Astec Industries, Inc.

Hello and welcome to the Aztec Industries third quarter 2026 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, everyone. Joining me on today's call are Jaco 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 review our third quarter highlights and market conditions. Brian will then discuss our financial results and balance sheet. For your convenience, a copy of our earnings release and presentation have been posted on our website under the investor relations tab at aztecindustries.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. Factors that can influence our results are highlighted in today's earnings release, and additional risks are described in our filings with the U.S. Securities and Exchange Commission. We also refer to certain GAAP and non-GAAP financial measures that management believes provide useful information to investors. Reconciliations of the non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release and in the appendix to this presentation, and now Turning to slide three, I will turn the call over to Jaco. Thank you, Steve.

Good morning, everyone, and thank you for joining us. As usual, I will begin with our third quarter results and then discuss the key factors in the markets in which we operate. This will include the latest developments on the renewal of the US Federal Infrastructure Bill. Finally, I will comment on order and backlog trends before turning the call over to Brian to review additional financial results and our Q4 outlook. As you saw in our press release earlier this morning, our third quarter results fell short of both our expectations and the high-level outlook we provided on our last earnings call. Let me address two key factors that contributed to what we believe was an outlier quarter. First, as for plants and related equipment. On our Q2 call, we discussed a slowdown in orders that began early to mid-quarter. That softness persisted longer than anticipated, resulting in an unfavorable mix of shipments and invoicing during Q3. Importantly, order activity has recovered meaningfully, and the infrastructure solutions backlog has increased by 93 million since the end of Q2 2026. and by $122 million compared with the same quarter last year. We expect this recovery, together with the timing of shipment from backlog, to drive a significant improvement in EBITDA performance in Q4 2026 versus prior year and into early part of 2027. Second, steel and broader material inflation. Our teams have been actively adjusting pricing to offset higher input costs. However, extended delivery lead times created the timing mismatch between pricing actions and the costs flowing through our P&L. As a result, cost inflation outpaced pricing by approximately 200 basis points during the quarter. We expect that gap to progressively close and return to parity over the next two quarters. While we would have obviously preferred to deliver stronger Q3 results, The underlying demand environment and recovery in orders gave us confidence the factors that weighed on this quarter are temporary rather than structural. That said, we continue to evaluate our product portfolio as we are committed to delivering shareholder value. Moving to slide 4, net sales were $352.4 million, an increase of 0.7% compared with the prior year period. Adjusted EBITDA was $18.9 million, resulting in an adjusted EBITDA margin of 5.4%, and positive free cash flow was driven by sound working capital management. After a slower than expected order intake during Q2, we are happy to report a strong reversal during Q3 for most of our infrastructure group products. The uncertainty created by the delay in the Build America 250 infrastructure bill and elevated oil and diesel prices were somewhat offset by strong demand for data centers and other large factory builds. Our material solutions segment continued to benefit from steady demand for rock crushing and screening equipment and aftermarket parts and service sales. Macroeconomic headwinds negatively impacted capital sales within the TSG business we acquired in July 2025. Parts and service volumes remain strong, and we are excited about the work our teams are doing to further integrate this business within Aztec. From a long-term perspective, however, federal, state, and local projects, together with data center construction, are expected to support continued multi-year demand. Parts and service sales were 125.8 million, up 0.3%. Parts and service represents 35.7% of third quarter sales and 35.2% of year-to-date sales. As a reminder, Q3 is historically the low quarter for parts and service as our customers are running full speed. Total backlog increased 49.2% to 670.5 million, led by a rebound in asphalt plant orders and solid demand for aggregate processing equipment. Based on the macroeconomic impact and our year-to-date performance and the shift of asphalt plant deliveries, we are revising our full year 2026 adjusted EBITDA guidance from the prior range of 160 to 175 million to a range of 140 to 150 million. On slide five, we summarize the key factors influencing our market along with directional price inflation relating to materials used in our products and those of our customers. The broader US economy remains slightly positive with the S&P 500 index and the Dow Jones Industrial Average up approximately 15% and 11% respectively. Economic growth has been partially offset by inflationary pressures and higher interest rates. Despite a healthy economy, increased diesel fuel prices have negatively impacted many of our customers, most of which use diesel fuel to operate their trucks and equipment. Liquid asphalt cement prices are also important to our customers, and infrastructure construction in general. Liquid AC is a byproduct of oil, and the ingredient that binds aggregate together in asphalt pavements. Prices spiked when the conflict in Iran began and have fluctuated over the past few months. Steel, our largest raw material input cost, continued to increase in price, driven by data center demand, elevated freight costs and tariffs. Public infrastructure activity in the United States remains healthy at the federal and state levels. I will share more on that in a moment. Private and residential markets are sensitive to interest rates and continue to be somewhat suppressed. That said, private work like data center construction and industrial mega projects are positive drivers in the private market. These projects consume large quantities of aggregates, concrete, and asphalt. Thus far, we estimate data center and industrial projects to have generated between 75 to 100 million of orders. Macroeconomic headwinds can create near-term variability. However, we continue to see attractive long-term demand fundamentals. Turning to slide six, as you may know, Congress approved the Infrastructure Investment Jobs Act in October 2022. Over a five-year period, $347.5 billion was approved to be spent on federal highways, bridges, and public transit. Through August of 2026, states have committed $300.5 billion, or approximately 86%, of highway and bridge funds to support approximately 129,600 new projects. The Federal Highway Bill expired on September 30, 2026. and was subsequently extended through December 11, 2026. The extension helped to reduce near-term uncertainty for companies involved in federal infrastructure construction and provided lawmakers additional time to address long-term reauthorization or extend current policies into 2027. State Department of Transportation budgets also remain at healthy levels. The preliminary fiscal 2027 data shown on the slide indicate substantial funding for highway and bridge activity going forward. For Aztec and our customers, a stable multi-year funded federal framework supports planning and investment decisions, and strong state funding provides consistent work. We remain constructive on the output for infrastructure spending in the United States. Our implied orders and book-to-bill trends are shown on slide seven. consolidated implied orders of 422 million were relatively flat on a year-over-year basis. Sequentially, implied orders were down 8.3% following a very strong Q2 implied orders for the material solution segment. Our book-to-bill ratio at the end of the third quarter stood at 120%. Infrastructure solutions implied orders increased 282 million, up 43.4% on a year-over-year basis, and 38% sequentially. Order intake increased and drove the book-to-bill ratio to 149%, further supporting our belief in strong underlying demand. Material Solutions implied orders were 140 million, which was down 37% from the same quarter of the prior year, and 45.3% sequentially. The book-to-bill ratio ended at 86%. Moving to slide eight, consolidated backlog was 670.5 million at quarter end, up 49.2% from the third quarter the prior year and up 11% from Q2 2026. Infrastructure solutions backlog stood at 382 million, and increase of 47% over the same period in 2025 and 32% from a quarter ago. As demand for asphalt plant and concrete plant equipment remains favorable, despite requests by selected customers for Q4 26 and Q1 2027 deliveries. As a result, our infrastructure solution segment expects to enter 2027 with backlog that is approximately 100 million higher versus when we entered 2026. Material solutions backlog was 289 million compared with 190 million at the end of the third quarter in the prior year for an increase of 52.1%. Backlog in the material solutions segment began to build in the second half of 2025 as dealer inventories returned to healthy levels, and conversions from rental to purchase units began to increase. Sequentially, the material solutions backlog went down 23 million, or 7.5%, following the strong Q2 implied order. I will now turn the call over to Brian Harris, our Chief Financial Officer.