Astec Industries, Inc.

Good day, ladies and gentlemen, and welcome to the Aztec Industries Third Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Steve Anderson. Sir, the floor is yours.

Thank you, and welcome to the Aztec Industries Third Quarter Earnings Call. Joining me on today's call are Barry Ruffalo, Chief Executive Officer, and Becky Weinberg, 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. Factors that can influence our results are highlighted in today's financial news release 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 financial The company refers to various U.S. GAAP, which are 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 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. Management of the company uses both GAAP and non-GAAP financial measures to establish internal budgets and targets and 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 appendix of our slide deck. All related materials are posted on our website at www.aztechindustries.com, including our presentation, which is under the Investor Relations and Presentations tabs. And now, I'll 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 Aztec's third quarter results. During our remarks today, I will begin by discussing key highlights from the quarter and provide an update on actions we are taking to drive operational and commercial excellence. I will also share more detail on what we are seeing in terms of demand and current market dynamics before turning the call over to Becky for details on our financial results. Then, we will highlight progress made on our continued strategic evolution and open the call for Q&A. Turning to slide four. The adaptability and dedication of our team drove strong third quarter performance with sales up 15.4% and adjusted EBITDA up 58.5% compared to the third quarter of 2020. I'd like to highlight the resilience of our team and their impressive ability to execute in a dynamic environment in a quarter marked by a combination of increased demand and ongoing industry-wide headwinds. We also saw a fourth consecutive quarter of record backlog of 184% year-over-year, a testament to the strength of our customer relationships as we continue to provide our customers exceptional value, superior service, and innovative industry-leading technology solutions. Second, we are realizing benefits from several strategic initiatives to mitigate industry headwinds, including increasing pricing to offset inflation, onboarding new talent, and proactively identifying supply chain disruptions. I will describe these initiatives in more detail later in my remarks and the results we are seeing thus far. Third, the successful execution of our strategy has positioned our business well for future growth. I am confident in our team's ability to execute in all economic scenarios as a more focused organization with a strong balance sheet and ample liquidity. This confidence is evidenced by our decision to increase our quarterly dividend. We are building on the three pillars of our strategic evolution and the actions we have taken to simplify and focus our business as we continue to shift our focus to grow. We have a multitude of organic growth initiatives underway, which I will provide further detail on later during our call. Lastly, we remain focused on driving commercial and operational excellence across our business as we position ourselves for future profitable growth. I'm excited for our organization's future as I look at How far we have come in our strategic evolution and the long runway ahead of us. We have the right team in place to execute our strategy and drive long-term stakeholder value creation. Turning to slide five, I'd now like to provide an update on our operations and the actions we have taken to optimize revenue, meet elevated customer demand, and proactively manage supply chain issues. We continue to drive operational excellence across the organization through our one Aztec business model. We are maintaining flexible operations, including cross-site manufacturing and manufacturing capacity sharing. We are focused on leveraging capacity and bandwidth across our footprint to deliver our customers best-in-class products and solutions across the rock-the-road value chain. And last, we remain focused on optimizing revenue within our footprint, and I'm glad to note this is the best third-quarter revenue generation in the history of our company. Now on to slide six. I reviewed some of the key industry dynamics that are impacting our business and some initiatives Aztec has in place to capture opportunities and address industry headwinds. We continue to see strong demand for our products across our infrastructure and materials solutions businesses. Conversations with customers indicate a positive outlook through the remainder of 2021 and into 2022. Our record backlog this quarter reflects continued strong demand. We have a number of initiatives in place to enable us to meet higher demand, and I will provide more detail on that shortly. Despite the latest extension of the Federal Highway Bill, customers continue to express optimism for increased U.S. infrastructure spending and view the bill as a long-term tailwind for our business. However, as I've mentioned in previous calls, we are not a company that is waiting around for a bill to be passed. We see significant near-term demand for our products, and we have a strategy in place to drive organic and intergranite growth moving forward. You should also note that our international and parts sales continue to grow as well. Our international and parts teams are doing an outstanding job of driving the business and leveraging the investments that we have made in people, processes, and tools, which allows them to be easy to do business with and focus on growth while delivering value to our global customers. Labor shortages continue to persist across the industry. However, we are seeing steady improvements as a result of hiring strategies with headcount up 8.5% year-over-year. Regarding inflation, we continue to see higher commodity transportation and logistics costs. We are, however, seeing early signs of steel prices starting to plateau and slowly decline. The situation remains fluid, and we are prepared to adapt prices accordingly to any further increases in import costs. On slide seven, we provide more detail on our initiatives to address labor shortages. We have four key elements highlighted, including targeted recruitment, engagement, and retention practices. and sharing the benefits of working at Aztec. As you can see, we have a number of initiatives in place to remain an employer of choice. We continue to evaluate our programs to retain current employees and enhance our recruiting practices. Our team is core to who we are here at Aztec, and we know the investments we make in our people will pay dividends to our organization and stakeholders in the future. On slide eight, we provide more detail on our historic backlog, posting record backlog at the end of the third quarter. In today's environment, we expect backlog to be converted to sales in approximately two to three quarters. We're acting quickly and diligently to convert our backlog in a timely manner through cross-site manufacturing, increased headcount, and automated processes. Some customers have begun to schedule orders in advance of their need in order to mitigate any future supply chain disruptions. This, combined with strong market demand, has resulted in longer lead times. We are constantly working to optimize our operating schedules to deliver end products to our customers at the desired time. In slide 9, we highlight some key ESG accomplishments since our last earnings call, including the announcement of our strategic partnership with CarbonCure. CarbonCure enables concrete producers to reduce the carbon footprint of concrete and reduce other input costs. This partnership is in line with our strategy to increase environmentally friendly products and services to customers as part of our sustainability commitment. CarbonCures Technology offers a solution to embody carbon at the early stages of concrete production where the opportunity is the greatest. I'm excited to be able to offer this product to our customers and further broaden our sustainability-focused solutions. While we are still in the early innings of our ESG journey, I'm excited and proud of the progress that we have made to date. To recap the third quarter, we saw improved performance with a healthy increase in sales and adjusted EBITDA, driven by our team's successful execution of our strategy and continued strong demand for Aztec products and solutions. Further, during the quarter, we started to see greater benefits from initiatives we put in place to meet strong customer demand, combat inflation, supply chain tightness, and labor constraints. While we expect some of these industry headwinds may persist into 2022, I'm encouraged by the actions that our team is taking to reduce the impact of our ability to continue to execute our strategy and drive profitable growth. We remain well positioned to capitalize on the positive customer sentiment that we are seeing well into 2022 in resilient demand for our products as we serve our customers with innovative and differentiated solutions. With that, I will now turn the call over to Becky to discuss our detailed financial results.