Q2 2024 LB Foster Co Earnings Call
Speaker Change: Hello, and thank you for standing by. Welcome to LB Foster's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Operator: for the Earnings Conference Call. At this time, all participants are in a listen-only mode.
Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Stephanie Schmidt of Investor Relations. You may begin.
Speaker Change: To ask the question during this session, you will 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 1-1 again.
Speaker Change: I would now like to turn the call over to Stephanie Schmidt of Investor Relations. You may begin.
Stephanie Schmidt: Good morning, everyone, and welcome to LB Foster's second quarter 2024 earnings call. My name is Stephanie Schmidt, the company's investor relations manager.
Stephanie Schmidt: Thank you, Operator.
Stephanie Schmidt: Good morning, everyone, and welcome to LB Foster's second quarter of 2024 earnings call. My name is Stephanie Schmidt, the company's investor relations manager.
Stephanie Schmidt: Our president and CEO, John Kasel, and our chief financial officer, Bill Thalman, will be presenting our second quarter operating results, market outlook, and business developments this morning. We'll start the call with John providing his perspective on the company's second quarter performance. Bill will then review the company's second quarter financial results.
Speaker Change: Our President and CEO , John Kasel, and our Chief Financial Officer, Bill Thalman, will be presenting our second quarter operating results, market outlook, and business developments this morning.
Stephanie Schmidt: John will provide perspective on market development and company outlook in his closing remarks. We will then open the session up for questions. 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 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.
Speaker Change: We'll start the call with John providing his perspective on the company's second quarter performance. Bill will then review the company's second quarter financial results.
Speaker Change: John will provide perspective on market developments and company outlook in his closing comments.
Speaker Change: We will then open the session up for questions.
Speaker Change: 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 lbfoster.com.
Speaker Change: Our comments this morning will follow the slides in the earnings presentation.
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. 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 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.
Speaker Change: Some statements we are making are forward-looking and represent our current view of our markets and business today.
Speaker Change: 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.
Speaker Change: For more detailed risks, uncertainties, and assumptions relating to our forward-looking statement, please see the disclosures in our earnings release and presentation.
Speaker Change: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided within today's earnings release and within our accompanying earnings presentation carefully as you consider these metrics.
John Kasel: Thanks, Stephanie. And hello, everyone.
Speaker Change: So, with that, let me turn the call over to John .
John Kasel: Thanks, Stephanie, and hello, everyone. Thank you for joining us today for our second quarter earnings call.
John Kasel: Thank you for joining us today for our second quarter earnings call. July 21st, 2024 marked the three-year anniversary of my appointment as President and CEO of L.B. Foster.
John Kasel: July 21st, 2024, marked three-year anniversary of my appointment as President and CEO of L.B. Foster Company.
John Kasel: I thought I'd begin today's call by providing a recap of what we accomplished over the last three years. I took over as President and CEO in 2021, which was a year of significant change for the company. Current chairman Ray Bettler joined the board in 2020 and helped us through a strategic reassessment of the business in 2021. With great guidance, leadership, and support, the board and senior management team established a strategic vision and an operating playbook to transform the company into a technology-oriented global infrastructure solution.
John Kasel: I thought I'd begin today's call by providing a recap of what we accomplished over the last three years.
John Kasel: I took over as President and CEO in 2021, which was a year of significant change for the company.
John Kasel: Our current chairman, Ray Bettler, had joined the board in 2020 and helped us through a strategic reassessment of the business in 2020.
John Kasel: and Stephanie Listwak. Thank you.
John Kasel: With great guidance, leadership, and support, the board and senior management team established a strategic vision and an operating playbook to transform the company into a technology-oriented global infrastructure solutions provider.
John Kasel: The cornerstone of the strategy was the portfolios, to establish our growth platforms, namely rail technologies and precast concrete. These businesses would receive the investment funding needed to drive profitable growth in the business. The balance of the business became a return plan, and these businesses would be optimized for cash generation.
John Kasel: The cornerstone of the strategy was a portfolio assessment.
John Kasel: to establish our growth platforms, namely rail technologies and
John Kasel: to Free Cast Concrete.
John Kasel: These businesses would receive the investment funding needed to drive profitable growth in the business.
John Kasel: The balance of the business became a returns platform.
John Kasel: And, where appropriate, divested to generate additional proceeds to fund growth initiatives, both organic and inorganic. Over a three-year period, we completed nine strategic transactions, filled off four non-core businesses, and exited a commoditized bridge grid decking product. These transactions generated cash, improved leverage, and eliminated distractions to our core group. Proceeds from these divestitures were used to complete four acquisitions over the same time period. Two in rail technologies in the United Kingdom and two in precast concrete in the United States.
John Kasel: These businesses would be optimized for gas generation.
John Kasel: And where appropriate, divested to generate additional proceeds to fund growth initiatives, both organic and inorganic.
John Kasel: Over a three-year period, we completed nine strategic transactions.
John Kasel: We sold off four non-core businesses and exited a commoditized bridge grid decking product line.
John Kasel: These transactions generated cash, improved leverage, and eliminated distractions to our core purpose.
John Kasel: Proceeds from these divestitures were used to complete four acquisitions over the same time period.
John Kasel: Two in rail technologies in the United Kingdom and two in precast concrete in the United States.
John Kasel: In late 2023, we completed a restructuring of our UK business in response to very challenging business conditions in the local market. We just announced an enterprise-wide restructuring that, along with headcount attrition already achieved, should generate annual run rate savings of $4.5 million per year. I will come back with more on this topic in my closing comments.
John Kasel: In late 2023, we completed a restructuring of our UK business in response to a very challenging business conditions in the local market.
John Kasel: More impactful, we just announced an enterprise-wide restructuring that, along with headcount attrition already achieved, should generate annual run rate savings of $4.5 million per year.
John Kasel: I will come back with more on this topic in my closing comments.
John Kasel: In summary, the impact flow of our transformation journey has been truly remarkable, as you can see in the results compared to 2021. Sales are up 6% due to the net impact of M&A. Adjusted gross margins are 4 to 60 basis points. And the trail in 12 months to just EBITDA is up 64%, translating to a 37.9% adjusted EBITDA leverage. I'm the Net Sales Corp. Chief.
John Kasel: The impact flow of our transformation journey has been truly remarkable as you can see in the results compared to 2021. Sales are up 6% due to the net impact of M&A. Adjusted gross margins are up 4 to 60 basis points.
John Kasel: And the trail in 12 months at Just Evita is up 64%, translating to a 37.9% at Just Evita Leverage. I'm the Net Sales Corp of the Chiefs.
John Kasel: Now on to today, I mentioned an earnings announcement. The second quarter was a bit weaker than we expected, and there's some near-term uncertainty in our end markets, given the broader recessionary and the Domestic and Global. While we believe we will turn to profitability expansion in the second half, we thought it would be prudent to be a bit more cautious with our financial guidance for 2024, given some of the larger macro drivers that could have a greater impact on demand at the end of the year.
John Kasel: No answers today.
Speaker Change: As mentioned in earnings announcement, the second quarter was a bit weaker than we expected, and there's some near-term uncertainty in our end markets given the broader recessionary concerns.
Speaker Change: and the domestic and global economies.
Speaker Change: While we believe we will turn to profitability expansion in the second half.
Speaker Change: We thought it would be prudent to be a bit more cautious with our financial guidance for 2024, given some of the larger macro drivers that could have a greater impact on demand risk.
John Kasel: Despite the tempered outlook, the midpoint of our 2024 guidance. It represents approximately 12% growth over 2023 on virtually flat organic sales growth. We're focused on what we control, getting back to profit expansion in the second half, and finishing 2024 strong so we can continue to build momentum towards achieving our aspirational goals. Bill will now cover the detailed financials for Q2, and I'll come back at the end with some closing remarks on our markets and outlook. It's over to you, Bill.
Speaker Change: to the end of the year.
Speaker Change: Despite the tempered outlook, the midpoint of our 2024 adjusted guidance represents approximately 12% growth over 2023, a virtually flat organic sales growth.
Speaker Change: We're focused on what we control, getting back to profit expansion in the second half, and finishing 2024 strong so we can continue to build momentum towards achieving our aspirational goals.
Speaker Change: Bill will now cover the detailed financials for Q2, and I'll come back at the end with some closing remarks on our markets and outlook.
Bill Thalman: Thanks, John. And good morning, everyone.
Bill Thalman: Over to you, Bill.
Bill Thalman: Thanks John and good morning everyone. I'll begin my comments covering the consolidated highlights of the second quarter on slide 7.
Bill Thalman: I'll begin my comments covering the consolidated highlights of the second quarter on slide seven. As always, the schedules in the appendix provide more detailed information on the financial results for the quarter, including certain non-GAAP measures discussed on today's call. As we've done in the past, we'll call out the impact of portfolio actions where applicable. For the second quarter, these impacts included last year's TIES divestiture and the bridge grid deck product line exit with a combined impact of 1.5% lower net sales this year. Net sales for the quarter were down 4.9% in total, 3.4% on an organic basis, driven primarily by weakness in the rail segment. I'll unpack the drivers on the segment slides in a moment.
Bill Thalman: As always, the schedules in the appendix provide more detailed information on the financial results for the quarter, including certain non-GAAP measures discussed on today's call.
Bill Thalman: As we've done in the past, we'll call out the impact of portfolio actions where applicable.
Bill Thalman: For the second quarter, these impacts included last year's TIES divestiture and the bridge grid deck product line exit, with a combined impact of 1.5 percent lower net sales this year.
Bill Thalman: I'll unpack the drivers on the segment slides in a moment.
Bill Thalman: Gross profit was down $1.7 million, with margins nearly flat with last year at 21.7%. Lower margins in rail were largely offset by improved margins in infrastructure. The improved margins within infrastructure were due primarily to the favorable impact of our portfolio actions. Coupled with an $800,000 gain on the sale of an ancillary property in the, Selling general and administrative costs increased $0.4 million over the prior year due primarily to corporate legal provisions as well as professional service costs incurred as associated with the announced restructuring.
Bill Thalman: Gross profit was down 1.7 million dollars with margins nearly flat with last year at 21.7 percent.
Bill Thalman: Lower margins in rail were largely offset by improved margins in infrastructure.
Bill Thalman: The improved margins within infrastructure were due primarily to the favorable impact of our portfolio actions, coupled with an $800,000 gain on the sale of an ancillary property in the quarter.
Bill Thalman: Selling general and administrative costs increased $0.4 million over the prior year due primarily to corporate legal provisions as well as professional service costs incurred as associated with the announced restructuring.
Bill Thalman: Net income for the quarter totaled $2.8 million, an unfavorable 19.4% versus the prior year quarter. The net gain realized on the property sale, as well as certain corporate legal costs, were excluded from adjusted EBITDA. Each of them was approximately $800,000 in the port.
Bill Thalman: Net income for the quarter totaled $2.8 million, unfavorable 19.4% versus the prior year quarter.
Bill Thalman: The net gain realized on the property sale, as well as certain corporate legal costs, were excluded from adjusted EBITDA.
Speaker Change: Each of them were approximately $800,000 in the quarter.
Bill Thalman: Adjusted EBITDA for the quarter was $8.1 million, down 23.8% versus last year, due primarily to lower gross profit coupled with higher professional service costs associated with the restructuring. In line with our seasonal working capital needs, cash used for operating activities in the quarter was $5 million. These needs were somewhat lower this year due to the commercial weakness in the quarter. I'll provide some additional color on orders and backlog by segment later in the presentation.
Speaker Change: Adjusted EBITDA for the quarter was $8.1 million, down 23.8% versus last year, due primarily to lower gross profit coupled with higher professional service costs associated with the restructuring.
Speaker Change: In line with our seasonal working capital needs, cash used for operating activities in the quarter was $5 million.
Speaker Change: These needs were somewhat lower this year due to the commercial weakness in the quarter.
Speaker Change: I'll provide some additional color on orders and backlog by segment later in the presentation.
Bill Thalman: The bridges on slide 8 reflect the organic and portfolio-driven impacts on sales and adjusted EBITDA for the quarter versus last year. The sales bridge on the left breaks out the impact of business divestitures and isolates the organic sales decline of $5 million, which was primarily realized within the rail sector. The E-50A bridge highlights the profitability uplift year-over-year delivered from our portfolio work. This is despite the $2.2 million sales decline from these activities.
Speaker Change: The bridges on slide 8 reflect the organic and portfolio-driven impacts on sales and adjusted EBITDA for the quarter versus last year.
Speaker Change: The sales bridge on the left breaks out the impact of the business divestitures and isolates the organic sales decline of $5 million, which was primarily realized within the rail segment.
Speaker Change: The EBITDA bridge highlights the profitability uplift year-over-year delivered from our portfolio work.
Speaker Change: This is despite the $2.2 million sales decline from these activities.
Bill Thalman: The legacy business profitability is down due primarily to the rail segment volumes and margins, coupled with corporate professional fees associated with the restructuring. Turning to sales and margin trends on slide number 9, the sales trend on the left reflects the strong organic performance we've delivered in recent quarters. Despite the softer second quarter, the trailing 12-month organic growth rate was still 8.7%. Additionally, despite the lower second quarter sales, margins have remained resilient at a level above 21% for five straight quarters.
Speaker Change: The legacy business profitability is down due primarily to the rail segment volumes and margins, coupled with corporate professional fees associated with the restructuring.
Speaker Change: Turning to sales and margin trends on slide number nine, the sales trend on the left reflects the strong organic performance we've delivered in recent quarters.
Speaker Change: Despite the softer second quarter, the trailing 12-month organic growth rate was still 8.7%.
Speaker Change: Despite the lower second quarter sales, margins have remained resilient at a level above 21% for five straight quarters.
Bill Thalman: This achievement highlights the transformation of our business portfolio as well as improved pricing and manufacturing execution across the majority of the business. We're confident in the long-term demand prospects for our end markets and believe we will see improvements once the macro uncertainty drivers begin to clear. In the meantime, we're focused on delivering strong profitability growth and margin expansion despite the short-term commercial headwinds. Over the next couple of slides, I'll cover our segment and performance in the quarter, starting with the rail segment on slide 10.
Speaker Change: This achievement highlights the transformation of our business portfolio as well as improved pricing and manufacturing execution across the majority of the business.
Speaker Change: We're confident in the long-term demand prospects for our end markets and believe we will see improvements once the macro uncertainty drivers begin to clear.
Speaker Change: In the meantime, we're focused on delivering strong profitability growth and margin expansion despite the short-term commercial headwinds.
Bill Thalman: Second quarter rail revenues, totaling $85.6 million, were down 6.6% from last year, including a 1.5% decline from the TIES divestiture. The 5% organic decline was driven primarily by lower volumes and softer market prices in the rail products business.
Speaker Change: Over the next couple of slides I'll cover our segment and performance in the quarter starting with the rail segment on slide 10.
Speaker Change: Second quarter rail revenues totaling $85.6 million were down 6.6% from last year, including a 1.5% decline from the Ties divestiture.
Speaker Change: The 5% organic decline was driven primarily by lower volumes and softer market prices in the rail products business unit.
Bill Thalman: Rail margins of 20.9% were down 80 basis points year over year, driven by lower overall sales and margins within rail products. On a positive note, margins in the global friction management and technology services and solutions improved versus last year, including some recovery in our UK business. Second quarter rail orders increased $1 million year-over-year and up $4.4 million excluding the impact of last year's ties divestiture. However, backlog of $114.8 million decreased $17.7 million from the prior year quarter, with the decline primarily within rail products and lower business activity in the UK.
Speaker Change: Rail margins of 20.9% were down 80 basis points year over year, driven by lower overall sales and margins within rail products.
Speaker Change: And on a positive note, margins in the global friction management and technology services and solutions improved versus last year, including some recovery in our UK business.
Speaker Change: Second quarter rail orders increased $1 million year-over-year and up $4.4 million excluding the impact of last year's ties divestiture.
Speaker Change: Backlog of 114.8 million decreased 17.7 million from the prior year quarter, with the decline primarily within rail products and lower business activity in the UK.
Bill Thalman: Second quarter rail orders and backlog increased sequentially 39.7% and 33.4%, respectively. Turning to infrastructure solutions on slide 11, segment revenue decreased $1.2 million, or 2.2%. However, 1.4% of the decline was due to divestiture and product line exit activity. Organic cells were relatively flat compared to the prior year.
Speaker Change: Second quarter rail orders and backlog increased sequentially 39.7% and 33.4% respectively.
Speaker Change: Turning the infrastructure solutions on slide 11, segment revenue decreased 1.2 million dollars or 2.2 percent.
Speaker Change: However, 1.4% of the decline was due to divestiture and product line exit activity.
Speaker Change: Organic cells were relatively flat compared to the prior year.
Bill Thalman: Gross profit margins were up 90 basis points to 22.9%. The improvement was realized within steel products driven by portfolio changes executed over the last year, as well as the $800,000 gain on the sale of an ancillary property. Infrastructure orders were $54 million, down $13.8 million from the prior year quarter due to softer demand across the steel products business unit, primarily in protective coating. Precast orders were flat year over year.
Speaker Change: Gross profit margins were up 90 basis points to 22.9 percent.
Speaker Change: The improvement was realized within steel products driven by portfolio changes executed over the last year, as well as the $800,000 gain on the sale of an ancillary property.
Speaker Change: Infrastructure orders were $54 million, down $13.8 million from the prior year quarter due to softer demand across the Steel Products Business Unit, primarily in protective coatings.
Speaker Change: Precast orders were flat year over year.
Bill Thalman: Backlog totaling $135 million was down $22.6 million, $6.9 million due to the bridge product line exit. The balance of the decline was realized across the Steel Products Business Unit. FreeCast Concrete Backlog improved $2 million versus last year. I'll next cover our year-to-date results on slide number 12. Organic sales increased 5.5%, partially offset by a 4.9% decline from divestiture and exit activity.
Speaker Change: Backlog totaling $135 million was down $22.6 million, $6.9 million due to the bridge product line exit.
Speaker Change: The balance of the decline was realized
Speaker Change: Precast Concrete Backlog improved $2 million versus last year.
Speaker Change: I'll next cover our year-to-date results on slide number 12.
Speaker Change: Organic sales increased 5.5 percent, partially offset by a 4.9 percent decline from divestiture and exit activities.
Bill Thalman: Organic sales growth was driven by the rail segment as a result of the strong segment performance in the first quarter. Gross profit improved $1.2 million, including the $800,000 property sale gain in Q2, while gross profit margins of 21.4% improved 30 basis points. The improvement can be attributed to the business portfolio changes in line with the company's strategic transformation, coupled with overall higher sales volumes and favorable business mix realized in the rail segment in the first quarter.
Speaker Change: Organic sales growth was driven by the rail segment as a result of the strong segment performance in the first quarter.
Speaker Change: Gross profit improved $1.2 million, including the $800,000 property sale gain in Q2, while gross profit margins of 21.4% improved 30 basis points.
Speaker Change: The improvement can be attributed to the business portfolio changes in line with the company's strategic transformation, coupled with overall higher sales volumes and favorable business mix realized in the rail segment in the first quarter.
Bill Thalman: Selling general and administrative costs increased $1.7 million over the prior year due primarily to corporate legal provisions as well as professional service costs associated with the announced restructuring. Income for the quarter totaled $7.3 million, a favorable $5.9 million over the prior year, including $4.3 million in gains from ancillary property sales in 2024. The prior year included $3.1 million in losses on the divestiture of Chemtech and Tide.
Speaker Change: Selling general and administrative costs increased $1.7 million over the prior year, due primarily to corporate legal provisions, as well as professional service costs associated with the announced restructuring.
Speaker Change: That income for the quarter totaled $7.3 million, favorable $5.9 million over the prior year, including $4.3 million in gains from ancillary property sales in 2024.
Speaker Change: The prior year included $3.1 million in losses on the divestiture of Chemtech and TISE.
Bill Thalman: The net gain realized on asset sales and certain corporate legal costs were excluded from the 2024 year-to-date adjusted EBITDA, which was $14 million, down $1.1 million due primarily to higher selling and administrative. Cash used by operating activities in the first half of 2024 was $26.8 million, driven by seasonal working capital needs and annual incentive and business insurance funds. I'll now cover our liquidity and leverage metrics reflected on slide 13. Second quarter net debt declined $2.5 million versus the prior year.
Speaker Change: The net gain realized on asset sales and certain corporate legal costs were excluded from the 2024 year-to-date adjusted EBITDA, which was $14 million down $1.1 million due primarily to higher selling and administrative costs.
Speaker Change: Cash used by operating activities in the first half of 2024 was $26.8 million, driven by seasonal working capital needs and annual incentive and business insurance funding.
Speaker Change: I'll now cover our liquidity and leverage metrics reflected on slide 13.
Speaker Change: Second quarter net debt declined $2.5 million versus the prior year, while the gross leverage ratio increased two tenths of a turn to 2.7 times.
Bill Thalman: While the gross leverage ratio increased two-tenths of a turn to 2.7 times, this level of net debt was largely in line with our expectations, and we expect net debt to decline through the balance of the year. We also expect the gross leverage ratio to improve by year-end. Our normal working capital cycle typically results in strong cash generation in the second half of the year.
Speaker Change: This level of net debt was largely in line with our expectations, and we expect net debt will decline through the balance of the year.
Speaker Change: We also expect the gross leverage ratio to improve by year-end.
Speaker Change: Our normal working capital cycle typically results in strong cash generation in the second half of the year.
Bill Thalman: We expect free cash flow to range between $25 million and $30 million in the second half of 2024, with a gross leverage ratio closer to our longer-term target of two times by year end. While our updated free cash flow guidance reflects a more cautious outlook for cash generation in 2024, we remain confident in our ability to manage our leverage metrics at around two times over the long term given our capital-light business model.
Speaker Change: We expect free cash flow to range between $25 million to $30 million in the second half of 2024, with a gross leverage ratio closer to our longer-term target of two times by year-end.
Speaker Change: While our updated free cash flow guidance reflects a more cautious outlook for cash generation in 2024, we remain confident in our ability to manage our leverage metrics at around two times over the long term given our capital light business model.
Bill Thalman: We plan to continue to prudently deploy operating cash in line with our capital allocation priorities, including continuing the execution of our stock repurchase program. Since the program's inception in February of 2023, we've repurchased about 204,000 shares of stock, representing approximately 1.9% of the common stock outstanding at an average price of approximately $19.50 per share. On August 5, 2024, our Board of Directors approved a modification to the program that shortens its tenure from three to two years and allows the remaining $11 million authorization to be used through February of 2025 without restriction.
Speaker Change: We plan to continue to prudently deploy operating cash along our capital allocation priorities, including continuing the execution of our stock repurchase program.
Speaker Change: Since the program's inception in February of 2023, we've repurchased about 204,000 shares of stock, representing approximately 1.9% of the common stock outstanding, at an average price of approximately $19.50 per share.
Speaker Change: On August 5, 2024, our Board of Directors approved a modification to the program which shortens its tenure from three to two years and allows the remaining $11 million authorization to be used through February of 2025 without restriction.
Bill Thalman: As a reminder, we're now down to $4 million owed to Union Pacific, with $2 million paid on August 1st and the remaining $4 million due in December. And the U.S. federal NOLs should continue to minimize our cash tax burden for the foreseeable future.
Speaker Change: As a reminder, we're now down to $4 million owed to Union Pacific with $2 million paid on August 1st and the remaining $4 million due in December .
Speaker Change: And the U.S. federal NOLs should continue to minimize our cash tax burden for the foreseeable future.
Bill Thalman: In summary, despite the softer outlook for cash generation for the full year, we believe the key drivers of strong, sustainable, free cash flow are in place and should continue to improve through the balance of 2024 and into 2024. I'll next revisit our capital allocation priorities outlined on slide 14. We continue to focus on managing leverage levels while opportunistically investing in organic growth opportunities we see in rail technologies and precast concrete.
Speaker Change: In summary, despite the softer outlook for cash generation for the full year, we believe the key drivers of strong, sustainable, free cash flow are in place and should continue to improve through the balance of 2024 and moving into 2025.
Speaker Change: I'll next revisit our capital allocation priorities outlined on slide 14.
Speaker Change: We continue to focus on managing leverage levels while opportunistically investing in organic growth opportunities we see in rail technologies and precast concrete.
Bill Thalman: Our announced restructuring program should further enable investment in growth platforms given the expected cost savings over the coming quarter. We're comfortable with gross leverage around two times and believe we will be back near that level by year-end. Capital spending is expected to run at approximately 2.5 percent of sales on average, which is slightly higher than our historical levels due to investment in our growth platform. As mentioned before, we continue to evaluate opportunities to return cash to shareholders through our stock repurchase program, and we plan to use this important capital allocation lever prudently, given the approved changes to the program.
Speaker Change: Our announced restructuring program should further enable investment in growth platforms given the expected cost savings over the coming quarters.
Speaker Change: We're comfortable with gross leverage around two times and believe we will be back near that level by year-end.
Speaker Change: Capital spending is expected to run at approximately 2.5% of sales on average, which is slightly higher than our historical levels due to investments in our growth platforms.
Speaker Change: As mentioned before, we continue to evaluate opportunities to return cash to shareholders through our stock repurchase program, and we plan to use this important capital allocation lever prudently, given the approved changes to the program.
Bill Thalman: We continue to consider small token acquisitions that can extend our product portfolio within our growth platform, and this is expected to become an increasingly important driver of our growth as we establish goals beyond 2025. And finally, we continue to consider a dividend as a capital allocation option as the prospects for stronger free cash flow improve, particularly in 2025 and beyond.
Bill Thalman: My closing comments will refer to slides 15 and 16, covering orders, revenues, and backlog by business. The book-to-bill ratio over the trailing 12 months was 0.93 to 1, which reflects the lower order rate in both segments, coupled with strong order book execution and improved Q2 order rates improved in rail year-over-year, while weaker demand across the steel products business drove the infrastructure down. Consolidated second quarter order rates did improve sequentially by 29.2 percent.
Speaker Change: The book-to-bill ratio over the trailing 12 months was 0.93 to 1, which reflects the lower order rates in both segments, coupled with strong order book execution and improved lead times.
Bill Thalman: And lastly, the consolidated backlog on slide 16 was down $40 million from the record high levels last year, with both segments experiencing decline. The real segment backlog is down $17.7 million or 13.3%. As mentioned in the past, order rates and backlog are susceptible to large swings driven primarily by project order timing and the rail distribution business. In addition, backlog in our UK business is down $9.2 million as we purposely scaled back our investment in this market until a clear recovery path developed.
Speaker Change: The rail segment backlog is down $17.7 million, or 13.3%.
Bill Thalman: On a positive note, the rail backlog is up approximately 30% versus the previous three-quarter average, indicating some favorable developments. However, the infrastructure backlog is down $22.6 million, or 14.3%, with the entire decline due to steel products. Precast Concrete Backlog improved to $1,000,000, or 2.2%. The $24.6 million decline in steel products backlog was due to lower demand levels across the business unit, as well as a $6.9 million decline from product line exit activity. 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 an improving backlog in the future once near-term macroeconomic conditions improve. In summary, we continue to remain optimistic about our 2024 outlook, despite some temporary headwinds experienced in the second quarter.
Speaker Change: Despite the lower backlog level, we remain optimistic in the longer-term prospects for growth and demand across our portfolio and expect this will translate into an improving backlog in the future once near-term macroeconomic conditions improve.
Speaker Change: In summary, we continue to remain optimistic about our 2024 outlook, despite some temporary headwinds experienced in the second quarter.
Bill Thalman: Our revised financial guidance implies an expected adjusted EBITDA growth rate of approximately 12% for 2024, with strong profitability expansion and cash generation in the second half. We remain focused on finishing the year on a positive note and look forward to reporting on our progress next quarter. Thanks for the time, and I'll now hand it back to John for his closing remarks.
Speaker Change: Our revised financial guidance implies an expected adjusted EBITDA growth rate of approximately 12% for 2024 with strong profitability expansion and cash generation in the second half.
Speaker Change: Thanks for the time and I'll now hand it back to John for his closing remarks.
John Kasel: Thanks, Bill. Please refer to slide 18 for an overview of our key business and market drivers underpinning our We continue to be optimistic of longer-term prospects for growth in our NMARCs, both for rural 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 through the balance of 20 Columbia.
John Kasel: Thanks, Bill. Please refer to slide 18 for an overview of our key business and market drivers underpinning our outlook.
John Kasel: We continue to be optimistic of longer-term prospects for growth in our NBARS approval segments, particularly given the continued emphasis on the infrastructure investment.
John Kasel: 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 through the balance of 2024 and beyond.
John Kasel: Transit ridership levels in the U.S. are back to pre-pandemic levels, and repair work on transit Lines is relatively strong. On the other hand, freight car loads within the domestic rail market are somewhat softer versus a year ago, which we believe is resulting in deferrals on project work for Class One, short line, and regional railroads. Developing macroeconomic uncertainty may also be impacted, and I'm sure Marcus somewhat. The recent findings regarding the East Palestine train derailment highlight the opportunity for our total track monitoring.
John Kasel: Transit ridership levels in the U.S. are back to pre-pandemic levels and repair work on transit lines is relatively strong at this time.
John Kasel: On the other hand, freight carloads within the domestic rail market are somewhat softer versus a year ago, which we believe is resulting in deferrals on project work for Class I short line and regional railroads.
John Kasel: Developing macroeconomic uncertainty may also be impacting demand.
John Kasel: and our servant, Marcus Sumwa.
John Kasel: The recent findings regarding the East Palestine train derailment highlight the opportunity for our total track monitoring solutions.
John Kasel: And we're seeing a nice increase in demand for those solutions year over year. As noted earlier, our UK business has shown some signs of recovery versus last. We believe market conditions have stabilized, and we're improving modestly, and are improving modestly in in-country economic development. Turning to our infrastructure markets, the CXT buildings pipeline continues to benefit from record spending on recreational parks, which is funded by the Great American Outdoors.
John Kasel: and we're seeing a nice increase in demand for those solutions year over year. As noted earlier, our UK business has shown some signs of recovery versus last year.
John Kasel: and other developers here.
John Kasel: Turning to our infrastructure markets, the CFT Buildings product line continues to benefit from record spending on recreational parks and campgrounds.
John Kasel: We expect this demand to remain robust through the balance of this year and into 2020. Now, withstanding the short-term weather-related headwinds we saw on HVAC, the government's funding for road and bridge rehab projects, as well as robust regional, commercial, and residential real estate development, should bode well for our infrastructure segment over the longer term. In summary, overall prospects for long-term sustainable profitable growth should remain strong in light of the infrastructure investment super cycle we expect for years to come. On slide 19, I'd like to emphasize the investment thesis for L.B. Foster, which is supported by four key pillars,
John Kasel: This is funded by the Great American Outdoors Act.
John Kasel: We expect this demand to remain robust through the balance of this year and into 2025.
John Kasel: Notwithstanding the short-term weather-related headwinds we saw in H1,
John Kasel: The government's funding for road and bridge rehab projects, as well as robust regional, commercial, and residential real estate development, should bode well for our infrastructure segment over the longer term.
John Kasel: In summary, overall prospects for long-term, sustainable, profitable growth should remain strong in light of the infrastructure investment super cycle we expect for years to come.
Albee Foster: On slide 19, I'd like to emphasize the investment thesis for L.B. Foster, which is supported by four key pillars.
John Kasel: First, we've taken the strategic steps necessary to transform our business portfolio, resulting in structural improvements in profitability that we delivered in 2023, and the execution of our restructuring program that we just talked about in 2024 is expected to also provide profitability improvements through the balance of the year. Second, we believe we represent an infrastructure pure play with multiple avenues for growth through multiple-year investment programs that are clearly needed in our CERN market.
Albee Foster: First, we've taken the strategic steps necessary to transform our business portfolio, resulting in structural improvements in profitability that we delivered in 2023, and the execution of our restructuring program that we just talked about in 2024. It's expected to also provide profitability improvement through the balance of the year.
Albee Foster: Second, we believe we represent an infrastructure pure play with multiple avenues for growth through multiple year investment programs.
John Kasel: We're also investing in key organic growth initiatives designed to take advantage of the macro. They're driving the need for infrastructure investment in our served region. Third, our capital-light business model, coupled with steady profitability improvements, and the completion of our UD Pacific Settlement Payments bill, which should provide a more favorable free cash flow for the second half of 24, and, And finally, we have a disciplined capital allocation approach with multiple drivers that have been deployed and are creating value for our shareholders, as evidenced by improved equity returns. The recent amendment to our stock repurchase authorization provides us greater flexibility to deploy more capital to buy back stocks at valuations to remain attractive.
Albee Foster: are clearly needed in our certain markets.
Albee Foster: We're also investing in key organic growth initiatives designed to take advantage of the macro trends.
Albee Foster: They're driving the need for infrastructure investment in our CERB regions.
Bill Thalman: Third, our capital light business model coupled with steady profitability improvements and the completion of our UD Pacific settlement payments Bill just mentioned.
Speaker Change: nd, later this year, should provide a more favorable free cash flow outlook.
Speaker Change: for the second half of 24 and beyond.
Speaker Change: And finally, we have disciplined capital allocation approach with multiple drivers that have been deployed and are creating value for our shareholders, as evidenced by improved equity returns.
John Kasel: Of course, Bill and I will remain prudent in our approach with leverage goals. So, in summary, we believe our strategy is sound and our execution along these four pillars should deliver results, improving results, through 2024. I'd like to close our updates with a reminder on our aspirational goals for 2025. You'll find this on the slides.
Speaker Change: The recent amendment to our stock repurchase authorization provides us greater flexibility to deploy more capital to buy back stocks through valuations remain attractive. Of course, Bill and I will remain prudent in our approach with leverage goals in mind.
Speaker Change: So in summary, we believe our strategy is sound and our execution along these four pillars should deliver results, improving results.
Speaker Change: through 2024 and beyond.
Speaker Change: I'd like to close our updates with a reminder on our aspirational goals for 2025. You'll find this on slide number 20.
John Kasel: I began today's call with a recap of our progress since 2021. We clearly have made tremendous improvements in our business, and I'm very proud of what we accomplished as a team in a very short period of time, and, more importantly, in a very challenging environment. We made some tough decisions along the way, including reorganizing the business and L.A. State University.
Speaker Change: I begin today's call with a recap of our progress since 2021.
Speaker Change: We clearly have made tremendous improvements in our business, and I'm very proud of what we've accomplished as a team in a very short period of time, and more importantly, in a very challenging environment.
Speaker Change: We made some tough decisions along the way, including business administrators and restructuring that resulted in some good people leaving our organization.
John Kasel: That resulted in some good people leaving our organization. As I mentioned in my opening comments, we began restructuring the UK in the fourth quarter of last year, and we're seeing the positive benefits from those actions in this year's results, with the new human capital program in line with their strategic roadmap and dry resource deployment efficiency across the entire business. Of course, we are far from finished with what we set off to do in 2021.
Speaker Change: As I mentioned in my opening comments, we began restructuring the UK in the fourth quarter of last year, and we're seeing the positive benefits from those actions in this year.
Speaker Change: Cheers for SALT.
Speaker Change: With the new Human Capital Program, in line with our strategic roadmap, we're taking the necessary steps to enable investment in our growth platforms.
Speaker Change: ndry Resource Deployment Efficiency across the entire business.
Speaker Change: Of course, we are far from finished from what we set off to do in 2021. There is significant work for us to do to fully take advantage of the opportunities in front of us.
John Kasel: There's significant work for us to do to fully take advantage of the opportunities in front of us. As you can see on this chart, we established our 2025 aspirational goals at the end of, and we are focused on managing through the short-term uncertainty and getting back to growth and profitability in the second half of the year. Delivering a strong H2 will help us build the required mobility needed to deliver an exce and set the stage for Kijuni Group. So with that, thank you for your time and continuing interest in LB Foster Company. I'll turn it back to the operator. Thank you. Ladies and gentlemen, as a reminder to ask the
Speaker Change: As you can see on this chart, we established our 2025 aspirational goals at the end of 2021.
Speaker Change: And we are focused on managing through the short-term uncertainty and getting back to growth and profitability.
Speaker Change: in the second half of the year.
Speaker Change: Delivering a strong H2 will help us build required momentum needed to deliver an exceptional 2024.
Speaker Change: That sets the stage for continuing growth of the Army.
Speaker Change: So with that, thank you for your time and continuing interest in LB Foster Company. I'll turn it back to the operator for the Q&A session.
Operator: Ladies and gentlemen, as a reminder, to ask a question, please press star 1-1 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Chris Sakai with Singular Research. Your line is open.
Speaker Change: Thank you. Ladies and gentlemen, as a reminder, to ask a question, please press star 1-1 on your telephone and then wait to hear your name announced.
Speaker Change: To withdraw your question, please press star 1 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Stephanie Schmidt: and Stephanie Schmidt.
Stephanie Schmidt: [inaudible]
Speaker Change: Our first question comes from the line of Chris Sakai with Singular Research. Your line is open.
Chris Sakai: Good morning, John and Bill. I guess just kind of a top-level question, you know, we've seen some softness and demand in rail and coatings and steel. How are we supposed to think about this going into the third and fourth quarters? Do you see a rebound there? Yes.
Speaker Change: Good morning, John and Bill. Morning, Chris.
Chris Zakia: I guess just kind of a top-level question, you know, we've seen some softness and demand in rail and coatings and steel. How are we supposed to think about this going into the third and fourth quarters? Do you see a rebound there?
John Kasel: Yes, thanks, Chris, for joining us today. Absolutely, we do. You know, we also get impacted by weather, and so some of these delays and some of these things, you know, we're starting to get the volumes through our factories. But, you know, as Bill and I talked about today, and you look at the year-over-year as well as sequential growth, we're looking at 29 percent H2 delivery versus last year in our EBITDA. So, we're expecting quite a bit of volume to move through our facilities in the second half of the year.
Speaker Change: Yes, thanks, Chris, for joining us today. Absolutely, we do. You know, we also get impacted by weather and the heat.
Speaker Change: H-1-2.
Speaker Change: So some of these delays and some of these things, you know, we're starting to get the
Bill Thalman: The volume through our factories, but as Bill and I talked about today, and you look at the year-over-year as well as sequential growth, we're looking at 29% H2 delivery versus last year in our EBITDA. So we're expecting quite a bit of volume moving through our facilities in the second half of the year.
Chris Sakai: Okay, thanks, and then I'm looking at the 2024 guidance for free cash flow. What were the main drivers now for breakeven guidance as previously $12 to $18 million?
Speaker Change: Okay, thanks. And then I'm looking at the 2024 guidance for free cash flow. What were the main drivers now for breakeven guidance as previously $12 to $18 million?
John Kasel: So I'll turn that over to Bill, but, you know, we got some, again, some movements going on a little bit, as we expected, a stronger Q2, and we were deferring some of that work into Q3. So we've got some working capital and some other things that are moving around, but in general, we still feel very, very good about our position and where we're going to end up in the years as far as leverage and really our balance sheet in general. Bill, would you like to add a little more context to that? Yeah, yeah. Hi Chris.
Speaker Change: So I'll turn that over to Bill, but you know we got some again we got some movements going on a little bit as we expected a stronger Q2 and we were deferring some of that work into Q3 so we've got some working capital and some other things that are moving around but in general we still feel very very good about our position.
Bill Thalman: and we're going to end up the years first as far as leverage and really our balance sheet in general. Bill, you want to add a little more context to that? Yeah, yeah. Hi, Chris. The range previously was $12 to $18 million with a $15 million midpoint.
Bill Thalman: The range previously was $12 to $18 million with a $15 million midpoint. We obviously announced our restructuring. That will consume some cash. But we'll get some savings from that as well, as outlined in the release. But the primary thing we're looking at is the timing of business in the rail business, which is likely to push volume off to the latter part of the year.
Speaker Change: We obviously announced our restructuring. That will consume some cash. We'll get some savings from that as well, as outlined in the release.
Speaker Change: The primary thing we're looking at is the timing of business.
Speaker Change: in the rail business that is likely to push.
Bill Thalman: And as a result of that, we'll end up having a higher working capital requirement in the second half of the year that is likely to end up with a more tempered cash flow overall. Now, that's a full-year cash flow. So, we had $31 million of negative free cash flow consumption in the first half of the year. We expect the second half to be $25 to $30 million positive free cash flow in the second half.
Speaker Change: volume off to the latter part of the year and as a result of that we'll end up having a higher working capital
Speaker Change: requirement in the second half of the year, that is likely to end up with a more tempered cash flow overall. Now, that's a full year cash flow. So, we had $31 million of negative
Speaker Change: We expect free cash flow consumption in the first half of the year. We expect the second half to be $25 to $30 million positive free cash flow in the second half of the year.
Bill Thalman: So it's right around break even for the full year, but really strong expectations for the second. And, of course, Chris, we close out the year with our last installment of $4 million with Union Pacific Payment. We feel very good about how we're going into the year, and more importantly, how we're going into 2025.
Speaker Change: So it's right around break even for the full year, but really strong expectations for the second half of the year.
Speaker Change: And of course, Chris, we close out the year with our last installment of $4 million with Union Pacific Payments.
Speaker Change: We feel very good about how we're getting into the year. More importantly, how we're going into 2025. Chris, one last item. I just want to highlight that obviously the leverage metric was a little elevated here at the end of the quarter, 2.7 times.
Bill Thalman: And Chris, just one last item. I just want to highlight that, obviously, the leverage metric was a little elevated here at the end of the quarter, 2.7 times the cash generation in the second half of the year plus the expected improvement in profitability year over year. In the second half of the year, we'll see our leverage drop from 2.7 times back closer to that two times target that we talked about.
Speaker Change: The cash generation in the second half of the year, plus the expected improvement in profitability year over year in the second half of the year, we'll see our leverage drop from 2.7 times back closer to that two times target that we talked about.
John Kasel: Okay, sounds good. And then with this restructuring program, how much will it take from or reduce SG&A, or what are the, do you have any sort of quantifiable numbers there? Well, let me.
Speaker Change: Okay, sounds good. And then with this
Speaker Change: How much will it take from or reduce SG&A or what are the, do you have any sort of quantifiable numbers there?
John Kasel: Well, let me kind of walk through the process first of all. So, you know, how we got here. I wanted to go through the three years for a reason, because transformation takes time and we needed to change our portfolio, right? Which we've done in the last three years. But in doing so, those four divestitures that we spoke about today, we have stranded costs in the business that we continue just to absorb, and so we knew over a period of time that we needed to make a change. More importantly, not just to get the cost out, which, by the way, is $4.5 million on the annual run rate.
Speaker Change: Well, let me kind of walk you through the process first of all. So, you know, how we got here is...
Speaker Change: I wanted to walk through the three years for a reason, because transformation takes time.
Speaker Change: We needed to change our portfolio, which we've done in the last three years, but in doing so, those four divestitures that we spoke to today, we have stranded costs in the business that we continue just to absorb in the business.
Speaker Change: And so we knew over a period of time that we needed to make a change.
Speaker Change: more importantly not just to get cost out which by the way is four and a half million dollars on the annual run rate It was about taking monies and bringing back to the company to make sure we're focusing our growth
John Kasel: It was about taking money and bringing it back to the company to make sure we're focusing on our growth. See, as we're transforming this company into a technology innovation type company from a distribution type steel company. We weren't very strong at the front of the house, so much of the work we've been doing is taking from the back office, administration, and putting it out in front of the customers, putting in front of us, you know, technology, and innovation.
Speaker Change: See, as we're transforming this company into a technology innovation type company from a distribution type steel company.
Speaker Change: We weren't very strong at the front of the house, so much of the work we've been doing is taking from the back office administration and putting it out in front of the customer.
John Kasel: And this is where we're really shoring up what we're doing and where we get excited about how we're going to finish the second half of the year, and more importantly, what we're going to do in 25 and beyond. So what Bill and I were talking about today is really, yeah, we had a little bit of headwinds here in the quarter. But you know, that just makes you stronger and makes you more focused.
Speaker Change: putting in front of us, you know, technology, innovation, and this is where we're really shoring up what we're doing, and where we get excited about how we're going to finish the second half of the year, more importantly, what we're going to do in 25 and beyond.
Speaker Change: So, what Bill and I were talking about today is really, yeah, we had a little bit of headwinds here in the court. But, you know, that just makes you stronger and makes you more focused.
Speaker Change: So the last couple, you know, months, we've been talking about this, working on this, and we did it last week, which was a very tough time in our company with a reduction in force, but this is something we did with a knee-jerk reaction related to what was going on at the quarter. This is something that was planned.
John Kasel: So the last couple of months, we've been talking about this, working on this, and we did it last week, which was a very tough time in our company with a reduction in force. But this is something we did as a knee-jerk reaction related to what was going on in the quarter. This is not something that was planned. So it happened last year, so we're starting to see the benefits through the balance of this year and, more importantly, into 2025.
Speaker Change: So it happened last year, so we're starting to see the benefits.
Speaker Change: Through the balance of this year, more importantly, into 2025 and beyond.
Chris Sakai: Okay, great. Thanks for the answers. Yeah. Thanks, Chris.
Speaker Change: Okay, great. Thanks for the answers. Yeah, thanks, Chris.
Operator: Please stand by for our next question. Our next question comes from the line of Justin Bergner with Cabeli Funds. Your line is open.
Speaker Change: Our next question comes from the line of Justin Berchner with Cabeli Funds. Your line is open.
Justin Bergner: Good morning, John. Good morning, Bill. Hi Justin. Hey. A few questions here. So to start, just on the revised free cash flow guide, the timing of rail deliveries, does that mean that you expect to end the year with a higher accounts receivable?
Justin Berchner: Good morning, John . Good morning, Bill. Hi, Justin. Hey. A few questions here. So, to start, just on the revised free cash flow guide,
Speaker Change: The timing of rail deliveries, so does that mean that you expect to end the year with a higher accounts receivable balance than expected, or are there other parts within that rail timing dynamic? No, definitely accounts receivable.
Bill Thalman: Yes. I was going to expect, are there other parts within that rail timing dynamic? No. Definitely not perceivable.
Bill Thalman: We're going to have a strong Q4, which is going to pump up that AR.
Bill Thalman: Q4, which will drive AR up. Got it, um...
Speaker Change: We're going to have a strong Q4, which is going to pump up that AR. Strong revenue for Q4, which will drive AR up. Exactly. Okay.
Bill Thalman: Maybe a second question would relate to the mix of business in rail. I mean, could you comment on whether the rail Technologies business, because it wasn't as evident in the, You know what? You know, you know, we sit and you put together all this work and all this paperwork, you know, what we feel really good about is our strategy. This is how we're pivoting the company into TTM and condition monitoring. We had a fantastic H1 related to those businesses. And then what we're doing in the UK as well.
Speaker Change: Got it, um...
Speaker Change: So maybe a second question would relate to the mix of business in RAIL.
Speaker Change: Could you comment on whether the rail technologies business continues to mix up margin because it wasn't as evident in the decrementals?
Speaker Change: this quarter.
Speaker Change: This is how we're pivoting the company into TTM and condition monitoring.
Speaker Change: We had a fantastic H1 related to those businesses.
Bill Thalman: So the headwinds we're seeing right now are really specific to our former returns business related to rail distribution and our ERP type work. This is where the company continues to be pivoting. But, you know, we saw quite a few headwinds and that carries a lot of volume and a lot of leverage. But we have a very strong backlog.
Speaker Change: and then what we're doing in the UK as well.
Speaker Change: So, the headwinds we're seeing right now are really specific to our former, you know, the returns business, related to rail distribution and our ERP type work. This is where the company continues to pivoting, but, you know, we saw quite a few headwinds and that carries a lot of volume and a lot of leverage.
Bill Thalman: We have very strong activity, and we feel very good about the second half year, that we'll continue to grow, really demonstrating our ability to drive profitability in rail and do it through technology. Okay, so just to maybe clarify that statement, so I guess the rail products business, even though it may not carry a high average margin, it's still a very large percentage of our overall real business to the extent that it's having a short-term challenge here, given the commodity prices and some of the weakness in the freight volumes that John had mentioned. It has an impact on the year-over-year decrements.
Speaker Change: We have a very strong backlog, we have very strong activity, and we feel very good the second half of the year that we'll continue to grow, really demonstrating our ability to drive profitability in rail and doing it through technology innovation.
Speaker Change: Okay, so just to maybe clarify that statement, so I guess the rail products business, even though it may not carry a high average margin, there's still
Speaker Change: fairly meaningful incrementals and decrementals.
Speaker Change: That's correct. It's a very large percentage of our overall real business to the extent that it's having a short-term challenge here given the commodity prices and some of the weakness in the freight volumes that John had mentioned. It has an impact on the year-over-year decrementals.
Bill Thalman: But as we also mentioned in the call script, the year-over-year profitability improvements in TTM, our technology-oriented monitoring business, as well as a recovery in our UK business, both were favorable components to the year-over-year improvement in rail, or those pieces were favorable within rail. It's just the rail products portion overcame that from a consolidated point of view. Okay.
Speaker Change: But, as we also mentioned in the call script, the year-over-year profitability improvements in TTM, our technologies.
Speaker Change: oriented monitoring business as well as a recovery in our UK business.
Speaker Change: Both were favorable components to the year-over-year improvement in rail, or those pieces were favorable within rail. It's just the rail products portion overcame that from a consolidated point of view.
Bill Thalman: And then just the restructuring program. Is this mainly to remove stranded costs? Is it to get ready for potentially a lower level of demand? Or is it something else?
Speaker Change: And then just the restructuring program.
Speaker Change: Is this mainly to remove stranded costs?
Speaker Change: Is it to get ready for potentially a lower level of demand? Is it something else? Just how should I think about
Bill Thalman: How should I think about what's really happening, from a business point of view on the restructuring side? Yeah, obviously, part of it is stranded costs, but it's about getting better. It's about taking all the work we did, all the investment we've made in SAP, all the back office type of work we've done with our technological innovation, and really putting our best foot forward to streamline the organization. As we move from three segments to two segments we did beginning this year, it's about simplifying the company. Simplifying it for you, the investor, is really what this is all about.
Speaker Change: What's really happening?
Speaker Change: from a business
Speaker Change: Obviously, part of it is stranded costs, but it's about getting better. It's about taking all the work we did, all the investment we've done in SAP, all the back office type of work we've done with our technology innovation, and really putting our best foot forward to streamline the organization.
Bill Thalman: But in doing so, we had to put our money where our mouth is. And these aspirational goals are all about continuing to drive this innovative technology, specifically through our precast business and what we're doing in rail. So taking money out wasn't the end game. That was a result. It was also about taking those monies and redeploying them, and redeploying them to the front of the house, out in front of the customer, and really, really redefining ourselves to the market, what we're doing, and how we're changing our portfolio over. Okay, that's very helpful. And then with the 2025 aspirational goals, I mean, Is it safe to say that maybe there was some restructuring program envisioned as you approach those goals, or would you say this is incremental?
Speaker Change: These aspirational goals is all about continuing to drive this innovation technology, specifically through our precast business and what we're doing in rail.
Speaker Change: So, taking money out wasn't the end game. That was a result. It was also about taking those monies and redeploying them, and redeploying them to the front of the house, out in front of the customer. And really, really redefining ourselves to the market, what we're doing and how we're changing.
Speaker Change: And our portfolio over time.
Speaker Change: Okay, that's very helpful. And then with the 2025 aspirational goals, I mean,
Speaker Change: Is it safe to say that maybe there was some restructuring program envisioned as you approached those goals, or would you say this is incremental? No. There was always a vision. If you look at our SG&A, as we kind of laid that out, or at least implied, you can see we were running high to the percentages.
Bill Thalman: No, there was always a vision in that. If you look at our SG&A, as we kind of laid that out, or at least implied, you'd think we were running high on that number, on that percentage. So we've been talking about this internally. We wanted to wait for the right time, not when we had a little bit of headwinds. We wanted to stabilize the company, get through these portfolio moves, which we did through 2020.
Speaker Change: So, we've been talking about this working internally. We wanted to wait for the right time, not when we had a little bit of headwinds. We wanted to stabilize the company, get through these portfolio moves, which we did through 2023.
Bill Thalman: We wanted to take these incremental changes, if you will. We weren't ready, honestly. In the last couple of years, we didn't have the people in positions as well as the skills in the company and the technology in place to make some of these things happen. But we're ready now. So we kind of ripped the band-aid off last week and said, here we go. Let's get after this.
Speaker Change: In 2024, we wanted to take these incremental changes, if you will. We weren't ready, honestly. In the last couple of years, we didn't have the people in the position as well as the skills in the company and the technology in place to make some of these things happen.
Speaker Change: We're ready now. So we kind of ripped the band-aid off last week and said here we go. Let's get after this.
Bill Thalman: Okay, got it. So, it doesn't seem like there's any change that will affect your ability to serve higher demand or meet growth.
Speaker Change: Okay, got it. So it doesn't seem like there's any change that will affect your ability to...
Bill Thalman: Let me tell you that, let me put it this way, if we didn't do what we did, I'd be, I would not be as bullish on the aspirational goals. We need to do this and invest in the future, and continue to bring about the profitability of the company.
Speaker Change: to serve higher demand or meet
Speaker Change: Let me tell you, let me put it this way, if we didn't do what we did, I'd be, I would not be as...
Speaker Change: bullish on the aspirational goals. We need to do this, invest in the future and continue to bring the profitability of the company.
Bill Thalman: Okay. Thanks for all the questions.
Justin Bergner: Thanks, Justin. Have a great day!
Speaker Change: Okay, thanks for all the questions. Thanks, Justin. Have a great day. You too.
Operator: As a reminder, ladies and gentlemen, that's star 11 to ask the question. Please stand by for our next question. Our next question comes from the line of John Bair with Ascend Wealth Advisors. Your line is open.
Speaker Change: As a reminder, ladies and gentlemen, that's star 11 to ask the question.
Speaker Change: Please stand by for our next question.
Speaker Change: Our next question comes from the line of John Baer with Ascend Wealth Advisors. Your line is open.
John Bair: Thank you. Good morning, John and Bill. First quick question: It looks like you had a legal expense in this quarter that didn't show up in the first quarter. Is that a one-time issue, or can you expand on what that was?
Speaker Change: Thank you. Good morning, John and Bill.
John Baer: First quick question. It looks like you had a legal expense in this quarter that didn't see anything in the first quarter. Is that a one-time issue or can you expand on what that relates to?
Bill Thalman: Yeah, sure. Bill, you want to maybe get a little with the... Yeah, yeah.
Bill Thalman: We're not going to expand on what it relates to. We've got an ongoing matter that we're working through. I think, as we mentioned, it was about an $800,000 expense within the quarter. There could be some additional amount in the future. We can't predict what that will be. We don't think it'll be at the same level that we've had in the past, but it's ongoing, and it's something that we're just going to manage here to a conclusion as fast as we can.
John Baer: Yeah, sure. Bill, you want to maybe get a little with the county? Yeah, yeah. We're not going to expand what it relates to. We've got.
Bill Thalman: on an ongoing matter that we're working through.
Bill Thalman: I think, as we mentioned, it was about an $800,000 expense within the quarter.
Bill Thalman: There could be some additional amount in the future. We can't predict what that will be. We don't think it will be to the same level that we've had in the past.
Bill Thalman: But it's ongoing and it's something that we're just going to manage here to a conclusion as fast as we can.
Bill Thalman: Do you have any... Do we have a sense of when this issue will be resolved?
Bill Thalman: Do you have any...
Bill Thalman: Unfortunately, not yet. It's an active matter, and we hope to resolve it as soon as possible.
Bill Thalman: [inaudible]
Bill Thalman: This issue will be resolved? Unfortunately not. It's an active matter and we hope to resolve it as soon as possible.
Bill Thalman: Okay, so no, not on the edge of being finalized. It could drag out for six months or longer.
Bill Thalman: Okay, so now...
Bill Thalman: [inaudible]
Bill Thalman: It's hard to say. We'd love to settle it as soon as we possibly can, but it takes a counterparty to do that, of course.
Bill Thalman: Alright, we've got a question with regard to... indicated some encouragement with regard to the U.K. Do you think, from what you're seeing, is that something that's perhaps sustainable or not? Yeah. Yeah.
Bill Thalman: OK.
Bill Thalman: All right, we've got a question with regards to...
Stephanie Schmidt: and Stephanie Schmidt.
Stephanie Schmidt: indicated some encouragement with regards to the UK, do you think?
Speaker Change: From what you're seeing, is that something that's perhaps sustainable?
John Kasel: Yeah, so I think they've had four prime ministers in five years. I mean, they've had quite a bit of turmoil in that organization. The charges and the actions we did in the fourth quarter were very important to get aligned with what we thought the activity would be, and then we took some additional actions. Some fine-tuning, if you will, part of the enterprise reduction force that we did last. The new team over there, under the leadership of Neil Sheffield, is doing just a tremendous job, really reinventing themselves and really focusing on what we can do and, more importantly, how we do it to make sure we're driving shareholder value.
Speaker Change: Yeah, so I think they've had four prime ministers in five years. I mean, they've had a quite a turmoil in that organization.
Speaker Change: The charges and the actions we did in the fourth quarter were very important to get aligned to what we thought the activity would be. And then we did take some additional actions.
Speaker Change: Some fine-tuning, if you will, part of the enterprise reduction of force that we did last week.
John Kasel: So we're very pleased with what's going on there. They've had a very tough stretch into COVID, and through COVID. It may not be an area of huge growth for us in the future, but that's OK. We like what they're doing. It's a large technology innovation center for us. We're taking much of what they do across the globe as it relates to rail. So we're very happy where they are today.
Neal Sheffield: The new team over there, under the leadership of Neal Shelfield, is doing just a tremendous job, really reinventing themselves and really focused on what we can do and, more importantly, how we do it to make sure we're driving shareholder value.
Neal Sheffield: So we're very pleased with what's going on there. They've had a very tough stretch into COVID, through COVID.
Neal Sheffield: and we're looking for...
Neal Sheffield: It may not be the area of huge growth for us in the future, but that's okay. We like what they're doing. It's a large technology innovation center for us. We're taking much of what they do across the globe as it relates to rail, so we're very happy where they're at today.
John Kasel: And then with regard to domestic rail, we touched on this a little bit in previous questions, but it sounds as if you highlighted that there was some softness. Is this more of a timing issue from your perspective? From your customers because you do reference the expected timing of larger orders, that lumpiness in. Is that a fair way to look at it?
Neal Sheffield: Good.
Speaker Change: And then with regards to domestic rail, we touched on this a little bit in previous questions, but it sounds as if you highlighted that there was some softness.
Speaker Change: Is this more of a timing issue from your customers because you do reference expected timing of larger orders?
John Kasel: This fairway. So, first of all, the good news: when you look at rail, you have to look at both those aspects of rail, right? Transit, First of all, ridership is back to pre-pandemic levels, and we felt very good about that. You know, we have a nice plate; half of what we do on rail is in transit Space. So, this is very good news for us. So, we'll see more and more of that activity in the second half. Again, why we feel very good about the second half. On the freight side, you got to look up at Canada, first of all.
Speaker Change: Commitments is that
Speaker Change: Is that a fair way to look at it? It's a fair way. So first of all, the good news, when you look at rail, you have to look at both aspects of rail, right? Transit, first of all, ridership is back to pre-pandemic levels.
Speaker Change: We feel very good about that. We have a nice play, or half of what we do in rail is in transit space. So this is very good news for us. So we'll see more and more of that activity in the second half. Again, why we feel very good about the second half. On the freight side, you've got to look at Canada first of all. They're doing okay.
John Kasel: They're doing okay. The Canadian Pacific and Canadian National, what's going on with respect to intermodal and moving commodities. Here in the U.S., though, you know, it's a little softer.
Speaker Change: Canadian Pacific and Canadian National, what's going on with respect to intermodal and moving commodities. Here in the U.S. though, you know, it's a little softer.
John Kasel: And so, they have delayed and deferred some of their spending. And this brings us back to the rail products conversation that we had. So, the work is coming. We're going to be very busy in the second half of the year. So, they just deferred some of the work that we typically did in H2, or excuse me, in the second quarter. We're now seeing it in each two. So, you know, just look for a stronger year and probably a stronger fourth quarter than we've seen in the past.
Speaker Change: and so they have delayed and deferred some of their spending.
Speaker Change: And this is back to the real products conversation that we've had. So the work is coming. We're going to be very busy in the second half of the year. So they just deferred some of the work that we typically was on H2, or excuse me, in the second quarter. We're now seeing it.
John Kasel: So, we had a great first quarter, as you know, John. We fell off a little bit, you know, related to demand, but... We're going to see that pick up again, but everyone needs to continue to invest in the type of stuff that we provide they need. So we feel very good about them keeping shoring up the railroads, doing the maintenance work, and more excitingly, they're really, they're bullish on our condition monitoring, our TTM, our, you know, devices that help them run a safe and secure network. That's where we're seeing a lot of activity and a lot of excitement that gives us the opportunity. I am really, really excited to be going into the second half of the year and, more importantly, in 2025.
Speaker Change: So, you know, just look for a stronger year and probably a stronger fourth quarter than we've seen in the past.
Speaker Change: So we had a great first quarter, as you know, John .
Speaker Change: We fell off a little bit, you know, related to demand, but...
Speaker Change: We're going to see that pick up again. Railroads need to continue to invest in the type of stuff that we provide they need.
Speaker Change: So we feel very good about they'll keep shoring up the railroads, doing the maintenance work, and more excitingly, they're really, they're bullish on our condition monitoring, our TTM, our, you know, devices that help them run a safe and secure network.
Speaker Change: That's where we're seeing a lot of activity and a lot of excitement that gives us hope.
Speaker Change: Really, really excited about going into the second half of the year, and more importantly in 2025 and beyond.
John Bair: Okay, last question. Indicate weather impacted your domestic sales on infrastructure. So basically, are you just pushing this stuff out from the second quarter into the third quarter? Is that kind of the way to look at it?
Speaker Change: All right.
Speaker Change: Okay, last question.
Speaker Change: Indicated whether it impacted your domestic sales on infrastructure.
Speaker Change: So basically, you're just pushing this stuff out from the second quarter into the third quarter? Is that the kind of way you look at it? Aside from...
Speaker Change: Your comments about protective coatings were down. Is there any indication that that's going to turn around or what will it take for that to
John Kasel: Aside from your comments about protective coatings being down, is there any indication that that's going to turn around, or what will it take for that to pick up and become more meaningful? Let's talk about infrastructure related to what's going on in precast specifically and those product lines. We got hit hard by the weather. Our locations that are located in Tennessee had the wettest record, you know, first half year, the wettest year on record, year to date, as well as what's happening in Texas and other regions. Very, very wet.
Speaker Change: We'll talk about infrastructure related to what's going on in precast specifically and those product lines.
Speaker Change: with weather, our locations.
Speaker Change: that are located in Tennessee. They had the wettest record.
Speaker Change: The first half here, the wettest year on record, year to date, as well as what's happening through Texas and the other regions. Very, very wet.
John Kasel: Not only just affecting our employees' ability to get to work, some of our facilities were shut down for days or, in one case, over a week related to weather and power outages. And the third case is, more importantly, what's going on in the construction areas. You know, if it's wet, they can't use their products, they can't put products underground, and they can't build the infrastructures needed. That's pent-up demand. That does not go away.
Speaker Change: Not only just affecting our employees to get to work, some of our facilities were shut down for days or in one case over a week.
Speaker Change: related to weather and power outages. And the third case is, more importantly, is what's going on.
Speaker Change: in the construction areas. If it's wet, they can't use their products, they can't put the product underground, and they can't build the infrastructures needed. That's pent-up demand. That does not go away, and we are obviously short of the hurricane this week.
John Kasel: And we are obviously, you know, short of the hurricane. We're seeing things that are drying out, and the need is there. So the SPIC is just going to be open much wider in the second half of the year. They need to get these products in the ground. They need to get these products in these areas built, so we feel very good. We're ready. We have products sitting in our yards, products sitting in our plants.
Speaker Change: You know, we're seeing things that are drying out.
Speaker Change: And the need is there, so the SPIC is just going to be open much wider in the second half of the year. They need to get these products in ground, they need to get these products in these areas built. So we feel very good. We're ready. We have products sitting in our yards, products sitting in our plants, we're ready to deliver.
John Kasel: We're ready to deliver. So, again, we feel very good about what we're looking at for H2. Coming back to, you know, we have two types of coding business. We have an inline coder, and then we have a specialized coder. The specialized coder business that we have is doing very well, and they're going to have a strong... The in-line coder working directly with CIPCO, those projects are as expected, you know; we're not doing too many pipelines, you know, moving between states right now.
Speaker Change: So, again, why we feel very good about what we're looking at for H2. Coming back to, you know, we have two types of coating business. We have an inline coater and then we have a specialized coater. Specialized coater business that we have is doing very well and they're going to have a strong second half of the year.
Speaker Change: The inline coder working directly with Pacifico, those projects are as expected. We're not doing too many pipelines, moving between states right now.
John Kasel: And we don't see much of that activity going on in the second half of the year. That may change with a different election or a different cycle, but right now, we're not counting on that business providing much, and it's not part of our guidance at all. So if that comes back in a big way, that'll be on top of what we're looking at. And what about steel products?
Speaker Change: and we don't see much of that activity.
Speaker Change: I'm going on the second half of the year. That may change with the different election or a different cycle, but right now we're not counting on that business providing much, and it's not really, it's not part of our guidance at all. So if that comes back in a big way, that'll be, you know, it'll be on top of what we're looking at today.
John Bair: What will it take to turn that around?
John Kasel: So, you know, when you say turn around, our threading business is actually doing very well. They got hit by the weather like everybody else.
Speaker Change: And what about steel products? What will it take to turn that around?
Speaker Change: So, you know, when you say turn around, our threading business is actually doing very well. They got hit with the weather like everybody else. We do our threading in Houston.
John Kasel: We do our threading in Houston, and of course, when it's wet, you know, this is for irrigation pipe. So, the demand for irrigation pipe is not as high, but we're starting to see that change as it dries out in the West. And we have a nice new market entry taking our pipe, our threaded pipe, on the West Coast. We feel good about what we're doing there. On the steel side, you know, we made a nice pivot from our grid decking business, right? And we closed the book on that last month and moved that business to another party, which left us with a bridge forms business.
Speaker Change: And, of course, when it's wet, you know, this is for irrigation pipe.
Speaker Change: So the demand for irrigation pipes is not as needed, but we're starting to see that change around as it dries out in the West. And we have a nice new market entry taking our pipe, our threaded pipe, in the West Coast right now.
John Kasel: In fact, we just had the board out there, and we toured the facility. It's a world-class facility. They're operating at a very high level. We're finishing up the largest job we ever did, which is down in Tampa, Florida, on the I-4 bridge. We feel very good about that. We've got quite a few bidding activities and opportunities in front of us to continue to use that. You know, we talked about an investment super cycle, so we're looking for quite a bit of work coming through that plant and that business in the second half of the year.
Speaker Change: In fact, we just had the board out there and we toured the facility. It's a world-class facility. They're operating at a very high level.
Speaker Change: We're finishing up the largest job we ever did, which is down in Tampa, Florida, on the I-4 bridge.
John Bair: Great. Thank you very much for taking the questions. Thanks, John. Take care.
John Kasel: Thanks, John. Take care.
Operator: Please stand by for our next question. We have a follow-up question from the line of Justin Bergner with Gabrielle Gabelli. Your line is open.
Speaker Change: Please stand by for our next question.
Justin Bergner: Thanks for the follow-up. I'm just looking at the sales guide. You didn't really take the high end down much, but you're talking about some headwinds in rail, and maybe that all gets caught up in the fourth quarter. I'm not sure. You're talking about protective coatings being weak, so is there some positive offset that's only allowing the sales guide to be taken down by $10 million at the high end? I'm just trying to put the pieces together.
John Kasel: You know, we don't get into the color of all this, but our precast business, especially on the legacy side, is having a tremendous year. The best year ever.
John Kasel: This Great American Outdoors Act that we referenced in our comments today, we're basically sold out for the balance of the year. So that's where Upside is going to come from. And then the new acquisition of Anjusco, which is bringing these products. Of course, we got hit with the weather and other things going on in Tennessee and other markets we serve there. But that's an area for Upside in the second half of the year.
Bill Thalman: And at this time, I will just add to that.
Bill Thalman: I might just add to that as well, because that's something that helps the overall business mix in the second half of the year. So we're really, while we have an overall top line somewhat flat to down slightly, overall, in the second half of the year, per the guidance, profitability is up nicely on a year-over-year basis. So we'll see an improved business mix in the second half that will drive profit expansion despite the top line softness overall. Great. That was really fast.
Speaker Change: The profitability is up nicely on a year-over-year basis, so we'll see an improved business mix in the second half that will drive profit expansion despite the top-line softness overall.
Justin Bergner: Great, that was it for me.
Speaker Change: Great, that was it for me. Thanks, Justin.
Operator: I'm showing no further questions in the queue. I would now like to turn the call back over to John for closing remarks. Thank you.
Speaker Change: Thank you.
Speaker Change: I'm showing no further questions in the queue. I would now like to turn the call back over to John for closing remarks.
John Kasel: Thanks, Tawanda, and thanks everybody for joining us today and thanks for the questions. We really appreciate it. I want to close with a couple of remarks related to the first, you know, core value of our company, SAFE. Back in the last quarter, I mentioned that the real focus on safety is at each and every year. And when you look at a company, you look at their safety results, it really speaks to how you treat your employees and really the culture of the company and really how profitable you could be because safety is a result of a lot of good things coming together.
John: Thanks, Tawanda, and thanks everybody for joining us today and thanks for the questions. We really appreciate it. I want to close with a couple remarks related to first core value of our company's safety.
Speaker Change: Back in the last quarter, I mentioned that the real focus on safety is each and every year. When you look at a company,
Speaker Change: If you look at their safety results, it really speaks to how you treat your employees.
Speaker Change: and really the culture of the company, and really how profitable you could be because safety is a result of a lot of good things coming together. In the last three years, we have struggled in our rails specifically. We've gone the wrong way, still way better in the industry, but...
John Kasel: In the last three years, we have struggled, in our rails specifically, we've gone the wrong way. Still way better in the industry, of course, our goals and our goals here at Foster are much we want to be a much better industry stand. But year over year, in the last three years, from 20, 21, 23, excuse me, 21, 22, and 23, our safety performance in the railroad business just continued to get worse year over year.
Speaker Change: Of course, our goals here at Foster, we want to be much better industry standards.
Speaker Change: But year over year in the last three years from 20, 21, 23, excuse me, 21, 22, and 23, our safety performance in the rail business just continued to get worse year over year.
John Kasel: So last year we sat down, and we said we needed to change this, so, compliments to the real group, leadership, real focus, making safety a part of our fabric each and every day and getting better. We made a number of changes to staff, including adding an operations guy named Dennis Scully who has done a fantastic job, and congratulations to Greg Lipper and his team, making safety a core value of our company. They have completed, in fact, the first half of the year with zero record of land.
Speaker Change: So last year we sat down we said we need to change this so
Speaker Change: compliments to the REL group.
Speaker Change: leadership, real focus.
Speaker Change: making safety a part of our fabric each and every day and getting better. We made a number of changes to staff, including adding an operations guy named Dennis Scully.
Speaker Change: has done a fantastic job and congratulations to Ray Glipper and his team making safety a core value of our company.
John Kasel: That's just tremendous results. In fact, perfect results if you want to look at them from that. When you look back at what that means, that's 715,699 hours of work that we did with n across the entire rail bus. So tremendous, very focused on that. So yes, we've had some headwinds, but from an operational, from an efficiency point of view, the business is coming back. Quoting looks good.
Speaker Change: They have completed, in fact, the first half of the year with zero recordable injuries.
Speaker Change: That's just tremendous results, in fact, perfect results if you want to look at it from that point.
Speaker Change: When you look back what that means, that's 715,699 hours.
Speaker Change: work hours, man hours, that we did with no recordable injury across the entire rail business, which represents over 51% of the hours we have worked as a company.
Speaker Change: So, tremendous, very focused on that. So, yes, we've had some headwinds, but from operational, from efficiency point of view, the business is coming back. Coatings look good.
John Kasel: A backlog of over 248 million is something that we feel good about. So we're ready to deliver in the second half of the year, and we will deliver. So, as a reminder, my second point is, you know, we had a very strong first quarter. In the second quarter, of course, it's not exactly where we expected it to be. We're going to continue to manage through those macro situations. But we were off 7% when you look at H1 over H1 year over year.
Speaker Change: A backlog at over $248 million is something that we feel good about, so we're ready to deliver in the second half of the year, and we will deliver.
Speaker Change: So, as a reminder, my second point is, you know, we had a very strong first quarter.
Speaker Change: In the second quarter, of course, it's not exactly where we expected we wanted it to be. We're continuing to manage to do those macro situations, but we were off 7% when you look H1 over H1 year over year.
John Kasel: When you look at H2, what we're putting in, and at the midpoint of our guidance, we're showing a 29% improvement year-over-year on EBITDA. So that's what we have in front of us, and this group, my team, and everybody across the company is up for the challenge of making and bringing this product to the market and driving shareholder return, which will give us a 12% year-over-year improvement in our EBITDA when you look at midpoint-to-midpoint, how we finished it, and what we're forecasting to do.
Speaker Change: When you look at H2, what we're putting in, you look at a midpoint of our guides.
Speaker Change: We're showing a 29% improvement year over year on EBITDA.
Speaker Change: So that's what we have in front of us, and this group, my team, and everybody across the company, we're up to the challenge.
Speaker Change: of making and bringing this product to the market and driving shareholder return, which will give us a 12% year-over-year improvement in our EBITDA when you look at midpoint to midpoint and how we finished and what we're forecasting to do.
John Kasel: We will make it happen. We're all in to do this, and we have the opportunities in front of us, and we will make it happen for the balance of the year, so thanks for your ongoing support. Thanks for your interest in L.B. Foster Company, and, speaking on behalf of Bill and myself, we're very much looking forward to talking to you in early November. Take care for now.
Speaker Change: We will make it happen. We're all in to do this and we have the opportunities in front of us.
Speaker Change: and we will make it happen for the balance of years. So thanks for your ongoing support. Thanks for your interest in L.B. Foster Company and I know speaking on behalf of Bill and myself, we're very much looking forward to talk to you in early November . Take care for now. Bye-bye.
Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference.
Speaker Change: Thank you for your participation. You may now disconnect.