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…

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…

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.