| Key Points: – Astec Industries will acquire TerraSource Holdings for $245 million in cash, expanding its scale, global reach, and aftermarket parts business. – Astec posted a 6.5% increase in net sales to $329.4 million and more than quadrupled net income to $14.3 million year-over-year. – The acquisition is expected to be earnings accretive from day one, with $10 million in expected run-rate synergies and a 5.9x adjusted EBITDA multiple. |
Astec Industries (NASDAQ: ASTE) reported a robust start to the year, posting solid first-quarter earnings and announcing a definitive agreement to acquire TerraSource Holdings, LLC in a $245 million cash deal. The acquisition, expected to close in early Q3 pending regulatory approvals, will significantly expand Astec’s scale, aftermarket revenue, and presence in adjacent material processing markets.
The Tennessee-based manufacturer of infrastructure and materials processing equipment posted Q1 net sales of $329.4 million, a 6.5% increase from the same period last year. Net income surged to $14.3 million, or $0.62 per diluted share, from $3.4 million, or $0.15 per share, in the prior year. Adjusted net income came in at $20.3 million, or $0.88 per share, while adjusted EBITDA jumped 86% to $35.2 million. Free cash flow was reported at $16.6 million.
“We are pleased to report another strong quarter in line with our plans to deliver consistency, profitability, and growth,” said Astec CEO Jaco van der Merwe. “The TerraSource acquisition adds scale and accretive margins, opens access to new markets, and strengthens our aftermarket parts offering—all aligned with our disciplined growth strategy.”
TerraSource, a material processing equipment manufacturer with over $150 million in annual revenue, brings a robust aftermarket business to the table. Roughly 60% of its revenues and 80% of its gross profit are derived from aftermarket parts—a key area of focus for Astec as it looks to increase recurring revenue and margin stability.
Astec said the deal, financed through cash on hand and new committed financing, is expected to be accretive to earnings immediately. With expected run-rate synergies of $10 million within two years and tax benefits of approximately $15 million, the transaction represents an adjusted EBITDA multiple of 5.9x.
From a segment standpoint, Astec’s Infrastructure Solutions division led Q1 performance with $236 million in sales, up 16.7% year-over-year, benefiting from strong demand in road building and concrete plants. The Materials Solutions division, however, saw a 12.7% decline to $93.4 million due to softer domestic equipment sales, though dealer interest remained high.
CFO Brian Harris emphasized the financial strength behind the transaction, noting that “TerraSource enhances our financial profile with expanded margins and quality of earnings. The acquisition aligns with our strategy and positions us for long-term growth.”
Despite a 28% year-over-year drop in backlog—down to $402.6 million—Astec remains confident in its ability to convert new demand as infrastructure markets evolve and financing capacity improves across contractor and dealer channels.
The TerraSource acquisition adds meaningful scale and global reach for Astec, reinforcing its position as a top-tier provider of material and infrastructure solutions. The company is expected to maintain its adjusted EBITDA guidance of $105 million to $125 million for the full year, excluding the pending deal.
With strong financials, a growing aftermarket footprint, and a major acquisition in play, Astec is positioning itself for long-term gains amid rising global infrastructure needs. Investors responded favorably in early trading, with Astec shares ticking higher following the announcement