管理層發言
Hello, and welcome to the Astec Industries Second Quarter 2026 Earnings Call. As a reminder, this conference call is being recorded. It is my pleasure to introduce your host, Steve Anderson, Senior Vice President of Administration and Investor Relations. Mr. Anderson, you may begin.
Thank you, and good morning, everyone. Joining me on today's call are Jaco van der Merwe, our Chief Executive Officer, and Brian Harris, our Chief Financial Officer. In just a moment, I'll turn the call over to Jaco to provide his comments, and then Brian will summarize our financial results. For your convenience, a copy of our press release and presentation have been posted on our website under the Investor Relations tab at www.astecindustries.com. Turning to slide 2, I'll remind you that our discussion this morning may contain forward-looking statements that relate to the future performance of the company. 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. In an effort to provide investors with additional information, the company refers to various GAAP and non-GAAP financial measures, which management believes provide useful information to investors. A reconciliation of GAAP to non-GAAP results are included in our news release and the appendix of our slide presentation. And now, turning to slide 3, I'll turn the call over to Jaco.
Thank you, Steve. Good morning, everyone, and thank you for joining us. As you will see, we delivered a solid quarter with record revenues and adjusted EBITDA. We continue to make progress with our strategic initiatives as we drive greater consistency, profitability, and growth. Moving to slide 4, net sales were up 23.6% over the same period the prior year, and adjusted EBITDA increased 26%. Adjusted EBITDA margins to 10.4%, which was a 20-basis-point increase over a solid second quarter in 2025, and we reported positive free cash flow. The Infrastructure Solutions segment remained healthy as net sales grew 11.6% over the same period the prior year, largely due to demand for concrete, mobile paving, forestry equipment, and inorganic contributions. For asphalt plant customers, order patterns remain consistent with the prior year. However, macro-driven events such as higher oil prices and uncertainty over the timing of the renewal of the Federal Highway Bill have caused select deliveries to shift to future quarters. Much of our second quarter backlog growth was driven by the anticipated resurgence of our Material Solutions segment, and we are optimistic about the future. Federal, state, and local projects are expected to drive multi-year demand. And the global mining sector is poised for significant investment. The surge in demand for lithium, nickel, copper, and rare earth elements is expected due to the electrification of transportation and growth in the construction of data centers. Dealer inventory levels in the Material Solutions segment are healthy, and we are seeing increased demand for mobile plants. Rental inventory conversions were active throughout the second quarter, and this provided dealers with the ability to replenish inventory. Our new product development efforts are also beginning to show benefits as new crushing and screening units manufactured in our Omagh, Northern Ireland facility gain traction. Providing excellent availability of parts and service to Astec customers remains a key priority. In the second quarter, we generated revenue of $135.5 million of parts and service, which was a 34.8% increase over the same period the prior year. As a percentage of net sales, parts and service reached 33.2% for the quarter and trended upward to 35% on a year-to-date basis. Backlog of $601.1 million increased 57.9%. Both segments contributed with most of the increase being derived from our Material Solutions segment. Overall, order activity in both segments remains encouraging. However, as stated, some asphalt plant customers have begun to schedule their deliveries for the fourth quarter of 2026 and first quarter of 2027. As such, we are revising our full-year 2026 adjusted EBITDA guidance from the previous range of $170 million to $190 million to $160 million to $175 million. For modeling purposes, we anticipate adjusted EBITDA for the second half of the year to have a split of approximately one-third in the third quarter and two-thirds in the fourth quarter. Turning to slide 5, we had a spectacular show at the Hillhead 2026 quarrying, construction, and recycling event held in the United Kingdom in June. Hillhead drew thousands of attendees to see live in-quarry equipment demonstrations over a three-day period. During the show, Astec was proud to launch eight new models, including our Frontier series units produced in our Omagh facility in Northern Ireland. The Frontier crushing, screening, and washing material handling lines are now available for the global market. All equipment is engineered with the latest innovations, underpinned by proven technology, and is fully compliant with CE standards. We were also pleased to display and operate two new prototypes at the show that will be available for sale later this year. Lastly, two new U.K. dealers for Astec products were introduced at the show as part of our overall growth strategy internationally. On Slide 6, we provide a status update for the renewal of the Federal Highway Bill. Two eras of federal surface transportation funding are shown side by side. The Infrastructure Investment and Jobs Act, which runs through September 2026, and its proposed successor, the BUILD America 250 Act, covering 2027 through 2031. At first glance, the $580 billion headline number in the BUILD America 250 Act appears smaller. As it pertains to Astec, however, that comparison can be misleading. Astec equipment is primarily used to process aggregates and produce asphalt and concrete that goes into our nation's infrastructure. We are pleased with the proposed 7% increase in highway funding from roughly $351 billion to $376 billion, and approximately 12% increase to improve our nation's bridges. Money also gets more certain as the formula-funded share climbs from 87% to 90%. These guaranteed non-discretionary portions increase every year, beginning with $65.54 billion in 2027 and progressively stepping up to $69.54 billion by 2031. So the takeaway is this. The BUILD America 250 Act may make a smaller headline, but it channels more government-guaranteed formula-based money into the core highway and bridge programs. The Federal Highway Program provides a meaningful volume of work for the infrastructure industry. This is good for our customers and in turn good for Astec. Exact timing of the Federal Highway Bill renewal has yet to be determined, but a temporary extension in the form of a continuing resolution appears likely. That said, whether the bill is renewed by September 30th or extended, a longer-term bill is a matter of when, not if. For Astec, this provides a baseline for achieving our 2030 revenue and EBITDA targets. Our implied orders and book-to-bill trends are shown on slide 7. On a consolidated basis, implied orders of $460 million grew $151.5 million, or 49.1%, for the same period the prior year, and 6.7% sequentially. As I mentioned previously, we are seeing strong across-the-board order intake by our Material Solutions segment, while macro uncertainty has created the shift in deliveries for selected asphalt customers. Moving to slide 8, backlog of $601.1 million increased 57.9% over the same period in the prior year. The majority of the increase was derived from our Material Solutions segment, which grew 150.6% from a combination of organic and inorganic growth. Infrastructure Solutions posted a 12.7% increase, primarily due to additional orders for concrete, mobile paving, and forestry products. I will now turn the call over to Brian Harris, our Chief Financial Officer.
Thank you, Jaco, and good morning. Our consolidated financial results are highlighted on Slide 10. Net sales of $408.1 million increased $77.8 million, or 23.6%, over the same period in the prior year. Net sales include parts and service revenue, which grew 34.8% to $135.5 million. Adjusted EBITDA increased 26% to $42.6 million, compared favorably to $33.8 million of adjusted EBITDA in the second quarter of the prior year. Adjusted EBITDA margin reached 10.4% for an increase of 20 basis points. Adjusted earnings per share of $0.94 in the quarter compared to a strong adjusted earnings per share of $0.90 in the second quarter of last year. Moving on to the Infrastructure Solutions segment shown on Slide 11, net sales grew 11.6% to $228.3 million from a combination of organic and inorganic contributions. This included aftermarket parts and service, which increased $2.9 million, or 4.6%, compared to the second quarter, the prior year. Operating adjusted EBITDA in dollars increased slightly. However, margin compression of 130 basis points was primarily due to a change in mix between asphalt plant and mobile paving equipment. The Material Solutions segment is shown on Slide 12. Net sales for the quarter grew 43% to $179.8 million due to organic and inorganic growth, while adjusted EBITDA grew 54.5% to $22.1 million. Segment operating adjusted EBITDA margin grew 90 basis points to 12.3% and compared favorably to the same period the prior year. Moving to Slide 13, we continue to maintain a strong balance sheet with ample liquidity. The quarter ended with cash and cash equivalents of $75.7 million, available credit of $190.1 million, for a total available liquidity of $265.8 million. Net leverage of 2.2x was well within our target range of 1.5x to 2.5x. We expect net leverage to further reduce to approximately 1.7x by end of 2026. As we have previously communicated, our 2026 outlook includes the following anticipated full-year ranges: adjusted EBITDA of $160 million to $175 million; an effective tax rate of 26% to 30%; depreciation and amortization of $55 million to $65 million; capital expenditures of $35 million to $45 million. We also expect the following quarterly ranges: adjusted SG&A of $70 million to $75 million; interest expense of approximately $7 million. I will now turn the call back to Jaco.
Thank you, Brian. Slide 14 reiterates the Astec Build to Connect Way and the key performance metrics shared during our 2026 Investor Day. These are the measures we believe matter most to investors as they deliver significant value. While progress will not occur in a straight line, we remain confident in our ability to achieve these targets by 2030. Slide 15 summarizes our key investment highlights. We have built a strong reputation as a dependable provider of internationally recognized brands and high-quality solutions. Our team remains closely engaged with customers, and ongoing conversations indicate continued optimism about activity levels across the construction market. We are encouraged by the results of our operational excellence efforts and expect continued improvement over time. We believe our manufacturing and procurement initiatives are increasing efficiency and will support further adjusted EBITDA growth. Several attractive opportunities and growth drivers support our path to 2030. We have launched a significant number of new products, including the models introduced at the Hillhead 2026 construction show. These products have been vetted through our disciplined, stage-gate approval process. We have additional products scheduled for launch over the next 12 to 18 months, each targeted at specific areas of market opportunity. Continued growth in our parts and service businesses will support margin expansion over time. Public funding remains stable and modestly growing, while our public end markets are generally non-cyclical. Our robust digital offering enables us to meet customer needs for unified connectivity suites that aggregate data across product types. Next, industry megatrends point to multi-years of growth in demand for construction materials. These megatrends include the construction of data centers, reindustrialization, and the domestic mining and rare earth minerals. Lastly, our strong balance sheet provides attractive options for capital allocation, including strategic inorganic growth opportunities aligned with our financial objectives, growth opportunities in both established and emerging international markets. With that, operator, we are ready for questions.
分析師問答
The floor is now open for questions. Your first question comes from the line of David MacGregor with Longbow Research.
I wonder if I could just start by asking you to talk about the different scenarios and assumptions behind the upper and the lower ends of the revised EBITDA guidance.
Yes, when we look at the new guidance range, we talked in the earnings release around the shift that we've seen in asphalt plant delivery. We've actually seen bookings comparable to 2025. Interestingly, earlier than normal, we've seen some deliveries from customers being scheduled for Q4 and then already for Q1 next year. What we've done is look at our ability to react. In the short term, we feel that there's still an opportunity for us to fit orders into the fourth quarter that will drive us to the higher end of the range. The bottom end of the range we feel we have great visibility to achieve, so it just depends on timing in the next couple of weeks of orders coming in. One thing I will say is that we actually had very strong bookings towards the end of the quarter for asphalt plants. July turned out to be one of our best bookings months. We've also seen a very strong bookings month for parts in July. So the momentum that we've seen late in the quarter is giving us confidence that we can operate within that range. If we get one or two plant deals to fall, we can get to the higher end of the range.
Right. And just to clarify on that, do you think the delays are related to the continuing resolution around BUILD America 250, or—I'm curious what you're seeing as maybe an explanation for why these are being pushed out?
Good question. We looked at the order pattern for last year and saw a similar pattern, although last year there was maybe a three- to four-week period at the beginning of Q2 where bookings were slow. This year it was more the first six to eight weeks. Then orders started to flow through strongly in June and July. There's a lot of uncertainty in the market right now. Our customers are affected by the spike in oil and diesel fuel prices. Smaller customers are definitely looking at the highway bill to give them confidence, while larger customers typically have a capex cycle and apply that as they see fit. So there's a difference of maybe three to four weeks this year compared to last year, but the developments and orders in June and July give us confidence that there's still demand. We have a good pipeline, and when we talk to customers, there's still a lot of work out there.
Right. Okay. And as a follow-up, you made passing reference to the spike in energy prices and some of the cost inflation in the market today. I was wondering if you could talk about the Infrastructure Solutions results this quarter, which didn't really show much operating leverage and you explained that, or Brian did, with regard to the mix between asphalt plants and mobile paving plants. To what extent was that lack of operating leverage a function of price/cost pressures, and if so, how does that play out from a cadence standpoint over the second half?
We saw a mix difference compared to prior year. We had a slightly lower parts mix and did see a bit of margin pressure on parts, but we don't see that as the norm. The team is putting the right actions in place to drive that higher. Last year Q2 was a very strong quarter for the Infrastructure Solutions team, and our visibility into H2 and the early part of next year indicates the pricing actions we've taken should drive margins back to where they were last year.
Your next question comes from the line of Steve Ferazani with Sidoti.
Jaco, I do have to follow up some of the previous questions because I'm trying to think about what your guidance assumes. Does your guidance now assume we're just going to get the one-year extension because that seems to have developed much more recently? And then have you gone back and looked at asphalt plant demand when we get into an extension cycle like we did in 2009? What's the downside risk from that, given a process that appears to be relatively dysfunctional?
On the bill, we're close to our trade associations and active in those conversations. The delay in the bill is not necessarily because of this bill, it's because other priorities have overshadowed it. We did get an indication there will probably be a continuing resolution until the end of the year and then hopefully either a new bill introduced or further resolution. Historically since the 1950s, we've generally had a bill. There were a couple of years with a slowdown in orders due to a one-year extension. Looking at our bookings in the last two months, they've been very strong. We have a very active pipeline and strong parts bookings. So at this point, there's no indication we'll see a slowdown. There's a lot of work to be done and no indicators giving us a view that this will cause a slowdown.
Great. That's very helpful. And then clearly, looking at the numbers, IS revenue was strong but lower margin, which seems mixed with lower asphalt plant deliveries. That indicates some of your other IS product lines have to be doing quite well. Can you talk about what's driving that and how much of that's driven by new product innovation versus gaining share?
On the Infrastructure Solutions side, we have a diversified portfolio now between asphalt, concrete, and mobile equipment. Over the last four to five years, Astec has a market-leading position in concrete, and we're proud of the mix that business has provided. The mobile side had a slower business last year, especially Q3 and Q4, and we feel Q3 and Q4 this year will be stronger. We introduced a new Shuttle Buggy replacement of an older model that has received very good reaction from customers. We now have two models in the market, and our backlog on that equipment is well into next year. Most of the new products we discussed at ConExpo and Hillhead are in the Material Solutions side, where we're very confident about the pipeline.
Got it. That's helpful. When we think about the Material Solutions side, which is clearly generating stronger results, the concern would be that things slowed when we had higher interest rates previously, and we might be heading into that environment again. Any risks there and what are you seeing?
Interest rates are always a consideration for customers and dealers. Interest rates have been at a higher level for some time now, and everyone is used to operating in that environment. Our dealers' rental fleet utilization is strong; I spoke to a regional sales leader who reported rental utilization well above 80% for several top dealers. That indicates a lot of work and equipment on rental. We've seen a strong conversion of rental to purchase, which gives dealers the opportunity to buy new equipment and replenish their rental fleets.
Your next question comes from the line of Steven Ramsey with Thompson Research Group.
I wanted to continue the topic in the materials segment. Can you talk about the organic demand within the segment, and then using the word resurgence to describe the demand profile there, can you talk about the nuances of that resurgence and if it's simply tied to some of the dynamics you just talked about or if it applies to other market verticals?
If you look back at Material Solutions over the last four or five years, when we came out of COVID we had a very strong backlog, and to some extent backlog that was higher than what the market was absorbing at the time. We then worked down inventory created in the dealer channel. We are now in a more stable environment for that business. Dealers' inventory is healthy and there's a lot of work across the country. When we had the record backlog in 2022, much of it was focused to one or two dealers. This time we're seeing orders across the board, and we are seeing significant retail orders where dealers received orders for equipment that will go directly to customers with no rental involved. Overall, it's been a strong business. TSG is in that product line, and we had our best bookings month for TSG last month. Internationally, Material Solutions has been strong. The work the team has done on new products and improving product quality over the last two to three years is starting to pay off.
Okay. That's helpful. And then in the infrastructure segment, the concrete and mobile equipment side of things, as those are improving for you, what is the mix impact to margin from those two categories growing? If concrete lags asphalt plants, is there a pathway for concrete to get to parity with asphalt plants?
From a financial performance perspective, our concrete plants are in line with the performance of our asphalt product line and are performing very well. Since we acquired those companies, we've done a lot of work there. Typically margins on mobile equipment are lower than on engineered-to-order product lines. If we see a bigger mix of mobile equipment, it will put some pressure on overall margins. However, we expect only a couple of percentage points swing in mix; I don't think it will be significant enough to drive margins down materially from where they are now.
Your final question comes from the line of Dilyara Sailaubayeva from Freedom Broker.
So I would like to ask on the Material Solutions side, given the mix shift toward this segment, how should we think about the timing of the backlog conversion in the second half?
Backlog in Material Solutions: we already have quite a bit of product scheduled for deliveries in the early part of next year, but most of the backlog will convert this year. That gives us good confidence about the second half, especially on Material Solutions, because we have a significant portion of the outlook already covered in terms of capital orders.
Thanks. So just to follow up on guidance, is the revised guidance mainly reflecting pressure in Infrastructure Solutions, or are there any other factors you implemented in the guidance?
I want to make clear that the guidance change was primarily due to the shift in deliveries of plants. The business is strong and bookings are comparable to last year. June bookings were strong and July bookings were strong. We see a shift of deliveries to Q4 and into Q1 on the plant side. As you know, moving three or four plants from one quarter to the next, or from one year to the next, can have a significant effect on our financial results.
There are no further questions at this time. I will now turn the call back to Steve Anderson for closing remarks.
Thank you. We appreciate your participation in our conference call this morning and thank you for your interest in Astec. As today's news release states, this conference call has been recorded. A replay of this conference call will be available through the registration link provided in our news release, and an archived webcast will be available for 12 months. The transcript will be available under the Investor Relations section of the Astec Industries website in five business days. This concludes our call, and I'm happy to connect if you have additional questions. Thank you all, have a good day.
This concludes today's call. Thank you for attending. You may now disconnect.