Q1 2024 LB Foster Co Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Q1 2024 L.B. Foster Earnings Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Stephanie Schmidt. Please go ahead.
Good day, and thank you for standing by and welcome to the Q1 2024 L. B Foster earnings Conference call.
Speaker Change: All participants one of them.
Operator: Good.
Stephanie Schmidt: The speaker's presentation there'll be a question and answer fashion.
Operator: Quick question to one question will need to press star one on your telephone.
Stephanie Schmidt: And in an automated message revising your hand is right.
Operator: Your question. Please press star one again.
Operator: Please be advised that today's conference is being recorded.
Stephanie Schmidt: I'll now turn the conference over to your Speaker for today definitely Smith. Please go ahead.
Stephanie Schmidt: Thank you, Operator. Good morning, everyone, and welcome to L.B. Foster's first quarter of 2024 earnings call. My name is Stephanie Schmidt, the company's Investor Relations Manager. Our President and CEO, John Kasel, and our Chief Financial Officer, Bill Thalman, will be presenting our first quarter operating results, market outlook, and business developments this morning. The call will start with John providing his perspective on the company's first quarter performance, and we'll then review the company's first quarter financial results. John will provide perspective on market development and the company outlook in his closing comments, and we will then open the session up for questions.
Stephanie Schmidt: Thank you operator.
Stephanie Schmidt: Good morning, everyone and welcome to L. B Foster's first quarter of 2024 earnings call.
Stephanie Schmidt: Same as Stephanie Smith, the Companys Investor Relations manager.
Stephanie Schmidt: Our president and CEO, John Castle, and our Chief Financial Officer, They'll fall and then will be presenting our first quarter operating adult market outlook and business developments. This morning.
Stephanie Schmidt: We'll start the call with John providing his perspective on the company's first quarter performance.
Stephanie Schmidt: I will then review the company's first quarter financial results.
Stephanie Schmidt: John will provide perspective on market developments and company outlook is it closing comment.
Stephanie Schmidt: We'll then open the session up for questions.
Stephanie Schmidt: Today's slide presentation, along with our earnings release and financial disclosures, was posted on our website this morning and can be accessed on our investor relations page at lbfoster.com. Our comments this morning will follow the slides in the earnings presentation. Some statements we are making are forward-looking and represent our current view of our markets and business today. These forward-looking statements reflect our opinions only as of the date 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.
Stephanie Schmidt: 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 L. B Foster dock com.
Stephanie Schmidt: Comments. This morning will follow the slides and the earnings presentation.
Stephanie Schmidt: Some statements, we're making are forward looking and represent our current view of our markets and business today.
Stephanie Schmidt: These forward looking statements reflect our opinions only as of the date 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.
Stephanie Schmidt: For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non-GAAP financial metrics, and we 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. So with that, I will turn the call over to John.
Stephanie Schmidt: For more detailed risks uncertainties and assumptions relating to our forward looking statements. Please see the disclosures in our earnings release and presentation.
John: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided in today's earnings release and within our accompanying earnings presentation carefully as you consider these metrics.
Stephanie Schmidt: So with that let me turn the call over to John.
John F. Kasel: Thanks, Stephanie. Hello, everyone.
John: Thanks, Jeff Hello, everyone. Thank you for joining us today for our first quarter earnings call.
John F. Kasel: Thank you for joining us today for our first quarter earnings call. Please turn the materials to highlight the quarter on slide number five, which reflect continuing progress and momentum towards strategic transformation. First quarter organic sales improved 16.9% over the prior year, but they were certainly a strong quarter delivered by a real second. In fact, real segment sales were up 29.4% on an organic basis.
John: Please turn to materials to highlight the quarter on slide number five which reflect continuing progress momentum through our strategic transformation.
John F. Kasel: First quarter organic sales improved to 16, 9% over the prior year with a exceptionally strong quarter delivered by our rail segment.
John F. Kasel: We also had net sales were up 29, 4% against basis.
John F. Kasel: The approved sales performance, coupled with a 90 basis point cross margin improvement ending at 21.1%, drove a 32.4% increase in adjusted EBIT value year over year. The overall improvement in profitability was driven by RailSight, which delivers strong profit improvement in the technology, services, and solutions business, both in North America and the United Kingdom. Infrastructure results were somewhat softer in the quarter with organic sales basically flat year-over-year as the pre-cast business was adversely impacted by challenging weather conditions in its urban areas. However, market demand remains robust in our construction segment, and we expect results to improve as we continue to move through the construction season.
John F. Kasel: The improved sales performance, coupled with a 90 basis point gross margin margin improvement ending at 21, 1% drove a 32, 4% increase in adjusted EBITDA year over year.
John F. Kasel: The overall improvement in profitability was driven by real estate, which delivered strong profit improvement in technology services and solutions business, both in North America, and the United Kingdom.
John F. Kasel: Infrastructure results were somewhat soft during the quarter with organic sales basically flat year over year.
John F. Kasel: It's a precast business was adversely impacted by challenging weather conditions in certain markets.
John F. Kasel: However market demand remains robust in our infrastructure segment, and we expect results to improve as we continue to move through the construction season.
John F. Kasel: As expected, our net debt increased to $74.9 million during the quarter, reflecting the increased funding to our working capital to support sales growth along with annual bonuses and insurance per unit. It's important to note that our net loss was down two and a half million versus last year, and the gross leverage ratio of 2.2 times improved two tests a year over year. As mentioned and announced, it will be sold on adjacent property associated with our former joint venture Magnolia, Texas, for $3.5 million in net proceeds. The associated gain was excluded from our adjusted EBITDA for the quarter.
John F. Kasel: As expected our net debt increased to $74 9 million during the quarter, reflecting increased volume to our working capital to support sales growth along with annual bonuses and insurance premiums.
John F. Kasel: It's important to note that our net debt was down to <unk>.
John F. Kasel: Versus last year and the gross leverage ratio of two two times.
John F. Kasel: Two tenths year over year.
John F. Kasel: As mentioned in our announcement, we sold an adjacent property associated with our former joint venture in Magnolia, Texas for three more net proceeds.
John F. Kasel: The associated gain was excluded from our adjusted EBITDA for the quarter.
John F. Kasel: Order rates recovered in the first quarter, increasing 25.5% sequentially and 3% last year on an organic basis. Backlog remains healthy at approximately $222 million, which is down $37.6 million versus last year, although noting that a $12 million increase in previous strategic investors completed in 2023. The balance of decline is largely due to our rail distribution business, which has improved to pre-COVID order fulfillment, translating the sales growth at a lower over the book level.
John F. Kasel: Order rates recovered in the first quarter, increasing 25, 5% sequentially and up 3% last year on an organic basis.
John F. Kasel: Backlog remains healthy at approximately $222 million, which is down $37 6 million versus last year.
John F. Kasel: No in the $12 million a decrease of <unk> strategic divestitures completed in 2023.
John F. Kasel: The balance of the decline is largely due to our rail distribution business, which has improved to pre COVID-19 order fulfillment lead times.
John F. Kasel: Translating the sales growth and a lower lower OLED book level.
John F. Kasel: With a strong start to the year in line with our expectations, we reaffirmed our 2024 financial guidance and believe we're on track to achieve our 2025 financial goals established over two years ago. Bill will now cover the detailed financials for Q1, and I'll come back at the end with some closing remarks. Our markets have been... Over to you, Bill. Thanks, John, and good morning, everyone.
John F. Kasel: With the strong start to the airline, but our expectations. We reaffirmed our 2024 financial guidance I believe we are on track to achieve our 2025 financial commercial scale.
Bill: Two years ago.
Bill: I will now cover the detailed financials for Q1 and I'll come back at the end for some closing remarks our markets.
John F. Kasel: Mark over to you Bill.
Bill: Thanks, John and good morning, everyone.
William M. Thalman: I'll begin my comments covering consolidated highlights for our first quarter on slide number seven. As a reminder, the schedules in the appendix provide more detailed information on our financial results for the quarter, including certain non-GAAP measures discussed on today's call. As John mentioned in his opening remarks, our first quarter results were strong, driven by both organic growth and the portfolio moves we made in line with our strategic roadmap. Portfolio moves completed last year included the sale of Chemtech at the end of Q1 and the sale of the Concrete Ties business at the end of Q2. In addition, last year we announced the exit of our bridge grid deck product line in Q3, and we also completed the Cougar Mountain precast acquisition in Q4.
William M. Thalman: I'll begin my comments covering consolidated highlights on our first quarter on slide number seven.
William M. Thalman: As a reminder, the schedules in the appendix provide more detailed information on our financial results for the quarter, including certain non-GAAP measures discussed on today's call.
William M. Thalman: As John mentioned in his opening remarks, our first quarter results were strong driven by both organic growth and the portfolio moves we made in line with our strategic roadmap.
William M. Thalman: Portfolio moves completed last year include the sale of <unk> at the end of Q1 and the sale of concrete ties business at the end of Q2.
William M. Thalman: Yeah.
William M. Thalman: In addition last year, we announced the exit of our bridge Brent deck product line in Q3, and we also completed the Cougar Mountain precast acquisition in Q4.
William M. Thalman: The organic results reviewed throughout today's presentation provide insight into the performance of our base business, excluding these portfolio actions. Net sales for the quarter were up 7.6%, 16.9% on an organic basis, with the organic growth driven primarily by the strong results in the rail segment. All infrastructural organic sales were essentially flat year over year.
William M. Thalman: Organic results reviewed throughout today's presentation provide insight into the performance of our base business. Excluding these portfolio actions.
William M. Thalman: Net sales for the quarter were up seven 6% 16, 9% on an organic basis with the organic growth driven primarily by the strong results in the rail segment.
William M. Thalman: Our infrastructural organic sales were essentially flat year over year.
William M. Thalman: Gross profit was up $3 million, which drove a margin expansion of 90 basis points, improving consolidated margins to 21.1%. The improvement was driven by the rail sales uplift, as well as the benefit of portfolio actions and improved product mix. Selling general and administrative costs increased over the prior year due to personnel and professional services costs. However, as a percentage of sales, SG&A was down 20 basis points to 18.3%. Net income for the quarter totaling $4.4 million included a $3.5 million net gain on the sale of the Magnolia, Texas property. The net gain realized was equal to the proceeds received as the property carried zero book value at the time of the sale.
William M. Thalman: Gross profit was up $3 million, which drove a margin expansion of 90 basis points, improving consolidated margins to 21, 1%.
William M. Thalman: The improvement was driven by the rail sales uplift as well as the benefit of portfolio actions and improved product mix.
William M. Thalman: Selling general and administrative costs increased over the prior year due to personnel and professional services costs.
William M. Thalman: However, as a percentage of sales SG&A was down 20 basis points to 18, 3%.
William M. Thalman: Net income for the quarter totaling $4 $4 million included a $3 $5 million net gain on the sale of the Magnolia, Texas property.
William M. Thalman: The net gain realized was equal to the proceeds received as the property carry zero book value.
William M. Thalman: <unk> of the sale.
William M. Thalman: The net gain realized on the property sale was excluded from the adjusted EBITDA for the quarter, which was $5.9 million, up 32.4% versus last year. As expected, cash used for operating activities in the quarter was $21.9 million due to seasonal working capital needs, coupled with funding for prior incentives and annual insurance premiums. I'll provide some additional color on orders and backlog by segment later in the presentation. The bridges on slide 8 reflect the organic and portfolio-driven impacts on sales and adjusted EBITDA for the quarter versus last year. The bridge on the left side highlights the strong organic growth realized in Q1, with a $19.5 million sales increase representing 16.9% organic growth. The net impact of M&A activities decreased revenue by $10.6 million, or 9.2%.
William M. Thalman: The net gain realized on the property sale was excluded from the adjusted EBITDA for the quarter, which was $5 9 million up 32, 4% versus last year.
William M. Thalman: As expected cash used for operating activities in the quarter was $21 $9 million due to seasonal working capital needs coupled with funding for prior incentives and annual insurance premiums.
William M. Thalman: I'll provide some additional color on orders and backlog by segment later in the presentation.
William M. Thalman: Yes.
William M. Thalman: The bridges on slide eight reflect the organic portfolio driven impacts on sales and adjusted EBIT da for the quarter versus last year.
William M. Thalman: The bridge on the left side highlights the strong organic growth realized in Q1 with the $19 $5 million sales increase representing 16, 9% organic growth.
William M. Thalman: The net impact of M&A activities decreased revenue $10 6 million or nine 2%.
William M. Thalman: The bridge on the right side highlights the improved profitability delivered from both organic and M&A drivers. Notably, adjusted EBITDA was up $0.6 million from M&A activities, despite the related $10.6 million decline in sales. However, the EPA leverage on the strong organic sales growth was tempered due to lower profitability and infrastructure, coupled with higher SG&A.
William M. Thalman: The bridge on the right side highlights the improved profitability delivered from both organic and M&A drivers.
William M. Thalman: Notably adjusted EBITDA was up <unk> $6 million from M&A activities, despite the related $10 $6 million decline in sales.
William M. Thalman: The EBITDA leverage on the strong organic sales growth was tempered due to lower profitability in infrastructure, coupled with the higher SG&A.
William M. Thalman: We expect our profitability from organic sources will improve as the year progresses. Overall, we're pleased to see the uplift in adjusted EBITDA, resulting in a 90 basis point improvement to 4.8% of sales for the quarter. Slide nine highlights the progress we've made in sales, growth, and margin expansion over the last two years. The net impact of our strategic execution resulted in 7% adjusted sales growth for the trailing four quarters ended March 31st, 2024. Of course, this reported result includes the impact of our portfolio work. However, organic growth over the same time period averaged approximately 13% per quarter, with the 16.9% realized this quarter being the high point.
William M. Thalman: We expect our profitability from organic sources will improve as the year progresses.
William M. Thalman: Overall, we are pleased to see the uplift in adjusted EBITDA, resulting in a 90 basis point improvement to four 8% of sales for the quarter.
William M. Thalman: Slide nine highlights the progress we've made in sales growth and margin expansion over the last two years.
William M. Thalman: Net impact of our strategic execution resulted in a 7% adjusted sales growth for the trailing four quarters ended March 31, 2012 24 of.
William M. Thalman: Of course. This reported result includes the impact of our portfolio work.
William M. Thalman: Organic growth over the same time period averaged approximately 13% per quarter with a 16, 9% realized this quarter being the high point.
William M. Thalman: Over the trailing four quarters adjusted gross profit increased 17, 3%, resulting in a 190 basis point improvement in adjusted gross margin to 21, 4%.
William M. Thalman: Over the trailing four quarters, adjusted gross profit increased 17.3%, resulting in a 190 basis point improvement in adjusted gross margin to 21.4%. As a result of our portfolio work and profitability initiatives, adjusted growth margins have exceeded 21 percent in each of the last four quarters. We're very pleased to see the impact of our transformation and our results and believe the structural improvement in the gross margin profile of our business will continue to deliver improving margins given the demand outlook from our infrastructure and markets.
William M. Thalman: As a result of our portfolio work and profitability initiatives adjusted gross margins have exceeded 21% in each of the last four quarters.
William M. Thalman: We're very pleased to see the impact of our transformation and our results and believe the structural improvement in the gross margin profile of our business will continue to deliver improving margins given the demand outlook from our infrastructure end markets.
William M. Thalman: Over the next couple of slides, I'll cover our segment performance in the quarter, starting with the rail segment on slide 10. First quarter rail segment revenues totaling $82.6 million were up 28.3% over last year, including a 1.1% decline from the TIES divest. Strong organic sales growth was realized in both rail products and technology services and solutions business units. We're especially pleased with the results in TSNS, which included an uplift from the domestic rail safety business, as well as some modest recovery in the UK. Rail margins of 22.5% were up 30 basis points year over year, driven by the strength of the TS&S business. New rail orders increased 13.6% year-over-year and 39.4% sequentially, driven primarily by rail products.
William M. Thalman: Over the next couple of slides I'll cover our segment performance in the quarter, starting with the rail segment on slide 10.
William M. Thalman: First quarter rail segment revenues totaling $82 $6 million were up 28, 3% over last year.
William M. Thalman: Including a one 1% decline from the <unk> divestiture.
William M. Thalman: Strong organic sales growth was realized in both rail products and technology services and solutions business units.
William M. Thalman: We're especially pleased with the results in <unk>, which.
William M. Thalman: Which included an uplift from the domestic rail safety business as well as some modest recovery in the U K.
William M. Thalman: Rail margins of 22, 5% were up 30 basis points year over year, driven by the strength of the <unk> business.
William M. Thalman: New rail orders increased 13, 6% year over year, and 39, 4% sequentially driven primarily by rail products.
William M. Thalman: While backlog levels decreased 24.3% versus last year, this decline was primarily due to shorter lead times and improved order fulfillment in NREL products, resulting in meaningful sales growth with a relatively lower backlog level. Last year's orders and backlogs associated with the Digested Concrete Ties business were $2.7 million and $3.5 million, respectively. Turning to infrastructure solutions on slide 11, segment revenue decreased $9.4 million, or 18.4%. However, 19.5% of the decline was due to divestiture and product line exit activity. Organic sales were relatively flat, with a 1% increase over the prior year.
William M. Thalman: While backlog levels decreased 24, 3% versus last year. This decline is primarily due to shorter lead times and improved order fulfillment and rail products, resulting in meaningful sales growth with a relatively lower backlog level.
William M. Thalman: Last year's orders in backlog associated with the divested concrete ties business were $2 7 million and $3 5 million respectively.
William M. Thalman: Turning to infrastructure solutions on Slide 11 segment revenue decreased $9 4 million or 18, 4%.
William M. Thalman: However, 19, 5% of the decline was due to divestiture and product line exit activity.
William M. Thalman: Organic sales were relatively flat with a 1% increase over the prior year.
William M. Thalman: Strong growth in steel products was offset by the impact of adverse weather conditions on customer project installations and precast concrete. Gross profit margins were up 80 basis points to 18.4% due primarily to portfolio changes executed over the last 12 months. New orders were $48.6 million, down $17.1 million from the prior year quarter, with divestiture and product line exit activity contributing a decline of $8.5 million. Backlog totaling $136.2 million reflects a $10.1 million decrease, $8.5 million of which was due to M&A activity.
William M. Thalman: Strong growth in steel products was offset by the impact of adverse weather conditions on cross customer project installations and precast concrete.
William M. Thalman: Gross profit margins were up 80 basis points to 18, 4% due primarily to portfolio changes executed over the last 12 months.
William M. Thalman: New orders were $48 6 million down $17 1 million from the prior year quarter with divestiture and product line exit activity contributing a decline of $8 5 million.
William M. Thalman: Backlog totaling $136 2 million reflects a $10 $1 million decrease $8 5 million of which was due to M&A activity.
William M. Thalman: I'll now cover our liquidity and leverage metrics on slide 12. We were pleased to see the continued improvement in our net debt and gross leverage metrics compared to last year. Next, that level decreased $2.5 million, and our gross leverage ratio decreased 0.2 times.
William M. Thalman: I'll now cover our liquidity and leverage metrics on slide 12.
William M. Thalman: We were pleased to see the continued improvement in our net debt and gross leverage metrics compared to last year.
William M. Thalman: Net debt level decreased $2 $5 million and our gross leverage ratio decreased <unk> two times.
William M. Thalman: As expected, we saw an uptick in both net debt and gross leverage during the quarter to fund seasonal working capital needs, as well as prior year incentive bonuses and annual insurance premiums. We remain confident in our ability to manage our leverage metrics around two times over the long term, given our capital-light business model and improving cash generation outlook. While we had a $21.9 million use of cash from operations during the quarter, we expect operating cash flow to improve along typical seasonal patterns as the year progresses.
William M. Thalman: As expected we saw an uptick in both net debt and gross leverage during the quarter defined as seasonal working capital needs as well as prior year incentive bonuses and annual insurance premiums.
William M. Thalman: We remain confident in our ability to manage our leverage metrics around two times over the long term given our capital light business model and improving cash generation outlook.
William M. Thalman: While we had a $21 $9 million use of cash from operations during the quarter, we expect operating cash flow to improve along typical seasonal patterns as the year progresses.
William M. Thalman: We remain confident in our free cash flow outlook guidance of $12 to $18 million in 2024, which includes the final $8 million that's owed under the Union Pacific Settlement Agreement. Cash generation will be prudently deployed against our capital allocation priorities, including continuing the execution of our share buyback program with $12.3 million of the original $15 million authorization still available through February of 2026. In summary, we believe the key drivers of strong, sustainable free cash flow are in place and should continue to improve throughout the balance of 2024 and beyond.
William M. Thalman: We remain confident in our free cash flow outlook guidance of $12 million to $18 million in 2024, which includes the final $8 million.
William M. Thalman: Under the Union Pacific settlement agreement.
William M. Thalman: Cash generation will be prudently deployed along our capital allocation priorities, including continuing the execution of our share buyback program with $12 $3 million of the original $15 million authorization still available through February of 2026.
William M. Thalman: In summary, we believe the key drivers of strong sustainable free cash flow are in place and should continue to improve throughout the balance of 2024 and beyond.
William M. Thalman: I'll next revisit our capital allocation priorities outlined on slide 13. As I just mentioned, we continue to focus on managing leverage levels while opportunistically investing in organic growth opportunities we see in rail technologies and precast concrete. We're comfortable with gross leverage around two times, which is down from the recent 3.3 times high point seen after the completion of three acquisitions in the summer of 2022. Capital spending is expected to run around two to two and a half percent of sales on average, which is slightly higher than our historical levels due to investments in our growth platform.
William M. Thalman: Our next revisit our capital allocation priorities outlined on slide 13.
William M. Thalman: As I just mentioned, we continue to focus on managing leverage levels, while opportunistically investing in organic growth opportunities, we see in rail technologies and precast concrete.
William M. Thalman: We're comfortable with gross leverage around two times, which is down from the recent three three times high point seen after the completed completion of three acquisitions in the summer of 2022.
William M. Thalman: Capital spending is expected to run around two to two 5% of sales on average, which is slightly higher than our historical levels due to investments in our growth platforms.
William M. Thalman: As mentioned before, we continue to evaluate opportunities to return cash to shareholders through our stock repurchase program, and we've been active since its inception in February of 2023, repurchasing approximately 151,000 shares, or 1.4% of the outstanding shares, at an average price of $17.89 per share.
William M. Thalman: I've mentioned before we continue to evaluate opportunities to return cash to shareholders through our stock repurchase program and we've been active since its inception in February of 2023, repurchasing approximately 151000 shares or one 4% of the outstanding shares at an average price of <unk>.
William M. Thalman: $17 89 per share.
William M. Thalman: We continue to evaluate small tuck-in acquisitions that can extend our product portfolio within our growth platforms, such as the recent Cougar Mountain acquisition that was completed at the end of 2023. And finally, we continue to consider a dividend as a capital allocation option as the prospects for stronger free cash flow improve. My closing comments will refer to slides 14 and 15, covering orders, revenues, and backlog by business. The book-to-bill ratio over the last 12 months was 0.94 to 1, which is somewhat softer due to the strong order book fulfillment rates and improved lead time.
William M. Thalman: We continue to evaluate small tuck in acquisitions that can extend our product portfolio within our growth platforms.
William M. Thalman: The recent Cougar Mountain acquisition that was completed at the end of 2023.
William M. Thalman: And finally, we continue to consider a dividend as a capital allocation option as the prospects for stronger free cash flow improved.
William M. Thalman: My closing comments will refer to slides 14, and 15 covering orders revenues and backlog by business.
William M. Thalman: The book to Bill ratio over the last 12 months was <unk> 94 to one which is somewhat softer due to the strong book order book fulfillment rates and improved lead times.
William M. Thalman: First quarter order rates did improve sequentially by 25.5% and were up 3% on an organic basis, highlighting an improving trend in demand. And lastly, our consolidated backlog on slide 15 reflects a healthy level with a decline year over year due both to divestiture and product line exit activity, coupled with improved lead times and order fulfillment execution. As mentioned in the past, our order rates and backlog are susceptible to swings driven primarily by large order timing in our rail distribution product offering.
William M. Thalman: First quarter order rate did improve sequentially 25, 5% and were up 3% on an organic basis, highlighting an improving trend.
William M. Thalman: <unk> levels.
William M. Thalman: And lastly, our consolidated backlog for on Slide 15 reflects a healthy level with a decline year over year due both to divestiture and product line exit activity, coupled with improved lead times.
William M. Thalman: Order fulfillment execution.
William M. Thalman: As mentioned in the past our order rates and backlog are susceptible to swings driven primarily by large order timing and our rail distribution product offering.
William M. Thalman: Despite the lower backlog level, we remain optimistic about the longer-term prospects for growth and demand across our portfolio and expect this will translate into improving backlog as the year progresses. In summary, we're pleased with the strong start to 2024 and look forward to continuing this progress throughout the balance of the year. Thanks for your time, and I'll now hand it back over to John for his closing remarks.
John: The lower backlog level, we remain optimistic in the longer term prospects for growth in demand across our portfolio and expect this will translate into improving backlog as the year progresses.
William M. Thalman: In summary, we're pleased with the strong start to 2024 and look forward to continuing this progress throughout the balance of the year. Thanks for your time and I'll now hand, it back over to John for his closing remarks John.
John F. Kasel: Thanks, Bill. Please turn to slide 17 for an overview of our key business and market drivers underpinning our LOC. You're optimistic about the longer-term prospects for growth and land markets for both segments, particularly given the continued emphasis on infrastructure investment. In 2023, we began to realize some project-related business from U.S. federal programs approved over the last several years. And we expect that trend to continue moving to 2024 and beyond. In addition, EPSA's on rail safety programs are another payable driver for our business.
John: Thanks, Bill Please turn to slide 17 for an overview of our key business and market drivers underpinning our outlook.
John F. Kasel: We are optimistic and longer term prospects for growth in our end markets through both segments, particularly given the continued emphasis on infrastructure investment.
John F. Kasel: In 2023, we began to realize some project related business from U S. Federal programs approved over the last several years.
John F. Kasel: And we expect that trend to continue into 2024 and beyond.
John F. Kasel: In addition emphasis on rail safety programs is another favorable driver for our business we.
John F. Kasel: We've seen an uplift in demand for our total track monitoring technology products in 2024, and we suspect this trend will continue. We are also cautiously optimistic that the U.K. construction markets have stabilized and are showing modest signs of improvement after a challenging 2023. And finally, record spending on recreational parks and campgrounds, funded by the Great American Outdoors Act, continues to drive strong demand for our CXT concrete buildings.
John F. Kasel: We've seen an uplift in demand for our total traffic monitoring.
John F. Kasel: Technology products in 2024 and.
John F. Kasel: <unk> space this trend will continue.
John F. Kasel: We're also cautiously optimistic that the U K construction markets have stabilized and is showing modest signs of improvement after a challenging 2023.
John F. Kasel: And finally record spending in recreational pursuits in campgrounds funded by the Great American outdoors that continues to drive strong demand for our <unk> concrete buildings.
John F. Kasel: Coupled with government funding for road and bridge rehab projects, as well as robust regional commercial residential real estate development, we believe the outlet for our long-term demand is favorable for our infrastructure segment. In summary, overall prospects for sustainable profitable growth should remain strongly in the infrastructure investment super cycle we expect for years to come. On slide 18, I'd like to emphasize the investment pieces for LB Foster, which is supported by four key pillars.
John F. Kasel: Coupled with government funding for road and bridge rehab project as well as robust regional commercial and residential real estate development. We believe the outlook for our long term demand is favorable for infrastructure segment.
John F. Kasel: In summary, overall prospects for sustainable profitable growth should remain strong way of infrastructure investment Super cycle, we expect for years to come.
John F. Kasel: On slide 18, I'd like to emphasize the investment thesis for L. B Foster, which is supported by four key pillars.
John F. Kasel: First, we've taken the strategic steps necessary to transform our business portfolio, resulting in structural improvements in profitability that were delivered in 2023 and are continuing, as evidenced by the first quarter results. Second, we reported stronger organic growth in 2023 and also started this year again with healthy growth. It's our belief and strategy that we represent an infrastructure pure play with multiple avenues for growth through multi-year investment programs. They're clearly needed in our served market.
John F. Kasel: First we've taken strategic steps necessary to transform our business portfolio, resulting in structural improvements in profitability is that were delivered in 2023.
John F. Kasel: Continuing as evidenced by our first quarter results.
John F. Kasel: Second we reported strong organic growth in 2023, and also started this year again with the growth.
John F. Kasel: It's our belief and strategy that we are representing infrastructure pure play with both.
John F. Kasel: Through growth through the multiyear investment programs. They are clearly needed in our served markets.
John F. Kasel: Third, with exceptional cash flow in 2023 and our capital-like business, coupled with improving profitability and the completion of our Union Pacific settlement payments later this year should all provide even more favorable cash flow in the future. Fourth and finally, we have a Disciplined Capital Allocation Process with multiple drivers that have been deployed and are creating value for our shareholders as evidenced by our improved equity return. So, in summary, we believe our strategy is sound and our execution along these four pillars should deliver improving results through 2024 and beyond. With these pillars in place, we're confident in our prospects for the future.
John F. Kasel: Third with the exceptional cash flow in 2023, and our capital light business model, coupled with improving profitability in the completion of our Union Pacific settlement payments later this year should all provide even more favorable cash flow in the future.
John F. Kasel: Fourth and finally, we have a disciplined capital allocation process with multiple drivers that have been deployed and creating value for our shareholders as evidenced in our improved equity returns.
John F. Kasel: So in summary, we believe our strategy is sound and our <unk> along these.
John F. Kasel: <unk> should deliver improving results through 2024 and beyond.
John F. Kasel: With each pillar is in place we're confident in our prospects for the future.
John F. Kasel: As I wrap up today's call on slide 19, I would remind everybody we've been closely monitoring the potential for L.B. Foster to be added back to the Russell 2000 Index this year. Our market cap as of last Tuesday, the measurement day, was approximately $255 million, up 106% over last year; the index was up 11.6% over the same time period, and the market cap cut off last year was approximately $160 million. Given our equity performance relative to the index, we believe we will be on the list for inclusion once published later this month.
Speaker Change: As I wrap up todays call on slide 19, I'll remind everybody we've been closely monitoring the potential for L. B foster to be added to the Russell 2000 index. This year.
John F. Kasel: Our market cap as of last Tuesday, the measurement date was approximately $255 million up 106% over last year.
John F. Kasel: The index was up 11, 6% over the same time period.
John F. Kasel: And our market cap cutoff last year was approximately $160 million.
John F. Kasel: Our equity performance relative to the index. We believe we will be on the list for inclusion once published later this month.
John F. Kasel: Looking back, it's been two and a half years since our investor day. At that time, they rolled out a strategic transformation roadmap and aspirational goals for 2025. Since then, we've completed nine transactions with a simplified business structure, improved our profitability profile, and aligned the business to capture robust demand in our served infrastructure market. They're pleased with the progress, but the journey continues. We reaffirmed our guidance for 2024 and have a clear line of sight to our goals for 2025.
John F. Kasel: Looking back it's been two and a half years since our Investor day.
John F. Kasel: At that time, there will there be a strategic transformation roadmap and aspirational goals for 2020.
John F. Kasel: So as <unk> completed nine transactions with a simplified our business structure.
John F. Kasel: Third our profitability profile and align the business to capture robust demand in our served infrastructure markets.
John F. Kasel: We are pleased with the progress with the journey continues we reaffirmed our guidance for 2024 and have a clear line of sight to our goals for 2025.
John F. Kasel: Our team is energized by the prospects for the future. Yes, indeed. We have a moment. As I started today's call, I want to end the call with recognition for our employees in the rail segment, this time on a topic of safety. This group worked the entire first quarter, more than 365,000 employee production hours, without a recorded wager.
John F. Kasel: Our team is energized by the prospects for the future, yes, Indeed, we have momentum.
John F. Kasel: As I started todays call I'll end the call with recognition to our employees in our rail segment with permanent topic of safety.
John F. Kasel: This group worked the entire first quarter over 365000 employee production hours.
John F. Kasel: Congratulations to Greg Lipper, who leads this group and all that made this happen. So, with that, thank you for your time and interest in L.B. Foster, and I'll turn it back to the operator for the Q&A session.
John F. Kasel: Alan a recordable injury.
John F. Kasel: Graduations to Greg Ledford relief with group and all of that made this happen.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star 1-1 on your telephone. Also, we ask that you please wait for your name to be announced before you proceed with your question. One moment while we compile the Q&A route. Our first question today will be from Alex Rygiel of B. Riley Securities. Your line is open.
John F. Kasel: So with that thank you for your time instilling interest normally foster.
Alexander John Rygiel: Sure Betsy operator for the Q&A session.
Operator: Okay.
Alexander John Rygiel: Thank you.
Operator: Reminder, if you would like to ask a question. Please press star one on your telephone.
Alexander John Rygiel: Also we ask that you. Please wait for your name to be announced before you proceed with your question one moment, while we compile the Q&A roster.
Operator: Our first question today will be coming from Alex Rygiel.
Alexander John Rygiel: Wireless Securities Your line is open.
Alexander John Rygiel: Thank you and good morning, gentlemen. Hi, everyone. I have a couple of quick questions here.
Alexander John Rygiel: Thank you and good morning, gentlemen.
Alexander John Rygiel: Hi, Alex.
John F. Kasel: First off, a very nice quarter. Congratulations on that. But there was no change to your full year guidance, and I understand it's early. The first quarter was strong. Did you see any kind of pull forward, or are you really just kind of staying conservative given where the new order activity is in the first quarter?
Alexander John Rygiel: So a couple of quick questions here first off very nice quarter congratulations on that.
John F. Kasel: There was there was no change to your full year guidance and understanding it's early.
John F. Kasel: First quarter was strong.
John F. Kasel: Did you see any kind of pull forward.
John F. Kasel: Or are you really just kind of staying conservative given where the new order activity is in the first quarter.
John F. Kasel: Yeah, actually, you know, we're pretty excited about the order activity. We did a little bit of activity that we thought might be a Q2 that moved into Q1. But most of it was, you know, like you said earlier, Q1. And there were a lot of headwinds out in the markets today. We're experiencing some nice results, a nice start, but we're being, you know, cautious in our guidance.
Speaker Change: Yes actually were pretty.
John F. Kasel: Order activity, we're feeling pretty good about.
John F. Kasel: We did a little bit of activity that we thought maybe a Q2 that moved into Q1.
John F. Kasel: But most of it was like you said earlier is Q1.
John F. Kasel: And.
John F. Kasel: There is a lot of headwinds out in the markets today.
John F. Kasel: We're seeing some nice results from nice start but were being <unk>.
John F. Kasel: Cautious in our guidance that we're giving in the market.
John F. Kasel: Fair enough. And then, as it relates to your comment about shorter lead times, can you go into a little bit more detail on that? Yeah, you know, it's a yes. I appreciate that.
Speaker Change: Fair enough and then as it relates to your comment about shorter lead times could you go into a little bit more detail on that.
John F. Kasel: Yeah, rail distribution. I mentioned that, and kind of back to pre-COVID levels. It's a good thing. You know, it did impact what we built in the backlog, because in the past, customers were coming to us with extended lead times and gave us orders and greater visibility. Because you had to, you know, build out that capacity in the mill, specifically SIPCO, which is a steel provider.
Speaker Change: Yes, I appreciate that.
John F. Kasel: Distribution I mentioned that in the kind of back to pre COVID-19 levels is a good thing.
John F. Kasel: Yes, it did impact will be built in the backlog because in the past we had customers who are coming to us with extended lead times and gave us orders some greater visibility.
John F. Kasel: This build out that capacity in the bill specifically of SIFCO, which is steel provider.
John F. Kasel: In the last six months or so, we've seen that get back to, you know, basically normal conditions. So the order rate and bidding rates are still good, but they just don't need to place orders as often as they did in the past, resulting in, you know, a little less order book. But that's a good thing for us. We were being pretty stressed, or, if you will, from a supply chain in the past. So we feel much better about where we're at today. It's much more back to normal.
John F. Kasel: In the last six months or so we've seen that get back to basically normal conditions. So the order rate.
John F. Kasel: And bidding rates still good but they just don't need to place the orders as often as he did in the past.
John F. Kasel: Resulting in little less order book, but Thats a good thing for US we are beings pre stressed stressed or if you will from a supply chain in the past.
John F. Kasel: So we feel much better about.
John F. Kasel: Where we're at today, it's much more back to normal.
John F. Kasel: And then lastly, as it relates to capital allocation. Clearly expect a pretty decent cash flow this year. CapEx is sort of being managed and maintained, so I suspect that's going to free up some capital here to allocate towards M&A, so maybe if you could talk a little bit about that and how you think about using debt and, C. L. Y. M. C. T. R. C. S. L. M. C. T. R. C. M. C. T. R. C. M. C. M. C. M. C. M. C. M.
John F. Kasel: And then lastly, as it relates to capital allocation.
John F. Kasel: Clearly you expect a pretty decent cash flow this year.
John F. Kasel: Capex is sort of not being managed and maintained.
John F. Kasel: I suspect that's going to free up.
John F. Kasel: Some capital here to allocate towards M&A. So maybe if you could talk a little bit about that and how you think about using that and.
John F. Kasel: Stock and future M&A transactions.
John F. Kasel: Well, sir, and I'll let Bill chime in as well, but you know, we, first of all, we, you know, Bill mentioned we're at two to two and a half percent of sales in our capital place. So, you know, we're pretty light on the capital side. We like to think through things, really work on the process itself, and then bring in capital only when it's needed, which has been very beneficial for us, especially with, as you see, our improved margins. And a lot of that is the heavy lifting by our men and women who are just making things and doing things better, including the safety results that I mentioned. Cash is critical.
Speaker Change: I'll start and I'll, let bill chime in as well.
John F. Kasel: First of all Bill mentioned.
John F. Kasel: Two to two 5% of sales as our capital play So we're pretty light on the capital side, we'd like to do all we can think two things really work on the process itself and then bring capital only was needed.
John F. Kasel: Which has been very beneficial for us, especially with the as you see our improved margins and a lot of that is the heavy lifting by our men and women that are just making things and doing things better including the safety results that I've mentioned.
John F. Kasel: Cash.
John F. Kasel: Free cash flow is something we really measure and monitor. We're excited about getting to the settlement payments with Union Pacific. That's $8 million that comes off and changes the balance of this year, and we'll have some dry powder as we move forward.
Bill: Is as critical free cash flow is something we really measured we monitor.
John F. Kasel: We're excited about.
John F. Kasel: Getting to the settlement payments with Union Pacific, that's $8 million that comes off and changes the balance of this year.
John F. Kasel: But getting back to your M&A question, Right now, we did quite a few, as we mentioned, nine deals in the last two and a half years. And we feel very good about where we're at with respect to our portfolio. We went from three segments to two segments, and we're really focused on execution right. , , , , , , , , , , , , , , to create as far as M&A work.
John F. Kasel: And we will have some dry powder as we move forward, but getting back to your M&A question.
John F. Kasel: Right.
John F. Kasel: Quite a few as we mentioned nine deals in the last two and a half years and.
John F. Kasel: And we feel very good about where we're at with respect to our portfolio. We look at the three segments.
John F. Kasel: Segments, and we're really focused on execution right now.
John F. Kasel: Make sure we hit the guidance and then go from there we're building a platform.
John F. Kasel: Within mining with the mind is 2025, the numbers that we put out there.
John F. Kasel: We put two and a half years ago and the billing net platform building that growth top and bottom line and up to that so we're not going to get.
John F. Kasel: Too crazy as far as M&A work I think we rebuilt a lot of credibility back in the marketplace today in shoring up what it is that we are building our core competence and really focus on.
John F. Kasel: I think we built a lot of credibility back in the marketplace today by showing what it is that we are, building our core competence and really focus on the things that really make the profitability and investors' interest in the company.
John F. Kasel: Things that really make profitability of investors' interest in the company.
John F. Kasel: That said, you know, we will continue to look at the cash situation. And Bill, I'll let you maybe chime in on what your thoughts are, including the dividend, perhaps in the future. Yeah. Yeah.
John F. Kasel: That said, we will continue to look at the cash situation and Bill I'll, let you maybe chime in on.
Bill: Your thoughts are including the dividend, perhaps in the future, yes, yes, I guess I would say Echo John's point, we had a great cash flow year last year right around $30 million to $33 million of free cash flow last year and the guidance is $12 million to $18 million this year.
William M. Thalman: I guess I would say to echo John's point, you know, we had a great cash flow year last year, right around $32, $33 million of free cash flow last year. And the guidance is $12 to $18 million this year. And the CapEx that we're doing this year is actually a little higher run rate than what we would expect over the longer term because of some of the organic opportunities we're investing in that will help us make the jump from where we're expecting to be in 2024 to 2025.
William M. Thalman: And the Capex that we're doing this year is actually a little higher run rate than what we would expect over the longer term because of some of the organic opportunities. We're investing in that will help us make the jump from where we are expecting to be in 'twenty four 'twenty five guidance.
William M. Thalman: And then with the stock repurchase programs, those will be continuing. And with the UP obligation going away and stronger cash flows in 2025, I think that's when the prospects of a dividend will get greater attention. And that's something that's continuously a discussion with our board today. So feeling good about the direction we're going and look forward to continuing to make progress this year. Very helpful.
William M. Thalman: And then with the stock repurchase programs those will be continuing and what the <unk> obligation going away and stronger cash flows in 2025 I think that's when you have the prospects of a dividend, we'll get greater attention and Thats something thats continuously a discussion with our board today.
William M. Thalman: So I'm feeling good about the direction were going and look forward to continuing to make progress in this year.
William M. Thalman: Very helpful. Thank you. Nice quarter.
William M. Thalman: Very helpful. Thank you nice quarter.
Speaker Change: Thanks, Alex.
Alexander John Rygiel: Thank you. One moment for the next question. As a reminder, if you would like to ask a question, please press star 1-1 on your telephone. The next question is coming from Chris Sakai.
Chris Sakai: Thank you one moment for the next question.
Chris Sakai: As a reminder, if you would like to ask a question. Please press star one on your telephone.
Alexander John Rygiel: Okay.
Chris Sakai: The next question coming from Chris Pocket.
Chris Sakai: Obviously, you had a research your line is open.
Chris Sakai: Hi, good morning. I just had a question about Chris Bakker. You mentioned that you see the backlog improving throughout the year. Can you help me understand or give a sense as to what levels you see it going to?
Chris Sakai: Hi, good morning.
Chris Sakai: So the question Chris.
Chris Sakai: I had a question on the backlog trends.
Chris Sakai: You mentioned that you see it improving throughout the year can you help us me understand.
Chris Sakai: Or if you have a sense as to what level do you see it going too.
John F. Kasel: Well, first of all, the bidding activity is very, very strong right now across the entire company, both on the infrastructure and rail side. I mean, sequentially, we feel very good about our uptick in activity from quarter to quarter. And even when you look at Q1 versus Q1 year over year, I don't know necessarily, we don't give guidance on what the backlog is. All I know is we have enough activity and upbidding activity to be able to reconfirm our guidance for this.
Chris Sakai: Well first of all the bidding activity is very very strong right now across the entire company, both the infrastructure and rail side.
John F. Kasel: Actually we feel very good about our uptick in activity from quarter to quarter and even when you look at Q1 versus Q1 year over year I don't know necessarily we don't give guidance what the backlog is all I know is we have enough activity in that bidding activity.
John F. Kasel: To be able to.
John F. Kasel: We reconfirm our guidance for this year.
John F. Kasel: Okay.
Chris Sakai: Okay. Great. Thanks. And it looks like Rail had a good quarter for revenue growth. Can you comment on what the main drivers were there?
Speaker Change: Okay, great. Thanks.
Chris Sakai: It looks like rail had a good quarter for revenue growth.
Chris Sakai: Can you comment on.
Chris Sakai: What were the main drivers there.
John F. Kasel: You had, you know, I mentioned in my remarks, very strong performance on the rail and actually very good performance on the entire rail segment, including the UK. I haven't said that in quite a while. You know, I say a year, but it might have been even longer.
Chris Sakai: Yes.
John F. Kasel: I mentioned in my remarks, a very strong performance on rail and actually very good performance out of the entire row segment, including the U K I Havent said that in quite a while.
John F. Kasel: Say a year it might have been even longer so U K year over year is really.
John F. Kasel: Stabilized and something that we feel much better about conditions going forward.
John F. Kasel: Team over there has done a great job of.
John F. Kasel: Just right sizing as to what the market's going on and what we saw that come through in the first quarter. Our acquisition, we made over there scratch.
John F. Kasel: So UK year over year is really stabilised and something that we feel much better about conditions going forward. The team over there has done a great job of, you know, just right sizing as to what the market's going on. And we saw that come through in the first quarter. Our acquisition we made over there, Scratch, also had a very, very good quarter with nice profitability. So that came through.
John F. Kasel: It has been also had a very very good quarter.
John F. Kasel: Nice profitability, so that came through and.
John F. Kasel: And the other piece that really is jumping off the page is our condition monitoring here in North America related to our sailing business, specifically with the Wild Mark 4 introduction of that product in the market, specifically helping our customers, the freight customers, as well as the transit customers with safety and safety measures that are going on, keeping the trains on the track as well as really looking at their operational efficiencies and effectiveness to help Holly run and manage their train operations. They've had a very, very strong start to the year.
John F. Kasel: And the other piece that really is jumping off the page as our condition monitoring here in North America related to our salient business.
John F. Kasel: Specifically with Walmart for.
John F. Kasel: Introduction of that product in the market specifically, helping our.
John F. Kasel: Our customers, so freight customers as well as the transit customers with.
John F. Kasel: Safety and safety measures that are going on.
John F. Kasel: Keeping the trains.
John F. Kasel: On the track as well as really looking at their operational efficiencies and effectiveness.
John F. Kasel: Now, how they run and manage their their train operations.
John F. Kasel: Had a very very strong start to the year.
John F. Kasel: Yeah, and they're going to continue to have a fantastic year as far as we can see. So we're very excited about the technology, the innovation, the things that the company has really been working on the last couple of years, moving this, migrating this technology from the UK and Western Europe and North America. And we're really seeing the fruits of our labor right now in the rail space, so that's really exciting us as much as anything else.
John F. Kasel: And theyre going to continue to have a fantastic year.
John F. Kasel: As far as we can see so we're very excited about the technology. The innovation the things that the company has really been working on last couple of years.
John F. Kasel: Moving this migrating this technology from the UK and Western Europe, and North America, and we're really seeing the fruits of our labor right now in the rail space. So that's really exciting us as much as anything else. It may not be coming through in per se order backlog in dollars of dollars, but it's coming to a profitable backlog, but gross.
John F. Kasel: It may not be coming through, per se, order backlog and dollars and dollars, but it's coming through a profitable backlog with gross margin and Joe Rygiel, Chris Sakai, William Thalman, John Kasel, LB. Q2 and beyond.
John F. Kasel: <unk>.
John F. Kasel: And giving them opportunities to really grow this business do something <unk>.
John F. Kasel: Significantly so from that point of view, we're where we expected to be at this time and we're looking to put together a strong.
John F. Kasel: Q2 and beyond.
Chris Sakai: Okay, great. Thanks for the answers.
Speaker Change: Okay, great. Thanks for the answers.
Operator: Thank you. One moment for the next question. And our next question is coming from Justin Bergner from Cabeli Funds. Your line is open.
Speaker Change: Thank you one moment for the next question.
Operator: And our next question is coming from Justin Bergner from Gabelli funds. Your line is open.
Justin Bergner: Good morning, and a nice quarter.
Justin Bergner: Good morning, and nice quarter.
John F. Kasel: Thank you. I appreciate it, Jeff.
Justin Bergner: Thank you appreciate it Jeff.
Justin Bergner: Just a couple of questions on the infrastructure slide, any sort of estimated quantification of the impact of tough weather on sales and EBITDA for the quarter.
Justin Bergner: Just a couple of questions on the <unk>.
Justin Bergner: Infrastructure.
Justin Bergner: Syed.
Justin Bergner: Any sort of estimated quantification of the impact of tough.
Justin Bergner: Tough weather.
Justin Bergner: On sales and EBITDA in the quarter.
John F. Kasel: Yeah, you know, we really didn't put a pencil to paper on that. I was out there myself this spring, you know, between the rain and actually had snow and talking to customers. It was just a lousy quarter related to, we built quite a bit of product. We have it ready to go, and as the construction areas kind of dry out, things will improve. You know, I really couldn't put a number to it.
Jeff: Yeah, we really didn't put a pencil to paper on that I was out there myself in that geography, the spring between the rain and actually had snow in talking to customers. It was just a lousy.
John F. Kasel: <unk> related to we built quite a bit of product.
John F. Kasel: We have a ready to go.
John F. Kasel: As the construction areas kind of dry out things will improve.
John F. Kasel: I really couldnt put a number to it that maybe bill.
John F. Kasel: I may be Bill, you could give me an order of magnitude. The precast business unit was down about 13% on a year-over-year basis, which is just about $3 million, and we would say the lion's share of that was due to the weather impact. You know, we've got a good order book position for the business. We feel like, you know, we're going to get back on track in the second quarter, but that was the year-over-year decline attributable to the precast business within infrastructure.
John F. Kasel: And just to get Hi, Justin just to give you order of magnitude the precast business.
John F. Kasel: Business unit was down about 13% on a year over year basis, which is just about $3 million and we would say the lion's share of that was due to the weather impact.
John F. Kasel: We've got a good order book position for the business, we feel like we're going to get back on track in the second quarter, but that was the year over year decline attributable to the free cash business within infrastructure.
William M. Thalman: Okay, are you seeing any macro impacts on precast? Q&A Q&A Q&A
Speaker Change: Okay and are you seeing any macro impacts on free cash.
William M. Thalman: Positive or negative I guess, the negative side might be higher interest rates or is that still very manageable.
John F. Kasel: No, very manageable. And the supply chain, as I mentioned on the rail side, is getting back to normal. The supply chain related to concrete and availability of cement is getting back to normal. So that's very, very good for us. You know, the allocations that were there in the past kind of limited our ability to perform.
William M. Thalman: No very manageable in the supply chain as I mentioned on the rail side getting back to normal to supply chain related to concrete and the availability of cement is getting back to normal. So that's very very good for us and the allocations that were there in the past kind of limited our ability to perform that situation has improved dramatically our market.
John F. Kasel: That situation has improved dramatically. Our markets are booming, doing very, very well down in Texas and the Southeast related to the need for concrete. So we don't see any pushback on concrete or, you know, the type of products that we're providing in the market. To the contrary, it's the opposite. We're running, and we'll be running at full capacity for as long as we can see.
John F. Kasel: They are booming.
John F. Kasel: Doing very very well down in Texas, and the southeast related to the need for concrete.
John F. Kasel: So we don't see any any pushback on concrete or the types of products that we're providing in the marketplace.
John F. Kasel: To the contrary, the opposite where run will be running at full capacity longs, we can see.
John F. Kasel: Okay, that's great. On the rail side. Help me understand, um...
Speaker Change: Okay, that's great.
John F. Kasel: On the rail side.
John F. Kasel: Help me understand.
John F. Kasel: There wasn't much gross margin. I guess there's modest gross margin improvement on sales being very strong. Is that just a function of some mix, or would you expect your margins to be flat with this type of sales growth normally?
John F. Kasel: There wasn't much gross margin.
John F. Kasel: I guess theres, a modest gross margin improvement on sales.
John F. Kasel: <unk> been very strong.
John F. Kasel: Is that just a function of some some mix or.
John F. Kasel: Would you expect jet margins to be flat with this type of sales growth normally yes, yes.
John F. Kasel: Yeah, that's right. I'll let Bill give you the details, you know, actual numbers of it to share, but it's definitely a mixed plate that we see, you know, came through this year, which is typical in the rail industry with the project-type work that we do. If we get a big rail product type work that's, you know, moving around by, you know, components, rail components, we'll bring down the revenue will be up in respect to margin, but it will be a little bit dilutive on the bigger picture.
John F. Kasel: Yes, that's right I'll, let bill get into the details.
John F. Kasel: Our actual numbers other towards share, but it's definitely a mix play though.
John F. Kasel: It came through this year, which is typical in the rail with the project type work that we do if we get a big rail products type work thats moving around but.
John F. Kasel: <unk>.
John F. Kasel: Rail components will bring down the revenue will be up in respect to margin will be a little bit dilutive on the bigger picture, but nice thing is after we supply that you got the you've got the other projects coming right behind it, but the friction management and the condition monitoring and things like that.
John F. Kasel: But the nice thing is after we supply that, you got the other products coming right behind it, but the friction management, and the condition monitoring, things like that, that really help, you know, boost profitability. And that's the nice thing about our company is, you know, we give them the whole package. It's not just selling the components anymore. It's about providing the chemicals and the treatments and now the monitoring devices for them to run effectively.
John F. Kasel: Really help boost up the profitability and that's the nice thing about our company as we give them the whole package now.
John F. Kasel: Not just sell into components anymore, it's about providing chemicals on the treatments and other monitoring devices for them to run effectively so that mix will come in and out.
William M. Thalman: So that mix will come in and out, but as we get into more of the actual rail season, which is Q2 and Q3, where most of the work is done, that's where we'll see the real uplift and leveraging of the business even more. It will be more impactful. Bill, any color you want to add to that? Yeah, yeah, thanks, John.
Bill: But as we get into more of the actual rail season.
Bill: Season, which is Q2 and Q3.
Bill: Most of the work is done.
Bill: What we will see that really uplift and leveraging of the business.
Bill: Even more it will be more impactful bill any color you want to add to that yes.
Bill: Yes, Thanks John.
William M. Thalman: I guess what I would highlight is the growth that we saw within the rail segment was highlighted by rail products, where they were up, in terms of dollars, $13 million on a year-over-year basis, about 33%. And across the portfolio, that's the business that's gonna have the lowest gross profit profile, which would have tempered the margin growth that we saw on a year-over-year basis. On the other hand, TS&S, which is the technology element of the portfolio, had really strong growth on a year-over-year basis of about 100%.
Bill: I guess, what I would highlight is the growth that we saw within.
William M. Thalman: The rail segment was highlighted by rail products, where they were up.
William M. Thalman: In terms of dollars $13 million on a year over year basis about 33% and across the portfolio. That's the business that's going to have the lowest gross profit profile, which would have tempered the margin growth that we saw on a year over year basis on the other hand steel products sorry.
William M. Thalman: <unk>, which is the technology element of the portfolio had really strong growth on a year over year basis about 100% now from a dollars point of view, they're much smaller component of the business and their margins are stronger as well so that contributed to the lift.
William M. Thalman: Now, from a dollar point of view, they're a much smaller component of the business, and their margins are stronger as well, so that contributed to the lift that we saw, but from a percentage point of view, the strength in the rail products portion of the business is really what tempered the margin performance on a year-over-year basis.
William M. Thalman: That we saw but from a percentage point of view the strength in the rail products portion of the business is really what tempered the Mas.
William M. Thalman: Margin performance on a year over year basis.
Justin Bergner: Okay, Guy, and then just one last question on RAIL. So it seems like what you're saying is there's very good growth in RAIL, but some of the revenue increase in the first quarter was a function of working down backlog as lead times returned to normal, but amidst all this good growth, there is still a lot of good stuff.
Justin Bergner: Okay got it and then just one last question on rail so it seems like what Youre seeing is theres very good growth in rail, but some of the revenue.
Speaker Change: <unk> in the first quarter was a function of working down backlog as lead times returned to normal but amidst still look good yeah. That's correct is that fair okay.
John F. Kasel: Thank you. That's right. Thank you, Jeff.
John F. Kasel: Yeah, that's right. Okay. Thank you. Yeah, that's right.
Speaker Change: Yes, that's right.
John F. Kasel: Thanks, Thank you Jeff.
John F. Kasel: Thank you. If you would like to ask a question, please press star one on your telephone. At this time, there are no more questions in the queue, and I would like to turn the call back over to John for closing remarks. Please go ahead.
Speaker Change: Thank you I would like to ask a question. Please press star one on your telephone.
John F. Kasel: At this time there are no more questions in the queue and I would like to turn the call back over to John for closing remarks. Please go ahead.
John F. Kasel: Thank you, Lisa. We appreciate everybody's... Being a part of today's call. As I said in my opening remarks, we are exceptionally strong start to 2024 and we have momentum. So we really feel good about where we're at today. We have quite a bit of work to do ahead of us to hit their aspirational goals and what we've set out to do, but we're off to a great start of the year.
John: Thank you Lisa appreciate everybody's.
John F. Kasel: Sure.
John F. Kasel: Being a part of today's call.
John F. Kasel: As I said in my opening remarks were exceptionally strong start to 2024 and.
John F. Kasel: And we have momentum so we really feel good about where we're at today.
John F. Kasel: Quite a bit of work to do ahead of us.
John F. Kasel: They're aspirational goals set off to do but we're off to a great start of the year.
John F. Kasel: And I really appreciate everybody, the company, the employees, as well as the board of directors, everybody coming together to make this happen. I mentioned earlier with the group the safety performance, and that's really testament to when we put our efforts together to really focus on making something important, and safety is a core value of our company, that we make results happen. And that was a great example of us coming together.
John F. Kasel: And I really appreciate everybody's the company.
John F. Kasel: <unk> as well as the board of directors, everybody coming together to make this happen I mentioned earlier with the group safety performance and Thats really Testament to when we put our.
John F. Kasel: Efforts together of really focusing on making something important and safety is a core value of our company that we this company makes results happen.
John F. Kasel: And that was a great example of US coming together last couple of years have been a tough time for the company.
John F. Kasel: The last couple of years have been a tough time for the company. It's been exciting to see everybody moving together, kind of rolling the boat together, and really focus on things that are really driving profitability as well as returns to our shareholders. And honestly, it's a fun place to work today. So thanks to everybody, and thanks to the company as well as investors who are hanging with us. And we feel good about where we are today and understand we're going to keep working on your behalf into the future. So, thanks again. Have a wonderful day, and we look forward to talking to you after Q-Tip.
John F. Kasel: And it's been exciting to see everybody moving together kind of rowing the boat together and really focus on things that are really driving the profitability as well as <unk> returned to our shareholders.
John F. Kasel: Honestly, it's a much it's.
John F. Kasel: Fun place to work today, so thanks to everybody and thanks for the company as well as investors, saying look us.
John F. Kasel: And we feel good about where we're at today and understand we're going to keep working on your behalf into the future. So thanks again have a wonderful day and we look forward to talk to you executed.
Operator: This does conclude today's conference call. Thank you all for joining us. You may now disconnect.
Speaker Change: This does conclude today's conference call. Thank you all for joining you may now disconnect.
Operator: Okay.
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