ASTEC INDUSTRIES INC 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The financial condition, results of operations and cash flows discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Astec Industries, Inc. and its consolidated subsidiaries, collectively, the "Company," "Astec," "we," "our" or "us." The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024. The financial position, results of operations, cash flows and other information included herein are not necessarily indicative of the financial position, results of operations and cash flows that may be expected in future periods. Forward-Looking Statements This Quarterly Report on Form 10-Q, particularly the following discussion and analysis of our results of operations, financial condition and liquidity in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the United States and global economies. Statements in this Quarterly Report on Form 10-Q that are not historical are hereby identified as "forward-looking statements" and may be indicated by words or phrases such as "anticipates," "supports," "plans," "projects," "expects," "believes," "should," "would," "could," "forecast," "management is of the opinion," or use of the future tense and similar words or phrases. These forward-looking statements are based largely on management's expectations, which are subject to a number of known and unknown risks, uncertainties and other factors described under the caption "Item 1A. Risk Factors" in Part II of this Report, elsewhere herein and in other documents filed by the Company with the Securities and Exchange Commission, including "Part I, Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2024, which may cause actual results, financial or otherwise, to be materially different from those anticipated, expressed or implied by the forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law. Executive Summary Highlights of our financial results for the three months ended September 30, 2025 as compared to the same period of the prior year include the following: • Net sales were $350.1 million, an increase of 20.1% • Gross profit was $84.2 million, an increase of 26.0% • Income from operations was $1.1 million, an increase of 115.3% • Net loss attributable to Astec was $4.2 million, an increase of 32.3% • Diluted loss per share was $0.18, an increase of 33.3% • Backlog was $449.5 million, a decrease of 5.5% Recent Developments and Business Conditions TerraSource Acquisition – On July 1, 2025, we completed the acquisition of TerraSource, a market-leading manufacturer of material processing equipment and related aftermarket parts serving complementary crushing, screening and separation applications. The Acquisition provides us with access to adjacent markets in materials processing equipment and related aftermarket parts and significant growth and value creation opportunities. New Credit Facility – In connection with the Acquisition, we entered into 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. 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 in our U.S. locations and converted the operations of three manufacturing sites along with Corporate. We expect the project to conclude in 2028 or 2029 with total approximate 25 INDEX implementation costs anticipated to range from $180 to $200 million. Through the third quarter of 2025, we have incurred total implementation costs of approximately $147 million. See Note 13, Strategic Transformation, Restructuring and Other Asset 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. Economic Conditions – We monitor macroeconomic and other factors that may affect our business such as steel and oil prices and geopolitical conflicts, among others. Steel is a major component of our equipment. In reaction to new or increased tariffs imposed by the Trump Administration and reciprocal actions by foreign governments, steel prices increased in the first half of 2025. As a result of stagnant demand growth, available domestic steel capacity and steady or declining material input costs, steel prices slowly declined through the third quarter of 2025. Despite these recent declines, we anticipate slight increases in steel prices toward the end of 2025 with minimal impact in early 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 based on the current macroeconomic environment, we anticipate that oil prices will experience moderate fluctuation throughout the remainder of 2025 and into 2026. New or ongoing geopolitical conflicts may cause a downturn in the construction industries in which we operate, cause an increase in oil prices, damage a significant portion of our inventory or materially impair our ability to distribute our products to customers. We monitor, adjust and potentially cease our operations in affected jurisdictions to ensure compliance with any governmental actions made in response to such conflicts. Whenever possible, we attempt to cover increased costs of production by adjusting the prices of our products. The markets we serve are competitive in nature, and competition limits our ability to pass through cost increases in many cases. Results of Operations Net Sales Net sales for the third quarter of 2025 were $350.1 million compared to $291.4 million for the third quarter of 2024, an increase of $58.7 million, or 20.1%. The increase in net sales was primarily driven by favorable pricing coupled with net favorable volume and mix that generated increases in (i) parts and component sales of $26.8 million, (ii) equipment sales of $24.7 million, (iii) service and equipment installation revenue of $5.1 million and (iv) freight revenue of $2.1 million. Included in these net increases is $40.5 million of incremental net sales from the acquired TerraSource business. Sales reported by our foreign subsidiaries in U.S. dollars for the third quarter of 2025 would have been $1.0 million lower had third quarter 2025 foreign exchange rates been the same as third quarter 2024 rates. Net sales for the first nine months of 2025 were $1,009.8 million compared to $946.1 million for the first nine months of 2024, an increase of $63.7 million, or 6.7%. The increase in net sales was primarily driven by favorable pricing partially offset by net unfavorable volume and mix that generated increases in (i) equipment sales of $25.6 million, (ii) parts and component sales of $24.9 million, (iii) service and equipment installation revenue of $7.1 million, (iv) freight revenue of $3.6 million and (v) used equipment sales of $2.3 million. Included in these net increases is $40.5 million of incremental net sales from the acquired TerraSource business. Sales reported by our foreign subsidiaries in U.S. dollars for the first nine months of 2025 would have been $1.3 million higher had the first nine months of 2025 foreign exchange rates been the same as the first nine months of 2024 rates. Domestic sales for the third quarter of 2025 were $280.4 million, or 80.1% of consolidated net sales, compared to $211.2 million, or 72.5% of consolidated net sales, for the third quarter of 2024, an increase of $69.2 million, or 32.8%. Domestic sales increased primarily due to higher (i) equipment sales of $39.6 million, (ii) parts and component sales of $24.0 million, (iii) service and equipment installation revenue of $4.1 million and (iv) freight revenue of $1.9 million. Included in these net increases is $28.2 million of incremental domestic revenue from the acquired TerraSource business. Domestic sales for the first nine months of 2025 were $816.2 million, or 80.8% of consolidated net sales, compared to $726.5 million, or 76.8% of consolidated net sales, for the first nine months of 2024, an increase of $89.7 million, or 12.3%. Domestic sales increased primarily due to higher (i) equipment sales of $51.1 million, (ii) parts and component sales of $26.8 million, (iii) service and equipment installation revenue of $6.3 million, (iv) freight revenue of $3.4 million and (v) used equipment sales of $2.3 million. Included in these net increases is $28.2 million of incremental domestic revenue from the acquired TerraSource business. 26 INDEX International sales for the third quarter of 2025 were $69.7 million, or 19.9% of consolidated net sales, compared to $80.2 million, or 27.5% of consolidated net sales, for the third quarter of 2024, a decrease of $10.5 million, or 13.1%. International sales decreased primarily due to lower equipment sales of $14.9 million partially offset by higher parts and component sales of $2.8 million and service and installation revenue of $1.0 million. Included in these net decreases is $12.3 million of incremental international revenue from the acquired TerraSource business. International sales for the first nine months of 2025 were $193.6 million, or 19.2% of consolidated net sales, compared to $219.6 million, or 23.2% of consolidated net sales, for the first nine months of 2024, a decrease of $26.0 million, or 11.8%. International sales decreased primarily due to lower equipment sales of $25.5 million and parts and component sales of $1.9 million. Included in these net decreases is $12.3 million of incremental international revenue from the acquired TerraSource business. Gross Profit Gross profit for the third quarter of 2025 was $84.2 million, or 24.1% of net sales, as compared to $66.8 million, or 22.9% of net sales, for the third quarter of 2024, an increase of $17.4 million, or 26.0%. The increase in gross profit was primarily driven by the impact of favorable pricing coupled with net favorable volume and mix of $37.9 million. This increase was partially offset by (i) manufacturing inefficiencies of $10.6 million, (ii) amortization of acquisition-related inventory fair value step-up of $4.3 million, (iii) net unfavorable inventory adjustments of $2.9 million and (iv) higher warranty program costs of $1.6 million. Gross profit for the first nine months of 2025 was $264.9 million, or 26.2% of net sales, as compared to $225.0 million, or 23.8% of net sales, for the first nine months of 2024, an increase of $39.9 million, or 17.7%. The increase in gross profit was primarily driven by the impact of favorable pricing coupled with net favorable volume and mix of $59.8 million and the favorable impact of changes in manufacturing input costs related to materials, labor and overhead of $3.3 million. These increases were partially offset by (i) manufacturing inefficiencies of $8.9 million, (ii) higher warranty program costs of $5.3 million, (iii) amortization of acquisition-related inventory fair value step-up of $4.3 million and (iv) net unfavorable inventory adjustments of $2.8 million. Selling, General and Administrative Expenses Selling, general and administrative expenses were $83.3 million or 23.8% of net sales, for the third quarter of 2025, compared to $65.6 million, or 22.5% of net sales, for the third quarter of 2024, an increase of $17.7 million, or 27.0%, primarily due to (i) increased personnel-related costs of $7.3 million, (ii) increased intangible asset amortization expense of $5.1 million, (iii) increased transaction costs of $3.9 million primarily attributable to the Acquisition, (iv) the $1.9 million benefit derived from the 37 BP Litigation loss contingency release offset by the final settlement amount recorded during 2024, (v) increased travel costs of $1.1 million and (vi) increased bad debt expense of $1.1 million. These increases were partially offset by lower costs related to our strategic transformation program of $3.4 million and lower technology support costs of $0.9 million. Selling, general and administrative expenses were $222.2 million, or 22.0% of net sales, for the first nine months of 2025, compared to $208.1 million, or 22.0% of net sales, for the first nine months of 2024, an increase of $14.1 million, or 6.8%, primarily due to (i) increased personnel-related costs of $16.9 million, partially driven by $5.9 million of employee incentive compensation costs, (ii) increased transaction costs of $6.1 million primarily attributable to the Acquisition and (iii) increased intangible asset amortization expense of $4.2 million. These increases were partially offset by lower costs related to our strategic transformation program of $10.4 million and decreased professional service costs of $2.8 million. 27 INDEX Restructuring Charges and Other Asset Gains, net Restructuring charges and the gain on sale of property and equipment, net for the three and nine months ended September 30, 2025 and 2024 are presented below: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Restructuring charges: Costs associated with exited operations – Enid $ (0.2) $ 8.4 $ (0.2) $ 8.5 Workforce reductions — — — 0.9 Total restructuring related charges (0.2) 8.4 (0.2) 9.4 Gain on sale of property and equipment, net: Gain on sale of property and equipment, net — — (0.1) (1.1) Total gain on sale of property and equipment, net — — (0.1) (1.1) Restructuring and other asset (gains) losses, net $ (0.2) $ 8.4 $ (0.3) $ 8.3 See Note 13, Strategic Transformation, Restructuring and Other Asset 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 discussion of the individual restructuring actions taken. Interest Expense Interest expense of $7.3 million and $11.4 million was incurred in the three and nine months ended September 30, 2025, respectively, as compared to $2.6 million and $8.4 million in the three and nine months ended September 30, 2024, respectively, primarily related to higher average outstanding borrowings coupled with higher interest rates on the 2025 Credit Facility as compared to the previous 2022 Credit Facility. Income Tax Our income tax benefit for the third quarter of 2025 was $0.9 million compared to $2.3 million for the third quarter of 2024. Our effective income tax rate was 17.6% for the third quarter of 2025 compared to 27.1% for the third quarter of 2024. The income tax benefit for the three months ended September 30, 2025 was lower compared to the same period in 2024 primarily due to lower pretax book loss and changes in the relative weighting of jurisdictional income and loss. Our income tax expense for the first nine months of 2025 was $10.3 million compared to a benefit of $0.6 million for the first nine months of 2024. Our effective tax rate was 27.7% for the first nine months of 2025 compared to 3.4% for the first nine months of 2024. The income tax expense for the nine months ended September 30, 2025 as compared to a benefit in the same period in 2024 was primarily due to higher pretax book income and changes in the relative weighting of jurisdictional income and loss, partially offset by a net nondeductible goodwill impairment incurred in 2024. 28 INDEX Backlog September 30, (in millions, except percentage data) 2025 2024 $ Change % Change Infrastructure Solutions $ 259.5 $ 351.1 $ (91.6) (26.1) % Materials Solutions 190.0 124.7 65.3 52.4 % Domestic Backlog 373.7 377.6 (3.9) (1.0) % International Backlog 75.8 98.2 (22.4) (22.8) % The backlog of orders as of September 30, 2025 was $449.5 million compared to $475.8 million as of September 30, 2024, a decrease of $26.3 million, or 5.5%. Backlog includes an incremental $64.1 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 customers as a result of macroeconomic factors. Segment Net Sales – Three Months Ended : Three Months Ended September 30, $ Change % Change (in millions, except percentage data) 2025 2024 Infrastructure Solutions $ 193.2 $ 165.0 $ 28.2 17.1 % Materials Solutions 156.9 126.4 30.5 24.1 % Infrastructure Solutions Sales in this segment were $193.2 million for the third quarter of 2025 compared to $165.0 million for the same period in 2024, an increase of $28.2 million, or 17.1%. The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in (i) equipment sales of $19.3 million, (ii) parts and component sales of $6.9 million, (iii) service and equipment installation revenue of $1.0 million and (iv) freight revenue of $0.9 million. Domestic sales for the Infrastructure Solutions segment increased $27.0 million, or 17.2%, for the third quarter of 2025 compared to the same period in 2024 primarily due to higher (i) equipment sales of $16.6 million (ii) parts and component sales of $8.2 million, (iii) service and equipment installation revenue of $1.2 million and (iv) freight revenue of $0.9 million. International sales for the Infrastructure Solutions segment increased $1.2 million, or 14.3%, for the third quarter of 2025 compared to the same period in 2024 primarily due to higher equipment sales of $2.7 million partially offset by lower parts and components sales of $1.3 million. Materials Solutions Sales in this segment were $156.9 million for the third quarter of 2025 compared to $126.4 million for the same period in 2024, an increase of $30.5 million, or 24.1%. The increase was primarily driven by net favorable volume and mix coupled with favorable pricing that generated increases in (i) parts and component sales of $19.9 million, (ii) equipment sales of $5.4 million, (iii) service and equipment installation revenue of $4.1 million and (iv) freight revenue of $1.2 million. Domestic sales for the Materials Solutions segment increased by $42.2 million, or 77.3%, for the third quarter of 2025 compared to the same period in 2024, primarily due to higher (i) equipment sales of $23.0 million, (ii) parts and component sales of $15.8 million, (iii) service and equipment installation revenue of $2.9 million and (iv) freight revenue of $1.0 million. 29 INDEX International sales for the Materials Solutions segment decreased $11.7 million, or 16.3%, for the third quarter of 2025 compared to the same period in 2024 primarily due to lower equipment sales of $17.6 million partially offset by higher parts and component sales of $4.1 million and service and equipment installation revenue of $1.2 million. Segment Net Sales – Nine Months Ended : Nine Months Ended September 30, $ Change % Change (in millions, except percentage data) 2025 2024 Infrastructure Solutions $ 633.8 $ 588.6 $ 45.2 7.7 % Materials Solutions 376.0 357.5 18.5 5.2 % Infrastructure Solutions Sales in this segment were $633.8 million for the first nine months of 2025 compared to $588.6 million for the same period in 2024, an increase of $45.2 million, or 7.7%. The increase was primarily driven by favorable pricing coupled with net favorable volume and mix that generated increases in (i) equipment sales of $27.8 million, (ii) parts and component sales of $8.4 million, (iii) service and equipment installation revenue of $3.4 million, (iv) freight revenue of $3.3 million and (v) used equipment sales of $2.1 million. Domestic sales for the Infrastructure Solutions segment increased $42.1 million, or 7.7%, for the first nine months of 2025 compared to the same period in 2024 primarily due to higher (i) equipment sales of $21.5 million, (ii) parts and component sales of $11.8 million, (iii) service and equipment installation revenue of $3.3 million, (iv) freight revenue of $3.3 million and (v) used equipment sales of $2.1 million. International sales for the Infrastructure Solutions segment increased $3.1 million, or 8.0%, for the first nine months of 2025 compared to the same period in 2024 primarily due to higher equipment sales of $6.3 million partially offset by lower parts and component sales of $3.4 million. Materials Solutions Sales in this segment were $376.0 million for the first nine months of 2025 compared to $357.5 million for the same period in 2024, an increase of $18.5 million, or 5.2%. The increase was primarily driven by favorable pricing coupled with net favorable volume and mix that generated increases in parts and component sales of $16.5 million and service and equipment installation revenue of $3.7 million. Domestic sales for the Materials Solutions segment increased by $47.6 million, or 26.9%, for the first nine months of 2025 compared to the same period in 2024, primarily due to higher (i) equipment sales of $29.6 million, (ii) parts and component sale of $15.0 million and (iii) service and installation revenue of $3.0 million. International sales for the Materials Solutions segment decreased $29.1 million, or 16.1%, for the first nine months of 2025 compared to the same period in 2024 primarily due to lower equipment sales of $31.8 million. Segment Operating Adjusted EBITDA Segment Operating Adjusted EBITDA is the measure of segment profit or loss used by our 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 12, 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 taxes. Segment Operating Adjusted EBITDA – Three Months Ended: Three Months Ended September 30, $ Change % Change (in millions, except percentage data) 2025 2024 Infrastructure Solutions $ 23.9 $ 15.6 $ 8.3 53.2 % Materials Solutions 15.4 14.5 0.9 6.2 % 30 INDEX Infrastructure Solutions Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $23.9 million for the third quarter of 2025 compared to $15.6 million for the same period in 2024, an increase of $8.3 million, or 53.2%. The increase in Segment Operating Adjusted EBITDA was primarily driven by the sales impact of net favorable volume and mix coupled with favorable pricing that generated higher gross profit of $16.4 million and lower technology support costs of $1.0 million. These increases were partially offset by (i) manufacturing inefficiencies of $3.0 million, (ii) higher personnel-related costs of $2.5 million, (iii) higher quality-related expenses of $1.2 million and (iv) net unfavorable inventory adjustments of $1.2 million. Materials Solutions Segment Operating Adjusted EBITDA for the Materials Solutions segment was $15.4 million for the third quarter of 2025 compared to $14.5 million for the same period in 2024, an increase of $0.9 million, or 6.2%. The increase in Segment Operating Adjusted EBITDA was primarily driven by the sales impact of net favorable volume and mix coupled with favorable pricing that generated higher gross profit of $21.5 million and the favorable impact of changes in manufacturing input costs related to materials, labor and overhead of $0.8 million. These increases were partially offset by (i) manufacturing inefficiencies of $7.0 million, (ii) higher personnel-related costs of $6.1 million, (iii) the $1.9 million benefit derived from the 37 BP Litigation loss contingency release offset by the final settlement amount recorded during 2024, (iv) net unfavorable inventory adjustments of $1.8 million and (v) higher travel-related costs of $0.8 million. Segment Operating Adjusted EBITDA – Nine Months Ended : Nine Months Ended September 30, $ Change % Change (in millions, except percentage data) 2025 2024 Infrastructure Solutions $ 99.0 $ 68.4 $ 30.6 44.7 % Materials Solutions 34.8 30.0 4.8 16.0 % Infrastructure Solutions Segment Operating Adjusted EBITDA for the Infrastructure Solutions segment was $99.0 million for the first nine months of 2025 compared to $68.4 million for the same period in 2024, an increase of $30.6 million, or 44.7%. The increase in Segment Operating Adjusted EBITDA was primarily driven by from (i) the sales impact of favorable pricing coupled with net favorable volume and mix that generated higher gross profit of $40.3 million, (ii) lower professional service costs of $2.2 million and (iii) lower technology support costs of $2.1 million. These increases were partially offset by (i) higher quality-related costs of $7.3 million, (ii) higher personnel-related costs of $7.0 million and (iii) net unfavorable inventory adjustments of $3.0 million. Materials Solutions Segment Operating Adjusted EBITDA for the Materials Solutions segment was $34.8 million for the first nine months of 2025 compared to $30.0 million for the same period in 2024, an increase of $4.8 million, or 16.0%. The increase in Segment Operating Adjusted EBITDA was primarily driven by the sales impact of favorable pricing coupled with net favorable volume and mix that generated higher gross profit of $19.5 million and the favorable impact of changes in manufacturing input costs related to materials, labor and overhead of $2.2 million. These increases were partially offset by manufacturing inefficiencies of $9.2 million and higher personnel-related expenses of $7.9 million. Corporate and Other Operations Corporate and Other operations, which are not an operating segment or included in one of the other reportable segments, had net expenses of $12.2 million for the third quarter of 2025 compared to $12.7 million for the same period in 2024, a decrease of $0.5 million, or 3.9%. The decrease in expenses was primarily driven by lower personnel-related costs of $1.3 million. Corporate and Other operations had net expenses of $37.8 million for the first nine months of 2025 compared to $34.5 million for the first nine months of 2024, an increase of $3.3 million, or 9.6%. The increase in expenses was primarily due to higher personnel-related costs of $2.0 million. Liquidity and Capital Resources Our primary sources of liquidity and capital resources are cash and cash equivalents on hand, borrowing capacity under our credit facilities and cash flows from operations. As of September 30, 2025, our total liquidity was $312.1 million, consisting of $67.3 million of cash and cash equivalents available for operating purposes and $244.8 million available for additional borrowings under the revolving credit facility, to the extent our compliance with financial covenants permits such borrowings. Our 31 INDEX foreign subsidiaries held $29.4 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 transformation initiatives, strategic acquisitions, 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 the 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. On July 1, 2025, we entered into 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. We had outstanding principal indebtedness on the term loan facility of $345.6 million and no outstanding borrowings under the revolving credit facility and as of September 30, 2025. Our outstanding letters of credit totaling $5.2 million decreased borrowing availability to $244.8 million under the revolving credit facility as of September 30, 2025. 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. In addition, the Brazilian subsidiary also enters into order anticipation agreements on a periodic basis. Both the outstanding borrowings under the credit facilities of the international subsidiaries and the order anticipation agreements are recorded in "Short-term debt" in our Consolidated Balance Sheets. Each of the credit facilities are 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 September 30, 2025, open purchase obligations totaled $118.7 million, of which $92.7 million are expected to be fulfilled within the remainder of 2025. We estimate that our capital expenditures will be between $25.0 million and $35.0 million for the year ending December 31, 2025, which may be impacted by general economic, financial or operational changes and competitive, legislative and regulatory factors, among other considerations. Cash Flows The following table summarizes cash flows during the nine months ended September 30, 2025 and 2024, respectively: Nine Months Ended September 30, (in millions) 2025 2024 Net cash provided by (used in) operating activities $ 25.3 $ (13.6) Net cash used in investing activities (260.4) (14.0) Net cash provided by financing activities 212.4 19.5 Effect of exchange rates on cash 1.2 0.2 Decrease in cash, cash equivalents and restricted cash (21.5) (7.9) Cash, cash equivalents and restricted cash, end of period $ 69.3 $ 55.3 Net cash provided by (used in) operating activities Our operating activities provided net cash of $25.3 million for the nine months ended September 30, 2025 as compared to a net use of $13.6 million for the nine months ended September 30, 2024. This increase is primarily due to increased cash inflows from net income reduced by non-cash charges of $47.4 million partially offset by higher net cash usages for our operating assets and liabilities of $8.4 million. The increased net cash usage for our operating assets and liabilities was mainly driven by decreased customer deposits of $32.2 million associated with lower backlog and the timing impacts for accrued liabilities of $27.8 million. The increased net cash usage was partially offset by the timing impacts of (i) payments of trade accounts payables of $27.4 million, (ii) collections on trade and other receivables of $21.4 million and (iii) lower employee-related payments of $14.2 million. 32 INDEX Net cash used in investing activities Net cash used in investing activities was $260.4 million during the nine months ended September 30, 2025 as compared to $14.0 million during the nine months ended September 30, 2024, primarily due to the TerraSource acquisition partially offset by decreased capital expenditures of $4.0 million. Net cash provided by financing activities Net cash provided by financing activities was $212.4 million during the nine months ended September 30, 2025 as compared to $19.5 million during the nine months ended September 30, 2024, primarily due to higher net debt borrowings in 2025 as compared to 2024. Dividends We paid quarterly dividends of $0.13 per common share to shareholders in the third quarter of both 2025 and 2024. Financial Condition Our total current assets increased to $821.2 million as of September 30, 2025 from $722.8 million as of December 31, 2024, an increase of $98.4 million, or 13.6%, due primarily to increases in (i) inventories of $78.1 million, (ii) trade and other receivables of $25.9 million and (iii) prepaid and refundable income taxes of $11.2 million. These increases were partially offset by a decrease in cash, cash equivalents and restricted cash of $21.5 million. Our total current liabilities increased to $318.3 million as of September 30, 2025 from $271.7 million as of December 31, 2024, an increase of $46.6 million, or 17.2%, due primarily to increases in (i) current maturities of long-term debt of $16.2 million associated with our term facility, (ii) accounts payables of $15.2 million and (iii) accrued employee-related liabilities of $12.7 million. Critical Accounting Estimates Our critical accounting estimates are described in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2024 was filed.