L.B. Foster Company (FSTR) on Q2 2021 Results - Earnings Call Transcript
Operator: Good day. Thank you for standing by. Welcome to the L.B. Foster Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Stephanie Listwak, Manager of Investor Relations. Please go ahead.
Stephanie Listwak: Thank you, operator. Good morning, everyone, and welcome to L.B. Foster's second quarter of 2021 earnings call. My name is Stephanie Listwak, the company's Investor Relations Manager. Our President and CEO, John Kasel; and our Chief Financial Officer, Bill Thalman, will be presenting our second quarter operating results, market outlook and business developments this morning. Bob Bauer, who recently stepped down as our CEO; and Jim Kempton, the company's Corporate Controller, are also joining us this morning. Bob will be making some opening comments, and then John will provide his perspective on the company's second quarter performance, and we'll update you on significant business matters and market development. Bill will then review the company's second quarter financial results. We will open the session up for questions at the conclusion of Bill's remarks. Today's slide presentation, along with our earnings release and financial disclosures were posted on our website this morning and can be accessed on our Investor Relations page at lbfoster.com. Our comments this morning will follow the slides in the earnings presentation. Some statements we are making are forward-looking and represent our current view of markets and businesses today, including comments related to COVID-19. 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, except as required by securities laws. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided within today's earnings release and within our company's earnings presentation carefully as you consider these metrics. For the purpose of helping you understand the underlying performance of the company, we will be referring to adjusted EBITDA, adjusted net income, adjusted diluted EPS, net debt and net leverage ratio during the presentation today. While we did not have any adjustments to EBITDA, net income or diluted EPS during the second quarter of 2021, historic periods referred to in the presentation today have been adjusted, as reflected in the reconciliation table included in the appendix to the earnings presentation. Additionally, in September of 2020, we announced the equity sale of our IOS Test and Inspection Services division. As a result of this divestiture, we have presented the test and inspection services business as a discontinued operation in the second quarter financial statement, including within the earnings release and presentation and have recast prior periods to reflect this change. The comments today will be focused on our results from continuing operations. So with that, let me turn the call over to Bob for some opening remarks.
Bob Bauer: Thanks, Stephanie. Well, I have the pleasure of co-hosting the call this quarter for the last time as we announced my retirement last month, along with the appointment of John Kasel as the company's next CEO, which took effect two weeks ago. As we noted in the press release, when we announced the change, this appointment follows a well-planned and thorough succession planning process that the Board and I worked on for some time, and it turned out exactly as we hoped it would. I'm really pleased with the outcome because I'm leaving with a really good management team in place. And I know I can speak for the Board of Directors when I say that the company's development and succession planning process is regarded as one of the most important business processes and that we're all very pleased with how it's helping us develop the next-generation of leaders across the entire company. John, has been with the company for 18 years, and over the course of that time, has managed all of our factory operations and eventually managed all of our business groups before being appointed COO in 2019. He's very familiar with all areas of the company. And at one-time or another, is interfaced with our key suppliers, business partners and many of our customers. He doesn't really need my help as he takes on the added responsibility, but I'll be available to John whenever he needs me until the end of the year when I officially retire from the company. And until then, my goal is to help him and the management team in any way that I can. I know John is eager to meet those of you that he hasn't met already. And of course, we would be happy to schedule an introductory call with anyone that would like to do so, just reach out to Stephanie if you'd like to do that. But before I hand it off to John for his comments on highlights of the second quarter, I just want to say it's been an honor and a privilege to serve as the company's CEO for nearly a decade, and I look forward in the future to rooting for the company's success from a shareholder point of view. So with that, I'm going to turn it over to John for his first earnings call.
John Kasel: Thanks, Bob. Good morning, everybody. I'm very excited about the future of the company and honored to be chosen to succeed you as CEO. We have a great team of people at L.B. Foster and for 18 years I've been here. I've had the pleasure to work alongside many of them, witnessing firsthand the teamwork and dedication that has had such a positive impact on the company's performance. I'm particularly excited about the opportunities I see for growth and a more concentrated focus on directing capital towards our top priorities in the most attractive markets we serve. Over the course of last year, I sat in many investor meetings and had a chance to meet some of you. In the coming weeks and months, I'm looking forward to meeting more shareholders and discussing our plans going forward. Before I turn the call over to Bill Thalman to cover details on second quarter results, I want to cover some of the highlights and add some context to the market outlook commentary we have provided. This is this time of year, we expect to see increases in sales, and we're pleased with the 33% sequential volume improvement from Q1, exceeding the forecast we provided on last quarter's call. This turned out to be a 9% sales increase over Q2 of last year and includes several positive developments. Among them are an 18.5% increase in rail segment sales, with solid growth from our core rail products, significant increases in friction management products and increases in field service we've been very anxious to see, particularly in Europe, where service work is finally ramping up after many months of delays due to COVID restrictions. In addition, the fabricated steel and precast concrete business each grew at more than 20% over prior year as construction project backlog moved through the operations and new orders continue to come in. Keeping our backlog for those two businesses well above this time last year. The strength of these two infrastructure Solutions product divisions is not easily seen because of the weakness that we still have in our Coatings and Measurement business, where the year-over-year sales decline is offsetting this growth and has led to the Infrastructure Solutions segment sales being essentially flat year-over-year. The strength across most of our businesses lines have helped us get more backlog into the hands of our customers, but the total company backlog only declined by $19 million during the quarter, finishing at a healthy $253 million, which is 12% above this time last year. A couple of other interesting notes about our backlog. First, our precast concrete business is sitting at near-record levels, up 33% over prior year. And second, our Coatings and Measurement business has more than doubled the low levels we had in the November through February time frame. This is one positive sign for the Coatings and Measurement business. However, volume remains very low as pipeline projects continue to be deferred, and we remain cautious with our outlook for this business. Our balance sheet continues to be very strong. And despite the significant increase in sales this quarter, we were able to effectively manage our working capital, resulting in net debt all increasing nominally. The operating cash use was less than $1 million for the quarter despite needing to fund the $38 million sales volume increase. Our teams continue to do a great job managing working capital, and this has helped us keep our net debt at $33 million. Setting aside the pipeline market, we are seeing new infrastructure projects being planned. Investment in transportation, general infrastructure projects are moving forward, where our risks continue investing in operational improvements and recent spending bills in the U.S., providing additional support for our served markets. Europe and more specifically, United Kingdom, where our business is concentrated, still has room for improvement. The U.K. continues to struggle with policies and reopening and continued spread of the virus and government restrictions continue to keep us from operating at full capacity. That opportunity for improvement, coupled with the recent easing of certain restrictions U.K., leads us to believe that there is a favorable outlook for rail operations in Europe for the remainder of 2021. But this view is subject to change based upon any resumption or imposition of pandemic related measures across the markets we serve. On the infrastructure solutions side of the company, the precast concrete and fabricated steel business units continue to experience favorable market trends. With several of our plants operating at near-capacity levels. We also saw a modest level of recovery in certain pockets of Coatings and Measurements, but we still have a long way to go to get back to the pre-pandemic levels in this business unit. I also want to mention that we are encountering some challenges with inflation, largely in materials we source for bridge products. In certain areas where pressure on wages is emerging. We have taken pricing actions to mitigate the impact and expect to take more, but it may be difficult to offset all the pressure in the back half of the year, which may drive some erosion of margins in certain parts of the business. Although we typically see seasonality in the business in the first quarter and a sizable uptick in revenue from Q1 to Q2, we believe that the substantial increase from first quarter to second quarter this year also represented the continued recovery from the effects of the pandemic on most of the businesses. While the increase in sales translated into incremental gross profit in the rail segment, the weaknesses in the midstream energy continued to drag on our earnings. On Slide 8, you can see the year-over-year results for infrastructure solutions. In particular, I want to draw your attention to a continued impact that the very low volume on our Coatings and Measurement business is having on gross profit margins. While we are pleased with the sequential improvement in gross profit for the business, operating at very low volume levels is having a significant impact on the year-over-year performance. In fact, the decline in gross profit margins for the Infrastructure Solutions segment is entirely due to the Coatings and Measurement weakness. This erosion of gross profit despite substantial increases in revenue, both year-over-year and sequentially in the second quarter for precast concrete products and the fabricated steel products businesses. The impact of Coatings and Measurement cascade to our bottom line results for the most part, whether you're looking at Q2 or year-to-date six months results, our EBITDA declined year-over-year is primarily due to the coatings and measurement performance. With that as an overview, I'd like to turn the call over to Bill and let him cover the financials in more detail. We can take any questions once he concludes his remarks. Bill?
Bill Thalman: Thanks, John, and good morning, everyone. I'll begin my review covering the second quarter results on Slide 10 of our presentation. As John mentioned, we were anticipating a significant sequential increase in results, both from seasonality as well as further recovery from the pandemic. In line with those expectations, second quarter sales were $154.5 million, up $38.4 million or 33% over the first quarter. Compared to last year, Q2 sales were up $13 million or 9.2%. The despite the significant year-over-year increase in revenue, Q2 gross profit decreased $2 million and the 16.9% gross profit margin was a 290 basis point decrease from last year's second quarter. This decrease was largely driven by the Infrastructure Solutions segment, which I'll discuss in more detail shortly. Second quarter selling and administrative expenses increased year-over-year by $900,000 or 4.8% to $19.8 million with the increase primarily driven by higher professional fees. The higher professional fees were related to a comprehensive strategic review of the business completed during the second quarter under John's leadership. We'll be discussing the results of that work in future calls. Selling and administrative expenses as a percentage of sales decreased to 12.8%, down 50 basis points from the prior year quarter. Second quarter net income from continuing operations was $2.9 million or $0.27 per diluted share compared to $7 million or $0.66 per diluted share last year. Adjusted net income from continuing operations for the quarter was also $2.9 million or $0.27 per diluted share compared to $6.5 million or $0.61 per diluted share last year. Second quarter adjusted EBITDA totaled $8.3 million, a decrease of $4.6 million compared to last year, driven primarily by the decline in gross profit in the Infrastructure Solutions segment, coupled with increases in selling and administrative expenses. I'll now cover our segment performance for the quarter reflected on Slide #11. Second quarter Rail segment revenue increased $13.8 million year-over-year, with the increase primarily attributable to a significant increase in new rail deliveries and a substantial uptick in our European operations during the quarter due to easing operating restrictions, primarily in the U.K. Infrastructure Solutions revenue was down $900,000, with the decline wholly attributable to the Coatings and Measurement business, which continues to face a challenging economic environment in the midstream energy market due to excess pipeline capacity. Partially offsetting this decline was a substantial increase in revenue in both precast concrete and fabricated steel businesses. Revenues have increased in these businesses as demand has increased with greater activity levels among general infrastructure projects. It should be noted that the Boise, Idaho facility was fully operational in this year's second quarter. Last year, the facility was in its start-up phase after relocation from Spokane, Washington. As a result, second quarter revenues for this location more than doubled year-over-year. Rail segment gross profit increased $1.6 million year-over-year, driven by the strong sales volume across all of our rail business units. However, rail gross profit margin declined 130 basis points due to the significant revenue increase in our rail distribution business year-over-year. Infrastructure Solutions gross profit declined $3.6 million from the prior year quarter, driven solely by the decline in revenues in the Coatings and Measurement business. Infrastructure Solutions gross profit margin was down 520 basis points compared to last year's second quarter. Our results for the first half of 2021 are reflected on Slide number 12. Year-to-date revenues were $270.6 million compared to $263.5 million last year, a $7.1 million increase or 2.7%. The gross profit decreased $6.3 million from the prior year comparable period and the 16.6% gross profit margin this year was a 290 basis point decrease from last year. I'll provide a little more color on the revenue and gross profit performance by segment in a moment. Selling and administrative expenses in the first half totaled $37.8 million, a $1.4 million decline or 3.6%, with the decline primarily driven by a decrease in personnel-related costs, including travel-related expenses. Selling and administrative expenses as a percentage of net sales in the first half of 2021 decreased to 14%, down 90 basis points from last year's comparable period. Year-to-date net income from continuing operations was $1.6 million or $0.15 per diluted share compared to $7 million or $0.66 per diluted share last year. Adjusted EBITDA totaled $11.1 million for the first half of 2021, a decrease of $6.6 million compared to the prior year period, driven primarily by the decline in gross profit in the Infrastructure Solutions segment. Cash flows from operations were $6.8 million year-to-date compared to $8.1 million year-to-date last year, while capital expenditures declined to $2.2 million versus $5.7 million last year. Capital spending this year primarily relates to the expansion of our Precast concrete business in Texas and expenditures for our ongoing SAP implementation as we continue to progress towards retiring 2 legacy ERP systems. We're still estimating total capital expenditures for 2021 in the $6 million to $8 million range, highlighting our capital-light business model. Circling back to the segment performance for the first half of 2021 on Slide number 13. Year-to-date rail sales increased $9.9 million or 6.8%, with the sales increase primarily driven by more robust demand and favorable operating conditions in our primary rail markets this year. Year-to-date infrastructure Solutions sales decreased by $2.7 million or 2.3%, with the decline attributable to the Coatings and Measurement business with a year-over-year sales decline of $24.4 million. Both fabricated steel and precast concrete businesses had meaningful sales increases totaling 16.0 and $5.7 million, respectively. Rail segment gross profit increased by $2 million or 7.1%, with the increase primarily driven by improved volumes in friction management and contract services product categories. Segment gross profit margin of 19% was unchanged year-over-year. Infrastructure Solutions gross profit decreased by $8.2 million or 34.6%, with a decrease primarily attributable to the decrease in sales volume in the Coatings and Measurement business, which accounted for the overall segment gross profit decline. This unit was also the primary driver of the 670 basis point gross profit margin decline. Turning to liquidity and our credit metrics on Slide number 14. Total available funding capacity, which is defined as our available capacity under our credit facility plus our cash, was $81.6 million at quarter end, up from both the beginning of 2021 and June 30 of last year. Net debt was $33.1 million on June 30, 2021, compared to $48.2 million on June 30, 2020, a reduction of $15 million over the last 12 months. Our adjusted net leverage ratio for the trailing 12-month period was 1.3 as of June 30, 2021. While our debt balance was up by $1.3 million during the quarter, we were very pleased that we were able to effectively manage our working capital and minimize the draw on our credit facility, given the 33% sequential increase in revenue. Our working capital as a percentage of sales was 17.7% at quarter end versus 19.9% in last year's comparable period. Slide 15 provides some perspective on our leverage performance over time. Over the last several years, we've strengthened our balance sheet and our overall financial flexibility. These improvements, coupled with our demonstrated ability to generate significant free cash flow, positions us well to take advantage of the improving market conditions and business opportunities. We are anticipating further debt reduction during the second half of 2021, with the assumption that we'll continue to see a reasonable economic recovery with no significant restrictions related to the pandemic and continuing improvement in end market conditions. We're still anticipating approximately $9 million in income tax refunds this year, with $500,000 received in the first half. We expect to receive $5.3 million in refunds in the third quarter with the remainder to be received in the fourth quarter. However, with delays in IRS processing times, there is some uncertainty on the timing of the refunds expected. Assuming no significant delays in these refunds, combined with the free cash flow that we typically generate, we should continue to drive down debt through the end of the year. We continue to assess opportunities for select bolt-on acquisitions in the Rail Technologies and precast concrete space. While it's unlikely we'll complete any significant acquisitions this year, we anticipate M&A activity will increase next year, assuming actionable, attractive targets aligned with our focused business platform strategy are identified. Slide 16 provides a breakdown of orders and revenue by segment over the last 5 quarters. In the second quarter, total orders were $138.6 million compared to $133.9 million last year, with the increase driven by the Infrastructure Solutions segment. Order activity was also up on a sequential basis, with new orders increasing by $2.9 million in the second quarter. Total orders in the second quarter were the highest level achieved since Q4 of 2019. Our book-to-bill ratios continue to trend favorably with a consolidated book-to-bill ratio of 1.07 for the trailing 12-month period. Improvement in infrastructure solutions order activity in the second quarter was realized across all business units, including Coatings and Measurement, which finally saw some improvement in order activity, both sequentially as well as year-over-year. However, I would caution that the activity was concentrated in select pockets of this business and at lower volumes and margins relative to historical performance. I'd also like to call your attention to the graph on the lower left-hand side, where you can see the revenue and order trends for the rail segment. You'll note that order activity is largely in line with the average quarterly order volume over the last 5 quarters, but this quarter, significant increase in revenue stands out from the prior quarters. This is a primary driver of the decline in backlog we experienced in Q2, which is reflected on Slide #17. Referring to Slide number 17; you'll note that the rail segment backlog decreased as compared to June 30, 2020, and December 31, 2020, both is the result of the significant increase in revenues during the second quarter. As we noted last quarter, we had been experiencing customer delays on certain projects in our backlog. Some of those projects finally move forward and the pace of backlog conversion improves. I'd also note that the rail backlog remains above pre pandemic levels, so it continues to be very healthy. Infrastructure backlog improved modestly during the quarter and remains robust. And as mentioned earlier, we saw an improvement in Coatings and Measurement backlog, which more than doubled since December. The consolidated backlog stood at $253.2 million at the end of the second quarter, an increase of $28 million or 12.4% compared to a year ago and $5 million or 2% during the first half of 2021. I'll conclude my comments with the market outlook summarized on Slide number 18. Based on our strong backlog, less restrictive operating conditions and stable to improving outlooks for our key end markets overall, we feel very well positioned for the second half of the year. While certain businesses focused on midstream energy market have shown some modest improvements, they are expected to remain relatively depressed for at least the remainder of the year. That being said, a continuation of the diminishing impact of the pandemic on most of our end markets should be favorable for us in the second half of the year. We are anticipating that precast concrete and fabricated steel businesses will continue to benefit from the current and anticipated infrastructure investment trends. And we are also optimistic about the outlook for our rail operations in the U.K. for the remainder of 2021, assuming no significant restrictions to operating conditions. We will be vigilant in actions designed to mitigate the impact of raw material inflation and supply chain disruptions where possible. However, we may experience some pockets of disruption and cost inflation, which could impact results in the second half. We continue to expect to benefit from an infrastructure spending bill, if approved in the U.S., we typically see an uplift from such programs as they often direct spending towards the transportation, rail and general infrastructure markets we serve. However, with the delays in Washington, the benefits would likely not be realized until after 2021. Finally, the outlook for our cash flow this year continues to remain strong. We're expecting significant tax refunds yet to come, continued working capital discipline and modest capital spending needs in line with our expectations. all of which bodes well for continued strong cash generation. So in summary, we're pleased with our performance in 2021 thus far and excited about the opportunities for further improvement in our results through the balance of the year and beyond. Thank you for your attention. And I'll now turn it back over to the moderator for the question-and-answer session.
Operator: Your first question comes from the line of Alex Rygiel from B. Riley.
Alex Rygiel: A couple of quick questions here. You mentioned that your precast concrete business was near-capacity. Do you have any plans to expand capacity?
John Kasel: Alex, thanks for the question, John Kasel here. We're continuing to look at those efforts. In fact, what we're doing is trying to get off our existing properties and set up some satellite facilities right now, moving product into better geographic spaces for us.
Bill Thalman: Yes. And Alex, I'd add to that. We're currently in the process of investing in our facility down in Texas. And we're also -- when you're looking at the operations, making sure that we've got the labor in place to support the volume that we've got. So we did have a minor disruption in the quarter related to labor in the precast space. The activity in that business is very robust, and we're proactively managing that labor force to make sure that we can maximize the output.
Alex Rygiel: Well, we think about the bigger picture as it relates to the second half of the year and in particular, as it relates to gross margin, you mentioned that there are some cost inflation that won't be fully offset by price increases. Are you suggesting that we should think about sort of gross margins comparable to 2Q levels in the second half of the year or slightly down?
Bill Thalman: I don't -- I wouldn't say slightly down. That's not what we're seeing at the moment. I think it's appropriate to say that the current run rate in terms of gross margins, the single biggest driver that we see impacting overall gross margins is the weakness in the Coatings and Measurement business. We continue to highlight that as a key driver of our performance. And we don't really go into disclosing future gross profit. But we would expect to see any challenges on the inflation front to be offset by improvements that we see in other areas of the business. Particularly, the strength in the precast business as well as improvements that we continue to see coming out of Europe.
Alex Rygiel: Sure. And then, turning over to the Cross London project. I believe you were going to add back a number of your team members in the month of June. Are those team members -- are you back to 100% yet on that project? And if not, when might you be?
Bill Thalman: Yes. that was -- we're about 75% right now. So that will continue through Q3 to get up to 100%. But it's steadily improving and increasing by the day right now.
Operator: Our next question come from the line of Chris Sakai from Singular Research.
Chris Sakai: Just an overall question regarding the delta variant. Are you seeing any headwinds there?
Bill Thalman: I wouldn't say specifically from an L.B. Foster operational point of view. I think just as the general market is, we're watching the developments very closely. We are not having any operational impacts related to that. And I think as many industries are figuring out how to navigate it, we're watching its impact on the markets that we serve as well as any potential impact on the company. I will say that we've been able to manage the impact of the pandemic pretty successfully over the last 12 to 18 months, and we feel confident in our ability to continue to manage it going forward.
Chris Sakai: Okay, great. And then, on the Coatings and Measurement backlog increase, what's driving that? And do you see any -- do you see that increasing in the future?
Bill Thalman: Yes. I would say that it's centered in certain parts of the Coatings and Measurement business, more around the measurement side. And we saw some nice orders come in and a little bit of an uptick there. In terms of it continuing, that's not something that we're currently anticipating any significant improvement in. I would say that the pipeline infrastructure situation in the U.S. continues to be a headwind, and we're looking for any opportunities for improvement there. But at the moment, we're not seeing them.
Chris Sakai: Okay, great. And along -- or to go with Coatings and Measurement, would you ever consider divesting that business? And if so, when and what would it take?
Bill Thalman: Well, we certainly wouldn't divest it now. We think the business has a promising upside. There's, again, certain parts of the business that continue to be attractive, and we're also looking for opportunities to diversify the markets in which we participate. So I guess at the moment, we're really focused on improving the operational performance at the current level of the market demand and looking for the options that we have to expand the markets we participate in.
Operator: Our next question will come from John Bair from Ascend Wealth Advisors.
John Bair: Bob, happy trails to you in the months ahead.
Bill Thalman: Thank you.
John Bair: That's as for a happy retirement. You did address the last questioner there on the Coatings and Measurement. And I'm just wondering, are there other -- given the headwinds with the energy markets, what other areas can you expand into water infrastructure, for example, obviously, a huge problem in the southwestern U.S. and growing other areas. Is that something you're focused on?
John Kasel: Yes. So John, John Kasel here. Thanks for the question. And we -- I agree with the best wishes to Bob, and he's one of the reasons that we're continuing to look at our greater -- our portfolio. So to kind of give you a broad brush. We've taken a deep dive and looking at the return on capital that we have and our ability to drive value and profit improvement across all of our businesses today. And of course, energy is one of them that really jumps off the page. So on the Chemtec side, the measurement side, we absolutely have started to pivot and reshape ourselves and much more in the energy -- moving off energy into the water, water transmission, water metering business. That is also the case in our precast business. So instead of just modular buildings, we're also starting to move water through our concrete products that we're building. So we're always looking at opportunities moving into different spaces, different geographies and water moving off energy is one of those we're doing today.
John Bair: Is the pre cash? Do you do conduit type products in for --
Bill Thalman: Was it conduit?
John Kasel: Conduit?
John Bair: Yes, right. Right. Yes, the large diameter conduit.
John Kasel: We're in manholes of moving water into the septic sewer system type business today.
John Bair: And then another question. Given the improved cash flow and expected cash coming in on tax refunds and so forth. Any consideration or thought about your share buybacks or a possible modest dividend implementation, maybe not necessarily this coming quarter by year-end, but is that something that you'd consider doing?
Bill Thalman: Yes. John, this is Bill. We have pretty active dialogues in this area related to capital allocation and the overall capital structure. And as we mentioned on the call, we've completed a pretty significant strategic review of the business that we'll be sharing more information on in the coming quarters. And as part of that, we're looking at the capital structure of the business. And given the cash that we expect to generate through the balance of the year and the different needs that we see in the future in alignment with that strategic road map, we'll be looking at capital structure and share buybacks and dividends could be a component of that overall implementation plan.
John Bair: Okay, very good. And one last question is regarding the M&A landscape, are there particular areas of the business that you're more focused on in the M&A a possible M&A? Or is it sort of more of an opportunistic whatever comes along that fits the picture overall?
John Kasel: Really the first part of your statement. We are -- we really are honing in on what's core or noncore to the L.B. Foster Company. And so acquisitions be bolt-ons or nice low tuck-ins are in the rail space as well as the infrastructure side and namely the precast concrete side of the business there.
Bill Thalman: Yes. One of the things I'd like to also highlight there, John, is that we're looking specifically at the technology side of the rail space. So when you think about the different solutions that we offer to our customers when it comes to operating transit and freight rail systems more efficiently, more economical and more environmentally friendly. Those are the technologies that we're really focused on when we're thinking about investments or acquisitions in the rail space. And it also includes the potential for acquisitions that may be overseas as we look to opportunities that exist outside the U.S.
Operator: And I'm currently showing no further questions in the queue. I'll turn it over to John Castle for any closing remarks.
John Kasel: Thank you, Victor. I'd again, like to thank Bob Bauer for his 9.5 years with the company, the support and dedication, commitment to myself as well as the entire management team. You will be missed, and we wish you all the best in the next chapter of your life so.
Bob Bauer: Thank you very much, John. Yes. Thank you to all the shareholders that have supported us over the years. It's been a great pleasure dealing with everybody out there.
John Kasel: And thanks for all of you for joining us. As I mentioned earlier in my comments, I'm very excited about the opportunity. I thank the directors and Bob, for their support. We're looking for shaping up Q3 and getting back to you with the results of that in the coming months. So take care, be safe, and we'll talk to you soon. Bye-bye.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
