This article first appeared on GuruFocus .
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record revenues and adjusted EBITDA in Q2 2026, with net sales up 23.6% and adjusted EBITDA up 26% year-over-year.
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Strong backlog growth of 57.9% to $601.1 million, driven by robust demand in the material solutions segment.
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Parts and service revenue surged 34.8% to $135.5 million, reaching 33.2% of net sales, indicating strong aftermarket demand.
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Successful launch of 8 new models at the Hillhead 2026 event, including the Frontier Series, expanding global market reach.
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Proposed Build America 250 Act includes a 7% increase in highway funding and a 12% increase for bridges, providing a positive long-term outlook for infrastructure demand.
Negative Points
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Revised full-year 2026 adjusted EBITDA guidance downward from $170-$190 million to $160-$175 million due to delayed asphalt plant deliveries.
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Macro uncertainties, including higher oil prices and timing of the federal highway bill renewal, are causing customers to shift deliveries to future quarters.
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Infrastructure Solutions segment experienced margin compression of 130 basis points due to a mix shift between asphalt plants and mobile paving equipment.
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Adjusted EBITDA margin only increased 20 basis points despite strong revenue growth, indicating limited operating leverage.
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The delay in the federal highway bill renewal creates uncertainty, with a continuing resolution likely, potentially impacting customer confidence and order timing.
Q & A Highlights
Q: Can you discuss the different scenarios and assumptions behind the upper and lower ends of the revised EBITDA guidance? A: CEO Jaco Funderuva explained that the guidance revision is due to a shift in asphalt plant deliveries, with customers scheduling deliveries for Q4 2026 and Q1 2027. The company has strong visibility to achieve the lower end of the range, while the higher end depends on securing 1-2 additional plant deals in the coming weeks. He noted that July was one of the best booking months for asphalt plants and parts, providing confidence in the revised range.
Q: Do you think the delays in asphalt plant deliveries are related to the continuing resolution around the Build America 250 Act? A: CEO Jaco Funderuva noted that while there is uncertainty in the market due to oil price spikes and highway bill timing, the order pattern is similar to last year, though the slow period was slightly longer this year. He emphasized that strong bookings in June and July indicate continued demand, with a good pipeline and customers reporting plenty of work available.
Q: Does your guidance assume a one-year extension of the highway bill, and what is the downside risk given the current political environment? A: CEO Jaco Funderuva stated that a continuing resolution until year-end is likely, with a new bill expected afterward. He highlighted that historically, the U.S. has always had an infrastructure bill since the 1950s, and despite potential delays, current bookings and parts orders remain strong with no indications of a slowdown.
Q: Can you elaborate on the organic demand within the material solutions segment and the "resurgence" you mentioned? A: CEO Jaco Funderuva explained that after working down dealer inventory levels post-COVID, the segment is now in a stable environment with healthy dealer inventories. Unlike the 2022 record backlog that was concentrated in a few dealers, current demand is broad-based, with strong bookings, including a record month for the segment, and significant retail orders going directly to customers without rental.
Q: What is the mixed impact on margins from the growth in concrete and mobile paving equipment within the infrastructure solutions segment? A: CEO Jaco Funderuva noted that concrete plants perform in line with asphalt plants financially, but mobile equipment typically carries lower margins. While a larger mix of mobile equipment could pressure overall margins, he expects only a couple of percentage points swing in mix, which should not significantly drive margins down from current levels.
Q: How should we think about the timing of backlog conversion in the material solutions segment for the second half of the year? A: CEO Jaco Funderuva stated that while some material solutions backlog extends into early next year, most of it will convert this year, providing strong confidence in second-half performance, particularly for the material solutions segment, as a significant portion of the outlook is already covered by capital orders.
Q: Is the revised guidance mainly reflecting pressure in the infrastructure solutions segment, or are there other factors? A: CEO Jaco Funderuva clarified that the guidance change is primarily due to the shift in plant deliveries, not a decline in business. Bookings are comparable to last year, with strong June and July performance. He emphasized that moving just 3-4 plants between quarters or years can significantly impact financial results.
Q: Can you explain the lack of operating leverage in the infrastructure solutions segment this quarter and the impact of price/cost pressures? A: CFO Brian Harris attributed the margin compression to a change in product mix between asphalt plants and mobile paving equipment, along with a lower parts mix and some margin pressure on parts. He noted that these issues are not expected to be the norm, and pricing actions taken should help restore margins to last year's levels in the second half.
Q: What is driving the strong performance in the infrastructure solutions segment outside of asphalt plants? A: CEO Jaco Funderuva highlighted the diversified portfolio, including a market-leading position in concrete and strong performance in mobile paving. He mentioned the successful launch of a new shuttle buggy model, which has received excellent customer response, with backlog extending well into next year. Most new product launches are focused on the material solutions side.
Q: Are there risks to the material solutions segment from potentially higher interest rates? A: CEO Jaco Funderuva acknowledged that interest rates are always a consideration but noted that the market has adapted to the higher rate environment. Dealer rental fleet utilization is strong, with some top dealers above 80%, and there has been active conversion of rental equipment to purchases, allowing dealers to replenish inventory with new equipment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
