Astec Industries, Inc. Aktie

Good morning, and welcome to Astec's 2026 Investor Day. My name is Steve Anderson, and I'm the Senior Vice President of Investor Relations. We're happy you've joined us today. I've been with Astec for over 26 years, and I can tell you, I've never been more excited about the future of Astec than I am right now. You'll learn more about the reasons why over the next 90 minutes.

Before we get started, I'd like to share some details about today's event. The event is being webcast and recorded for replay. Presentation materials are available under the Investor Relations tab of the Astec Industries website at www.astecindustries.com. We don't anticipate any interruptions during the presentation, but we are broadcasting from one of our manufacturing facilities in Chattanooga, Tennessee. In the unlikely event you hear any noises from our production areas, please excuse us and know that any disruptions will be quickly resolved. Some statements we will make are forward-looking. For more details about the risks, uncertainties and assumptions relating to these statements, please see our safe harbor language in this presentation. We will also discuss GAAP and non-GAAP financial metrics. We encourage you to familiarize yourself with our disclosures and the reconciliation tables as you consider these metrics.

Before we go deeper, I'd like to introduce you to our executive leadership team, many of whom you'll hear from today. We are leaders with over 130 years of combined experience across infrastructure, materials, manufacturing, engineering, finance, innovation and human resources. For our agenda today, we will cover 5 primary topics: who we are, the next era of growth, the megatrends shaping our markets, how we operate through the Astec Built to Connect Way and ultimately, why we feel Astec is a compelling long-term investment.

Questions can be submitted via the chat box on the webcast page during the presentation and will be answered during the brief question-and-answer session at the conclusion of the presentation. With that, let me turn the presentation over to Jaco van der Merwe, our President and Chief Executive Officer.

Thank you, Steve, and I appreciate your kind words about how you view Astec today. Welcome to Astec's 2026 Investor Day. I want to start by thanking my team and all our partners who made this day possible. Secondly, I want to thank each of our participants on the call today. I trust that you will find the next 90 minutes insightful and that you will walk away as excited about Astec's future as we are. Since 1972, Astec has provided innovative solutions and exceptional customer service to the Rock to Road industry. Over the past 3 years, we have focused relentlessly on building a solid foundation, improving consistency, strengthening our balance sheet and proving we can execute.

Today marks an inflection point. This is the moment where we describe the future of Astec and how we will further improve consistency, how we will enhance profitability and lastly, how we will grow. Our purpose, vision, core values and 3 strategic pillars are ingrained in who we are, how we operate and how we win. Achieving Astec's full potential will take focus on multiple fronts. Growing our recurring revenue mix and bringing industry-changing solutions to the market will be key for us to reach the long-term goals we will share with you today. We like the industry we play in as the demand for infrastructure, natural resources and recycling will continue to grow. I am very proud of our team, our product portfolio, our strong brand and the relationship we have and are still building with our customers. Before we get into details, we want to start with who we are. This short video brings Astec to life, our people, our purpose and the work behind the results we deliver.

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What a fantastic overview of Astec. At Astec, we are built to connect. Think about it this way. Everything you drive on, everything you land on, your house, hotel or the office you are in right now has probably needed the products Astec makes during the construction process. We connect people, families and industries to the future. What did you see in this video? Products, manufacturing sites, customer sites, I saw so much more than that. I see a company and industry that is made up of hard-working people, people who make things happen.

Focusing on our employees and our customers are 2 of the 3 strategic pillars, the third being innovation. Having engaged, enabled and empowered employees is the key to success of our business. Part of our vision is to provide life-changing opportunities for our 4,500 team members. When we do this well, the results will follow. I want to share one of many examples with you. Kim Graf is a General Manager at one of our manufacturing sites. Kim started with Astec in 1992 at our front desk. She slowly worked herself into the HR team, where she later became the HR manager. Her ability to communicate well made it a natural choice when the GM position became available a couple of years later. Today, she runs one of our best facilities. Today, we have over 4,500 employees and 26 manufacturing sites around the world. We generate 80% of our revenue in the U.S., of which approximately 34% is from parts and service.

Over the last 3 years, this team has generated a total return for our shareholders of 74%. This is an example of what is possible if we work together and use our resources in the right way. Astec operates in 2 strong segments, Infrastructure Solutions and Materials Solutions. Both these segments have strong and growing parts and service businesses. The Astec brand is well known for quality and customer service in asphalt, aggregates, mineral processing and concrete production industries.

Our product brands provide customers with a connection to legacy brands and companies started or acquired by Astec over the last 50-plus years. I'm very proud of how our 2 recent acquisitions have integrated into Astec and our branding structure. Our 2 operating segments have truly assembled an unrivaled product portfolio that reflects the products our customers need to be successful. Each segment has a strong new product development pipeline, combined with our Astec digital solutions, we are uniquely positioned in the Rock to Road rock to road space like no other OEM in North America.

As an example of our focus on new product development, we have showcased and launched over 25 new or upgraded products at the March 2026 ConExpo trade show. Products are important, but providing our customers with solutions and support is what differentiates us in the market. Our parts and service business now makes up approximately 34% of our total revenue. Growing this to 40% to 50% will ensure we provide our customers with the support they expect from us while improving our consistency and profitability.

Launching our Astec Signal platform at ConExpo 2026 was an exciting event for us. Moving away from products with software to providing customers with intelligence from products is transforming how we do business. Although Astec generates 80% of our revenue in the U.S., we have significant market share growth opportunities.

Parts and service, mining, aggregate production, recycling and selected adjacencies like industrial heating are just a few examples. Internationally, our products and brands are recognized well beyond our size and install base. We have a blank canvas internationally, supported by various manufacturing and sales facilities in key markets around the world. We will continue to grow our international presence through organic and inorganic growth. Finding local manufacturing closer to key markets is part of our acquisition focus. To bring this to life, we want to show you how Astec comes together from raw material to finished solutions and from plant to the job site. This is our Rock to Road story.

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Iron becomes smart. I love that expression. I mentioned earlier that providing customers with intelligence from equipment will be a key differentiator for Astec through our Signal platform helping customers manage and utilize their equipment in a safe and more efficient way will become a necessity in an environment of inflation and customer consolidation.

Launching Astec's Signal platform at ConExpo 2026 was a huge milestone for us. This platform will enable us to further grow our parts and service mix and our customers to run equipment safer and more efficiently across the Rock to Road portfolio. Imagine an environment where you have 100% visibility of where your fleet is located, how well it's running and how you operate in the most efficient way, and an environment where you use Signal to drive intelligence and operational improvement, an environment where you minimize equipment downtime through smart services, telematics, all from your smartphone or tablet, an environment where you run equipment remotely or autonomously in a safe and productive manner. An environment where customers use our smart services to fix or prevent problems before they happen. These are all elements becoming a reality as we speak.

Focusing on customer service has been an important part of our legacy since Astec was founded over 5 decades ago. When our customers are successful, we are also. Our customers rely on us for support, training, efficiency improvements and to bring industry-changing innovation to them. Our customer base is very diverse from a new entrant to the market who chooses us because of our support and expertise to the large industry consolidators who need visibility and performance across their Rock to Road portfolio.

We engage all of them at all levels in their respective organizations. Our teams are available 24/7. We are, however, taking this to the next level. During 2025, we launched our Astec customer focus principles. The A representing acting with urgency and empathy. We want to respond quickly and with care. The S represents simplify every experience, remove friction and make it easy for the customer. The T stands for take ownership, own the engagement from start to finish and follow through. E represents engaging as OneASTEC, work together across roles and departments to deliver a complete solution. And lastly, the C stands for communicate effectively, keep the customer informed throughout the engagement. We are very proud of the business that Dr. Brock and his founding partner started. Since our inception in 1972, Astec has grown through various cycles. Some were very successful and some were full of valuable lessons. As you all know, we grew through acquisitions. Our company started as a pure-play asphalt plant producer.

Entering the crushing and screening market was a natural adjacency when Astec bought Telsmith, JCI and KPI. The addition of Peterson, BTI and Power Flame complemented the asphalt, crushing and screening businesses. In early 2017, Astec took a deliberate decision to enter the concrete plant market through the acquisition of RexCon. Since then, we have added CON-E-CO and BMH to become the leading suppliers of concrete plant equipment in North America.

The acquisition of MINDS gave us the opportunity to build a digital platform that can support our businesses. Launching of our Signal platform positioned Astec to meet the digital and AI needs of our customers. The acquisition of TerraSource Global added opportunities in washing, recycling and soft rock mining. Our most recent acquisition of CWMF was a great tuck-in business, which provides regional support to customers in the northern part of the U.S.

As mentioned before, we are at an inflection point. Over the last 3 years, we have worked very hard to create consistency, improve our profitability, and we made the biggest acquisition in the history as we continue to grow. But we are not done yet. In fact, we see many additional opportunities to enhance all 3 elements: consistency, profitability and growth.

As we enter the next phase of our company's journey, we are excited about the opportunities for growth, the markets we operate in and the Astec Build to Connect way we have been operating under for the last 3 years. We see various industry megatrends that will have a positive effect on our future growth. Recycling, reindustrialization, digital solutions and mining are just a few examples. As these megatrends connect with our Built to Connect business model, we will generate greater results. Our focus remains on growing our top and bottom line in a consistent, disciplined yet aggressive manner.

I will now hand it over to Brian Harris, our Chief Financial Officer, who will walk you through our long-term growth targets and financial capacity.

Okay. Thanks, Jaco. In this section of the presentation, we outline our financial and operational targets for the next 5 years. These are the targets that management will hold themselves accountable for, and it's our intention to provide regular updates on our progress towards these targets in the coming quarters and years ahead. While we do not expect improvement in performance to be upwards in a straight line, we fully expect to achieve these targets by 2030. And that in doing so, we will deliver significant shareholder value.

Management has selected 4 performance metrics, which we believe to be the most relevant to investors, those that reflect best-in-class peer performance and those which are consistent with management's long-term incentive plans and align closely with shareholder value creation. With that said, I would like to add a little color to each metric. Revenue growth CAGR of greater than 6% compares to our previous 3-year average of 3%. So you may ask why the acceleration in top line organic growth. Astec is at an inflection point where the coming together of innovative new products with our superior digital offering provides the opportunity to capitalize on the tailwinds from growth megatrends and favorable end markets.

Our global footprint and brand recognition is a launch pad for growth in a number of key markets and recent acquisitions have created increased scale and expanded the global installed base. Adjusted EBITDA margin is perhaps the most important metric by which the quality of our earnings is compared to our industry peers. From a relatively low starting point 3 years ago, we have achieved a 440 basis point improvement, and we expect to build consistently at a pace of 75 to 150 basis points each year. This margin improvement is underpinned by a number of initiatives, most importantly, growing the higher-margin parts and service revenue in our mix, continuous improvement in our manufacturing efficiency and a relatively fixed SG&A base that can support a substantially larger business, providing a leveraged P&L account.

Return on invested capital is another critical performance metric for investors and management alike. First and foremost, we must ensure that our return on invested capital is exceeding our weighted average cost of capital, which currently sits at 8.25% compared to our reported 2025 adjusted ROIC of 11.5%. I will discuss our capital allocation priorities in a moment. But first, I want to emphasize that our goal is not to strive for a bigger and bigger ROIC percentage, but rather to grow the capital employed base upon which we generate a return which exceeds the cost of capital. By doing so, we will generate significant economic profit. Consider an extreme example. Most investors would prefer to earn a 20% return on $1 million of capital rather than a 50% return on $1,000 of capital, even though the rate of return on the smaller capital is higher.

The last of our 4 metrics is operating cash flow, which is also a management incentive metric and one which will be driven by improved and growing EBITDA, a focus on working capital management and stable consistent maintenance capital expenditure. We are often asked about our capital allocation strategy, and we believe this question lends itself less to a specific answer and more to a set of decision rules. Starting from a balance sheet with almost 0 debt 3 years ago, Astec has been able to allocate capital in a prudent but value-creating way.

The left-hand chart shows the $380 million of capital deployed over the past 3 years, during which time, capital expenditure has averaged 2.4% of revenue. Cash has been returned to shareholders through a long-standing dividend policy and we invested $250 million for the TerraSource acquisition in 2025. This left the company with a net debt to adjusted EBITDA leverage ratio of 2x, well within our stated range of 1.5 to 2.5x. The right-hand column provides a forward look at the capital to be deployed in the 5 years from 2026 to 2030. Assuming a continuation of the current dividend policy, no share buybacks, capital expenditure at 2.5% of revenue and including the acquisition of CWMF in January 2026, our capital deployed would be $409 million. However, this is just half the story because it would leave the company with a leverage ratio well below 1x. If we were to operate with a leverage ratio range between 1.5x and 2.5x, we have the capacity to deploy a further $400 million to $600 million of capital.

Astec has developed a robust capital deployment decision-making strategy that will result in a positive NPV investment, an optimal capital structure and excess cash flow return to shareholders in a value-maximizing way. Clearly, as a growth-oriented company, it's essential that we take a disciplined approach to inorganic growth. And to this end, we have developed a comprehensive playbook that defines the businesses that will be of interest and most importantly, those that will not be a good fit. Our 2 most recent acquisitions of TerraSource and CWMF are great examples of businesses that met all our acquisition criteria. Both transactions were compelling for different reasons, but had the common feature of being EPS accretive in the first full year.

The graphic on the left summarizes the critical elements of our acquisition playbook. Delving into these a little deeper. Recurring aftermarket parts and service revenue is important to increase our mix of higher-margin products and get closer to our peers that are often in the 40% to 50% range. Enhancing the overall scale of the business will allow us to unlock synergies in procurement and the back office as well as leveraging our relatively fixed SG&A cost base.

As we grow our digital service offerings, companies that can support our technology and innovation aspirations will be of great interest. Achieving leadership in our chosen markets, which are aligned with the macro trends will allow us to grow faster than the underlying markets. Being closely tied to our large-scale customers can further enhance our market position in an industry that is consolidating at breakneck speed. And often overlooked, but something that Astec management is very focused on is how well the 2 cultures will fit together. History is littered with examples of acquisitions that look good on paper but failed due to cultural differences.

As I said earlier, capital deployment revolves around a decision-making strategy with shareholder value creation at the center. Here are some of the big themes that will drive growth in the construction industry and inform our thinking around acquisition opportunities. The reindustrialization of America, whether this be in basic manufacturing or the construction of large-scale data centers consumes large quantities of aggregates and concrete. The growth in mining, particularly as it relates to rare earth metals, will be another source of incremental revenue.

The digital revolution that is upon us will drive automation along with innovative new technologies that put data in the hands of operators in a more meaningful way than ever before. Companies that incorporate this technology into their equipment will drive new sources of revenue and access to a larger customer base. Lastly, the need to continuously reduce cost and improve efficiency will drive the need for equipment that can be more energy efficient, allow for increased use of recycled materials and reduce downtime. Astec has the breadth of product and global reach to service all these industry trends and importantly, has the capital available to do so while prudently managing debt levels.

And now back to Jaco for a more in-depth view of the megatrends and why Astec is well positioned to take advantage of them.

Thank you, Brian. Our core business is within the infrastructure market. It is an attractive market segment that will need investments for decades to come. According to the American Society of Civil Engineers, if the United States wants to improve from a C report card grade to a B, we will need over $9 trillion of investment. As a reminder, the Infrastructure Investment and Jobs Act provided $1.2 trillion of investment with $379 billion for highways, $65 billion for Energy & Power and $69 billion for water and environment. We expect the next highway bill to be very focused on roads and bridges, and this portion could be as high as $600 billion. We have a lot of work to do as a country with about 4.1 million miles of roads and 623,000 bridges in poor or mediocre condition. Our customers operate in this space.

The need for investment is clear, and it has bipartisan support. Our funding mechanisms needs reform, and our company and industry are very involved with regulators to get this done. Astec is well positioned to respond and take advantage of the funding needed to keep our infrastructure intact. Both Brian and I talked about megatrends earlier that we believe will have a positive effect on Astec. This slide provides more detail on what sits below these megatrends. Movement in the macro environment cannot be controlled by the company, but many of the examples listed here will have a positive effect on Astec.

Recent developments around data center growth is a great example. We know our markets and our customers use our equipment to take advantage of these megatrends. The release of our Signal platform positions us well to benefit when our customers shifts towards the use of digital platforms. Our Build to Connect way has been in place and refined over the last 3 years. We have a strong and clear purpose of Build to Connect. Our vision of building industry-changing solutions that create life-changing opportunities both honors our legacy but also explains what will make us successful in the future, innovation and employees. The 3 strategic pillars provide the foundation of our purpose and vision: engage employees, customer focus and innovative solutions. Our engaged employees will look after our customers, who will then reward us with business to fund innovation. Next, members of our executive leadership team will present on the 3 strategic pillars.

Aletheia Silcott will start by talking about our team members, and then Michael Norris will talk about being customer-focused and developing innovative solutions.

Thank you, Jaco. Hello. I'm Aletheia Silcott, and I have the pleasure of serving our employees as the HR leader at Astec. I would like to share with you how our people approach directly supports our strategy, sustainable growth and operational performance. Before I get into the details, though, I'd like to start with our people, the men and women who help us to be the success that we are today. This short video brings to life what it means to be an Astec employee and how being engaged, enabled, and empowered directly supports our strategy and performance.

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At Astec, our employees are guided by a clear purpose, built to connect. That purpose shows up not just in what we build for our customers, but in how we develop, enable and engage our workforce. And we believe that a high-performance culture with fully engaged employees is a competitive advantage, especially in a complex manufacturing-driven environment.

The men and women at Astec are what makes us truly successful. They are the heart of our organization and the craftsmen of our product when we create a positive employee experience for our team members, they, in turn, create innovative solutions and go above and beyond for our customers.

Let me briefly walk you through how this comes to life and what we've been focused on over the last 3 years. First, living our vision of life-changing opportunities. In 2025 alone, more than 300 of our team members were promoted or took on new challenges internally. This is not incidental. That's intentional. We focus on clearly defined career journeys and leadership development programs at all levels of the organization that allows us to grow talent from within. Why does this matter to investors? Because internal mobility protects institutional knowledge and lowers long-term talent costs. It also creates stronger leaders who understand our products, our customers and our operating model.

Second, establishing a high-performance culture. We drive consistency and accountability through our OneASTEC operating model, supported by a well-defined high-performance framework. This creates alignment across all of our functions and geographies and ensures that we execute with quality and discipline even as we scale. Our high-performance culture is not just about expectations, it's about clarity. Our teams know what success looks like, how performance is measured and how they contribute to our collective results. That clarity translates directly into execution of reliability and improved operating outcomes.

Third, operational excellence driven by each and every one of our team members. A great example of this is our WIN program, where employees submit improvement ideas directly from the front lines. To date, over 3,000 projects have been submitted, demonstrating a culture where grassroot ideas are grown and owned locally and benefit the entire organization.

At the same time, we are investing heavily in lean capability. We currently have 93 manufacturing certification graduates with 145 additional graduates scheduled for this year. This builds internal problem-solving capability and drives continuous improvement in productivity, quality, safety, all critical to margin performance.

Finally, training and development and employee incentives. We offer more than 580 training courses spanning technical skills, leadership development and compliance. We also conduct a biannual Voice of OneASTEC employee engagement survey. This survey provides critical insights into the needs of our team members. We strive to be a best place to work, and the voice of the employee is paramount as we curate competitive benefits, wages and opportunities.

We also take pride in recognizing our talented employees who make a lasting impact on our organization. Programs like our Bravo awards and peer recognition reinforce our winning behaviors and reward employees who deliver results aligned with our strategy. In summary, we foster a culture and a workforce that is empowered to act, enabled with the right tools and engaged in continuous improvement. For our investors, this means stronger execution, lower operational risk, better scalability and a culture that supports long-term value creation. Our people strategy is not separate from our business strategy. It's a core driver of it.

And now over to our Group President of Materials Solutions, Michael Norris, who's going to touch on our other 2 strategic pillars.

Thank you, Aletheia. At Astec, everything we do starts and ends with our customers. We are a reliable provider of the world's renowned brands and top-tier solutions, and that reputation has been earned over decades of listening to what our customers need and delivering their expectations. This slide captures the foundation of how we put customers at the center of our business. First, we develop customer-focused solutions. We offer custom solutions spanning the full Rock to Road value chain. Our engineering teams work directly alongside customers to develop innovative answers to their most pressing challenges. This is not off-the-shelf equipment. It's the purpose-built technology designed for real-world job site conditions.

And second, we focus on overall customer experience. As Jaco mentioned previously, our Astec customer-focused principles got every interaction with our customers. A great example of the impact, we have enabled our customers to improve their recycled portion of their asphalt content by up to 20%, helping them operate more efficiently and sustainably.

Third, customer training and support. We run dedicated customer schools designed to help operators get the maximum value from their tailored solutions. Annually, we train over 2,000 customers. Training is available in the classroom, in the field and through virtual sessions, meeting our customers wherever they are. This investment in education directly translates into better uptime and productivity for their operations.

And fourth, we deliver an enhanced aftermarket experience. We have a global service team supporting all business segments, along with inspection services, specifically designed to prevent costly downtime. And backing all of this up is over 1 million square feet of parts on the shelf, ensuring timely delivery so that customers are never waiting on us. The bottom line is this, our customer-first mindset is not just a philosophy. It's embedded in how we design, build, train and service. It drives loyalty, repeat business and ultimately, long-term value for our shareholders.

Now we will turn to a short video that shares what happens when more than 50 years of innovation pushes even further.

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Our customers told us something loud and clear. We don't just need machines, we need smarter machines, and that's exactly what we build. Take our Signal Connectivity Suite. Imagine running a job site with real-time visibility into performance, health and productivity, all unified across your entire Rock to Road fleet through one asset management dashboard. That's not a future promise. That's today. Think about parts and service. We built the MyAstec portal so your team can find the exact part they need in just 3 clicks, no catalogs, no hold times, 3 clicks and you're ordering.

At ConExpo 2026, we launched or upgraded over 25 new products, each one backed by our disciplined phase gate new product development process that ensures everything we release is ready for the real world, not just the showroom. Now here's where it gets exciting. Our advanced technology group is developing AI-powered simulations that are transforming the industry as we know it. SiloBot uses artificial intelligence for more efficient inspection, assessment and reporting. DropZone uses AI detection for safe truck loading, and we're using extended reality as both a sales and a service tool, which will allow our customers to walk through an entire asphalt plant or a crushing plant virtually before it's even built. This is what built to connect really means. It's not just connecting Rock to Road, it's connecting data, people and the future of the industry to the technology that will define it. Innovation isn't a department at Astec. It's who we are.

Thank you, Aletheia and Michael. To add what Michael just talked about, our focus on innovation and developing sustainable solutions provides several benefits for our customers, including operating within federal and state legal environments and obtaining permits for new facilities, driving cost reductions through energy and operational efficiency. Customers depend on us to keep doing product development and to ensure they can operate in a changing environment.

This is an area where we effectively combine product and digital innovation to make the complete system more efficient. Astec is uniquely positioned in the Rock to Road space to deliver for our customers. Earlier in the presentation, Brian outlined the key performance metrics that we will hold ourselves accountable for and which we believe are of great interest to investors. However, we know that investors have a choice. And when they choose to invest in Astec, they do so knowing that our performance compares favorably with the peer group and best-in-class companies.

Our recent share price performance and the total shareholder returns compare very well with our peer group, which demonstrates that a turnaround has begun at Astec, giving us the confidence to deliver even greater shareholder value in the future. Our 2030 targets also compare favorably with both peers and best-in-class companies, providing a compelling basis for investment in Astec.

During full year 2025, we delivered 10% EBITDA for the first time since we started reporting adjusted EBITDA in 2016. We are committed to delivering our 2030 targets as we elevate Astec to new levels. 14% to 17% adjusted EBITDA, 13% to 15% ROIC and 25% plus operating cash flow growth are achievable targets. Our focus on growing our parts and service business, introducing new products and continuing our operational excellence journey are anchored by a strong balance sheet.

Executing our plans will position us well to deliver the 2030 targets. To reinforce the investment thesis in Astec, I'd like to remind you of the growth drivers and industry tailwinds. We have a large number of new products launching over the next 12 to 18 months, which target specific segments of the market. Our growing parts and service business will expand margins. Public funding is stable and growing and the public end markets are noncyclical.

The industry megatrends promise multiple years of growth in the demand for construction materials and our positive cash flow and strong balance sheet provide excellent options for capital allocation. The flywheel multiplier effect of these growth drivers with the Astec Built to Connect Way will supercharge the impact on shareholder value creation, reinforcing the case to invest in Astec.

Thank you for spending your morning with us today. We really appreciate your time and interest in Astec. Putting investor money to work successfully is a big responsibility. The Astec leadership team shares in that responsibility as we are all shareholders. We know what we need to do to deliver our long-term results. We know what good looks like. We are dedicated to strengthen our parts and service business, continuous improvement and bringing our industry-changing solutions to the market. Over the last 3 years, we delivered 74% of total shareholder returns. We focused on creating consistency. Now we are shifting our focus to further improve profitability and to accelerate our growth.

Thank you. I will now turn the presentation back over to Steve.

At this time, our management team is available to take questions. As a reminder, questions can be submitted in the chat box on the webcast page, and we will get to as many of those as we can. During the Q&A session, I will be off camera receiving questions that you have submitted on the Investor Day website. I will direct your questions as appropriate.

But before we get started, I want to ask Jaco to introduce a key recent addition to the Astec team. Jaco?

Yes. Thank you, Steve, and I want to welcome Chad Hartley this morning. Chad is our new Group President for the Infrastructure Solutions Group. Chad, you joined us on Monday, so I assume everything is already figured out by now.

Absolutely.

So we're very fortunate Chad brings many years of experience in sales, manufacturing, running global operations to our team. So Chad, why Astec? I mean, what piqued your interest in the business? And what are the opportunities that you see right now?

Yes. Thanks, Jaco, and great to be here with Astec. When you take a look at this business, extremely strong foundation, a lot of good things going on within the business, driving more consistency in the results. And then truly, it's at this inflection point that you talk about on the journey. So I think it's just an absolutely great time to be a part of the company. What I see is great people within the organization and truly from the shop floor all the way up through leadership, the passion, the engagement that I've seen has been really, really good. And I think right now, it's just really about time to accelerate, right? So the consistency that is starting to happen. So that's great. A couple of other things I would just say, the innovation, the digital piece of things, that ecosystem and how this business has a portfolio to really drive a broader industry solution is great. And so all in all, I just think it's a great time to be a part of this company and just I see the passion and I see the opportunity within Astec.

Yes, absolutely. And we definitely welcome you to the team and look forward to see what you can bring to the table for us.

Thank you, Chad. And now for a question-and-answer session. Our first question goes to Jaco. Can you elaborate on the most important drivers for margin growth over the next 5 years?

Yes. As part of our presentation today, we talk about growing our EBITDA margin from 14% to 17%. And we know that is a really aggressive target. But there's 3 significant focus areas for us. Number one is growing our parts and service business. It gives us a huge opportunity to connect with our customers on a daily basis and to make sure our customers' equipment are running as they want them to run.

Secondly, we see a big opportunity still in improving our own internal operations, manufacturing, sales and operations planning, improving quality, the state of our inventory. So there's so many opportunities from an operational excellence point of view.

Lastly, we're very excited about our new product development pipeline. And just recently at ConExpo, we launched over 25 new or significantly upgraded equipment. So that pipeline is healthy. Between those 3 focus areas, we feel margin can be driven into this range that we quoted. But we also see some efficiencies from an SG&A point of view. Right now, we know that we have some room for improvement compared to our peer companies.

All right. Thank you, Jaco. Next question, I'll direct to Brian. Brian, how much of your anticipated revenue and margin growth will be organic versus inorganic?

Yes. The vast majority of the revenue growth that we have in the next 5 years is organic for the reasons that Jaco just mentioned. But there are a couple of other areas. One, of course, is the inorganic growth that we've got from CWMF. The first year, we closed that deal on January 1, 2026. So we have a full year in year 1 of that 5-year plan. And then also, we have the second 6 months of the TSG acquisition, which we closed in July of last year. So both of those would be incremental. But everything else that we have in the plan for the next 5 years is organic growth.

Thank you, Brian. Next question I'll direct to Michael Norris, Group President of our Material Solutions segment. The Materials Solutions segment went through a down cycle, but has shown recent improvement. How do you see the cycle playing out over the next 5 years?

Yes. Thanks for the question, Steve. And Material Solutions is definitely on the upswing. If we take a look at the cycle a little bit and think about the last 2 years, it was really impacted by high interest rates and how that impacted our business was that our big producers that use our equipment, they limited their investment in capital. The high interest expense really impacted our channel partners' ability to reinvest in their inventory. We had high inventory levels. I think that was across our own peer group. But I think if you think about it now, that's changed. Our customers, they're used to working in this high interest rate environment today, and we have increased demand from infrastructure spending.

Data centers are driving a lot of interest in our business today. We also have TerraSource that joined us that gives us a lot of new markets that we can go into. I think if you think about energy, if you think about fertilizers, special minerals like lithium and those types of things. And those markets, they have a different cycle than what the traditional aggregate market has. So I think we have opportunity and durability in that cycle. And also, I would say that TerraSource brings thousands of assets for us to harvest the aftermarket as well. And that just gets us closer to our 40% to 50% target of aftermarket revenue. So I think we're in a good place. Our portfolio is strong. And I think we're at the right time in the cycle to be able to grow this business over the next several years.

All right. Thank you, Michael. And for Chad, Chad, can you tell us about your operational, commercial and manufacturing experience and how they relate to Astec?

Yes, absolutely, Steve. I think the experience I've got centers around a lot of the themes that Astec is really on, right, disciplined execution, building strong teams, thinking about the innovation pipelines, everything. That's all been things that have been experiences in my career. Transformation is another thing. Again, this inflection point that we talk about, been through a lot of journeys of transforming parts of the business, bringing different parts of the business together. And I think a lot of that opportunity here within Astec. And then from a customer focus perspective, really bringing innovation, industry solutions, digital, all those things together as you have an acquisitive company, there's just broader aspects that you can bring customer solutions to. So I think those are all things that I have a lot of passion for and have a lot of background in. So I just feel like the fit of these things that with everything that's been talked about today and a lot of the experiences I've had, sticking to disciplined execution, building strong teams, all those things really come together.

Thank you, Chad. I'll direct this next question to Jaco. With Signal, how much of the rollout is from retrofitting installed Astec equipment versus a possible accelerator in equipment replacement demand?

Yes. That's -- Steve, that's a really good question. Signal is obviously a platform that consists of various pieces. And included in there is controls, obviously, in the future, telematics, management capabilities. So today, every piece of equipment that goes out is signal ready. But there's a significant opportunity for us to go and retrofit. And that cycle has already started. We are very fortunate that various of the big players in the market have chosen our solution as their platform for the future. And we think this business can grow significantly over the long term. And it's going to be a mix between new installations, but also retrofits.

All right. And as a follow-up and related question, Jaco, can you discuss how you plan to monetize the new Signal digital platform and how the digital megatrend plays into your 2030 targets?

Yes. So obviously, Signal and monetizing a product like Signal is something new for Astec. Our teams, our product management teams have done a lot of work around that. And we see various channels on how to monetize this. First of all, obviously, sell the technology as part of the new product that we sell, selling controls for plant upgrades or retrofits. But long term, I think there's an element of license fees as you go, and it becomes more a way for the customer to run their business versus just the product. Now I will say Signal, obviously, as a product, we want to monetize that. But long term, our goal is to use Signal to drive smart services and with that then sell more parts to our customers. I can see a future where we use Signal to provide services to our customers, to provide spare parts for them without even them interacting in the process. They will trust us to make sure they keep their machines running and their equipment running in the most efficient way.

Thank you, Jaco. Brian, I'll direct the next question to you. How much revenue can you support with the existing level of SG&A? And will SG&A need to grow as you expand internationally?

Yes. So look, today, our SG&A percentage of revenue is about 19%. We know that's high relative to our industry peers and higher than where we would like it to be. But we've talked about having this leveraged P&L account. So the G&A portion of that corporate back office expenses and the infrastructure that we need to support being a public company is relatively fixed.

So as our top line grows, then we'd expect that percentage to come down. Now obviously, as we grow our sales organically, we may need to flex our sales teams and our sales expenses appropriately. But the SG&A will not grow at the same kind of pace that we see our top line growing at. So we will bring that percentage down. And ultimately, that will improve our EBITDA margins as well as we go over the next 5 years here.

Thank you, Brian. And Jaco, I'll direct the next one to you. Can you talk about the role of acquisitions in getting to the 40% to 50% part mix goal?

Yes. Acquisitions play an important role in our strategic road map. And I think the recent acquisition of TerraSource is a great example where we found a business that has a very high parts and service mix in that product. So obviously, that will help us. That will probably, over the next year as it gains momentum, help us to add another 2, 3 percentage points to our mix. Today, we are at 34%. Brian also presented earlier today our strategic filters around acquisitions. And you can clearly see aftermarket is a key consideration when we do acquisitions.

I will say we've also noticed through our scouting of the market of acquisition opportunities that a lot of companies that is available have not focused that much on parts and service business. And that just means that there is a great opportunity for us that if we do buy a business that we can use the way we think about equipment and servicing our customers that we can grow that mix within an acquired business. So absolutely part of our focus. We are constantly looking for that pure-play parts players. But if we have to buy a company with a lower percentage and we see the opportunity, we will definitely take advantage of that.

Jaco, I might add to that just a little bit. If I think about our own population and the assets that we have in place, I think we have a lot of opportunity to capture more of our own share as well. So there's an inorganic path to get there, but I think organically, we have a good path to get there as well.

Yes.

All right, Michael, I'll direct the next question to you. On the mining and rare earth minerals opportunity, can you talk about how you're seeing the demand in the recent 1 to 2 years and where you see the opportunity going?

Yes, I would say it's a great question. I think today, if I think about just North America, when we talk about the rare earth minerals and you think about the Department of Defense and the investments that they're making in rare earth minerals here, I mean, that Mountain Pass project, we're in on that.

Our dealer channel network is in on those projects. And that's going to get to be more and more of a higher demand for us. And we're well positioned with our product portfolio and the products that we have to be able to capitalize on that. So it's an important part of the future for us. I mean we're seeing that demand.

Yes. And if I can add a little bit there. We've talked about different megatrends that is of interest to us. And mining is a space that is definitely an opportunity for us. In certain markets around the world, South Africa, Brazil, where we have factories that is predominantly focused on mining. And here in North America, we are playing way on the outside of mining. So great opportunity for us, obviously, with rare earth minerals, great opportunity now that we have the TerraSource product portfolio and getting into soft rock mining. So that space is something that's very interesting to us.

All right. Brian, I'll send the next one to you. On the greater than 6% organic revenue CAGR target, how much of that growth is expected to come from Infrastructure Solutions versus Material Solutions?

Yes. The mix is probably pretty even right now. We've got a lot of activity on the MS side. You've seen our backlog has grown substantially over the last 2 or 3 quarters, so we do expect that to be a good source of the growth. But probably over the 5 years, it will be pretty well balanced, maybe a little more acceleration in MS in the near term. But over the 5-year horizon that we've been looking at, I think, pretty well balanced between both IS and MS.

And maybe, Michael, you can add a little bit of color around the new products that we launched at CONEXPO and what does that pipeline look like for MS here over the next...

Yes, I would just -- thanks, Jaco. Just to add to that. I mean, I think if I look at our innovation pipeline that we have on the MS side, I mean, over the next 18 months, we're going to have over a dozen new products that are going to hit the market. And those are focused on domestic market, North America, that's our big market, but also on the international side.

So you can imagine on our mobile equipment, we primarily manufacture in North America for North America historically and the weights and dimensions and over-the-road access and those types of things are different globally. So a lot of our innovation pipeline gives us opportunities to expand our North American business, but also grow internationally as well. So a lot of good stuff coming.

All right. And Jaco, if you could address this. Can you talk about how your concrete segment fits into the long-term framework of Astec? What are you trying to achieve in this business from a parts and service standpoint? And from a high level, can you compare and contrast the margin profile of concrete versus asphalt?

Yes, absolutely. We bought RexCon in 2017, and I've had the great fortune to watch this concrete portfolio grow. And I will say it gives Astec great diversification. If you look at our customers today, they do crushing and screening, they do asphalt production, they do concrete production, obviously, lay down. So it really fits well with that rock to road portfolio that we're building. From a margin profile point of view, it's -- I will say it's comparable with asphalt.

Typically, on the concrete plant, the mix of parts is a lot lower compared to what you see on an asphalt plant just because of the complexity in asphalt production. But overall, it still has a really nice margin profile. And we are really starting now the new product development in that space. And over the next couple of years, we're very excited about how we will bring changes to that market and obviously have a solution for our signal platform that connects to the concrete side as well.

Thank you, Jaco. Michael, I'll direct the next one to you. Can you talk about the opportunity to develop system sales? And is the installed base a source of advantage? Can you leverage existing brands? How do you develop dealer support for MS systems? How should we think about the benefit?

Yes, that's a great question, Steve. I think maybe first, I'll define what a system is maybe for some of the listeners who don't understand that. So on the MS side of the business, we have 2 mainly tracks of portfolio that we offer. One is we call a system, which is a complete fixed plant installation. You can imagine this, the larger producers are doing a lot of tons per hour. And so that's what that system business is. And we're trying to grow that business because it's a larger system.

Obviously, it's a bigger order, but it's also a bigger consumer of parts, and we talk about trying how we're going to grow our parts business. And the other path that we have is around the mobile track stuff. And so that typically goes through a dealer channel. And so if we think about the mix of those, the system business is better for parts, better for aggregate production on big volumes. And then the mobile stuff is more for the contractor market. It's more of a little bit smaller. Parts consumption is not quite as high as it is on the other units. So the systems business is a big portion of us, an important part of what we do and it's also one of the largest profitability opportunities that we have.

And Michael, maybe to add to that -- I will say since Michael is in his role, we, for a while there, Astec lost its focus on the system business. And I will say we've done a great job bringing that back to life. And Michael, maybe just talk about the pipeline a little bit.

Yes, I would say, I mean, our pipeline of project opportunities is in the hundreds at the moment. And when we talked earlier about the high interest rates, kind of pausing that capital investment by the large producers, well, that's all coming online today. And we've seen that pick up significantly in the latter half of Q4. And Q1 has been strong and it continues into Q2 as well. I mean the pipeline is really growing there.

And typically, when you have a system like that, I mean, you -- that will be in place for 15, 20-plus years and it just produce spare parts every day of the week.

Yes. And that's a great point. I mean, for us, we try not to lose any deals when it comes to the systems, projects that we have. If you're out, you can be out for 10 years or more and you lose that annuity for the parts business along with that. So we've really focused on that. And for us, it's a competitive advantage. I mean our engineering teams, how we ETO, we can do that with some of the digital tools that we have today.

We can do the augmented reality, lay out your plant in your quarry. Before you even place a PO, we can walk you through what that would look like to help you identify traffic patterns and where you want to stockpile and just kind of get your logistics and your quarry in place. So we have a lot of tools to kind of help promote that, and it's a big focus for us at the moment.

All right. Thank you. Brian, I'll direct the next question to you. Do you include any larger CapEx investments in your 2.5% of revenue target or is this primarily maintenance CapEx? And is it reasonable to think you can reach 100% cash conversion within your target period?

Yes. We haven't really included any major significant capital expenditure projects in the 2.5%. That's pretty much the run rate. We've been at 2.4% for the past 3 years. So we've included 2.5% in the model that we've got going forward for the next 5 years. And a lot of that is maintenance and replacement. We are investing in the manufacturing facilities to upgrade them, improve our efficiencies, reduce costs. So the 2.5% is really the major part of that.

We have a few parts-related questions, so I'll summarize those. Does reaching 40% to 50% of revenue from parts and service by 2030 require additional M&A? Or do you have a current plan to attain that mark organically? And what efforts are underway?

Yes. Getting to that target, obviously, is going to take both acquisitions and growing organically. I mentioned earlier, TerraSource was a great opportunity for us to buy a very strong parts and service business. And even with that mix, we think there's a lot more to go after. Michael talked about the thousands of installations that they have and getting to touch every one of those is something that we're busy putting the resources in place. There is not that many pure-play parts businesses that makes 100% sense, but there is quite a few, and we are exploring those.

But from an organic point of view, we see obviously significant opportunity, both in the local market, internationally. And we're very excited about how we're going to use our Signal platform to help us to enable that. And I think if we do that well, our customers will see the benefit with improved run time or uptimes in their operations. And that will just generate in a new cycle of capital spend with us.

All right. Thank you. Another question related to parts. Do you have sufficient infrastructure in place to achieve the 40% parts mix targets or will that require additional investment?

Yes. I will say, in general, we have. We have great capability in shipping and receiving. We have the warehouse capacity. Obviously, if you look at parts, there's a mix between procured parts that we buy and sell and then there's manufactured parts. And in certain of our facilities, we will need investment in capacity. And Michael, maybe you can say something about that just in MS, from a machining point of view, what you've seen and what your team is working on.

Yes. I'll maybe go back to the previous question that asked really about what we're doing today, right? So today, right now, there's people out there that are going and calling on these customers where our assets are located and doing machine audits and things like that to go and try to drive that business today. So we have those asset populations mapped out. We know where they are. We have people in place going out to call on those things.

So that's what we're doing today. If we think about our capacity to fulfill parts, I mean, fill rate for us is one of the major focuses. We look at that on a monthly basis for all of our sites and all of our product portfolios to make sure that we have the parts on the shelf and available at the time the customer needs it. And we find if you do that, you win a lot. And so we're really focused on that.

Yes. And I will also note that in most product lines, from a market share point of view, we have an opportunity to grow our share as in general, it's lower than what we see in some of our capital equipment product lines. So big opportunity and opportunity with existing customers running our equipment. The last thing on parts is, it takes time to develop that.

It's not something that you're just going to get a big order and all of a sudden, you jump to 40%. It is something that you have to work on, on a daily basis. A tool like MyAstec that we have now rolled out on our asphalt plants, soon, it will be on our concrete plants are all ways that we want to make it easy for our customers to do business with us. And if we do that, we feel comfortable that we can grow that to 40% to 50%.

All right. Thank you, Jaco. Next one I'll direct to Brian. How do you envision deploying capital towards acquisitions going forward? Larger deals, smaller bolt-ons, acquisitions, other?

Yes. Look, I think it's going to be a combination of the above. We've talked in the presentation there about having $400 million to $600 million of capital available to allocate towards acquisitions if we maintain our leverage in that 1.5x to 2.5x range. We have a very active business development process within the company and we have a pretty active pipeline of potential targets. We're constantly looking at them. We've talked about the filters and the discipline that we have.

But it's a little hard to predict exactly when those deals will land, how big they'll be. There could be some smaller bolt-on, tuck-in deals along the way that fit nicely with the existing portfolio that we have. And there could be larger transformational ones. But we're very disciplined about the approach that we take to our acquisition. And it will just take -- it will take time for those to land. We're going to stay well within our leverage boundaries, and we'll acquire what we can and what's the best fit for the company going forward.

All right. Thank you, Brian. And I'll stick with you, Brian, on this one. How are you thinking about the level and timing and investment necessary to achieve your international growth goals?

Well, again, the growth goals are both domestic and international. We have a very good international footprint. It represents about 20% of our revenue today. We operate in some very attractive end markets. We'd like to grow internationally. And it really depends on the art of the possible when it comes to acquisitions. We get inbound inquiries all the time with businesses that are for sale, and we look hard at those, but it's about managing risk, about being in the right markets where we see the growth potential. I wouldn't say there was a specific mix between international and growth. The 80-20 domestic international is quite a good mix just now. And that may not change significantly over time. But we will be looking at international targets to under...

Own around the world, sometimes much bigger than what we are. But our opportunity to grow market share is significant internationally. And players, international players like our product. So if we can take our existing product and make it close to the customers, I think there is a significant opportunity for us. So we're excited about that. I think the really good thing is we have a lot of international experience. If I just look at all 4 of us, we've all lived in different countries and worked in different countries. So lots of international experience within our leadership team.

All right. Great. And we have time for just a couple more questions. I'll direct the next one to Michael. In Material Solutions segment, where do you foresee your growth coming from geographically?

We just kind of as we discussed a little bit earlier, I think the North American market for us is still our primary market and it's the most stable market for us. But we have good foundations already set up in Latin America, and we're seeing good growth opportunities there. Brazil for us has been a growth area for us over the last few years.

So Asia, I think with TerraSource, with the energy and the potash and the fertilizer and those types of markets are going to be a growth area for us in the Middle East. I think we have a lot of opportunity. And again, going back to this innovation, imagine, our products today were for North America. And so our new products that were coming out are going to give us more of an international appeal. And so we're excited about what the future looks like there. And like I said, all those are coming online over the next 18 months or so. So we're excited about what the growth opportunities are internationally.

Okay. Great, thank you. Jaco, maybe address this one, please. If you are able to build out the parts enterprise, are you able to leverage the investment by expanding the offering beyond Astec parts and carrying margin attractive non-Astec parts?

Yes, absolutely. If you look at our customer base today, a lot of our customers, especially right now, are growing through industry consolidation. So a lot of acquisitions made by our customers. And that means that they have a mixed fleet of equipment. So customers want to deal with us. And if we provide them better service on Astec equipment with our support, they're looking to us for support on competitive parts as well. And in some of our business areas, we're already doing really well with that.

And just here recently, both Michael and -- in our Infrastructure Solutions side, we've launched dedicated platforms that are specifically focused on competitive parts. And we see a significant opportunity there. And to be quite frank, I think we're doing a really good job. We're supporting our customers. We have great fill rate today. So if a customer needs something, we probably have it. And if we can create that same type of availability from a competitive point of view, we feel that we can attract quite a bit of business there.

All right. Thank you, Jaco. And then this question ties parts and digital together, but can you talk about the customer acceptance rates on MyAstec? And is this accelerating? For new users of MyAstec, what kind of acceleration in your parts are you seeing? And what are you seeing once those customers are fully on board?

Yes. If I remember correctly, we probably now have 400 assets, 400 asphalt plants on MyAstec. So it's growing on a daily basis. We have a team now that just go from customer to customer. We create a digital twin of what the customer have so that we know exactly what that customer wants when they order parts from us. So anything technology related, there is a variance in adoption.

Typically, the younger employees, and we see a lot of that in our industry now, they adapt to this technology really quickly. Somebody who's run an asphalt plant that's used to picking up the phone and say, send me that thing and everybody knows what that thing is, they want to do that. So we're catering for both. But we know long term, it's going to be a great opportunity for us. And obviously, that's a platform that we now started to take to concrete. And it's going to be on the Material Solutions side as well in the future. So yes, a great opportunity for us.

I might just add a little bit to that, Jaco, if you don't mind, on the Signal platform you talked about and the telematics piece there. I mean, really all of this ease of tools that we're trying to put together is really try to reduce friction. If we can be easy and have a good fill rate, we feel pretty confident that we can win in that market segment. So telematics and Signal is going to be a good adder for us for sure.

All right. And Jaco, as we wrap up, are there -- is there a final message you'd like to leave with us?

Yes, absolutely, Steve. First of all, I want to thank everybody for joining us today. And I trust that you've learned a lot about Astec today. And I trust that you see how excited we are about the future of Astec. I think if you look at our long-term targets, taking this business to a 14% or 17% EBITDA business, it's elevating it to a place that we've never been before. And I think we, as a team, we really like the product portfolio that we have. We like the market that we play in. And I think we have a very clear path to get to our 2030 targets.

And I want to remind you of those, obviously, growing our parts and service business, driving operational excellence and then bringing new products to the market that gives our customers the opportunities to stay competitive. And I got away from CONEXPO this year so energized because it was so clear that we are leading the way around that. So the next thing is we are very fortunate that we have a strong balance sheet. And Brian talked about the financial capacity that we have to take advantage of inorganic opportunities. And we have a strong process. We have a strong team around that. And I think over the next few years, we're going to put that money to work in a good way.

And then lastly, we've proven that we can execute. The last 3 years, we've grown and improved our shareholder returns to 74% over the last 3 years. So this team have demonstrated through our Build to Connect way that if we execute, the results will come. And from my side, where I'm sitting today, I hope you guys agree, this journey has just started. Today, we're not only announcing these targets to the market, we're making a commitment. We're making a commitment with our 4,500 employees that we're going to take this business and really put it in a place where it deserves to be. So thank you very much. We appreciate your time.

Thank you, Jaco, and thank you all for joining us today. As we've mentioned previously, our Investor Day materials can be found in the Investor Relations section of the Astec Industries website at www.astecindustries.com. So have a great day. We're adjourned.

Hello, and welcome to the Astec Industries First 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. 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 provide his comments, then Brian will summarize our financial results. For your convenience, a copy of our press release and presentation have been posted on our website under the Investor Relations tab at www.astecindustries.com. Turning to Slide 2. 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.

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. We also refer 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 of other companies. We do not intend these items to be considered in isolation or as a substitute to 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 3. I will turn the call over to Jaco.

Thank you, Steve. Good morning, everyone, and thank you for joining us. On Slide 4, we highlight our first quarter and trailing 12-month performance. Net sales for the quarter increased 20.3% and stood at approximately $1.47 billion on a trailing 12-month basis from a combination of organic growth and inorganic contributions.

Adjusted EBITDA for the quarter was $30.3 million with an adjusted EBITDA margin of 7.6%. On a trailing 12-month basis, adjusted EBITDA and adjusted EBITDA margin were $136 million and 9.2%, respectively.

Positive free cash flow afford us opportunity to invest in organic and inorganic growth opportunities. And in the first quarter, we generated $32.6 million of free cash flow.

Our Infrastructure Solutions segment continues to see healthy demand for asphalt plants and concrete plants and the outlook remains positive. Challenging markets for forestry and mobile paving equipment persisted. However, we are pleased to see a recent uptick in backlog for these products. The total segment backlog increased $37 million, including $17 million contributed by CWMF, which joined Astec on January 1. The backlog for Materials Solutions increased $110 million or 87% from a balance of organic and inorganic contributions. Given the stability of federal funding, healthy state budgets and incremental business from data centers and onshoring activities, we expect positive multiyear demand for Astec products in both segments.

Parts and service sales increased $24 million or 19.7% versus the first quarter prior year and remained at approximately 37% as a percentage of total sales for both periods. Q1 profitability was lower than planned, reflecting a combination of timing effects and near-term cost pressures from tariffs, freight and sales mix.

Overall expenses were also impacted by the ConExpo trade show that occurs once every 3 years. We are, however, encouraged by increased backlog in each segment, and we expect better quarters ahead. As such, we are maintaining our full year 2026 adjusted EBITDA guidance range of $170 million to $190 million.

On Slide 5, we reiterate our dedication to creating value for all stakeholders by delivering consistency, profitability and growth. Driven by our Astec Build to Connect way of doing business, we create consistency through our constant interaction with customers, execution of our operational excellence initiatives and the delivery of superior products to our customers. As our historical adjusted EBITDA margin in the middle column shows, we have increased profitability in each of the last 3 years.

Growth provides scale and scale enhances profitability. We are making strides in growing aftermarket parts and service sales, consummating acquisitions, developing new products and leveraging the technology and digital connectivity we bring to the market. Our plans to grow are well underway, and we are excited about our future.

On Slide 6, we provide an update on the integration of our most recent acquired companies. On July 1, 2025, we acquired TerraSource, which boasts the flagship brands of Gundlach, Jeffrey Rader, Pennsylvania Crusher and Elgin. And effective January 1, 2026, we welcomed the dedicated employees of CWMF to the Astec family.

Both organizations are highly respected and are strong culture fits for Astec. We are off to a great start. Many integration processes are now complete, including the seamless addition of new employees to our payroll, benefits and e-mail systems. We have successfully integrated all finance functions and have aligned all sales territories. Additional implementations completed or in process include product branding and the identification of cross-selling and procurement opportunities.

We are also assessing manufacturing optimization and sharing of best practices and product designs. Our joint teams work well together, and we anticipate many benefits in 2026. Please turn to Slide 7. As you know, Astec is well positioned to capitalize on the robust road construction and aggregate sectors across the United States, where approximately 80% of our revenues are generated. Steady federal funding for U.S. infrastructure provides stability for our customers and in turn, Astec and our stakeholders.

In 2022, Congress passed the 5-year infrastructure bill valued at $347.5 billion. According to the American Road and Transportation Builders Association, $261 billion or 75% of those funds have been allocated as of February 28, 2026. These formula funds for highways and bridges have enabled more than 116 and 500 new products across our country.

Additionally, the total value of state and local government transportation contract awards was 152.2 billion in 2025, which was up from $132.2 billion in 2024. This was a new record. The existing 5-year bill is set to expire on September 30, 2026. The renewal of the bill has bipartisan support. This is evidenced by the stance of key members of the House Transportation and Infrastructure and the Senate Environment and Public Work Committees.

Transportation Secretary, Sean Duffy summarized it well when he said, it is one of the unique spaces in government where we work together because safety is not red or blue issue, it's an American issue.

Congress has recently finalized transportation funding legislation for the rest of fiscal year 2026 and is focused on passing a timely, comprehensive surface transportation reauthorization bill. Sector developments such as these benefit Astec, a company dedicated to the rock to road industry.

Continued improvements in infrastructure supports ongoing demand for our equipment, parts and digital solutions. Our strong reputation in aggregates as well as road and bridge construction drive steady growth.

On Slide 8, we show first quarter implied orders and book to bill ratios. Organic results exclude the impact of the CWMF acquisition and orders prior to the first quarter of 2025 exclude the impacts of the TerraSource acquisition. Implied orders of $397 million compared to a strong fourth quarter of $465 million. On a year-over-year basis, implied orders increased $85 million or 27.2% from a combination of organic and inorganic contributions.

Book to bill ratios in each segment exceeded 100%. On Slide 9, we are pleased to report that our backlog grew to $549 million compared to $403 million for the same period in 2025. This was an overall increase of $146 million or 36%.

The backlog in Infrastructure Solutions segment increased $37 million or 13%, primarily due to increases in asphalt plants, mobile paving and forestry equipment and a $17 million contribution from the newly acquired CWMF.

Backlog in the Materials Solutions segment increased $110 million or 87% over the same period the prior year from a combination of legacy and inorganic contributions. To recap, our backlog is the total amount of confirmed orders supported by signed contracts. We are pleased with the order activity in both of our segments. And now I will turn the call over to our Chief Financial Officer, Brian Harris.

Thank you, Jaco, and good morning. I'll now discuss our consolidated results for the first quarter, provide segment-specific details and review our liquidity and leverage. Our financial performance for the first quarter and on a trailing 12-month basis is presented on Slide 11.

Consolidated net sales for the quarter increased 20.3% compared to the same quarter the prior year and grew 11.5% on a trailing 12-month basis. Most of the growth was attributable to the legacy Materials Solutions business and inorganic growth in both segments. Parts and service represented 36.9% of net sales, which compared to 37.1% in the first quarter of 2025.

As Jaco mentioned, first quarter expenses from the ConExpo trade show and freight, duty and tariff expenses impacted first quarter profitability and margins. As a result, operating adjusted EBITDA declined $4.9 million versus the same period the prior year. For the trailing 12 months, adjusted EBITDA grew $7.7 million or 6%. Adjusted EBITDA margins for the quarter and trailing month period declined by 310 basis points and 50 basis points, respectively. Based on the aforementioned factors, adjusted earnings per share for the quarter were $0.54 compared to $0.91 in the first quarter of 2025, while down only slightly on a trailing 12-month basis.

Moving to our Infrastructure Solutions on Slide 12. Net sales in this segment were $237 million for the first quarter of 2026 compared to $236 million for the same period in 2025. Our newly acquired business performed as expected, while their contributions were partially offset by legacy equipment volumes that measured to a strong performance in the prior year and shortfalls related to timing differences. For the trailing 12-month period, net sales of $858.4 million were down 1.5% compared to the prior year.

Segment operating adjusted EBITDA for the Infrastructure Solutions segment was $34.8 million for the first quarter of 2026 compared to a strong same quarter comparison in 2025. The $8.1 million difference resulted primarily from higher exhibits and promotional costs, along with increases in freight, duty and tariffs.

For the trailing 12-month period, the difference in segment adjusted EBITDA was $12.6 million for a decline of 9.1%. Adjusted EBITDA margin stood at 14.7% for the quarter and the 12-month periods, respectively. Our Materials Solutions segment is shown on Slide 13. We were pleased to see the continued resurgence of our Materials Solutions legacy products during the first quarter. Net sales included organic and inorganic contributions and combined for an increase of $65.9 million or 70.6% over the first quarter in 2025.

For the trailing 12-month period, net sales increased $164.8 million or 36.3%. Segment operating adjusted EBITDA for the Materials Solutions segment was $8.9 million for the first quarter of 2026 compared to $5.2 million for the same period in 2025.

This is an increase of $3.7 million or 71.2%. For the trailing 12 months, operating adjusted EBITDA increased $22.1 million or 59.6%. Increases were primarily due to the impact of net favorable volume and mix and favorable pricing. As with the Infrastructure Solutions segment, higher exhibit and promotional costs, freight, duty and tariffs were partial offsets.

Adjusted EBITDA margin remained at 5.6% for the first quarters of 2025 and 2026, respectively, and grew 140 basis points to 9.6% on a trailing 12-month basis. Moving to Slide 14. Our balance sheet remains strong and is supported by substantial liquidity. At quarter end, we had $73.4 million in cash and cash equivalents, along with $194.1 million in available credit, resulting in total available liquidity of $267.5 million. Including a draw on our revolving credit facility of approximately $70 million for the purchase of CWMF, net debt to adjusted EBITDA stood at approximately 2.3x and is within our target range of 1.5x to 2.5x.

We have the capacity for continued organic and inorganic growth. As we have previously stated, our 2026 outlook entails the following anticipated full year ranges: adjusted EBITDA of $170 million to $190 million, an effective tax rate between 25% and 28% capital expenditures between $40 million and $50 million, depreciation and amortization of $55 million to $65 million and the following quarterly ranges: adjusted SG&A of $70 million to $80 million; interest expense, approximately $7 million.

I will now hand the call back to Jaco.

Slide 15 provides an overview of the key investment highlights for Astec. Astec has earned a reputation as a reliable provider of internationally recognized brands and high-quality solutions for our customers, and we take pride in this legacy. Our team maintains strong engagement with customers.

From recent discussions, we've observed that customers remain optimistic about ongoing activity in the construction market. We are pleased our commitment to operational excellence is delivering results, and we anticipate further improvement going forward. We are confident our initiatives in manufacturing and procurement are boosting efficiency, which will lead to ongoing gains in adjusted EBITDA.

Several exciting opportunities are fueling our growth, including the expansion of our recurring aftermarket parts and service business, which remains a key focus for the Astec team, the development of strong pipeline for innovative products, stability associated with the multiyear federal highway program, along with strong state and local funding for infrastructure projects in the U.S. market. opportunities for growth in both established and emerging international markets and strong inorganic growth opportunities consistent with our financial objectives. As Brian noted, our strong balance sheet gives us flexibility to invest in growth initiatives and manage our leverage efficiently.

Moving on to Slide 16. We are excited about our 2026 Investor Day to be held on May 13, 2026. We invite you to join us for this virtual event, which will begin at 8:00 a.m. Eastern Daylight Time. During the presentation, we will share more about who we are, our next era of growth, industry megatrends, our Build to Connect way of doing business, reasons to invest and our 2030 financial targets. With that, operator, we are ready for questions.

[Operator Instructions] And your first question comes from the line of Steve Ferazani with Sidoti.

Jaco, I guess when I look through the numbers, and we obviously expected the higher costs related to ConExpo. But I mean, the surprising number to me was the gross margin. You covered a couple of reasons for it, and it was particularly saw in the Infrastructure Solutions side. can you sort of give us the buckets on how much of it was inflationary freight pressures versus mix versus timing, et cetera? Or were there any efficiency letdowns in the quarter?

For IS, we definitely saw a different mix this quarter compared to what we saw as a very strong Q1 last year. We did see a lower asphalt plants and parts business during the quarter, which obviously pulled down margins a little bit.

When we look at this business, and we've talked about this a lot, in the past that if you have 1 or 2 plants move out from 1 quarter to the next, it can make a pretty big difference. So if you take a breakdown there, capital and parts, we saw a reduction in both of those. Now tariffs did affect them a little bit to a lesser extent than what we've seen on the MS group.

So we are managing that going forward. I think I mentioned in prior calls that we moved really quickly when it came to pricing when all the tariffs and those came to light. So some of that is maybe just timing catching up. to the pricing. We also have additional pricing that is in the pipeline that should mitigate this in the quarters to come.

Because -- yes, that's -- I mean, probably just the follow-up question, which is given the numbers in Q1, your confidence level to hit those full year targets given the year-over-year difference. If it's pure mix and the timing is you're going to be more plants and parts heavy in 2Q and you got the pricing in, I get it. I'm just trying to see if there's anything else here that should be caused for concern.

No, look, I mean, look at backlog, we're very encouraged by strong backlog. We have another positive book-to-bill quarter, which is always nice. And we have definitely additional pricing in the pipeline. We're continuously evaluating the cost that's coming from these macro trends. And we are also very encouraged about the work our teams are doing to improve our quality cost and our operational efforts. So Steve, we're obviously still confident. That's why we kept the guidance for the full year. And with that strong backlog, we feel that we have the opportunity to achieve that.

So given the -- I mean, we saw the -- how much of the order shift sequentially was seasonality?

From an invoicing point of view or a bookings.

The implied orders, the reported implied orders, if you will, that just seasonality and timing.

Yes. I mean if you look at implied orders for IS, quarter-over-quarter, it was pretty flat. Obviously, we have CWMF in that number now. And on MS quarter-over-quarter, that's where we saw the biggest variance. Now those came on top of Q4, which is typically our strongest bookings quarter. But overall backlog, if you look at the backlog and the book-to-bill ratio, both positive in MS and in IS.

So that's why we like to give the annual guidance and not try to guide on a quarterly basis. We know we're going to have these quarterly fluctuations.

And if you could just touch on synergy realization and where you are with integration of the acquisitions and potential synergy realization over the next multiple quarters?

Yes. We are very happy with the way the integrations are going. From a synergy point of view, the realization is coming through the pipeline now pretty quickly.

I will say the synergies on the CWMF acquisition is coming in faster than what we saw on PSG just because it's so close to home. We do business with a lot of the same suppliers. So we're pretty positive there. But the number that we gave the Street for synergies on PSG, we're very confident that over the next 12 months, we're going to realize those.

And if I could get one more in, in terms of, obviously, you've been generating much stronger parts and aftermarket numbers. Some of that's from the acquisitions. But I know that was a priority when you became CEO, Jaco. Where are you in that progress? And is there a lot more to go? Or do you feel like you've achieved a lot of what you wanted to?

Yes. No, in my mind, there's a lot more to go. During Q1, which is typically a strong parts quarter for us, we were close to 37% parts and service. Next week, we're going to have our Investor Day where we're going to talk about our aspirations there. But we still see significant opportunity to improve that mix.

Your next question comes from the line of Steven Ramsey with Thompson Research Group.

I wanted to start with, obviously, the topic of the day, demand data centers. You cited strong demand from this market. I'm curious if you could ballpark how much of a contributor that was in the quarter and maybe compare that to last year? And then maybe go through your success here, if it's following your customers versus intentional initiatives to capture this demand?

Yes, Steve, good question. The data center demand and actually some of the other demand around chip factories and things like that is obviously something that we are keeping a very close eye on.

If you look at our backlog for the MS group, it's up significantly year-over-year and even during the quarter, it increased nicely.

So Stephen, we see the benefit from that. It is a little bit difficult for us to track it specifically just for data centers or other onshoring. What I will say is, obviously, our customers that provides aggregates to these markets are very close to these markets.

They typically enjoy the business if they were in a 30 or 50-mile radius from where the construction goes. And we enjoy business with all of those customers. So we see cases where customers need to increase output, some cases, as much as 10x what they did in prior years just to deal with the demand that's coming from these data centers.

so we don't have a specific number there, Steven. We are looking at a way to try to track that. But I think if you look at the big aggregate suppliers, they are very outspoken about the effect this have. And obviously, we do business with all of those companies, and that's where we see the benefit. We have seen some uptick in our industrial heating space that is in the infrastructure group, also supplying to data centers, but to a much lesser extent than what we've seen on the Material Solutions side.

Okay. That's very helpful. And I wanted to think about order activity from the perspective of market share and how your orders are comparing to the marketplace? Do you feel like you're tracking the market? Or do you feel like you're gaining share overall or just any pockets of strength within orders?

Yes. So I will say we don't feel that we're losing market share anywhere. Obviously, we have various product lines that is in our portfolio. We feel very good about our product portfolio that we have. And I mean, you joined us on the stage for ConExpo. We were very encouraged by the reaction from the market on all the new products that we showcased at ConExpo. And when you have new products, the positive flow-through typically result in you taking some market share. We have, over the last year or 2 in the Material Solutions side, put a renewed focus on large system sales.

And we are definitely seeing the positive momentum from that product line, and we believe that will continue. Maybe one last comment. The work that we're doing on our digital platform, we are definitely seeing positive reaction from our customer base.

We are talking and growing that business significantly through especially our major customers transitioning to one platform. And in various examples, they've chosen us to be that platform provider. So, and that will have a positive effect in the future on equipment sales. It will have a positive effect on our parts and service sales.

Okay. That's great. And then last one for me. You had very strong free cash flow in the quarter. It appears like much of that was working capital driven. If you zoom out and look forward, can you give a general view on free cash flow conversion out of EBITDA...

Yes, Steve, it's Brian here. Thanks for the question. Yes. Look, I think that's going to continue to be pretty strong. You're right that in the quarter, we did benefit from working capital movement.

Our inventory was actually down quite a bit from the year-end position. A lot of that is in raw material, but raw material and finished goods were both down. We had, Q4 is always a big sales quarter. So we had some good cash collections in Q1 as well.

And I think that trend there's a bit of seasonality in the business. So working capital will move up and down during the course of the year. But I think the underlying efficiency of our working capital, our working capital turns certainly improved in the quarter, and we'd expect to see that continue. We have a pretty strong operating cash flow in the quarter and in the balance of the year. So I think conversion ratio will be good.

[Operator Instructions] your next question comes from the line of David MacGregor with Longbow Research.

I guess my first question was for Brian. And I just wanted to go back to the whole discussion around price cost. And you, I think, were very clear in your prepared remarks about the timing of price traction versus the emerging cost inflation. You use FIFO cost on your balance sheet.

So you've got some pretty good visibility, I guess, on what's coming up here over the next couple of quarters. Can you just talk about what you see coming in the backlog versus the pricing initiatives you have in the marketplace today and how that should play into 2Q or second half? And obviously, you've left the guidance unchanged. So you're expecting some kind of recovery. I'm just trying to get some sense of cadence or timing around those margin dynamics.

Yes. Look, I think if you go back to that Q1 of 2025, we had a gross margin of over 28%. If anything, that was a little bit of an outlier when you look at Q1 historically. And that was because we got ahead of the game, we talked about this before on pricing. And so the tariff situation cost didn't really begin to materialize until April and beyond. So we had a strong comp in Q1 of 2025.

Tariffs kicked in this quarter to a greater extent. We did, we felt cover a lot of the underlying inflation outside of tariffs with our pricing initiatives. we've got more pricing that we can implement here in the balance of the year. And we're very careful about making sure that we try to anticipate those costs when we quote and the price that we quote that's in our backlog should accommodate our anticipated inflation and tariff increases that are coming. Obviously, freight and duties related to higher diesel and hydrocarbon costs are another factor that's certainly affecting things in the short term and have a little bit of uncertainty in the balance of the year, but we're trying very hard to make sure that when we price our products in the market that we're taking that into account.

Right. So just to try to summarize on this, is this something where we're still going to see some year-over-year margin pressure in 2Q before it's fully normalized in the second half?

It's possible, but I think Q2, we're going to emerge with stronger margins in the second quarter than we saw in the first.

Okay. Good. I guess second question, maybe for Jaco. How much of a catalyst do you think a highway bill reauthorization will be to just order releases? And I'm just trying to get a sense of from your conversations with your counterparts in the marketplace, if you sense that people are maybe holding off on purchase orders until there is a bill in place.

Yes, David, I mean I will tell you, obviously, everybody knows that there's a lot going on in the world right now. Our industry has been hit with inflationary pressures around, like Brian just said, fuel prices, tariffs, obviously is something.

But a highway bill, I will say, for smaller players in the market, typically a highway bill gives a lot of confidence because if you're going to buy an asphalt plant, you want to know that there's going to be 3 to 5 years of good funding available.

Our industry has gone through significant customer consolidation, as you guys know. And I think our bigger customers are better managing their CapEx through different cycles and are maybe less prone to cut spend without the clarity of an infrastructure bill. Now what I will say is we are very involved with our trade organizations. We're very involved talking to the respective people involved in creating the highway bill. Just this morning, actually, I received a note from our team at NAPA, the National Asphalt Paving Association. And they think that the first language around the bill could be published as early as the 18th of May. So we're looking forward to that. We know that there's discussions taking place right now.

We know that like we said in the prepared remarks, this is something where government actually works together very well on. So we're positive that we're going to see a bill. Hopefully, it comes sooner than later. The good thing is that funding is available for the full year this year. So our customers are busy. They have a lot of work. A highway bill that's focused on roads and bridges, I think, will be a nice injection for '27 and beyond.

Right. That's great color. Next question I just wanted to ask you around the whole notion of price analytics. And you've been investing in price analytics here. I'm just trying to get a sense of where we are in that journey from a margin development standpoint. Do you feel like you're still in the early innings of the kind of the efficacy of that investment? And I guess, at a point in time where we're really trying to sort of wrestle through price cost here, this is a pretty big part of the story. So I'm just trying to get a sense of where you are in...

I will say from a process point of view, we're probably in the best state that Astec has been in for many years. Now on the flip side is, obviously, the variability right now is big. So our teams are continuously looking at movement in prices that we buy versus what we sell for.

Our procurement team is very actively renegotiating as tariffs change. I mean, as you guys know, there's actually some of the tariffs that should start to lower over coming periods. And getting that thing back from suppliers is a key focus for us.

So David, yes, we feel that we have a good process in place. But the amount of variability that's happening on a daily basis is definitely challenging for the team. But at least we have a team, we have a process and it gives us much better outlook than what we had before.

Okay. Good. I wanted to ask you about Astec Signal. You talked about ConExpo. It was a good reaction there to the new product rollout. Just trying to get a sense of what kind of reaction you got specifically to the Signal platform. And from that reaction, what's your sense of sort of the ability of that technology to accelerate placement cycles?

Yes. We're very excited about that, David. I mean we are investing significantly in further developing the platform. We're investing in additional manufacturing capability. Next time when in Chattanooga, we'll show you that.

We think that this is just starting. We have a really good platform. It's going to provide a lot of benefits both to us and our customers in the future. So overall, reception has been really positive. So we'll talk quite a bit more about Signal during our Investor Day next week as well.

Great. Great. And then last question, Brian, where do you see the balance sheet leverage at year-end based on the guidance you've got right now?

Yes. David, I think if you take the midpoint of the guidance, we should end somewhere around about 1.7 times.

And now I'll turn the call over to Steve Anderson, Senior Vice President of Investor Relations.

Thank you, Rebecca. We appreciate everyone's participation in our conference call this morning, and thank you for your interest in Astec. As today's news release states, the conference call has been recorded. A replay of this conference call will be available through May 20, 2026, an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries website within the next 5 business days. This concludes our call. But as always, feel free to contact me with any additional questions. Thank you. Have a good day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Hello, and welcome to the Astec 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 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 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.astecindustries.com.

Turning to Slide 2. 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 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 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 3, I will turn the call over to Jaco.

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 4, 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 a 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 Solutions segment, while forestry and mobile paving equipment were challenged. During the fourth quarter, we saw an increase in the backlog for forestry and mobile paving equipment, though they remain at the lower end of historical ranges.

The Materials Solutions 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 multiyear demand in the Materials Solutions and Infrastructure Solutions segments in 2026. Parts sales increased 19.7% versus the fourth quarter prior year. For the year, parts 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 5, 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 Astec products and incorporate our name and logo with the TerraSource legacy flagship brands, including Gundlach, Jeffrey Rader, Pennsylvania Crusher and Elgin. Our joint teams are busy expanding the parts 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 Astec 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 1.

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 5-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 5-year bill is set to expire on September 30, 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 multiyear 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 preconstruction levels.

Overall, a healthy compound annual rate of 3.41% is expected for the U.S. 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 7, we show fourth quarter implied orders, which were up $46 million or 11% from the prior quarter in 2024. The Infrastructure Solutions segment showed a 31% increase, while our Material Solutions segment declined slightly by 6.8%. We were pleased with our overall order intake as our book-to-bill ratio was 116% on a consolidated basis. The book-to-bill ratios for the Infrastructure and Material Solutions segments were 115% and 117%, respectively.

Moving to Slide 8. 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 Solutions segment reflects a combination of strong order 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 Solutions 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, Jaco, 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 Solutions 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 parts 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 Solutions 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 2x is well within our target range of 1.5 to 2.5x. 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 Jaco.

Thank you, Brian. Moving to Slide 14. Please mark your calendars to visit us at the 2026 CONEXPO-CON/AGG trade show in Las Vegas from March 3 through the 7. 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 Astec's long-standing 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 multiyear federal and state funding for interstate and highway projects within our core U.S. market. Exploring expansion possibilities in both established and emerging international markets, pursuing inorganic growth with our demonstrated disciplined and focused 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.

[Operator Instructions] Your first question comes from the line of Steve Ferazani with Sidoti.

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 guide. So 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. 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 remains 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 because 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 TerraSource, we see you saw it on the organic side. Can you talk about what's turned that market so quickly?

Yes. Steve, we definitely saw a good order intake on both businesses, the legacy MS and TSG business. I will say TSG also came through really strong during the fourth quarter, and we got the results that we were looking for when we did the business. I will say we talked a lot about the state of inventory in our dealer network. And we have seen and spoke to our dealers this year recently, they have very healthy backlog situations. Now they have very healthy inventory.

For a while there, they didn't necessarily have the right inventory. We worked through all of that. Their rental utilization is really strong. And obviously, some of those inventory started to convert and hence, the bookings on our side. We have also seen a very positive development around data centers that is affecting this business. We see multiple of those super large projects coming through. And our team is very well positioned to enjoy some of that business. And I know our dealers are highly engaged with these large projects. So yes, we are also excited about this. I think our team is ready to take advantage of this and hence, the outlook that we provided for 2026.

Okay. 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.

Yes. 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 bookings stayed pretty strong. And 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.

And you're a little bit closer to this. Any updates on what you think highway funding might move forward this year? And are there any concerns on your end if it slowed down?

Yes. So a couple of things on that. So we were at the National Asphalt Pavement Association just here a couple of weeks ago, and we got an update there from our government affairs teams. And they believe that conversations are on track that we will hear something about an infrastructure bill here in the next couple of months. On a positive note, as we mentioned in our prepared remarks, is that funding for 2026 was actually approved by Congress.

So overall, I think our customers is in a good space. We know that most of them have very good backlogs for the year. So I think our customers are very focused on the long-term possibilities of U.S. infrastructure. And even if the bill doesn't get renewed on time, we feel that there is good momentum, the need for infrastructure is there. And I think our customers are looking beyond just the bill year at the end of the year. Of course, if we do get -- I think it will be very positive for us and for our customers.

Got it. That's helpful. When we -- I want to turn to the guidance, which is certainly on EBITDA well above where we were. I'm trying to think about, 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 parts sales, which are higher margin. 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?

Yes. Steve. So I mean, if you look at the walk from '25 to '26, there's obviously a couple of things that plays a role there. We have full year TSG. We have CWMF, which will basically be work for us for the full year. We've built some synergies in there for those 2 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 we do see some organic growth for this year. And obviously, we baked some of that into the number. If we get a highway bill or a new infrastructure bill, we could probably go to the higher end of the range, but we felt that, that range is something that we feel makes sense this early on in the year.

You haven't talked that much about the numbers around. I know CWMF is much smaller. Can you talk about what that contribution is 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?

Yes. So on CWMF, obviously, we disclosed the sales that they have. And we haven't shared exactly what their profitability is. But Steve, we did mention that it's accretive from day 1. So we are very happy with where they fit their margin profile fit in with the rest of our asphalt business. So you can do that math a little bit. But overall, we feel that they will be accretive day 1.

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 teaming these 2 deals up. The integration has been going really well. And so we have the team available to continue to go down this path. Our liquidity is in a strong position right now. So we're going to continue to look. And there's a lot of opportunities for us still to grow both in the U.S. and internationally. So yes, we're excited about where we are. We're excited about the firepower we have available. And hopefully, we'll find similar companies like TSG and CWMF to add to the team.

Your next question comes from the line of Steven Ramsey with Thompson Research Group.

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 1, if you could talk to their parts contribution and maybe where Astec can help on that front.

Yes. No, absolutely. When I look at the CWMF business, the first thing is the owners, Carmie 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 Astec -- it is amazing to me just how fast our teams have come together here. Obviously, we know this business in and out. 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 Astec 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. And we'll give our customers the support that they deserve and they used to from a legacy Astec point of view. So yes, 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 yes, we feel very confident about what this will look like in a couple of years.

Excellent. And then sticking to acquisition -- 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 rates 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?

Yes. No, Steve, obviously, we're still pretty early in that improvement cycle. One thing that I will say is that 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 3 to 6 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 Astec 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 Astec business. So yes, we're excited about that. Overall, the performance for TerraSource for the 6 months we've owned them have been in line with our expectations. And 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 Astec business. So yes, we're excited about what they're going to bring to the table in the future.

Okay. That's great. And on the Materials Solutions segment, you pointed 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 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 center exposure you have?

Yes. We actually try to calculate that a little bit because I will say the majority of the crushing and screening that's going to be needed 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 start-ups 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're 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 that you're -- is it being filled through dealers primarily? Or is there any direct business?

Yes. No, most of that is through dealers. So our crushing and screening product line goes through dealers. Obviously, there's concrete needed there as well. That goes through a dealer structure. Obviously, any asphalt that is done around data centers that we sell directly to customers. And once again, there -- 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?

Yes. So Stephen, we've been talking about growing our margins 0.7% to 1.5% a year on average. And if you go and look at the last 3 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 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 I think we've shown that we can do it. And 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?

Yes. Yes. 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 Astec is strong. We are unified under our brand. We will have TerraSource on display. Our CWMF team will be part of us. So I think we're going to show really strong, and it's going to give our customer confidence. And I'll be honest with you, I think it's going to give our own team members a boost just to see how well we show up now as we're still a relatively small player in the market. So yes, I'm excited. Hopefully, we'll see you there next week. And hopefully, we'll have great attendance as well.

Your next question comes from the line of David MacGregor with Longbow Research.

Congratulations on the strong results. 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 Astec easier to buy from. And just how should we think about this as a revenue growth facilitator in '26?

Yes. No, David, I mean, that's a great question. And if I look at the state of our industry and some of the larger players 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 it will help us to grow that parts and service business in the future.

And there's a big opportunity here. I will say we're just scratching the surface on what this business can become. And if you go to ConExpo, you will see how this is now integrated in every piece of equipment. And I hate to use the AI term here, but our teams are doing really good things to start to bring more and more opportunities that we can help our customers using the data to make better decisions. And 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.

Yes. 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 expect some follow-through.

Yes, the forestry business was an interesting one in the last 12, 18 months. We've owned the Peterson business now for, I think, 12, 13 years. And this down cycle was probably the worst we've seen since we've owned it. A couple of things there. The paper and pulp industry is a little bit in turmoil. And then thank goodness, the U.S. didn't have much storm damage last year. But obviously, that typically drives quite a bit of business for us. So I am, however, happy to say that the last couple of weeks, we've actually seen some decent order intake there. And that's a business that traditionally when it was running at full cylinders that we -- it made really good profit. 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. I wanted to get you to talk a little bit about the parts business in 2026 as well. And I know that you've put a lot of work in the 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?

Yes. So a couple of things there. We're continuously looking at the way we go to market. One of the platforms that you will see at ConExpo is what we call MyAstec. 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 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 we are continuously strengthening our presence in the market. So with CWMF on board now, we got some part sales guys from them. We've broken up our territories a little bit. So now we have even more feet on the street for parts on asphalt side. And then, of course, the TSG side, big opportunity there. These guys, when we bought them, they basically were in the, I will say, the second or third innings of reviving these historical strong brands. And we are enabling them, focusing on full rate. We're adding salespeople 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?

Yes. Thanks, Dave. Thanks for the question. Yes, 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 working capital management. It's always a little bit tricky to judge exactly where you'll be at the year-end. We shipped 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 our guide on our capital expenditure of $40 million to $50 million next year. We've got a lot of good projects in our plants for operational improvement, improved quality and automation. So we'll be reinvesting some of that free 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. We -- a lot of our ETO business, we don't have finished goods inventory. So it's -- the real opportunity is strengthening that parts availability. And you hit the head on the nail or the nail on the head there by saying that we want to make sure we drive that. And 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 double-digit number that we need to add to fix that. So it's doable within a fairly decent investment.

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

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 Astec. 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 Astec Industries website within the next 5 business days. This concludes our call, but we're happy to connect later if there are additional questions. Thank you all, and have a good day.

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

Hello, and welcome to the Astec Industries Third Quarter 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, everyone. Joining me on today's call are Jaco van der Merwe, our 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.

For your convenience, a copy of our press release and presentation have been posted on our website under the Investor Relations tab at www.astecindustries.com.

Turning to Slide 2. I'll remind you this morning that our discussion will 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 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 of 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 3, I'll turn the call over to Jaco.

Thank you, Steve. Good morning, everyone, and thank you for joining us. We were pleased to post another solid quarter, evidencing our focus on delivering consistent profitability and growth.

Before we start, I would like to thank our combined Astec team as we continue to execute. As a reminder, our results now include TerraSource, which we completed on July 1.

On Slide 4, we present a summary of our third quarter performance. This quarter, we continued our positive momentum with increased net sales, increased adjusted EBITDA and adjusted earnings per share. Adjusted EBITDA was $27.1 million, up $9.7 million or 55.7% from the third quarter of 2024. Adjusted EBITDA margins increased to 7.7%, a gain of 170 basis points, while adjusted earnings per share reached $0.47 for a year-over-year increase of 30.6%.

Our backlog at quarter end was $449.5 million, representing a sequential increase of $68.7 million, $64.1 million of which was due to the addition of TerraSource, while the backlog in our legacy Infrastructure Solutions and Materials Solutions segments both increased slightly. We continue to see customers order closer to their desired delivery dates due to a combination of our shorter lead times and finished goods inventory on hand.

Within the Infrastructure Solutions segment, asphalt plants, concrete plants, heaters and burners delivered strong results and contributed to margin expansion, while forestry and mobile paving equipment faced headwinds due to challenging end market conditions. Parts sales for the Infrastructure Solutions segment were strong, posting a 14.8% quarter-over-quarter increase. The Material Solutions segment includes the successful integration of TerraSource. Backlog in this segment has been stable for the past 5 quarters. We have noticed improved customer sentiment due to the recent movement in interest rates, and our parts sales mix increased 670 basis points with the addition of TerraSource.

Lastly, you may recall, our normal third quarter experiences seasonality as our customers are busy in the field. We were pleased to drive enhanced year-over-year performance, resulting in a 170 basis point increase in our adjusted EBITDA margin, our best since the third quarter of 2017.

On Slide 5, we outlined the third quarter highlights and present our updated outlook for the full year. As previously highlighted, higher net sales contributed to year-over-year increases in adjusted EBITDA margin and adjusted earnings per share, and we posted adjusted ROIC of 12.3%. Given our solid performance through the first 3 quarters of the year, we are raising the lower end of our full year guidance from $123 million to $132 million, while maintaining the upper range at $142 million. Our updated outlook is based on the current operating environment, which I will cover on the next slide.

Slide 6 provides an overview of the current operating environment. There are several external factors affecting the markets in which Astec operates, including potential opportunities as well as challenges. One opportunity is the ongoing funding provided by the current federal highway bill in the United States. Multiyear commitments for federal road and bridge projects provide stability for Astec's customers, many of which have reported substantial backlogs of work. In addition, the demand for aggregate, concrete and asphalt use and other public residential and nonresidential construction projects is encouraging. All of these are good examples of projects requiring materials processed with the equipment we build at Astec.

Astec's recent acquisition of TerraSource demonstrates the potential of further inorganic growth within our disciplined financial framework. And the One Big Beautiful Bill enacted in the United States earlier this year extended expiring provisions from the 2017 Tax Cuts and Jobs Act. The reinstated business tax benefits such as accelerated depreciation and R&D tax credits are expected to benefit many of our customers.

Lastly, the increased mining activity of rare earth minerals in the United States presents an opportunity for Astec's Material Solutions products as minerals are embedded in ore bodies, which must be crushed, screened and conveyed. Current challenges include fluctuations in tariffs and any related uncertainty they create. We expect that last week's Federal Open Market Committee decision to reduce interest rates will further improve customer sentiment.

On Slide 7, we remind you that Astec operates in favorable markets. Within the United States, contract awards from state and local governments serve as key predictors of upcoming construction projects. Those projects typically break ground within 30 to 60 days of being awarded, although the actual construction time line can extend over several years based on the project size and complexity.

As of August 30, 2025, approximately $230 billion or 66% of Infrastructure Investment and Jobs Act funds have been committed with $150 billion or 44% already allocated. ARPA reports that obligation rates remain strong, indicating that significant funding will continue to flow even after 2026. The current surface transportation law is set to expire on October 1, 2026. On September 18, Astec team members participated in Hill Days, cosponsored by the National Asphalt Paving Association; National Stone, Sand and Gravel Association; and National Ready-Mix Concrete Association. After the event, they confirmed federal transportation leaders remain optimistic about passing a new transportation bill next year and are committed to securing presidential approval well before the deadline. These developments are promising for Astec. As a specialized provider in the Rock to Road sector, ongoing infrastructure upgrades fuel stable, long-term demand for our capital equipment, aftermarket parts and digital solutions.

Our strong reputation in the infrastructure market, especially in aggregates and the road and bridge construction, positions us well for the future.

Slide 8 provides a summary of how we actively manage the ongoing shift in the current tariff landscape. Astec maintains a proactive approach to minimizing tariff effects. For example, our OneAstec procurement team requires suppliers to justify any price increases, and we are actively negotiating every purchase. We have also implemented new pricing measures when necessary and we'll continue to evaluate this situation to safeguard our margins. We are consistently pursuing dual sourcing and alternative sourcing options and are working to realign our supply chain, including reshoring to the U.S. when possible.

Ongoing management of our manufacturing footprint is also a priority. So far, our mitigation strategies have neutralized tariff-related impacts on our margins. These efforts are evident in our results, and we anticipate our initiatives will remain effective throughout the rest of the year. As you know, the tariff environment is fluid and creates an element of uncertainty for future periods. That said, we will continue to be proactive with our mitigation strategy in order to neutralize the impact of tariffs and to limit potential impacts to manufacturing inefficiencies. As such, our revised full year adjusted EBITDA guidance noted on Slide 5 reflects our current perspective on our operating environment, including the impact of tariffs.

Slide 9 provides an update on our TerraSource integration. I could not be more pleased with how our team members are working together. Step 1 of onboarding of TerraSource employees was to ensure a seamless transition to the Astec payroll and benefit system. That has been completed successfully. Additional steps are listed on the slide and include harvesting synergies, including procurement opportunities.

We have also made investments in high-turn inventory to further drive enhanced parts fill rates. As a reminder, we define fill rates as having the part ready to ship within 24 hours of receiving the order. Although it has only been a few months since welcoming TerraSource to the Astec family, our combined team is already in the process of adding to our parts sales force, aligning our sales channel and cross-selling efforts, developing and funding new products and identifying factory utilization opportunities. We expect most synergies to show up in 2026 and are very satisfied with our progress thus far.

On Slide 10, we show our historical backlog information. On a sequential basis, backlog continued to evidence stability in the Infrastructure Solutions and legacy Material Solutions segment. TerraSource contributed $64.1 million to Material Solutions and was the primary growth driver to our consolidated backlog. The backlog in our Infrastructure Solutions segment reflects a combination of strong invoicing for asphalt and concrete plants, partially offset by weaker demand for mobile paving and forestry equipment.

In the Materials Solutions segment, backlog net of TerraSource remained steady at approximately $126 million. Looking ahead, we anticipate growing demand for Material Solutions products in the upcoming quarters.

Slide 11 is presented net of TerraSource and shows sequential and quarter-over-quarter increases in consolidated implied orders and our book-to-bill ratios. Both segments contributed to the quarter-over-quarter improvement, while the Infrastructure Solutions segment drove the sequential increase on a consolidated basis. We are pleased to show book-to-bill exceeded 100% in both the Infrastructure Solutions and Materials Solutions segments.

With that, I'll hand the call over to Brian, who will share further insights into our third quarter financial performance.

Thank you, Jaco, and good morning, everyone. The next 3 slides provide both Q3 and trailing 12-month data, which we feel provide an excellent view of the underlying financial trends in our business.

Turning to our consolidated financial results presented on Slide 13. Net sales increased by 20.1%, which was due to strong demand for asphalt and concrete plants and the inclusion of TerraSource. Demand for forestry and mobile paving equipment continues to be soft due to a relatively high interest rate environment and an extended global slowdown in end markets.

Over the trailing 12-month period, net sales increased 6.7%. We are pleased to report an adjusted EBITDA of $27.1 million for the third quarter, up 55.7% from $17.4 million in the same period last year. Looking at the trailing 12 months, adjusted EBITDA margin grew 49%.

Our third quarter adjusted EBITDA margin grew 170 basis points over the same period in 2024. And on a trailing 12-month basis, adjusted EBITDA margin grew 300 basis points to 10.5%.

Adjusted earnings per share for the third quarter were $0.47, a 30.6% increase over the $0.36 reported in Q3 '24, while adjusted earnings per share grew by 48.7% on a trailing 12-month basis.

Turning to the Infrastructure Solutions segment outlined on Slide 14. The third quarter came in strong with a 17.1% increase over the third quarter in 2024. Growth was generated in both equipment and parts sales for the quarter. Solid demand for asphalt and concrete plants helped drive increased domestic sales, while international sales were stable. However, forestry and paving remain somewhat depressed. Net sales for the trailing 12-month period grew 8.8%. Segment operating adjusted EBITDA and EBITDA margin grew quarter-over-quarter and on a trailing 12-month basis. Our adjusted operating margin for the Infrastructure Solutions segment grew to 12.4% when compared to the same period in 2024 for an increase of 290 basis points. Segment operating adjusted EBITDA margin on a trailing 12-month basis reached an impressive 17.2% versus 12.7% in 2024. The 450 basis point improvement was primarily the result of strategic pricing, operational excellence initiatives and effective expense management.

Moving on to Slide 15. As previously mentioned, the Materials Solutions segment now includes TerraSource. Net sales for the quarter increased $30.5 million or 24.1%. Adjusted EBITDA for the segment increased 6.2%. However, adjusted EBITDA margin showed a 170 basis point decline due to elevated profitability in the third quarter of 2024, stemming from the onetime release of $1.9 million of litigation reserves. On a trailing 12-month basis, increases were seen in net sales, segment operating adjusted EBITDA and segment operating adjusted EBITDA margin.

As shown on Slide 16, our balance sheet remains strong, supported by substantial liquidity. At quarter end, we held $67.3 million in cash and cash equivalents and had $244.8 million in available credit, resulting in total liquidity of $312.1 million. Our net debt to adjusted EBITDA of approximately 2x is well within our target range of 1.5 to 2.5x. This provides us with the capacity for continued organic and inorganic growth.

For modeling purposes, you should take into account the following full year ranges: adjusted EBITDA of $132 million to $142 million, effective tax rate between 24% and 27%, capital expenditures between $25 million and $35 million. And the following ranges for Q4: adjusted SG&A of $65 million to $73 million, depreciation and amortization of $37 million to $42 million.

And I'll now hand the call back to Jaco.

On Slide 17, we provide a glimpse of our recently released 2025 Corporate Sustainability Report. As you will see in the report, we are committed to innovate our products and technologies to help our customers achieve their efficiency and cost reduction goals through sustainability investments, respect our natural resources, ensure the safety and well-being of our employees and uphold employee satisfaction by demonstrating our devotion to our core values.

Slide 18 provides an overview of the key investment highlights for Astec. We take pride in Astec's ongoing reputation as a reliable provider of world-renowned brands and top-tier solutions for our customers. We continue to maintain a high level of engagement with our customers. While they remain somewhat cautious, their outlook is positive and customers are optimistic about the ongoing activity in the construction markets.

We are also proud that our focus on operational excellence is yielding results with many benefits still ahead. Efforts in manufacturing and procurement are enhancing efficiency, and we are seeing favorable trends in adjusted EBITDA. Our business is driven by several exciting growth opportunities, including expanding our reoccurring aftermarket parts business, which remains a key focus for the Astec team, advancing our strong pipeline of new products. Please mark your calendars to visit the Astec booth at the 2026 ConExpo-Con/AGG trade show in Las Vegas from March 3 through March 7, 2026, where we will showcase various new products.

The reliability offered by multiyear federal and state funding for interstate and highway projects in our primary market, the United States, multiple opportunity for expansion in both existing and emerging international markets, strategic inorganic growth prospects that align with our financial objectives. As Brian mentioned, our solid balance sheet gives us flexibility to support growth initiatives and effectively manage our leverage.

With that, operator, we are ready for questions.

[Operator Instructions] Your first question comes from Steve Ferazani with Sidoti.

Appreciate the detail on the call this morning. First one, general question -- first general question in terms of your raising the low end of guidance. Was there any worries you saw that sort of dissipated in 3Q? Or are you seeing something particularly better in 4Q that gave you the confidence to raise that low end?

Yes. No, Steve, good question. As a reminder, when we did the Q2 earnings call, we spoke about the fact that we still had quite a bit of gaps in our capacity to fill at the end of -- or when we had the Q2 call. Fortunately, for us, that filled in very nicely. And with our short lead times, our teams have the ability to deliver those in Q4. So we have the capital orders to deliver Q4 sales that we need to deliver that new range.

When I look at your book-to-bill and order rates in 3Q, at least even the last 2 years, there was a change this quarter versus the last 2 years in terms of orders and even in IS. Did something change this year? Because typically, this has been seasonally weaker for the last 2 years?

Yes. So I don't think we've noticed anything specific. We definitely saw a later or a different booking process from our customers. As I said, if we look at where we were in Q2, we still had substantial gaps in our capacity to fill. And obviously, that came through during the third quarter.

Steve, I think the other thing is we are getting to the tail end of what I want to say, the uncertainty around tariffs. And I think customers are just getting to a point where they know they need to make a decision. And obviously, we were the beneficiaries of that.

That's helpful. The one to me was a negative surprise that even if I back out the litigation expense from the year ago MS, margins still would have been somewhat flat. Our expectation was TerraSource would have -- would be accretive to margins. Can you tell us if they were in 3Q and your expectation on the timing of synergy realization now that you're working through the integration?

Yes. No, absolutely. So first of all, I want to say we could not be happier with what we're seeing of the TerraSource team now that they're part of our organization. We are excited about the work that our legacy team is doing. Obviously, last year, we had that one release that gave the benefit to that. Quarter-over-quarter, obviously, you will always have some swing, Steve. We are pretty excited about the underlying trends that we're seeing. And I think you will see the margins come.

Remember, this was the first quarter that TerraSource was on our side. The legacy MSE sales was a little bit lower compared to last year. So obviously, that has an effect. But it's early days. We're excited about the work the team is doing. The TerraSource margins were accretive. So there's nothing that we have seen that raises our eyebrows now that we own them for the last 3 months. So yes, I think in the next coming quarters, the full effect of TerraSource will show up.

And your expectation, any changes in what you expect can be realized synergies and the timing of realizing them?

No. No, we have good visibility of the synergies that we communicated during the deal announcements. Some of the synergies are realized already. So we've seen some benefit. Obviously, they will flow through over a 12-month period. And we expect to see quite a bit of the synergies next year already.

Okay. You may not have this number, but any -- the breakdown of how much parts as a percentage of revenue per segment now? I'm assuming it's much -- it will now be at least higher on the MS side.

Yes. So we -- I think we mentioned that in the release that MS have jumped about 670 basis points. So as a company now, I think we bounced to 32% or so. So I think that number is going to consistently pick up as it reflects in our rolling numbers. So it's definitely having the effect that we were hoping for, Steve.

Great. And if I could get one more in, in terms of tariff uncertainty on your end, given the addition of the Section 232 tariffs. Is that getting a little bit harder to offset or no changes?

Yes. I mean it's complicated. I can tell you that. But we feel that we have a very good understanding of it. Our raised lower end of the range takes into consideration how we think we can deal with the tariff, Steve. So one thing I will say is that the flow-through is real. And the actions that our teams have taken on pricing and taken on looking for alternative supplies have really positioned us well to mitigate the tariff increases. And I think we're pretty well positioned for next year.

[Operator Instructions] your next question comes from Steven Ramsey with Thompson Research Group.

I wanted to start with the parts results within the Infrastructure segment. Good results there. Can you maybe parse out a bit the volume and price contribution to that 15% growth and maybe kind of the push-pull dynamics there of better internal execution and reaching customers versus just natural demand that comes from the plants?

Yes. Yes. No, good question, Steven. One thing I will say is we've been working on driving our parts business for quite a while now. And those efforts are starting to pay off. So obviously, that's a big piece of that growth. I mean, Brian, pricing-wise, I don't think we have broken that out specifically. But I will say, if I look at it, we've basically adjusted for inflation over the last year or so. And then obviously, Steven, where we have seen tariff increases coming through, that have been reflected. And overall, I will say probably 4% to 5% cost of goods sold effect that show up partially in that number. But I will say the majority of that is due to the work the teams are doing to grow that parts business.

Okay. That's excellent. That's helpful. And you called out asphalt and concrete plant strength in the quarter. On a percentage basis, was one a bigger driver than another?

No, I won't say that. We're very fortunate that both those segments are very strong. So no, I will not say that. Obviously, asphalt plant sales, when you sell an asphalt plant, depending on the size, it can be $8 million, $10 million. So we just have one additional one, and it makes a big swing in the quarter. So -- but no, I don't think there's a trend more to the one versus the other.

Understood. Understood. Flipping to the Materials segment, you've talked about the dealer inventory dynamic. Can you maybe share the incremental changes that you're seeing there? And is this something that you expect to be washed out in the fourth quarter? Or is this more of a 2026 dynamic? And then maybe one more that would be good to get insight on is TerraSource within the dealer channel, are they experiencing the same dynamics?

Yes. Yes. So let's talk legacy first. We've now said for the last 2 quarters, we've actually, I think, reached a period where our dealer inventory for MS is pretty healthy. The type of inventory that our dealers have are the right level. We've actually started to see some dealer stocking again. So I think we're in a pretty good position, Steven, when it comes to dealer inventory. Obviously, there's always some movements that takes place dealer to dealer. But we're in pretty good shape.

And the other thing that I'm excited about in the MS side is, historically, we were very strong in our system sales. So a system is where you put a significant amount of equipment together and provide a customer a whole solution. And there was a period in time where Astec lost the focus on that. We brought that focus back here in the last 2, 3 years. And that is starting to show up as well. And obviously, that is something that doesn't necessarily get consumed out of inventory. So you have more of a flow-through effect from us to the dealer. So as that business starts to flow through, I think the dependency we have on dealer inventory for the pure mobile units should become less and less.

On the second question, TSG. So TSG has a channel that uses, I want to say, all the channels possible. They sell direct in some areas. They do go through dealers in some areas. We have some agents in some areas. So we're busy working through that. There's a possibility that some of their sales in the future will go through our dealer channel. But the product is a little bit different. It's more project related. So I don't expect besides spare parts that our dealers will stock a lot of TerraSource equipment going forward.

Okay. Okay. That's helpful. I wanted to get some more details on the fill rates with TerraSource that you talked about synergies coming in, in 2026 for that business and their parts fill rates, clearly a lot of upside for them to reach core Astec levels. Can you talk about the timing on how you expect TerraSource fill rates to improve over the coming quarters and years?

Yes, absolutely. I mean that's an effort that started day 1. As you know, I'm personally very passionate about that and fortunately, the TerraSource team as well. They know having parts on the shelf makes a big difference. There's a big gap between what they have as performance versus what we are having today. And if I look back for Astec, it took us 18 to 24 months to get to where we are today. I think this is going to be a lot faster than that. So I will say within the next 12 months, we're going to get them very close to our fill rates. And obviously, we believe that, that will have a good effect on their performance going forward. So -- the team is engaged. The work has started. We've identified where to go, and I will continue to keep the market updated on the performance there.

Excellent. That's good. Last one for me. You called out rare earth mining as a potential demand catalyst. Have you seen any of this to date or in conversations? And are there internal moves you're making within product development or within channels to take advantage of this?

Yes. Yes, we actually received our first orders. One of the companies has been in the news a lot lately because the government took a stake in that. We got a nice order from them just here recently. So it's real, Steven, it's coming. Investments are happening. And the good thing for us is our equipment can do the work today. So there's not a need for a major redevelopment that needs to take place. So our dealer network are very entrepreneurial. So they are very aware of all the opportunities that's coming up in their markets, and they're taking advantage of that. And we are seeing it. So it's not just talk, it's actually orders.

That concludes our Q&A session. I'll now turn the conference back over to Mr. Anderson for closing remarks.

Thank you, Carla. We do appreciate your participation in our conference call this morning, and thank you for your interest in Astec. As today's news release states, this conference call has been recorded. A replay of the conference call will be available through November 19, 2025, and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries website within the next 5 business days. This concludes our call. I'm happy to connect later if you have additional questions. Thank you all. Have a good day.

This concludes today's conference call. You may now disconnect.

Hello, and welcome to the Astec Industries Second Quarter 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, everyone. Joining me on today's call are Jaco van der Merwe, 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.

For your convenience, a copy of our press release and presentation have been posted on our website under the Astec Investor Relations tab at www.astecindustries.com.

Turning to Slide 2, 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 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 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, I will turn the call over to Jaco.

Thank you, Steve. Good morning, everyone, and thank you for joining us. I'm excited to report the Astec team delivered another strong quarter and completed the previously announced TerraSource acquisition to drive future growth. Our team continues to progress as we execute our strategic initiatives to deliver consistency, profitability and growth. Thanks to the 4,500-plus team members around the world for their dedication and engagement.

On Slide 4, we provide a second quarter overview. Our results for the quarter were solid for net sales, and we generated increased profitability, as evidenced by our adjusted EBITDA and adjusted earnings per share. Adjusted EBITDA of $33.7 million increased $6.1 million or 22.1% over the second quarter of 2024. Adjusted EBITDA margin of 10.2% increased 220 basis points and adjusted earnings per share were strong at $0.88, a 44.3% increase over the second quarter of 2024.

Backlog stood at $380.8 million and declined sequentially by 5.4%. This was primarily due to a combination of shorter lead times that allowed customers to place orders closer to the desired delivery dates, and challenging market conditions for forestry and mobile paving products in the Infrastructure Solutions segment. We continue to see healthy demand for asphalt and concrete plants in the Infrastructure Solutions segment.

Net sales in Materials Solutions remained relatively stable at $125.7 million, despite being challenged by the impact of high interest rates. We were especially pleased to see sequential and year-over-year increases in applied orders. Initial signs of dealer inventory replenishment were seen and rental utilization remained strong.

We expect continued progress in our Materials Solutions segment in the second half of the year. Another quarter of positive free cash flow was driven by increased profitability and continued focus on working capital management.

On Slide 5, we provide second quarter highlights and our full year outlook. As discussed, we generated strong adjusted earnings per share on solid net sales. We were pleased to achieve double-digit adjusted EBITDA margin and return on invested capital of 10.2% and 11.6%, respectively. Return on invested capital has improved 61.1% since the second quarter of 2024.

Based on progress made in the first half, we are raising the lower end of our full year guidance from $105 million to $110 million on our core business, while keeping the top end unchanged at $125 million.

Our updated full year guidance also reflects the expected second half contributions by TerraSource. We expect TerraSource to provide adjusted EBITDA in the $13 million to $17 million range, bringing our consolidated guidance expectations for adjusted EBITDA to a range of $123 million to $142 million for the full year. This range is based on the current state of the operating environment that I will cover on Slide 8.

Continuing the TerraSource discussion on Slide 6. We were pleased to announce the completion of the TerraSource acquisition on July 1st. TerraSource is a market-leading manufacturer of material processing equipment and related aftermarket parts, serving complementary crushing, screening and separation markets. This presents a unique opportunity for Astec as it will be accretive from day 1 with aftermarket part sales representing approximately 63% of total revenue and 80% of gross margin.

On Slide 7, we highlight the TerraSource integration and synergy focus for the second half of this year. We feel very good about the way this process has started. Thank you to both teams for all the hard work over the last 90 days. Collaboration among our combined team members has been strong. I'm also glad to report that our Oracle Human Resource system allowed us to integrate the payroll and onboarding process seamlessly from day 1, [ identified ] various procurement and other synergies and are off to a good start towards realizing the savings.

Further, increasing parts and service revenue is a major opportunity, and we are focused on optimizing parts fill rates and increasing our feet on the street for further growth. Other opportunities include sales channel alignment and capitalizing on cross-selling, new product development, and factory utilization.

Slide 8 reflects the current operating environment. Currently, there are a number of external tailwinds and headwinds in the market in which we operate. Among opportunities is the status of federal highway funding in the United States. Multiyear core levels of work on federal roads and bridge projects provide stability for many Astec customers. As a result, customer sentiment is generally positive as many have reported having large backlogs of work.

As evidenced by our recent acquisition of TerraSource, we have current and future opportunities to grow inorganically. The search and data center infrastructure is another opportunity for Astec customers. These huge construction projects require large amounts of concrete for foundations, walls, sidewalks and curbs and asphalt pavement. All of these contain construction materials that have been processed through the type of equipment Astec make.

On July 4, 2025, the one big beautiful bill was enacted into law in the United States. This bill extends many expiring provisions of the 2017 Tax Cuts and Job Act and restores favorable tax treatment for certain business provisions, including accelerated depreciation and R&D tax credits.

Challenges currently being faced include the ever-changing tariff environment and high interest rates, which present headwinds to equipment dealers, end users, and contribute to a soft market for forestry and mobile paving equipment. We rarely mentioned weather as a challenge. However, this year could be an exception. May was the wettest month on record in many states. In our hometown of Chattanooga, for example, the rainfall in May broke a record previously set in 1929. Excessive amounts of rain caused widespread delays in processing aggregates and in construction projects.

Moving to Slide 9. As we have shared previously, approximately 80% of Astec's revenues are generated in the United States, which is a favorable market. America's infrastructure is foundational to our national economy, global competitiveness and our quality of life.

Domestically, state and local government contract awards are a leading indicator of future construction activity expected to break ground within 30 to 60 days. Depending on the size and scope of the project, actual construction work often takes place over a multiyear period. According to the American Road and Transportation Association, ARPA, Economics Team and Dodge Data Analytics, the total value of state and local government transportation contract awards increased 9%, growing to $47.8 billion through April 2025 compared to $43.8 billion through April of 2024.

Approximately $202 billion or 58% of the Infrastructure Investment and Job Act funds have been committed as of April 2025 and $124 billion or 36% has been funded. According to ARPA, the obligation rates are on track and a lot more money will be spent even after 2026.

The current surface transportation law expires October 1, 2026. During the Transportation Construction Coalition Fly-In on May 6 through May 8, ARPA reported Washington transportation policymakers were optimistic about the prospects for enactment of a new surface transportation bill next year and have pledged to bring the new bill for President Trump's signature well before the current one expires.

On July 17th, U.S. Transportation Secretary, Sean Duffy, spoke at an 'America Is Building Again' infrastructure event. Secretary Duffy announced that the priority for the House of Representatives is the Surface Transportation Reauthorization and noted the house theme for the Surface Transportation Reauthorization is 'America Builds'. Their goals are to get money to the states efficiently and cut the amount of red tape through permitting reform.

These messages bode well for Astec as we are a niche industry player focused on the rock to road sector. Needed improvements to our infrastructure provide long-term stable demand for our equipment, aftermarket parts and digital solutions. We have strong brand recognition in the infrastructure sector, which is largely comprised of aggregates and the road and bridge construction.

Turning to Slide 10. Thus far, we have successfully navigated the ever-changing tariff environment. To date, mitigation efforts have offset tariff impacts to cost of goods, which have been in the 2% to 3% range. This is reflected in our second quarter results, and we expect our actions will continue to be effective for the remainder of the year. Astec has ongoing proactive strategies to mitigate the impact of tariffs. Our One Astec procurement team is requiring suppliers to provide support for any price increases, and we are actively negotiating all purchases. We have initiated additional pricing action, and we'll continue to assess the situation to protect margins.

We continue to practice dual sourcing and resourcing. We are managing supply chain alignment and will [ reshore ] to the United States when feasible. We are continually managing our manufacturing footprint. Our updated full year adjusted EBITDA guidance includes our current view of the tariff environment.

On Slide 11, we show our backlog information. Our shorter production lead times and part fill rates have allowed customers to place orders closer to the desired delivery dates. We have also experienced variability in the ordering patterns from customers due to macroeconomic factors mentioned on Slide 8.

Current backlog levels in the Infrastructure Solutions segment are a combination of healthy invoicing for asphalt and concrete plants, dealers ordering equipment closer to desired shipment dates, and softness in our orders for mobile paving products and the markets for forestry products.

In our Materials Solutions segment, backlog has stabilized in the $125 million range for the past 4 quarters, and we expect demand for Materials Solutions products to gain momentum in the second half of the year.

Our implied orders and book-to-bill trends are shown on Slide 12. Implied orders on a consolidated basis have stayed above $300 million for 4 of the last 5 quarters. In Q2, a decline in forestry and mobile paving orders in the Infrastructure Solutions segment was significantly offset by an increase in implied orders in the Materials Solutions segment. The Materials Solutions segment has increased implied orders for 4 consecutive quarters and posted increases on both a sequential and quarter-over-quarter basis.

The consolidated book-to-bill ratio declined slightly from 95% to 93% as an increase in Infrastructure Solutions was offset by a drop from a strong 113% to 99% in Materials Solutions.

Though some degree of uncertainty remains in the broader economic environment, we are focused on maintaining discipline and taking the necessary actions to achieve our goals.

With that, I will now turn the call over to Brian to provide additional comments on our second quarter financial results.

Thank you, Jaco, and good morning. Our consolidated financial results are highlighted on Slide 14. Net sales decreased 4.4% as healthy demand for asphalt and concrete plants was offset by declines in the demand for forestry and mobile paving equipment in the Infrastructure Solutions segment.

Materials Solutions sales increased slightly to $125.7 million, and our consolidated aftermarket parts sales grew 2.9%. We were pleased to generate an adjusted EBITDA of $33.7 million in the second quarter, which compared to $27.6 million in the second quarter of last year. Adjusted EBITDA margin reached 10.2%, a 220 basis point increase over the prior year. Adjusted EBITDA and adjusted EBITDA margins benefited from pricing and mix, as evidenced by a 330 basis point increase in gross margin.

Adjusted earnings per share of $0.88 in the second quarter compared favorably to $0.61 of earnings per share posted in Q2 2024 for an increase of 44.3%.

Moving on to the Infrastructure Solutions segment shown on Slide 15. As just discussed, equipment sales in the quarter were lower as healthy demand for asphalt and concrete plants was offset by weak demand for forestry and mobile paving equipment. Aftermarket parts increased $4.8 million or 9.4% compared to the second quarter of 2024.

Segment operating adjusted EBITDA dollars and adjusted EBITDA margins were positively affected by pricing, operational excellence initiatives and expense management. Adjusted EBITDA of $32.2 million was an 18.4% increase over $27.2 million in the prior year. Adjusted EBITDA margin was 15.7% compared to 12.3% in the second quarter of 2024, for an increase of 340 basis points.

The Material Solutions segment is shown on Slide 16. Equipment sales for the quarter increased $4.1 million or 4.9%, while aftermarket parts sales declined slightly by $2.2 million or 5.9%. Similar to the Infrastructure Solutions segment, Materials Solutions margins were positively affected by pricing, operational excellence initiatives and expense management. This was evidenced by a 39.2% increase in adjusted EBITDA to $14.2 million from $10.2 million in the prior year and a 310 basis point increase in adjusted EBITDA margin to 11.3% from 8.2% for the same quarter in 2024.

Moving on to the second quarter adjusted EBITDA bridge on Slide 17. We were pleased to report adjusted EBITDA of $33.7 million, an increase of $6.1 million or 22.1% over the second quarter of 2024. Favorable pricing, lower steel and freight costs and the proactive efforts by our OneASTEC procurement team helped manage inflation, the impact of tariffs and modest manufacturing and other period costs.

On Slide 18, you can see we maintain a strong balance sheet with ample liquidity. We ended the quarter with a cash and cash equivalents of $87.8 million, available credit of $159.8 million for total available liquidity of $247.6 million. Our free cash flow in the quarter of $9 million was 53.9% of net income. These results were driven by profitable sales and sound working capital management.

In connection with the closing of the TerraSource acquisition, we entered into a new credit agreement, providing for: one, a revolving credit facility, a term loan facility, a swing line facility and a letter of credit facility in an initial aggregate amount of up to $600 million; and two, an incremental facilities limit in an aggregate amount not to exceed $150 million.

Our team has done an excellent job of managing liquidity as we have reshaped the balance sheet. We expect net leverage below 2x at the end of 2025 on a pro forma basis and expect net leverage to decline further in 2026, providing availability for further inorganic growth.

I will now turn the call back to Jaco.

Thank you, Brian. On Slide 19, we summarize our Astec investment highlights. We are proud that Astec continues to be a trusted source of globally recognized brands and high-quality solutions for our customers.

We consistently maintain an ongoing high level of customer interaction. At the recent National Asphalt Pavement Association midyear meeting in July, we were pleased to hear that though customers continue to remain somewhat cautious, they displayed favorable sentiment and are encouraged by the level of activity in construction markets. We are also pleased that our operational excellence efforts continue to gain traction, and we have many of the benefits yet to come.

Manufacturing and procurement efforts are driving efficiencies, and we are seeing positive adjusted EBITDA trends. Our business has several exciting growth drivers, including growing our recurring aftermarket parts business. This is an ongoing major initiative for the Astec team, our robust new product pipeline, the stability provided by multiyear federal and state funding for interstates and highways in our major markets, the United States, numerous expansion opportunities in current and future international markets, inorganic growth opportunities that are strategically aligned to meet our financial criteria. And as Brian mentioned, we have a strong balance sheet that provides ample liquidity to fund growth and manage leverage.

With that, operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Steve Ferazani from Sidoti

Appreciate all the detail on the call. I did want to dig a little bit deeper on the year-over-year margin improvement. Just trying to get a better sense of how much that is pricing versus mix? Because, I mean, when I look at the year-over-year incremental margins in both segments, they're pretty impressive.

Yes, absolutely. We are very proud of the work our teams have done on margin expansion here. I will say our OneASTEC procurement team's efforts are one of the main contributors here. As you could see in the EBITDA bridge, the team have been very successful to navigate inflationary pressures, tariff pressures and have helped us to further improve our margins.

And then the second contributor here, our operational excellence efforts are flowing through now. We've seen this now for a couple of quarters. And especially on the Materials Solutions side, as our factories are filling up, we expect that margin profile to further improve in the future. So, just a great work done by our procurement teams, our OpEx teams. And, of course, we have been very proactive looking at our market pricing to mitigate any potential tariff effects.

And did you see -- did you provide what was the EPS drag from tariffs in the quarter? Do you have a number?

Yes. I think we've said in the call that we were pretty successful mitigating any effect during the quarter. So, we did not provide a number, Steve, because we feel like that we did a pretty good job eliminating most of the effect of tariffs.

Okay. Perfect. And then can you just talk a little bit about the market differences between what you're seeing in asphalt and concrete plants versus mobile paving equipment, why they're kind of going in different directions right now?

Yes. Yes. So I think our mobile paving equipment is now in the same situation as what the MS business was for quite a while, where we see inventory levels in our dealers being full, interest rates hitting that customer environment. As a reminder, our mobile paving equipment goes through a dealer model where the asphalt plant business is direct. So, we're seeing a little bit of what's happening here now what the MS business have seen for the last 2 years.

Okay. I mean, I guess the concern would be that we're seeing early signs of caution as the current infrastructure spending bill winds down, even though there's been a lag in the release of dollars. And maybe you're seeing it first in mobile paving equipment and then you'll see it later on asphalt and concrete plants. Would you say that's just not true?

Yes. I think when we look at backlog and the different product lines, I think there's a couple of things to consider here. Firstly, I think our team has done a great job delivering a great quarter despite all the challenges that we've listed on Slide 8. Our customers have work, and they are still cautiously optimistic here about funding, about backlog for next year. And I think that's evident in our implied orders being over $300 million here, 4 out of the last 5 quarters. So, I also think that our teams have done a really good job reducing our lead times, Steve. And just during the quarter, for instance, we reduced our parts backlog by 16%.

And as you know, that's something that I've been very passionate about driving down. So, we feel that we have Q3 covered in backlog from an equipment point of view. We see very stable parts order flow through. That provides us great visibility for Q3. Q4 still have availability in capacity. Our shorter lead times provide us the opportunity to process orders and still deliver that during this year. So, the asphalt and concrete plant side have definitely seen a different backlog level than what we've had historically. But we see this a little bit more normal. And I always ask my team what the definition of normal is.

But if you go back historically, Q3 is typically a quarter where we will start to see asphalt plant orders right into the beginning of Q4 as companies release their budgets for next year. And then with -- especially this year with our short lead times, we feel that we can capitalize on any orders coming in between now and the next 2, 3 weeks that we can still deliver this year.

Got it. Great. And if I get one more in, just about the impressive cash flow through the first half of the year. Typically, you see a working capital build that reverses in the second half and the second half typically is the stronger cash flow half. That being said, you're at over 100% conversion of adjusted net income. Brian, if I could ask, one, how you're doing it? It looks like it's really on the receivables line which you've held. But if you could talk about sort of how you're thinking the seasonality of working capital -- of free cash flow plays out this year?

Yes. Thanks, Steve. Yes, the working capital management has been very good this year, continues to be an area of focus for us. I think, actually, we still have some opportunity within inventory levels. As we get towards the end of the year, we typically start to see some more downward movement there.

So, I'm pretty optimistic that we can continue on this trend. Free cash flow has obviously been an area of focus for us. And as I said, I think the team is doing a great job of managing that. So, it's just a constant area of focus.

And maybe, Steve, if I can just add -- yes, maybe just add something there. I think if you look at our receivables and our payables, it's probably in the best shape it's been in a long time in our organization. But we're really attacking cash and cash flow from all aspects. And we want to make sure we have the ability to fund further inorganic growth. And the only way we can do that is if we continuously drive our cash flow.

There are no further questions. I'd like to turn the call back over to Steve Anderson for closing remarks.

All right. Thank you, Jordan. We do appreciate everyone's participation in our conference call this morning, and thank you for your interest in Astec. As today's news release states, this conference call has been recorded. A replay of the conference call will be available through August 20, 2025, and an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the Astec Industries website within the next 5 business days.

This concludes our call, but I'm happy to connect with follow-up questions later. So, thank you, all, and have a good day.

This concludes the meeting. You may now disconnect.