ASTEC INDUSTRIES INC 10-Q

Item 1A. Risk Factors In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition or future results. Other than as described below, there have been no material changes from the risk factors previously disclosed therein. The risks described in our Annual Report on Form 10-K for the year ended December 31, 2024 and in this Quarterly Report on Form 10-Q 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. We may fail to realize all of the anticipated benefits of the acquisition of TerraSource Holdings, LLC ("TerraSource") or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating the TerraSource business. Our results of operations going forward may differ materially from any pro forma financial data provided. On July 1, 2025 we completed our previously announced acquisition of TerraSource for $245.0 million. The success of the acquisition will depend, in large part, on our ability to successfully combine and integrate the acquired business and realize the anticipated benefits, including synergies, cost savings, innovation opportunities and operational efficiencies from the acquisition. The integration of the acquired business is a complex, costly and time-consuming process and may result in material challenges, including, without limitation: • difficulties in retaining current customers, suppliers and strategic partners and developing new business relationships; • challenges in retaining and assimilating key personnel; • coordinating geographically overlapping organizations; • unanticipated issues in integrating information technology, communications and other operations and systems; • diversion of management's attention to integration matters; • difficulties in achieving anticipated synergies, business opportunities and growth prospects from the TerraSource acquisition; • difficulties in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; • difficulties in managing the expanded operations of a significantly larger and more complex company; • the impact of potential liabilities the Company may be inheriting from TerraSource; • difficulty addressing possible differences in corporate culture and management philosophies; • a potential deterioration of the Company's credit ratings; and • unforeseen or unexpected expenses or delays associated with the integration. Many of these factors are outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy, which could adversely affect our business, financial condition and results of operations and result in us becoming subject to litigation. In addition, even if the TerraSource business is integrated successfully, the full anticipated benefits of the acquisition of TerraSource may not be realized, including the synergies, cost savings or sales or growth opportunities that are anticipated. These benefits may not be achieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in the integration process. All of these factors could cause reductions in our earnings per share, decrease or delay the expected accretive effect of TerraSource and negatively impact the price of shares of our common stock. As a result, it cannot be assured that the acquisition of TerraSource will result in the realization of the full anticipated benefits. Additionally, in connection with the TerraSource acquisition, any unaudited pro forma financial data that may be provided is not necessarily indicative of what our actual financial position or results of operations may be. Any unaudited pro forma financial data will be derived from our audited and unaudited financial statements and TerraSource’s audited and unaudited financial statements and will reflect certain assumptions and adjustments. The assumptions used in preparing unaudited pro forma 31 INDEX financial data may not prove to be accurate, and other factors may adversely affect our financial condition or results of operations. Our existing and future levels of indebtedness could adversely affect our financial health, our ability to obtain financing in the future, our ability to react to changes in our business and our ability to fulfill our obligations under such indebtedness. On July 1, 2025 and simultaneously with the consummation of the acquisition of TerraSource, we entered into a new Credit Agreement, by and among us, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto from time to time (the "2025 Credit Agreement"), that provides for (i) a 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 (collectively, the "2025 Credit Facilities"). In connection with establishing the 2025 Credit Facilities, we (i) repaid all outstanding borrowings under our prior $250.0 million revolving credit facility pursuant to that certain Credit Agreement, dated as of December 19, 2022, between the Company and Wells Fargo Bank, National Association (the "2022 Credit Facility"), utilizing borrowings under the 2025 Credit Facilities, and (ii) terminated the 2022 Credit Facility. As of July 1, 2025 and after giving effect to the completion of the acquisition of TerraSource and the borrowings under the 2025 Credit Facilities, we had outstanding principal indebtedness of $350.0 million and availability of $244.8 million under the 2025 Credit Facilities, subject to certain financial covenants. Our level of indebtedness could: • make it more difficult to satisfy our obligations with respect to our other indebtedness, resulting in possible defaults on and acceleration of such indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of such cash flows to fund working capital, acquisitions, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing for working capital, acquisitions, capital expenditures, debt service requirements and other general corporate purposes; • limit our ability to refinance indebtedness or cause the associated costs of such refinancing to increase; • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations (because a portion of our borrowings are at variable rates of interest); and • place us at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorable interest rates who, as a result, may be better positioned to withstand economic downturns. Any of the foregoing impacts of our level of indebtedness could have a material adverse effect on our business, financial condition and results of operations. Furthermore, our future access to debt capital markets to finance existing debt obligations or to obtain capital to finance growth could become restricted due to a variety of factors, including a deterioration of our performance or financial condition, overall industry prospects or changes in debt capital markets or the general economy. The inability to access credit markets on acceptable terms, if at all, could have a material adverse effect on our financial condition and ability to fund future growth. Additionally, our debt instruments include certain affirmative and negative covenants that require us to comply with certain financial covenants and impose restrictions on our financial and business operations, including limitations on liens, indebtedness, fundamental changes and changes in the nature of our business. A failure to comply with the covenants contained in our debt instruments could result in an event of default or an acceleration of debt under our debt instruments. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures None.