Astec Industries, Inc.

Hello and welcome to the Aztec Industries third quarter 2020 earnings call. As a reminder, this conference call is being recorded. It is my pleasure to introduce your host, Steve Anderson, Senior Vice President of Administration and Investor Relations. Thank you, Mr. Anderson. You may begin.

Thank you and welcome to the Aztec Industries third quarter 2020 earnings call. My name is Steve Anderson and joining me on today's call are Barry Ruffalo, our Chief Executive Officer, and Becky Weinberg, our Chief Financial Officer. In just a moment, I'll turn the call over to Barry to provide comments, and then Becky will summarize our financial results. Before we begin, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company, and these statements are intended to qualify for the safe harbor liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions. and others that are contained in our filings with the SEC. As usual, we ask that you familiarize yourself with those factors. In an effort to provide investors with additional information regarding the company's results, the company refers to various GAAP, which is US Generally Accepted Accounting Principles, and non-GAAP financial measures, which management believes provide useful information to investors. These non-GAAP financial measures have no standardized meaning prescribed by US GAAP and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management of the company does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. Comments made during today's call will refer to non-GAAP results and a reconciliation of GAAP to non-GAAP results are included in our news release and Appendix of our slide deck. All related earnings materials are posted on our website at www.aztecindustries.com. And before I turn the call to Barry, I'd like to remind everyone of our upcoming virtual 2020 Investor Day on December 10th. Now let me turn the call over to Barry.

Thank you, Steve. Good morning, everyone, and thank you for joining us on the call this morning to discuss our third quarter 2020 results. I continue to be proud and impressed of the hard work and dedication of our team members throughout the pandemic. As you can see from our results, our team has focused on operational excellence and execution to significantly contribute and ensure the success of our organization during this time. We continue to prioritize the health and safety of our employees, suppliers and customers as we navigate through this and never stop in terms of our focus on driving long term profitable growth. I'll begin with key highlights from the quarter and then provide an update on our operations. I will also discuss what we're seeing in terms of demand in our supply chain before turning the call over to Becky for details on our financial results. We'll also highlight progress made on our strategic transformation plan and then open the call for Q&A. Starting on slide four, here are today's key messages. First, as a result of the actions that we've taken over the past year to transform our company, and our increased focus on driving operational excellence, we were able to drive another quarter of strong performance and improved quality of earnings with a 13% increase in adjusted EBITDA and 170 basis point increase in EBITDA margin compared to the prior year, despite the challenging macro environment. Second, in the quarter, customer demand remained resilient as our products are essential for building infrastructure and are used to facilitate the transportation needs of our communities. My recent conversation with some of our key customers confirmed that while they continue to deal with near-term uncertainties, they also continue to demand Aztec solutions and will continue to support them and remain vigilant as we help them navigate through the ongoing pandemic. Third, given our focus on operational excellence, we remain well-positioned to execute in all market conditions with a strong balance sheet and liquidity, including, importantly, a net cash position. We also saw further success in the quarter in improving our working capital terms and will remain focused on further improvement. Fourth, during the third quarter, we continued to make progress on our strategic transformation under simplified focus and growth pillars with the completion of the sale of the remaining Jeffco assets and the acquisition of Conoco and BMH. The integration of Conoco and BMH is going well, and as a result of the acquisitions, we have a stronger infrastructure solutions portfolio with the ability to provide our customers with access to the most robust line of concrete products in the infrastructure industry. Importantly, we seek not only to be strategic and disciplined acquirers, but also strong integrators of businesses. We continue to look for opportunities to support our rock the road strategy and build upon our strong foundational product lines. Lastly, on this slide, throughout the pandemic, we have demonstrated agility and flexibility to respond to our customers' needs and we will continue to do so in any economic scenario. Our ability to execute against our strategy and drive operational excellence across the organization has served us well in this environment and is a key driver of our success. We will continue to focus on the factors within our control and build upon the strong foundation that we have created here at Aztec. With that, let me turn to slide five. As a reminder, As part of our continued transformation beginning this year, we went from three segments to two. Our revenue mix during the quarter was 35% material solutions and 65% infrastructure solutions. The key here is that we refer to our business as being able to serve a strategic value chain that is really from rock to road, including our two recent acquisitions. On slide six, we provide an update on our operations. We continue to have as many of our employees working from home as possible. with the intention to gradually bring back the team as the COVID-19 situation alleviates. Currently, approximately 30% of our office employees are working remotely. Prior to the pandemic, we had implemented Microsoft Teams across the organization and our workforce has adapted well to using this system over the past several months of remote working. Regarding our facilities, all of Aztec's facilities around the globe are fully operational with no material interruptions during the third quarter and we maintain the ability to flex operations as needed and quickly adapt to the changing environment. Now turning to slide seven, I will touch on some business dynamics that we are seeing and hearing from our customer conversations. Our ongoing dialogue with customers suggests that they are doing well with a strong backlog through 2020 and into 2021. The recent 12-month extension of the FAST Act has provided our customers with increased visibility and confidence. Importantly, we continue to see bipartisan support for U.S. infrastructure construction and look forward to continuing to service and support our customers as they require critical aspect solutions. On the demand front, many of our customers remain cautiously optimistic for a rebound once the pandemic is contained. With respect to our supply chain, today we have not experienced any significant disruptions, though we are constantly maintaining discussions with our suppliers to identify and mitigate risks. We have also expanded the depth of our supply chain to support our risk mitigation efforts. Overall, during the quarter we continued to make significant progress and our results demonstrated good traction on our strategic transformation with a 2% increase in adjusted EBITDA and a 60 basis point expansion in the adjusted EBITDA margin, despite the decrease in sales as our aftermarket parts sales remained strong and improved slightly from the prior year. Our third quarter performance is a direct result of the restructuring initiatives we started in 2018, in addition to our increased focus on operational excellence and strategic procurement. Before turning the call over to Becky, I'd like to highlight a couple of initiatives that we have recently adopted here at Aztec to help support our culture of continuous improvement and operational excellence. First, I've been hosting one-hour meetings with a small group of different team members across the organization each week to discuss improvements that can be made to further enhance our culture of continuous improvement. These conversations have been extremely insightful, and we are already implementing some of the suggestions from these meetings, and I expect the trend to continue. We are also gaining strong traction across the organization for our winning behaviors that support our culture initiative. These behaviors include open and honest communication, drive for creativity, customer-centric innovation, and one Aztec in all that we do. I'm proud of the culture here at Aztec, and I'm excited to share some more details with you at the upcoming Investor Day regarding our initiatives to drive operational excellence and grow across the organization. Now with that, I'll turn the call over to Becky to discuss our detailed financial results.