FSTR - Earnings call 3 2023 | L.B. Foster Company

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Operator

Good day, and welcome to L.B. Foster's Third Quarter of 2023 Earnings Call. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this call is being recorded. I would now like to turn the call over to Stephanie Schmidt, the company's Investor Relations Manager.

begin. may You

Stephanie Schmidt

Good Third operator. is and to welcome Schmidt, Thank of morning, XXXX Foster's Manager. Relations Quarter company's name Earnings L.B. the you, Investor everyone, Call. Stephanie My

be and and President Financial Thalman, quarter business will outlook CEO, results, Castle; will provide development We'll presenting perspective Our call the our this with on closing third financial company's our then John morning. John Officer, Bill Chief Bill market review and operating on will start performance. quarter his the his and providing results. developments quarter John perspective market in company the third company's third outlook comments.

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

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

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

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

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

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

John Kasel

quarter our joining for hello, earnings Thanks, us everyone. Thanks Stephanie, call. for third today and

growth profitability momentum business of strategic our continued driven materials, third X the gain Slide As you profile on can of the to and transformation, quarter. by improved during our see presentation

exit the were commercial product Steel we associated which Bridge within projects being $X.X the exit the in down included an segment. as the You'll deck & line. which the line, included quarter expected Products line announced costs completed with certain of Grid the of product our is update and product we Measurement previously recall that The wind million, value

points the versus report generated achieved highest last I of cash of facility for administrative items, from addition, associated customer net pleased the $XX.X for year, highlighting sales for of third cash million, recorded The with used operations business. debt to since bad third on improving up these profile quarter Gross that the the XXXX. debt significant were representing of expand adjusted protection. filed made XX.X%, cash to level basis, the in $XXX,XXX was margins particularly gross by EBITDA of reduced In year-over-year. am strong was million, progress reported basis the million. in the revolving reduce generation which improving with we year-to-date gross margins Adjusting was U.K. points basis growth the continue a margins a XX.X% up XX.X% XX who nonroutine quarter, On we XXX with flow $XX.X our with adjusted being we flow and in credit a have borrowings profitability adjusted year-over-year. to organic $XX.X provision quarter our expense

X.Xx quarter our and we ratio a lower at leverage result in borrowings, down our credit is soft. reported were gross end quarter reported last finished we from a of the somewhat down After third significantly for a the third order quarter second from This quarter. intake As strong order the the of at X.Xx for Xx. with quarter, rates the facility year's last more we very in

$XXX that important Backlog ratio approximately continuing was divestiture X.X:X. the million X, year. the decline book-to-bill completed trailing activities year-over-year a we at $XX.X to However, I book with totaled orders entirely note strategic expansion. to the indicating X.XX: order and quarter approximately exit ratio due book-to-bill Third past with the at it's $XXX.X over million XX-month million remains standing healthy

So but somewhat with current cautious U.K., are that, prospects for more business in the in conditions for domestic outlook the our markets, region. we end confident in growth our and given key in the that the

pleased As year finish of have we for progress beyond. further look and metrics. to our progress maintained and a a for while and adjusted XXXX, guidance and I'm we the narrowing in for result, XXXX far thus made continued to strong midpoint sales the EBITDA XXXX both in range the the forward very with

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

William Thalman

my John. Thanks, on of begin our Slide X. consolidated highlights the covering quarter Good comments morning, everyone. I'll third

the provide schedules results, in appendix our detailed referenced measures non-GAAP As always, including opening. more financial her on information in the Stephanie

his there John As year. remarks, our in results mentioned adjusted items quarter in a out as couple of called that opening compared are to last the we for

the was exit quarter. in reduction sales change value approximately certain the $X.X activities, profitability in approximately in resulted impact product total with projects margins deck line the $X cash in in a million with million addition the of in a product the in other gross and $X.X resulting During noncash reduction line. the associated of million exit $X.X million quarter. announced in This commercial adjustment expenses third Bridge to on quarter, expected the associated in and of we A

administrative recorded from quarter. $XXX,XXX the U.K. we due customer the provision for filed In during a for a potentially addition, protection amount who in a uncollectible

with related million, of acquisition, multiyear includes long-term the which the ties $XXX.X were inorganic a the profit XX.X%. businesses organic in increase third partially increased XX GAAP components, of sales price the XX Offsetting nonroutine last third periods adjusted during gross and quarter the $XX.X coupled in from were quarter a full months. basis year. to VanHusco of was Chemtech U.K. segments the profit profit over a by XX As million last divestitures. basis portfolio million, increase up divested reported our the in revenue for on items to in $XX.X XXX Noting track commercial an the gross year-over-year quarter. or points for gross the from XX.X% Adjusting realization All completed increased by for increases to quarter both XX.X% a results coupled above and that profit current margins High million mix points from was gross XX.X% project with in had a of in year. impact increasing higher $X margins last offset included XX.X% then XX.X%, August net decline was net increase the impact sales quarter sales for and of basis, moves, adverse impact sales On Crossrail profit quarter. The gross this sales organic and adjusted the reminder, a last and X.X% acquisitions over reported volumes, the X.X% business sales resulted of contracts year's settlement certain items improvements with

U.K. bridge into As $XXX,XXX in for at continued profit exit favorable a up remain expected, and in We're with to continued points XX.X%, XXX trend consistently XXXX. XXXX, income adjusted in the year-over-year. bad QX. we $XXX,XXX debt deck $X.X coming and moving QX has performance grid in reduced throughout trends provision above optimistic in and happy basis year-to-date margins The million gross impact adjusted net XX% see favorable XXXX, margin to

growth the in XX.X% showing improving highlights basis This revenue to million, of to adjusted decreased of the additional or sales reported backlog the transformation. and EBITDA third The $XX.X $X.X bridges the and million orders, quarters XX growth. net with adjusted and EBITDA business million benefits quarter improved adjusted adjusted $XX.X net of which with our improvement over the presentation. year-over-year points in is highlight adjusted John on the quarter second the The chart covered color X%, X.X% $X.X where is the on performance EBITDA margins However, left Slide later several profitability consecutive above performance to EBITDA X within impact we attributable consolidated X.X%. the on provide of remarks, items margin initiatives to adjusted some M&A representing our We've in and organic portfolio increase business realized our organic his growth. last sales these opening million portfolio adjusted I'll been the legacy transformation, debt sales and organic the sales. strong

John continue a in we QX. have favorable remain to healthy rates opening growth organic his to As in remarks, expect backlog, highlighted and we

with As we in impact comparison stated the net the the call, second the due coupled our to second in XXXX a presents and quarter of scratch VanHooseCo acquisitions. lapping divestitures, of tie tougher of the Chemtech half and M&A

chart resulted through resulted with was on higher due and rail an years. portfolio sales XXXX, in strategy XXXX. but combined profitability precast SG&A in impact achieved executing and the through The the X growth focused of EBITDA activity progress achieved our portfolio quarters perspective X we profitability of improving in to sales forward are the our wages growth business, right up see results was growth XX, growth our sales, the Slide adjusted the incentive strategic we've in in and costs. to every an to summary, business and in we're highlights in a execution made with In sales provides over is our organic progress growth we business in the Our M&A slightly quarter. the adjusted continued a in impact programs. opportunities for down decline Despite transformation, XX% largely progress double-digit legacy trailing on the the look largely we work. as important year-over-year growth we've concrete profitability The the pleased work September technologies we ended strong million. on expenses tied and organic wrap line $X.X improvement X with achieved sales to our complete, across strategy net invest continuing the last on

of transformation, to be XX.X%, focused In XXX that sustainable same with the end a a period, in margin and increased our believe our demand we portfolio improvement should gross resulting have profit gross point profit profitability gross Over the structural in the business adjusted from margins time markets. infrastructure profile in in prospects organic XX.X%. summary, growth longer-term our improvement initiatives adjusted basis resulted

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

X.X%, Strong X.X% organic X.X%. XXX business partially and declined revenues $XXX,XXX weakness Technology of continuing for U.K. profit settlement, Adjusting XX.X% last gross friction markets. profit within Services Rail XXXX year-over-year. in Solutions year-over-year Third softness partially Rail adjusted adjusted Products margins of both basis Adjusting in impact the growth $XX.X the of for by XX.X% the and down organic due the primarily sales up management adjusted offset quarter orders year, both Reported down gross divestitures divestiture. settlement of and by points driven points. were with segment million increased was profit basis to in the offset Rail of the in year-over-year. in continuing XXX net and realized by up growth components backlog U.K. Global sales Products. with the were Rail track was rail The primarily orders were divestitures decline gross of and Crossrail Crossrail commercial timing margin

million. and flow VanHooseCo improved were on year-over-year. Slide up segment Revenues the our XX.X% legacy XX% reflected the in up of points segment XXX with Summit XX.X% expanded XXX VanHusco million, accounting and the both Sales $X.X XX.X% have up due and gross with strong nearly margin were business, impact cash up improved impact VanHooseCo to of Last gross Bridge levels by revenue year's performance due acquisition and margins. impact, coupled the XX to Protective And volumes, Bridge down comments. of Protective pipeline XX% last organic in grid growth $XX.X XX.X%, profit year, because from X.X% XX.X% on Concrete are million versus basis were the my in because was our Precast profit with million, growth and exit thus the the or improvements of purchase divestiture benefit a in Grid structural points portfolio The favorable $X.X XX, gross by $XX.X realization coating gross results product Coatings. highlights accretive exit of in an operating and associated respectively, basis by organic due Adjusted for segment by in year-to-date up As were was margins to Order up XXXX. legacy adjusted steel we've representing M&A Adjusting the Reported basis basis last Year-to-date points in decreased realized profitability XXX driven million. $XX.X year-to-date $XX.X far with in million orders Measurement Protective businesses. Orders points and & margin grid XX order favorable changes gross of and reduction more million, the the exit deck Gross the profit, divestitures fabricated in resulting increased backlog offsetting XXX precast is backlog XX.X% activities. X.X%, to profit deck order deck established year. sales for business. covered X.X% to year-over-year contributed products. remains margin EBITDA Bridge and and orders net the X.X%. margins increased $X.X The acquisition backlog Adjusted profit. Coating rates I than to the offsetting of to impacts sales. the increase gross price and Steel $X.X down million organically, XXX opening last The on impact basis were to provided included XX.X% operations strength respectively. Chemtech reflects line Coatings $X.X Dec X.X% in healthy gains the revenues a margins in EBITDA on impacts, grid million Slide results Slide bridge decrease Products at year within points

Our XX. metrics and leverage on Slide liquidity are

strong cash debt investment, net flow quarter million profitability million the with operations. in decreased lower capital expected, working As from driving in $XX.X and $XX.X

quarter. the from made result, significant XX As start the over months per of quarter the agreement improving credit decreased of at last ratio Xx leverage X.Xx the quarter. our from down at at metrics with our We've end progress year's leverage the a to gross third leverage gross the of end our X.Xx last

as proceeds. year-to-date, flow our provided that gross far million essentially actually net divestiture free we've our improved this on leverage These result breakeven the to by reduced were of a so were divestitures While an dilutive they as ratio cash year $XX.X debt basis ratio. businesses $XX.X EBITDA million

net to generate to fourth in expect us flow allow positive the debt. free our which reduce cash We should quarter, further

XXXX. Union a the due due As $X million be in and remainder reminder, million of this in fully obligation $X Pacific our satisfied through XXXX year will with warranty settlement

debt operating cash a believe to We starting the early cash profitability place, future. loss management have we're should the of with this also acquisitions In our $XXX million point drivers approximately for see our priorities. progress along model, following completed remain in our diligent improving summary, the and the net with inflection potential we've the and prudent made that in results. beneficial imminent, foreseeable business allocation carryforwards obligations tax signs With leverage last quarter's federal net and capital we're pleased flow free flow with federal and leverage free minimize is we capital-light favorable top reducing year

Our on capital outlined XX. allocation priorities are Slide

X with investing level and We're Xx, and in gross comfortable is the run X.X% year continue of XXXX. to on we've Rail this managing investments Concrete. I the while to and spending cautiously of paybacks. in completion levels X opportunities around we see to achieved average, after As higher with historical Technologies quick pleased we just returns mentioned, than levels sales X% at Capital organic slightly acquisitions focus Precast organic leverage on growth high to leverage our in due approximately expected which the growth is strategic

since to $XX cash with the opportunities shareholders of inception to evaluate $XXX,XXX repurchase shares of been February through to program, to a return approximately continue its thus stock and million we've consuming X.X% We authorization. XXXX far, active the outstanding reduction our in

in small a to XX strong as priority, a allocation current for precast and levels was covering while ratio product The cash be pursue The $XX months in and distributing where book-to-bill sales My to quarter the and value platforms we continue evaluate a dividend XX capital acquisitions in growth shareholders within The not rates X.XX:X this Slides our the refer tuck-in flow through order that to continue million. improve lumpy. is at X.XX:X, will notable to portfolio We will rail and comments extend in the prospects segments XXXX rates could free stronger option orders, beyond. backlog somewhat closing second order were revenues and XX ratio order can quarter. softer order decline seasonal last the most consolidated and very concrete book-to-bill approximately with by over level in intake business. by after somewhat outpacing was third our

And third quarters. In finishing coming We far, forward We decline year-over-year which the benefits our fulfillment John? to an you exit across on remain consolidated and quarters, prospects level for to and his continued strategic our look beyond. backlog strategic longer-term reinforces demand improving expect time, and portfolio will building optimistic for this momentum divestiture the and due progress backlog with million. your confidence product in order our improve our to John with transformation. overall progress thus remarks. Slide highlight activities, from growth the strong coming healthy and closing in we're our which a for translate reflects XXXX. XXXX We the totaled in over hand entirely the quarter back We're XX our backlog in to $XX.X in the it closing, rates a lastly, backlog expect line playbook. note for and and seeing Thank and I'll XXXX in pleased on our business results now in year-to-date into our

John Kasel

levels refer outlook. optimistic longer-term market infrastructure of growth Bill. for It's our particularly and Rail market customers. some an Technologies deliveries key a our experiencing remain that demand with on-time ongoing Slide on and liquidity drivers, particularly our disruptions the highlight U.K. to in and here rail markets, with in prospects overview important efficiency operating business increasing and savings, is Thanks, for We to challenging fuel Canada. and safety, business Please XX weaker emphasis rail U.S. given underpinning

on local actions As expect, to some we which reduce help costs conditions with as improve. market and provide and us investment, team focus our could mitigation change you would may flexibility will immediate are working limit

opportunities deck the finally, demand spending boost play. see traditional protective projects in back broader coatings investment to applications to across Here line, programs. bridge precast more from seeing robust the business the of concrete line U.S., pipeline our grow grid the product the which forms product continues alternative infrastructure to allow portfolio. And in the exit the increased is in a the should effort addition Also, developing for demand in from focused remain

to by enabled prospects continue market which We of summary, overall we're our organizations. for remains the reach expand just believe despite growth beginning our investment U.K., to Company, to we face come. light profitable growth potential infrastructure the years of combined addition expect strong we the near-term cycle challenges the VanHooseCo we the our In in in of of super realize for

quarter near-term second along rebranded I challenges, our unveiled to refinement infrastructure to tagline with our as global goals update, XXXX. During company in the solve innovating our

Despite You'll line in confident X progress for that key previously add, growth mentioned we the short-term accelerate our our profitability in remain in outlook I with to and to find will our we also #XX. to due on expect challenges this goals. factors. U.K., begin Slide I near-term

Precast Rail anticipate above-average we First, and growth Technologies in Concrete.

next substantial revenue our are on to profitability increases. SG&A over years, turn In and organic XXXX the of progress L.B. continued year. management L.B. the by anticipated the Second, Foster up past sharing execute forward see we leverage we're as for expense made our execution continuing next time against and team the continue back and of margin prepared we believe begin definitely I has the operator look wrap into the phase initiatives transforming across focus closing, And Foster. session. energized portfolio. accomplishments achieving. momentum we're and I'll and and to to in X And third, to transformation team it our will Thank by interest for results Q&A you your our on well we

Operator

[Operator Instructions].

Alex Riley from B. with Rygiel comes question first Securities. Our

Alexander Rygiel

from So benefits a you spending see nice quarter any to opportunities? bidding there. Are starting in federal

William Thalman

talked we see for the Yes. in $XXX in -- quarter. million necessarily don't the We about we bookings didn't it the

is very with how with pleased October very year. we're bidding we that the results saw activity -- right bookings, we in were is line However, finish is the in Activities we were saying what now. going which strong to

through this it's money starting to government. now the years, we So and we're about being state Alex, see been out and since talked there, it flow

Alexander Rygiel

of For then a kind was sort that the Book-to-bill of topic, sure. And bit in quarter soft. on

You obviously referenced some seasonality there.

affected have divestitures. appreciating some the than more quarter, of that broadly was against have fourth October Anything You the quarter. kind that, third heading might strong that

William Thalman

QX fantastic us. Yes. Well, for was of first all,

on of which was course, at and XX fourth October favorable X-year the period, over years, I months. and over But back I period a looking over of the into our too we're flat X.X% on mentioned, XX% X-year basis. the went year-over-year a Of last look quarter. heading it last period. strong couple up over we're and if we're over basically And time, a backlog the was you as looked

through. construction, activity choppy. it's We're to So, starting lot starting we're a come see but really to of

we're prospects So about beyond. very and in feeling good 'XX our

John Kasel

thing might the of in accretion much the margin the backlog Alex, other is would is divestiture been balance I that bring because than the portfolio. acquisitions have better the The work profitability to higher that and past the the what highlight,

William Thalman

right. That's

Alexander Rygiel

and you maybe low about kind think early But low little of a comments organic it's know broader it year? sort I this and digit? then any expectations as at XXXX? XXXX strength especially given Do to single that. for think of digit, kind digit, growth relates guidance you to of high And all single thinking double the of Are

William Thalman

Well, let's put way. this it

your We're First of in aspirational guidance or our all, not goals those. XXXX. of we backing off put

really at that Xx plow right we've organic that lot look some specifically a into programs very So happen. now to and if pleased have, generate quarter take got very, now, of 'XX we this our cash of opportunities leverage some a with. we're is make that to really in And programs that it you stone specific stepping we

with and precast will aspirational side. year Rail our that in XXXX. a of that. more see transition We'll leave you'll be But in Technologies coming you goals next to the So

Operator

question next from Our Chris Research. Sakai with comes Singular Chris.

Chris Sakai

about Can seems you that quarter? it -- the quarter? looking how talk were And the for was this down? they It for Yes. seasonality are next orders things new -- was

John Kasel

Well, for joining for Yes. us question. today. Thanks thanks again the

Chris. We -- do a lot are of We bids, know, it's large choppy. you as

hit quarter. So they magical the sometimes

extend kind Sometimes quarter, into right next we're and that's what of the they seeing now.

off we're well in very strong October a year. in So to a shape nice QX. really finish up start in it lines to came the

get what the So worked we happens the in profitability think specific of getting seeing we don't we're as up activity company. We're Bill significant. quarter. we those changes jobs about And too focused That we're and that made were more portfolio that mentioned, should looking the just we're at sure make on really that get. we

So million $XX.X the we backlog. some of out that took backlog fact

management very type lot and really working consumed are as low-margin time as capital. those of Now work well a

more global the technology become and our our work innovation So we're a we're getting now company. changes in strategy, much making line with

we're into situation pretty at feel our where and good beyond. heading today, about where more we're we 'XX So and importantly,

Operator

[Operator Instructions].

further Our next like John I'd turn question any for John [Opearor with the not Castle to I'm Blair comes any Ascent showing call to over further Advisors. remarks. Wealth Instructions]. questions. from

John Kasel

think continuing leverage feeling on haven't as now. about today That's the before. we're today number once the hit we to guess, term now. a about since appreciate to is how as good This XXXX. here a for for Thanks I been well into as We joining opportunities focus do heading in it. we're is year. see working shareholders cash is Xx the third investors I And for -- this excited seen well as ratio really it our where leave We very down really next earnings. right generation meeting were something we quarter quarter. as as the gives the that company to feeling that Really Michelle. on focus And us -- we our well Thanks, has case at our our gross that, short we

of your Bye-bye. thanks again. in and time the everybody. for to Foster, your interest thanks importantly, more care, L.B. year. you for close We'll So after take talk And the

Operator

you a you disconnect. does Thank This and have participation. conclude the Everyone, day. for program, now may your great

L.B. Foster (FSTR) 7 Nov 232023 Q3 Earnings call transcript