Astec Industries, Inc.

Hello and welcome to the ASTEC Industry's fourth quarter and full year 2024 earnings call. As a reminder, this conference call is being recorded. It is my pleasure to introduce to you your host, Steve Anderson, Senior Vice President of Administration and Investor Relations. Mr. Anderson, you may begin.

Thank you and good morning, everyone. For your information, a copy of our press release and presentation are posted on our website, under the Investor Relations tab at www.aztechindustries.com. Join me on today's call for Jaco Verdamurba, Chief Executive Officer, and Brian Harris, Chief Financial Officer. In just a moment, I'll turn the call over to Jaco to provide his comments, and then Brian will summarize our financial results. Turning to slide two, 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 financial news release and others are contained in our filings with the US Securities and Exchange Commission. 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 and non-GAAP financial measures, which management believes provides useful information to investors. These non-GAAP 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 does not intend these items to be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of GAAP to non-GAAP results are included in our news release and the appendix of our slide presentation. And now turning to slide three, I'll turn the call over to Yaku.

Thank you, Steve. Good morning, everyone, and thank you for joining us. Moving to slide four, I am pleased to report we delivered quarterly records for net sales, adjusted net income, and adjusted EBITDA. The fourth quarter is typically one of the strongest quarters of the year. This year we benefited from several of our continuous process improvement initiatives. Strong net sales for the quarter were primarily driven by capital equipment and aftermarket parts in our infrastructure solution segment. Demand for asphalt and concrete plans has remained healthy and we are encouraged by the level of quoting activity. Capital equipment sales in our material solutions segment continue to be challenged by high interest rates and further dealer inventory destocking activity. On a positive note, quarterly aftermarket parts sales remain stable throughout 2024. This confirms the feedback we have received from our customers and dealers about being busy and having a lot of work on their books. At a recent meeting with our material solutions dealers, the vast majority stated December was a record month. Both they and we expect channel inventory levels to be nearing the end of the right-sizing phase that has been taking place over the past two years. Our material solutions dealers have seen further destocking activity in January, which supports our view of a stronger second half of 2025. Full year net sales were relatively flat at $1.3 billion. We saw strong capital equipment demand in our infrastructure solution segment, partially offset by lower equipment sales in material solutions. Aftermarket parts were stable in both the infrastructure solutions and material solution segments. Backlog moderated due to strong invoicing of asphalt and concrete plant equipment. and the previously discussed delays in dealers placing restocking orders. Adjusted EBITDA of 47.9 million increased 47% in the fourth quarter, and adjusted EBITDA margin increased 360 basis points to 13.3%. For the year, adjusted EBITDA of 111.8 million increased 1.6%, and adjusted EBITDA margins increased 40 basis points to 8.6%. For the full year 2025, we expect further progress in consistency and profitable growth to produce adjusted EBITDA in the range of 105 million to 125 million. This range does not take into account the potential impact of tariffs. As part of our operational excellence initiatives, we have invested in resources to leverage our purchasing power and reduce supply risk. Since COVID, we have been identifying and building relationships with secondary and tertiary sources of supply across the globe. We certainly are not immune to short-term tariff risk, but our operational excellence and procurement efforts provide some degree of mitigation. I will also remind you that approximately 80% of our net sales are domestic and the majority of our manufacturing takes place in the United States. Less than 15% of our purchases are sourced from China. Positive free cash flow was generated as a result of profitable sales and our focus on working capital management. On slide five, we remind you of the strategic framework we introduced at the beginning of 2024. We believe having empowered, enabled, and engaged employees puts us in the best position to consistently take care of our customers and, in turn, our shareholders. As our internal voice of One Aztec survey showed, employee engagement continues to grow from a favorable level and ongoing engagement is planned in 2025. Being customer-focused is in the DNA of Aztec. We value our customers and will continue to provide them with industry-changing solutions and exceptional service. We are also excited about new product launches and advanced digital integrations and services in store for 2025, many of which will be showcased at the upcoming World of Asphalt AG1 show in St. Louis. On slide six, we provide a brief state of the industry. As you know, ASTEC is a niche industry player focused on the rock to road market segments. In any given quarter, approximately 80% of our net sales are within the United States. Many of our nation's roads and bridges are in poor condition and need significant repair and replacement. A large portion of domestic funding comes from federal programs. in addition to state and private resources. Investment in America's infrastructure continues as evidenced by the American road and transportation data, showing states have committed over 180 billion in highway and bridge formula funds to support over 89,000 new projects. The total value of state and local government highway and bridge contract awards was nearly $121 billion in 2024, up from $114.6 billion in 2023. To put this in perspective, the value of awards was $83 billion in 2021. Growth has been driven by a combination of federal, state, and local investments. According to the US Department of Transportation, approximately 60% of authorized IIJA funds have been obligated, with only 36% having been dispersed. Since our origin in 1972, ASTEC has provided solutions for the infrastructure industry. The need for our products is expected to continue for the foreseeable future. This provides stability for our employees, customers, and shareholders. Worldwide spending on the road maintenance and upgrades continues to climb. We see international markets as opportunities based on having strong brand recognition, but modest to small market share. On slide seven, we show our implied orders, which were up slightly year over year and showed a strong increase sequentially. Our infrastructure solution segment drove the majority of the overall increase. However, our material solution segment generated a 12% increase over this year's third quarter. Moving on to slide eight, our backlog for both segments declined sequentially, but remained healthy, supported by growth in implied orders. Current backlog levels are a combination of strong invoicing for asphalt and concrete plants, dealers ordering equipment closer to the desired shipment dates and internal operational excellent efforts to increase capacity throughput. We are encouraged by the order intake in both groups thus far in 2025. With that, I will now turn the call over to Brian to provide additional details on our fourth quarter and full year financial results.