Astec Industries (NASDAQ:ASTE) used its 2026 Investor Day to outline a five-year growth plan centered on higher recurring revenue, digital products, operational improvements and disciplined acquisitions.
President and CEO Jaco van der Merwe said the Chattanooga, Tennessee-based equipment manufacturer is at an “inflection point” after three years of work to improve consistency, profitability and its balance sheet. He said Astec’s long-term plan is built around its “Built to Connect” operating approach and its position in what the company calls the “Rock to Road” value chain, including equipment for asphalt, aggregates, mineral processing and concrete production.
Van der Merwe said Astec now has more than 4,500 employees and 26 manufacturing sites worldwide. The company generates about 80% of its revenue in the U.S., with parts and service representing approximately 34% of total revenue. Over the past three years, he said, Astec generated a 74% total return for shareholders.
Company Targets Higher Margins and Organic Growth
Chief Financial Officer Brian Harris laid out financial targets that management said it expects to achieve by 2030. The company is targeting revenue growth at a compound annual growth rate of greater than 6%, compared with a prior three-year average of 3%.
Harris said Astec expects adjusted EBITDA margin to improve to a range of 14% to 17% by 2030. He said the company has already improved adjusted EBITDA margin by 440 basis points from its level three years ago and expects to build margins at a pace of 75 to 150 basis points per year.
Astec also set a 2030 adjusted return on invested capital target of 13% to 15%. Harris said the company’s current weighted average cost of capital is 8.25%, compared with reported 2025 adjusted ROIC of 11.5%. The company also set a target of more than 25% operating cash flow growth.
Van der Merwe said Astec delivered 10% adjusted EBITDA in 2025 for the first time since the company began reporting the metric in 2016. He said the main drivers of future margin growth will be an increased mix of parts and service, operational excellence initiatives and new product development. In the Q&A session, he also cited potential efficiencies in selling, general and administrative expenses.
Parts and Service Mix Seen as Key to Profitability
A central part of Astec’s plan is to increase parts and service revenue to 40% to 50% of total revenue from the current level of about 34%. Van der Merwe said that shift would improve consistency and profitability while strengthening customer support.
Harris said recurring aftermarket parts and service revenue is a key factor in Astec’s acquisition strategy. He said many industry peers are already in the 40% to 50% range for aftermarket mix. Van der Merwe said the 2025 acquisition of TerraSource Global is expected to add to Astec’s parts and service mix, potentially contributing another two to three percentage points as it gains momentum.
Michael Norris, Group President of Materials Solutions, said TerraSource brings thousands of installed assets that Astec can use to expand aftermarket revenue. He also said Astec is working to capture more of its own installed base through customer outreach, machine audits and improved fill rates.
Van der Merwe said reaching the target will require both organic growth and acquisitions. He said Astec also sees opportunities to sell competitive parts to customers operating mixed fleets, particularly as its customers consolidate and acquire assets from multiple equipment providers.
Signal Platform and Digital Tools Highlighted
Astec executives highlighted the launch of the Signal platform at CONEXPO-CON/AGG 2026 as a major step in the company’s digital strategy. Van der Merwe said the platform is intended to provide customers with intelligence from equipment, including fleet visibility, telematics, remote diagnostics, asset health monitoring and future autonomous or remote operating capabilities.
“Iron becomes smart,” van der Merwe said, describing the platform’s role in connecting equipment data to customer operations.
In the Q&A session, van der Merwe said every new piece of equipment leaving Astec is “Signal ready,” and that the company also sees a significant retrofit opportunity across installed equipment. He said monetization may come through technology embedded in new products, controls for plant upgrades and retrofits, and potentially license fees over time. Longer term, he said Astec wants to use Signal to drive smart services and parts sales.
Norris also discussed MyAstec, a digital parts portal that the company said allows customers to find and order parts in three clicks. Van der Merwe said about 400 asphalt plant assets are currently on MyAstec, with expansion planned into concrete and Materials Solutions.
Acquisitions and Capital Allocation
Harris said Astec deployed $380 million of capital over the past three years, including $250 million for the TerraSource acquisition in 2025. He said that transaction left Astec with a net debt-to-adjusted EBITDA leverage ratio of 2 times, within the company’s stated range of 1.5 to 2.5 times.
Looking from 2026 through 2030, Harris said Astec expects to deploy $409 million of capital assuming continuation of its current dividend policy, no share buybacks, capital spending at 2.5% of revenue and the inclusion of the January 2026 acquisition of CWMF. He said maintaining leverage between 1.5 and 2.5 times would give Astec capacity to deploy an additional $400 million to $600 million of capital.
Harris said acquisition targets will be evaluated using criteria that include aftermarket revenue opportunities, scale, digital capabilities, market leadership, customer alignment and cultural fit. He said TerraSource and CWMF both met Astec’s criteria and were expected to be accretive to earnings per share in the first full year.
Infrastructure, Mining and International Markets
Astec executives pointed to infrastructure spending, reindustrialization, recycling, digital transformation and mining as major demand drivers. Van der Merwe cited the American Society of Civil Engineers’ estimate that more than $9 trillion of investment would be needed for the U.S. to improve its infrastructure grade from C to B.
He also noted that the Infrastructure Investment and Jobs Act provided $1.2 trillion of investment, including $379 billion for highways, $65 billion for energy and power, and $69 billion for water and the environment. He said Astec expects the next highway bill to be focused on roads and bridges, with that portion potentially reaching as high as $600 billion.
Norris said the Materials Solutions business is seeing improvement after a down cycle affected by high interest rates. He said customers have adapted to the current rate environment, while infrastructure spending and data center construction are driving demand. He also highlighted opportunities in energy, fertilizer, lithium, soft rock mining and rare earth minerals following the TerraSource acquisition.
Internationally, Harris said Astec currently generates about 20% of revenue outside the U.S. and will consider international acquisition targets. Norris said Materials Solutions sees opportunities in Latin America, including Brazil, as well as Asia and the Middle East. Van der Merwe said Astec’s global brand recognition creates opportunities to expand market share, particularly where products can be manufactured closer to customers.
Van der Merwe closed the event by saying Astec has a clear path to its 2030 targets through parts and service growth, operational excellence, new products and inorganic opportunities supported by its balance sheet.
About Astec Industries (NASDAQ:ASTE)
Astec Industries, Inc is a designer and manufacturer of specialized equipment for infrastructure-related markets. Headquartered in Chattanooga, Tennessee, the company develops, engineers and produces machinery for asphalt road-building, aggregate processing, concrete production, underground mining, landscaping and utility installation. Astec's product portfolio includes asphalt plants, portable crushers, conveyors, screening plants, mixers, continuous miners and related support equipment.
Organized into multiple operating segments—Roadbuilding; Aggregate & Mining; Energy; and Pavement Preservation & Maintenance—Astec Industries serves contractors and municipalities that build and maintain transportation, energy and utility networks.
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