in an aggregate amount not to exceed $150.0 million. We had outstanding principal indebtedness on the term loan facility of $336.9 million and $50.0 million outstanding borrowings under the 2025 Revolving Credit Facility as of March 31, 2026. Our outstanding letters of credit totaling $5.9 million decreased borrowing availability to $194.1 million under the 2025 Revolving Credit Facility as of March 31, 2026.

Current wording

On July 1, 2025, we entered into the 2025 Credit Agreement that provides for (i) the 2025 Revolving Credit Facility, a term loan facility, a swingline facility and a letter of credit facility, in an initial aggregate amount of up to $600.0 million and (ii) an incremental facilities limit in an aggregate amount not to exceed $150.0 million. We had outstanding principal indebtedness on the term loan facility of $332.5 million and $54.0 million outstanding borrowings under the 2025 Revolving Credit Facility as of June 30, 2026. Our outstanding letters of credit totaling $5.9 million decreased borrowing availability to $190.1 million under the 2025 Revolving Credit Facility as of June 30, 2026.

Previous wording

Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom each have separate credit facilities with local financial institutions primarily to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees. The outstanding borrowings under such credit facilities of the international subsidiaries are recorded in "Short-term debt" in our Consolidated Balance Sheets. Each of these credit facilities is generally guaranteed by Astec Industries, Inc. and/or secured with certain assets of the local subsidiary.

Current wording

Certain of our international subsidiaries in Australia, Brazil, Canada, South Africa and the United Kingdom each have separate credit facilities with local financial institutions primarily to finance short-term working capital needs, as well as to cover foreign exchange contracts, performance letters of credit, advance payment and retention guarantees. The outstanding borrowings under such credit facilities of the international subsidiaries are recorded in "Short-term debt" in our Consolidated Balance Sheets.

Previous wording

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of March 31, 2026, open purchase obligations totaled $189.5 million, of which $186.3 million are expected to be fulfilled within the remainder of 2026.

Current wording

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of June 30, 2026, open purchase obligations totaled $196.0 million, of which $179.4 million are expected to be fulfilled within the remainder of 2026.

Previous wording

We estimate that our capital expenditures will be between $40.0 million and $50.0 million for the year ending December 31, 2026, 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 $35.0 million and $45.0 million for the year ending December 31, 2026, 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, 2026 and 2025, respectively:

Current wording

The following table summarizes cash flows during the six months ended June 30, 2026 and 2025, respectively:

Previous wording

Our operating activities provided net cash of $40.7 million for the three months ended March 31, 2026 as compared to $20.5 million for the three months ended March 31, 2025. This increase is primarily due to net cash provided by our operating assets and liabilities of $25.8 million partially offset by decreased cash inflows from net income reduced by non-cash charges of $5.6 million. The net cash provided by our operating assets and liabilities was mainly driven by fluctuations in (i) inventories of $16.5 million, (ii) trade and other receivables of $9.0 million and (iii) customer deposits of $7.4 million. The net cash provided was partially offset by fluctuations in prepaid and refundable income taxes of $4.3 million and higher employee-related payments of $3.0 million.

Current wording

Our operating activities provided net cash of $52.8 million for the six months ended June 30, 2026 as compared to $33.4 million for the six months ended June 30, 2025. This increase is primarily due to net cash provided by our operating assets and liabilities of $22.6 million partially offset by decreased cash inflows from net income reduced by non-cash charges of $3.6 million. The net cash provided by our operating assets and liabilities was mainly driven by fluctuations in inventories of $37.9 million and prepaid and refundable income taxes of $5.2 million. The net cash provided was partially offset by fluctuations in (i) customer deposits of $13.2 million, (ii) trade and other receivables of $7.9 million and (iii) higher employee-related payments of $6.4 million.

Previous wording

Net cash used in investing activities was $76.2 million during the three months ended March 31, 2026 as compared to $4.2 million during the three months ended March 31, 2025, primarily due to the CWMF acquisition and increased capital expenditures of $4.2 million.

Current wording

Net cash used in investing activities was $83.7 million during the six months ended June 30, 2026 as compared to $7.7 million during the six months ended June 30, 2025, primarily due to the CWMF acquisition and increased capital expenditures of $7.7 million.

Previous wording

Net cash provided by financing activities was $39.0 million during the three months ended March 31, 2026 as compared to a net use of $15.0 million during the three months ended March 31, 2025, primarily due to higher net debt borrowings in 2026 as compared to 2025.

Current wording

Net cash provided by financing activities was $36.2 million during the six months ended June 30, 2026 as compared to a net use of $29.2 million during the six months ended June 30, 2025, primarily due to higher net debt borrowings in 2026 as compared to net repayments in 2025.

Previous wording

We paid quarterly dividends of $0.13 per common share to shareholders in the first quarter of both 2026 and 2025.

Current wording

We paid quarterly dividends of $0.13 per common share to shareholders in the second quarter of both 2026 and 2025.

Previous wording

Our total current assets increased to $819.5 million as of March 31, 2026 from $816.6 million as of December 31, 2025, an increase of $2.9 million, or 0.4%, due primarily to increases in inventories and cash, cash equivalents and restricted cash of $3.8 million and $3.0 million, respectively. These increases were partially offset by a decrease in trade and other receivables of $3.1 million.

Current wording

Our total current assets decreased to $816.4 million as of June 30, 2026 from $816.6 million as of December 31, 2025, a decrease of $0.2 million. Decreases in inventories and prepaid and other assets of $5.7 million and $1.8 million, respectively, were offset by increases in cash, cash equivalents and restricted cash and prepaid and refundable income taxes of $4.8 million and $2.4 million, respectively.

Previous wording

Our total current liabilities increased to $349.6 million as of March 31, 2026 from $328.0 million as of December 31, 2025, an increase of $21.6 million, or 6.6%, due primarily to increases in accounts payables and customer deposits of $14.7 million and $12.4 million, respectively. These increases were partially offset by decreases in accrued employee-related liabilities and accrued product warranties of $2.6 million and $2.0 million, respectively.

Current wording

Our total current liabilities decreased to $324.4 million as of June 30, 2026 from $328.0 million as of December 31, 2025, a decrease of $3.6 million, or 1.1%, due primarily to decreases in (i) customer deposits of $10.5 million, (ii) accrued employee-related liabilities of $6.4 million and (iii) accrued product warranties of $3.2 million. These decreases were partially offset by increases in accounts payable and other current liabilities of $14.1 million and $2.7 million, respectively.