Astec Industries NASDAQ: ASTE reported first-quarter fiscal 2026 results that showed strong sales growth and rising backlog, while profitability fell short of management’s expectations due to mix, tariff-related costs, freight, and trade show expenses. Executives said they remain confident in full-year targets, pointing to improving order activity, pricing actions in the pipeline, and continued demand supported by U.S. infrastructure spending.
Quarterly performance and profitability pressures
Chief Executive Officer Jaco van der Merwe said net sales increased 20.3% in the quarter, and the company’s trailing 12-month net sales stood at about $1.47 billion, supported by “a combination of organic growth and inorganic contributions.” Adjusted EBITDA for the quarter was $30.3 million, translating to a 7.6% adjusted EBITDA margin. On a trailing 12-month basis, adjusted EBITDA was $136 million with a 9.2% margin.
Chief Financial Officer Brian Harris said profitability was pressured in the quarter, with operating adjusted EBITDA declining $4.9 million versus the prior-year period. Adjusted EBITDA margin fell 310 basis points year over year for the quarter. Adjusted earnings per share were $0.54, down from $0.91 in the first quarter of 2025.
Management attributed the margin pressure to several factors, including costs tied to the CONEXPO-CON/AGG trade show, which occurs every three years, along with freight, duty, and tariff expenses. Van der Merwe also said first-quarter profitability was “lower than planned,” reflecting “timing effects and near-term cost pressures from tariffs, freight, and sales mix.”
Segment results: Infrastructure steady, Materials rebounds
In Infrastructure Solutions, Harris said net sales were $237 million, essentially flat with $236 million a year earlier. He noted the newly acquired business performed as expected, but results were offset by tough comparisons and timing differences in legacy equipment volumes. Segment operating adjusted EBITDA was $34.8 million, down $8.1 million versus the prior year’s “strong” first-quarter comparison, driven primarily by higher exhibit and promotional costs and higher freight, duty, and tariffs. Adjusted EBITDA margin for the segment was 14.7%.
During the Q&A, van der Merwe told Sidoti’s Steve Ferazani that Infrastructure Solutions experienced a different mix versus last year, including “a lower asphalt plants and parts business during the quarter,” which weighed on margins. He added that moving “one or two plants” between quarters can materially affect results. On tariffs, he said they affected the segment “a little bit,” but to a lesser extent than in Materials Solutions, and the company has additional pricing actions “in the pipeline” to mitigate impacts.
Materials Solutions posted the sharpest growth. Harris said first-quarter net sales rose $65.9 million, or 70.6%, versus the prior year, reflecting both organic and inorganic contributions. Segment operating adjusted EBITDA increased 71.2% to $8.9 million from $5.2 million, benefiting from favorable volume and mix and pricing, with trade show and logistics-related costs partially offsetting gains. The segment’s adjusted EBITDA margin was 5.6%, unchanged from the prior year’s first quarter, while trailing 12-month margin expanded to 9.6%.
Orders and backlog rise; multiyear demand outlook remains positive
Van der Merwe said Astec continued to see “healthy demand for asphalt plants and concrete plants,” while “challenging markets for forestry and mobile paving equipment persisted,” though he noted a “recent uptick in backlog for these products.”
He reported first-quarter implied orders of $397 million, compared with $465 million in the fourth quarter. Year over year, implied orders increased $85 million, or 27.2%, driven by both organic and acquisition-related contributions. Van der Merwe said book-to-bill ratios in each segment exceeded 100%.
Backlog rose to $549 million, up from $403 million in the year-ago period, an increase of $146 million, or 36%. Van der Merwe said Infrastructure Solutions backlog increased $37 million, including a $17 million contribution from CWMF, which joined the company on Jan. 1. He also said backlog in Materials Solutions increased by $110 million, or 87%, from a blend of legacy and inorganic contributions.
Van der Merwe tied demand expectations to government funding and other end-market activity, citing “stability of federal funding, healthy state budgets, and incremental business from data centers and onshoring activities.” He said the company expects “positive multiyear demand for Astec products in both segments.”
Pricing, tariffs, and margin cadence
Questions centered on how quickly pricing actions can catch up to higher costs. Harris said first-quarter 2025 gross margin was “a little bit of an outlier,” as the company had “got ahead of the game” on pricing before tariff-related costs materialized later in 2025. In the current quarter, he said tariffs “kicked in … to a greater extent,” and while the company has implemented pricing initiatives and has “more pricing” available for the remainder of the year, freight and duties tied to higher diesel and hydrocarbon costs remain a factor with some uncertainty.
On the near-term margin trajectory, Harris said the company expects to “emerge with stronger margins in the second quarter than we saw in the first.”
Acquisitions, aftermarket mix, liquidity, and outlook
Van der Merwe updated investors on integration of recent acquisitions, including TerraSource (acquired July 1, 2025) and CWMF (effective Jan. 1, 2026). He said many integration processes are complete, including adding employees to core systems, integrating finance functions, and aligning sales territories. The company is also working on branding, cross-selling, procurement opportunities, and evaluating manufacturing optimization.
On synergies, van der Merwe told analysts he is “very, very happy with the way the integrations are going,” and said synergy realization is “coming through the pipeline now.” He added that CWMF synergies are arriving faster than TerraSource’s due to overlap with suppliers, and the company remains confident it will realize the TerraSource synergy number previously provided to the market over the next 12 months.
Aftermarket was another focus. Van der Merwe said parts and service sales increased $24 million, or 19.7%, and remained about 37% of total sales. In Q&A, he said there is “a lot more to go” on improving that mix, noting that Astec plans to discuss its aspirations at its Investor Day.
Harris said the company generated $32.6 million of free cash flow in the quarter, aided by working capital movements including lower inventory and seasonal cash collections following a large fourth-quarter sales period. He said working capital will vary seasonally, but the company expects underlying efficiency to continue improving.
At quarter-end, Astec had $73.4 million in cash and cash equivalents and $194.1 million in available credit, for total liquidity of $267.5 million. After drawing about $70 million on its revolver to fund the CWMF purchase, net debt to adjusted EBITDA was about 2.3x, within the company’s 1.5x to 2.5x target range. Harris said that based on the midpoint of guidance, the company could end the year at “somewhere around about 1.7 times.”
Astec maintained its full-year fiscal 2026 adjusted EBITDA guidance of $170 million to $190 million. Management also reiterated expectations for an effective tax rate of 25% to 28%, capital expenditures of $40 million to $50 million, and depreciation and amortization of $55 million to $65 million. The company also provided quarterly ranges that include adjusted SG&A of $70 million to $80 million and interest expense of about $7 million.
Astec also announced it will host a virtual Investor Day on May 13, 2026, where the company plans to discuss its strategy, industry trends, and 2030 financial targets.
About Astec Industries NASDAQ: ASTE
Astec Industries, Inc is a designer and manufacturer of specialized equipment for infrastructure-related markets. Headquartered in Chattanooga, Tennessee, the company develops, engineers and produces machinery for asphalt road-building, aggregate processing, concrete production, underground mining, landscaping and utility installation. Astec's product portfolio includes asphalt plants, portable crushers, conveyors, screening plants, mixers, continuous miners and related support equipment.
Organized into multiple operating segments—Roadbuilding; Aggregate & Mining; Energy; and Pavement Preservation & Maintenance—Astec Industries serves contractors and municipalities that build and maintain transportation, energy and utility networks.
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