Astec (ASTE) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, February 25, 2026 at 8:30 a.m. ET

Call participants

• President & Chief Executive Officer — Jaco van der Merwe
• Chief Financial Officer — Brian Harris
• Senior Vice President, Investor Relations — Stephen C. Anderson

Takeaways

• Net sales -- $400,600,000 for the quarter, marking a record fourth quarter.
• Full-year net sales growth -- 8.1%, fueled by organic and inorganic expansion.
• Adjusted EBITDA -- $44,700,000 for the quarter, with a margin of 11.2%.
• Full-year adjusted EBITDA and margin -- $140,700,000 at a 10% margin, up 140 basis points.
• 2026 adjusted EBITDA guidance -- $170,000,000 to $190,000,000 provided by management.
• Parts sales -- $432,700,000 for the year, an 11.5% increase and 30.7% of net sales.
• Q4 parts sales growth -- Rose 19.7% compared to prior year’s period.
• Backlog -- $514,000,000 at period end, up 14.4% sequentially and 22.5% year over year.
• Book-to-bill ratio -- Increased, as implied orders rose $46,000,000 or 11% sequentially from Q4 2024.
• Infrastructure Solutions segment Q4 net sales -- $223,600,000.
• Infrastructure Solutions segment full-year adjusted EBITDA margin -- 15.7%, a year-over-year increase of 120 basis points.
• Balance sheet liquidity -- $314,700,000 combining $70,000,000 cash and $244,700,000 available credit.
• Net debt/adjusted EBITDA -- Approximately 2x, within the stated target range.
• Recent acquisitions -- TerraSource and CWMF, collectively exceeding $200,000,000 in annual revenue acquired.
• CAPEX guidance -- $40,000,000 to $50,000,000 targeted for 2026.
• Depreciation and amortization -- Estimate of $55,000,000 to $65,000,000 for 2026.
• Adjusted SG&A guidance -- $70,000,000 to $80,000,000 per quarter anticipated for 2026.
• Effective tax rate guidance -- Expected in the 25%-28% range for the year ahead.
• Aftermarket business expansion -- Company continues to prioritize increasing aftermarket parts and service sales.
• Data center construction impact -- Management specifically cited accelerating multi-year equipment demand, especially in aggregate and infrastructure segments.

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Risks

• President & Chief Executive Officer van der Merwe said, "The forestry business was interesting the last 12–18 months. We’ve owned the Peterson business for about 12–13 years, and this down cycle was probably the worst we’ve seen since we’ve owned it." He added, "The paper and pulp industry is a bit in turmoil, and thankfully the U.S. didn’t have much storm damage last year, which typically drives business for us."

Summary

Astec Industries (NASDAQ:ASTE) presented robust year-end results, highlighting record net sales and material improvements in adjusted EBITDA margin. The firm guided for continued profitability growth in 2026, supported by organic momentum, the integration of TerraSource and CWMF, and multi-year infrastructure and data center-related tailwinds. Expanded aftermarket parts sales and a healthy backlog position management to pursue disciplined capital deployment and strategic growth initiatives across both core and acquired businesses.

• Management described CWMF as "accretive from day one" and noted further capacity and margin potential from new integration initiatives.
• Quotes during the call emphasized the importance of expanding the digital platform, especially the MyAstec and Signal initiatives, as future drivers for parts and service revenue.
• The company pointed to sizable synergy opportunities from dealer engagement, inventory optimization, and vertically integrated product rollouts.
• Congressional approval of continued federal and state funding was cited as a direct catalyst boosting the outlook and supporting elevated backlogs across key segments.

Industry glossary

• Book-to-bill ratio: A measure comparing incoming orders received to products shipped and billed during a specific period; a ratio above 1.0 typically signals growing demand.
• CONEXPO: A major North American construction trade show, relevant for launching new products and strengthening industry relationships.
• MyAstec: The company's digital platform for equipment lifecycle management and parts ordering, including digital twin functionality for customers.
• Signal platform: Astec Industries' new digital platform aimed at enhancing visibility, service, and data analytics for its equipment portfolio.
• PSG: Within company context, a business unit referenced as materially contributing to fourth-quarter results and organic growth, precise definition not formally provided in call.

Full Conference Call Transcript

Jaco van der Merwe: Thank you, Steve. Good morning, everyone, and thank you for joining us. We were pleased to report that hard work produced a successful year in 2025. On slide four, we highlight our fourth quarter and full year performance. For the quarter, we achieved record fourth quarter net sales of $400,600,000. Full year net sales increased 8.1% due to a combination of organic and inorganic growth. Adjusted EBITDA for the quarter was a solid $44,700,000. This yielded an adjusted EBITDA margin of 11.2%. Adjusted EBITDA of $140,700,000 for the year was at the upper end of our guidance range. The full year adjusted EBITDA margin was 10%, which was a 140 basis point increase over the prior year.

We are optimistic about 2026 due to our progress on internal initiatives and positive customer sentiment. Full year 2026 adjusted EBITDA guidance is a range of $170,000,000 to $190,000,000. We continue to generate positive free cash flow which allows us to fund both organic and inorganic growth. In 2025, we saw healthy demand for asphalt plants and concrete plants within the Infrastructure Solutions segment, while forestry and mobile paving equipment were challenged. During the fourth quarter, we saw an increase in the backlogs for forestry and mobile paving equipment, though they remain at the lower end of historical ranges. The Material Solutions segment demonstrated anticipated recovery late in the year with a combination of organic and inorganic growth.

Federal funding, healthy state and local budgets, and the construction of data centers are expected to drive multiyear demand in the Material Solutions and Infrastructure Solutions segments in 2026. Parts sales increased 19.7% versus the fourth quarter prior year. For the year, parts sales totaled $432,700,000, representing an 11.5% increase over the prior year and 30.7% of total net sales in 2025. As previously stated, growing our parts and service business continues to be a priority. We were pleased to show an increase in backlog to $514,000,000. This represented sequential and year-over-year growth of 14.4% and 22.5%, respectively, through a combination of organic and inorganic activity.

On slide five, we highlight the acquisitions of TerraSource and CWMF that collectively represent over $200,000,000 of annual revenue acquired by Astec Industries, Inc. As part of the TerraSource integration, we will share the new brand and designs at CONEXPO. The new designs are consistent with existing Astec Industries, Inc. products and incorporate our name and logo with the TerraSource legacy flagship brands, including Gundlach, Jeffrey Rader, Pennsylvania Crusher, and Elgin. Our joint teams are busy expanding the parts sales force, coordinating sales channels and cross-selling strategies, pursuing new product development, and assessing opportunities for optimal use. We anticipate benefits from these actions will be realized in 2026.

On 01/01/2026, we were excited to welcome the skilled and dedicated employees of CWMF to the Astec Industries, Inc. family. As a reminder, CWMF is a highly respected manufacturer of portable and stationary asphalt plant equipment and parts primarily concentrated in the Midwest, South Central, and Great Lakes regions of the United States. Our organizations are a strong cultural fit and we expect CWMF to be accretive from day one. Slide six provides detail on the state of the U.S. infrastructure and aggregate industries. Astec Industries, Inc. benefits from strong road construction and aggregate markets in the United States. As you may know, in 2022, Congress approved a five-year $347,500,000,000 infrastructure investment bill.

Funds committed within the bill totaled $148,000,000,000, or 71%, through 11/30/2025. Congress recently reached an agreement on transportation spending legislation for the remainder of fiscal year 2026. Road and street construction also supports the U.S. aggregate industry as aggregates are used in asphalt, concrete, and as base. In addition to expected increases in federal funds for road and bridge construction, 2026 state transportation budgets anticipate growth as well. Data centers and the aggregates and the infrastructure necessary to support them are also expected to drive multiyear demand.

In an October 2025 study by Thompson Research Group, aggregate quarries within a 30-mile truck radius of a major data center construction project saw demand for aggregate tonnage nearly double that of preconstruction levels. Overall, a healthy compound annual growth rate of 3.41% is expected for the U.S. aggregate markets through 2033. These industry trends provide advantages for Astec Industries, Inc., a company specializing in the rock-to-road sector. Ongoing infrastructure enhancements contribute to sustained demand for our equipment, parts, and implied orders, which were up $46,000,000 or 11% from the prior quarter in 2024. Our book-to-bill ratio was up and our backlog grew to $504,000,000, an increase on a sequential and year-over-year basis of 14.4% and 22.5%, respectively.

In forestry equipment, we are especially pleased with increased backlog in our Material Solutions segment. Thank you.

Brian Harris: Thank you, Jaco, and good morning. Next I will cover our fourth quarter consolidated results detailed by segment, liquidity and leverage, along with some 2026 outlook detail. Capital equipment and aftermarket parts adjusted EBITDA and margins increased due to strong volume, favorable pricing, and product mix. For the fourth quarter, adjusted earnings per share were $1.06. For the full year, net sales grew 8.1%, which was attributable to incremental net sales from the acquired TerraSource business, as well as positive organic volume and mix coupled with favorable pricing. As Jaco mentioned, we were pleased to report an adjusted EBITDA of $140,700,000, which was at the high end of our guidance range.

Both segments experienced growth as adjusted EBITDA margin expanded by 140 basis points on a consolidated basis to 10%. Adjusted earnings per share for the full year 2025 were $3.33, representing a 28.6% increase over the prior year. On slide 11, we show the Infrastructure Solutions segment, which generated fourth quarter net sales of $223,600,000. This measured to a strong prior-year comparison of $248,800,000, as solid demand for asphalt and concrete plant sales was offset by softness from mobile paving and forestry equipment. Aftermarket part sales were relatively flat albeit at healthy levels. Q4 sales increased $20,000,000 or 2.4%. Segment adjusted EBITDA was $134,300,000 for 2025, compared to $121,500,000 for 2024, an increase of $12,800,000 or 10.5%.

Full-year adjusted EBITDA margin grew 120 basis points to 15.7% compared to 14.5% in 2024. Increases were primarily due to the impact of net favorable volume and mix from inorganic and organic operations, coupled with favorable pricing. Adjusted EBITDA margin for the quarter increased 530 basis points to 11.8%. For the year, net sales increased 18.2% to $553,000,000 over the prior year and adjusted EBITDA grew 49.5% to $55,600,000. Adjusted EBITDA margin in 2025 reached 10.1% compared to 8% in 2024, an increase of 210 basis points. As shown on slide 13, our balance sheet remains strong, supported by substantial liquidity.

At quarter end, we had $70,000,000 in cash and cash equivalents along with $244,700,000 of available credit, resulting in total liquidity of $314,700,000. Net debt to adjusted EBITDA of approximately two times is well within our target range. For 2026, account for the following anticipated full-year ranges: adjusted EBITDA of $170,000,000 to $190,000,000; an effective tax rate between 25–28%; capital expenditures of $40,000,000 to $50,000,000; depreciation and amortization of $55,000,000 to $65,000,000; and a quarterly range for adjusted SG&A of $70,000,000 to $80,000,000. I will now hand the call back to Jaco.

Jaco van der Merwe: Thank you, Brian. Moving to slide 14, please mark your calendars to visit us at the 2026 CONEXPO Trade Show in Las Vegas from March 3 through the 7th. Our display will be located in the Central Hall in Booth C30236 where we will showcase several new products. We will also demonstrate our existing new Signal digital platform. Slide 15 provides an overview of our key investment highlights. We are proud of Astec Industries, Inc.’s longstanding reputation and premium solutions for our customers. Our team is highly engaged with customers. Based on recent interaction, customers have a favorable outlook. Efforts within our manufacturing and procurement are enhancing efficiency and we are seeing continued improvement in adjusted EBITDA.

Our growth is supported by several promising opportunities, including growing our recurring aftermarket parts business, which remains a top priority for the Astec Industries, Inc. team; advancing our robust pipeline of innovative new products, many of which will be on display at CONEXPO; having consistent multiyear federal and state funding for interstate and highway projects within our core U.S. market; exploring expansion possibilities in both established and emerging international markets; and pursuing inorganic growth with our demonstrated, disciplined, and focused approach to strategic acquisitions. As Brian mentioned, our strong balance sheet provides flexibility to fund our growth initiatives and manage leverage effectively. With that, operator, we’re ready to take your questions.

Operator: Thank you. To ask a question, please press 1. We will pause for just a moment to compile the Q&A. Your first question comes from the line of Stephen Michael Ferazani with JMP. Please go ahead.

Stephen Michael Ferazani: Really surprised by the strong backlog in 4Q, the orders as well as the guide. I want to dig into some of those pieces. As far as what you’re seeing in Material Solutions, it looks like that’s where you had a really significant beat on the top line this quarter. I’m assuming that’s what’s contributing to the strong guide. Higher interest rates coming down could help as well, and it felt like some of the smaller customers were not ready to buy, and now it’s coming through. On the organic side, can you talk about what you’re seeing, and also touch on PSG?

Jaco van der Merwe: We’re seeing it coming, and even if we back out TerraSource, you can see it on the organic side as well. PSG also came through really strong during the fourth quarter, and we got the results we were looking for when we did the business. We’ve talked a lot about the state of inventory in our dealer network, and we’ve seen and spoken to our dealers recently. They have very healthy backlog situations and healthy inventory. For a while, they did not necessarily have the right inventory; we worked through that. We’ve also seen very positive development around data centers that is affecting this business.

We see multiple super-large projects coming through, and our team is very well positioned to enjoy some of that business, and our dealers are highly engaged.

Stephen Michael Ferazani: Flipping over to Infrastructure Solutions, that backlog actually was higher than we were thinking as well. Our expectation was that as you enter the last year of the current highway funding bill, maybe you would see a slowdown in concrete and asphalt plant orders. That does not seem to be happening. Any updates on what you think highway funding might look like this year, and are there any concerns on your end if it slows?

Jaco van der Merwe: You’re right, Steve. We’re happy with how the year ended. Obviously, we had a very strong comp versus the prior year, but bookings stayed pretty strong, and here in the first couple of weeks of the year, MS and the IS business have seen strong order intake as well. On funding, we believe conversations are on track and that we will hear something about an infrastructure bill in the next couple of months. On a positive note, as we mentioned in our prepared remarks, funding for 2026 was approved by Congress. Overall, our customers are in a good space, and most of them have very good backlogs for the year.

They’re focused on the long term and the need for infrastructure is there. If we do get the bill, it will be very positive for us and for our customers.

Stephen Michael Ferazani: Turning to guidance, EBITDA is well above where we were. Since you’ve taken over, you’ve tried to improve production efficiencies, made investments in the plants, and you’ve been growing higher-margin parts sales. How much of this growth is driven by top line versus margin, beyond the margin improvement generated by higher throughput?

Jaco van der Merwe: If you look at the walk from 2025, we built some synergies in for the two deals, and we feel pretty good about our progress. These synergies take a while to work through the inventory we already have. We do see some organic growth for this year, and we’ve baked some of that into the number. If we get a new highway bill, we could probably go to the higher end of the range, but we feel the range makes sense this early in the year.

Stephen Michael Ferazani: You haven’t talked that much about the numbers around CWMF. I know it’s much smaller. Can you talk about what that contribution is to your range in 2026? And as a follow-up, how should we think about your M&A strategy with TerraSource and now CWMF?

Jaco van der Merwe: On CWMF, we’ve disclosed the basics, but we haven’t shared exactly their sales or profitability. We did mention that it is accretive from day one, and we’re very happy with where they fit and their margin profile. From an acquisition point of view, we have good momentum. Our team has done a fantastic job teeing these two deals up, and integration has been going really well. We have the team available to continue down this path. Our liquidity is in a strong position, so we’re going to continue to look. There are a lot of opportunities for us to grow both in the U.S. and internationally, and CWMF adds a great team to the company.

Operator: Your next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead.

Steven Ramsey: Hi. Good morning, everyone. To start, maybe continue the CWMF topics. You said it’s accretive day one. Can you talk to their parts contribution and where Astec can help on that front?

Jaco van der Merwe: Absolutely. The owners, Colman and Travis, have done a fantastic job with this business. They’ve created a great culture, and that culture fits in very well with Astec Industries, Inc. Our teams have come together quickly. We know this business in and out, and the discussions between our teams around working together, integrating sales structures, and synergies have gone as well as we could have imagined. They’ve built a very good manufacturing facility with strong capabilities, and we see opportunities to use that facility and grow output together with our Astec asphalt teams.

From a parts point of view, their parts mix is a little bit lower than what we have in our traditional asphalt business, so there’s a big opportunity to grow that. We’re going to ensure great parts availability and give our customers the support they expect from Astec.

Steven Ramsey: Sticking with recent acquisitions, for TerraSource can you talk about the progress with this business? Good to see margin improvement in the Materials segment. And can you talk about improving fill rates within TerraSource—where it is now versus when you closed?

Jaco van der Merwe: We’re still early in that improvement cycle. Our teams have done the calculations; we know exactly what we need to do and what inventory needs to be on the shelf. That process is underway, and within the next three to six months, we expect to be very close to where we want to be, which will positively influence the business. We’re making sure that as we bring this inventory in, we take advantage of synergy opportunities so we can buy at the levels we achieve in our legacy Astec business. Overall, TerraSource performance for the six months we’ve owned them has been in line with expectations. In the last couple of weeks, we’ve made significant improvements in team integration.

Our engineering team is finalizing products we’ll have at CONEXPO, and this business fits very well with Astec Industries, Inc.

Steven Ramsey: You pointed out infrastructure activity and data centers. On the Material Solutions segment, can you talk a little bit more on data centers—how your equipment is being deployed there, how much of that growth is following existing customers versus intentional efforts—and any ballpark on exposure?

Jaco van der Merwe: The majority of the crushing and screening needed to build these data centers will be done by companies we already do business with. These are customers with existing relationships and close ties to our dealers. We’ve seen quite a few large projects coming our way and we’re adding capacity in our facilities to take advantage. We haven’t put out a specific number we’re comfortable with yet, but based on our quoting pipeline we feel this business will be strong and support our EBITDA guidance for the year.

Steven Ramsey: To clarify, is the demand for data centers being filled through dealers primarily, or is there any direct business?

Jaco van der Merwe: Most of it is through dealers. Our crushing and screening product line goes through dealers; concrete needs go through a dealer structure as well. Any asphalt done around data centers—there we sell directly to customers, and many of our existing customers are involved in that construction.

Steven Ramsey: With the EBITDA guidance, do you expect margin expansion in both segments?

Jaco van der Merwe: We’ve been talking about growing our margins 0.7% to 1.5% a year on average, and over the last three years we’ve done that. It’s our aim to continue to achieve those improvements year over year, and we won’t be doing our job if we don’t do that again this year. There’s a lot of work to be done, but the team is ready, we know how to do it, and we have the opportunities—now it’s on us to execute.

Steven Ramsey: Last quick one. CONEXPO is a big event that doesn’t happen every year. In the past, does this help sales in the coming quarters as you roll out new products or highlight improvements? Is there any scenario where CONEXPO is a needle mover enough to shift the guidance or push you to the high end?

Jaco van der Merwe: These big shows always raise the question about return on investment. We’re very excited about this CONEXPO. Basically every product on display is either new or substantially upgraded. We’re going to launch our Signal digital platform there, which I’m very excited about. Are we going to walk away with $100,000,000 in new orders? Probably not. But will it send a signal to the market and our customers that Astec is strong and unified under our brands? Yes. We’ll have TerraSource on display and our CWMF team as part of us. It will give customers confidence and give our own team a boost to see how well we show up. So I’m excited—we’ll see you there next week.

Operator: Your next question comes from the line of David MacGregor with Longbow Research. Please go ahead.

David MacGregor: Good morning, and congratulations on the strong results. Picking up on your last point with rolling out the digital platform at CONEXPO, can you talk about progress on building out digital solutions generally? The goal is to make Astec easier to buy from—how should we think about this as a revenue growth facilitator in ’26?

Jaco van der Merwe: Great question. The world looks at what I call “dumb iron” and asks how we make it more productive and reliable. That’s what we want to achieve with our digital platform—give customers great visibility into equipment performance, utilization, and most importantly, help ensure their equipment runs all the time. Our digital platform will help do that and drive parts business and increase our service offerings. It will help us grow parts and service in the future. We’re just scratching the surface of what this can become. At CONEXPO you’ll see this integrated into every piece of equipment. Our teams are doing good things using data to help customers make better decisions.

We have multiple large customers standardizing on our platform; they’re going to benefit from this and will see the full capability next week. We’re excited—this is great for us long term.

David MacGregor: You mentioned a modest positive inflection in orders within the forestry business. Can you talk about what you’re seeing there and the extent to which you expect follow-through?

Jaco van der Merwe: The forestry business was interesting the last 12–18 months. We’ve owned the Peterson business for about 12–13 years, and this down cycle was probably the worst we’ve seen since we’ve owned it. The paper and pulp industry is a bit in turmoil, and thankfully the U.S. didn’t have much storm damage last year, which typically drives business for us. However, in the last couple of weeks we’ve seen decent order intake there. When that business runs at full cylinders, it makes really good profit, so if it comes back it will add to our profitability. We’ve baked some of that into the EBITDA outlook.

David MacGregor: On the parts business in 2026, you’ve done a lot of work on strategic inventory investments and expanding service support. How should we think about the drivers here in 2026, and what changes, if anything, in how you go after that business?

Jaco van der Merwe: We’re continuously improving how we go to market. One of the platforms you’ll see at CONEXPO is what we call MyAstec, a digital platform we’ve created starting for asphalt plants where we create a digital twin for our customers that makes ordering much easier. That platform is rolled out, and we’ve started to introduce it to concrete plants. We’re making it easier for customers to do business with us. We’re also strengthening our presence in the market. With CWMF on board, we got some part salespeople from them, and we’ve broken up territories to add more feet on the street for parts on the asphalt side.

On the TerraSource side, big opportunity there—we’re reviving historically strong brands and enabling them, focusing on fill rate, and adding salespeople to go after parts. These actions take time: last year’s actions pay off this year; what we’re putting in place now will play out later this year and into next year.

David MacGregor: Last one for Brian on working capital in the model for ’26 and how we should think about source versus use. Within that, on the equipment side you’ve seen people ordering on shorter lead times—does that give you the ability to fund growth in parts inventory with maybe a little less equipment inventory?

Brian Harris: Thanks, Dave. Working capital continues to be an area of focus for us. The better the cash flow we generate, the more ability we have to grow. In 2026, we see further opportunities to improve working capital management. Year-end forecasting can be tricky—inventory can convert into receivables in the short term—so pinpointing the exact year-end position is difficult. But overall, I see opportunities for continued improvement, and we’re going to drive cash through increased operating earnings as well. We’ve guided capex to $40,000,000 to $50,000,000 next year with a lot of good projects in our plants for operational improvement, improved quality, and automation.

We will reinvest some free cash flow back into the business, and overall I think working capital should improve slightly.

Jaco van der Merwe: Maybe one other comment to add: a lot of our ETO business doesn’t have finished goods inventory, so the real opportunity is strengthening parts availability. On TerraSource, we’ve done the calculations—yes, it will take a couple of million of inventory to get fill rates where we want them, but it’s not a double-digit number. It’s doable within a reasonable investment.

David MacGregor: Great. Thanks. Congratulations again on the progress, and I look forward to catching up with you next week.

Jaco van der Merwe: Thank you.

Operator: That concludes the Q&A session. And now I will turn the call over to Stephen C. Anderson, Senior Vice President of Investor Relations.

Steve Anderson: Thank you. We appreciate your participation in our conference call this morning and thank you for your interest in Astec Industries, Inc. As today’s news release states, this conference call has been recorded. A replay of the conference call will be available through 03/11/2026, and an archived webcast will be available for ninety days. The transcript will be available under the Investor Relations section of the Astec Industries, Inc. website within the next five business days. This concludes our call, but we are happy to connect later if there are additional questions. Thank you all, and have a good day.

Operator: Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect.

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