Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Astec Industries Inc (NASDAQ:ASTE) reported strong financial results for Q1 2025, with net sales growing by 6.5% over the prior year.
• The company achieved an adjusted EBITDA of $35.2 million, marking an 86.2% increase over Q1 2024.
• Astec Industries Inc (NASDAQ:ASTE) announced a strategic acquisition of Pterosaurs, expected to enhance their material solutions segment.
• The company maintained a strong balance sheet with cash and cash equivalents of $90.1 million and available credit of $148.8 million.
• Astec Industries Inc (NASDAQ:ASTE) experienced a double-digit improvement in their material solutions backlog and implied orders, indicating potential growth in the second half of the year.

Negative Points

• The company's backlog declined slightly on a sequential basis, indicating potential challenges in maintaining order levels.
• High interest rates and dealer inventory destocking negatively impacted capital equipment sales in the material solutions segment.
• There is uncertainty surrounding the impact of tariffs, which could affect costs and customer purchasing decisions.
• The demand for mobile paving and forestry units was soft, partially offsetting strong sales in other areas.
• Astec Industries Inc (NASDAQ:ASTE) did not raise its guidance due to uncertainties related to tariffs and potential customer hesitancy.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Signs with ASTE.

Q: Why didn't Astec Industries raise guidance despite strong performance and positive order trends? A: Yao van der Merwe, CEO, explained that while the company has seen strong performance, uncertainty around tariffs is a concern. The company has a strong team managing the situation, but the potential impact of tariffs on costs and customer behavior remains uncertain.

Q: How is Astec Industries positioned to handle current tariffs, and will there be a lag in margin recovery? A: Yao van der Merwe, CEO, stated that the company has learned from past experiences and has internal models to simulate tariff impacts. Immediate actions have been taken, especially for parts, and the company is prepared to manage any significant changes.

Q: Can you provide insights into the performance of the newly acquired company, Teosaurs, compared to Astec's legacy material solutions? A: Yao van der Merwe, CEO, highlighted that Teosaurs has a smaller exposure to mobile crushing and screening markets and a significant portion of its business comes from aftermarket parts, which contributes to higher margins. The acquisition is expected to enhance Astec's material solutions segment.

Q: Does the guidance exclude any impact from tariffs, and how is Astec managing the current tariff environment? A: Brian Harris, CFO, confirmed that the guidance excludes tariff impacts. The company has modeled potential impacts and is actively managing supply chain and pricing strategies to mitigate risks.

Q: Can Astec reprice its backlog in response to tariff changes? A: Yao van der Merwe, CEO, stated that while the company cannot reprice the backlog, proactive measures have been taken to cover potential impacts, and the backlog is at a more manageable level compared to previous periods.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.