Q2 2021 L B Foster Co Earnings Call
Good day, Thank you for standing by welcome to the L. B Foster second quarter 2021earnings conference call at this time, all participants on a listen only mode.
And the speaker's presentation, there will be a question answer session to ask a question. During the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded and if you require any further assistance. Please press star zero.
And I'd like to hand, the conference over to your Speaker today, Stephanie, Let's walk manager Investor Relations. Please go ahead.
Thank you operator.
Good morning, everyone and welcome to L. B Foster second quarter of 2021 earnings call. My name is Stephanie, let's walk the company's Investor relations manager or.
Our president and CEO, John Castle, and our Chief Financial Officer, Bill Com and will be presenting our second quarter operating results market outlook and business developments. This morning.
Bob Bauer, who recently stepped down as our CEO and Jim Kempton the company's corporate controller are also joining us this morning.
Bob I'll be making some opening comments and then John will provide his perspective on the company's second quarter performance and will update you on significant business matters and market development sales.
I will then review the company's second quarter financial results, we will open the session up for questions at the conclusion of those remarks.
Today's slide presentation, along with our earnings release and financial disclosures were posted on our website. This morning and can be accessed on our Investor Relations page at L. B Foster dotcom.
Our comments this morning will follow the slides in the earnings presentation.
Some statements, we're making are forward looking and represent our current view of markets and businesses today, including comments related to COVID-19.
These forward looking statements reflect our opinions only as of the day of this presentation and we undertake no obligation to revise or publicly release the results of any revisions to these statements in light of new information, except as required by securities laws.
For more detailed risks uncertainties and assumptions relating to our forward looking statements. Please see the disclosures and our earnings release and presentation.
We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided within todays earnings release and within our accompanying earnings presentation carefully as you consider these metrics.
Yeah.
For the purpose of helping you understand the underlying performance of the company will be referring to adjusted EBITDA. Adjusted net income adjusted diluted EPS net debt and net leverage ratio during the presentation today.
While we did not have any adjustments to EBITDA net income per diluted EPS. During the second quarter of 2021 historic periods referred to in the presentation today have been adjusted as reflected in the reconciliation tables included in the appendix to the earnings presentation.
Additionally, in September of 'twenty, and 'twenty, we announced the equity sale of our Iowa Test and inspection services Division as a result of this divestiture, we have presented the test and inspection services business as a discontinued operation and our second quarter financial statements, including within the earnings release and presentation.
And have recast prior periods to reflect this change the comments today will be focused on our results from continuing operations.
So with that let me turn the call over to Bob for some opening remarks.
Thanks, Stephanie.
Well I have the pleasure of co hosting the call this quarter for the last time as we announced my retirement last month, along with the appointment of John Castle as the company's next CEO, which took effect 2 weeks ago.
As we noted in the press release, when we announced the change this appointment follows a well planned and thorough succession planning process that the board and I've worked on for some time and it turned out exactly as we hoped it would.
I'm really pleased with the outcome because I'm, leaving with a really good management team in place and I know I can speak for the board of directors when I say that the company's development and succession planning process is regarded as 1 of the most important business processes and that we're all very pleased with how it is helping.
<unk> developed and next generational leaders across the entire company.
John's from what the company for 18 years and over the course of that time has managed all of our factory operations and eventually managed all of our business groups before being appointed CLO and 2019. He is very familiar with all areas of the company and at 1 time or another is interfaced with our key suppliers.
Business partners and many of our customers.
He doesn't really need my help as he takes on the added responsibility, but I'll be available to John whenever he needs me until the end of the year when I officially retire from the company and until then my goal is to help him and the management team and any way that I can.
I know John is eager to meet those of you that he hasn't met already on <unk>.
Of course, we would be happy to schedule and introductory call with anyone that would like to do so just reach out to Stephanie if you'd like to do that but before I hand, it off to John for his comments on highlights of the second quarter I just want to say, it's been on honor and a privilege to serve as the company's CEO for nearly a decade and I'll look for.
And the future to rooting for the company's success from a shareholder point of view, so with that I'm going to turn it over to John for his first earnings call. Thanks, Bob Good morning, everybody I'm very excited about the future of the company and honored to be chosen to succeed you as CEO.
We have a great team of people of L. B Foster and for 18 years I've been here I've had the pleasure to work alongside many of them witnessing firsthand the teamwork and dedication that has had such a positive impact on the company's performance.
Particularly excited about the opportunities I see for growth and a more concentrated focus on directing capital towards our top priorities and the most attractive markets we serve.
Over the course of the last year I've sat in and many investor meetings and he had a chance to meet some of you.
And the coming weeks or months I'm looking forward to meeting more shareholders and discussing our plans going forward.
Before I turn the call over to Bill Tallman to cover details on second quarter results I want to cover some of the highlights and add some context to the market outlook commentary we have provided.
This is the time of year, we expect to see increases in sales and we were pleased with a 33% sequential volume improvement from Q1 exceeding the forecast we provided on last quarter's call.
This turned out to be a 9% sales increase over Q2 of last year includes several positive developments among them are and 18, 5% increase and rail segment sales with solid growth from our core rail products significant increases and friction management products and increases and field services and are very anxious to see.
And in Europe, where service work is finally wrapping up after many months of delays due to COVID-19 restrictions and.
In addition, the fabricated steel and precast concrete business each grew at more than 20% over prior year as construction project project backlog and move through the operations and new orders continue to come in.
And our backlog for those 2 businesses well above this time last year.
The strength of these 2 infrastructure solutions product divisions is not easily seen because of the weakness that we still have and theyre coatings and measurement business.
And where the year over year sales decline is offsetting this growth and has led to the infrastructure solutions segment sales being essentially flat year over year.
The strength across most of our businesses lines have helped us get more backlog into the hands of our customers, but the total company backlog only declined by $19 million during the quarter, finishing at a healthy $253 million, which is 12% above this time last year.
A couple of other interesting notes about our backlog first our precast concrete business is sitting at near record levels up 33% over prior year and second our coatings and measurement business has more than doubled the low levels. We had and then November through February time frame.
This is 1 positive sign for the coatings and measurement business. However, volume remains very low as pipeline projects continued to be deferred and we remain cautious with our outlook for this business.
Our balance sheet continues to be very strong and and despite the significant increase of sales. This quarter, we were able to effectively manage our working capital reserve, resulting in net debt all increasing nominally the operating cash use was less and 1 million for the quarter, Despite and aimed to fund to 38 million sales volume increase our teams continue to do great job.
Working capital and this has helped us keep our net debt at $33 million.
Setting aside the pipeline market, we are seeing new infrastructure projects being planned investment in transportation and general infrastructure projects are moving forward, Robert continue investing and operational improvements and recent spending bills and the U S. Providing additional support for our served markets.
Europe, and more specifically United Kingdom, where our business is concentrated as still has room for improvement and the UK continues to struggle with policies and reopening and continued spread of the virus and government restrictions continue to keep us from operating at full capacity.
That opportunity for improvement coupled with the recent easing of certain restrictions U K leaves us to believe that there's a favorable outlook for rail operations and Europe for the remainder of 2021.
But this view is subject to change based upon any resumption or imposition of pandemic related measures across the markets we serve.
On the infrastructure solutions side of the company the precast concrete and fabricated steel business unit continues to experience favorable market trends.
And with several of our plants are operating at near capacity levels. We also saw a modest level of recovery and certain pockets of coatings and measurements, but we still have a long way to go to get back to the pre pandemic levels and this business unit.
And I also want to mention they were and counting some challenges with inflation largely and materials, we source for bridge products and certain areas where pressure on wages as emerging we have taken pricing actions to mitigate the impact and expect to take more but it may be difficult to offset all the pressure on the back half of the year, which may drive some erosion of margins and.
And certain parts of the business.
Although we typically see seasonality and the business and the first quarter and a sizable uptick and revenue from Q1 to Q2, but we believe that's a substantial increase from first quarter to second quarter of this year also represented the continued recovery from the effects of the pandemic on most of the businesses.
While the increase in sales translate into incremental gross profit and a real segment.
The weaknesses and the midstream energy continued to drag on our on our earnings.
On slide 8 you can see the year over year results for infrastructure solutions, and particularly on 1 draw your attention to a continued impact that the very low volume on our coatings and measurement business is having on gross profit margins.
While we are pleased with the sequential improvement in gross profit for the business operating at very low volume levels as having a significant impact on the year over year performance in fact, a decline in gross profit margins for the infrastructure solutions segment is entirely due to the coatings and measurement weakness.
This erosion of gross profit despite substantial increases in revenue both year over years and sequentially and the second quarter for precast concrete products and fabricated steel products businesses.
The impact of coatings and measurement Cascades to our bottom line results for the most part whether youre looking at Q2 or year to date 6 months results. Our EBITDA declined year over year is primarily due to the coatings and measurement performance.
With that as an overview I'd like to turn the call over to Bill and let him cover the financials in more detail. We can take any questions. Once he concludes his remarks bill.
Thanks, John and good morning, everyone I'll begin my review covering the second quarter results on slide 10 of our presentation.
As John mentioned, we were anticipating a significant sequential increase and results both from seasonality as well as further recovery from the pandemic.
In line with those expectations second quarter sales were $154.5 million up $38.4 million or 33% over the first quarter.
Compared to last year, Q2 sales were up $13 million or 9.2%.
Despite the significant year over year increase and revenue Q2, gross profit decreased $2 million and the 16, 9% gross profit margin was a 290 basis point decrease from last year's second quarter.
This decrease was largely driven by the infrastructure solutions segment, which I'll discuss in more detail shortly.
Second quarter, selling and administrative expenses increased year over year by $900000 or 4.8% to $19.8 million with the increase in <unk>.
<unk>, primarily driven by higher professional fees.
The higher professional fees were related to a comprehensive strategic review of the business completed during the second quarter under John's leadership.
And we'll be discussing the results of that work and future calls.
Selling and administrative expenses as a percentage of sales decreased to 12, 8% down 50 basis points from the prior year quarter.
Second quarter net income from continuing operations was $2.9 million.
Our 27 per diluted share compared to $7 million.
Or <unk> 66 per diluted share last year.
Adjusted net income from continuing operations for the quarter was also $2.9 million or <unk> 27 per diluted share compared to $6.5 million or 61 cents per diluted share last year.
Second quarter, adjusted EBITDA totaled $8.3 million, a decrease of $4.6 million compared to last year, driven primarily by the decline in gross profit and the infrastructure solutions segment, coupled with increases in selling and administrative expenses.
I'll now cover our segment performance for the quarter reflected on slide number 11.
Second quarter rail segment revenue increased $13.8 million year over year with the increase primarily attributable to a significant increase and new rail deliveries and a substantial uptick in our European operations during the quarter due to easing operating restrictions, primarily and the U K.
Okay.
Infrastructure solutions revenue was down $900000 with the decline wholly attributable to the coatings and measurement business, which continues to face a challenging economic environment and the midstream energy market due to excess pipeline capacity.
Partially offsetting this decline was a substantial increase in revenue on both precast concrete and fabricated steel businesses.
Revenues have increased and these businesses as demand has increased with greater activity levels among general infrastructure projects.
It should be noted that the Boise, Idaho facility was fully operational and this year's second quarter.
Last year, the facility was and its startup phase after relocation from Spokane, Washington, as a result second quarter revenues for this location more than doubled year over year.
Yes.
Rail segment gross profit increased $1.6 million year over year, driven by the strong sales volume across all of our rail business units.
However, rail gross profit margin declined 130 basis points due to the due to the significant revenue increase and our rail distribution business year over year.
Infrastructure solutions gross profit declined $3.6 million from the prior year quarter, driven solely by the decline in revenues and the coatings and measurement business.
Infrastructure solutions gross profit margin was down 520 basis points compared to last year's second quarter.
Our results for the first half of 2021 are reflected on slide number 12.
Year to date revenues were $270.6 million compared to $263.5 million last year.
$7.1 million increase or 2.7%.
Gross profit decreased $6.3 million from the prior year comparable period, and the 16, 6% gross profit margin. This year was a 290 basis point decrease from last year.
I'll provide a little more color on the revenue and gross profit performance by segment and a moment.
Selling and administrative expenses and the first half totaled $37.8 million.
A $1.4 million dollar decline or 3.6% with the decline primarily driven by a decrease and personnel related costs, including travel related expenses.
Selling and administrative expenses as a percentage of net sales and the first half of 2021 decreased to 14% down 90 basis points from last year's comparable period.
Year to date net income from continuing operations was $1.6 million or <unk> 15 per diluted share compared to $7 million or <unk> 66 per diluted share last year.
Adjusted EBITDA totaled $11.1 million for the first half of 2021, a decrease of $6.6 million compared to the prior year period, driven primarily by the decline in gross profit and the infrastructure solutions segment.
Cash flows from operations were $6.8 million year to date compared to $8.1 million year to date last year, while capital expenditures declined to $2.2 million versus $5.7 million last year.
Capital spending this year, primarily relates to the expansion of our precast concrete business in Texas.
And expenditures for our ongoing SAP implementation as we continue to progress towards retiring 2 legacy ERP systems.
We're still estimating total capital expenditures for 2021 in the $6 million to $8 million range, highlighting our capital light business model.
Circling back to the segment performance for the first half of 2021 on slide number 13.
Year to date rail sales increased $9.9 million or 6.8% with the sales increase primarily driven by more robust demand and favorable operating conditions and our primary rural markets. This year.
Year to date infrastructure solutions sales decreased by $2.7 million or 2.3%.
And with the decline attributable to the coatings and measurement business with a year over year sales decline of $24.4 million.
Both fabricated steel and precast concrete businesses had meaningful sales increases totaling 16.0 million and $5.7 million respectively.
Rail segment gross profit increased by $2 million or 7.1% with the increase primarily driven by improved volumes and friction management and contract services product categories.
Segment gross profit margin of 19% was unchanged year over year.
Okay.
Infrastructure solutions gross profit decreased by $8.2 million or 34, 6% with a decrease primarily attributable to the decrease in sales volume and the coatings and measurement business, which accounted for the overall segment gross profit decline.
And this unit was also the primary driver of the 670 basis point gross profit margin decline.
Turning to liquidity and our credit metrics on slide number 14.
Total available funding capacity, which is defined as our available capacity under our credit facility plus our cash was $81.6 million at quarter end up from both the beginning of 2021 and June 30th of last year.
Net debt was $33.1 million on June 32021, compared to $48.2 million on June 30 of 2020, a reduction of $15 million over the last 12 months.
Our adjusted net leverage ratio for the trailing 12 month period was $1.3 as of June 32021.
While our debt balance was up by $1.3 million during the quarter. We were very pleased that we were able to effectively manage our working capital and minimize the draw on our credit facility, given the 33% sequential increase and revenue.
Our working capital as a percentage of sales was 17, 7% at quarter end versus 19, 9% and last year's comparable period.
And.
Slide 15 provides some perspective on our leverage performance over time.
Over the last several years, we've strengthened our balance sheet and our overall financial flexibility.
These improvements coupled with our demonstrated ability to generate significant free cash flow and positions us well to take advantage of the improving market conditions and business opportunities.
We're anticipating further debt reduction during the second half of 2021 with the assumption that we will continue to see a reasonable economic recovery with no significant restrictions related to the pandemic and continuing improvement and active and market conditions.
We're still anticipating approximately $9 million and income tax refunds this year.
With 500000 received and the first half.
We expect to receive $5.3 million and refunds in the third quarter with the remainder to be received in the fourth quarter.
However, with delays and IRS processing times, there is some uncertainty on the timing of the refunds expected.
Assuming no significant delays and these refunds and combined with the free cash flow that we typically generate we should continue to drive down debt through the end of the year.
We continue to assess opportunities for select bolt on acquisitions, and the rail technologies and precast concrete space.
While it is unlikely we will complete any significant acquisitions. This year, we anticipate M&A activity will increase next year, assuming actionable attractive targets aligned with our focused business platform strategy are identified.
Slide 16 provides a breakdown of orders and revenue by segment over the last 5 quarters.
And the second quarter total orders were $138.6 million compared to $133.9 million last year with the increase driven by the infrastructure solutions segment.
Order activity was also up on a sequential basis with new orders, increasing by $2.9 million and the second quarter.
Total orders and the second quarter were the highest level achieved since Q4 of 2019.
Our book to Bill ratios continue to trend favorably with a consolidated book to Bill ratio of 1.17 for the trailing 12 month period.
And.
Improvement in and infrastructure solutions order activity and the second quarter was realized across all business units, including coatings and measurement, which finally saw some improvement and order activity both sequentially as well as year over year.
However, I would caution that the activity was concentrated and select pockets of this business and at lower volumes and margins relative to historical performance.
I'd also like to call your attention to the graph on the lower left hand side, where you can see the revenue and order trends for the rail segment.
You'll note that order activity is largely in line with the average quarterly order volume over the last 5 quarters, but this quarter significant increase in revenue stands out from the prior quarters.
This is a primary driver of the decline and backlog we experienced in Q2, which is reflected on slide number 17.
Yes.
Referring to slide number 17.
You'll note that the rail segment backlog decreased.
Compared to June 30 of the 2020 and December 31 of 2020.
Both as a result of the significant increase in revenues during the second quarter.
As we noted last quarter, we had been experiencing customer delays on certain projects and our backlog.
Some of those projects finally moved forward and the pace of backlog conversion improved.
I'd also note that the rail backlog remains above pre pandemic levels. So it continues to be very healthy.
Infrastructure backlog improved modestly during the quarter and remains robust.
And as mentioned earlier, we saw an improvement and coatings and measurement backlog, which more than doubled since December.
The consolidated backlog stood at $253.2 million at the end of the second quarter and increase of $28 million or 12, 4% compared to a year ago.
And $5 million or 2%.
During the first half of 2021.
I'll conclude.
<unk> my comments with the market outlook summarized on slide number 18.
Based on our strong backlog less restrictive operating conditions and stable to improving outlooks for our key end markets overall, we feel very well positioned for the second half of the year.
While certain businesses focused on midstream energy market have shown some modest improvements.
They are expected to remain relatively depressed for at least the remainder of the year.
That being said a continuation of the diminishing impact of the pandemic on most of our end markets should be favorable for us and the second half of the year.
We are anticipating that pre cast concrete and fabricated steel businesses will continue to benefit from the current and anticipated infrastructure investment trends.
And we are also optimistic about the outlook for our rail operations and the U K for the remainder of 2021, assuming no significant restrictions to operating conditions.
We will be vigilant and actions designed to mitigate the impact of raw material inflation and supply chain disruptions where possible.
However, we may experience, some pop pockets of disruption and cost inflation, which could impact results and the second half.
We continue to expect the benefit from and infrastructure spending Bill if approved and the U S.
We typically see and uplift from such programs as they often direct spending towards the transportation rail and general infrastructure markets we serve.
However, with the delays and Washington, the benefits would likely not be realized until after 2021.
Finally, the outlook for our cash flow. This year continues to remain strong.
We're expecting significant tax refunds, yet to come and continued working capital discipline and modest capital spending needs and line with our expectations all of which bodes well for continued strong cash generation.
So in summary, we're pleased with our performance and 2021 thus far and excited about the opportunities for further improvement and our results through the balance of the year and beyond.
Thank you for your attention and I'll now turn it back over to the moderator for the question and answer session.
And as a reminder to ask a question you will need to press star 1 on your telephone and.
And to withdraw your question press the pound key.
Please standby and while we compile the Q&A roster.
Our first question comes from the line of Alex Rygiel from B Riley you may begin.
Good morning, gentlemen, and thank you for taking my question.
Good morning, Alex Good morning, Alex.
A couple of quick questions here.
You mentioned that your pre cast concrete business was near capacity do you have any plans to expand capacity.
Alex Thanks.
Thanks for the question John on Castle here, we're continuing to look at those efforts in fact, what we're doing is trying to get off our existing properties and set up some silos satellite facilities right now are moving product into a better geographic spaces for us.
And Alex I would add to that.
Currently and the process of investing and our facility down in Texas.
And we're also when Youre looking at the operations.
And making sure that we've got the labor in place to support the volume that we've got.
So we did have a minor disruption in the quarter related to labor and the pre cash space.
And.
Activity and that business is very robust and we're proactively managing that labor force to make sure that we can maximize the output.
Okay.
Well, we think about the bigger picture as it relates to the second half of the year.
And in particular as it relates to gross margin you mentioned that there are some.
Cost inflation that won't be fully offset by price increases.
Are you, suggesting that we should think about sort of gross margins.
Comparable to <unk> levels, and the second half of the year or slightly down.
I don't I wouldn't say slightly down that's not what we're seeing at the moment.
I think it's appropriate to say that the current run rate in terms of gross margins. The single biggest driver that we see impacting overall gross margins is the weakness and the coatings and measurement business. We continue to highlight that as a.
Key driver of our performance.
And we don't really go into disclosing future gross profit.
We would expect to see any challenges on the inflation front to be offset by improvements that we see and other areas of the business, particularly the strength and the pre cash business as well as improvements that we continue to see coming out of Europe.
Sure.
And then turning over to the Cross London Project I believe you were going to add back and number of your team members and the month of June.
Are those team members are you back to 100% yet on that project and it.
And when might you be.
Yeah.
We're about 75% right now so that will continue through Q3 to get up to 100%.
But is steadily improving and increasing by the day right now.
Excellent. Thank you I'll get back in the queue.
Thanks, Alex.
Yeah.
And once again that's.
And 1 for question still on.
Next question comes from the line of Chris Sakai from singular research you may begin.
Hi, good morning.
Good morning, Chris just the overall question regarding the Delta that are you seeing any headwinds there.
I wouldn't say specifically from a L. B foster operational point of view.
I think just as the general market as we're watching the developments very closely.
We are not having any operational impacts related to that and I think.
As many industries R R.
Figuring out how to navigate it we're watching its impact on the markets that we serve as well as <unk> and any potential impact on the company and I will.
I'll say that.
We've been able to manage the impact of the pandemic pretty successfully over the last.
12 to 18 months, and we feel confident and our ability to continue to manage it going forward.
Okay, Great and then.
On the coatings and measurement.
Backlog increase.
On what's driving that and do you see any do you see that increasing and the future.
Yes.
I would say that it's centered in certain parts of the coatings and measurement business.
More around the measurement side.
And we saw some nice orders come in and a little bit of an uptick there.
In terms of it continuing.
That's something that we're <unk>.
Currently anticipating any significant improvement and.
I would say that the pipeline infrastructure situation and the U S continues to be a headwind and we're looking for any opportunities for improvement there, but at the moment, we're not seeing them.
Okay, Great and then.
And along our to go with coatings and measurement.
Would you ever consider divesting that business and its.
So when and what would it take.
While we certainly wouldn't divest it now we think the business has a promising upside.
And again certain pockets and parts of the business that I continue to be attractive and we're also looking for opportunities to diversify the markets and which we participate.
So I guess at the moment, we're really focused on improving the operational performance at the current level of the market demand and looking for the options that we have to expand the markets we participate in.
Okay, great. Thanks.
Yeah.
Thank you on our next question comes from the line of <unk>.
John Bair from ascend wealth advisors you may begin.
Thank you for taking my call and and questions and.
Bob Happy trails to you and the and the months ahead.
Thank you for a happy retirement.
You did address the last questioner there.
On the on the coatings and measurement.
And I'm just wondering are there other given the headwinds with the energy markets.
What other areas can you.
Expand into.
The water infrastructure for example, obviously a huge.
Problem and the southwestern U S and growing other way and other areas.
And.
Is that something you're focused on.
Yeah, So John John Castle here. Thanks for the question and we agree with the best wishes to Bob.
And he's 1 of the reasons that we'll continue to look at.
Greater our portfolio so.
Kind of give you a broad brush.
And a deep dive.
And looking at the <unk> and the.
Return on capital that we have and their ability to drive value and profit improvement across all of our businesses today and.
And of course energy is 1 of them, they're really jumps off the page and so on the <unk> side. The measurement side, we absolutely have started to pivot and reshape ourselves and are much more on the energy moving off of energy into the water and water transmission and water metering business.
That is also the case and our free cash business.
So instead of just modular buildings, we're also starting to move water through our concrete products that we're building so.
We're always looking at opportunities moving into different spaces different geographies and our water moving off of NRG is 1 of those we're doing today.
As the free cash do you do conduit.
Type products and.
Yeah.
Was it conduit conduit.
Right right, yeah, yeah, the large large diameter.
Yes.
Sure and demand holds up and moving water into the septic or sewer system type business today.
And then another question given the improved cash flow and expected.
Cash coming in on tax refunds, and so forth any consideration or thought about either share buybacks or possible.
Modest dividend and implementation.
Maybe and not necessarily coming quarter by year end, but that's something that you'd consider doing.
Yes, John this is bill.
And pretty active dialogues and this area related to capital allocation and the overall capital structure.
And as we mentioned on the call we've completed a pretty significant strategic review of the business that we'll be sharing more information on in the coming quarters and as part of that we're looking at the capital structure of the business and given the cash that we expect to generate through the balance of the year and the <unk>.
Needs that we see and the future and alignment with that strategic roadmap.
We will be looking at capital structure and share buybacks and dividends could be a component of that overall implementation plan.
Okay very good and 1 last question is.
Regarding the M&A landscape.
Are there particular areas of the business that you are more.
Focused on.
And the M&A.
Possible M&A or is it sort of.
More of an opportunistic whatever comes along that fits the picture overall.
Really the first part of your statement. We are we really are honing in on what's core and non core to the L. B Foster company.
And so acquisitions be it bolt ons or a nice little tuck ins or are in the rail space as well as the infrastructure side and enabling the precast concrete side of the business there.
Yes, 1 of the things I would like to also highlight there John is that.
And we're looking specifically at the technology side of the rail space. So when.
When you think about the different solutions that we offer to our customers when it comes to operating transit and freight rail systems more efficiently.
More economical and more environmentally friendly those are the technologies that we're really focused on when we're thinking about investments or acquisitions and the rail space.
And it also includes the potential for acquisitions that may be overseas as we look to opportunities that exist outside the U S.
Okay.
Very good good luck third quarter and and going forward.
All right you're taking my questions.
Thanks for your interest thanks, John.
And once again Thats star 1 for any questions 1 more on for questions.
And I'm currently showing no further questions and the queue I'll turn it over to Jon Kessler for any closing remarks.
Thank you Victor.
And again like to thank Bob Bauer for his 9 and a half years with the company the support and dedication and commitment.
To myself as well as the entire management team.
You will be missed and we wish you all the best and the next chapter of your life, So fair Bob John.
Yes. Thank you to all the shareholders, who have supported us over the years, it's been a great pleasure dealing with everybody out there.
And thanks for all of you for joining us as I mentioned earlier and my comments and I'm very excited about the opportunity I think the directors and Bob for their support.
And we're looking for shaping up on Q3 and getting back to you with the results of that and the coming months, So take care be safe and we'll talk to you soon bye bye.
Okay.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
And then.