ASTE 10-K & 10-Q changes, risk factors and insider trading

•declining economy domestically andor internationally;

Many of our customers depend on government funding of highway construction and maintenance and other infrastructure projects. Historically, much of the U.S. highway infrastructure market has been driven by government spending programs, and federal government funding of infrastructure projects has typically been accomplished through bills that establish funding over a multi-year period. For example, the U.S. government funds highway and road improvements through the Federal Highway Trust Fund Program. This program provides funding to improve the nation's roadway system. In November 2021, the U.S. government enacted the Infrastructure Investment and Jobs Act ("IIJA"). The IIJA allocates $548 billion in government spending to new infrastructure over the five-year period concluding in 2026, with certain amounts specifically allocated to fund highway and bridge projects. If Congress does not reauthorize or fully fund the IIJA when it expires at the end of fiscal year 2026, demand for our products could decline.

Governmental funding that is committed or earmarked for federal highway projects is always subject to political decision making that may result in repeal or reduction. Congress could pass legislation in future sessions that would allow for the diversion of previously appropriated highway funds for other national purposes, or it could restrict funding of infrastructure projects unless states comply with certain federal policies. Furthermore, the 2024 U.S. presidential and congressional election results couldhave altered and may continue to alter legislative priorities and have a material impact on government funding of infrastructure projects.

In recent years, global interest rates have remained elevated compared to historically low levels that previously enabled low financing costs for construction projects. Continued periods of higher interest rates, compared to historic low levels, could have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer demand for our products, make it more difficult for customers to cost-effectively secure financing to fund the purchase of new equipment or our customers' ability to repay obligations to us. Our customers’ inability to secure financing for projects on attractive terms could result in the delay, cancellation or downsizing of new purchases which could adversely affect our sales.

We currently face strong competition in product performance, price and service. Some of our domestic and international competitors have greater financial, product development and marketing resources than we have. If competition in our industry intensifies or if our current competitors enhance their products or lower their prices for competing products, we may lose sales or be required to lower the prices we charge for our products. This may reduce revenue from our products and services, lower our gross margins or cause us to lose market share. In addition to the general competitive challenges we face, international trade policies could negatively affect the demand for our products and services and reduce our competitive position in such markets. The 2024 U.S. presidential and congressional election results may have a significant impact on U.S. domestic and global trade policies. The implementation of more restrictive trade policies, such as higher tariffs, duties or charges, in countries where we operate could negatively impact our business, results of operations and financial condition. In addition, unfavorable currency fluctuations could result in our products and services being more expensive than local competitors.

In 2024,2025, international sales represented approximately 22.2%19.9% of our total sales as compared to 19.0%22.2% in 2023.2024. We plan to continue increasingincrease our already significant sales and production efforts in international markets. Both the sales from international operations and export sales are subject in varying degrees to risks inherent in doing business outside of the United States. Such risks include the possibility of unfavorable circumstances arising from host country laws or regulations and general economic and political conditions in the countries we do business, which are typically more volatile than the U.S. and more vulnerable to geopolitical conditions. In addition, the U.S. Government has established and, from time to time, revises sanctions that restrict or prohibit U.S. companies and their subsidiaries from doing business with certain foreign countries, entities and individuals. Doing business internationally also subjects us to numerous U.S. and foreign laws and regulations, including regulations relating to anti-bribery, privacy regulations and anti-boycott provisions. We incur meaningful costs complying with these laws and regulations. The continued expansion of our international operations could increase the risk of violations of these laws in the future. Significant violations of these laws, or allegations of such violations, could harm our reputation, disrupt our business and result in significant fines and penalties that could have a material adverse effect on our results of operations or financial condition.

Our ability to match new product offerings to diverse global customers' anticipated preferences for different types and sizes of equipment and various equipment features and functionality, at affordable prices, is critical to our success. This requires a thorough understanding of our existing and potential customers on a global basis, particularly in Europe, Asia, Africa, the Middle East and Latin America.basis. Failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant adverse effect on our business.

Additionally, our international sales involveinclude someexporting levelboth ofcomponents exportand completed products from the U.S.,U.S. eitherto ofcustomers componentsin orother completed products.countries. Policies and geopolitical events affecting exchange rates could adversely affect the demand for construction equipment in many areas of the world. Further, any strengthening of the U.S. dollar or any other currency of a country in which we manufacture our products and/or any weakening of local currencies can increase the cost of our products in foreigninternational markets. Irrespective of any effect on the overall demand for construction equipment, the effect of these changes can make our products less competitive relative to local producing competitors or other non-U.S. competitors and, in extreme cases, can result in our products not being cost-effective for customers. As a result, our international sales and profit margins could decline.

We require access to various parts, components and raw materials at competitive prices in order to manufacture our products. Changes in the availability and price of these parts, components and raw materials (including steel) have changed significantly and rapidly at times. The availability and price of such items are affected by factors like demand, changes to international trade policies that may result in additional tariffs, duties or other charges, freight costs, global pandemics, shipping and container constraints and labor shortages and costs, each of which can significantly increase the costs of production. Increased production costs could become particularly significant if the U.S. or foreign governments impose additional tariffs, including on steel. The Trump administrationU.S. recently imposed asignificant 25%increases tariffin tariffs on all steel and aluminum imports, which may result in meaningfully higher steel costs and, as a result, increased production costs that we may not be able to pass onto our customers.

The OneASTEC business model was designed to better set strategic direction, define priorities and improve overall operating performance. Coupled with our strategic pillars that are aligned to focus on our employees, our customers and our innovation, the OneASTEC business model is centered around continuous improvement. Our future success is partly dependent upon successfully executing and realizing performance improvements, revenue gains, cost savings and other benefits from our initiatives. It is possible that we may not fully realize, or sustain, the expected benefits from the OneASTEC business model. Furthermore, the implementation of the OneASTEC initiatives will result in an increase in near-term expenses and may negatively impact operational effectiveness and employee morale.

As part of our growth strategy, we may pursue attractive acquisition opportunities if and when they become available. Failure to identify and acquire suitable acquisition candidates on appropriate terms could adversely impact our growth strategy. In addition, we may not be able to fully integrate the operations of any future acquired businesses with our own operations in an efficient and cost-effective manner or without significant disruption to our or the acquired companies’ existing operations. Moreover, acquisitions involve significant risks and uncertainties, including uncertainties as to the future financial performance of the acquired business, the achievement of expected synergies, difficulties integrating acquired personnel and corporate cultures into our business, the potential loss of key employees, customers or suppliers, difficulties in integrating different computer and accounting systems, exposure to unforeseen liabilities of acquired companies and the diversion of management attention and resources from existing operations. We may be unable to successfully complete potential acquisitions due to multiple factors, such as issues related to regulatory review of the proposed transactions or obtaining favorable financing or losing out on attractive acquisition opportunities to competing bidders that may have greater financial resources than us. We may also be required to incur additional debt or issue additional shares of our common stock in order to consummate acquisitions in the future. Potential new indebtedness may be substantial and may limit our flexibility in using our cash flow from operations. The issuance of new shares of our common stock could dilute the equity value of our existing shareholders. Our failure to fully integrate future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness, could prevent us from remaining competitive and, ultimately, could adversely affect our financial condition, operating results and cash flows.

We are subject to income taxes in the United States and other foreign jurisdictions. Our provision for income taxes and cash tax liabilities in the future could be adversely affected by numerous factors, including changes in the geographic mix of our earnings among jurisdictions, challenges by tax authorities to our tax positions and intercompany transfer pricing arrangements, fluctuations in foreign currency exchange rates, adverse resolution of audits and examinations of previously filed tax returns and changes in tax laws and regulations. Our results of operations could be adversely affected by, among other things, changes in the effective tax rates in the U.S. and foreign jurisdictions, a change in the mix of earnings between U.S. and non-U.S. jurisdictions or among jurisdictions with differing tax rates, adverse resolution of audits or examinations of previously filed tax returns and changes in tax laws or treaties and related changes in generally accepted accounting principles.treaties.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the Organization for Economic Co-Operation and Development's Base Erosion and Profit Shifting Pillar Two ("Pillar Two") rules, including the adoption of Pillar Two by several jurisdictions in which we operate. Additionally, we typically incur substantial research and development costs each year and have historically received significant research and development tax credits due to these expenditures. Congress could reduce or eliminate such tax credits in future years, which could have a material adverse effect on our operating results.

We have completed a number of acquisitions and expect to continue to complete selected acquisitions in the future as a component of our growth strategy. In connection with acquisitions, applicable accounting standards generally require the net tangible and intangible assets of the acquired business to be recorded in the balance sheet of the acquiring company at their fair values as of the date of acquisition. As a result, any excess in the purchase price paid by us over the fair value of net tangible and intangible assets of any acquired business is recorded as goodwill. DefiniteDefinite-lived lived-intangibleintangible assets are required to be amortized over their estimated useful lives, and this amortization expense may be significant. If it is later determined that the anticipated future cash flows from the acquired business may be less than the carrying values of the assets and goodwill of the acquired business, the assets, including both definite-lived and indefinite-lived intangible assets, or goodwill may be deemed to be impaired. If this occurs, we may be required under applicable accounting rules to write down the value of the assets or goodwill on our balance sheet to reflect the extent of any such impairment. Any such write-down of assets or goodwill would generally be recognized as a non-cash expense in our results of operations for the accounting period during which any such write down occurs.

At October 1, 2024,2025, we performed a subsequent qualitative assessment of goodwill impairment, and our testing indicated no additional impairment had occurred at any of our reporting units. A decrease in our market capitalization, profitability or negative or declining cash flows increases the risk of goodwill or other intangible asset impairments. Future impairment charges could have a material adverse impact on our results of operations and shareholders' equity.

We believe our culture, focused on safety, devotion, integrity, respect and innovation, is one of our strongest assets. Our strong culture positions us to recruit and retain top-level talent across our organization. We believe our employees and experienced leadership group are competitive advantages, as the best people, over time, produce the best results. Our ability to attract and retain qualified engineers, skilled manufacturing personnel and other professionals, either through direct hiring or acquisition of other businesses employing such professionals, will also be an important factor in determining our future success. The shrinking availability of qualified talent in these areas is a significant challenge in retaining and attracting sufficiently qualified personnel to enable us to meet customer demand efficiently, resulting in longer lead times to convert backlog to revenue and materially and adversely impacting our margins. If we are unable to attract the most talented candidates, and cannot retain and engage additional highly qualified managerial, technical, manufacturing and sales and marketing personnel by investing in their talent and personal development, our operational and financial performances could continue to suffer.

Failure to retain our key personnel or attract additional key personnel as required and the impact of our recent leadership changes may adversely impact our ability to implement our business plan and our results of operations could be materially and adversely affected.

We are subject to various risks related to conducting business domestically and internationally which encompass a wide range of government regulations including but not limited to: the U.S. Foreign Corrupt Practices Act, other anti-corruption laws, regulations administered by U.S. Customs and Border Protection, the U.S. Department of Commerce’s Bureau of Industry and Security, the U.S. Department of Treasury’s Office of Foreign Assets Control and various non-U.S. government entities, including applicable import and export control regulations and customs requirements, imposition by the U.S. and foreign governments of additional taxes, tariffs, economic sanctions on countries, entities or persons, embargoes or other restrictions on trade, currency exchange regulations and transfer pricing regulations. We are also subject to potential adverse changes or increased uncertainty relating to the political, social, religious and economic stability of the countries in which we do business or transact with and their diplomatic relations with the U.S. Accordingly, we are at risk to comply with complex international laws and regulations that may change unexpectedly,unexpectedly and differ or conflict with laws in other countries in which we conduct business. While we maintain compliance programs to help ensure compliance with such regulations, there is no assurance that we will be effective in complying with all such regulations. Failure to comply with such regulations could subject us to criminal and civil penalties, disgorgement and other sanctions, remedial measures, legal expenses and reputational damage, all of which could have an adverse impact on our business, financial condition, results of operations and liquidity.

As a public company, we face public and investor scrutiny related to Environmental, Social and Governance ('ESG"ESG") activities. We risk damage to our brand and reputation if we fail to act responsibly or meet any commitments that we may set in a number of areas, such as diversity, equity and inclusion, environmental stewardship, including with respect to climate change, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations. Moreover,Some compliancestakeholders may disagree with applicableour lawsgoals and regulationsinitiatives and the pursuitfocus of other ESG-related objectivesstakeholders may require us to make additional capitalchange and operationalevolve expendituresover thattime. Stakeholders also may have adifferent material adverse effectviews on ourwhere earnings,ESG liquidity,focus financialshould conditionbe orplaced, competitiveincluding position.differing views of regulations in various jurisdictions in which we operate.

•Net sales were $1,305.1$1,410.4 million, aan decreaseincrease of 2.5%8.1%

•Gross profit was $327.9$374.2 million, aan decreaseincrease of 0.9%14.1%

•Income from operations was $23.2$65.9 million, aan decreaseincrease of 52.3%184.1%

•Net income attributable to Astec was $4.3$38.8 million, aan decreaseincrease of 87.2%802.3%

•Diluted income per share was $0.19,$1.68, aan decreaseincrease of 87.1%784.2%

•Backlog was $419.6$514.1 million, aan decreaseincrease of 26.4%22.5%

Our strategic transformation program includes the ongoing multi-year phased implementation of a standardized enterprise resource planning ("ERP") system, which is replacing much of our existing disparate core financial systems. During 2024, we modified the pace of deployment of future site conversions to improve efficiencies and reduce business disruptions at our manufacturing sites, which will reduce the scope of the program to exclude sites outside North America. To date, we have launched the human capital resources module in our U.S. and Canadian locations and converted the operations of three manufacturing sites along with Corporate, two of which occurred during the second quarter of 2024.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 year ended December 31, 2024,2025, we have incurred total implementation costs of approximately $133$151 million.

See Note 21, Strategic Transformation and Restructuring, Impairment and Other Asset (Gains) Charges, net of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional discussion of the costs related to these strategic initiatives.

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 and, to a lesser extent, concrete as surface choices for roads and highways. Liquid asphalt is a by-product of oil refining.refining, Anand increase or decreasechanges in the price of oil impactsimpact the cost of asphalt, which is in turn likely to alter demand for asphalt and therefore affect demand for certain of our products. While increasing oil prices may have a negative financial impact on many of our customers, our equipment can use a significant amount of reclaimed asphalt pavement, thereby partially mitigating the effect of increased oil prices on the final cost of asphalt for the customer. We continue to develop products and initiatives to reduce the amount of oil and related products required to produce asphalt. While oil prices had declined from the peak prices in 2022, throughout 2024 they remained relatively stable. Price volatility continues to make it difficult to predict the costs of oil-based products used in road construction such as liquid asphalt and gasoline. Oil prices have routinely fluctuated in recent yearsyears, and are expected to continue to fluctuate in the future. Basedbased on the current macroeconomic environment, we anticipate that oil prices will experience moderate fluctuation throughout 2025.2026.

Steel is a major component of our equipment. ThroughoutIn 2024,reaction to import tariffs and market uncertainty, steel prices easedincreased fromin the historicallyfirst highhalf levelsof experienced2025, before experiencing a gradual decline in 2022the andsecond 2023. We anticipate that steel prices will increase during 2025, including as a resulthalf of the tariffsyear, onresulting allin steela importsrelatively recentlystable imposedaverage byprice for the Trumpyear administrationoverall. Despite rising prices at the end of 2025, we anticipate minimal price changes in 2026 as domestic mills manage output and othermaintain tradepricing policiesadvantages implementedover by the U.S. and foreign governments. We anticipate that steel demand will increase in 2025 driven by a global focus on construction projects.imports. We continue to employ flexible strategies to ensure supply and minimize the impact of price volatility. Potential ongoing constraints in the supply of certain steel products may continue pressuring the availability of other components used in our manufacturing process. Furthermore, given the volatility of steel prices and the nature of our customers' orders, we may not be able to pass through all increases in steel costs to our customers, which may negatively impactsimpact our gross profit and margins.

Net sales decreasedincreased $33.1$105.3 million, or 2.5%,8.1%, to $1,410.4 million in 2025 from $1,305.1 million in 2024 from $1,338.2 million in 2023.2024. The decreaseincrease in net sales was primarily driven by net unfavorablefavorable volume and mix partiallycoupled offset bywith favorable pricing that generated decreasesincreases in (i) equipment sales of $21.8$44.6 millionmillion, (ii) parts and component sales of $44.5 million, (iii) service and equipment installation revenue of $21.1 million. These decreases were partially offset by increased parts and component sales of $7.5$12.8 million and increased(iv) otherfreight revenue of $4.0 million. Included in these net increases is $84.7 million of incremental net sales from the acquired TerraSource business. Sales reported by our foreign subsidiaries in U.S. dollars for 20242025 would have been $2.8$2.5 million higherlower had foreign exchange rates been the same as the 20232024 rates.

InternationalDomestic sales for 20242025 were $289.7$1,130.2 million, or 22.2%80.1% of net sales, compared to $254.8$1,015.4 million, or 19.0%77.8% of net sales, for 2023,2024, an increase of $34.9$114.8 million, or 13.7%.11.3%. InternationalDomestic sales increased primarily due to higher (i) equipment sales of $30.7$58.9 millionmillion, and(ii) parts and component sales of $6.0$42.1 million, (iii) service and equipment installation revenue of $11.2 million and (iv) freight revenue of $3.4 million. Included in the net increase is $58.4 million of incremental domestic revenue from the acquired TerraSource business.

We performed a qualitative assessment for the annual test of goodwill impairment performed in 2025 and concluded that there was no impairment of goodwill. During the prior year, we determined that the carrying value of the Materials Solutions reporting unit exceeded its fair value as of June 30, 2024. As a result, we recognized a pretax non-cash goodwill impairment charge of $20.2 million in "Goodwill impairment" in the Consolidated Statements of Operations to fully impair the goodwill allocated to the Materials Solutions reporting unit during the second quarter of 2024. No net goodwill related to Materials Solutions is reflected in the Consolidated Balance Sheet as of December 31, 2024. See Note 7, Goodwill of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of the pretax non-cash goodwill impairment charge.

Restructuring, Impairment and Other Asset (Gains) Charges, Netnet

Restructuring, impairment and other asset (gains) charges, net for the years ended December 31, 20242025 and 20232024 are presented below:

See Note 21, Strategic Transformation and Restructuring, Impairment and Other Asset (Gains) Charges, net, of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for discussion of the individual restructuring actions taken and the impairment charges recorded.taken.

Interest expense of $10.7$18.5 million was incurred for the year ended December 31, 20242025 as compared to $8.9$10.7 million for the year ended December 31, 2023,2024, an increase of $1.8$7.8 million, primarily related to higher average outstanding borrowings coupled with higher interest rates on ourthe revolving2025 Credit Facilities as compared to the Company's previous credit facility.facilities (the "2022 Credit Facilities"), which were replaced by the 2025 Credit Facilities.

The items having the most significant impact on the effective tax rate for 20242025 are the out-of-period expense associated with the correction of under-accrualseffects of state income tax expenses recorded in the fourth quarter of 2024 and aforeign net nondeductible goodwill impairment of $2.9 millionitems, partially offset by a net benefit of $3.3$3.7 million for research and development tax credits. The item having the most significant impact on the effective tax rate for 20232024 is a net benefit of $1.8$3.3 million for research and development tax credits. Future utilization of our NOLs and state tax credit carryforwards is evaluated on a periodic basis, and the valuation allowance is adjusted accordingly. There is no guarantee that we will not incur additional valuation allowances to our NOLs.

The backlog of orders as of December 31, 20242025 was $419.6$514.1 million compared to $569.8$419.6 million as of December 31, 2023,2024, aan decreaseincrease of $150.2$94.5 million, or 26.4%.22.5%.

Backlog includes an incremental $53.2 million from the acquired TerraSource business in the Materials Solutions segment. 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, most notably in the Materials Solutions segment,customers as a result of macroeconomic factors such as higher inflation and elevated interest rates, among other factors. These factors have influenced customer ordering patterns and are expected to continue, albeit in a less impactful manner.

Sales in this segment were $857.4 million for 2025 compared to $837.4 million for 2024 compared to $800.4 million for 2023,2024, an increase of $37.0$20.0 million, or 4.6%.2.4%. The increase was primarily driven by favorable pricing coupledpartially withoffset by net favorableunfavorable volume and mix that generated increasedincreases newin equipment sales and(i) parts and component sales of $51.9 million and $5.4$6.7 million, respectively.(ii) Theseequipment increasessales wereof partially$6.3 offsetmillion, by lower(iii) service and equipment installation revenue of $20.4$4.7 million and (iv) freight revenue of $3.2 million.

Domestic sales for the Infrastructure Solutions segment increased by $34.4$17.4 million, or 4.6%,2.2%, for 20242025 compared to 20232024 primarily due to increaseshigher in equipment and(i) parts and componentscomponent sales of $49.7 million and $4.4$10.7 million, respectively. These increases were partially offset by lower(ii) service and equipment installation revenue of 20.0$4.8 million and (iii) freight revenue of $3.0 million.

International sales for the Infrastructure Solutions segment increased $2.6 million, or 5.0%,4.8%, for 20242025 compared to 20232024 primarily due to increased equipment sales of $2.2$6.5 million partially offset by decreased parts and component sales of $4.0 million.

Sales in this segment were $553.0 million for 2025 compared to $467.7 million for 20242024, comparedan to $537.8 million for 2023, a decreaseincrease of $70.1$85.3 million, or 13.0%.18.2%. The decreaseincrease was primarily driven by net unfavorablefavorable volume and mix partiallycoupled offset bywith favorable pricing that generated decreasedincreases in (i) equipment sales of $73.7$38.3 million.million, These(ii) decreasesparts wereand partiallycomponent offsetsales byof increased$37.8 othermillion and (iii) service and equipment installation revenue of $3.7$8.1 million.

InternationalDomestic sales for the Materials Solutions segment increased $32.3$97.4 million, or 15.9%,41.9%, for 20242025 compared to 20232024 primarily due tohigher increased(i) equipment sales andof $59.1 million, (ii) parts and component salessale of $28.5$31.4 million and $5.0(iii) million,service respectively.and installation revenue of $6.4 million.

Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $134.3 million for 2025 compared to $121.5 million for 2024 compared to $102.4 million for 2023,2024, an increase of $19.1$12.8 million, or 18.7%.10.5%. The increase in Segment Operating Adjusted EBITDA resulted primarily from (i) the impact of favorable pricing coupled with net favorable volume and mix that generated $38.9$35.5 million higher gross profit, (ii) decreases in annual incentive compensation costs of $1.8 million, (iii) the net franchise tax expense of $1.7 million and (iv) decreases in property maintenance costs of $1.1 million.profit. These increases toin Segment Operating Adjusted EBITDA were partially offset by (i) manufacturingincreases inefficienciesin personnel-related costs of $12.5$10.5 million, (ii) the impact of higher inflation on materials, labor and overheadquality-related costs of $6.9$5.9 million, (iii) increasednet ITunfavorable andinventory professional services costsadjustments of $5.1$4.9 million and (iv) increasedmanufacturing selling, general and administrative personnel-related costsinefficiencies of $2.6$4.5 million.

Segment Operating Adjusted EBITDA for the Materials Solutions segment was $55.6 million for 2025 compared to $37.2 million for 20242024, comparedan to $50.7 million for 2023, a decreaseincrease of $13.5$18.4 million, or 26.6%.49.5%. The decreaseincrease in Segment Operating Adjusted EBITDA resulted primarily from (i) the impact of manufacturingnet inefficiencies of $10.9 million, (ii) unfavorablefavorable volume and mix partiallycoupled offset bywith favorable pricing that generated $4.6$46.1 million lowerhigher gross profit,profit. (iii) the impact of higher inflation on materials, labor and overhead costs of $3.1 million, (iv)These increases in net scrap expenses of $1.7 million and (v) the net unfavorable impact of inventory adjustments of $1.4 million. These Segment Operating Adjusted EBITDA decreases were partially offset by thehigher impactpersonnel related costs of the$13.9 lossmillion contingencyand relatedmanufacturing to the 37BP litigation,inefficiencies of which$12.6 $7.9 million was recorded in 2023 as compared to the $1.9 million benefit derived from the loss contingency release offset by the final settlement recorded during 2024.million.

Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under a $250.0 million revolvingour credit facilityfacilities and cash flows from operations. As of December 31, 2024,2025, our total liquidity was $228.1$314.7 million, consisting of $88.3$70.0 million of cash and cash equivalents available for operating purposes and $139.8$244.7 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 $31.6$38.8 million of cash and cash equivalents available for operating purposes which is considered to be indefinitely invested in those jurisdictions.

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 the payment of our quarterly cash dividend, financing other strategic initiatives of our business, including, but not limited to, our strategic transformation initiatives, strategic acquisitionsacquisitions, 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 ourthe revolving credit facility will be sufficient to meet working capital and capital expenditure requirements for our existing business for at least the next 12 months.

We had $105.0outstanding principal indebtedness on the term loan facility of $341.3 million and $72.0 million inno outstanding borrowings under the Creditrevolving Facilitiescredit facility as of December 31, 2024 and 2023, respectively.2025. Our outstanding letters of credit totaling $5.2$5.3 million decreased borrowing availability to $139.8$244.7 million under the revolving credit facility as of December 31, 2024. We anticipate continuing to utilize the Credit Facilities with more frequency in the near-term to support our working capital needs.2025. The 2025 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 December 31, 2024.2025. Due to the increased borrowings under our 2025 Credit Facilities and higher interest rates,Facilities, we expect our interest expense in the near-term to remain at elevated levels.

We regularly enter into agreementsagreements, primarily to purchase inventoryinventory, in the ordinary course of business. As of December 31, 2024,2025, open purchase obligations totaled $122.0$119.4 million, of which $120.6$115.0 million are expected to be fulfilled within one year.

We estimate that our capital expenditures will be between $35$40.0 million and $45$50.0 million for the year ending December 31, 2025,2026, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations.

Net cash provided by operating activities decreasedincreased to $61.4 million during 2025 as compared to $23.0 million during 2024 as compared to $27.8 million during 2023.2024. This decreaseincrease is primarily due to decreasedincreased cash inflows from net income reducedadjusted by non-cash chargesitems of $6.9$49.5 million partially offset by decreased net cash usages from our operating assets and liabilities of $1.4 million. The decreasedhigher net cash usages for our operating assets and liabilities wereof primarily$11.1 million. The increased net cash usage for our operating assets and liabilities was mainly driven by fluctuations in (i) customer deposits of $20.3 million, (ii) inventories of $15.6 million and (iii) prepaid and refundable income taxes of $14.6 million. The increased net cash usage for our operating assets and liabilities was partially offset by the timing of inventory purchases in 2024 of $90.4 million and reduced other assets of $11.9 million. These decreases were partially offset by (i) the timingimpacts of payments onof trade accounts payables of $43.6 million, (ii) the timing of collections on trade accounts receivables of $41.1$33.8 million and (iii) higherlower employee-related payments of $14.1$15.1 million.

Net cash used in investing activities increasedwas by $5.1$287.8 million during 2024the year ended December 31, 2025 as compared to 2023$18.0 million during the year ended December 31, 2024, primarily due to the cashTerraSource inflows from the sale of the Tacoma facility's land, building and certain equipment assets for $19.9 million in the first quarter of 2023 that did not recur. This wasacquisition partially offset by decreased capital expenditures of $13.6$20.2 million during 2024 as compared to 2023.million.

Net cash provided by (used in) financing activities

Highlights of our financial results for the three months ended MarchJune 31,30, 2026 as compared to the same period of the prior year include the following:

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

See Note 11, Strategic TransformationTransformation, 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.

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, risingIncreased steel demand in certain markets and elevated freight and energy costs have driven increased steel prices in the first quarterhalf of 2026. We anticipate that steel prices will remain elevated during the remainder of 2026.

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 quarterhalf of 2026 due to the conflict in the Middle East. We anticipate that these high prices will persist in the short term.

Net sales for the firstsecond quarter of 2026 were $396.3$408.1 million compared to $329.4$330.3 million for the firstsecond quarter of 2025, an increase of $66.9$77.8 million, or 20.3%.23.6%. 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$42.6 million,million (ii)and 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$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 firstsecond quarter of 2026 would have been $4.5$4.0 million lower had second quarter 2026 foreign exchange rates been the same as second quarter 2025 rates.

InternationalDomestic sales for the firstsecond quarter of 2026 were $77.3$332.6 million, or 19.5%81.5% of consolidated net sales, compared to $55.6$262.0 million, or 16.9%79.3% of consolidated net sales, for the firstsecond quarter of 2025, an increase of $21.7$70.6 million, or 39.0%.26.9%. InternationalDomestic sales increased primarily due to increases in (i)higher equipment sales of $15.4$44.3 million,million (ii)and parts and componentservice revenues of $26.1 million. Included in the net increase is $37.0 million of incremental net sales offrom $3.3acquired million and (iii) used equipment sales of $2.7 million.businesses.

Gross profit for the firstsecond quarter of 2026 was $99.1$106.8 million, or 25.0%26.2% of net sales, as compared to $92.4$88.3 million, or 28.1%26.7% of net sales, for the firstsecond quarter of 2025, an increase of $6.7$18.5 millionmillion, or 7.3%.21.0%. 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$41.0 million,million (ii)and lower warranty program costs of $3.2 million and (iii) net favorable inventory adjustments of $1.6$1.0 million. TheseThis increasesincrease werewas partially offset by (i) themanufacturing impactsinefficiencies, inclusive of manufacturing variances partially due to freight, duties and tariffstariffs, of $16.1$8.6 million, (ii) the impact of inflation on materials, labor and overhead of $6.2$8.4 million and (iii) thenet amortizationunfavorable inventory adjustments of acquisition-related inventory fair value step-up of $1.4$6.4 million.

Selling, general and administrative expenses were $90.2$85.5 million,million or 22.8%21.0% of net sales, for the firstsecond quarter of 2026, compared to $71.9$67.0 million, or 21.8%20.3% of net sales, for the firstsecond quarter of 2025, an increase of $18.3$18.5 million, or 25.5%,27.6%, primarily due to (i) increased personnel-related costs of $7.8 million, (ii) increased intangible asset amortization expense of $7.2 million, (ii) increased personnel-related costs of $5.3 million, (iii) increased exhibittechnology and promotionalsupport costs of $3.0$1.8 million primarily due to the ConExpo industry trade show held once every three years,million, (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$1.2 million, (v) increased professional service costs of $1.1 million and (vi) increased dealer commissions of $0.9 million.

Interest expense of $7.4$7.1 million and $14.5 million was incurred in the three and six months ended MarchJune 31,30, 2026, respectively, as compared to $2.0$2.1 million and $4.1 million in the three and six months ended MarchJune 31,30, 2025, respectively, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit FacilitiesFacility as compared to our previous credit facilities, which were replaced by the 2025 Credit Facilities.facility.

Our income tax expense for the firstsecond quarter of 2026 was $1.5$4.5 million compared to $5.4$5.8 million for the firstsecond quarter of 2025. Our effective income tax rate was 53.6%30.0% for the firstsecond quarter of 2026 compared to 27.4%25.7% for the firstsecond quarter of 2025. The income tax expense for the three months ended MarchJune 31,30, 2026 was lower compared to the same period in 2025,2025 primarily due to lower pretax book income and changes in the relative weighting of jurisdictional income and loss.

Sales in this segment were $237.0$228.3 million for the firstsecond quarter of 2026 compared to $236.0$204.6 million for the same period in 2025, an increase of $1.0$23.7 million, or 0.4%.11.6%. The increase was primarily driven by favorable pricing partially offset by net unfavorablefavorable volume and mix coupled with favorable pricing that generated increases in equipment sales and service and equipment installation revenue of $2.6$20.6 million and $1.2parts million,and respectively.service Theserevenues increasesof were$2.9 partiallymillion. offsetIncluded byin lowerthe usednet equipmentincrease is $8.0 million of incremental net sales offrom $2.1the million.acquired CWMF business.

InternationalDomestic sales for the Infrastructure Solutions segment increased $2.2$29.6 million, or 15.4%,15.9%, for the firstsecond quarter of 2026 compared to the same period in 2025,2025 primarily due to higher equipment sales of $3.1$25.9 million partially offset by lowerand parts and componentservice revenues of $3.5 million. Included in the net increase is $8.0 million of incremental net sales offrom $0.8the million.acquired CWMF business.

International sales for the MaterialsInfrastructure Solutions segment increaseddecreased $19.5$5.9 million, or 47.2%,32.6%, for the firstsecond quarter of 2026 compared to the same period in 2025,2025 primarily due to higher (i)lower equipment sales of $12.3 million, (ii) parts and component sales of $4.1 million and (iii) used equipment sales of $2.7$5.3 million.

Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by theour 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.

Segment Operating Adjusted EBITDA for the MaterialsInfrastructure Solutions segment was $8.9$32.9 million for the firstsecond quarter of 2026 compared to $5.2$32.2 million for the same period in 2025, an increase of $3.7$0.7 million, or 71.2%.2.2%. The increase in Segment Operating Adjusted EBITDA resultedwas primarily fromdriven by the sales impact of net favorable pricing, volume and mix coupled with favorable pricing that generated $22.6 million higher gross profit of $10.3 million and lower quality-related costsexpenses of $1.8$2.8 million. These increases were reducedpartially offset by (i) manufacturing variances partially due to freight, duties and tariffs of $9.1 million, (ii) increases in personnel-related costs of $6.5 million, (iii) the impact of inflation on materials, labor and overhead of $1.7$5.9 million, (ii) unfavorable inventory adjustments of $5.4 million and (iviii) highermanufacturing exhibitinefficiencies, inclusive of freight, duties and promotional coststariffs, of $0.8$1.3 million.

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$12.4 million for the firstsecond quarter of 2026 compared to $12.9$12.7 million for the same period in 2025, ana increasedecrease of $0.5$0.3 million, or 3.9%.2.4%.

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 MarchJune 31,30, 2026, our total liquidity was $267.5$265.8 million, consisting of $73.4$75.7 million of cash and cash equivalents available for operating purposes and $194.1$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 $38.8$36.5 million of cash and cash equivalents available for operating purposes, which is considered to be indefinitely invested in those jurisdictions.

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$332.5 million and $50.0$54.0 million outstanding borrowings under the 2025 Revolving Credit Facility as of MarchJune 31,30, 2026. Our outstanding letters of credit totaling $5.9 million decreased borrowing availability to $194.1$190.1 million under the 2025 Revolving Credit Facility as of MarchJune 31,30, 2026.

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.

We regularly enter into agreements, primarily to purchase inventory, in the ordinary course of business. As of MarchJune 31,30, 2026, open purchase obligations totaled $189.5$196.0 million, of which $186.3$179.4 million are expected to be fulfilled within the remainder of 2026.

The following table summarizes cash flows during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively:

Our operating activities provided net cash of $40.7$52.8 million for the threesix months ended MarchJune 31,30, 2026 as compared to $20.5$33.4 million for the threesix months ended MarchJune 31,30, 2025. This increase is primarily due to net cash provided by our operating assets and liabilities of $25.8$22.6 million partially offset by decreased cash inflows from net income reduced by non-cash charges of $5.6$3.6 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$37.9 million and (iii)prepaid customerand depositsrefundable income taxes of $7.4$5.2 million. The net cash provided was partially offset by fluctuations in prepaid(i) customer deposits of $13.2 million, (ii) trade and refundableother income taxesreceivables of $4.3$7.9 million and (iii) higher employee-related payments of $3.0$6.4 million.