Great. I'm Steve Ferazani, an Analyst at Sidoti. Welcome back to Sidoti's September Virtual Investor Conference. Before I introduce the presenter, I'd just like to remind everyone, if we have time for Q&A at the end, you press that Q&A button at the bottom of the screen and type in the questions, and we'll get to as many as we can, time permitting. And now I'm so pleased to be joined by Astec Industries, the ticker is ASTE. We're joined by CEO Jaco van der Merwe. Sorry if I butchered that, Jaco. That's okay. Interim CFO, Heinrich Jonker, and Senior Vice President of Administration Investor Relations, Steve Anderson. Gentlemen, the floor is yours. Yeah. Good morning, and thanks, Steve. Thanks for the opportunity, and good morning, everybody. You know, obviously, we have our normal safe harbor regulations there that everybody is aware of, and on the call today, obviously, myself, we have Heinrich Jonker, who's our VP of Finance for our Infrastructure Solutions business and Interim CFO, and like Steve said, we have Steve Anderson on the call as well this morning. You know, just as an introduction, obviously, you know, this business that we have here, Astec Industries, we are really in the heart of the construction industry. If you think about it, you know, anything that you drive on, everything that you land on, and you know, any type of construction that you live in or sleep in, you know, that's what we do, and that's what our equipment provides solutions to. A short overview of the company. We are headquartered here in Chattanooga, in Tennessee. Company was started in 1972. We have about four thousand three hundred employees worldwide at the end of last year. We did about $1.3 billion in sales. You know, really good EPS development last year compared to the prior year, and we ended on about 8.2% EBITDA for last year. We play in the Rock to Road space. All the way from our customers mining stone and sand, we do all the crushing and screening. We process that material through our asphalt and concrete plants, and then we also go all the way to laying down asphalt on road construction jobs. We have two reporting segments: our Infrastructure Solutions business, which is about two-thirds of our business, asphalt plants, concrete plants, the predominant piece of that segment, and then on the Materials Solutions side, we have crushing and screening, and within both of these solutions, we have a really strong parts and service business. And our parts and service, depending on the quarter, is about 25%-30% of our overall sales. Just quickly on the leadership team, I've taken over as CEO last year, January, and I'm very excited about the team that we built here. You know, from an operational point of view and an industry point of view, myself spent you know eighteen years with a company called Epiroc or Atlas Copco. I've been with Astec for the last eight years. Ben Schneemann, who's our Group President for IS, spent many years with Komatsu, and then Michael Norris, who's running our Materials Solutions business, spent many years with Sandvik. So really strong operational team, supported by very good functional leaders and, you know, very excited about the team that we've built. Over the last few years, Astec has also refreshed its board and, you know, we are supported by a very diverse group of people. You know, former CFOs, people with really strong technology background, people with very strong financial background, acquisition background, and also with very specific industry knowledge. So really good board. We have a good relationship with our board, and they've been very supportive of me and the team the last eighteen months. Now let's get back to the business. And you know, one of the things that we as a team are very focused on is creating a business that will be much more consistent in performance in the future. And you know, we are focusing on three strategic pillars to do that. Needless to say, you know, creating opportunities for our employees and really getting them involved in the running of our business, empowering them, our employees across our businesses. We have been focusing really hard to bring back the focus on our customers and providing them with the solutions they need to be successful and you know, in line with our legacy of really bringing industry-changing innovation to the table. Over the last couple of quarters, we've been talking a lot about some of the new products that we've been bringing to the market. I'm really excited on how these three strategic pillars are creating the foundation of what we're trying to create here for the future. From a capital point of view, we've always had a strong balance sheet and we are continuously driving our balance sheet in the right direction. You know, due to an escalation of inventory over the last few years due to supply chain, we've used our revolver a little bit and, you know, I'm excited about the work our teams are doing there to drive that down. You know, we believe that we wanna use our strong balance sheet obviously in the future to create growth when the right opportunity comes along. Now, just long term, you know, one of the things that I'm excited about is our focus on our parts and service business. It's already a strong part of our business. You know, if you go and look at the companies where myself, Michael, and Ben come from, you know, those businesses all have a really strong parts and service part of their businesses and we know, you know, for this company to be strong in the future, we have to develop that. Obviously, we are excited about the new products that we're creating, that we're bringing to market. Some of those are in the market right now and, you know, I'm excited to hear the feedback from our customers and, you know, we have a good pipeline of product and we already, you know, looking forward to the next ConExpo in 2026, and all the new products that we will have on display for our customers, you know, between now and that point in time. But, you know, just a rich pipeline of new products. As a team, we've also been very focused on right-sizing our SG&A, and for those of you who followed us for a while, have seen that, you know, during my time, we've done a lot of work on, you know, creating the right overhead structure for our business. We still have a lot of work to do there and, you know, we're looking for opportunities on a daily basis to exploit that. I'm also excited about the work our OneASTEC procurement team is doing. Now that the supply chain is stabilized, it gives us the opportunity to really engage with our suppliers and, you know, driving costs down over the long term. Having good presence is important for us, and we've consistently growing our North American dealer network, including our international dealer network. You know, those take years to foster and I'm excited to see what our dealers are doing and you know, we have a lot of opportunity to expand globally, you know, as we develop the right products for our international markets. From an operational excellence point of view, I will say today we have the strongest operational leadership team in Astec's history, in my mind, and we have really good you know manufacturing engineering, quality engineering structures in place now that will help us drive operational excellence, you know, in all facets of our business. And then lastly, we are in a good space. You know, federal funding is obviously flowing right now and, you know, just next week, myself and various industry leaders will be in Washington, D.C. already campaigning for the next round of federal funding. We know that, you know, our country is in need of infrastructure improvement, and I think that will give us really good opportunity for the future as well. Exciting business. You know, we have a really good team. I think we have a really good foundation to build on and, you know, we also know what good looks like and our team is really excited about executing our own plans and able to compete with the best in our space. So, Steve, that's all we have from our side, and we are very happy to take questions. Great. Thanks so much, Jaco. If you have any questions, please again, press that Q&A button at the bottom of your screen. Type them in, and we'll get to as many... We have about 15 minutes remaining, so we'll get to as many as we can. Why don't I kick it off, Jaco? You mentioned you are seeing the federal funds flowing. There have been some questions raised about how much of the increased spending is being eaten up by inflationary pressures. How would you characterize it and how it's impacting the business? No, Steve, good question, and also a valid concern. You know, probably everybody on the call know that the last infrastructure bill was the biggest bill we've had, and obviously we were all excited about that, and you're right, so you know, quite a bit of the additional funding from the bill has been absorbed by inflation, so you know, in general, cost of construction has gone up 20-25%, so this bill, you know, will obviously provide a lot of work, but it will not have the intended outcome that the government had by actually moving infrastructure in the right direction, so you know, at best, we will stay at the same level, you know, when it starts. So, you know, that just means, you know, if we wanna get to a point where the state of our infrastructure actually improves, Steve, that, you know, the next bill will have to be even bigger. Otherwise, we're just gonna go backwards. So how much are you paying attention to the upcoming November elections, and how much can that matter? Yeah, you know, obviously, I think infrastructure, Steve, is one of the areas that both parties agree on. Right. This is actually, you know, a Democratic-led bill. Previous one was Republican. So, you know, for us, I think, you know, both parties agree that infrastructure is important. It's creating really good-paying jobs. So I don't think it matters on who gets in. You know, they will have to be spending. You know, obviously, both parties have a preference on where they wanna spend money, but I think infrastructure will get its fair share. It doesn't matter who's in power. Do you have a question about how much of your spending is public funding and how much is private spending in terms of how it affects you? Yeah, I mean, you know, we are very fortunate that we, we're obviously servicing both of those sectors. You know, majority of funding from a volume point of view goes into road and bridge construction. So, you know, federal funding will always be the biggest piece. Okay. Now, typically, when there's strong federal funding, you know, private funding is positive because, you know, people feel that, you know, the economy is strong and they can invest as well, so... Okay. Can you talk about, you mentioned the three new... You highlighted three new product launches, including the mill and the track paver. Mm-hmm. Can you talk a little bit about what the early response- I know you had highlighted that when you had unveiled them. I believe it was at ConExpo, or maybe it was the other big conference. Can you talk about what early response has been like for and how committed you are to those- Yeah ... product lines? Yeah. No, Steve, we are excited. You know, the paver has been out now, you know, for the last maybe two months. We have quite a few running in the market. And, you know, we had a DOT inspector on one of the jobs a few weeks ago, and his comment was, you know, this is the best product he's seen so far. Mm. The milling machine will hit the street, you know, here in the next couple of weeks. We already have quite a few orders for those, and so yeah, we're excited about this. The piece that really excites us is that both these units will give us access to the biggest volume markets in those product lines. You know, we've always had product, but these were gaps, but they were also the biggest volume gaps. I think we have a good price point, we have a good quality product, and I think we'll get our fair share of the market, these two products. Your customer base on Infrastructure versus the Materials Solutions side's a little bit different. Infrastructure has been a lot healthier lately. In previous earnings calls, you've indicated the interest rate environment may be pressuring your Materials Solutions customers. Yesterday, we got the 50 basis point- Yeah ... adjustment. Does that give you any sort of positive view on how that might affect that side of the business? Yeah. Yeah, no, it's you know, it's a good question, Steve. One thing that I will say is you know, if you look at our customer base, you know, you have a few big players, you know, the CRHs, the Vulcan Materials, those people. You know, interest rates does not really affect them. Right. So it's more the smaller contractor base. And you know, any reduction in interest rates will have a positive effect. You know, does 50 basis points make a big difference in the numbers? Probably not. But I think it makes a difference in the sentiment overall. So I think it will have a positive effect. You know, will it change it around completely? Probably not. What needs to change that around then? Yeah, I mean, I think, you know, longer-term, stability around interest rate will definitely have a positive effect. Okay. One thing that I will say, Steve, you know, I just came back from a three-day customer visit trip. We met with eight different customers. You know, we were in Pennsylvania, Delaware, New Hampshire, Maine, and most of these customers run our asphalt plants. They also run, you know, our crushing and screening equipment. Mm. You know, we were in the pits, and equipment is running, man. So, you know, they are consuming the equipment, and it's just a matter of time that they're gonna need to replace those. ... And you've noted on previous conference calls, including the most recent one, demand for the asphalt and concrete plants, which is sort of your core business, has been there. It's been really good, so. Okay. I have a question about your international exposure, how big it is, and whether that's something you're expanding? Yeah, so, you know, historically, we were in that about 20% range, Steve, depending on the strength of the dollar. But, you know, Steve, international is really, it's almost a blank canvas for us. You know, we have our market share internationally is really small. Although we actually have pretty good brand recognition. So, you know, the international market is really an open canvas for us and a great opportunity. But we need the right product, and various of the new product developments that we're doing will fill those gaps. We've announced, you know, in the past, the investments we're making in our Northern Ireland facility, and especially for our crushing and screening business, you know, that product will position us very well from an international point of view. Excellent. Can you touch on your parts business? I know when you came on board and took over this role 18 months ago, you said it would be a focus. It is typically higher margin, maybe reduces cyclicality of the business. Can you talk about how those efforts have gone over the last 18 months? Yeah. Yeah, I do love the parts and service business, I can tell you that. If you look at our competitors, you know, they've created stability in their businesses with strong parts and service businesses. So, we have a big opportunity to grow that. The team has done really good here in the last 18 months to reduce our backlog, because we actually had an unhealthy backlog in certain of our product lines, which really means that our customers didn't get the right support from us. Mm. ... and our teams have done a fantastic job to fix that, and our customers are starting to see that. So Steve, now we are on the offense. Yeah. So we can actually go and now really be aggressive driving that business and it will have a positive effect on our capital equipment sales as well, so. Excellent. We've gotten a couple of questions in, well in a couple of different ways, but just M&A opportunities. How... timing of M&A, what you're looking at, and what's out there? Yeah. No, we are excited about, you know, getting back in that space. And, you know, it's interesting, the moment you start looking, the opportunities come your way. So, you know, right now, Steve, we are laser focused on getting our balance sheet in even better shape and Yeah ... getting our revolver work down, so that we have firepower the moment we get to the right deal. One thing that we do not wanna do is we do not wanna go into a business that will disrupt, you know, our stability that we're busy creating. So, you know, we will be very selective, and we will make sure that it fits into, you know, our Rock to Road strategy. So, yeah, there's good opportunities and, you know, we will bring the right deal to the market, when we're ready. You mentioned the balance sheet, and you've made strides in the last couple of quarters in terms of working capital. I know Heinrich's been involved in trying to get inventory levels down to more reasonable levels. How are you thinking about cash conversion moving forward, and are we expecting to see improvements? Yeah. Yeah, no, absolutely. And, you know, if we don't do that, you know, we will not be able to... or we won't be allowed, I wanna say, to go and do the deals that we wanna do. Right. The team here is very focused. You know, we showed a nice benefit last quarter. You know- Mm the improvement during Q3, as we said during the earnings call, will not be as significant because, you know, we are building, especially on the asphalt plant side, you know, for the Q4 shipments. Right ... you know, customers are running right now, so, they, they're waiting for the down season to take delivery of equipment. So by year end, we feel pretty confident on where we will be. Okay. Can you touch a little bit on the ERP system implementation? I know this question comes up a lot, where you are- Yeah ... and how meaningful that can be once it's complete. Yeah. Yeah, Steve, so I mean, during the last earnings release, we did mention that we made a decision to slow down the rollout of that significantly. Mm. You know, we wanna make sure that we focus on the quality of the implementation instead of just the speed. You know, the plan is in place now. We have a good team in place, but we will use less cash over the next few years- Okay ... in on an annual basis than what we originally planned, but it will take us a little bit longer, and I'm okay with that. So we're busy working on the next wave and, you know, we will have at least three or four sites in our plan for next year. ... And can you touch on efficiency improvements in at facilities? I know you went through the process of closing a plant at a time when demand was coming back. That created some problems on top of the other supply chain issues. That's before your time in this role. Can you talk about where you are in terms of getting efficiency up at the remaining plants and capturing that Yeah on a margin? Yeah, I will say that, you know, the plant that was in the Materials Solutions side, you know, we are 95% done with that. Okay. You know, let's put it this way: if we didn't do that and, you know, the team hasn't fixed that, the result of that business would have been worse than what it was. So the team have done a really good job there. The closure of the business that we had on the paving side, there's still a few bumps and bruises there. I will say we've fixed the parts situation now completely. We almost have zero backlog there now. So we're getting close, Steve. There's more work to be done. Sure. So it will probably take another, you know, 12 months or so before we see the real benefit of that. On the Oracle side, I will tell you, you know, our HR module that we implemented is working really well. Our corporate reporting system is working really well. You know, and slowly but surely, the efficiencies in the sites are getting better. But we're learning a lot. You know, and every time we will implement a new site, it will go better and better, and our internal team is getting stronger and stronger as well, so. Okay. Yeah. Just about out of time. We did have a question. It is an investor conference. If you can respond to the stock performance and your thoughts on it, and just closing comments before we wrap it up. Yeah. Yeah, Steve, you know, obviously the market is. They decide on what happens with the stock. We as a team are very well aware of where the top-performing companies are in our space. You know, between myself, Ben, and Michael, our two group presidents, you know, we've worked for a lot of those top-performing companies, so we know what good looks like. And, you know, we like to win, so we wanna be in the space where those guys are. And we're gonna make the right decision for our businesses so that we can be there in the long term. So if the stock reacts positive to that, that'll be great, but we'll decide that. We're gonna focus on executing our plans, and I'm excited about the work the team is doing. Excellent. Covered a lot of ground today. Thanks for taking so many questions, Jaco- Yeah ... the team of Astec. If anyone else, if we didn't get to your question, you can please reach out to me at Sidoti, or you can reach out directly to Steve Anderson and the folks at Astec, and they'll happily respond. Thanks, everyone, for being here, and hope you enjoy the remainder of the Sidoti conference. Thanks, guys. Thank you. Thank you, everybody. Thank you. Bye.