Astec Industries, Inc.

Hello, and welcome to the Aztec Industries fourth quarter and full year 2025 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 good morning. Joining me on today's call are Jakob van der Merwe, our chief executive officer, and Brian Harris, our 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. For your convenience, a copy of our press release and the presentation have been posted on the website under the investor relations tab at www.aztechindustries.com. 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 can influence our results are highlighted in today's financial news release and others are contained in our filings with the U.S. 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 provide 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 gap measures. A reconciliation of gap to non-gap results are included in our news release in the appendix of our slide presentation. And now, turning to slide three, I will turn the call over to Jakub. Thank you, Steve.

Good morning, everyone, and thank you for joining us. We were pleased to report strong fourth quarter and full year results. that shows the benefits of our focus on consistency, profitability, and growth. I would like to thank our ASTEC team members for their dedication and hard work that produced a successful year in 2025. On slide four, we highlight our fourth quarter and full year performance. For the quarter, we achieved record fourth quarter net sales of 400.6 million. Full-year net sales increased 8.1% due to a combination of organic and inorganic growth. Adjusted EBITDA for the quarter was a solid 44.7 million. This yielded an adjusted EBITDA margin of 11.2%. Adjusted EBITDA of 140.7 million for the year was at the upper end of our guidance range. The full-year adjusted EBITDA margin was 10%. which was 140 basis point increase over the prior year. We are optimistic about 2026 due to our progress on internal initiatives, positive customer sentiment, and the stability provided by federal funding for infrastructure in the United States. Based on expected organic and inorganic contributions, our full year 2026 adjusted EBITDA guidance range is 170 million to 190 million. We continue to generate positive free cash flow, which allows us to fund both organic and inorganic growth. In 2025, we saw healthy demand for asphalt plants and concrete plants within the infrastructure solution segment, while forestry and mobile paving equipment were challenged. During the fourth quarter, we saw an increase in the backlogs for forestry and mobile paving equipment, though they remain at the lower end of historical ranges. The material solution segment demonstrated anticipated recovery late in the year with a combination of organic and inorganic growth. Federal funding, healthy state and local budgets, and the construction of data centers are expected to drive multi-year demand in the material solutions and infrastructure solution segments in 2026. Part sales increased 19.7% versus the first quarter prior year. For the year, part sales totaled $432.7 million, representing an 11.5% increase over the prior year and 30.7% of total net sales in 2025. As previously stated, growing our parts and service business continues to be a priority. we were pleased to show an increase in backlog to 514 million. This represented sequential year-over-year growth of 14.4% and 22.5%, respectively, through a combination of organic and inorganic activity. On slide five, we highlight the acquisitions of TerraSource and CWMF that collectively represent over 200 million of annual revenue acquired by ASTEC. As part of the TerraSource integration, we will share their new brand designs at Conexpo. The new designs are consistent with existing Aztec products and incorporate our name and logo with the TerraSource legacy flagship brands, including Gunlock, Jeffrey Rider, Pennsylvania Crusher, and Elgin. Our joint teams are busy expanding the part sales force, coordinating sales channels, and cross-selling strategies, pursuing new product development and assessing opportunities for optimal factory use. We anticipate benefits from these actions will be realized in 2026. On January 1, 2026, we were excited to welcome the skilled and dedicated employees of CWMF to the Aztec family. As a reminder, CWMF is a highly respected manufacturer of portable and stationary asphalt plant equipment and parts, primarily concentrated in the Midwest, South Central, and Great Lakes regions of the United States. Our organizations are a strong cultural fit, and we expect CWMF to be accretive from day one. Slide 6 provides detail on the state of the U.S. infrastructure and aggregate industries. ASTEC benefits from strong road construction and aggregate markets in the United States. As you may know, in 2022, Congress approved a five-year $347.5 billion infrastructure investment bill. Funds committed within the bill totaled $248 billion, or 71%, through November 30, 2025. These highway and bridge formula funds support over 111,000 new projects and construction increased over the prior year. Although the existing five-year bill is set to expire on September 30th, 2026, Congress recently reached an agreement on transportation spending legislation for the remainder of fiscal year 2026. and now plans to turn their attention to securing an on-time renewal of a robust long-term surface transportation reauthorization. Investments in highways, bridges, and street construction also supports the U.S. aggregate industry as aggregates are used in asphalt, concrete, and as base material. In addition to expected increases in federal funds for roads and bridge construction, 2026 state transportation budgets anticipate growth as well. Data centers and the aggregates and the infrastructure necessary to support them are also expected to drive multi-year demand. In an October 2025 study by Thompson Research Group, aggregate quarries within a 30-mile truck haul distance of a major data center construction project saw the demand for aggregate tonnage that nearly doubled that of pre-construction levels. Overall, a healthy compound annual rate of 3.41% is expected for the US aggregate markets through 2033. These industry trends provide advantages for ASTEC, a company specializing in the rock-to-road sector. Ongoing infrastructure enhancements contribute to sustained demand for our equipment parts, and digital solutions. Our established reputation in aggregates as well as road and bridge construction underpins consistent growth. On slide seven, we show fourth quarter implied orders, which were up 46 million or 11% from the prior quarter in 2024. The infrastructure solution segment showed a 31% increase while our material solution segment declined slightly by 6.8%. We were pleased with our overall order intake as our book to bowl ratio was 116% on a consolidated basis. The book to bowl ratios for the infrastructure and material solution segments were 115% and 117% respectively. Moving to slide eight. We are pleased to report that our backlog grew to 514 million and increased on a sequential and year over year basis by 14.4% and 22.5% respectively. The backlog in our infrastructure solution segments reflects a combination of strong water activity for asphalt and concrete plants, partially offset by softer demand for mobile and forestry equipment. We are especially pleased with increased backlog in our material solution segment, which grew 105.8 million or 92.7% over the prior year fourth quarter from organic and inorganic contributions and 29.9 million or 15.7% sequentially. As a reminder, backlog represents the dollar value of firm orders with executed contracts. Backlog is also a function of lead times, and we continue to focus on increasing our manufacturing velocity to fulfill customer orders as soon as possible. And now I will turn the call over to our Chief Financial Officer, Brian Harris.

Thank you, Jacco, and good morning. Next, I will cover our fourth quarter consolidated results, details by segment, liquidity and leverage, along with some 2026 outlook detail. Turning to our financial performance for the quarter and the full year as represented on slide 10, we achieved record fourth quarter sales driven by heightened demand for both capital equipment and aftermarket parts. Adjusted EBITDA and margins increased due to strong volume, favorable pricing, and product mix. For the fourth quarter, adjusted earnings per share were $1.06, For the full year, net sales grew 8.1%, which was attributable to incremental net sales from the acquired TerraSource business, as well as positive organic volume and mix, coupled with favorable pricing. As Jaco mentioned, we were pleased to report an adjusted EBITDA of $140.7 million, which was at the high end of our guidance range. Both segments experienced growth as adjusted EBITDA margin on a consolidated basis expanded by 140 basis points to 10%. Adjusted earnings per share for the full year ending 2025 were $3.33, representing a 28.6% increase over the prior year. On slide 11, We show the infrastructure solution segment, which generated fourth quarter net sales of 223.6 million. This measured to a strong prior year comparison of 248.8 million as solid demand for asphalt and concrete plant sales were offset by softness for mobile paving and forestry equipment. Aftermarket part sales were relatively flat, albeit at healthy levels. Q4 delivered an adjusted EBITDA margin of 15.8% that compared to an exceptional prior year Q4 EBITDA margin of 21.3%. For the year, net sales increased 20 million or 2.4%. Segment operating adjusted EBITDA was 134.3 million for 2025 compared to 121.5 million for 2024. for an increase of 12.8 million or 10.5%. Full year adjusted EBITDA margin grew 120 basis points to 15.7% compared to 14.5% in 2024. The material solution segment is shown on slide 12. Net sales and segment operating adjusted EBITDA for the quarter increased substantially over the same period in 2024. Increases were primarily due to the impact of net favorable volume and mix from inorganic and organic operations, coupled with favorable pricing. Adjusted EBITDA margin for the quarter increased 530 basis points to 11.8%. For the year, net sales increased 18.2% to 553 million over the prior year, and adjusted EBITDA grew 49.5% to 55.6 million. Adjusted EBITDA margin in 2025 reached 10.1% compared to 8% in 2024 for an increase of 210 basis points. As shown on slide 13, our balance sheet remains strong, supported by substantial liquidity. At quarter end, we had 70 million in cash and cash equivalents, along with 244.7 million of available credit, resulting in total liquidity of $314.7 million. Net debt to adjusted EBITDA of approximately two times is well within our target range of 1.5 to 2.5 times. This provides us with the capacity for continued organic and inorganic growth. For our 2026 outlook, you should take into account the following anticipated full year ranges. Adjusted EBITDA of $170 million to $190 million. An effective tax rate between 25% and 28%. Capital expenditures of $40 million to $50 million. Depreciation and amortization of $55 million to $65 million. And the quarterly range for adjusted SG&A of $70 million to $80 million. I will now hand the call back to Jakob.

Thank you, Brian. Moving to slide 14, please mark your calendars to visit us at the 2026 ConExpo ConAg Trade Show in Las Vegas from March 3rd through the 7th. Our display will be located in the central hall in booth C30236, where we will showcase several new products. We will also demonstrate our existing new signal digital platform and extended reality offerings. These products are all available for sale and will have a positive impact on organic growth. We hope to see you there. Slide 15 provides an overview of our key investment highlights. We are proud of Aztec's longstanding reputation as a trusted source of globally recognized brands and premium solutions for our customers. Our team is highly engaged with customers. Based on recent interaction, customers have a favorable outlook about ongoing construction market activity. We are glad to see our dedication to operational excellence is producing strong results, and we expect to realize additional benefits moving forward. Efforts within our manufacturing and procurement are enhancing efficiency, and we are seeing continued improvement in adjusted EBITDA. Our growth is supported by several promising opportunities, including growing our recurring aftermarket parts business, which remains a top priority for the ASTEC team, advancing our robust pipeline of innovative new products, many of which will be on display at ConExpo, having a consistent multi-year federal and state funding for interstate and highway projects within our core U.S. markets, Exploring expansion possibilities in both established and emerging international markets. Pursuing inorganic growth without demonstrated discipline and focus approach to strategic acquisitions. As Brian mentioned, our strong balance sheet provides flexibility to fund our growth initiatives and manage leverage effectively. With that operator, we are ready for questions.

At this time, if you would like to ask a question, press star, then the number 1 on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Steve Ferozani with Sidoti. Please go ahead.

Steve Ferozani, Ferozani & Good morning, Brian. Appreciate all the detail on the call. Obviously, positively surprised by the strong fourth quarter revenue. I know you were facing a challenging comp. And then really surprised by the strong backlog in 4Q, the orders, as well as the guides. I want to dig into some of those pieces. As far as what you're seeing in material solutions, it looks like that's where you really significantly beat me on the top line this quarter. And I'm assuming that's what's contributing to the strong guide given the orders. What started to turn that around, Jaco? I know we went through several quarters where it just remained soft. You had pointed before to higher interest rates as they came down. That could help as well as all of those products were underused. Just some of the smaller customers weren't ready to buy and it was coming. And now we see it's coming. Even if we back out to our source, we see you saw it. on the organic side. Can you talk about what's turned that market so quickly?

Yeah. Hi, good morning, Steve. You know, we definitely saw a good order intake on both businesses, you know, the legacy MS and TSG business. I will say TSG also came through really strong during the fourth quarter. And, you know, we got the results that we were looking for. when we did the business. I will say, you know, we talked a lot about, you know, the state of inventory in our dealer network. And we have seen and spoke to our dealers just here recently. They have very healthy backlog situations now. They have very healthy inventory. You know, for a while they were, They didn't necessarily have the right inventory. We worked through all of that. Their rental utilization is really strong. And, you know, obviously some of those inventories started to convert and hence the bookings on our side. You know, we have also seen a very positive development around data centers that is affecting this business. You know, we see multiple of those super large projects coming through. And, you know, our team is very well positioned to enjoy some of that business. And I know our dealers are highly engaged with these last projects. So, yeah, we are also excited about this. I think our team is ready to take advantage of this. And hence, you know, the output that we provided for 2026. Fantastic.

And flipping over to infrastructure solutions, that backlog actually was ahead of where we were thinking as well. Just because our expectation was as you enter the last year of the current highway funding bill, maybe you'd see a slowdown in concrete and asphalt plant orders. That doesn't seem to be happening.

Yeah, no, you're right, Steve. So we're happy with how the year ended. Obviously, we had a very strong comp versus the prior year, but booking stayed pretty strong. I'm happy to say here in the first couple of weeks of the year, both MS and the IS business, the order intake has been strong as well.

Andy, you're a little bit closer to this. Any updates on what you think highway funding looks like?

might move forward this year and are there any concerns on your end if it if it slowed down yeah yeah so you know a couple of things on that so we we were at the national asphalt paving association just yet a couple of couple of weeks ago and you know we got an update there from our government's affairs teams and and you know they believe that conversations are on track You know, that we will hear something about an infrastructure bill here in the next couple of months. You know, on a positive note, as we mentioned in our prepared remarks, is that, you know, funding for 2026 was actually approved by Congress. So, you know, overall, I think our customers are in a good space. We know that most of them have very good backlogs for the year. So, you know, I think our customers are very focused on the long-term possibilities of US infrastructure. And, you know, even if the bull doesn't get renewed on time, you know, we feel that there is good momentum. The need for infrastructure is there. And I think our customers are looking beyond just, you know, the bull here at the end of the year. Of course, if we do get a bull, I think it will be very positive for us and for the customers.

Got it. That's helpful. I want to turn to the guidance, which is certainly on EBITDA well above where we were. I'm trying to think about, you know, Jaco, since you've taken over, you've tried to improve production efficiencies. I know you've made investments in the plants. You've been growing part sales, which are higher margin sales. I'm trying to think of how much of this growth is driven straight by top line or how much you think this is on margin beyond just the margin improvement generated by higher throughput.

Yeah, Steve. So, I mean, if you look at the walk from, you know, from 25 to 26, you know, there's obviously a couple of things that plays a role there. You know, we have full year DSG. We have CWMX, which will basically be worked for us for the full year. We built some synergies in there for those two deals and we feel pretty good about our progress around synergies. Obviously, these synergies take a while to work through the inventory that we already have. And, you know, we do see, you know, some organic growth for this year. And obviously, we bake some of that into the number. You know, if we get a highway bill or a new infrastructure bill, you know, we could probably go to the higher end of the range. But, you know, we felt that that range is something that we feel, you know, makes sense, you know, this early on in the year.

you haven't talked that much about the numbers around. I know CWMF is, is, is much smaller. Can you talk about what that contribution is to your, to your, to your range in 2026? And then as a follow-up, just how we should read through on your, what your M&A strategy sort of is with TerraSource and now CWMF.

Yeah. So, you know, on, on CWMF, obviously we disclosed the, um, you know, the sales that they have. And, um, You know, we haven't shared exactly what their profitability is, but, you know, Steve, we did mention that it's accretive from day one. So we are very happy with where they fit, their margin profile fit in with the rest of our asphalt business. So, you know, you can do that math a little bit. But overall, you know, we feel that they will be accretive day one. From an acquisition point of view, I mean, obviously we have good momentum right now. I will say our team have done a fantastic job with teeing these two deals up. The integration has been going really well. And so we have the team available to continue to go down this path. You know, our liquidity is in a strong position right now. So we're going to continue to look. And, you know, there's a lot of opportunities for us still to grow both in the U.S. and internationally. So, yeah, we're excited about where we are. We're excited about the firepower we have available. And, you know, hopefully we'll find will find similar companies like DSG and CWMF to add to the team.

Great. Thanks so much, Rocco.

Thank you, Steve. Your next question comes from the line of Steven Ramsey with Thompson Research Group. Please go ahead.

Hi. Good morning, everyone. Hi, morning, Steven. Hi, Steve. I wanted to start with the, maybe kind of continue the CWMF topic for a minute, the improvement potential that you can bring to that business or how both businesses can benefit from each other. And seeing that it's accretive day one, if you could talk to their parts contribution and maybe where Aztec can help on that front.

Yeah, no, absolutely. You know, when I look at the CWMF business, you know, the first thing is, you know, the owners call me and Travis, they've done a fantastic job with this business. They've created a great culture and that culture fits in so well with Aztec. You know, it is amazing to me just how fast our teams have come together here. Obviously, we know this business in and out and, you know, And the discussions between our teams around working together, integrating sales structures, synergies has gone as good as what we could have imagined. This business and the previous owners, they've done a fantastic job creating a very nice manufacturing facility with good capabilities. And we see opportunities to use that facility and grow the output together with the rest of our Aztec asphalt teams. From a parts point of view, their parts mix is a little bit lower than what we have on our traditional asphalt business, Steve. So there's a big opportunity there. To grow that, we're going to do the same thing with them to make sure we have great parts availability. We'll give our customers the support that they deserve and they used to from a legacy Aztec point of view. We're excited about this. This buy will give us much more than just another asphalt product line. It will give us manufacturing capability. It brings a great team to the table. So yeah, we feel very confident about what this will look like in a couple of years.

Excellent. And then sticking to recent acquisitions, for TerraSource, can you talk about the progress with this business? Good to see margin improvement in the materials segment. And can you talk about the improving fill rate within TerraSource? I know that was a focal point. Can you talk about where it is now versus where it was when you closed the deal?

Yeah, no. You know, Steve, obviously, we're still pretty early in that improvement cycle. One thing that I will say is that, you know, our teams have done all the calculations. We know exactly what we need to do and what is the inventory that we need to put on the shelf. That process is going and I will say within the next three to six months, we're going to be very close to where we want them to be and we know that that will have a positive influence on the business. So good interaction, good buy-in from the team. They're running with this and obviously the Aztec team just supports them The other thing that we're making sure of is as we bring this inventory in, we make sure that we take advantage of the synergy opportunities that we have so that we can bring that inventory in at the levels that we can buy for in our legacy Aztec business. We're excited about that. Overall, the performance for TerraSource, for the the six months we've owned them have been in line with our expectations. And, you know, I will say here in the last couple of weeks, we've made significant improvements in the integration of the team. Just yesterday, I listened to our engineering team talking about the products that we're going to have at Conexpo. And, I mean, this just fits in so well with the Aztec business. So, So we're excited about what they're going to bring to the table in the future.

Okay, that's great. And on the material solution segment, you point out, obviously, infrastructure activity and data centers. Can you talk a little bit more on data centers and how your equipment is being deployed there and how much of your data center growth is following customers versus customers?

intentional efforts on your part and then maybe one other thing on data centers is ballpark how if you can gauge it how much data centers uh data center exposure you have yeah we you know we actually uh we actually try to calculate that a little bit um because you know um i i will say the majority of the crashing and screening that's going to be needed to to get these data centers built will be done by companies that we already do business with. So it's not that you will see a huge amount of new startups popping up. So these are customers that we have relationships with. They are close to our dealers. And we're taking advantage of historical relationships. We've seen quite a few large projects that's coming our way and we're going to try to take advantage as much as we can. We are adding capacity in our facilities again to make sure we can take advantage of this. So Steve, I think we well positioned exactly how much it will contribute. We haven't got to a number that we feel comfortable yet, but we can just see what is in our quoting pipeline. And we feel that this business will be strong and support our EBITDA guidance range for the year.

Okay, that's excellent. And to clarify, the demand for data centers, is it being filled through dealers primarily or is there any direct business?

Yeah, no, most of that is through dealers. So, you know, our crossing and screening product line goes through dealers. You know, obviously there's concrete needed there as well. That goes through a dealer structure. You know, obviously any asphalt that is done you know, around data centers that, you know, that we sell directly to customers. And once again, they, you know, a lot of our existing customers are involved in that construction.

Okay, that's helpful. And one thing I wanted to make sure of with the EBITDA guidance, do you expect margin expansion in both segments?

Yeah, so, you know, Stephen, we've been talking about growing our margins, you know, 0.7% to 1.5% a year, you know, on average. And if you go and look at the last three years, I think we've successfully done that. And, I mean, it's our aim to build on our consistency and continue to try to achieve those improvements year over year. And, you know, we won't do our job if we don't do that again this year. So obviously there's a lot of work to be done to achieve that. But, you know, I think we've shown that we can do it. And, you know, the team is ready to go and execute this year. We know how to do it. We know that we have the opportunities. So now it's just to us to go and execute.

Excellent. And then last quick one for me, ConExpo, a big event that clearly doesn't happen every year. Can you talk about in the past if this helps sales in the coming quarters to a degree as you roll out new products or highlight improvements to existing products? And is there any scenario where ConExpo is a needle mover enough to shift the guidance or go to the high end?

Yeah, you know, these big shows, you can always question, is it delivering a good return on investment? I will just say we are very excited about this ConExpo. Basically, every product that we have on display is either new or substantially upgraded. We are going to launch our Signal digital platform there that I'm very excited about. So Steven, I will say, are we going to walk away there with $100 million in new orders? Probably not. But will this send a signal to the market and to our customers that Aztec is strong, we are unified under our brands, we will have TerraSource on display, our CWMF team will be part of us. Um, so I, I think we're going to show really strong and, you know, it's going to give our, our customer confidence and, and, you know, I'll be honest with you. I think it's going to give our own team members, you know, a boost just to see how well, you know, we show up now as a, as you know, we're still a relatively small player in the market. So, um, so yeah, I'm excited. Hopefully we'll see you there next week and hopefully we'll have great attendance as well.

Yep, I'll be there. Looking forward to it. Thank you.

Your next question comes from the line of David McGregor with Longbow Research. Please go ahead.

Yes, good morning, everyone, and congratulations on the strong results. Hey, morning, David. Good morning. I wanted to begin by just maybe picking up on your last point there with regard to rolling out the digital platform at ConExpo. Maybe you could just talk about kind of progress on building out digital solutions generally. And I know this is something you've been doing a lot of work on, but I guess the goal is ultimately to make Aztec easier to buy from. And just how should we think about this as a revenue growth facilitator in 26?

Yeah. Yeah. No, David, I mean, that's a great question. And, you know, if I look at the state of our industry and some of the larger players and and where we want to take this business. The world is going to look at basically what I call dumb iron and how do we make this dumb iron more productive and more reliable. And that's one of the things that we want to achieve with our digital platform. I mean, we want to give our customers great visibility around how their equipment is performing. Are they getting the utilization of their equipment? And then most importantly is how do we help our customers to ensure that their equipment runs all the time? And our digital platform is going to help them to do that. And we see various opportunities coming out of that, driving parts business and increasing our service offerings. So, you know, it will help us to grow that parts and service business in the future. And, you know, there's a big opportunity here. I will say we're just scratching the surface on what this business can become. And, you know, if you go to ConExpo, you will see how this is now integrated, you know, in every piece of equipment. And, you know, I hate to use you know, the AI term here, but, you know, our teams are doing really good things to start to bring more and more, you know, opportunities that we can help our customers, you know, using the data to make better decisions. And, you know, we have multiple large customers now that's standardizing on our platform, and they're going to be the beneficiaries of this. So, I know they're all looking forward to next week because they're going to see the full capability and we're excited. I think it's going to be great for us long term.

Yeah, it's exciting. The second question for me, you mentioned in your prepared remarks that you were seeing a modest positive inflection in orders within the forestry business. I just wanted to maybe get you to talk about that a little bit further and what you think you're seeing there and the extent to which you may think. expect some follow through.

Yeah. Yeah. Yeah. The forestry business was an interesting one the last 12, 18 months. You know, we've owned the Peterson business now for, I think, 12, 13 years. And, you know, this down cycle was probably the worst we've seen since we've owned it. You know, a couple of things there, you know, the paper and pulp industry is a little bit in turmoil. And then, you know, thank goodness the U.S. didn't have much storm damage last year. But obviously, you know, that typically drives quite a bit of business for us. So I am, however, you know, happy to say that, you know, the last couple of weeks we've actually seen some decent order intake there. And, you know, that's a business that traditionally when it was running at full capacity, full cylinders, it made really good profits. So if that comes back, it will add to our profitability. And obviously, we baked some of that in already in the EBITDA outlook.

Okay, good. Thank you for that detail. I wanted to get you to talk a little bit about the parts business in 2026 as well. And I know that you put a lot of work into strategic inventory investments and expanding the service support. How should we think about the drivers here in 2026? What changes, if anything, in terms of how you go after that business?

Yeah. Yeah. So, you know, a couple of things there. We, you know, we continuously looking at the way we go to market. You know, one of the platforms that you will see at ConExpo is what we call MyAztec. And that's a digital platform that we've created starting for asphalt plants, where we're creating a digital twin for our customers that makes the ordering so much easier. So that platform is rolled out. We've just started to now introduce that to the concrete plant side of the business. So, you know, we're really trying to find ways to make it easier for our customers to do business with us. So that's one thing. The second thing is, you know, we are continuously strengthening our presence in the market. So with CWMF on board now, you know, we got some parts sales guys from them. We've broken up our territories a little bit. So now we have even more feet on the street. um for for parts you know on on asphalt side um and then of course you know the the tsg side um big opportunity there you know these guys when we bought them they basically you know were in the i will say the second or third innings of reviving these historical strong brands and we are enabling them you know focusing on on full rate we're adding sales people to go after that parts business. And David, obviously, these things take time. The actions of last year will pay off this year. And the actions we're putting in place now will play out well later in the year and into next year.

Got it. Last question for me is maybe for Brian, just on working capital in the model for 26 and how we should be thinking about source versus use and I guess within that, I know that on the equipment side, you've seen people ordering on shorter lead times. Does that give you the ability to fund growth in parts inventory with maybe a little less equipment inventory?

Yeah, thanks, Dave. Thanks for the question. Yeah, working capital continues to be an area of focus for us. Obviously, the better cash flow that we can generate, the more ability we have to grow. I think in 2026 we're going to see further opportunities to improve our work in capital management. It's always a little bit tricky to judge exactly where you'll be at the year end. We shift a lot of inventory, but sometimes it goes into receivables in the short term, so year-end forecasting can be a little challenging. But overall, I do see opportunities for continued improvement. And of course, we're going to drive cash through increased operating earnings as well. And then we've got, you'll see, a guide on capital expenditure, $40 to $50 million. Next year, we've got a lot of good projects in our plants for operational improvement. improve quality and automation, so we'll be reinvesting some of that pre-cash flow back into the business. But overall, I think working capital should improve slightly.

David, maybe one other comment just to add to that. A lot of our ETO business, we don't have finished goods inventory. um you know it's um the the real opportunity is strengthening that parts availability and and you you hit the head on the nail or the nail on the head there by saying that you know we want to make sure we drive that and you know on the tsg side we've done the calculations and yes it will take a couple of million or so of inventory but it's not that it's going to be a you know a double digit number that we need to add to fix that. So it's, you know, it's doable within a fairly decent investment.

Great. Thanks. Congratulations again on all the progress and look forward to catching up with you next week.

Thank you.

That concludes the Q&A session. And now I'll turn the call over to Steve Anderson, Senior Vice President of Investor Relations.

All right. Thank you. We appreciate your participation in our conference call this morning, and thank you for your interest in Aztec. As today's news release states, this conference call has been recorded. A replay of the conference call will be available through March 11, 2026, and an archived webcast will be available for 90 days. The transcript will be available under the investor relations section of the Aztec Industries website within the next five business days. This concludes our call, but we're happy to connect later if there are additional questions. Thank you all. Have a good day.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.