Astec Industries, Inc.

Good day and thank you for standing by. Welcome to the ASTEC Report's first quarter 2022 results call. At this time, all participants are in the listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that this conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to our speaker today, Mr. Steve Anderson. Please go ahead.

Thank you, and welcome to the Aztec First Quarter 2022 Earnings Conference 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 could 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 U.S. GAAP 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 gap measures. A reconciliation of gap to non-gap results are included in our news release and the appendix of our slide deck. All related earnings materials are posted on our website at www.aztechindustries.com. which is under the Investor Relations and Presentation tabs. And now I will turn the call over to Barry. Thank you, Steve.

Good morning, everyone, and thank you for joining us. I will begin with a brief overview of the quarter followed by highlights of progress made on our continued strategic evolution and key messages from the quarter. Then Becky will share details on our financial results and capital deployment. I will then share more detail on what we are seeing in terms of demand and current market dynamics and conclude with a discussion of our recent acquisition and a reminder of our ESG priorities. I will then open the call for Q&A. Beginning with slide four, end market demand remains strong for our products and services as evidenced by another quarter of sales growth and record backlog. Looking back over the quarter, we saw the continuation of challenges from the fourth quarter continue in the first quarter. with January being the most impacted. Since then, we have witnessed a steady progression of improving conditions in the environment in which we operate, giving us confidence that future performance will improve. Our entire organization is working hard to overcome the supply chain, logistics, and cost challenges we face, and I am proud of their progress as we gain traction on mitigating these challenges. Pricing action we have already implemented and are taking now should be realized in future quarters, giving us additional tailwinds to support our margins. Customers are anxious to get our products, and we are on track to improve output to convert our backlog into profitable sales. I think we are set up for steadily improving performance throughout the balance of this year, and I'm confident in our team's ability to overcome the challenges we are facing. As you can see in our key messages, we saw another quarter of top-line growth driven by solid market demand and positive customer sentiment. First quarter sales increased 2.4% compared to last year, and we grew backlog to record levels from the sixth consecutive quarter. I continue to be extremely encouraged by conversations with customers as they are seeing robust demand and are eager to receive our industry-leading solutions. Second, we continue to be impacted by supply chain and logistics constraints that are being felt across the industry. This has limited our ability to meet strong customer demand and has impacted our bottom line results. In addition, the labor restrictions we experienced in Q4 related to the COVID-19 pandemic lingered into January. Our one Aztec operating model is instrumental in mitigating the challenges we face by driving price realization to offset inflation, proactively addressing supply chain disruptions and onboarding new talent. Third, we stand with the people in Ukraine who have been impacted by the conflict in the region. We are in support of and in compliance with the U.S. sanctions against Russia and hope for a quick and peaceful end to the violence in Ukraine. Our exposure to Russia is immaterial to our financial results other than that any direct impact of the industry may feel from steel inflation, customer sentiment, or increased energy costs. Fourth, we remain well positioned to execute and grow with a strong balance sheet and continued focus on operational excellence, which enables us to operate in challenging macro environments and invest in growth. Fifth, we made significant progress in building out and enhancing our technology platform with the addition of a chief technology officer in our recent acquisition of Mines. I will say more about the Mines acquisition later in the call, but now I would like to tell you about SID Burma, the newest addition to our executive team. As chief technology officer, SID is responsible for providing strategic direction and formulating innovation plans, strategic partnerships, and technology investments. He brings a wealth of experience in industrial systems and manufacturing that have confidence in our strategic digital vision and roadmap to drive technology innovation at Aztec. Lastly, we have positioned our business for the future, pursuing profitable growth that drives long-term stakeholder value that is guided by our simplified focus and growth strategy. This focus provides us a stable framework to address the current micro-trend headwinds we are now facing. Turning to slide five. We continue to operate as One Aztec, a proven framework that gives our team the tools to navigate industry headwinds. This model is customer-centric and focused on the rock-the-road value chain, where our integrated business is best positioned to deliver unmatched value, which is further illustrated on slide 6 with our portfolio of industry-leading solutions. The One Aztec approach touches everything we do, from channel retention and development to operational excellence and efficiency. Guided by common values, we are positioned to mitigate the supply chain and logistic disruptions being faced by our locations. The actions we are taking are driving greater efficiency, helping us identify multiple sources for critical components, and enabling us to better meet growing customer demand. It is not always easy, but I remain confident our continued focus on the 1S model will serve us well through 2022 and beyond. Slide 7. As I mentioned in my opening remarks, demand remains strong for our products across both infrastructure and material solutions. Our commercial team and I continue to have conversations with customers who share positive sentiment for their businesses, which in turn supports our optimistic sales outlook for 2022. Our record backlog reflects continued strong demand for our solutions, and we have numerous initiatives in place to help us expand capacity to meet higher demand. The Federal Highway Bill is a long-term tailwind for our business and can further augment existing demand growth across our markets. We see significant near-term demand for our products, and we have a strategy in place to augment those market tailwinds with incremental organic and inorganic growth initiatives. We successfully established and implemented initiatives to address labor shortages, including actions to strengthen our recruiting process and actions to improve our engagement, retention, and attraction. Doing so enabled us to build headcount and challenging environment during 2021, which now positions us to better serve our customers. Looking forward, we see additional needs to bring in talent to ensure we are meeting customer demand and believe the continuation of our current practices will allow us to expand our workforce as needed. Supply chain and logistics disruptions remain a concern. Of note, electrical components tend to be the most challenging. Our sourcing team is working tirelessly to identify secondary supply sources and engage with partners who understand our long-term outlook and can meet our demand requirements. We continue to deploy operational excellence initiatives and leverage our One Aztec business model to increase throughput and mitigate the impact of these challenges. We also continue to invest capital for equipment to deliver product more effectively and are exploring expansion of our footprint into low-cost territories. We have focused efforts to leverage pricing power in the market to pass through higher inflationary costs. We anticipate elevated commodity, transportation, and logistics costs to continue across the industry through 2022. As a price leader, we implement further price increases as needed to offset higher inflationary costs. Taking a look at slide eight, you can see our backlog trend over the last eight quarters. This quarter, we achieved our sixth consecutive quarter of record backlog, nearly doubling the levels seen this time last year. We have confidence in our backlog as experience tells us that these orders tend to be sticky and are rarely canceled. Current expectations are that these orders will be converted into sales within approximately three quarters. We have several initiatives to increase capacity to meet higher demand, such as increasing headcount in our manufacturing facilities. In addition, we now have manufacturing engineers to increase project management capabilities, and we are investing in capital to expand facility output. leverage cross-site manufacturing where possible, and continue our journey of further automation. We believe these actions will accelerate the conversion of our backlog to sales and better enable us to deliver products to our customers at the desired time. In summary, we achieved another quarter of sales growth and grew backlog to record levels once again, showing the strength and end-market demand and the desire our customers have for our high-value products and services. Our operating and commercial teams are responding to the dynamic macro environment, following our playbook to mitigate supply chain disruptions, rising costs, and labor challenges in order to meet strong demand and serve our customers. I remain optimistic that 2022 will be a positive year for Aztec, our customers, and our shareholders. With that, I will now turn the call over to Becky to discuss our detailed payout results.