Astec Industries, Inc.

Hello, and welcome to Aztec Industry Second Quarter Earnings Call. As a reminder, this conference call is being recorded. It's my pleasure to introduce your host, Steve Anderson, Senior Vice President of Administration and Investor Relations. Mr. Anderson, you may begin.

Thank you, and welcome to the Aztec Second Quarter 2024 Earnings Conference Call. Joining me on today's call are President and Chief Executive Officer, Yaku Gunder Merva, and our interim chief financial officer, Heinrich Yocker. In just a moment, I'll turn the call over to Yocko to provide comments, and then Heinrich 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. 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 earnings release, and others are contained in our filings with the SEC. As usual, we ask that you familiarize yourself with those factors. I'll also note that the company refers to various US GAAP 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 are therefore unlikely to be comparable to the calculation of similar measures of other companies. The company does not intend these items to be considered in isolation or as a substitute for the related US GAAP measures. A reconciliation of GAAP to non-GAAP results is included in our earnings release and the appendix of our presentation. All related earnings materials are posted on our website at www.aztechindustries.com under the investor relations and presentation tabs. And now I'll turn the call over to Jakob. Thank you, Steve.

Good morning, everyone, and thank you for joining us. Before I begin, I would like to thank our employees for their hard work and engagement. It is through their effort and dedication we stay focused on our customers and provide industry-changing solutions. Our second quarter highlights are summarized on slide four. While we continue to face some industry headwinds that impacted our results, we are encouraged by the trajectory of our second quarter performance. Our infrastructure solution segment saw continued solid performance in the quarter with an increase in implied orders due to high demand for asphalt and concrete plants. Strength in the infrastructure construction market is anticipated through the beginning of 2025. We also saw improvement from the first quarter in material solutions, with solid dealer quoting for future bookings and sales. With our backlog continuing to stabilize, we are confident in our ability to meet current and future demand for our products. We anticipate more conversions and solid performance in the latter half of the year. Additionally, we've been focusing on inventory management and reduced our inventory by 5.9% for $28.7 million versus the first quarter of 2024. Moving to our headline results, in the second quarter we delivered $345.5 million in net sales and gross margin of 23.5%. with consolidated implied orders up 5.9% sequentially. As I mentioned, the healthy demand in infrastructure solutions for asphalt and concrete plant deliveries helped to drive positive results with implied orders up 3.4% sequentially. Material solutions were impacted by longer product conversions from rental to buy and continued finance capacity constraints due to the current interest rate environment. Despite this, implied orders for material solutions were up 11.8%. Our backlog levels continue to stabilize at $531.1 million due to solid performance in infrastructure solutions and support our view for continued performance in the second half. Turning to slide five, we give an update on our strategic roadmap. As you will recall, we introduced this new strategic framework last quarter as we aligned the organization's focus on three core pillars, empowered, enabled, and engaged employees, customer-focused, and industry-changing innovation. I've been pleased to see that this framework has been embraced by our employees across the company, and we are all working together to execute across the three pillars. At the same time, we believe that achieving goals requires accountability, which is why we have taken the next step to define key metrics to track our progress towards our long-term goals. The progress we've made on operational improvements over the past several quarters gives us confidence in our ability to execute on these three strategic pillars. Turning now to slide six to look at current business dynamics. we start with infrastructure solutions. We are confident in the strength of the segment overall and are focused on driving efficiency, ensuring strong inventory control and cost reduction. We saw net sales of 221.4 million, an increase of 11% year over year. As I mentioned earlier, this increase was due to strong performance from equipment sales and pricing actions we've taken while the infrastructure construction market remains strong. We also saw segment operating adjusted EBITDA margin of 12.3%, which decreased 60 basis points, primarily due to manufacturing inefficiencies and higher SG&A costs that were partially offset by positive net volume and mix and pricing net of inflation. On the material solution side, we reported net sales of 124.1 million, which decreased 17.7% year over year. This reflects lower equipment sales due to longer product conversions and continued finance capacity constraints with contractors and dealers. Our segment operating adjusted EBITDA margin of 8.2% decreased 390 basis points. Results were impacted by lower net volume and mix, manufacturing inefficiencies, and higher SCNA costs, vastly offset by pricing, net of inflation, and other period costs. We also wanted to provide a brief update on domestic road building, a foundational element to our business. With total state budgets up 12% year over year, we are seeing increased activity in the domestic road building market. We expect continued strong demands for asphalt road building and concrete production equipment moving forward, supporting strength we are seeing in implied orders. Looking at a macro level, total federal highway funding allocations total $350 billion through 2026, with committed funds to date achieving $133.7 billion and $73.4 billion in funding reimbursed to the states. We believe the continued allocation of this funding provides stability for our industry, and we are confident in our ability to capitalize on consistent spending. On slide seven, you will see our implied orders are up 5.9% sequentially at $317 million. in comparison to 299 million last quarter. We saw increases for both infrastructure solutions and material solutions. This aligns with our continued expectations for steady momentum for the rest of the year and into 2025. Infrastructure solutions saw an increase of 3.4% sequentially to 217 million in comparison to 210 million last quarter. and material solutions saw implied orders increase by 11.8% sequentially to 100 million versus 89 million last quarter. We are encouraged by solid dealer quoting for future bookings and sales. Flight 8 shows our historical backlog trends. We are seeing backlog stabilizing, supported by strong performance in infrastructure solutions. Total backlog of 531 million as of June 30, 2024, is returning to the historical range. Our backlog for infrastructure solutions was $369 million, a decrease of 16% year-over-year, and our backlog for material solutions was $163 million, a decrease of 35.1% year-over-year, while net sales were strong at $345.5 million. As I stated earlier, consolidated implied orders were up in both segments. We remain focused on delivering for our customers and expect increased conversions in the back half of the year. Slide 9 showcases Aztec's presence at Hillhead 2024, the UK's largest quarrying, construction and recycling exhibition. During the event, we had the opportunity to highlight new products and do live demonstrations to current and potential customers. On display, we showcase 16 products and unveiled three of our new Aztec products. Visitors spend more time at the show than ever before with over 19,000 attendees, a record number across the exhibition's 42-year history. We were excited to present live in front of this audience and showcase how product development and innovation is a central component of our strategy. At the show, ASTEC made a meaningful statement to the market with our significant presence and new products on display. Just last week, I had the opportunity to visit our sites in Brazil and Chile. The new products being displayed at ELEAD will be instrumental for our success in these regions. To complement this, I am encouraged by the skill and enthusiasm of our employees and how they service and interact with our customers. With that, I will now turn the call over to Heinrich to discuss our detailed financial results.