Q4 2020 L.B. Foster Co Earnings Call

For more detailed risks uncertainties and assumptions related to our forward-looking statements. Please see the disclosures in our earnings release and presentation.

we will also discuss non-gaap Financial metrics and encourage you to read our disclosures and Reconciliation tables provided with in today's earnings release and within our accompanied wage earnings presentation carefully as you consider these metrics

before I start to review the results would like to briefly touch on a few items related to this evening presentation.

First similar to the third quarter earnings call we have presented the iOS test and inspection services business, which we sold in early September as a discontinued operation in the financial systems including within the earnings release and presentation and have recast prior periods to reflect this change. My comments today will be focused on our results from continuing operations.

So as you may have seen in our press release and 8-k on February 16th in the fourth quarter of 2020. We realign our operating segments to more effectively and efficiently provide solutions to the infrastructure markets that the company serves.

The rail Technologies and services segment consisting of businesses previously reported in the former real products and services segment reflects our current focus on serving Transit and walk away operators and related infrastructure.

The former Construction Products segment and former former tubular and energy segments were realigned into the infrastructure Solutions segment as these businesses collectively provide a variety of products and services for infrastructure markets to support the efficient transportation of people goods and commodities for General Civil Works primarily in the United States with Bob will be discussing this reorganization in more detail in his comments and will be presenting the results based on this revised operating structure in this evening's presentation.

So with that I will start my financial review.

For the purposes of helping you understand the underlying business performance many of our comments today will be based on fourth-quarter and full-year results, excluding certain non-recurring charges and benefits wage as a result. I will refer to adjusted ebitda adjusted net income and adjusted diluted EPS during the presentation.

And we'll be discussing the results from continuing operations unless otherwise noted.

During the fourth quarter. Our sales were 115.6 million compared to 141.3 million in Q4 2019 at 25.8 million or 18.2% decrease.

Consolidated gross profit decreased 6.5 million over the prior-year quarter gross profit margin of 18.8% with a decrease of 120 basis points from Q4 wage 2019.

The decreases in sales and gross profit in the quarter were due to several reasons.

Even though the company was generally considered in essential business and allowed to operate during the pandemic COVID-19 resulting effect on the already weakened demand for crude oil continue to impact the infrastructure Solutions segment during the quarter.

The pandemic also impacted the rail segment causing reduced demand for a friction management consumables and delays in new Rail and Transit projects and services all which continue to influence results in during the fourth quarter.

More specifically a real Technologies and services segment was impacted in both are real products and are real technology businesses across the North America and Europe.

The real products business sales decline by approximately 2.7 million impacted primarily by project delays.

Technologies business added decline of approximately seven million in revenues

These results were primarily driven by a weak demand for a solid consumable friction management offerings do to lower rail traffic volumes caused by the pandemic the decline in revenues drove the decline in gross profit quarter-over-quarter. However, gross margins in the real segment were up versus Q4 of 2019 by 120 basis points system primarily by. Over. Margin improvements in our Canadian and UK operations.

From an infrastructure Solutions segment perspective the challenging Dynamics in the oil and gas markets caused by the pandemic have continued impact our businesses serving the Midstream energy Mark these events have driven the 25% decrease in Revenue volumes quarter-over-quarter the decreases in sales coupled with margin erosion in the Coatings and measurement business home resulted in the decline in gross profit of 5.3 million versus Q4 of 2019 in the infrastructure Solutions segment.

Now moving onto expenses.

Our Consolidated selling and administrative expenses decreased by over 2.3 million or 11.6% to approximately 17.4 million in the fourth quarter off the fourth quarter of 2020 also benefited from a quarter-over-quarter decrease of a million dollars in stock based compensation expense.

Net interest expense was essentially flat quarter-over-quarter at approximately $920,000.

Our income tax benefit from continuing operations was 140,000 in Q4 2020.

In the fourth quarter of 2019 the income tax benefit was approximately 27.7 million which was driven by the twenty nine point six million dollar reversal of a valuation allowance on our deferred tax assets.

Our fourth quarter net income from continuing operations with 2.3 million or $0.21 per diluted share compared to net income from continuing operations of 30.2 million months or $2.83 per diluted share last year.

Excluding the impact of restructuring costs incurred during the quarter of approximately $260,000. Now the tax adjusted net income from continuing operations for the quarter was 2.5 million or $0.24 of adjusted net income per diluted share compared to three point five million or 33% of adjusted net income per diluted share in Q4 2019.

Adjusted ebitda totaled six point nine million in the fourth quarter a decrease of 3.9 million compared to Q4 of 2019 adjusted ebit excludes. Approximately $350,000 of restructuring costs incurred during the fourth quarter of 2020.

For the year ended December 31st 2020. Our revenues were four hundred ninety seven point four million as compared to 616.4 million in 2019 month this led to gross profit of 95 million as compared to 120.9 million in 2019 with a 2020 gross profit margin off 19.1% vs. 19.6% in 2019.

Sg&a declined by 8.9 million and 2020 to 73.6 million from 82.5 million and 2019 as a result of a cost-containment program to navigate through the pandemic environment that interest expense was 3.8 million compared to 4.9 million in 2019.

A 2020 net income from continuing operations was 25.8 million or $2.42 per diluted share compared to net income from continuing operations of $48 million or $4.51 per diluted share last year.

Excluding the impact of restructuring costs incurred of approximately 1.9 million net of tax in the distribution from our unconsolidated Partnership of 1.4 million out of tax money in the tax benefits resulting from the iOS divestiture of 15.8 million adjusted. Net income from continuing operations for the year was ten point five million or 6% of adjusted net income per diluted share compared to twenty one point three million or $2 of adjusted net income per diluted share in 2019.

Adjusted ebitda for 2020 was $32 million, excluding the impact of relocation and restructuring costs of 2.5 million and the distribution from our church solidated Partnership of 1.9 million.

Adjusted ebit up for 2019 was 47.4 Million which excludes relocation in restructuring cost of one point eight million in pension settlement costs of 2.2 months.

Now turning to the balance she our trade working capital decreased by 7.8 million compared to December 31st, 2019 mainly due to a decrease in receivables of 15.3 million. This decrease was primarily attributable to the decline in sales during 2020 due to the pandemic.

Our net debt was thirty seven point five million at December 31st, 2020 compared to $44 million at December 31st, 2019.

Our adjusted net leverage ratio for the trailing-twelve-month. Is 1.2 times as of December 31st 2020.

Over the last several years. We have strengthened our balance sheet, which should continue to help us manage through these challenging times and positions as well to execute on our strategic initiatives.

Our current ratio as of December 31st. 2020 is a very healthy 2.05.

Our total available funding capacity that is the available capacity under revolving credit facility Plus or cash was approximately 76.6 million as of the end of the year.

In addition as we discussed on the third quarter earnings call. We are anticipating a tax refund of approximately $9 later this year as a result of the iOS test and inspection services divestiture.

We are also expecting that the approximately 19 million dollars tax benefits generated as part of the sale of the test and inspection services business will reduce our cash outlays for taxes for the foreseeable future.

To further expand our cash flows are cash provided by continuing operating activities in the fourth quarter was 4.3 million compared to 16 million in 2019.

However, many years day Paces cash flows from continuing operations is 20.5 million vs. 26.2 million for the year ended December 31st, 2019 with a 5.7 million dollar year-over-year decrease.

Our Capital expenditures during that time. We're approximately 9.2 million which derives free cash flow of approximately 11.4 million based on a Thursday stock price of $15.05 as of December 31st, that would imply a free cash flow yield of approximately 7.2%

During the fourth quarter our Capital expenditures were 1.5 million the fourth quarter expenditures included the final installment on our continuous weld Railcar and unloader within our range of approximately $400,000 as I've previously noted. This is a very infrequent Capital requirement for the company as these assets have a very long useful life in total. We spent five point six million on this Railcar of which 3.8 million was expended in 2020. The rail car has been placed in the service during the fourth quarter off.

now when the new orders and backlog

thank you for over all workers were 134.4 million compared to 175.4 Million last year. However, we did see a 3% sequential Improvement in a activity compared to the third quarter.

We're your volume decreased in both the rail and infrastructure segments compared to the fourth quarter of 2019 by 13.7 million and 27.3 million respectively.

With regard to the decline in the infrastructure Solutions segment the Coatings of measurement business unit, which primarily serves the Midstream energy Market contributed 26.5 million of the quarter-over-quarter decrease.

248.2 million as of the end of the fourth quarter an increase of 19.2 million or 8.4% compared to December 31st. 2019. Thursday, most notably backlog increased in both segments versus December 31st, 2019, which is a positive sign and needs as these businesses move into 2021 despite the continuing challenges presented by the Midstream energy Market.

That concludes my comments on these results. So with that I will now turn it over to Bob. Thanks Jim. I wanted to start by pointing out that we put a lot of information in the exhibit furnished with the press release to help investors understand how our business has been uniquely affected by the environment over the last few quarters unlike most challenging environments. This year was an incredibly unique in that certain areas of our businesses are impacted more significantly than others there been pockets of resiliency. We have a strong backlog up significantly in some areas. Although some of the increase is due to pain demek related issues that have delayed converting the backlog in the sales revenue. We have to take significant action this year in businesses that serve energy customers including exiting the Upstream test and inspection services business, which in our view had no path to acceptable returns.

The severe Decline and travel earlier this year and the subsequent impact it had on the energy sector was well-documented. However, it's a bit more challenging to predict exactly how the various Transportation modes will recover.

During 20/20 our primary concerns centered around the severe decline in transit rail ridership as well as declining Freight rail traffic volume, which was more short-lived as a year came to a close. It turns out both rails sectors have been among the more resilient areas as projects kept moving forward all the way through the fourth quarter off with the exception of certain on-site service work and weakness and solutions that are coupled to traffic volume before I get into more specifics on that though. I want to cover off the organization changes. We made that have also resulted in a change in how we're reporting results into segments now. So on February 16th, we announced a new report segment structure that's aligned with an organization structure intended to provide clear line of sight around the opportunities for growth and asset leverage during the past years.

We focused on ways to reduce costs and streamline operations and our goal was to emerge stronger leaner and more focused on the actions that will create value for our shareholders month after we took steps in 2020 to restructure certain businesses and exit another we identify greater benefits by consolidating our non-rail segment assets under one leader. That's Bill Tracy and named that segment infrastructure Solutions.

among our business

In the infrastructure Solutions segment our products and services with some common markets customers support functions and facility capabilities off the opportunities to share more tools and assets and expose untapped leverage opportunities with customers and back office support that should result in lower costs and improved return on Capital these businesses serve design-build and contractor customers that manage the turnkey projects and they need partners that can provide Comfort engineering Solutions with make the order business models and experience dealing with large complex infrastructure projects.

Our businesses in this segment manage projects that span a wide range of Transportation energy heavy civil agricultural commercial and residential infrastructure needs and they have several things in common such as engineered solutions to address tailored customer specifications unique design and application engineering skills with his project management capabilities and expertise and bid proposals the comply with government-funded projects.

This change is an ideal way to create scale around the most attractive markets and product that will maximize Returns on these Assets in this segment. The same can be said for our rail Technologies and services segment. Although the businesses in this segment have not changed. What is different is that all of the operations wage report to a single business line executive Greg leopard that can focus on opportunities around integration and Technology based business development across a footprint. In fact, three of our initiatives one integrating new technologies to address long-standing industry problems to making our track products more resilient and three starting up new services are at the center of our strategy for growth in this segment.

So I turn now to talk a bit about the results for 2020 and the headline in our price released that for me best describes the year and the most recent month is that resiliency in Rail and general infrastructure as projects continue while energy markets remain a significant challenge some of the best evidence of this is seen in our backlog growth which highlights the resiliency from a broad range of businesses and Rail and general infrastructure projects off but it also includes pockets of difficulty converting the backlog the sales as pandemic related disruption on job sites and Engineering departments and from government ordered Thursday measures including lockdowns is causing delays and therefore keeping our sales volume somewhat depressed.

Add some data.

That supports our assessment of resiliency in this rail and general infrastructure projects area. So our fiscal year Consolidated orders fell 16% if you exclude our Coatings and measurement businesses that largely serve energy customer's orders were down only 6%

our Consolidated backlog increased 8.4% If you exclude the decline in backlog from the Coatings and measurement divisions, the Consolidated backlog increased 24% a more specifically what you'll see behind the change is that the infrastructure Solutions segment backlog which finished the year at $127 million increasing 1.3% was a combination of our Coatings in measurement business is declining by almost 28000 and the balance of the segment increasing by $29 million.

That's a 32% increase in backlog from the non energy-related divisions in this segment from projects such as Bridge decking civil and commercial construction and transportation projects both Railway and Highway some using our precast concrete Solutions as well.

The order of magnitude of some of these increases is what gives us confidence in the current resiliency in the infrastructure segment.

Turning to the rail segment Warner orders finished below prior-year down 11% while backlog Rose by 17% orders off fairly steady through the first three quarters ranging between $69 and $75 million per quarter. And then he peaked at $81 million in the fourth quarter, but backlog has remained at elevated levels since around April when the early shutdowns took place and pandemic protocols were enacted and it peaked off the fourth quarter at 121 million.

The Peak at your end was driven by new orders for Transit projects and increased service work in the US but also by our inability to convert backlog to sales in Europe where strict lockdowns have disrupted shipments and service work and in North America where various customer issues caused pockets of delays these lingering issue some headwinds work dealing with is what has caused us to describe the environment as a resilient rather than recovering which we expect to use once we start to convert more backlog to sales and service and improving Market environment and rail traffic and an energy pipeline projects another data point that'll help you quantify. The delays in shipping is the 30 million dollar rise in backlog in the fourth quarter. We have far greater capacity than our sales of a 115 million dollars in the quarter under more normal circumstances.

I would have expected the additional sales volume in the quarter.

by at least the amount of a backlog increase

So let me turn now to a little bit more of the performance-oriented numbers the order decline in 2020 drove. The decline in sales of $119 million is Jim stolpa and Light Up the Volume decline. I did a pretty good job holding on to margins with only a fifty basis point decline in Gross margins particular faith in light of the decline in some of our rail Technology's products and services which typically have higher margins.

A loss of friction management consumable sales and certain field service work that's stopped created a significant profit headwind for the rail segment as well at the same time. This team did a great job holding expenses down and reducing costs that help minimize the segment profit declined to approximately 20 basis points for the month and finish very strong in the fourth quarter. The second part of the margin story is the decline that took place in the infrastructure segment as a result of significant decline in demand from energy customers, the pandemic created a substantial decline in demand for oil which translated into significant cutbacks in capital program for companies serving upstream and Midstream markets often Midstream reductions lag the market changes and are not as severe as Upstream volatility, but this one month

Typical year the severe reduction in travel resulted in approximately a 20 million barrels per day dislocation in supply and demand for a. That has had longer-lasting impact on all suppliers to the industry as operators proceeded to shut down projects.

The infrastructure Solutions segment loss in Q4 is entirely associated with the two divisions within the Coatings and measurement business that serves Midstream pipeline Market. This is now the only energy exposure we have after selling the test and inspection business in September.

Sales for these two divisions was six million dollars in the fourth quarter this compares to 19.6 million and 1/4 quarter of 2019. Chef orders were only four million in the fourth quarter through these two divisions or orders were relatively flat too protective Coatings for the last three quarters of the year off in orders for measurement systems for pipelines hit a significant low point in the fourth quarter.

Given the severity of a decline. Both divisions are expected to see a modest Improvement in orders in the first half of 2021. In the meantime, we'll be dealing with extraordinarily low volume that presents a headwind for profit margins near-term and I'll expand on that more in a moment. I wanted to turn to a couple of comments on cash flow and debt following what Jim told you Capital spending increased in 2020 as we finalize the factory previously planned in 2019 and replaced a rail delivery train that was retired. These were significant Investments and very long-lived assets that don't change very often where one of the unique companies in North America that has the capability to deliver fourteen hundred foot strings of continuously welded rail.

these two Capital invest

Representative more than half of the cap tax and 2020.

I expect the 2021 Capital spending to be lower as we don't have very large projects like this slammed. We completed the heavy restructuring actions that required capital and we have manufacturing capacity. Well above current volume levels at all. But a few locations, we're demanding a strong we plan on putting some Capital toward our sap roll out as we aim to turn off old Legacy Erp systems in the near-term. We have some working capital pressure right now as we bring in inventory to deal with the growing backlog. I expect this to be a short-term issue in most operations team. I'm most concerned about our inability to finish projects in the UK where the current lockdown is creating several issues with closing out projects and eventually getting paid.

We're also wrestling with shifting program priorities on the part of local governments making changes due to getting access to otherwise very congested Transportation factories. Well, we're very pleased that we were able to reduce debt in 2020 bringing our net debt to 37.5 million at year-end. I paid off debt reduction is another attainable goal for 20 21, assuming we see a reasonable recovery throughout 2021 with continued spending on Transit programs to stop to the pandemic lockdowns from where we sit today. I think it's unlikely that we'll have an acquisition this year unless it's at the very end of the year. We want to feel more assured of the future business climate before we take on any new businesses. So I'm going to move to kind of my last section of birth.

Here and talk a little bit about Market Outlook and some of the risks and opportunities we see, you know, in in 2021, of course A continuing pandemic presents a risk particularly if it results in continued disruption Don Site Services and a depressed market for transportation projects that we have exposure to but today we're optimistic that that's risk showing signs of subsiding we expect profitability in q1 for infrastructure solutions to remain low at approximately fourth-quarter levels as a result of low sales volume from the energy pipeline Focus divisions.

These two divisions are operating near break-even levels at the current volume. But as volume improves, we expect to leverage our overhead and selling costs and therefore profit margin should rise at a much faster rate than sales rise.

Transit rail funding for us operators needs increase federal government support beyond what has already been approved if the gap between what's been requested and wage is anywhere near Thirty to forty billion dollars in the US that could create added pressure on spending we expect upside to our outlook on life an infrastructure program is approved in the US. We typically see an uplift from such programs as they often are directed toward transportation and general infrastructure projects that we serve.

And finally turning the how we anticipate 20-21 unfolding. We expect first quarter sales volume to reflect continuing pandemic disruption, especially in the United Kingdom, and we haven't identified a lot of opportunity to ship more backlog to boost sales. The first quarter will likely also included very low volume from the divisions that serve energy customers putting pressure on profit margins as these businesses operate at close to break-even profit levels. We expect a significant change in this environment as we move into the second quarter our current forecast calls for a significant sequential increase in sales from two one two, Q to specific projects in our backlog are expected to remain on track for second-quarter delivery many of which wage

Are not struggling with pandemic related issues on site. The second quarter increase in sales volume is expected to be broad-based and lift profit margin a significant Lee from Ford first quarter levels. And as we approached mid-year, we are expecting the elevated backlog to provide support for an even stronger second-half.

So hopefully that gives you some insight on how 20-21 is going to start to unfold. I'm going to wrap up here. And before I wrap up. I want to conclude by thanking our teams across the world for everything they continue to do to keep us operating safely. I mean, we continue to face extraordinary circumstances. It's taken some Extraordinary Measures deal with it. And I have a great deal of confidence that will keep operations running efficiently as we prepare for return to normalcy sometime this year and hopefully it's sooner rather than later. So I'm going to stop there and with that would be happy to take any questions that anyone has so I'll return it back to the operator.

Thank you, as a reminder to ask a question. You would need to press star one on your telephone and to a draw a question. Press the pound key. Please standby will be compiled the Kenny Ross.

my first question will come from the line of Alex Riggio from be right you maybe

Thanks, Bob gym, a couple of quick questions really lights your your comment with regards to the business being resilient versus a recovering commentary about sort of the Outlook over the next couple of quarters, um is interesting in that it's suggesting a recovery, but I'm kind of wondering is the the the pickup in activity more sort of a function of a success in building your backlog during sort of a a challenging. Or is it truly the anticipation of a stronger Tailwind coming to drive that business in the second half of the year. Yeah. Hi Alex. This is Bob. Glad to have you with us today. I I'd say it's more of a ladder, you know, the fact that certain parts of our business have been resilient. I mean part of the message with that is that they haven't really gotten that soft.

Through this period of time and when you look at the portions that actually improved over the course of the four quarters of twenty-twenty, you know, we already saw an improving environment at least from that that low Point around the first and second quarter, but but they're not they're still not as quite as strong as they could be because we still have service work we did in complete in the real segment. We still have sales of consumable products and and other projects for friction management equipment that didn't go through you know, and and and even some of our new technology-based products they were off to a bit of a slow start in 2020 because I just couldn't get access to customers through the year. So some of those things, you know held back the I think the opportunities that we had in twenty twenty years.

And so from that standpoint, I you know, I look at twenty Twenty-One and I think it's going to be better. I think that will also be able to execute on other programs that we have underway like growth projects are precast concrete business, you know, which has been one of the more exciting areas where we've introduced new products and stepped into new markets. And again, it just feels like it comes at a time where it's just tougher to get some of these orders to ship. So, you know this backlog, is it a point where we're confident that you know, we've got off a clogged that we're going to shift in 2021. I'm going to be anxious to see what it looks like in the second half of the year, but that'll give us a Tailwind having that elevated backlog. And I think that's also going to get one from just an improving environment with which we can execute under

very helpful and

And you know clearly their congresses is working on the American Rescue plan right now the 1.9 trillion dollar sort of COVID-19 plan. Would you discuss any opportunities that you might see in that that could help your end markets as well, maybe draw a little bit of comparison to get the proposed, you know, two to three trillion dollar infrastructure bill that might get discussed in Washington and how that could impact your business relative to maybe past infrastructure bills of five to ten years ago. Yeah, you know, let me start with the latter part of that off because one of the things that we typically comment on is that whenever there is an infrastructure bill passed we get an uplift from that and and the time that it was pass.

Back, you know after the financial crisis and the kind of the 2010-2011 time. You know, we saw an increase across number of our different businesses Transportation projects got funding but also funding also went to you know, what they called shovel-ready projects at the time and and even even other longer-term projects are precast concrete business saw benefit from it. We saw benefit in some other construction areas. So anytime something like that goes through, you know our exposure to transportation and two general infrastructure, you know is usually going to get some benefit. Well now when you scale that back to where you started with that question on, you know, what's going to come out of this 1.9 trillion dollar spending package. I think we're a little bit less certain on that, but I can say that I know that there is Transit rail funding.

And it in fact I I saw highlights for example on on how much is going to Bart in San Francisco. That was I think one of the one of the debates so am I think the transit rail agencies are going to get money. That's probably the most notable area that that package will help us with them. But you know, as as money flows to States states are going to be in a better position to also work on other projects, you know, whether those are Highway and Bridge projects or other kinds of just general infrastructure, you know, where we might even see some some business again flow to our precast concrete business.

Very helpful. Thank you very much. Thanks Alex.

Our next question will come from Chris sky from Cingular research. You may begin.

Hi, Bob, just I got a question on the London Crossville Rail Project in the fourth quarter. Wanted to see your thoughts there how it's progressing. And you know, was it seeing if it's being similar COVID-19? That's it's all and keep three.

I think that's probably a pretty fair statement to say similar disruption in the fourth quarter as the third quarter. We are operating well below the dead Manpower that we had on that project prior to the pandemic emerging so we have scaled back our headcount in our london-based services operation that is on that project. It does mean that some of this backlog we're carrying on Cross is is partly attributable to cross Rail and it's moved into twenty Twenty-One. So we're going to have more work on the cross Rail Project in 2021 than we originally thought we would have so one hand that that's good money. And and we we are currently projecting that based on the news coming out of the UK right now that you know somewhere in this I'm going to call log.

Second-quarter sort of mid to late second-quarter. They're they're really expected to allow for a lot more movement of people but we still are operating we're both in the central business in the UK. We still have people on that site. We're just running at a level that I would call about half of the workforce that we would normally be operating. But otherwise

Okay, great. And then as far as

Precast concrete goes, you know, what as we go into 2021. What are some of the drivers there that are going to increase orders and and and your backlog? Well, I'll start with the fact that we are launching some new products, you know, we continue to step into new products and off cast concrete business every every quarter in most of those products are products outside of our precast concrete buildings off. These are products that are going into General infrastructure applications. We can facility to Boise Idaho as we talked about last year. I also acquired a small precaster in that area that is bringing us new products into that market that we otherwise wouldn't have had for that particular market place. So yep.

We expect to see some market share gains and access to customers in that area that we wouldn't have had access to another example of this is you know, when you stepped into the market segment for the tanks, you know in a while probably about two years ago now, we'll probably got into that mainly in the Texas region where there was a lot of growth in that area. These are tanks that are going both into commercial and residential applications and we are now opening another satellite operation down in the Houston area wage as as we speak. We're we're putting an organization together in that area that will be a satellite operation from our Hillsboro Texas facility that allows access another New Market. So, you know, you got a combination of new products new Regional markets that were stepping into and in some cases a hybrid of the two this is falling off.

to expand our serve market and

And you know stepped into the product lines. We haven't been in before. I think the other thing to mention to Bob it's there's the potential for the Great American outdoors act to be a potential Catalyst for that business as well. So that's another thing that we're looking to see how those funds get deployed and how that might assist the precast concrete business. Yeah, Jim speaking about if you have doubts about that, he's speaking about a bill that was passed that allocated five billion dollars to National Parks in that great American outdoors act and you know, a lot of that could go towards our precast concrete buildings that that that are in many of those parts. So yeah, that's another good point. Thanks, Jim.

Okay, great. Well, thanks. Thanks for that. And just I mean one thing you mentioned your your business in Texas. Do you see any of the the recent weather related issues? Have you experienced any business delays there?

We have experience some delays there and you know two weeks ago when weather was at its worst point. We're in the process of catching up and we don't expect any material impact from it this quarter.

Okay. All right. Great. Thanks. Yep. Thank you. Thanks. Chris. Our next question comes from John bear from a sandwich advisers and they begin with thank you. Good afternoon. Thanks for taking my call. Do you have in the the headwinds you have in the in the Midstream business Coatings? And I'm wondering whether you're giving any consideration to selling selling up entity off and particularly given the

I'll use a strong term hear the hatred this Administration has towards the hydrocarbon business delays. And obviously if first executive order being to cancel the Keystone Pipeline, just wondering if you're thinking about difficulty in in general about additional pipelines being billed. Well, whether or not you have the opportunity for you know retrofits as this in that particular infrastructure, you know, the extensive and old and I'm sure there's plenty of sections and so forth that need to be mean to be revamped. So if you kind of share your thoughts on on on that General concept sure John

Well, I'll I'll start by saying that you know, I'm not going to make any announcement here on today's phone call about some different direction that we're going to go in with those businesses. I will say before I comment on on the future of it along the lines of where some of your color was going that you know, we we do have two businesses where we have some great core competencies and Coatings that provide Corrosion Protection and in measurement systems that were also currently looking into in terms of ways that wage and diversify in those businesses into other markets other markets would be gas applications in addition to liquids and and there could be applications. In fact, we've actually already seen our first order in a water Market application. So there's some core competencies there that we thank God.

We can build off of 2.

Access some additional markets. We're not serving today.

That's what I was going to say. The the water order is at a fresh water salt or salt water because that that kind of triggered a flashlight here, which is a push towards offshore wind turbine, you know wind farms and so forth. I'd say corrosive environment obviously being in a saltwater and just wondering if I could be a diversification area for you and if you you know kind of been looking at that as well. Yeah, it's not salt salt water as in off or applications or desalination type applications, you know, the first place that we're looking is just in fresh and Wastewater, you know, that sucks in the domestic area.

But you know, we we get most of our business from capital projects. We don't get a lot from retrofits at least in our protective Coatings business office will be some more opportunities for retrofits and replacing old equipment when it comes to measurement systems because those those are systems, you know that from time to time. We'll we'll see more wage replacement member replacement of of a pipeline. But but you know, I I guess maybe just to summarize for your for your thoughts on that question do we think about these things as we look at the company's strategy on a continual basis. We understand the fact that there is on a long-term basis and I mean long that hydrocarbon-based fuels and energy may find its way into a less favorable environment and there'll be more Renewables and other song

Cause of energy that are used this is a small part of the company at this point. So I think we're going to look for the opportunities where we can diversify. We're going to make the best out of businesses that have nice cash flow when they're operating at a good point in the market and I'll refrain from speculating, you know, where we'll be with it three five or ten years from now.

Okay, very good. I don't think hydrocarbons are going away anytime soon. Despite what a lot of people think or would like to think. So anyway, thank you very much for taking my questions. And you're you're welcome. Yeah, we do agree with you. That's a long journey.

Yeah very much very much. So, thank you. Thank you so much.

Once again, that's star one for questions. Our next question comes flying Brett Kearney from Global funds. You may begin. Hey guys, good evening. Thanks for taking my question. Am I Brad? Hey, I wanted to ask about the Bridge Business. It sounds like that's one that continues to stand out as you know continuing to perform. Well is that when you would put into the category of you know, a lot of funding was secured pre pandemic and projects continue to move forward or how you thinking about the outlaw doubt look up a business. I guess giving your existing backlog and what you're seeing from kind of customers municipalities in that market Yeah Yeah. Well, yeah, you're you're right about the fact that that backlog was climbing going into the year. We had already had a plan for for 20 20 off.

On you know that was based on.

Pretty strong order activity before the year started and the the pandemic really hasn't caused any disruption in that business other than early on in the year, you know, when we're running a little bit slower and and had some problems with deliveries to sites. But you know, we we caught up mostly with that twenty-twenty and do you know the outlook for for this year is good. It's got one of the strongest backlogs that we've had and we're just seeing you know, what we've described over the years with this business there. There are times when the big projects come and and it's just based on funding that emerges based on, you know, the condition of these Bridges, you know, I'm not suited for the kinds of approach that we used to put new decking in place. So it's going to be a good year for that business and it's carrying a dead.

A fair amount of the backlog that we have for that fabricated Steel part of our infrastructure segment, and I guess we're a ways away from this but if we were to get them and force structure Bill and bridges was, you know, that's been called out by the American Society of civil engineers as needing significant Investments. I guess giving your backlog ends kind of the duration that the work entails, you know, do you anticipate you have good amount of capacity as long as we think about the sequencing if a federal infrastructure Bill were to come to Pass include meaningful Bridge funding. Yeah. I I I think would be fine with that. But I think if it wanted Bridge decking, you know, we're we're operating in our current Bridge decking plant, which actually has two facilities one of which is only partially utilized birth.

Where we make forms for a variety of different Bridge construction, but the bridge decking Xin one primary facility where we have where we have shift capacity that we could add it as long as we can find labor and we typically are successful at that. We would be able to you know, we would be able to expand capacity wage and you know, we also we also provide sometimes concrete bridge beams for some of this work as well. So our concrete business will occasionally benefit from some of this in terms of making concrete bridge beans. So yeah, I would not be too concerned. I I haven't seen this Market provide an uplift where we have run out of capacity in the past month. I'd be I'd be delighted if we have that problem.

Yep. All right traffic. Thanks so much, Bob. Yeah sure thing.

Once again, that's star one for questions. One one more time for questions.

And currently I'm not showing any questions at this time. I'd like to turn the call back over to Bob for any closing remarks.

All right. Well, thank you everyone for joining us today. We appreciate you spending time with us and we'll look forward to talking with you around the end of April when we wrap up the first quarter. So thanks for joining us.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

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