Good morning, my name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the Astec Second Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Steve Anderson, Senior Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to the Astec second quarter 2022 earnings conference call. Joining me on today's call are Barry Ruffalo, Chief Executive Officer; and Becky Weyenberg, Chief Financial Officer. In just a moment, I will turn the call over to Barry to provide his comments and then Becky will summarize our financial results. Before we begin, 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. Any 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 SEC. 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, which are generally accepted accounting principles and non-GAAP financial measures, which management believes provides useful information to investors. These non-GAAP financial measures have no standardized meaning prescribed by U.S. GAAP, and therefore are unlikely to be comparable to the calculation of similar measures for other companies. Management of the company does not intend these items to be considered in isolation or as a substitute for related GAAP measures. Management of the Company uses both GAAP and non-GAAP financial measures to establish internal budgets and targets and to evaluate the company's financial performance against such budgets and targets. A reconciliation of GAAP to non-GAAP results are included in our news release and the appendix of our slide deck. All related earnings materials are posted on our website at www.astecindustries.com, including our presentation, which is under the Investor Relations Presentations tabs. And now I will turn the call over to Barry.

Thank you, Steve, good morning everyone and thank you for joining us. I will begin with a brief overview of the quarter followed by highlights of progress made on our continued strategic evolution and key messages from the quarter. I will then share what we are seeing in terms of demand and current market dynamics. Then Becky will share details on our financial results and capital deployment, and we will then open the call for Q&A. We are well diversified industrial company, as shown on Slide 4 with two segments providing valued equipment, parts and digital solutions to our customers in Infrastructure and Materials markets. As a leader in our space, we have significant coverage across the Rock to Road value chain, allowing us provide a wide range of our customers' needs. I'll begin with a brief overview of our business, because I believe it is a helpful backdrop to understand the strong demand we are seeing as described in our key messages on Slide 5. Second quarter revenue grew nearly 15% year-over-year with strong growth across both of our segments as robust end market demand for our products and services continue. Customer sentiment and economic drivers in the markets we serve generally remain positive. Strong market demand has resulted in record backlog positions. Despite strong sales and disappointed we are not able to deliver better profitability. Second quarter financial results were negatively impacted by several factors that reduced our margins. Among them were continued inflation and manufacturing inefficiencies associated with the industrywide supply chain and logistics constraints in the temporary absorption of expenses in order to support customer needs. Based on our demand outlook for the rest of 2022 and into 2023, we believe the long-term benefit of taking care of our customers outweighs these short-term cost and we…

Thank you, Barry, and good morning everyone. As shown on Slide 11, sales increased to $318.2 million in the second quarter, up 14.6% compared to the same period as last year. Equipment and parts sales increased 18.5% and 9.1% respectively. The 23.3% increase in domestic sales was partially offset by an 8.4% decline in international sales. As Barry mentioned, demand remains strong and we maintained record backlog increasing 92% from the second quarter of 2021 to $837.4 million. Backlog increased in both segments with Infrastructure Solutions surging 161% and Materials Solutions growing 22.5%. Activity remains robust globally with our commercial teams connecting with customers and matching their needs with our solutions. Second quarter adjusted EBITDA decreased 36.5% to $13.2 million compared to the prior year period. Adjusted EBITDA margin decreased to 4.1% as cost inflation more than offset volume, pricing and mix this quarter, inclusive of $2.7 million unfavorable foreign exchange. We do expect this to improve in the second half of the year as previously price backlog continues to work through the system and pricing actions are realized. Adjusted SG&A expenses decreased 1.3% driven primarily by leveraging solid top line growth and controlling expenses. Adjusted earnings per share was $0.19 down $0.27 from the second quarter of 2021 and excludes $10.6 million or $0.47 of transformation, restructuring and other costs, including $6.4 million of costs associated with our ongoing Simplify, Focus and Grow transformation program. Our adjusted net effective tax rate for the quarter was 27.1% due to the mix of international income relative to domestic income. Moving on to Slide 12. Infrastructure Solutions sales increased 16.6% to $209.6 million in the quarter, primarily due to favorable net volume, pricing and mix. Domestic sales were up 26.8%, while international sales fell 13.6%. Equipment sales were up 20% and parts…

Thank you, Becky. We remain committed to achieving our long-term goals as shown on Slide 17. This builds on Becky's last slide, it's a disciplined approach to investing our capital as a key driver to achieving these goals. In addition, we must remain focused on operational excellence and the One Astec operating model to drive consistent and sustainable profitability across the organization. Finally on Slide 18, you can see a summary of our key investment highlights that begins with our leadership positions with an attractive markets that are aligned with secular growth trends enabled by innovation, high quality products and a superior customer service. Our established position in the market in the global installed base drives a predictable and recurring revenue stream for high margin aftermarket business. Our strong balance sheet enables us to withstand macro challenges and further create shareholder value. All of this supports our team's progress towards our Simplify, Focus, Grow strategy which leads the profitable growth. In closing, we serve strong markets for solutions our customers want. Their sentiment has been positive, leading to strong order flow, and record backlog. We continue to invest in our business, at the same time supply chain challenges have been a headwind this quarter. We believe positive results will be generated as we deploy operational excellence through our One Astec operating model and further realized pricing actions taken to offset the impact of inflation. I'm confident we will be able to achieve our long-term targets and build sustainable long-term shareholder value. With that, operator, we are now ready to open the call for any questions.

[Operator Instructions] And your first question is from the line of Stanley Elliott with Stifel. Please go ahead.

Good morning, everyone. Thank you guys for taking the question. Could we start-off on the margin side, I mean, with 4Q we had the margin miss - little bit like there were some of the getting manufacturing and labor up to speed in addition to the inflation seem to have kind of right side itself in the first quarter and then kind of back here again in the second quarter. Maybe talk I guess start off, kind of what happens sequentially from the first quarter, the second quarter. I know it's seasonally a bit of a weaker quarter but would love to hear kind of what drove the downside on the margins?

Good morning, Stanley, it's Barry. Yes, good question, thank you. I think that when we look at the sequential progress we've made from Q1 to Q2, obviously, we did see inflation spiked up a little bit higher in Q2 versus Q1. It's a good news there, is that we were able to offset pretty much the spike in inflation with pricing. So from our pricing volume mix, the pricing - sorry, pricing volume mix inflation ratio, we were able to maintain that. The manufacturing variances, we've had supply chain issues, that actually drove more manufacturing inefficiencies in the quarter. And as I said before, you think about the supply chain, I would say generally the supply chain has shown some improvement for us. But the things that we're left with, Stanley, are very complicated. There are things that our supplier can't get rectified on their side. And so therefore the things that we're driving to improve that with them sometimes includes re-engineering of different components or trying to test other brands and configurations, in order to put on our equipment. So it takes us a little bit longer and more work to actually get those things in place. So, I think that when we look at the quarter-over-quarter, those are the things that are really different. And I would just also remind you that in Q4, the thing that really drove the Q4 performance is really COVID. We saw a huge spike in COVID cases that ultimately impacted our labor in Q4. So the things that we dealt with in Q4, really to Q2 - our difference in that COVID has not really impacting our labor. But the supply chain and in some of that inflation is really what's driven not alone, as we've called out the currency fees, which is also the thing that we've dealt with now in Q2, which in the past has been more of a good guy for us, as we went through 2021. So that's - it's a little bit in the quarter as well.

Yes. And probably for the rest of the year, it would be my guess, you drill down to the segments, so within - you looking at kind of the differences, you're with the kind of the Material Solutions business down, let's call it 800 basis points. With that having more of a distribution kind of been versus at the infrastructure side, is something changed there? I understand you have a lot of retail orders and you can't really move price, but - we certainly were at the impression, you had a little more flexibility to push price and that you would necessarily see a margin delta of that, would expect it to have to be in a little more stable quarter-to-quarter?

Yes. Thank you, Stanley I'd point out that the Q2 of 2021 was a really great quarter for the Material Solutions segment. And as you pointed out, we did see that the gross margin drop. When I think about that there is elements of pricing and inflation or inflation to go with that. In the manufacturing variances we're in a area that, also due to the supply chain issues that have impacted us in that part of the group. So as much as we've seen the company, our absorption actually improve Q4 to Q1 to Q2, that's still is a driver for us in the business. We have had a lot of success in pricing. We've taken recent pricing actions within part of our business. So, I think that we've shown good pricing power in our Materials Solutions segment. We - and as you've mentioned, that's where we have the best ability because it's mostly in the IPS side of the business infrastructure business, it's really a lot of direct orders. So there we're dealing directly with the customers and that becomes a little bit harder. Obviously, when the dealer organization with Materials Solutions, some of those orders are stocked and they stock your orders for sure. We've been working with our dealers to continue to take prices up.

And then lastly, Barry, you mentioned some unrealized price in the backlog in the second half and some benefits, you'd expect to see, how should we think about the second half of the year versus the first half, either price cost or absolute pricing? Anything there that could help us.

Yes. Thanks, Stanley. So as we talked about in Q1 as well, we see and as mentioned in our opening we see that the price cost situation will continue to improve as we go through the rest of the year. And that's still where we stand today. So from Q1 to Q2 we stick with that statement, that we'll continue to see that and we go through the rest of the year. We should see that parity continue to stay where it is and improve across Q3 and Q4.

[Operator Instructions] Your next question is from the line of Brian Sponheimer with Gabelli. Please go ahead.

I wanted to talk a little bit further down the road, you mentioned some revenue coming in 2023 from Federal Highway Bill. I'm just curious what those conversations are like with your customer base given maybe some of the volatility that they're seeing as far as just within their own businesses and what from a project standpoint? Is more concrete that you're going to be able to within 12 months see your equipment maybe put into play for?

Yes. Hi, Brian thanks for the question. So, I've spent a lot of time here in the last months with customers and you know, most of our customers have a backlog today that takes at least a year out and many of them more than a year out. They are dealing with margin pressures, just like everyone else is and that's impacted in different ways, where they have projects in states where there is indexed bidding that they are able to maintain their margins in some states where there is not they've been - they've actually taken the margin fit as they've gone through their cycle. Generally though I would tell you, Brian, that the customer sentiment is still very positive and they see work being bid and laid and so they - as we talked about, we really haven't seen any money really flow from the infrastructure build. Yes, and we also know that when that's passed it's typically about 18 months before we start to see work naturally flow. And so we're still within that time frame in regards to where we would naturally expect a little bit of a pause before some of that starts to flow to the market. So generally, I would say, Brian, that our customers really across the Board, whether that's in different parts of the United States or really globally, are generally very positive. Obviously, in European region it's a little bit of concern, but that's really a small part historically of our revenue stream, Brian, so we don't necessarily see those types of impacts, you having an adjustment on our performance as we move forward in time.

I appreciate that color. I'm also curious as to the permitting and start to finish timeframe that is a truly easier with this Federal Highway Bill to actually get a project with shovels in the ground and moving along?

Yes, good question. And I know as you probably read as well, Brian, federal government is working on permitting and regulations to try and allow these types of projects to become more shovel ready, looking forward. But I would say in today's environment, it hasn't really changed very much from what we had historically - from our customers historically realized. So I would say, that's not really had any type of impact yet on our customers' ability to perform work.

And at this time there are no further questions, I will now turn the call back to Steve Anderson for any closing remarks.

All right. Thank you, Dennis. Again, we appreciate your participation in this conference call and thank you for your interest in Astec. As today's news release indicates, today's conference call has been recorded. A replay of this conference call will be available through August 17th, 2022 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 seven days. All of this information is contained in the news release distributed earlier this morning. This concludes our call, but I'm happy to connect if you have additional questions. Thank you all. Have a good day.

This does conclude the Astec's second quarter 2022 earnings conference call. Thank you all for participating. You may now disconnect.