Astec Industries, Inc.

Hello and welcome to the Aztec Industries, Inc. 4th Quarter 2020 Earnings Call. As a reminder, this conference call is being recorded. It is now 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 4th Quarter 2020 Earnings Conference 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 for 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. Factors that can influence our results are highlighted in today's financial news release and others 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 are U.S. 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 U.S. GAAP and are therefore 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. Management of the company uses both GAAP and non-GAAP financial measures to establish internal budgets and targets to evaluate the company's financial performance against such budgets and targets. You should also note 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 in the appendix of our presentation. All related earnings materials are posted on our website at www.astecindustries.com. And now, I'll turn the call over to Barry.

Thank you, Steve. Good morning, everyone, and thank you for joining us to discuss our fourth quarter 2020 results. I would like to thank the entire Aztec team for their hard work and continued focus on our core values to serve our customers during an extraordinary and unprecedented year. As I mentioned before, the health and safety of our employees, suppliers, and customers continue to be our number one priority as we continue to navigate through the pandemic. Our fourth quarter results demonstrate our ability to execute and perform well with a focus on continuous improvement and driving operational excellence through our one Aztec business model. 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 further progress made on our strategic transformation and then open the call for Q&A. Beginning on slide four, here are today's key messages. We had a strong finish to the year as we drove another quarter of robust performance with adjusted EBITDA margin expanding by 490 basis points compared to the prior year despite a decrease in net sales. The margin improvement is a direct result of our ongoing strategic transformation and our ability to gain further traction on our operational excellence initiatives. Second, Customer demand for Aztec solutions remains resilient as backlog at the end of the year increased by approximately 37% compared to the prior year. As you know, we typically comment that our backlog represents at least one full quarter of work, but now in some product lines, our backlog covers a good two quarters of capacity. We continue to provide our customers with industry-leading technology solutions that deliver value and support our walk-the-road initiatives. As we continue to stay engaged with our customers, we can share with you that many know 2021 is already full of projects, and they are starting to schedule work into 2022. Third, we have significantly strengthened our positioning this year, and we remain poised for future growth with our streamlined organizational structure, strong balance sheet, and ample liquidity. Our continued focus on operational and commercial excellence will enable us to further strengthen our organization in 2021. Fourth, during the quarter, we continue to execute against our strategic initiatives to simplify, focus, and grow the business. We continue to leverage and build upon our One Aztec business model, which gives us a great foundation to grow organically by having the most comprehensive rock-to-road set of customer solutions, and through acquisition by having disciplined processes and company-wide tools. We also completed the acquisition of Gravel Automation during the quarter, which included bringing in an experienced vice president of product management for our controls and automation platforms. For 2021, we will continue to transform our company with greater emphasis on the focus and growth strategic pillars. Lastly, on this slide, 2020 was a transformational year for Aztec, and our strong performance was a testament to our dedication and abilities to execute throughout cycles. In 2021, we will build upon the positive momentum from 2020 and further transform the business with a focus on commercial and operational excellence, profitable growth and long-term stakeholder value creation. We will continue to build upon the strong foundation we have created here at Aztec. Moving on to slide five. For those who are new to the company, this is our business segment breakdown. Our revenue mix during the quarter was approximately 30% materials solutions and 70% infrastructure solutions. Under the simplified two-segment structure, we are able to serve a strategic value chain that supports our rock-the-road strategy. Turning to slide six, as a reminder, we unveiled our one asset business model at Investor Day back in December. Our focus on operational excellence across the organization has enabled us to operate with minimal disruption throughout the pandemic. We continue to have many of our employees work from home with approximately 30% of our office employees working remotely. Regarding our manufacturing sites, all SEC facilities around the globe continue to be fully operational with no material interruptions during the fourth quarter, and we maintain the ability to flex operations as needed and quickly adapt to the changing environment. On slide seven, I will touch on some business dynamics we are seeing and hearing about from our customers. Although we are still in unprecedented times relative to the pandemic, we could be in the early innings of an upcycle in North America as we continue to see strong residential real estate demand followed by improvements in non-residential. Construction demand continues to show signs of improvement in our ongoing conversations with customers to adjust the positive demand outlook for 2021. Under the new administration, we are optimistic about increased U.S. infrastructure spending as it is a key component of President Biden's Build Back Better plan. Furthermore, the Coronavirus Response and Relief Supplemental Appropriations Act was recently signed into law. This bill will appropriate $10 billion to highway infrastructure projects. Importantly, during January alone, 25 states introduced new transportation funding measures which should further support infrastructure spending. With respect to our supply chain, to date, we have not experienced any significant disruption and we are constantly maintaining discussions with our suppliers to identify and mitigate risk. We have also expanded the depth of our supply chain to support our risk mitigation efforts. In terms of market risk, the industry has started to see commodity inflation for many raw materials such as steel, and we expect this will continue as we move deeper into 2021. Additionally, we are beginning to notice tightness in labor availability, for some positions as well as container shortages in general to support the increase in backlog. As always, we proactively monitor the environment to take action and manage our business accordingly. Turning to slide eight, we highlight some of our important ESG initiatives. Although we are not new to innovating sustainable products such as warm mixed asphalt systems and cold planers that reclaim asphalt off of existing roads for reuse in new pavements, We are still in early days of our ESG journey as a whole. Our efforts continue to create more products such as the double-barrel green system and our shuttle buggies, which focus on reducing fuel consumption, eliminating the trucking of materials to the central site, and reducing the need for virgin oil products. Enhancing our ESG profile as a company is one of our top priorities. One of our recent accomplishments was under the governance pillar. During the fourth quarter, we remediated all prior period material weaknesses and did so approximately one year ahead of schedule. This was an impressive feat, and I am proud of Becky and her finance team and all of the ADSEC employees involved for the hard work they've put in over the past year to achieve this accomplishment. We continue to gain traction on our ESG initiatives throughout the organization, and our team is engaged and excited about our increased focus and early progress in this area. Here at ADCET, we know that these initiatives will help us be better, healthier, and more sustainable solutions providers. I invite you to visit the About Us page on our website to learn more about our ESG commitment. We look forward to providing you continued updates on our progress. Overall, during the quarter, we continue to make significant progress on our transformation strategy to simplify, focus, and grow the business. The fourth quarter marked another period of strong execution and performance with a 69% increase in adjusted EBITDA and a 490 basis point expansion in adjusted EBITDA margin, despite a decrease in sales. 2020 was a remarkable year for our organization, and I know that we will continue to build upon the strong foundation as we continue to execute our strategy and drive commercial and operational excellence and growth across the organization. With that, I will now turn the call over to Becky to discuss our detailed financial results.