Astec Industries, Inc.

hello and welcome to the aztec industry's first quarter 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 mr anderson you may begin thank you and thank you everyone for being on our first quarter 2023 earnings call joining me on today's call are yako fundamurva

Chief Executive Officer, and Becky Weinberg, our Chief Financial Officer. In just a moment, I'll turn the call over to Jaco 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 SEC filings. 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, 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 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. 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. A reconciliation of GAAP to non-GAAP results are included in our news release and in the appendix of our slide deck. All related earnings materials are posted on our website at www.aztechindustries.com under the Investor Relations and Presentations tabs. And now I will turn the call over to Jaco. Thank you, Steve.

Good morning, everyone, and thank you for joining us. I would like to begin my comments with the key messages summarized on slide four. We had a great start to 2023 as the global Aztec team delivered unique solutions and outstanding service to our customers, despite facing a challenging and dynamic environment. Demand remained favorable across our business, and customers' engagement is positive. Tailwinds from highway funding, along with excitement about our new products and solutions, are pushing revenues higher and keeping our backlog at elevated levels. As a result of the strong performance of the entire ASTEC team, we delivered year-over-year growth in net sales of 19.5% in the first quarter and expanded adjusted EBITDA margins 360 basis points. These are great accomplishments and I am proud of the contribution from everyone across our organization. Internally, we are elevating our performance and execution to achieve objectives as we unite with a sharpened focus on the one Aztec operating model. As I traveled and meet employees, I'm encouraged by their embracement of our operating model to drive more consistent results, especially while facing volatile economic conditions. To further drive the performance culture into our operations, we are implementing a number of initiatives. One major project is hitting a significant milestone this month as we go live with the Oracle Cloud ERP at one of our manufacturing sites. Becky will say more in a few minutes, but I'm excited about how this will enable process efficiency, continuous improvement, and driving performance excellence. Finally, our key messages conclude with execution against our simplify, focus, and grow strategy to drive sustainable shareholder value. We will say more about these key messages during the call today. Turning to slide five, I would like to share with you my early observations of after nearly four months as CEO. Our team is highly engaged and energized with a clear focus on delivering results. As I have visited global sites, the team understands the value that Aztec brings to our customers and are eager to elevate their performance so we can ingrain a culture of continuous improvement and operational excellence. In addition, Our customers are equally energized and excited about our new innovative products and solutions that will enable them to meet their requirements. I have the privilege to frequently meet with customers, including at the recent ConExpo event, and I can attest that sentiment remains positive. They have a long runway with projects to build out and upgrade infrastructure. and we are proud to partner with them in serving the rock-to-road value chain. Finally, we have an aligned and united executive leadership team that is driven and committed to achieving our long-term goals. These factors combine to give me great confidence as we progress in 2023. The priorities for ASTEC in 2023, shown on the right-hand side of the slide, are the same ones that I shared last quarter. executing on simplified focus and growth strategy and delivering on our commitments to employees, customers, and shareholders. This will remain our focus. Turning to slide six, I would like to spend a few minutes discussing our simplified focus and growth strategy while updating you on the progress we have made and our near-term priorities. As a reminder, The three pillars of our strategy are designed to create a performance culture and provide the organization with a common framework to fully unlock the value from ongoing strategic initiatives and thereby maximizing project returns. We continue to make progress on our simplified pillar. For an example, this quarter we completed the sale of our Tacoma facility, completing the consolidation that was announced in 2021. we are improving focus through operational excellence. For example, our ERP implementation is hitting significant milestones in May with the launch of the solution at our first site. We continue to elevate aftermarket excellence by improving parts fill rate and driving down parts backlog, as well as introducing new technologies and capabilities that allow us to provide even greater customer service. Overall, Our Simplify, Focus, and Grow framework is driving the right behaviors, and I'm convinced that it will enable us to create value for employees, customers, partners, and shareholders. We were thrilled to participate in the recent ConExpo trade show and engage with customers. Slide 7 shows some key takeaways from this event. ASTEC was well represented at the show. This was the first ConExpo since we launched our one Aztec brand, and we had a broad suite of products, including eight newly launched machines, an introduction of Aztec Digital, asphalt plant virtual reality station, a fully detailed scaled asphalt plant model, and two fully assembled concrete bed plants. The positive multi-year outlook is driving customer engagement that exceeded our expectations. we were very pleased with the level of interest in our solutions. Turning to slide eight, I would like to provide an update on current business dynamics and how we are responding. I have already mentioned the positive customer sentiment supported by strong demand for road building equipment and materials. This has driven higher sales and supported solid backlog, giving us confidence for 2023. Additional demand support is coming as funds are beginning to flow from the Federal Highway Bill, providing a stable and elevated source of funding for the next several years. As we consider the challenges in meeting this demand, we are encouraged as the tight labor market started to ease. At the same time, wage inflation has normalized. These factors should help us as we stabilize our team and expand output to meet strong demands. Finally, we continue to deploy operational excellence initiatives and strategic pricing adjustments to align with input cost changes. We show our historical backlog on slide 9. Backlog levels, while modestly below last year's strictly elevated levels, remain very healthy and supportive of our positive outlook. Over the last two years, backlog has increased 90%. Over the same period, quarterly revenue has increased 22%. Several observations emerged from this review of our backlog trend. First, we knew that backlog would ease from record levels as we improved output and supply chain constraints were resolved. However, they are still at historical high levels due to tremendous demand for our products. Our order activity has moderated as economic stability returned following a volatile period over the last two years. Third, the current level of backlog gives us clear visibility to demand for 2023. And fourth, we still have room for improvement as we work to convert backlog to revenue. I would also note our domestic dealer inventories remain below optimum levels, which is a source of future demand. We have several ongoing initiatives to expand output and increase capacity, including capacity expansions at our Omaha UK facility. We have also improved our order fill rates for parts in support of aftermarket excellence. These combined efforts should help us more effectively meet strong demand for our products and continue to convert backlog to sales. Turning to slide 10, we have identified key focus areas that we believe create value for our stakeholders as part of our ESG journey. Admittedly, we are still in the early phases of this journey. However, we are in motion and have established plans to make meaningful progress. I would like to highlight two examples that demonstrate success in our ESG journey. On slide 11, we tell the story of one of the many remarkable women at Aztec that are paving the way for women in manufacturing. Avril is the GM for our Franklin Boulevard site in Eugene. In this role, she leads a group of over 200 team members producing crushing and screening equipment within our material solutions portfolio. Her dedication and leadership are a true inspiration for all Aztec employees. and we are honored to have her and many other women like her on our team. On slide 12, we show how one of our products is making a difference by turning solid waste into a useful product. One of the byproducts of road construction is green waste, vegetation that was cleared to make way for the new or widened road. The Peterson Horizontal Grinder converts this waste that was destined for a landfill into valuable mulch that can be used for water retention, erosion control, compost, or overall aesthetic improvements to landscaping. This innovative product helps reduce waste and add value. Moving to slide 13, we introduced our ASTEC digital suite of solutions to the ConExpo attendees with very positive reception. This is a very exciting initiative for us. and it greatly enhances the customer experience, provides us with data that can be used to improve product performance and drive standardization across the rock-to-road value chain. As seen on slide 14, we are creating a digital ecosystem that our customers can leverage into competitive advantage in their business, ensuring they are using our product to their greatest advantage. Through internal development, and our recent strategic acquisitions, we are connecting hardware to software by integrating telematics, connectivity, controls, and equipment to create actionable intelligence. We are creating a core competency of data analytics and plan to introduce this disruptive technology across our platform to drive transformation. I'm very excited about this area and look forward to what we will achieve to create value for our customers and a competitive advantage for Aztec. With that, I will now turn the call over to Becky to discuss our detailed financial results.