L.B. Foster (FSTR) 9 May 232023 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to L.B. Foster's First Quarter 2023 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. advised conference be being Please Instructions] that is today's recorded. [Operator

ahead. the now Investor to go like would conference Relations to Please Listwak, I Stephanie turn over today, your Manager. speaker

welcome Thank to XXXX you, call. is Relations company's name Listwak, My morning, Manager. operator. everyone, earnings L.B. first quarter Good Foster's of the Investor Stephanie and

Our Bill results, presenting be quarter operating Thalman, market this CEO, and our Kasel; development our and John and will President Chief Officer, business outlook Financial first morning.

John with quarter company call perspective the his then perspective the first start We'll development quarter outlook provide company's the providing closing comments. John performance. review and on his on market will will Bill in financial company's first results.

our earnings and were then website morning on page disclosures open this release our session posted lbfoster.com. will Relations can our questions. Investor the on with be Today's at accessed and for financial We along up slide presentation,

slides earnings morning comments the presentation. follow in the Our will this

current are new opinions Some our except any only statements our obligation of this as making the business are as reflect these publicly markets to securities presentation, in we represent statements of forward-looking or by undertake the date release view These statements to no of we and laws. revisions results of of today. forward-looking and light our revise required and information,

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

to encourage you today's We as accompanying our also metrics. presentation earnings our will within you and these read and earnings reconciliation consider non-GAAP and metrics provided release financial disclosures tables within discuss carefully

to turn me let So with that, over call John. the

everyone. hello, and Stephanie, Thanks,

earnings joining us for today Thanks quarter our first call. for

second positive off continue Slide X, to in established As strong and we're to you can XXXX, of beginning we XXXX. momentum start the half we a on see the

million year's clearly our with I'm XXX more in EBITDA say to QX pleased double at last that in the sales, X.X% in EBITDA adjusted operating coming our XX.X% XX.X% QX. strategic at points gross in was that seeing XX.X%. results are results growth organic were actions expanded and benefits or basis of with $X.X margins of growth Sales noting to transformation QX,

debt actions, basis. of These further at facility The on us Chemtech flow ratio delever Crest cash $XX.X $X.X the gross transformation operating in levels quarter. our X.Xx. leverage with continued with proceeds free quarter modifications sale of net million end to provided proceeds, and the of coupled we for at with our near Chemtech in the million $X.X reduction allowed divestiture of the to the a Speaking improving in million portfolio despite stand-alone breakeven

our and the million Order the our quarter reduce rates both book-to-bill adjusted range the we by of our of sale million continue did QX end. ends by to of despite guidance sale results grow of Chemtech, X.XX:X maintained ratio and $XX our but range, of of expanded Chemtech the to backlog strong consideration year-over-year at at EBITDA revenue million. XXXX the $XX In more $XX X.X% importantly,

allocation capital million trends Airport continue a our with adding moving to executing XXXX. continuing valuable our we're repurchase and progress February, in playbook, finally, $XX through expect In tool. program, And a authorized operating favorable we summary, the share pleased strategic

to I'll come Next, the some you, the QX, Over detailed Bill financials will for of closing Bill cover and remarks. end back at

good Thanks, John, and morning, everyone.

measures the The sale X. Stephanie more Note covering on provide quarter the the consolidated of referenced. non-GAAP results, the our on highlights in detailed schedules Slide I'll begin the Chemtech financial our including that completed QX. my at end was first appendix comments of information

results. included So results are their QX operating in our

exclude portfolio, year. quarter XXXX in business the the VanHooseCo Scratch, and last include the components also third results divested track QX that but additions to was

volumes, million in coupled or sales realization quarter $XXX.X business and were increased gross Higher mix $XX.X XX.X%. sales up with profit over improvements year. million, First XX.X% price last

profit of together volumes our achieved achievements, the As a gross We're year-over-year trends portfolio and continue actions, these XXX benefits of quarters. in margin with with favorable to and strong basis accretive expanded very expect improve our points as margins improvement pleased seasonally these the third result to XX.X%. second

The the transaction $X.X on loss loss million in in resulted Chemtech $X net million divestiture a QX.

and more improved to doubling items orders, later cash in $X.X some in backlog the year-over-year opening and I'll consolidated on EBITDA presentation. to adjusted with However, additional million more color John his than covered $X.X million, X.X%. EBITDA remarks, performance these the provide margin

within QX chart and with on impacts organic portfolio sales Slide our X sales highlights EBITDA the the legacy sales contributing provides QX the our highlighting and growth of year-over-year, the in million organic left $XX.X realized growth. XX.X% bridge business increase, the our benefits The a of transformation. strong

impact of million net $X.X revenue, increased The X.X%. M&A or

The of his commercial organic moving As expect achieved chart right progress the to the and revenue we profitability leverage our and $X.X XX.X% with rates John remains in highlighted year-over-year, in robust, EBITDA in the in XXXX. quarter. million legacy remain favorable, opening remarks, on improving activity highlights representing business growth through inorganic improving

growth also was activities low to year-over-year, seasonally quarter. M&A in volumes contributed tempered due the favorably but somewhat the to EBITDA

we this expect QX of to year. more the coming realized pronounced quarters in be QX We similar in last what impact to and

gross we've in typically are in softer seasonality provides our QX in X margins. perspective margins a on our important in progress the to made profitability, Gross the due an normal business. specifically Slide

QX we've market year's achieved is the result quarter, the much However, energy the when was more this in robust. since XX.X% first XXXX seen result highest

legacy recovery efforts This favorable our of the the trend benefits and highlights actions portfolio business. margin in

growth revenue business to our take to We XXXX in improved continue improvements through structural hold. expect as moving the continue gross margins strong and

I'll Rail our three segment performance, with on XX. segment slides, the Over Slide the cover starting next

up $XX.X partially offset First quarter of slightly were by with M&A. segment rail revenues organic X.X% growth, the million, at impact year-over-year

the sales impact on XX.X% friction in XXX Rail and products points U.K. of partially realization volumes were higher Technology management and divestiture. portfolio. the rail Services across expanded by basis in track and of majority global in friction business management Solutions components the improved price growth to Strong the the offset & and margins softness

XX.X% to were and and respectively, distribution. X.X%, order components the backlog down New orders in timing rail primarily due track divestiture in

As $X.X Precast million reflected segment year-over-year. increased XX, XX.X% or on Slide revenue Concrete

were growth X.X% the margins of impact million, VanHusco of with realization XX.X%. remain and and $X.X contributed the basis up Revenues and accretive to VanHooseCo improved up representing and to Gross backlog acquisition due operating $X.X legacy $XX.X contributing precast the XXX were million organically business. points million, VanHooseCo and respectively. XX.X% price acquisition, in both performance in strong robust segment our Orders the

increase in basis Coatings, measurement and margins, by partially but and gross up results Improved XX offset were by by higher largely and raw costs material XXX in partially higher Fabricated & weaker Products volumes which Steel to driven Slide by lower volumes were for bridge. XX% on business. coatings Protective driven fabricated Measurement The segment revenues, in offset the a sales reflects XX.X% Bridge points

Orders in improved despite and coatings. in order backlog were due intake at primarily and XX.X%, up fabricated divestiture the protective to respectively, Chemtech bridge XX.X% quarter end

to liquidity metrics Slide XX. cash Turning and on our

the We make continue to and net during debt progress gross quarter. reducing our leverage

reduced cash million in end $XX.X from at Chemtech million quarter divestiture. and debt free flow million We $XX.X proceeds to $X.X in with the $X.X net million

ratio X.Xx the end leverage X.X turn gross at for a improvement of of an facility quarter. quarter, our the the during of improved also revolving We credit to the

federal February, approximately $XXX profitability tax cash refunds carryforwards that operating in to million our expected and we reduce future as income we in received I should $X taxes to approximately improve. have million that in loss net are highlight continues federal

our allocation aligned well priorities remain with capital Our strategy. unchanged and are

in capital $XX X.X million last nearly aligned we've longer no businesses by strategy. raised years, the our Over underperforming three divesting with

businesses: acquire within and video to our platforms. redeployed fit that Those proceeds intelligent VanHooseCo, were three scratch growth well

active any acquisitions the inorganic opportunities, future. investment foreseeable While do we continue not to be anticipate for evaluating significant we

run to slightly while opportunities deleveraging than spending our about Precast investments. in spending the organic is cautiously due Capital growth on the Rail continue expected Technologies focus activities X% of sales, We to organic typical in Concrete. we higher level see and investing growth to

be $X XXXX each warranty $XX payments, after million in XXXX. Union fully million Our obligation Pacific will in fulfilled of and settlement

million with reducing shareholders net and will last improvement authorized and priority. remains repurchase earlier year. acquisitions progress further top through a cautiously the we're made lastly, $XX leverage the board And return to our completed our cash this evaluate debt summary, year In program the opportunities following pleased to we've stock we by

by My refer XX million. to will The continuing the closing by book-to-bill backlog X.XX:X, XX reflects on ratio was outpacing the months sales XX the comments particularly the $XX business. trailing quarter. ratios over Slides Slide seen and with business, first and across covering The book-to-bill orders, approximately in we've orders revenues XX, strength

robustness the the and all backlog the over the lastly, last in of ratio the quarter However, at majority the net on increasing particularly X.XX:X was benefits months. first M&A the And segments the with business strong consolidated consolidated activity commercial completed our actions XX their the of XX order Slide reflects books book-to-bill quarter. across in of

The Precast up the last Coatings was segment impact year in the XX% XX% the is our last in VanHooseCo Backlog and year strength despite backlog in & improved acquisition business. continuing Measurement business. to Steel increase, Chemtech the demand Protective up legacy attributed the Products the over versus divestiture, of highlighting

our down track grew was from segment to playbook, and strategic results start In our to And and divestiture we the business, forward balance backlog the XXXX the confidence versus order our the quarter quarter. primarily the timing X% beyond. of progress Rail X% while reporting in rail and year, last reinforce through the backlog of due components look summary, first continuing of

closing time, Thank back I'll John it his for John? you for your over now hand and to remarks.

Bill. Thanks,

with the start see how Please my quarters. end all closing our turn key a Slide of in developing remarks markets to We'll brief XX. overview coming we

in our increase quarters the the funding also previously major seeing quoting and should seen the than for several rates coming approved order mentioned over reflect projects during years before. and past are update uptake infrastructure projects As We're in an from significant benefited greater has government past the business in we've demand. this the funding levels activities ever in calls,

and offerings in impacts the technology-based solutions is currently of and dampening rail an inflationary United with markets. U.K. we products, rail customers pronounced demand safety taking area we're on improving support monitoring with capture heightened States opportunity for with opportunity Technologies our for with our represents steps in this key initiatives demand The the Rail our to And advanced our focus One offering. of softness services. that, are in safety

in sales the Our U.K.

down year-over-year quarter. were in XX% the first

somewhat market the of we significant in divestiture benefit further rates continue have are we in to quoting volatile However, quarters. the Chemtech The should coming work energy to the exposure order that quarter, U.S. and a the amount our improved in reduce

the benefiting is traditional from pleased industrial which Coatings was many renewed resilient the that we our in map, modest adjacent move applications. business, prevalent in end in markets due recovery and programs. remain with of part cautiously infrastructure key to see markets, we're government-funded road strategic will investment in for optimistic infrastructure market the recessionary The and of remain our while Protective pipeline And conditions are our to support line

In closing, quotation order on XX, will the Slide robust remain majority across of our business. rates and

multiple platforms announced and programs. Technologies continue Rail benefit year Precast Our previously infrastructure from investment to concrete growth

As our in EBITDA with by underpinning a expansion continuing confident in of to Foster, growth margin forward in of of employees $XXX approximately aspirational approximately behalf look coming of million the reporting and XXXX. result, our we And on organic on we million revenue our and that, goals all potential progress the L.B. remain quarters. $XX

your back to L.B for moderator Foster, and I'll now turn Thanks Q&A it interest the the again in session. for

the our for line Riley from first One comes [Operator of moment Alex B. Securities. Rygiel question. Instructions] with Question

now is line Your open.

morning, quarter. couple of A you. quick A of quick Thank couple questions gentlemen. here. nice Very Good questions.

of new of in maintained of that gross a this was at precast be in that least strong. segment very XXXX? kind First, level can low sort range, XX% sort Is the margin through

Yes. We so. think

planning In it. are dollars dollars. on exceeding now tell will that the you fact, we're right inflationary pricing I

in a working done out customers. of this, we've So with our getting front good job

be So as additional that well that grow on we margins. to facilities we anticipate coming as our those to able leverage should continue to

and next third Alex. to especially quarter end quarter, Now

margins with some of kind bigger then need ahead are long-term X%? of XXXX vision, to on do you're relative target that plan? you order to the And like or EBITDA And to in what this things of helpful. this Super do right catalysts plan that achieve of your you feel

past. moves a We're going out I the us. we the we're focus XX.X core of growth think were very and made signal organic the to and next important couple on done in here. really really is competencies the path in our XX.X% that portfolio his clear Well, These on focus have Bill on quarter of first coming in in highlighted we to the leveraging right now well years pretty that remarks, what with

short been aspirational of everything we feel like all inflation, So yes, on couple we Considering I back we would impact labor the to in feel place that's in very to good. are goals a COVID, we we workforce, going to related very related that the guess years absolutely ago, the answer good is, where be. put

Very you. nice. Nice Thank quarter.

Alex. Thanks,

One moment our you. question Thank please. for next

Our question line the from Singular Sakai next comes Research. Chris of with

now Your open. line is

morning, in the section steel guess, question, to products the year? on thinking gross segment should quarter. good and the be had how improved the profit like next it's about in a I hi, in John or this Yes. it for I quarter Bill. we and well Wanted gross measurement, looks significantly see as the just profit

pleased question have your right, and up as business, very to of our a because related a of first Chris, what's been facility joining of well going that to we to for the we coatings that segment, make pipeline return Birmingham, Willis as there's a work which couple somewhat industry. in appreciate nice today, that the modest that we're has all, Well, thanks with as on uplift and levels respect pieces us and

the Chris. though, And pleased seeing grid are that products. on with of a product. on part we specifically of that of mentioned going and of We well, build course, By We headwinds, what's as bridge today, large, are really was segment. that with some decking we the Chemtech that segment one some products

Chemtech. see with divestiture is gross profit improvement the So in of what you're to going continuing

that over feel about heading a very two segment to we good going years. next poorly it's X.X year-over-year to the where more on be years basis, So

Okay. Thanks for that.

Now far shed concerned, more Can any are for some there? you as as are divestitures there plans light more?

Yes.

But playbook you the quarter, portfolio. a to have I we our everything we things strategic and the we have aspirational going every get that. mention when just we'd that. is of part this drive we think of in not transformation XXXX in that comment in together that expectations on beyond, It or want our But we put is we're to we and that done. appreciate not big company goals, to know like and part do asked was you

borrower to We've about. the lot lot just very is returns, the or at if So see here Alex line met businesses. short time. done period was both a coming, work over not and of going a don't we've growth always we look top of back what those a we in talking But done

what we're organic some have So that our here going sit and markets the we of on to creating back and and we have kind in work that we a little scale bit, really opportunities digest really serve. leverage

rest And declined. Okay. it's year? How question gross leverage we have you should of the ratio? me. this target for Do Great. I know for the a see last

to over that flip me Let Bill.

think the weigh I also to of that on we're he like February would that because at stock in program. with buyback looking

well you got as comments buyback that? $XX as program on So balancing the revenue. stock our some some between of things we're the million Bill,

activity typically with quarter, quarter, favorable strong quarter. the operating we the in were achieved a got from working would occurs to AR. sales. QX, ramp quarter great of the had We we investment on see from proceeds obviously a revenue really both We flow cash morning, had Good cash pleased Chris, generation yes, that capital free was because Chemtech the we Yes. we that a but the in collections QX

us us the to ratio. gross So about the X.X pay that helped facility leverage on to down got turns

million level. we We We longer-term comfortable quarter, with to EBITDA expectation in to a is reversal capital that comfortable a around a and would investment in of Xx maybe feel quarter working that the we be that growing the the revenue second of stated support $X.X of strong little bit to goal -- needed expect right of leverage because In with an we've just would stable see that X. QX. QX

two of then as closer down that end heading and see progresses, the see the the year. able back year be we'll progress to to But should turn, we by

perspective in then have our once we goals. get So have, deployment at the we with capital that there, that line kind other our short-term we'll that strategy. of And opportunities was look we

Okay. Great. for the Thanks answers.

Thank it, Chris. you. Appreciate

[Operator Thank next our next for question. you. moment moment One Instructions] One our for question.

Kearney from line Brett Our Gabelli of the ETFs next question Trust. with comes

Your line is now open.

taking you want guys. with John, for question. Good comments LB pick Foster's Thanks the made some monitoring in one morning. I help my prepared up Hi, the offerings condition solutions. last on remarks technology rail to of your with that of

seeing from know I this rollouts, need. you've at out customers some share derailments have can what you in coming to but heard you're you seen. the we've terms industry this product of address how of solutions anticipate high-profile just in days of it's anything latest marketplace pretty your of receptivity Just in some to the these early the or of some train point critical

Yes.

It's technology our importantly, mind So for doing our make technology want just understand we top a more really appreciate and sure can let's thanks, our get to of the the we everything now. is. to and for mind that we're take maybe question. company and what back industry top And right step of

So all, we got first a will load wild, of which detector. impact

which hunting looking X at released loads. market we of at new and And at rails, really technologies or impacts, new looking in the just what's revision the going Mark moving understanding from significant cars and a over Mark has to back balanced that capabilities are forth X, looking to are

have measuring So significant And been installed track the America. the used over XX relationship train on place across a device between it's for what's large going in the and and North has over a for the and we this two. years, base that's device

managing play that safety contact the the significant as relationship a have between between and wheel on far patch to other That's The steel steel. that in piece the rail. we as

track or you into track. assets keep sure is go environmental point that that the well the making also making or of the sure you tangent and it are view a go operating view, one, to of but performing to from able as fuel and on from an efficiency down the and going curve train well point of life So

obviously, a answering significant of world. we been Congress that the our the can. offering. customers. thing at So that's selling is we also with we've across least have With this, wherever that, middle in And questions and We're using working

customers we're at looking they're being installed, used. frame. of where And course, time then our they're these they're the devices how with same working And at

it will be I you I out. coming early there regulations mentioned. do So is on, think as think

I large, are focusing think as the well the bring to safety forefront what railroads by freight well. as to do and transit could both history of as that on

I mentioned, So I you lot but there's right and business interest just have mind, to in company of and our a solutions materials our the that applications services and in don't I will time now that. line tell and the related a

quarters So on give more and that I talk how guess in some probably we'll that's coming you the going. about updates

still very curious quarter, the it you're the with there? of activity I then the momentum aside and what's helpful. what Outdoors Excellent. you from most seeing American or from even of just That's very VanHooseCo, orders or the great sales And kind just concrete precast Is residual in noticed legacy lines that? driving have product just strong the products kind IIIA the business, robust

of have a Yes. they all, didn't last great year year. Well, first

happen. get federal of because had So backlog we the local energized and a out and call governments. do was that some primarily team things let's the way constrained work is. got And large and We backlog of make to it the that and state with that it just

what pricing really into able new inflation to as as mentioned were exceeding get after far we arrangements So dollars I get earlier some dollars.

operations struggling past fantastic to did fantastic did components that our supply a in bringing side. job legacy really group the of really, a Our and job the get on the we're chain

all and I We bringing really or think and everybody the is skill heading. they're got do technologies, rail to growth new right good brought in down of of where and be group guys reality we your honestly, new VanHooseCo part. precast very they're two fired that the strides facilities And where new about platforms now. And listen, said, we more to hitting up management, feel you acquisition the at organization on in need sets, employing is going have

So clear leadership team we've myself, any taking advantage full to is made it that? would opportunity And them color the to they're do really, more to Bill here it. I Bill, to add you up. really say step the want and

Yes. No.

backlog had we bit highlight and Just John last without was to constrained mentioned operating had environments a material raw year, some escalating the challenging costs.

about product better engineering we talked And get through trouble the to we If we're able a nice the sign drawings XX shape, to get order to lined you facility. work recall, on production be manufacturing had off got up much to and that we fact months later, in getting book.

have as we're a in in And to constraint weather little performance a bit for QX the growth revenue we wasn't getting but well. and did stronger and business, in a looking of QX, QX coming it

continued momentum. the on Congratulations

Well, got appreciate at that. we to We've that it. we built internally. word, too, because Thanks it but for look we how go, a that's definitely using ways

further questions conference back no Chief this time. the for John [Operator I'd to Kasel, Officer, Mr. closing Executive to remarks. like hand Instructions] Showing at

striving Thanks, Noman. safety the world-class We end today. Foster. really everybody are meeting on appreciate I'd facilities I that internal like to best a for joining comment just be to L.B Thanks to the have. really with we and us it.

how really first to really quarter are things, I'm what one of entire core value company. injury safety year. we do had pleased that our represents in announce the we it's of our And And the and only we

and Now the the many, our very employees safety focus, more excitement pleased all employees the company. the one of but and and attention too the importantly, injury is I'm with in energy to

the with it our to ties kind done of line And well So performance. group. really in

follows, there, profitability in and is comes productivity such. the the safety the When quality

to their and in something XXXX importantly where going is we're from up in play. about we've be reaching going grow past, beyond. and the then than where be We We've continue going So more up goals to been. very excited to here that strategies aspirational that shored our we're really the stepping team feel really we are learned feel

Foster. I'll again your interest for we'll L.B. in and close thanks it back to Noman, meeting. So turn the And

Thank conference participation. for today's concludes your This you. call. you Thank

have You a day. disconnect. may Everyone, wonderful now