Q1 2026 Astec Industries Inc Earnings Call

May 6, 2026

Operator: Hello, welcome to the Astec Industries Q1 2026 Earnings Call. As a reminder, this conference call is being recorded. It is my pleasure to introduce your host, Stephen Anderson, Senior Vice President of Administration and Investor Relations. Mr. Anderson, you may begin.

Speaker #2: Senior Vice President of Administration and Investor Relations, Mr. Anderson, you may begin.

Speaker #1: Thank you, and good morning. Joining me on today's call are Jaco 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.

Stephen Anderson: 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. Brian will summarize our financial results. For your convenience, a copy of our press release and presentations 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. 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 US Securities and Exchange Commission.

Steve Anderson: 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. Brian will summarize our financial results. For your convenience, a copy of our press release and presentations 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. 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 US Securities and Exchange Commission.

Speaker #1: For your convenience, a copy of our press release and presentations have been posted on our website under the Investor Relations tab at www.ASTECINDUSTRIES.com. Turning to slide two, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company.

Speaker #1: In 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 U.S.

Speaker #1: 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.

Stephen Anderson: 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 in the appendix of our slide presentation. Now, turning to slide 3, I will turn the call over to Jaco.

Steve Anderson: 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 in the appendix of our slide presentation. Now, turning to slide 3, I will turn the call over to Jaco.

Speaker #1: 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 for the related GAAP measures.

Speaker #1: A reconciliation of GAAP to non-GAAP results are included in our news release, and the appendix of our slide presentation. And now, turning to slide three, I will turn the call over to Jaco.

Speaker #2: Thank you, Steve. Good morning, everyone, and thank you for joining us. On slide four, we highlight our first quarter and trailing 12 months performance.

Jaco van der Merwe: Thank you, Steve. Good morning, everyone, thank you for joining us. On slide 4, we highlight our Q1 and trailing 12 months performance. Net sales for the quarter increased 20.3% and stood at approximately $1.47 billion on a trailing 12 months 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. In Q1, we generated $32.6 million of free cash flow.

Speaker #2: Net sales for the quarter increased 20.3% and stood at approximately 1.47 billion on a trailing 12 months basis, from a combination of organic growth and inorganic contributions.

Speaker #2: 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.

Speaker #2: Positive free cash flow afforded us opportunity to invest in organic and inorganic growth opportunities. And in the first quarter, we generated 32.6 million of free cash flow.

Speaker #2: 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.

Jaco van der Merwe: 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 first. The backlog for Material 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 Q1 prior year and remained at approximately 37% as a percentage of total sales for both periods.

Speaker #2: However, we are pleased to see a recent uptick in backlog for these products. The total segment backlog increased 37 million dollars, including 17 million contributed by CWMF, which joined ASTEC on January 1st.

Speaker #2: The backlog for material 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 multi-year demand for ASTEC products in both segments.

Speaker #2: 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.

Speaker #2: 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 three years.

Jaco van der Merwe: 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 three years. We are, however, encouraged by increased backlogs in each segment, and we expect better quarters ahead. As such, we are maintaining our full year 2026 adjusted EBITDA guidance range of $170 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 Built 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.

Speaker #2: We are, however, encouraged by increased backlogs 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 dollars.

Speaker #2: On slide five, 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.

Speaker #2: As our historical adjusted EBITDA margin in the middle column shows, we have increased profitability in each of the last three years. Growth provides scale, and scale enhances profitability.

Jaco van der Merwe: As our historical adjusted EBITDA margin in the middle column shows, we have increased profitability in each of the last three years. Growth provides scale. 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. We are excited about our future. On slide 6, we provide an update on the integration of our most recent acquired companies. On 1 July 2025, we acquired TerraSource, which boasts the flagship brands of Gundlach, Jeffrey Rader, Pennsylvania Crusher, and Elgin. Effective 1 January 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.

Speaker #2: 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.

Speaker #2: Our plans to grow are well underway, and we are excited about our future. On slide six, we provide an update on the integration of our most recent acquired companies.

Speaker #2: On July 1, 2025, we acquired Terrasource, which boasts the flagship brands of Gundlach, Jeffrey Rader, Pennsylvania Crusher, and Elgin. Effective January 1, 2026, we welcome the dedicated employees of CWMF to the ASTEC family.

Speaker #2: 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 email systems.

Jaco van der Merwe: Many integration processes are now complete, including the seamless addition of new employees to our payroll, benefits, and email 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 US infrastructure provides stability for our customers, and in turn, Astec and our stakeholders. In 2022, Congress passed a 5-year infrastructure bill valued at $347.5 billion.

Speaker #2: 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.

Speaker #2: We are also assessing manufacturing optimization and sharing best practices and product designs. Our joint teams work well together, and we anticipate many benefits in 2026.

Speaker #2: Please turn to slide seven. 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.

Speaker #2: Steady federal funding for US infrastructure provides stability for our customers, and in turn, ASTEC and our stakeholders. In 2022, Congress passed a five-year infrastructure bill valued at $347.5 billion.

Speaker #2: According to the American Road and Transportation Builders Association, $261 billion or 75% of those funds have been allocated as of February 28th, 2026. These Formula funds for highways and bridges have enabled more than 160 and 500 new products across our country.

Jaco van der Merwe: According to the American Road & Transportation Builders Association, $261 billion, or 75% of those funds, have been allocated as of 28 February 2026. These formula funds for highways and bridges have enabled more than 116,500 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 five-year bill is set to expire on 30 September 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 Works committees.

Speaker #2: 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.

Speaker #2: This was a new record. The existing five-year bill is set to expire on September 30th, 2026. The renewal of the bill has bipartisan support.

Speaker #2: This is evidenced by the stance of key members of the House Transportation and Infrastructure and the Senate Environment and Public Works 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 a red or blue issue."

Jaco van der Merwe: 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 Q1 implied orders and book-to-bill ratios. Organic results exclude the impact of the CWMF acquisition, and orders prior to the Q1 of 2025 exclude the impacts of the TerraSource acquisition.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Our strong reputation in aggregates as well as road and bridge construction drive steady growth. On slide eight, we show first quarter implied orders and book-to-bill ratios.

Speaker #2: 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.

Speaker #2: Implied orders of $397 million compared to a strong fourth quarter of $465 million. On a year-over-year basis, implied orders increase 85 million or 27.2% from a combination of organic and inorganic contributions.

Jaco van der Merwe: Implied orders of $397 million compared to a strong Q4 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 and 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.

Speaker #2: Book-to-bill ratios in each segment exceeded 100%. On slide nine, we are pleased to report that our backlog grew to 549 million compared to 403 million for the same period in 2025.

Speaker #2: This was an overall increase of 146 million or 36%. The backlog in infrastructure solution segment increased 37 million or 13%, primarily due to increases in asphalt plants and mobile paving and forestry equipment, and a 17 million contribution from the newly acquired CWMF.

Speaker #2: Backlog in the material solution segment increased 110 million or 87% over the same period the prior year. From a combination of legacy and inorganic contributions.

Jaco van der Merwe: Backlog in the Material Solutions segment increased to $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. Now I will turn the call over to our Chief Financial Officer, Brian Harris.

Speaker #2: 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.

Speaker #2: And now I will turn the call over to our Chief Financial Officer, Brian Harris.

Speaker #1: 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.

Brian Harris: Thank you, Jaco, and good morning. I'll now discuss our consolidated results for Q1, provide segment specific details, and review our liquidity and leverage. Our financial performance for Q1 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 Material Solutions business and inorganic growth in both segments. Parts and service represented 36.9% of net sales, which compared to 37.1% in Q1 of 2025. As Jaco mentioned, Q1 expenses from the CONEXPO trade show and freight, duty, and tariff expenses impacted Q1 profitability and margins.

Speaker #1: 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.

Speaker #1: Most of the growth was attributable to the legacy material solutions business and inorganic growth in both service represented 36.9% of net sales, which compared to 37.1% in the first quarter of 2025.

Speaker #1: 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.

Brian Harris: 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 Q1 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 Q1 2026 compared to $236 million for the same period in 2025.

Speaker #1: 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.

Speaker #1: Based on the aforementioned factors, adjusted earnings per share for the quarter were 54 cents compared to 91 cents in the first quarter of 2025, while down only slightly on a trailing 12-month basis.

Speaker #1: 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.

Speaker #1: Our newly acquired business performed as expected, while their contributions were partially offset by legacy equipment volumes that measured to a strong performance the prior year and shortfalls related to timing differences.

Brian Harris: Our newly acquired business performed as expected, while their contributions were partially offset by legacy equipment volumes that measured to a strong performance 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 Q1 2026 compared to a strong same-quarter comparison in 2025. The $8.1 million difference resulted primarily from higher exhibit 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%.

Speaker #1: 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 solution segment was 34.8 million for the first quarter of 2026 compared to a strong same-quarter comparison in 2025.

Speaker #1: The 8.1 million difference resulted primarily from higher exhibit 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%.

Speaker #1: Adjusted EBITDA margins stood at 14.7% for the quarter and the 12-month periods respectively. Our material solution segment is shown on slide 13. We were pleased to see the continued resurgence of our material solutions legacy products during the first quarter.

Brian Harris: Adjusted EBITDA margin stood at 14.7% for the quarter and the 12-month periods, respectively. Our Material Solutions segment is shown on slide 13. We were pleased to see the continued resurgence of our Material Solutions legacy products during the Q1. Net sales included organic and inorganic contributions and combined for an increase of $65.9 million or 70.6% over the Q1 2025. For the trailing 12-month period, net sales increased $164.8 million or 36.3%. Segment operating adjusted EBITDA for the Material Solutions segment was $8.9 million for the Q1 2026 compared to $5.2 million for the same period in 2025. This was an increase of $3.7 million or 71.2%.

Speaker #1: 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%.

Speaker #1: Segment operating adjusted EBITDA for the material solution segment was 8.9 million for the first quarter of 2026 compared to 5.2 million for the same period in 2025.

Speaker #1: This was an increase of 3.7 million or 71.2%. For the trailing 12-month 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.

Brian Harris: 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 Q1s of 2025 and 2026, respectively, and grew 140 basis points to 9.6% on a trailing 12-months 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.

Speaker #1: As with the infrastructure solution 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.

Speaker #1: Moving to slide 14, our balance sheet remains strong and is supported by a substantial liquidity. A 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.

Speaker #1: 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 2.3 times and is within our target range of 1.5 to 2.5 times.

Brian Harris: 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 2.3 times and is within our target range of 1.5 to 2.5 times. 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 to 190 million. An effective tax rate between 25% and 28%. Capital expenditures between $40 to 50 million. Depreciation and amortization of $55 to 65 million. The following quarterly ranges. Adjusted SG&A of $70 to 80 million. Interest expense, approximately $7 million. I will now hand the call back to Jaco.

Speaker #1: 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.

Speaker #1: An effective tax rate between 25% and 28%. Capital expenditures between 40 million and 50 million. Depreciation and amortization of 55 to 65 million. And the following quarterly ranges.

Speaker #1: Adjusted SG&A of 70 million to 80 million. Interest expense approximately 7 million. I will now have the call back to Jaco. Slide 15 provides an overview of the key investment highlights for ASTEC.

Jaco van der Merwe: 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 reoccurring aftermarket parts and service business, which remains a key focus for the Astec team.

Speaker #1: ASTEC has earned the reputation as a reliable provider of internationally recognized brands and high-quality solutions for our customers. And we take pride in this legacy.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: Several exciting opportunities are including the expansion of our reoccurring 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 multi-year federal highway program, along with strong state and local funding for infrastructure projects in the US market.

Jaco van der Merwe: 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 US 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.

Speaker #1: 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.

Speaker #1: Moving on to slide 16, we are excited about our 2026 investor day to be held on May 13th, 2026. We invite you to join us for this virtual event, which will begin at 8:00 AM Eastern Daylight Time.

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

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

Speaker #1: 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.

Speaker #1: With that, operator, we are ready for questions.

Speaker #2: At this time, if you would like to ask a question, press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Operator: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Steve Ferazani with Sidoti & Co. Your line is open.

Speaker #2: And your first question comes from the line of Steve Ferranzi with Sidaco. Your line is open.

Speaker #3: Morning, Jaco. Morning, Brian. Appreciate all the detail on the call. 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.

Steve Ferazani: Morning, Jaco. Morning, Brian. Appreciate all the detail on the call. Jaco, I guess when I looked through the numbers and we, you know, we obviously expected the higher costs related to CONEXPO. I mean, the surprising number to me was the gross margin. You covered a couple of reasons for it, and it was particularly soft 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?

Speaker #3: You covered a couple of reasons for it, and it was particularly sought in the infrastructure solution side. Can you sort of give us the buckets on how much of it was inflationary freight pressures versus mix versus timing?

Speaker #3: Etc. Or were there any efficiency letdowns in the quarter?

Jaco van der Merwe: For IS, we definitely saw a different mix this quarter compared to, you know, what we saw as a very strong Q1 last year.

Speaker #4: 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 plant and parts business during the quarter.

Jaco van der Merwe: For IS, we definitely saw a different mix this quarter compared to, you know, what we saw as a very strong Q1 last year.

Jaco van der Merwe: Yeah.

Steve Ferazani: Yeah.

Jaco van der Merwe: We did see a lower asphalt plants and parts business during the quarter, which obviously pulled down margins a little bit. You know, when we look at this business, and we've talked about this a lot in the past, that if you have one or two plants move out from one quarter to the next, it can make a pretty big difference.

Speaker #4: 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 one or two plants move out from one quarter to the next, it can make a pretty big difference.

Speaker #4: 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.

Steve Ferazani: Yeah.

Steve Ferazani: If you take a breakdown there, you know, capital and parts, you know, we saw a reduction in both of those. Tariffs did affect them a little bit to a lesser extent than what we've seen on the MS group. You know, 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.

Jaco van der Merwe: If you take a breakdown there, you know, capital and parts, you know, we saw a reduction in both of those. Tariffs did affect them a little bit to a lesser extent than what we've seen on the MS group. You know, 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.

Speaker #4: 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 things came to light.

Steve Ferazani: Right

Steve Ferazani: Things came to light. Some of that is maybe just timing catching up to the pricing. We also have, you know, additional pricing that is in the pipeline that should mitigate this in the quarters to come.

Jaco van der Merwe: Things came to light. Some of that is maybe just timing catching up to the pricing. We also have, you know, additional pricing that is in the pipeline that should mitigate this in the quarters to come.

Speaker #4: 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.

Speaker #3: Because yeah, I mean, you probably know the follow-up question which is, given the numbers in Q1, you're confidence level to hit those full-year targets given the year-over-year difference.

Steve Ferazani: That, yeah, that's, I mean, you probably know the follow-up question with which is, you know, given the numbers in Q1, your confidence level to hit those full year targets.

Steve Ferazani: Yeah

Jaco van der Merwe: Yeah

Steve Ferazani: the year-over-year difference. If it's pure mix and the timing is you're gonna be more plant and parts heavy into Q, and you got the pricing in, I get it. I'm just trying to see if there's anything else here that should be cause for concern.

Speaker #3: If it's pure mix and the timing is you're going to be more plant and parts-heavy into Q and you got the pricing in, I get it.

Speaker #3: I'm just trying to see if there's anything else here that should be cause for concern.

Speaker #4: Yeah. Now, look, I mean, look at backlog. We very encouraged by strong backlog. We have another positive book-to-build quarter, which is always nice. And we have definitely additional pricing in the pipeline.

Jaco van der Merwe: Look, I mean, look at backlog. We very encouraged by strong backlog. We have, you know, another positive book-to-bill quarter, which is always nice. You know, we have definitely additional pricing in the pipeline. We continuously evaluating, you know, the cost that's coming from these macro trends. We are also very encouraged about the work our teams are doing to improve our quality cost and our operational efforts. Steve, we obviously, you know, still confident. That's why we kept the guidance.

Speaker #4: We 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.

Speaker #4: So Steve, we 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.

Steve Ferazani: Yeah

Steve Ferazani: for the full year. You know, with that strong backlog, we feel that we have the opportunity to achieve that.

Jaco van der Merwe: for the full year. You know, with that strong backlog, we feel that we have the opportunity to achieve that.

Speaker #3: So given the I mean, we saw the how much of the order shift sequentially was seasonality?

Steve Ferazani: I mean, we saw the, how much of the order shift sequentially was seasonality?

Jaco van der Merwe: From an invoicing point of view or a bookings, point of view?

Speaker #4: From an invoicing point of view or a bookings point of view?

Jaco van der Merwe: From an invoicing point of view or a bookings, point of view?

Steve Ferazani: The implied orders, the reported implied orders. Do you owe that to seasonality and timing?

Speaker #3: The implied orders, the reported implied orders. Do you owe that to seasonality and timing?

Speaker #4: Yeah. I mean, if you look at implied orders, for IS, quarter over quarter, it was pretty flat. Obviously, we have CWMF and that number now.

Jaco van der Merwe: Yeah. 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.

Steve Ferazani: Right.

Steve Ferazani: On MS quarter over quarter, that's where we saw the biggest variance. Now, you know, those came on top of Q4, which is typically our strongest-.

Speaker #4: 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.

Jaco van der Merwe: On MS quarter over quarter, that's where we saw the biggest variance. Now, you know, those came on top of Q4, which is typically our strongest-.

Steve Ferazani: Right

Jaco van der Merwe: Bookings quarter. You know, overall backlog, if you look at the backlog and the book-to-bill ratio, both positive in MS and in IS. You know, that's why we like to give, you know, the annual guidance and not try to guide on a quarterly basis.

Speaker #4: But overall backlog, if you look at the backlog and the book-to-build 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.

Steve Ferazani: Understand.

Steve Ferazani: We know we're gonna have these quarterly fluctuations.

Jaco van der Merwe: We know we're gonna have these quarterly fluctuations.

Speaker #4: We know we're going to have these quarterly fluctuations.

Steve Ferazani: And if you could just touch on synergy realization, where you are with integration of the acquisitions and potential synergy realization over the next multiple quarters.

Speaker #3: And if you could just touch on synergy realization, where you are with integration of the acquisitions and potential synergy realization over the next multiple quarters.

Steve Ferazani: And if you could just touch on synergy realization, where you are with integration of the acquisitions and potential synergy realization over the next multiple quarters.

Speaker #4: Yeah. Yeah. 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.

Jaco van der Merwe: Yeah. Yeah, we are very, 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, you know, faster than what we saw on TSG, just because, you know, it's so close to home. We do business with a lot of the same suppliers. We are pretty positive there. The number that we gave the street for synergies on TSG, we are very confident that, you know, over the next 12 months, we are going to realize those.

Speaker #4: I will say the synergies on the CWMF acquisition and is coming in faster than what we saw on TSG just because it's so close to home.

Speaker #4: 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 TSG, we're very confident that over the next 12 months, we're going to realize those.

Speaker #3: And if I could get one more in terms of obviously, you've been generating much stronger parts in aftermarket. Numbers, some of that's from the acquisitions, but I know that was a priority when you became CEO, Jaco.

Steve Ferazani: 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? Is there a lot more to go, or do you feel like you've achieved a lot of what you wanted to?

Speaker #3: 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?

Speaker #4: Yeah. 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%.

Jaco van der Merwe: Yeah, no, in my mind, there's a lot more to go. You know, during Q1, which is typically a strong parts quarter for us, we were close to 37% parts and service. You know, next week, we're going to have our Investor Day, where we're gonna talk about our aspirations there.

Speaker #4: Parts and service. Next week, we're going to have our investor day. Where we're going to talk about our aspirations there. But Steve, we still see significant opportunity to improve that mix.

Steve Ferazani: Okay.

Jaco van der Merwe: Steve, we still see significant opportunity to improve that mix.

Speaker #3: Great. Thanks, Jaco. Thanks, Brian.

Steve Ferazani: Great. Thanks, Jaco. Thanks, Brian.

Speaker #5: Your next question comes from the line of Stephen Ramsey with Thomas Research Group, your line is open.

Operator: Your next question comes from the line of Steven Ramsey with Thompson Research Group. Your line is open.

Steven Ramsey: Hey, good morning. Thanks for taking my questions. 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. Maybe go through your success here, if it's following your customers versus intentional initiatives to capture this demand.

Speaker #3: Hey, good morning. Thanks for taking my questions. I wanted to start with, obviously, the topic of the day, demand data centers you cited strong demand from this market.

Speaker #3: 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.

Speaker #4: Yeah, Steve, morning. 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.

Jaco van der Merwe: Yeah, Steve, morning. Good question. You know, 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 Material Solutions group, it's up significantly year-over-year, and even during the quarter, it increased nicely. Steven, we see the benefit from that. It is a little bit difficult for us to track it specifically just for data centers or other, you know, onshoring. What I will say is, obviously, our customers that provides aggregates to these markets are very close to these markets. They typically, you know, enjoy the business if they work in a 30 or 50-mile radius from where the construction goes.

Speaker #4: 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 Steven, we see the benefit from that.

Speaker #4: 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.

Speaker #4: 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.

Jaco van der Merwe: We enjoy business with all of those customers. You know, we see cases where customers need to increase output, some cases as much as 10 times what they did in prior years just to deal with the demand that's coming from these data centers. We do not 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, you know, they are very outspoken about the effect this have. Obviously, you know, we do business with all of those companies, and that's where we see the benefit.

Speaker #4: So, we see cases where customers need to increase output—some cases as much as 10 times what they did in prior years—just to deal with the demand that's coming from these data centers.

Speaker #4: 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.

Speaker #4: 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.

Jaco van der Merwe: We have seen some uptick in our industrial heating space that is in the Infrastructure Solutions group, also supplying to data centers, but to a much lesser extent than what we've seen on the Material Solutions side.

Speaker #4: Also supplying to data centers. But to a much lesser extent than what we've seen on the material solution side.

Speaker #3: Okay. That's very helpful. And one of the things 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?

Steven Ramsey: Okay, that's very helpful. 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?

Jaco van der Merwe: Yeah. I will say we do not feel that we are losing market share anywhere. You know, obviously we have various product lines that is in our portfolio. We feel very good about our product portfolio that we have. 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. You know, when you have new products, the deposit of 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 systems. We are definitely seeing the positive momentum from that product line. You know, we believe that will continue. Maybe one last comment.

Speaker #4: Yeah. 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.

Speaker #4: 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.

Speaker #4: And when you have new products, the positive flow-through typically results in you taking some market share. We have over the last year or two in the material solution side, put a renewed focus on large system sales.

Speaker #4: 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.

Jaco van der Merwe: You know, the work that we're doing on our digital platform, we are definitely seeing positive reaction from our customer base. We are talking and, you know, growing that business significantly through, you know, especially our major customers transitioning to one platform. In various examples, you know, they've chosen us to be that platform provider. That will have a positive effect, you know, in the future on equipment sales. It will have a positive effect on our parts and service sales.

Speaker #4: 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.

Speaker #4: 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.

Speaker #3: Okay. That's great. And then last one for me, yet very strong free cash flow in the quarter. Appears like much of that was working capital driven.

Steven Ramsey: Okay, that's great. Last one from me. You had very strong free cash flow in the quarter. 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? Thanks.

Speaker #3: If you zoom out and look forward, can you give a general view on free cash flow conversion out of EBITDA? Thanks.

Brian Harris: Yes, Steve, it's Brian here. Thanks for the question. Yeah, 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, you know, Q4 is always a big sales quarter, so we had some good cash collections in Q1 as well. 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.

Speaker #4: Yeah, Steve, it's Brian here. Thanks for the question. Yeah, 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.

Speaker #4: 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.

Speaker #4: 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.

Speaker #4: 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.

Brian Harris: 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. I think conversion ratio will be good.

Speaker #4: 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.

Speaker #4: So I think conversion ratio will be good.

Steven Ramsey: That's great. Thank you all.

Speaker #3: That's great. Thank you all.

Speaker #4: Thank you.

Jaco van der Merwe: Thank you.

Operator: Again, if you would like to ask a question, press star one on your telephone keypad, and we'll pause for just a moment. Your next question comes from the line of David MacGregor with Longbow Research. Your line is open.

Speaker #5: Back in. If you would like to ask a question, press star one on your telephone keypad. And we'll pause for just a moment. Your next question comes from the line of David McGregor with a long bone research.

Speaker #5: Your line is open.

Speaker #6: Yes, good morning, everyone.

David MacGregor: Yes. Good morning, everyone.

Speaker #4: Morning, David.

Jaco van der Merwe: Hey, David.

Speaker #6: Good morning. I guess my first question was for Brian and 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.

David MacGregor: Good morning. I guess my first question was for Brian and just wanted to go back to the whole discussion around price cost. You I think were very clear in your prepared remarks about, you know, the timing of price traction versus, you know, the emerging cost inflation. You used 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, you know, what you see coming in the backlog versus the pricing initiatives you have in the marketplace today and how that should play into Q2 or H2? obviously, you've left the guidance unchanged, so you're expecting some kind of recovery.

Speaker #6: You used 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.

Speaker #6: 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 Q2 or second half and obviously you've left a guidance on change.

Speaker #6: So you're expecting some kind of recovery. I'm just trying to get some sense of cadence or timing around those margin dynamics.

David MacGregor: I'm just trying to get some sense of cadence or timing around those margin dynamics.

Speaker #4: Yeah. Look, I think if you go back to that Q1 of 2025, we had a gross margin of over 28%. If anything, that was the little bit of an outlier when you look at Q1 historically.

Brian Harris: Look, I think if you go back to that Q1 of 2025, we had a gross margin of over 28%. If anything, that was the little bit of an outlier when you look at Q1 historically. That was because we got ahead of the game. We talked about this before on pricing. The tariff situation cost didn't really begin to materialize till April and beyond. We had a strong comp in Q1 of 2025. Tariffs kicked in this quarter to a greater extent. We felt, you know, cover a lot of the underlying inflation outside of tariffs with our pricing initiatives.

Speaker #4: And that was because we got ahead of the game and we talked about this before on pricing and so the tariff situation cost didn't really begin to materialize till April and beyond.

Speaker #4: 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.

Speaker #4: 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.

Brian Harris: We've got more pricing that we can implement here in the balance of the year. We're very careful about making sure that we try to anticipate those costs when we quote. 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 has a little bit of uncertainty in the balance of the year. We're trying very hard to make sure that when we price our products in the market, that we're taking that into account.

Speaker #4: Obviously, freight and duties related to higher diesel and hydrocarbon costs are another factor that's certainly affecting things in the short term. And has a little bit of uncertainty in the balance of the year.

Speaker #4: 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.

Speaker #6: Right. So just to try to summarize on this, is this something we're still going to see some year-over-year margin pressure in Q2 before it's fully normalized in the second half?

David MacGregor: Right. Just to try and summarize on this, is this something where we're still gonna see some year-over-year margin pressure in Q2 before it's fully normalized in H2?

Speaker #4: You know, 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.

Brian Harris: You know, it's possible, but I think Q2, we're going to emerge with stronger margins in Q2 than we saw in Q1.

Speaker #6: 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 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?

David MacGregor: Okay, good. I guess second question, maybe for Jacco. You know, how much of a catalyst do you think a highway bill reauthorization will be to just order releases? 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.

Speaker #4: Yeah. Yeah, 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.

Jaco van der Merwe: Yeah, David, I mean, you know, I will tell you, obviously everybody knows that there's a lot going on in the world right now. You know, our industry has been hit with, you know, inflationary pressures around, like Brian just said, fuel prices, you know, tariffs obviously is something. You know, a highway bill, I will say for smaller players in the market, typically a highway bill gives a lot of confidence because, you know, if you're gonna buy an asphalt plant, you wanna know that there's gonna be, you know, 3 to 5 years of good funding available. You know, our industry has gone through significant customer consolidation, as you guys know.

Speaker #4: Tariffs, obviously, are 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 three to five years of good funding available.

Speaker #4: 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.

Jaco van der Merwe: You know, I think our bigger customers are better managing their CapEx through different cycles and, or maybe less prone to cut spend without the clarity of a infrastructure bill. Now, what I will say is, you know, we are very involved with our trade organizations. We are very involved talking to the respective people involved in creating the highway bill. You know, just this morning actually, I received a note from our team at NAPA, the National Asphalt Pavement Association, they think that the first language around the bill could be published as early as the 18 May. We are looking forward to that. We know that there's discussions taking place right now.

Speaker #4: And I'll 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.

Speaker #4: 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.

Speaker #4: 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.

Jaco van der Merwe: We know that, you know, like we said in the prepared remarks, you know, this is something where government actually works together very well on. We're positive that we're gonna see a bill. Hopefully it comes sooner than later. You know, 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. You know, and a highway bill that's focused on roads and bridges, I think will be a nice injection for, you know, 2027 and beyond.

Speaker #4: 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.

Speaker #4: 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 2027 and beyond.

Speaker #6: Right. Right. That's great color. Thank you for that. Next question, I just wanted to ask you around the whole notion of price analytics. And you've been investing in price analytics here.

David MacGregor: Right, right. That's great color. Thank you for that. 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, you know, 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, of that investment and I guess at a point in time where we're really trying to sort of wrestle through price cost here. You know, this is a pretty key part of the story. I guess that's where you are in this.

Speaker #6: 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?

Speaker #6: 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 key part of the story.

Speaker #6: So I'll try to get a sense of where you are on this.

Speaker #4: Yeah. I will say from a process point of view, we in probably in the best state that ASTEC has been in for many years.

Jaco van der Merwe: Yeah. I will say from a process point of view, we, you know, probably in the best state that Astec has been in for many years now. You know, on the flip side is obviously the variability right now is big. Our teams are continuously looking at movement in, you know, prices that we buy versus what we sell for. Our procurement team is very actively renegotiating as tariffs change. I mean, as you, as you guys know, there's actually some of the tariffs that should start to lower over coming periods. You know, getting that then back from suppliers is key focus for us.

Speaker #4: 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.

Speaker #4: 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 overcoming periods.

Speaker #4: And getting that then back from suppliers is key focus for us. So David, yeah, we feel that we have a good process in place.

Jaco van der Merwe: David, yeah, we feel that we have a good process in place, but, you know, the amount of variability that's happening on a daily basis is definitely challenging for the team. At least we have a team, we have a process, and it gives us much better, you know, outlook than what we had before.

Speaker #4: 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.

Speaker #4: And it gives us much better outlook than what we had before.

Speaker #6: Okay. Good. I wanted to ask you about ASTEC Signal. You talked about ConExpo. There was a good reaction there. To the new product rollout.

David MacGregor: Okay, good. I wanted to ask you about Astec Signal. You talked about CONEXPO. There 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. From that reaction, what's your sense of sort of the ability of that technology to accelerate placement cycles?

Speaker #6: 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?

Speaker #4: Yeah. We're very excited about that, David. I mean, we are investing significantly in further developing the platform. We investing an additional manufacturing capability next time we're new in Charanuga, we'll show you that.

Jaco van der Merwe: We, we're very excited about that, David. I mean, we are investing significantly in further, you know, developing the platform. We are investing in additional manufacturing capability. You know, next time when you're in Chattanooga, we'll show you that. We, we think that this is just starting. We have a really good platform. It's gonna provide a lot of benefits both to us and our customers in the future. You know, overall, the section has been really positive. We'll talk quite a bit more about Signal during our Investor Day next week as well.

Speaker #4: 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.

Speaker #4: So, overall, the reception has been really positive. We'll talk quite a bit more about Signal during our investor day next week as well.

Speaker #6: Great. Great. And then last question, Brian, where do you see the balance sheet leverage at your end based on the guidance you've got right now?

David MacGregor: Great. Great. Last question. Brian, where do you see the balance sheet leverage at year-end based on the guidance you've got right now?

Speaker #5: Yeah. David, I think if you take the midpoint of the guidance, we should end somewhere around about 1.7 times.

Brian Harris: Yeah. David, I think if you take the midpoint of the guidance, we should end, somewhere around about 1.7x.

Speaker #6: Got it. Thanks very much.

David MacGregor: Got it. Thanks very much.

Speaker #4: Thank you.

Jaco van der Merwe: Thank you.

Speaker #1: And now I'll turn the call over to Steve Anderson, Senior Vice President of Investor Relations.

Operator: Now I'll turn the call over to Stephen Anderson, Senior Vice President of Investor Relations.

Speaker #7: 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.

Stephen Anderson: Thank you, Rebecca. We appreciate everyone's participation in our conference call this morning, and thank you for your interest in ASTC. As today's news release states, the conference call has been recorded. A replay of this conference call will be available through 20 May 2026, and an archive 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.

Steve Anderson: Thank you, Rebecca. We appreciate everyone's participation in our conference call this morning, and thank you for your interest in ASTC. As today's news release states, the conference call has been recorded. A replay of this conference call will be available through 20 May 2026, and an archive 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.

Speaker #7: A replay of this conference call will be available through May 20th, 2026, in an archived webcast will be available for 90 days. The transcript will be available under the Investor Relations section of the ASTEC Industries website.

Speaker #7: Within the next five business days. This concludes our call. But as always, feel free to contact me with any additional questions. Thank you. Have a good day.

Operator: Ladies and gentlemen, this concludes today's conference call, you may now disconnect.

Speaker #1: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Operator: Hello, welcome to the Astec Industries Q1 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.

Speaker #8: 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.