A maker of heavy equipment for building roads and processing materials, Astec designs asphalt and concrete plants, road-construction machinery, and crushers, screeners, and washers used by contractors, government agencies, miners, and recyclers. It was founded in 1972 in Chattanooga when engineer Dr. J. Don Brock and four friends, upset that their employer planned to move its asphalt operations away, sketched a business plan around a kitchen table. Its name is a mash-up of "asphalt technology," and those asphalt plants can run on warm-mix systems and recycled material.
Astec Q2 revenue rose 24% to $408M on acquisitions, but net income fell 37% as manufacturing inefficiencies and inflation compressed margins.
grew, but profit did not follow. Net sales rose 23.6% to $408.1 million, driven by $48.6 million from acquired businesses, yet fell 37.1% to $10.5 million as $8.6 million in manufacturing inefficiencies and $8.4 million in inflation offset the volume gains. The company is growing its top line through deals while its factories struggle to convert that growth into earnings.
Key takeaways
fell 37.1% to $10.5 million, as a 23.6% increase to $408.1 million was absorbed by higher costs, including $8.6 million in manufacturing inefficiencies and $8.4 million in inflation.
contracted 0.6 points to 26.2%, with favorable volume and pricing outweighed by the manufacturing inefficiencies, inflation, and $6.4 million in unfavorable adjustments.
Materials Solutions sales rose 43.0% to $179.8 million, including $40.6 million from the TerraSource acquisition, while Infrastructure Solutions grew 11.6% to $228.3 million.
Section summaries
Management's Discussion and Analysis
Q2 2026 net sales rose 23.6% to $408.1M driven by acquisitions and favorable volume/pricing, but net income fell 37.1% on higher costs.
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Consolidated increased 23.6% to $408.1M, with $48.6M from acquired businesses and broad gains in equipment and parts/service revenue.
contracted 50 to 26.2% as favorable volume/pricing was offset by manufacturing inefficiencies ($8.6M), inflation ($8.4M), and unfavorable adjustments ($6.4M).
SG&A expenses rose 27.6% to $85.5 million, driven by $7.2 million in higher intangible asset from acquisitions, $5.3 million in personnel costs, and $1.2 million in strategic transformation spending.
rose 57.9% to $601.1 million, with Materials Solutions backlog more than doubling, partly due to demand from large data center projects.
improved to $52.8 million from $33.4 million a year ago, supported by reductions, while total liquidity stood at $265.8 million.
What changed
The $16.1 million in manufacturing inefficiencies flagged in Q1 2026 persisted, with $8.6 million recorded in Q2, indicating the operational challenges from integrating TerraSource and CWMF have not yet moderated.
continued to contract, falling to 26.2% from 28.1% in Q1 2025 and 25.0% in Q1 2026, as the pricing and volume benefits from acquisitions are being consumed by rising production costs.
Infrastructure Solutions , which had declined 3.7% in FY 2025, showed a recovery in orders, contributing to the overall backlog rising to $601.1 million, though the 's organic demand trajectory remains a point to track.
remained elevated at $365.4 million, essentially flat from Q1 2026, as the company carries the debt from the TerraSource and CWMF acquisitions without significant paydown.
What to watch
Q3 2026 to see if the manufacturing inefficiencies moderate as TerraSource and CWMF integration progresses, or if the $8.6 million quarterly run-rate persists.
Materials Solutions margin to assess whether the 43% growth, driven by acquisitions and data center projects, translates into higher profitability as acquisition-related costs roll off.
trajectory as the $365.4 million in and the variable-rate exposure on the continue to flow through the income statement.
Infrastructure Solutions organic sales and to determine if the 's growth is stabilizing independently of the acquisition-driven gains in the overall company results.
Infrastructure Solutions sales grew 11.6% to $228.3M, while Materials Solutions surged 43.0% to $179.8M, including $40.6M from the TerraSource acquisition.
rose 27.6% to $85.5M, driven by higher intangible ($7.2M), personnel costs ($5.3M), and strategic transformation spending ($1.2M).
jumped 57.9% to $601.1M, with Materials Solutions backlog more than doubling, partly due to demand from large data center projects.
improved to $52.8M from $33.4M, supported by reductions, while total stood at $265.8M at quarter-end.
Quantitative and Qualitative Disclosures About Market Risk
Our quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2025. Our market risk exposures have n…
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Our quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2025. Our market risk exposures have not materially changed since our Annual Report on Form 10-K for the year ended December 31, 2025 was filed.
From time to time, we are involved in legal actions arising in the ordinary course of our business. Except as noted elsewhere in this Report, there are no pending or threatened litigation proceedings that our management believes will result in an outcome that would materially af…
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From time to time, we are involved in legal actions arising in the ordinary course of our business. Except as noted elsewhere in this Report, there are no pending or threatened litigation proceedings that our management believes will result in an outcome that would materially affect our business, financial position, cash flows or results of operations. Nevertheless, there can be no assurance that future litigation to which we become a party will not have a material adverse effect on our business, financial position, cash flows or results of operations.
See Note 8, Commitments and Contingencies of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding material legal proceedings in which we are involved.
In addition to the other information set forth in this Report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial…
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In addition to the other information set forth in this Report, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2025 are not the only risks facing our Company. Additional risks and uncertainties not currently known to management or that management currently deems to be immaterial also may materially and adversely affect our business, financial condition or operating results.