Q2 2020 L.B. Foster Co Earnings Call
Greetings welcome to L.P. Foster company's second quarter 2020 results conference call.
This time, all participants are in listen only mode.
Brief question answer session will follow the formal presentation.
If anyone should they should operate assistance during the conference. Please press star zero from your telephone keypad.
Please note this conference is being recorded.
At this time I'll turn the conference over to Jim Kimpton Controller, and principal accounting officer, he may be answer.
Thank you operator.
Good evening, everyone and welcome to L., we foster second quarter earnings call.
I'm, Jim kept in the company's corporate controller and principal accounting officer.
Also with me today is our president and CEO Bob Bauer.
I will be covering the company second quarter financial highlights today, following our previous CFO, Jim Malone East decision to leave the company to pursue other opportunity.
[music].
This evening.
Review the company second quarter financial results.
After work Bob will review the company second quarter performance and provide an update on significant business issues in market developments.
Then we'll open up the session for questions.
Today's slide presentation, along with our earnings release and financial disclosures were posted on our website earlier today and can be accessed Warner Investor Relations page and they'll be foster dot com.
Some statements. So we're making are forward looking and represent our current view of our markets in business today, including comments related to cope with 19.
These forward looking statements reflect our opinions only as of the data this presentation.
We undertake no obligation to revise or publicly released the results of any revisions to these statements in light of new information, except as required by security laws.
For more detailed risks uncertainties assumptions related to our forward looking statements. Please see the disclosures in our earnings release in presentation.
We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided within today's earnings release and within our accompanying earnings presentation carefully as you consider these metrics.
I'm going to cover the second quarter results, the CV, but before I do that I would like to discuss several other items.
At the ended June we executed in an amendment to our credit facility.
The amendment provides for among other changes.
<unk> expense to the financial covenants inexperienced the definition of adjusted EBITDA in the agree but.
We determined that given the uncertainty on the current environment due to the cobot 19 pandemic and our desire to take the appropriate restructuring actions to address related issues that this was the prudent course of action.
Well, we're cautiously optimistic about the company's near term outlook. These changes will provide us with the necessary flexibility to fund actions intended to improve profitability and maintain the appropriate liquidity if difficult conditions persist.
For further information regarding the amendment and the credit agreement. Please reference our form 8-K filed on July 1st.
In our 10-Q to be filed tomorrow.
I also wanted to remind you of our relocation of our precast concrete facility for a Spokane, Washington to Boise, Idaho.
As you May recall this relocation as part of an initiative focused on regional growth opportunities and logistical savings associated with the more centralized location that moves us closer to the company's existing and prospective customer base.
Well, we incurred no further nonrecurring costs related to this relocation in start up one and that basis during the quarter.
The facility has not yet achieved full operational efficiency, it's significant startup costs and inefficiencies are in the construction segment six month results.
Finally, as we've discussed on previous calls in the fourth quarter 2019, we took a number of actions aimed at reducing cost and risk in our tubular and energy services segment by closing three service centers and reducing headcount in our test inspection and threading services Division.
During the quarter and year to date period, we trailing costs totaling 67000, and 271000, respectively related to these actions.
These majors are now completed and we do not anticipate any further charges to come through related to these activities.
However on May four 2020, the company announced the closure of three additional test inspection and threatening services facilities and other cost cutting measures related to this business.
These actions coupled with other cost reduction majors, taking in other parts of the company.
Resulted in approximately 7 million in nonrecurring restructuring charges during the quarter of which approximately 4.5 million where non cash impairment charges.
The operational results of the sites close during the quarter negatively impacted adjusted EBIT up by approximately 400000 for the quarter and by $1.2 million for the year to date period.
We believe that these actions will help mitigate the negative impact at this division has been having owner companies result, and will better position the tubular and energy segment to navigate the current challenging dynamics in the oil and gas market caused by the Kobin 19 pandemic.
The company is continuing to evaluate strategic alternatives for this business, including closing sites or idling operations at additional locations.
Bob will be touching on the impact of the cobot 19 pandemic on our business and specifically the resulting effect on our operating segments later on in the presentation.
So with that I will start my financial review.
For the purposes.
Helping you understand the underlying business performance many of our comments today will be based on the second quarter results, excluding the nonrecurring restructuring charges of approximately $7 million that I just discussed.
And a 1.9 million dollar benefit related to a nonrecurring distribution associated with our interest in a nonconsolidated partnership.
As a result, I will refer to adjusted EBITDA adjusted net income in adjusted diluted EPS during the presentation today.
During the second quarter or.
<unk>.
Compared to 200.9 million in Q2 2019.
55.2 million or 27.5% decrease.
Consolidated gross profit decreased by 10.1 million over the prior year quarter.
Gross profit margin of 18.6% wasn't an increase of 10 basis points from Q2 2019.
The decreases in sales and gross profit in the quarter were due to several reasons.
Even though the business, which generally considered a central business in allowed to operate during the pandemic cope with my team negatively affected our operating results in Q2.
During this time the company experienced disruptions in our supply chain any customer acceptance of products and services as well as general weakness in demand as stay at home orders were enacted remained in place.
Our rail products and services segment was primarily impacted in our rail products business and our rail technologies business in both North America in Europe.
The real products business declined by approximately $16 million driven by lower demand quarter over quarter, resulting from declines in freight real procurements and decrease transit rail deliveries.
The rail technologies business had a decline of approximately 10.7 million in revenues.
These results were driven by weakened demand for solid consumable offerings in North America due to lower rail traffic volumes driven by the pandemic.
In addition, the London Crossrail project was impacted by work stoppage cost by stayed home orders in the UK.
We are anticipating onsite services for the Crossrail project to resume in the third quarter.
The declines in revenues drove the decline in gross profit quarter over quarter. However, I would note. The gross profit margins for the rail segment increased by approximately 130 basis points quarter over quarter based on higher margin product mix.
From a tubular and energy segment perspective, the challenging dynamics in the oil and gas market caused by the cobot 19 pandemic have caused U.S. exploration and production companies to significantly decreased activity and implement spending cuts.
These events have driven the 34.7% decrease in revenue volumes quarter over quarter.
These decreases in sales coupled with weakness in the upstream energy market and its impact on the test inspection and threatening services division drove the decline in gross profit in the tubular and energy segment, a 4.4 million versus Q2 of 2019.
During the quarter. The construction products segment was primarily impacted by reduced volumes in our piling business driven by the Q2 2019 contributions of the Port Everglades project.
Well was completed in the fourth quarter 2019.
In addition, during Q2, our new precast concrete Boise facility at approximately 4.1 million less revenue when compared to a Spokane, Washington facility in the second quarter of 2019.
We do expect is planned to reach full operational efficiency during the third quarter.
Well gross profit declined due to the decreases in revenue volume.
Gross margins for the segment were up approximately 30 basis points for the quarter. Despite the impact of the Boise facility ramp up.
Now moving one do expenses.
Our consolidated selling and administrative expenses decreased by over $3.3 million or 14.4% to approximately 19.6 million in the second quarter.
Net interest expense was reduced by 507000 or 31.7% for the second quarter due to a 35.5 million dollar reduction in outstanding debt at June Thirtyth 2020, when compared to June Thirtyth 2019.
Our income tax expense was 1.1 million in Q2, 2020, resulting in an effective tax rate of 67.6%.
Provision for income taxes included 2.6 million of tax expense on 8.1 million of ordinary income generated in the quarter.
Offset by a 1.5 million dollar discrete tax benefit related to the 6.5 million dollar test inspection and threatening services ages charges and asset impairments taken during the quarter.
Our second quarter net income was 523000 or five cents per diluted share compared to income up 9.6 million or 90 cents per diluted share last year.
Excluding the impact of restructuring costs of approximately $7 million incurred during the quarter. The benefit of approximately 1.9 million for nonrecurring distribution associated with our interest in an unconsolidated partnership and the related tax effects associated with these adjustments result.
Really an adjusted net income for the quarter of 4.4 million or 41 cents per diluted adjusted diluted share.
Adjusted EBITDA totaled 11.8 million in the second quarter, a decrease of 5.4 million compared to Q2 2019. However, it is an increase of approximately 8.7 million from the first quarter of 2000 wanting.
Now turning to the balance sheet, our trade working capital decreased by 6.8 million compared to December 30, Onest 2019, due mainly to decrease in inventory of 5.6 million.
The decrease in inventory in 2020 was due to better inventory management and our rail distribution business.
Net debt was 48.2 million at June Thirtyth 2020, compared to 79.1 million at June Thirtyth of 90.
Our leverage ratio for the trailing 12 month period is 1.5 times as of June Thirtyth 2020.
Over the last several years, we've strengthened our balance sheet, which should help us manage through these challenging times and position us well to execute on our strategic initiatives.
Our current ratio as of June Thirtyth 2020 is a very healthy 1.86.
Our total available funding capacity that is the available capacity under our revolving credit facility plus our cash was approximately 71.1 million as is the ended the quarter.
From a cash flow perspective, our cash provided by operating activities in the second quarter was $13 million compared to 4.1 million in 2019.
The 8.9 million dollar period over period improvement in operating cash flow was primarily related to our continued focus on trade working capital improvements.
I'd also like to note that this reflects operating cash flow of approximately 44.9 million in the last 12 month period.
Our capital expenditures during that time period were approximately $12.4 million, which derives free cash flow over approximately $32.5 million.
Based on our closing stock price up $12.77 per share as of June thirtyth that would imply a free cash flow yield or approximately 24%.
During the second quarter, our capital expenditures were $3 million.
The second quarter expenditures, primarily relate to the continuous weld railcar and unload are within our rail segment and continued investments in our precast concrete products business, including our Boise, Idaho facility as well as our existing Hillsboro, Texas plant.
I would note that the continuous weld railcar unloader is a very infrequent capital requirement for the company as these have a very long useful life associated with them.
To date, we've spent 4.1 million on this railcar of which 2.3 million has been spent year to date in 2020.
We anticipate spending an additional 1.5 million in Q3 on this railcar which will be the final payment related to this asset at which time. This railcar will be placed into service.
We are anticipating our capital spend to be approximately 9 million to 11 million for the entire year.
Now one to new orders in backlog in Q2 overall orders were 138.3 million compared to 164.1 million last year with the decline primarily attributable to the tubular and energy segment.
Order volume increases the quarter progressed in certain pandemic related restriction orders were lifted or software.
Rail segment orders were marginally below first quarter by 1.5 million and construction segment orders increased 12.9 million sequentially from the first quarter of 2020.
Tubular and energy segment orders declined 10.1 million sequentially from the first quarter of 2020.
Backlog stood at 225.9 million at the end of the second quarter, an increase of 16.6 million or 7.9% compared to June Thirtyth 2019 backlog.
Most notably backlog increased by approximately 29.7 million in the rail when construction segments versus June Thirtyth 2019, which is a positive sign in these businesses as we move into the back after the year.
That concludes my comments on the second quarter results, so with that I will now turn it over to Bob.
Thank you, Jim and Hello, everyone.
Jim covered a lot of ground and his report census was a quarter, where significant focus would be on our ability to navigate a difficult market and determine where are the impact would be great. As a result of a pandemic environment.
We were closely watching order input rates to assess the impact of a pandemic and whether there were signals of how our recovery might unfold as.
As you'll hear on our report we saw new orders actually improving as the quarter progressed at a helped by some key projects as is typical.
Among the other key results to discuss our the sequential improvement in profit from the first quarter and the significant difference in our underlying segment performance.
When comparing railing construction to the tubular and energy segment.
These changes helped shed light on the current environment and may be more relevant than the second quarter year over year comparisons that work spectrum to reflect the decline.
After many shutdown orders.
You will see a distinct difference in the impact depend demick is having on our tubular and energy segment, highlighting the fact that the energy related activity in the U.S. has been hit very hard and as taken a more significant toll on our results than the softness from transportation markets has.
I'm not going to spend time talking about what I think investors already know as it relates to people all over the world exploring alternatives to public forms of transportation or avoiding them altogether.
In the subsequent severe decline in demand for oil that resulted.
This is reflected in our second quarter year over year results, especially in our energy related businesses.
What became more clear to us as the pandemic unfolded was that the impact from the big drop in demand for oil was going to be far worse on our energy related businesses compared to the impacted the pandemic would have near term on our other transportation focus businesses.
Our drilling and production customers in the U.S. turned off production about as fast as they could and our upstream tubular test and inspection services saw a dramatic decline.
On the other hand as ridership on trends or rail systems plummeted that the same time transit rail operators did not turn off all the long term infrastructure projects underway.
And when looking at freight rail, although volumes declined due to recession like conditions. They continued to support maintenance and other programs, although at lower levels as capital spending and other measures were taken similar to what you would see them take during a recession.
Before I go into comparing some numbers on this subject I want to expand on our actions that led to the decision to take the charges in our tubular and energy segment.
The decline in production of oil and gas in the US was more severe than what we saw in the 2015 to 2016 timeframe as global demand sale and drillers headed for another round, but cash flow and capital preservation to stay alive.
Immediately impacted our upstream services division and signs where emerging that midstream operators weren't far behind as constraints on transport volume would be pushed out.
We had sufficient backlog going into the second quarter for midstream customers that ordered coated pipe and measurement systems, but the upstream services business is not a backlog driven business.
Backlog there as measured in days and order input can and did fall fast.
The 35% decline and segment year over year sales came from all the energy focus divisions with the worst decline coming from the test and inspection services division serving drilling customers.
Total segment decline must talk to overcome but we managed to keep the gross margins for the entire tubular segment above 20%.
Over the $7 million in charges, we took this quarter for actions related to lowering cost six and a half million dollars was related to shutting unprofitable service centers with poor forward looking forecast and the test and inspection division.
These actions are in line with previous comments, we've made about continuing to deal with locations, where the market is not showing signs of a recovery anytime soon.
Our view of the overall upstream market is that it will continue to struggle as operator strive to achieve cash flow objectives. Our goal. Following these actions has to minimize and hopefully eliminate losses from the test and inspection division.
Having shuttered the locations that didnt have a path to profitability. We have also been rightsizing the balance of the business, which is today positioned in markets that should have the best chance of recovering when production increases assuming that the supply chain isn't pressured more.
From customers.
Let's look at the other pieces now first a year over year consolidated sales for the quarter were down as expected, particularly with having a record level of sales last year and Q2, but in contrast to the 28% decline in year over year sales is a lower.
16% decline in consolidated orders.
Almost all of which is from the tubular and energy segment, leaving the year over year orders for rail and construction to be relatively flat with prior year.
So during the current environment, we considered this among the more promising signs.
As we analyze the year over year sales change, it's difficult to separate the impact from Novartis versus a recession driven by the virus. The accumulation of reasons that range from work from home orders slowing of programs strain on government budgets and intentional delays and.
Spending are all surfacing as reasons for business activity that has declined from quarters prior to the emergence of the pandemic.
North America freight rail traffic is down from a year ago and transit ridership is well off normal use all over the world, especially in our key markets.
This is having a direct impact on consumable sales for friction management and lubricants that managed the wheel rail interface, which are well off last year's pace.
The decline in consumables unrelated service work coupled with the service work in London that has been shut down accounts for nearly all of the year over year sales decline in our rail technologies business in Q2.
There are several examples of expansion and maintenance of transit rail networks that has not slowed significantly and has kept our core rail products backlog above prior year June levels.
While year over year sales in the quarter for rail products are lower the order volume and increase in backlog has been a signal to us that these operators continue to move forward with programs that have a long term view of infrastructure needs and their assuming ridership well return in the future.
The further help you understand our consolidated results and the stark difference between rail in construction combined versus tubular.
Here are some data for comparison.
For Q2 sales railing construction is down 25% tubular is down 35%.
Consolidated gross profit declined by $10 million of which 4.4 million came from tubular a disproportionate amount.
Orders for railing construction were flat with prior year Q2.
In Q1, they were down 20% another solid sequential improvement.
The consolidated backlog increase of 17 million was driven by a 30 million dollar increase in railing construction, bringing the backlog for these combined segment up 16% over prior year.
Not only are these results among the segments very different but our outlook is very different over the balance of the year, which I'll address momentarily.
Turning now the profitability among the most significant developments and our results as the sequential quarterly improvement in profit.
Our adjusted EBIT da.
Improved by $8.7 million over the first quarter to 11.8 million.
Sales volume and the second quarter was better than Q1 by $17 million, but that wouldn't normally produced an 8.7 million dollar increase and EBIT da.
Sequentially gross margins improved from 16.8% the first quarter to 18.6% in the second quarter.
Every segment improved with rail better by 220 basis points construction, better by 60 basis points and tubular better by 320 basis points, Yes, I did say tubular better by 320 basis points in this sequential.
Comparison, you can see how the restructuring actions in tubular helped improve results from the first quarter.
The other factor, helping sequential profit improvement is the increasing productivity at the new precast plant in Boise, Idaho.
This plant move was still underway in Q1 as startup activity and training of a new workforce was occurring.
As productivity has been improving and is expected to get even better we expected to have a positive impact on sequential results.
And there was favorable pricing and customer mix on certain product lines, along with our ability to plan for service and delivery interruptions that help produce the improvement in gross margins.
The improvement translated into adjusted net income of $4.4 million after removing the 7 million in restructuring charges and the $1.9 million of income from the unconsolidated partnership along with their related tax effects and the increase in profit was the big factor in dry.
Having the $13 million on operating cash flow for the second quarter with another quarter of contribution from working capital management.
We are able to pay down debt by $8.6 million.
On a year to date basis, we've spent $7.4 million on capital spending we have a front end loaded spending right. Jim described the plant move to Boise and the new train added to our rail distribution fleet that all started last year and cash for this work.
Back to be in the first half of 2020.
Our capex plans for the balance of the year are much lower and would like to bring this number in close to the midpoint of Jim's range.
My last subject is turning to the second half of the year, there's still a fair amount of uncertainty about what's ahead and most of our customers are struggling to forecast the next few quarters.
So much hinges on whether traffic improves on freight and transit rail lines and an unprecedented conditions make that difficult to predict.
On the other hand, numerous transit rail projects are expected to continue certain stimulus money is being directed to transit rail agencies and more maybe coming.
And the freight rail road market, we expect volume the struggle and we expect these operators to trim expenses.
I believe our current volume reflects this environment I don't expect an increase in our consumable was driven friction and management business until volume from freight railroads gets better and transit operator see more traffic.
On the other hand, we do expect increases in services that were stopped and some sites in Q2, especially in Europe, where the decline was more severe.
This is expected to give us a boost in revenue in this category.
As attention turns to a recovery, we are ending the quarter with a strong backlog and we also have some new products. We've launched that have helped fill of market void. In addition to increasing staffing levels in the service business has worked resumes.
Turning to construction.
Certain construction projects have not move forward at the normal pace as getting projects from the bid stage to closing an order is taking longer than normally plant.
We believe that certain engineering firms and government operations involved in transportation related projects struggled to work effectively in the current environment.
This is likely to get better only one novartis outlook and related safe working environment improve.
However, we did and the first half of the year when a backlog of $107 million up 16% from year end and 20% from June 32019, which should help mitigate some of the effects of these delays in projects.
Our outlook for tubular and energy is that a challenging environment will continue.
Although there are numerous predictions, but the price of oil will improve and it already has we do not expect drillers to run back out and resume prior activity.
Consolidations have already started to occur among MP companies in the current challenging environment, we expect there to be fewer upstream operators and the price of oil to remain volatile for some time with lower travel volume expected into 2021.
We expect pipeline projects to slow down, but not much more from the current pace.
Keep in mind, we're still working off some backlog and our coated products and metrics measurement systems business.
In summary, as we think about the second half the positives seemed outweigh the negatives across our entire business and there is a real solid chance at will have positive year over year orders next quarter. If the market doesn't have further pandemic related disruption.
This could keep our backlog up over 200 million, which would be nice to see going into the fourth quarter.
Finally hits reassuring when you have a team of people that can deal with difficult issues and the most complicated environments.
We have great partners, we go to market with network coordinating activities with.
We have relied on our proven business processes in our business system. During these challenging times.
But most of all we have people jump in and help one another one the need arises and for that the senior management team is grateful for their efforts.
Im going to end my comments, there and return the call, but the operator and we can take your questions.
Thank you.
At this time will be conducting a question and answer session.
If you like to ask a question today. Please press star one on your telephone keypad and a confirmation total indicate your lines in the question Q.
You mean press star to if you'd like to move your question from the Q.
Hi. This is the reason speaker equipment, maybe necessary to pick up your handset before pressing the star keys.
One moment, please while we pull for questions.
Once again as a reminder, you me press star one to ask a question today.
Thank you.
My first question is from the line of Alex Rodriguez with B. Riley. Please proceed with your questions.
Thank you good afternoon gentlemen.
Hello, Alex Thanks for joining us.
Absolutely.
Could you give us a little bit more of an update on the London Crossrail project.
Yes, well I can tell you a little bit about maybe to start with what happened in the second quarter.
Of course, the outbreak over in that area was pretty severe.
Right there in the second quarter and for pretty much the entire quarter. They asked us to send our field tax home.
So that's a that's a pretty significant project for us.
I can't I cant recites exactly the number of field Tech. So we have on that project, we're talking about a lot of people when I mean, a lot of people talking about the approaching 200.
People that could be out in the field work on on that project.
So they were largely.
At home in the second quarter and they are now bringing them back on two sites. So those sites are.
The actual stations, where all of the automation work is taking place in the London Underground project. So we're doing a lot of systems integration work there.
Connecting.
A lot of systems that that have to do with passenger information.
As as well as access control and video monitoring and you know a lot of the high Tech equipment. That's there. That's there so they're back I can't say that everybody's back yet where we're ramping them up.
This point.
But we are getting back on to the side than we do anticipate that work is going to resume and hopefully get back to you know the rate at which we were once working there, but that's probably something we won't know and known until this third quarters behind us.
And you also mentioned that you had a number of new product launches in the rail business.
Can you go a little bit deeper into our what those work.
Yes, there were actually across was more more than rail.
Across the entire business, maybe I'll start with some that weren't rail and then what the rail ones.
Just as some examples we've had a number in the precast concrete.
Area.
So these these are adding to our precast concrete buildings, which is the marquee product line for that particular business.
We've stepped into new product lines.
They have expanded some of our business in the area of bridge beams.
We're in sceptics systems.
And other products that go with septic systems for residential one kind of light commercial duty applications.
And we continue to work on our buildings product line as as well.
And.
You know when the rail area, we've got some new technology. This is rolled out in some of our.
Allegheny rail products that are used to manage signaling systems.
A number of new things in the area of disruption management in our controls in sport and displays business. So these are these are product lines that.
Our some of the newer ones that we have where.
We have some installed now for rock fault detection Avalanche protection.
And some of our new display systems are used for disruption management in transit stations.
For passenger information.
And it looks like they're finding their way into airports and some other applications, where we have some projects that were pretty hopeful we're going to land here.
Where these kinds of displays that are multi functional and we provide both the software and hardware for them.
Our taking us into markets that Weve never served before.
And then as it relates to the new facility in Boise, you mentioned that it would be up to full operational efficiency in the third quarter.
Help me to better understand that comment does that mean, it's going to be up to full revenue generated rating piece in the quarter as well as profitability this quarter as the Spokane facility was number quarters ago.
Well, yes, so you've got two things at play there right. So in the second quarter was run and still well off the pace that Spokane was front and I think that was about a $4 million gap and year over year sales.
Really what we're talking about more than anything else is the productivity that we measure on manpower per unit of manufacturing. So we are not yet rounding.
Hey.
At the rate that we had been running in Spokane.
On labor hours per unit of manufacturing for each of the products that we make there. So thats all part of ramping up a new workforce, that's entirely new to us virtually everybody would that we've hired there is new to the company.
And so they're learning and the second quarter, we were ramping up at a pretty fast pace I would say in terms of that workforce learning what to do so what were really anticipating in the third quarter is that the not and I would say it will probably would give ourselves probably until the end of.
Third quarter, but by that time that the labor that will be used per unit of manufacturing is going to reach what we see in our other facilities and what we had been the Spokane facility.
Whether or not the sales will be exactly where we were is a little harder to predict.
And thats because business conditions right now or.
A little difficult to forecast at the moment.
But the order rate there is picking up our backlogs improving and I feel pretty confident that we're going to be closing that gap at least.
That's great and one last question could you give us a little bit of comment our color.
Cash flow expectations in second half of the year and prioritized.
Well, we don't normally forecast cash flow.
I will maybe do our best us as we can from time to time.
When we put some presentations together to talk about what we think cash while looks like but I would stop short of forecasting cash flow for.
Second half of the year.
Our priorities among our cash flow among that freight the free cash flow.
Maybe I'll start with operating cash flow I did mention that most of our capital was in the first half of the year. So we always we will have a little bit more capex.
In the second half of the year.
But the balance of what will be left.
Is likely going to be used to pay down debt.
Thats continued to be a priority for us we were pretty happy with the way that we've been able to bring our debt on our balance sheet down and improve our leverage ratio here over the last couple of years would we'd like to keep doing that.
But we do have our eye open for a few other opportunities in there where maybe we can fund.
Organic growth.
There might be something small in the way above maybe a bolt on acquisition.
Maybe in the precast concrete area.
Were more kind of looking at something right there right now and I'm talking about something small.
But you know that that's that's likely what you'll see yes, just add on to that as as Bob touched on.
On the cap Capex spend we were looking at about seven and a half year to date to 7.4 million year to date.
And we're anticipating again being between that 9 million to 11 million Mark So that capex spend will be down in the back half of the year.
Also want to note that we've been very focused on working capital management. We recently had our business reviews with all the business units here and.
That remains a high priority for us to really how the business units focus on that working capital management.
Very helpful. Thank you gentlemen.
Thank you, yes, thank you Alex.
Thank you as a reminder, you May press star one at this time to ask a question well pause a moment to assemble the queue.
Right.
Yes.
Thank you.
Our next question comes from the line of Chris Skype with singular research. Please proceed with your questions.
Hi, just sorry.
Question.
Okay and light on the on the.
Fabricated bridge and precast concrete products division.
Just wanted to see.
What's going on there why why are they are strong.
Theres strong backlog increases there.
Well I'll start with.
Fabricated bridge.
We actually started the year, whether decent backlog and it has improved since that time.
We were actually.
Anticipating that during the year, we were going to wind up seeing some big projects start to break.
And one of them did break and we did book that project. So say second phase of the new Burke Bacon project.
So that was that was a really nice order for us that came a little later in the quarter, but.
That that bridge decking business from time to time, it can be a little bit cyclical.
In 2020 is looking like a really good year shaping up for that business or.
We're going to have a backlog right now, but looks like it's going to keep us extremely busy through the balance of the year and met facility and a lot of work is in grid decking, which is our premier product line.
But our bridge forms business is doing fairly well as well so that's coming from funding for bridge rehabilitation projects.
In the in the precast area.
Our pre cast business has been one of our nicer growth areas over the last few years.
I mentioned.
One Alex asked about some of the new products. So I started with.
Precast concrete.
There, there's a number product lines, we've been adding there we've been stepping into some new geographic territories.
We've expanded our served market what some of these product lines markets that we haven't served before.
Our our eastern location that we established.
A little more than five years ago.
Continues to be a nice growth area for us.
So so precast concrete products you know with of course, they're not they're not connected as much to transportation like so much of our other businesses.
And.
So it hasn't been it hasn't been hit by some of those.
Same impact.
With that but I got to really point to our team that has really spend up some nice growth programs for that business, I think where you're continuing to take share in that marketplace and we're continuing define new markets to step into.
Okay, great thanks to that.
Yes, you're welcome.
As a reminder press star one to ask the question at this time.
Once again.
Let's turn the floor back over to Mr., Bob Bauer for closing remarks.
Alright, well, thank you operator, well thanks, everyone for joining us today. We appreciate your interest and we'll look forward to catching up with you next quarter. Thank you very much bye bye.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time, we thank you for your participation.