Q3 2024 LB Foster Co Earnings Call
Operator: Good day and thank you for standing by. Welcome to the Q3 2024 L.B. Foster Earnings Conference Call.
Good day, and thank you for standing by.
Speaker Change: Compared to Q3, 'twenty 'twenty four L. B Foster earnings conference call.
Operator: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1 once again.
At this time, all participants are in listen only mode.
Speaker Change: After the Speakers' presentation, there'll be a question and answer session.
To ask a question during the session.
Speaker Change: Your press Star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question Press Star one again.
Operator: please be advised that today's session is being recorded.
Please be advised that today's session is being recorded.
Operator: I would now like to turn it over to Lisa Duranti. Go ahead, Lisa.
Speaker Change: I would now like to turn it over to visa direct it go ahead Lisa.
Lisa Duranti: Thank you, Operator. Good morning, everyone, and welcome to L.B. Foster's third quarter of 2024 earnings. My name is Lisa Duranti, the company's Investor Relations Manager. Our president and CEO, John Kasel, and our chief financial officer, Bill Thalman, will be presenting our third quarter operating results, market outlook, and business development.
Lisa: Thank you operator good morning.
Lisa: Everyone and welcome to L. B Foster's third quarter of 2024 earnings call.
Lisa Taranto: My name is Lisa Taranto <unk>, the Companys Investor Relations manager.
Lisa Taranto: Our president and CEO, John Castle, and our Chief Financial Officer, Bill Thomas will be presenting our third quarter operating results market outlook and business developments. This morning.
John Kasel: We will start the call with John providing his commentary on the company's 3rd quarter performance. Bill will then review the company's 3rd quarter financial results. John will provide his perspective on market development and company outlook in his closing comments.
Lisa Taranto: We will start the call with John provide any commentary on the third company's third quarter performance Bill will then review the company's third quarter financial results.
Lisa Taranto: John will provide his perspective on market developments and company outlook in his closing comments.
John Kasel: We will then open up the session for questions.
Speaker Change: We'll then open up the session for questions.
Lisa Duranti: 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. Today's discussion includes corrections made to the company's previously reported financial statements as disclosed in the Form 10-KA for 2023 and Form 10-QA for the first and second quarters of 2024 filed with the Securities and Exchange Commission.
Lisa Taranto: Today's slide presentation, along with our earnings release and financial disclosures were posted on our website. This morning and can be accessed on our Investor Relations page at L. B Foster Dot com are.
Lisa Taranto: Our comments this morning will follow the slides and the earnings presentation.
Lisa Taranto: Today's discussion includes corrections made to the company's previously reported financial statements as disclosed in our Form 10-K, a for 2023 and Form 10-Q for the first and second quarters of 2024 filed with Securities and Exchange Commission.
Lisa Duranti: Some statements we are making are forward-looking and represent our current view of our markets and business today. These forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these statements in light of new information, except as required by security laws. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation.
Lisa Taranto: Some statements, we're making are forward looking and represent our current view of our markets and business. Today. These forward looking statements reflect our opinion 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.
Lisa Taranto: As required by Securities laws.
Lisa Taranto: More detailed risks uncertainties and assumptions relating to our forward looking statements. Please see the disclosures in our earnings release.
Lisa Taranto: <unk> increased in patients.
Lisa Duranti: We will also discuss non-GAAP financial metrics and encourage you to carefully read our disclosures and reconciliation tables provided within today's earnings release and presentation as you consider these metrics.
Lisa Taranto: We will also discuss non-GAAP financial metrics and encourage you to carefully read our disclosures and reconciliation tables provided in today's earnings release and presentation as you can see.
John Kasel: So with that, let me turn the call over to Thanks, Lisa. And hello, everyone. Thank you for joining us today for our third quarter earnings call.
Lisa Taranto: And are these metrics.
Speaker Change: With that let me turn the call over to John.
John Castle: Basically said Hello, everyone. Thank you for joining us today for a third quarter earnings call.
John Kasel: I'll start today's call by recognizing and welcoming Lisa Duranti. Lisa was recently promoted to manager of financial reporting investor relations. I'm also pleased to announce that Stephanie Schmidt has been promoted to an expanded role in our financial reporting. We're fortunate to have both Stephanie and Lisa leading our investor relations and financial reporting efforts.
Speaker Change: I'll start today's call by recognizing welcome Lisa Durante Liza was recently promoted to manager financial reporting Investor Relations.
Speaker Change: Also pleased to announce that Stephanie Smith has been promoted to expand his role in our financial reporting team for.
Speaker Change: We're fortunate to have both Stephanie at least leading our investor relations and financial reporting efforts and look forward to their continued contributions congratulations Lisa and Stephanie.
John Kasel: I look forward to their continuing Congratulations, Lisa. Turning in the quarter, we're very pleased with the progress achieved during the third quarter, as reflected in our exceptional profitability and cash generation results. These results clearly indicate our strategy to transform the profitability profile of our business is on track. The 23.8% gross margin report represents the highest level we've seen in over a decade and was up 490 basis points over last year. The margins achieved were around $137.5 million in sales, which were down $5.4%. Highlighting the improved portfolio profitability and efficiency. That income of the quarter was $35.9 million and included a $30 million favorable tax valuation reserve.
Speaker Change: Turning to the quarter, we're very pleased with the progress achieved during the third quarter as reflected in our sex exceptional profitability cash generation results.
Speaker Change: These results clearly indicate our strategy to transform the profitability profile of our business is on track.
Speaker Change: The 23, 8% gross margin reported represents the highest level, we see in over a decade and was up 490 basis points over last year.
Speaker Change: Tomorrow is achieved around 137 5 million in sales, which were down five 4% highlighting the improved portfolio profitability and efficiency.
Speaker Change: Income in the quarter was $35 9 million included a $30 million favorable tax valuation reserve adjustment.
John Kasel: Noting that our improving profitability trends allow us to really And adjusted EBITDA was $12.3 million, up 16.4% over the last year, despite the lower sales, with improved gross margins and lower SG&A. As expected, and in line with our normal seasonal working capital cycle, we also delivered a very strong quarter of cash generation, with cash from operations totaling $24.7 million. Cash was deployed primarily to reduce our net debt by $17.7 million to $65.4 million at the quarter end. As a result of our lower debt levels and improving profitability, our gross leverage ratio improved by 0.8 times, ending the quarter in an impressive $1.3 million.
Speaker Change: Noting that our improving profitability trends allow us to release this provision.
Speaker Change: And adjusted EBITDA was $12 3 million up 16, 4% over last year. Despite the lower sales with improved gross margins and lower SG&A expenses.
Speaker Change: As expected and in line with our normal seasonal working capital cycle. We also delivered a very strong quarter of cash generation with cash from operations totaling $24 7 million.
Speaker Change: Cash was deployed primarily to reduce our net debt by $17 7 billion to $65 4 million at quarter end as a result of our lower debt levels and improving profitability, our gross leverage ratio improved by eight times ending the quarter at an impressive one nine times.
John Kasel: We also continue funding CAPEX initiatives within the rail technology and precast concrete load platform. At the same time, we expanded our stock purchase program, buying approximately 127,000 shares for $2.6 million during the quarter.
Speaker Change: We also continued funding capex initiatives within our rail technology pre cast concrete platforms.
Speaker Change: At the same time, we expanded our stock purchase program buying approximately 127000 shares for $2 6 million during the quarter.
John Kasel: With the third quarter results largely in line with our expectations, we made modest updates to our 2024 financial. We lowered the sales expectations slightly, but maintained the midpoint of our just even outlook in line with the improved earnings efficiency of the portfolio. And with the strong results achieved in the third quarter, we slightly increased our outlook with the second half free cash flow, now expected to range between $30 and $35 million. In summary, we're very pleased with our third quarter results and look forward to riding our continuing momentum to a strong finish to 2024.
Speaker Change: With the third quarter results largely in line with our expectations, we made modest updates to our 2024 financial guidance.
Speaker Change: The sales expectation slightly but maintained the midpoint of our adjusted EBITDA in line with the improved earnings sufficiency of the portfolio.
Speaker Change: And with the strong results achieved in the third quarter, we slightly increased our outlook with the second half free cash flow now expected to range between 30% and $35 million.
Speaker Change: In summary, we're very pleased with our third quarter results and look forward to driving our continuing momentum to a strong finish to 2024.
William Thalman: I'll turn it over to Bill to cover the financial details for the quarter, and I'll come back at the end with some closing remarks on our markets and our Over to you, Bill. Thanks, John, and good morning, everyone. I'll begin my comments covering the third quarter highlights on slide 7. As always, the schedules in the appendix provide more information on our results, including non-GAAP measures discussed on today's call. Also, we'll call out the impact of significant portfolio actions where meaningful. For the third quarter, the only inorganic impact is the bridge grid deck product line exit that was announced last year.
Speaker Change: I'll now turn it over to bill to cover the financial details for the quarter and I'll come back with some closing remarks on our markets and outlook over to you Bill.
Bill Thomas: Thanks, John and good morning, everyone.
Bill Thomas: I'll begin my comments covering the third quarter highlights on slide seven.
Bill Thomas: As always the schedules in the appendix provide more information on our results, including non-GAAP measures discussed on today's call.
Speaker Change: Also we will call out the impact of significant portfolio actions were meaningful for us.
Speaker Change: The third quarter, the only inorganic impact is the grids grid deck product line exit that was announced last year.
William Thalman: Net sales for the quarter were down 5.4%, driven primarily by domestic rail commercial weakness, with organic sales down 8.5%. Infrastructure organic sales were down approximately 2%. Despite the lower sales, gross profit grew to $32.8 million, up $5.3 million versus the prior year. Last year's gross profit included $3.9 million in adverse impacts from the bridge grid deck exit, contributing to the year-over-year improvement. The benefits of our strategic execution delivered a gross margin of 23.8% in Q3, the highest level achieved in over 10 years. Gross profit and margin improvement was realized in both rail and infrastructure, despite lower sales in both segments.
Speaker Change: Net sales for the quarter were down five 4% driven primarily by domestic rail commercial weakness with organic sales down eight 5%.
Speaker Change: Infrastructure organic sales were down approximately 2%.
Speaker Change: Despite the lower sales gross profit grew to $32 8 million up $5 $3 million versus the prior year.
Speaker Change: Last year's gross profit included $3 $9 million and adverse impacts from the bridge grid back exit contributing to the year over year improvement.
Speaker Change: The benefits of our strategic execution delivered a gross margin of 23, 8% in Q3.
Speaker Change: Highest level achieved in over 10 years.
Speaker Change: Gross profit and margin improvement was realized in both rail and infrastructure despite lower sales in both segments.
William Thalman: I'll unpack sales and margin drivers by segment further on the slides ahead. Selling general and administrative costs in Q3 were $24.3 million, down $0.1 million from the prior year. The current quarter included $0.4 million in costs associated with a resolved legal matter and $0.8 million in costs associated with the previously announced Enterprise Restructuring Program. These increases were offset by $0.8 million in lower employment costs and $0.7 million in lower bad debt expenses. As a reminder, last year's VAD debt expense included a $0.9 million charge related to the bankruptcy of a UK customer. Net income for the quarter totaled $35.9 million, including $30 million due to a favorable tax valuation allowance adjustment.
Speaker Change: Our impact sales and margin drivers by segment further on the slides ahead.
Speaker Change: Selling general and administrative costs in Q3 were $24 $3 million down zero point $1 million from the prior year.
Speaker Change: The current quarter included <unk> 4 million in costs associated with a resolve legal matter and zero point $8 million and costs associated with the previously announced enterprise restructuring program.
Speaker Change: These increases were offset by <unk> $8 million, and lower employment cost and <unk> $7 million and lower bad debt expense.
Speaker Change: As a reminder, last year's bad debt expense included <unk> $9 million charge related to the bankruptcy of a UK customer.
Speaker Change: Net income for the quarter totaled $35 9 million, including $30 million due to a favorable tax valuation allowance adjustment.
William Thalman: In 2022, we established a valuation allowance on our net deferred tax asset balance sheet position, including federal net operating loss carry forwards available. Accounting rules require the reserve at that time due to the level of cumulative pre-tax income in 2020 through 2022, as well as the trend in profitability during that period. As a result of the improving trend in financial performance in 2023 and 2024, we were able to release the federal tax valuation allowance in the third quarter, resulting in the tax benefit this quarter. Note that as a result of releasing the valuation allowance, our effective tax rate will return to a more normal level of approximately 28% starting with the fourth quarter.
Speaker Change: In 2022, we established a valuation allowance on our net deferred tax asset balance sheet position, including federal net operating loss carryforwards available.
Speaker Change: Accounting rules require the reserve at that time due to the level of cumulative pre tax income in 2020 through 2022 as well as the trend in profitability during that period.
Speaker Change: As a result of the improving trend in financial performance in 2023, and 2024, we were able to release the federal tax valuation allowance in the third quarter resolving in the tax benefit this quarter.
Speaker Change: Note that as a result of releasing the valuation allowance our effective tax rate will return to a more normal level of approximately 28% starting with the fourth quarter.
William Thalman: The accounting change has no impact on cash taxes, which will remain at nominal levels given the approximately $100 million in federal NOLs available. The legal and enterprise restructuring costs previously mentioned were excluded from adjusted EBTA for the quarter, and these amounts were approximately $0.4 million and $0.9 million, respectively, in the third quarter. Adjusted EBITDA for the quarter was $12.3 million, up 16.4% versus last year, due primarily to the gross profit improvement and lower SG&A. Cash generation for the quarter was strong with $24.7 million in cash from operations, up $6.1 million over last year's third quarter.
Speaker Change: The accounting change has no impact on cash taxes, which will remain at nominal levels given the approximately $100 million in federal Nols available.
Speaker Change: The legal and enterprise restructuring costs previously mentioned were excluded from adjusted EBITDA for the quarter.
Speaker Change: And these amounts were approximately <unk> 4 million and <unk> 9 million, respectively in the third quarter.
Speaker Change: Adjusted EBITDA for the quarter was $12 3 million up 16, 4% versus last year due primarily to the gross profit improvement and lower SG&A.
Speaker Change: Cash generation for the quarter was strong with $24 $7 million in cash from operations up $6 $1 million over last year's third quarter.
William Thalman: I'll cover the deployment of operating cash flow along with some additional color on orders and backlog by segment later in the presentation. Slide 8 reflects the organic and portfolio-driven impacts on sales and adjusted EBITDA for the quarter versus last year. As mentioned in my opening, the only remaining inorganic impact of NODE is the bridge grid deck exit. You will see this strategic decision is delivering improved results with $0.3 million of higher EBITDA on $1.3 million in lower sales. In addition, this product line was working capital intensive while generating no financial return. As a result of our decision to exit this product line, working capital is down $4.6 million from the first half of 2023, improving cash flow and financial flexibility.
Speaker Change: I'll cover the deployment of operating cash flow along with some additional color on orders and backlog by segment later in the presentation.
Speaker Change: Slide eight reflects the organic portfolio driven impacts on sales and adjusted EBITDA for the quarter versus last year.
Speaker Change: As mentioned in my opening the only remaining inorganic impact of note is the bridge grid that exit.
Speaker Change: You will see this strategic decision is delivering improved results with <unk> 3 million of higher EBITDA on $1 3 million and lower sales.
Speaker Change: In addition, this product line was working capital intensive while generating no financial returns.
Speaker Change: As a result of our decision to exit this product line working capital is down $4 $6 million from the first half of 2023, improving cash flow and financial flexibility.
William Thalman: The legacy portfolio delivered $1.4 million higher adjusted EBITDA despite $8.5 million lower organic sales, driven primarily by the improved gross margin profile of our business portfolio. This improvement is highlighted on the trend charts on slide number nine. The sales trend on the left reflects organic growth we've delivered over the last 12 months. Despite softer second and third quarter commercial conditions primarily impacting the rail segment, The trailing 12-month organic growth rate was still 3%, with a greater sales mix coming from our growth platform. And the improved gross margin profile achieved as a result of our strategic transformation is evident with the chart on the right.
Speaker Change: The legacy portfolio delivered $1 4 million higher adjusted EBITDA, Despite $8 5 million lower organic sales driven primarily by the improved gross margin profile of our business portfolio.
Speaker Change: This improvement is highlighted on the trend chart on slide number nine.
Speaker Change: The sales trend on the left reflects organic growth we've delivered over the last 12 months.
Speaker Change: Despite softer second and third quarter commercial conditions, primarily impacting the rail segment.
Speaker Change: The trailing 12 month organic growth rate was still up 3% with a greater sales mix coming from our growth platforms.
Speaker Change: And the improved gross margin profile achieved as a result of our strategic transformation is evident with the chart on the right.
William Thalman: Simply said, our growth platforms are becoming a larger percentage of our overall business, and we believe there is more runway for growth ahead. On the next couple of slides, I'll unpack the key drivers of this improvement by second. Starting with Rail on slide number 10, third quarter revenues totaling $79.5 million were down 8.5% from last year. The entire decline was organic and driven primarily by weaker commercial conditions in the rail products business unit. Partially offsetting this decline were higher volumes in our rail growth platforms, global friction management, and total track monitors. In addition, our UK business continues to show signs of recovery after a challenging period for their markets in 2023.
Speaker Change: Simply said our growth platforms are becoming a larger percentage of our overall business and we believe there is more runway for growth ahead.
Speaker Change: On the next couple of slides I'll unpack the key drivers of this improvement by segment.
Speaker Change: Starting with rail on slide number 10 third quarter revenues totaling $79 5 million were down eight 5% from last year.
Speaker Change: The entire decline was organic and driven primarily by weaker commercial conditions in the rail products business unit.
Speaker Change: Partially offsetting this decline were higher volumes in our rail growth platforms global friction management and total track monitor and.
Speaker Change: In addition, our U K business continues to show signs of recovery after a challenging period for their markets in 2023.
William Thalman: Despite the lower sales, rail's margins of 23.2% were up 340 basis points year-over-year. Driven by strength in our higher margin growth platforms, as well as the ongoing recovery of the UK business Highlighting an improving trend, third quarter rail orders increased $2.9 million, driven by strengthening rail products and global friction management demand. These increases were tempered by a significant decline in orders in the UK business as we narrow our focus in those markets. Rail backlog was down $5 million entirely due to the UK. Backlog for both the rail products and friction management businesses increased year over year.
Speaker Change: Despite the lower sales rails margins of 23, 2% were up 340 basis points year over year, driven by strength in our higher margin growth platforms as well as the ongoing recovery of the U K business.
Speaker Change: Highlighting an improving trend third quarter rail orders increased $2 $9 million, driven by strengthening rail products and global friction management demand.
Speaker Change: These increases were tempered by a significant decline in orders in the UK business as we narrow our focus in those markets.
Speaker Change: Rail backlog was down $5 million entirely due to the U K backlog for both the rail products and friction management businesses increased year over year.
Speaker Change: Okay.
William Thalman: Turning to infrastructure solutions on slide 11, segment revenue decreased $0.5 million, or 0.9%, due to the softness in our protective coatings and bridge product lines within steel products. This was partially offset by growth in precast concrete, which grew 10.5% year over year. Gross margins were up 720 basis points to 24.6%. Gross margins in the 2023 period included the impact from the bridge grid deck exit, which reduced gross profit by $3.9 million last year. The remaining improvement was due primarily to improved precast margins, which were up 360 bases. Infrastructure orders were $43.3 million, down $7.1 million from the prior year quarter due to softer demand across the Steel Products Business Unit, primarily in protective coating.
Speaker Change: Turning to infrastructure solutions on Slide 11 segment revenue decreased <unk> $5 million or <unk>, 9% due to the softness in our protective coatings enbridge product lines within steel products.
Speaker Change: This was partially offset by growth in free cash concrete, which grew 10, 5% year over year.
Speaker Change: Gross margins were up 720 basis points to 24, 6%.
Speaker Change: Gross margins in the 2023 period included the impact from the bridge grid deck exit, which reduced gross profit by $3 $9 million last year.
Speaker Change: The remaining improvement was due primarily to improved pre tax margins, which were up 360 basis points.
Speaker Change: Infrastructure orders were $43 3 million down $7 1 million from the prior year quarter due to softer demand across the steel products business unit, primarily in protective coatings.
William Thalman: Precast concrete orders were up $3.6 million or 13.2% year over year. Backlog totaling $120.3 million was down $29.2 million, with $4.5 million due to the bridge product line exit. The balance of decline was realized across the steel products business unit and precast concrete backlog increased $1.6 million versus last year. I'll next cover the key takeaways from our year-to-date results on slide 12. Organic sales increased 1.5%, partially offset by a 3% decline from divestiture and exit activity. Organic sales growth was driven by the rail segment as a result of the strong growth achieved in the first quarter.
Speaker Change: Pre cast concrete orders were up $3 6 million or 13, 2% year over year.
Speaker Change: Backlog totaling $123 million was down $29 $2 million with $4 $5 million due to the rich product line exit.
Speaker Change: The balance of the decline was realized across the steel products business unit and precast concrete backlog increased $1 $6 million versus last year.
Speaker Change: Our next cover the key takeaways from our year to date results on slide 12.
Speaker Change: Organic sales increased one 5%, partially offset by a 3% decline from divestiture and exit activity.
Speaker Change: Organic sales growth was driven by the rail segment as a result of the strong growth achieved in the first quarter.
William Thalman: While infrastructure sales are down $11.1 million, the majority of the decline is due to divestiture and product line equity. Precast concrete sales are up 1% year over year with an improved margin trend. Gross profit improved $6.1 million, while gross profit margins of 22.2% improved 180 basis points. As a reminder, the 2023 gross profit was adversely impacted by the $3.9 million from the bridge grid deck exit. While 2024 gross profit includes a $0.8 million gain on a property sale completed in the second quarter. The balance of the improvement is due to business portfolio changes in line with the company's strategic transformation, coupled with overall favorable business Selling general and administrative costs increased $1.6 million year over year.
Speaker Change: While infrastructure sales are down $11 $1 million. The majority of the decline is due to the divestiture and product line exits.
Speaker Change: Pre cast concrete sales are up 1% year over year.
Speaker Change: With an improved margin trend.
Speaker Change: Gross profit improved $6 1 million, while gross profit margins of 22, 2% improved 180 basis points.
Speaker Change: As a reminder, the 2023 gross profit was adversely impacted by the $3 $9 million from the bridge grid exit.
Speaker Change: While 2024 gross profit includes a <unk> $8 million gain on a property sale completed in the second quarter.
Speaker Change: The balance of the improvement is due to business portfolio changes in line with the company's strategic transformation, coupled with overall favorable business mix.
Speaker Change: Selling general and administrative costs increased $1 $6 million year over year.
William Thalman: The increase is due primarily to $1.2 million in legal costs associated with a resolved legal matter. In addition, current year SG&A includes $1.1 million in other professional services expenses, including $0.8 million associated with the announced restructuring, as well as $0.8 million in employee-related restructuring charges. These increased expenses were partially offset by lower employment costs and lower bad debt provisions. The $3.5 million net gain realized on the Magnolia JV property sale completed earlier this year, as well as the legal costs and restructuring charges incurred, were excluded from the 2024 year-to-date adjusted EBITDA, which was $26.3 million, up $0.7 million on a year-to-date basis, with further growth expected in Q4.
Speaker Change: The increase was due primarily to a $1 $2 million in legal costs associated with a resolved legal matter.
Speaker Change: In addition, current year SG&A includes $1 1 million and other professional services expenses, including <unk> 8 million associated with the announced restructuring.
Speaker Change: As well as <unk> 8 million in employee related restructuring charges.
Speaker Change: These increased expenses were partially offset by lower employment costs and lower bad debt provisions.
Speaker Change: The $3 $5 million net gain realized on the Magnolia JV property sale completed earlier this year.
Speaker Change: As well as the legal costs and restructuring charges incurred.
Speaker Change: Were excluded from the 2024 year to date adjusted EBITDA.
Speaker Change: Which was $26 $3 million up <unk> $7 million on a year to date basis with further growth expected in Q4.
William Thalman: I'll now cover liquidity and leverage on slide 13. Net debt declined $17.7 million during the quarter to $65.4 million, largely in line with our expectations. Our normal seasonal working capital cycle should result in net debt continuing to decline through the balance of the year. We increased our free cash flow outlook for the year and our updated guidance, with second half free cash flow now expected to range between approximately $30 to $35 million. This outlook considers the funding of corporate initiatives, including the enterprise restructuring previously announced and the expected settlement of two defined benefit pension plans, one each in the U.S.
Speaker Change: I'll now cover our liquidity and leverage on slide 13.
Speaker Change: Net debt declined $17 $7 million during the quarter to $65 4 million largely in line with our expectations.
Speaker Change: Our normal seasonal working capital cycle should result in net debt continuing to decline through the balance of the year.
Speaker Change: We increased our free cash flow outlook for the year and our updated guidance with second half free cash flow now expected to range between approximately $30 million to $35 million.
Speaker Change: This outlook considers the funding of corporate initiatives, including the enterprise restructuring previously announced and the expected settlement of two defined benefit pension plans one each in the U S and the UK.
William Thalman: and the U.K. The total funding for the restructuring is expected to be approximately $1.4 million in 2024, with run rate savings totaling $4.5 million exiting 2024. The settlement of the two pension plans is expected to cost between $2 million and $2.5 million in funding and will eliminate the risk and burden of maintaining these two legacy programs. The Outlook also includes the final payment of the Union Pacific legal settlement with $4 million due on December 1st. The completion of this funding requirement, which has impacted free cash flow by $8 million a year over the last six years, will provide a significant boost to our financial flexibility in 2025 and beyond.
Speaker Change: The total funding for the restructuring is expected to be approximately $1 4 million in 2024 with run rate savings totaling $4 $5 million exiting 2024.
Speaker Change: The settlement of the two pension plans is expected to cost between $2 million and $2 5 million in funding and will eliminate the risk and burden of maintaining these two legacy programs.
Speaker Change: The outlook also includes the final payment of the Union Pacific legal settlement.
Speaker Change: With $4 million due on December one.
Speaker Change: The completion of this funding requirement, which has impacted free cash flow by $8 million a year over the last six years will provide a significant boost to our financial flexibility in 2025 and beyond.
William Thalman: As a result of the lower levels of debt and improved profitability, our gross leverage ratio improved 0.8 times to 1.9 times at the end of Q3. This level is also favorable to 2.0 times last year and in line with our longer term leverage goal. We expect the leverage goal will continue to improve through the end of 2024. We also expanded our stock repurchase program using $2.6 million to purchase approximately 127,000 shares or 1.2% of shares outstanding. Since the program's inception in February of 2023, we've repurchased about 331,000 shares, or approximately 3% of common stock outstanding, utilizing total proceeds of $6.6 million.
Speaker Change: As a result of the lower levels of debt and improved profitability, our gross leverage ratio improved <unk> eight times to one nine times at the end of Q3.
Speaker Change: This level is also favorable to two eight times last year and in line with our longer term leverage goals.
Speaker Change: We expect the leverage goal, we will continue to improve through the end of 2024.
Speaker Change: We also expanded our stock repurchase program using $2 $6 million to purchase approximately 127000 shares or one 2% of shares outstanding.
Speaker Change: Since the program's inception in February of 2023, we repurchased about 331000 shares or approximately 3% of common stock outstanding.
Speaker Change: Rising total proceeds of $6 6 million.
William Thalman: The current repurchase authorization expires in February of 2025, with $8.4 million remaining available. In summary, we continue to believe that 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: The current repurchase authorization expires in February of 2025 with $8 $4 million remaining available.
Speaker Change: In summary, we continue to believe that 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.
William Thalman: 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 initiatives in rail technologies and precast concrete. Our announced restructuring program should further enable investment in growth platforms given the expected cost savings over the coming quarters. We're comfortable with gross leverage around two times, and the prospects for improving profitability and cash generation should provide enhanced opportunities for capital allocation while maintaining this leverage level over time. Capital spending is expected to run at approximately 1.5% to 2% of sales over the long term, with spending levels slightly elevated in 2024 due to investments in our growth platform.
Speaker Change: Our 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 initiatives and rail technologies and precast concrete.
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 the prospects for improving profitability and cash generation should provide enhanced opportunities for capital allocation.
Speaker Change: Maintaining this leverage level over time.
Speaker Change: Capital spending is expected to run at approximately one 5% to 2% of sales over the long term with spending levels slightly elevated in 2024 due to investments in our growth platforms.
William Thalman: We continue to consider small, tuck-in acquisitions that extend our product portfolio within our growth platform. While we don't foresee any imminent transactions, we continue to develop the opportunity pipeline with an eye towards inorganic profitable growth in 2025 and beyond. Finally, we plan to continue the prudent execution of our stock buyback program to return excess capital to shareholders while maintaining a balanced view of leverage and growth.
Speaker Change: We continue to consider small tuck in acquisitions that extend our product portfolio within our growth platforms.
Speaker Change: While we don't foresee any imminent transactions, we continue to develop the opportunity pipeline with an eye towards or inorganic profitable growth in 2025 and beyond.
Speaker Change: Finally, we plan to continue the prudent execution of our stock buyback program to return excess capital to shareholders, while maintaining a balanced view of leverage and growth.
William Thalman: My closing comments, we refer to slides 15 and 16 covering orders, revenues, and backlog trends by business. The book to bill ratio over the trailing 12 months was 0.94 to 1, up slightly from last quarter, which reflects lower order rates in both segments, coupled with strong order book execution and improved lead time. Rail order rates have begun to recover with the trailing 12-month book-to-bill ratio at 0.99 to 1, including a 41.3% increase in friction management orders in Q3. Lower orders across the steel products businesses drove the lower infrastructure book-to-bill ratio. As mentioned earlier, precast concrete orders were up 13.2% in the third quarter.
Speaker Change: My closing comments will refer to slides 15, and 16 covering orders revenues and backlog trends by business.
Speaker Change: The book to Bill ratio over the trailing 12 months was <unk> 94 to one up slightly from last quarter, which reflects lower order rates in both segments, coupled with strong order book execution and improved lead times.
Speaker Change: Rail order rates have begun to recover with the trailing 12 month book to Bill ratio at <unk> 99 to one including a 41, 3% increase in friction management orders in Q3.
Speaker Change: Lower orders across the steel products business businesses drove the lower infrastructure book to Bill ratio as mentioned earlier precast concrete orders were up 13, 2% in the third quarter.
William Thalman: And lastly, on slide 16, consolidated backlog was down $34 million from the record high level seen last year, with both segments experiencing decline. The real segment backlog is down $5 million or 5.3% due to our UK business as we scale back initiatives in the UK market in line with our strategy. Infrastructure backlog is down $29.2 million, or 19.6%, with the entire decline due to steel products. Precast concrete backlog improved $1.6 million, or approximately $2.5 million. The $30.8 million decline in steel products backlog is due to the lower demand levels across the business unit, as well as $4.5 million from product line X.
Speaker Change: And lastly on slide 16, consolidated backlog was down $34 million from the record high levels seen last year with both segments experiencing declines.
Speaker Change: The rail segment backlog is down $5 million or five 3% due to our UK business as we scale back initiatives in the U K market in line with our strategy.
Speaker Change: Infrastructure backlog is down $29 2 million or 19, 6%, but the entire decline due to steel products.
Speaker Change: Cash concrete backlog improved $1 $6 million or approximately 2%.
Speaker Change: The $38 million decline in steel products backlog is due to the lower demand levels across the business unit as well as $4 5 million from product line exits.
William Thalman: Despite the lower backlog levels, we remain optimistic in the outlook for profitable growth with a focus on driving demand generation and our growth platforms of rail technologies and precast concrete.
Speaker Change: Despite the lower backlog levels, we remain optimistic in the outlook for profitable growth with a focus on driving demand generation and our growth platforms of rail technologies and pre cast concrete.
William Thalman: In summary, we had a strong third quarter result and we look forward to finishing 2024 with a similar performance. While our revised financial guidance implies slightly lower organic sales in the fourth quarter, the midpoint of our adjusted EBITDA guidance would be a 50% increase over last year's fourth quarter. Coupled with continued progress on cash generation, debt reduction, and improved economic returns, we are well positioned to wrap up the year with strong momentum.
Speaker Change: In summary, we had a strong third quarter result, and look we look forward to finishing 2024 with a similar performance.
Speaker Change: While our revised financial guidance implies slightly lower organic sales in the fourth quarter. The midpoint of our adjusted EBITDA guidance would be a 50% increase over last year's fourth quarter.
Speaker Change: Coupled with continued progress on cash generation debt reduction and improved economic returns, we are well positioned to wrap up the year with strong momentum.
William Thalman: Thanks for the time this morning.
Speaker Change: Thanks for the time this morning, I'll now hand, it back over to John for his closing remarks Scott.
John Kasel: I'll now hand it back over to John for his closing remarks.
John Kasel: Thanks, Bill. Please refer to slide 18 for an overview of our key business market drivers and their pinning hours. Phil mentioned that our trail and 12 month book to bill ratio improved slightly in the third quarter. The improvement was realized in the rail segment with improving demand in both rail products and total friction management. The recovery of market conditions for our UK business remains on track. Here in North America, we started to see some increased quoting and project activity in the rail market, which should translate to solid growth for our rail products, revenue, and future quarters.
Bill Thomas: Thanks, Bill please refer to slide 18 for an overview of our key business market drivers underpinning our outlook.
John Castle: Bill mentioned that our trailing 12 month book to Bill ratio improved slightly in the third quarter. The improvement was realized in the rail segment with improving demand in both oil products and total friction management.
John Castle: The recovery of market conditions for our UK business remains on track.
Bill Thomas: Here in North America, we started to see some increased quoting and project activity in the rail market, which.
Bill Thomas: Should translate to solid growth for our rail products revenue in future quarters.
John Kasel: Coating activity for total track monitoring solutions also continues on the positive trend. And I'm pleased to say that we're beginning to be awarded business with new product technologies in this space. With the increased focus on rail safety, operating efficiency and reliability, we expect this trend to continue. While demand levels in the rail segment are improving, infrastructure markets are somewhat choppy. The infrastructure book-to-bill ratio declined in the recent quarter due to the continuing weakness of steel products.
Bill Thomas: Quoting activity for total attract monitoring solutions also continues on a positive trend.
Bill Thomas: And I'm pleased to say that we are beginning to be awarded business with new product technologies in this space.
Bill Thomas: With the increased focus on rail safety operating efficiency and reliability. We expect this trend to continue into 2025 and beyond.
Bill Thomas: While demand levels in the real estate and our improving infrastructure markets are somewhat choppy.
Bill Thomas: Infrastructure book to Bill ratio declined in recent quarter.
Bill Thomas: Due to the continuing weakness of steel products.
John Kasel: Well, let me start by highlighting the positive developments of PRE-CAB. Business in this product group remains robust with demand in our CXT buildings bolstered by the funding from the Great American Outdoors Act is continuing at record level. In addition, we are in the process of commissioning a facility in Central Florida to produce EnviroCast This organic strategic action is to service the booming regional residential and light industrial commercial real estate markets in that area. Our licensed technology offers an attractive solution for builders who are faced with rising costs and construction delays due to lack of labor materials for traditional construction.
Bill Thomas: So let me start by highlighting the positive developments in pre cast concrete.
Bill Thomas: Business in this product group remains robust with demand in our <unk> buildings bolstered by the fundings from the Great American Outdoors Act is continuing and record levels and.
Bill Thomas: In addition.
Bill Thomas: We are in the process of commissioning a facility in central Florida to produce <unk> waltzes.
Bill Thomas: This organic strategic action is to service the booming regional residential and light industrial commercial real estate markets in that area.
Bill Thomas: Our licensed technology offers an attractive solution for builders, who are faced with rising costs and construction delays due to lack of labor and materials for traditional construction methods.
John Kasel: We believe this factory-built modular concrete wall system positioned in the weather-challenged area of Central Florida. will lead to substantial pre-cast growth for years to come. In contrast to precast concrete, business activity in steel products remains somewhat soft pretty much across the board, particularly for the bridge forms and gas pipeline coating We are, however, seeing solid quoting activity in these markets, indicating some level of pent-up demand, but project orders have not yet been released. We're also expecting that the completion of the election cycle here in the U.S. will create some certainty for our customers, allowing them to proceed with much-needed work in the bridge and pipeline efforts.
Bill Thomas: We believe this factory built modular concrete wall system positioned in the weather challenged area of Central Florida.
Bill Thomas: Will lead to substantial free cash growth for years to come.
Bill Thomas: In contrast to pre cast concrete business activity and steel products remains somewhat soft pretty much across the board, particularly for the British forms and gas pipeline coating services.
Bill Thomas: Wherever is seeing solid quoting activity in these markets, indicating some level of pent up demand for project orders have not yet been released.
Bill Thomas: We're also expecting that the completion of the election cycle here in the U S. We will create some certainty for our customers, allowing them to proceed with much needed work and the bridge and pipeline infrastructure.
John Kasel: In summary, overall prospects for long-term sustainable growth should remain strong in light of the infrastructure investment superset. We expect for years to come. Most importantly, demand levels in our growth platforms of real technologies and precast concrete remain robust, which should translate into expanding profitable growth and return.
Bill Thomas: In summary, overall prospects for long term sustainable growth should remain strong in light of the infrastructure investment Super cycle, we expect for years to come.
Bill Thomas: Most importantly demand levels in our growth platform is a real technologies in precast concrete remained robust, which should translate into expanding profitable growth and returns.
John Kasel: As you know, I like to revisit our investment thesis each quarter. The third quarter is an excellent example of why we believe L.B. Foster is an attractive investment as depicted on slide 19. So let me unpack. First, we've taken the strategic steps necessary to transform our business portfolio, and the results were clearly demonstrated with robust growth and profitability delivered in third quarter despite lower Second, the drivers for long-term organic growth are in place. While the third quarter total sales were down year over year due to the weakness of steel products and rail products, organic growth was realized in both growth platforms of rail technologies and precast concrete.
Bill Thomas: As you know I'd like to revisit our investment thesis each quarter. The third quarter is an excellent example of one.
Bill Thomas: While we believe there will be losses and attractive investment as depicted on slide 19.
Bill Thomas: So let me unpack this.
Bill Thomas: Firstly, we've taken the strategic steps necessary to transform our business portfolio and the results were clearly demonstrated with robust growth and profitability delivered in the third quarter, despite lower sales level.
Bill Thomas: The drivers for long term organic growth are in place.
Bill Thomas: While the third quarter total sales were down year over year due to the weakness of steel price of rail products organic growth was realized in both global growth platforms, our rail technologies and pre cast concrete.
John Kasel: The multiple-year infrastructure investment supercycle we expect for years to come should translate into steady growth for our returns platforms and accelerate growth for rail technologies and precast concrete. Third, our capital light business model, coupled with steady profitability. and the completion of our Union Pacific Settlement Payments should translate into increased free cash flow moving to 2025. Our third-quarter results highlight the cash-generating power of our... Fourth, we have a disciplined capital allocation approach with multiple drivers that have been deployed in creating value for our shareholders. As evidence of that, we expanded our stock repurchase program third quarter and will continue to deploy capital across our priorities.
Bill Thomas: The multiple year infrastructure investment Super cycle, we expect for years to come should translate into steady growth for our returns platforms and accelerate growth for rail technologies and pre cast concrete.
Bill Thomas: Third our capital light business model, coupled with steady profitability improvements and the completion of our Union Pacific settlement payments should translate into increased free cash flow moving into 2025 our.
Bill Thomas: Our third quarter results highlight the cash generating power of our business.
Bill Thomas: We have a disciplined capital allocation approach with multiple drivers that have been deployed and creating value for our shareholders as evidence of that we expanded our stock repurchase program third quarter, and we will continue to deploy capital across our priorities of course, this isn't a balanced prudent and strategic way.
John Kasel: Of course, this is in a balanced, prudent, and strategic way.
John Kasel: So in summary, we believe our strategy is sound and our execution along these four pillars should deliver improving results for 2024 and beyond. On slide 20, I'd like to close today's call by thanking our team for their commitment to our strategy and congratulate them on a strong third quarter. If you recall, Bill and I have been highlighting that we expect to deliver strong profitability growth and cash generation in the second half of 2025. As you can see, we delivered on both in the third quarter, and we are well positioned to finish 2024 in the same way.
Bill Thomas: So in summary, we believe our strategy is sound and our execution along these four pillars should deliver improving results through 2024 and beyond.
Speaker Change: On slide 20, I'd like to close today's call by thanking our team for their commitment to our strategy and congratulate them on a strong third quarter, if recall bill and I've been highlighting that we expected to deliver strong profitability growth and cash generation second half of 2024.
Bill Thomas: As you can see we delivered on both in the third quarter and we are well positioned to finish 2024 in the same way.
John Kasel: Thank you for your time and continuing interest in L.B. Foster.
Bill Thomas: Thank you for your time and continuing interest in L. B Foster I'll turn it back to the operator for the Q&A session.
Operator: I'll turn it back to the operator for the Q&A.
Operator: Thank you.
Operator: At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw a question, please press star one, one again. Please stand by while we create our Q&A roster.
Speaker Change: Thank you at this time, we will conduct the question and answer session Andrew.
Speaker Change: As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw question. Please press star one one again, please stand by while we create our Q&A roster.
Chris Sakai: Our first question comes from Chris Sakai with Singular Research. Go ahead, Chris. Hi, John and Bill. Good morning. Hi, Chris. So just I'm looking at the 2025 revenue goal targets.
Bill Thomas: Our first question comes from Christopher <unk> with singular Research go ahead, Chris.
Christopher <unk>: Hi, John and Bill Good morning, Hi, Chris.
Speaker Change: So just I'm looking at the 2025 revenue goal targets.
John Kasel: Can you help kind of shed some color on what, I guess, what we're expected to see, I guess, next year that will really help boost that revenue number to get to the target? Yeah, good question. Thanks, Chris. We're getting kind of a line of sight what's going on with the balance of the quarter and you know right now activity is strong. If you see whether our guidance shows us landing between 530 and 540 for the balance of the year on sales and then uplifting with revenue targets for 580 to 620 next year. So I'm sure that's where your question is.
Chris: Can you.
Speaker Change: Kind of shed some color on what I guess what.
Speaker Change: Expected to see I guess next year that really helped boost that revenue number to get to get to the target.
Chris: Good question Thanks, Chris.
Speaker Change: And we're getting kind of line of sight, what's going on with the balance of the quarter end right.
Speaker Change: Right now our activity is strong.
Speaker Change: ACC with our guidance shows us landing between $5 $30 40 for the balance of the year on sales and then uplifting with revenue targets.
Speaker Change: 80, 620 next year, so just where your questions going and Thats, where its happening is coming in our growth platforms and suddenly to sales we feel very good about our margins I think were about 22, 2% year to date.
John Kasel: And that's where it's happening, it's coming in our growth platform. We feel very good about our margins. I think we're about 22.2% year to date. a strong quarter at 23.8%. So we feel very, very good at what's going on in our margins and our portfolio.
Speaker Change: During the quarter at 23, 8%. So we feel very very good at what's going on in our margins.
John Kasel: So it's all about the organics. I mentioned what was happening right now in Florida, which is an extension of our recent acquisition that we made in Tennessee. We feel very good what's going on and continue to grow our concrete business. We've been talking in great depth about what's happening with total track monitoring and the friction management business, both those two are doing extremely, extremely well, and we have great opportunities, all organic line of sight that we're going to continue to build off each group's platform.
Speaker Change: Julio.
Speaker Change: So it's all about the organics.
Speaker Change: Sure.
Speaker Change: Right now in Florida.
Speaker Change: An extension of our recent acquisition that we made.
Speaker Change: In Tennessee.
Speaker Change: So we feel very good with going out and continue to grow our concrete business.
Speaker Change: The Bill talk at Great depths about what's happening with.
Speaker Change: Total track monitoring.
Speaker Change: Friction management business. Both those two are doing extremely extremely well and we have great opportunities all organic line of sight there continue to.
Speaker Change: To build out these growth platforms.
Speaker Change: Through the balance of this year and more importantly next year.
John Kasel: Okay, thanks. A gross margin of 23.8 percent this quarter. That was good.
Speaker Change: Okay. Thanks, and then.
Speaker Change: Gross margins of 23, 8% this quarter.
John Kasel: Was this quarter more of an anomaly quarter? Or how should we be looking at gross margins next quarter and into 2025? Well, you can see the number, if you look at 2025, it's between 22 and what, 23 percent. So, obviously, this is a higher run rate. So, Chris, this is our strategy. Our strategy is to continue to transform the company in technology innovation. And we're doing it. So it was a very good quarter. And as Bill and I both mentioned, we haven't seen numbers like this in 10 years. But that's what we expect. So we are going to continue to push the top line, but it's really about bottom line return by managing RSG&A and continuing to get these margins as it relates to bringing innovation to the marketplace, specifically in the rail and the pre-K.
Speaker Change: Good.
Speaker Change: Was this quarter more of an anomaly quarter or how should we be looking at gross margin next quarter and into 2025.
Speaker Change: You can see the number if you look at $2025 in 2022.
Speaker Change: And what 23%. So obviously this is a higher run rate, but Chris. This is our strategy. Our strategy is continuing to transform the company technology innovation company and we're doing it so yes.
Speaker Change: A very good quarter, and then as Bill and I. Both mentioned, we haven't seen numbers like this that 10 years, but that's what we expect in this business.
Speaker Change: So we are going to continue to push the top line, but it's really both bottom line return by managing our SG&A and continuing to get these margins as it relates to.
Speaker Change: Bringing innovation to the marketplace specifically in rail.
Speaker Change: Free cash markets.
Chris Sakai: Okay, great. Thanks for the answer. Thanks, Chris.
Speaker Change: Okay, great. Thanks for the answer.
Operator: Thank you, Chris, for your question.
Speaker Change: Thanks, Chris.
Speaker Change: Thank you Chris for your question.
John Bair: Our next question comes from John Blair with Ascend Wealth Advisors. Go ahead, John. Thank you. It's Bair. There's no L in there. No L's in a couple months. Anyways.
Speaker Change: Our next question comes from John Blair with ascend wealth Advisors go ahead John.
Speaker Change: Thank you to bear there is no Ellen there no Allison a couple months anyways.
John Kasel: Good morning, John and Bill. A couple of questions here for you. On your slide 18, you are showing commissioning a facility in Central Florida. I apologize if I missed a comment on this, but how long do you believe it will take to get that up and running and what kind of CapEx is required to build that facility? We've been working on this for a while. It's a brownfield installation, so that means we're partnering with a very large pre-caster, one of the largest pre-casters in Central Florida. We felt that was the best way to come to the market, enter the market with the infrastructure over there is related to making the product.
Speaker Change: Good morning, John and Bill.
Speaker Change: Couple of questions a couple of questions here for you on your slide 18 U.
Speaker Change: Our showing commissioning of facility in central Florida, and I apologize if I missed com.
Speaker Change: Comment on this but how.
Speaker Change: How long do you believe it will take to get that.
Speaker Change: Up and running and what kind of Capex is required to build that facility.
Speaker Change: We've been working on this for a while it's a brownfield.
Speaker Change: Installation so that means we're partnering with a very large precast or one of the largest free casters and central Florida. We felt that was the best way to to come to the market and to the market with the infrastructure over there is related to making the product.
John Kasel: And then, of course, we bring in the commercial side, the technical side, the engineering side. So it's a wonderful partnership that we forged. It's been now three years we started a relationship with that company, so we feel very, very good about it. The route has been broken. We are expecting to be making our first product by the end of the year, end of this year. So capital, based upon the way we set it up, we were targeting between $3.5 to $4 million. So again, if you go back to the investment thesis, we talk about being capital white.
Speaker Change: Course, we bring into the commercial side and the technical side the engineering side.
Speaker Change: So it's a wonderful partnership that we sports spin.
Speaker Change: Now three years, we started a relationship with the with that company. So we feel very very good about it.
Speaker Change: Throughout has been broken.
Speaker Change: We are we are expecting to be making our first product by the end of the year end of this year.
Speaker Change: So capital based upon the way we set it up.
Speaker Change: We were targeting at between three $5 million to $4 million in capital. So again, if you go back to the investment thesis, we talked about being capital light.
John Kasel: This is another great example where we really go in and we do it the right way. We spend enough money, but it's not a heavy capital call. It's about taking. products to the market, but doing it with channel partners that really know what they're doing. and more importantly, we're very excited about these opportunities in the Central Florida.
Speaker Change: This is another Great example, where we really go in and we do it the right way we spend enough money.
Speaker Change: It's not a heavy capital call.
Speaker Change: It's about taking out.
Speaker Change: Products to the market, but doing it with channel partners. They really know what they are doing.
Speaker Change: And more importantly, we're very excited about these opportunities in the central Florida market.
John Kasel: Okay, and then are your projections for 25 on far revenue build in a run rate for this kind of for this particular facility and that market? Yeah, so if you go back to what Chris Sakai's question was, because we got to, we got to increase the sales that's going year over year. So keep in mind, our strategy has been about managing our portfolio. So we've been really taking that top line down over the last couple of years, right? In 2020. That's behind us now. So our portfolio is in place and now we're going to continue to grow and much of that revenue is coming to all, in fact, all of us coming to organics.
Speaker Change: Okay, and then are your projections for 2005 on as far as revenue build in a run rate.
Speaker Change: For this kind of truth for this particular facility in that market.
Speaker Change: And if you go back to what Chris <unk> question was because we were going to increase the sales is growing year over year. So keep in mind, our strategy has been about managing our portfolio. So that we have.
Speaker Change: <unk> really taken that topline down over the last couple of years right from 2020.
Speaker Change: That's behind US now so our portfolio is in place and now we're going to continue to grow and much of that revenue is coming to all and thank all of those come with the organics and this is a great example of it.
John Kasel: And this is great. And so that $3 to $4 million of CapEx towards this project is basically behind you as well, right? Yeah, of course, we're spending a little bit. Okay. The major cost. Yeah, so adding the last $4 million of the Union Pacific deal, get that behind you, that's a pretty nice swing. Yeah, thanks for bringing that up. Yeah, that's putting both of those together. That's pretty significant.
Speaker Change: And so that $3 million to $4 million of Capex towards this project is basically behind you as well right.
Speaker Change: Yes of course, we are spending a little bit okay.
Speaker Change: Major caution thats behind US, yes, yes, so so adding the.
Speaker Change: Last $4 million of the.
Speaker Change: The Union Pacific deal get that behind you.
Speaker Change: Pretty nice swing, yes, thanks for being with us.
Speaker Change: Yes.
Speaker Change: Both of those together.
John Kasel: My other question for you, you mentioned about bolt-ons. Would targeted bolt-ons be focused on US operations as opposed to Europe or elsewhere? Yes. Today, about 95% of our sales is North American. We're not going to stray away from that. We feel very bullish of what's going on. We do believe there's investment supercycle. We do believe there's a lot of pent-up demand right now. And I think we're in a good place here in the US specifically to take advantage of that for three years.
Speaker Change: It's pretty pretty significant well my other question, Yes. My other question for you.
Speaker Change: You mentioned about bolt ons.
Speaker Change: Wood targeted bolt ons be focused on U S operations as opposed to Europe or.
Speaker Change: Elsewhere.
Speaker Change: Yes.
Speaker Change: So today, while 95% of our sales in North America.
Speaker Change: We don't we're not going to stray away from that we feel very bullish of what's going on we do believe theres investment Super cycle. We do believe there is a lot of pent up demand right now.
Speaker Change: We're in a good place here.
Speaker Change: In the U S specifically to take advantage of that for three years to come.
John Bair: All right. Very good. Thanks very much for taking the questions and hope to see you soon. Take care. Thank you, John.
Speaker Change: Alright, great.
Speaker Change: Very good thanks, very much for taking the questions.
John Castle: See you soon take care. Thank you John.
Speaker Change: Yes.
Speaker Change: Alright.
Operator: As a reminder, if you'd like to ask any more questions, please press star 1-1 on your telephone.
Speaker Change: As a reminder, if you'd like to ask any more questions. Please press star one on your telephone.
Operator: This concludes our question and answer session.
John Kasel: I would now like to turn it back over to John Kasel for closing remarks. Go ahead, John. I really appreciate it, Mark. And more importantly, I want to appreciate the team that's sitting in the room with me today. We've got a group that has done just a tremendous amount of heavy lifting here. And the work that we put out to the market, I think, second to none, as far as the information, the transparency, the level of detail, and this group here has worked night and day getting ourselves ready for today's call, as well as all the things that we need to get done, and doing board meetings as well.
Speaker Change: This concludes our question and answer session I would now like to turn it back over to John Castle for closing remarks go ahead John.
Speaker Change: I really appreciate it mark and more poorly I want I. Appreciate the team is sitting in the room with me today.
Speaker Change: We've got a group that has done just a tremendous amount of heavy lifting here.
Speaker Change: And the work that we've put out to the market I think the second such.
Speaker Change: As far as information that transparency at the level of detail and this group periods worked night and day.
Speaker Change: Getting ourselves ready for today's call as well as all of the things that we need to get done and do at board meetings as well so.
John Kasel: I'd like to start with Bill Thalman, who heads up the group. I look at Bill as a partner that, you know, we run the business with. His guidance and leadership has been, I'm sure, tremendous, and his input. that he brings to the party second to none.
Speaker Change: I'd like to start with Tom <unk>, who heads up the group.
Speaker Change: Look at Bill as a part of it.
Speaker Change: We run the business with them.
Speaker Change: Yes.
Speaker Change: Guidance and leadership has been uninsured are tremendous.
Speaker Change: Input.
Speaker Change: That is he brings to the party is second to none.
John Kasel: Recently, Sean Riley brought Sean over and has done a tremendous job of bringing a team together that is nothing short of a world-class team. which starts with Joe Kosuke. Joe has done a tremendous job. Again, these are the people behind the scenes really making things happen.
Speaker Change: Recent come.
Speaker Change: Coming in Sean Reilly, who brought build broad genre over instead of just a tremendous job of bringing the team together with shorter work World class team.
Speaker Change: So let's start with <unk>.
Speaker Change: Joe has done a tremendous job again these are the people behind the scene jewelry, making things happen.
John Kasel: I mentioned two of them right off the start. who's just moved up into this nice role with the promotion, and then Stephanie Schmid who's been really carrying the load. And now again, recently promoted to a larger role within the company.
Speaker Change: I mentioned two of them right off the start.
Speaker Change: Sure Felicia.
Speaker Change: <unk> has just moved up consists this nice roll promotion and Stephanie Smith has been really carrying the load.
Speaker Change: And now again recently promoted to a larger growth within the company. So I.
John Kasel: So I'd really like to thank this team. for what they've done, and more importantly, really putting us in a favorable position of how we go up the market. To me, it's all about restoring credibility. and that's first and foremost within the company, and the second is with the shareholders. And I think the package information and our transparency and the information of how we do it more. How we present ourselves is second to none, so I'd like to again thank all that they've done. and we'll continue.
Speaker Change: I'd like to thank this team.
Speaker Change: What they've done and more poorly really putting et cetera.
Speaker Change: <unk> positioned our go to market to me, it's all about restoring credibility.
Speaker Change: And Thats first and foremost within the company and the second.
Speaker Change: As with the shareholders and I think the package information that our transparency and information of our do it more importantly.
Speaker Change: How we present ourselves.
Speaker Change: So I'd like again, thank this team.
Speaker Change: All that they've done.
John Kasel: So with that, thank you for joining us for the third quarter. And Bill and I and his team look very much forward to finishing up a very strong fourth quarter as we've talked about, and more importantly, really getting into 2025 and beginning to put this company together. Thanks for your interest in L.B. Foster and have a great holiday season. We look forward to talking to you. in March of next year.
Speaker Change: We will continue to do.
Speaker Change: So with that thank you for joining us for the third quarter.
Speaker Change: And bill and I and the team there.
Speaker Change: Very much forward to.
Speaker Change: Finishing up with very strong strong fourth quarters, we've talked about and more importantly, really good exit 2025.
Speaker Change: And to put this company on the map. Thank you for your interest in Boston.
Speaker Change: Have a great holiday season, and look forward to talking to you.
Speaker Change: In March of next year take care.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Thanks for watching!
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].