Good day, ladies and gentlemen. And welcome to the second quarter 2008, L.B. Foster Earnings Call. My name is Jasmine and I'll be the operator for today. At this time all attendants will be in a listen-only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today's call, Mr. David Russo, Chief Financial Officer. You may proceed, sir.

Thank you, Jasmine. Good afternoon, ladies and gentlemen. Thank you for joining us for L.B. Foster Company's earnings conference call to review the company's second quarter 2008 operating results. My name is David Russo and I am the Chief Financial Officer of L.B. Foster. Also on the call today is Mr. Stan Hasselbusch, L.B. Foster's President and CEO. This afternoon, Stan will provide an overview of the company's second quarter performance, give an update on critical business issues and discuss market conditions. Afterward, I will review the earnings press release issued earlier this morning before we open up the session for questions. Means to access this conference call via webcast were disclosed in our earnings press release and were posted on the L.B. Foster Company website under the Investor Relations page. This webcast will be archived and available for seven days. Today's call includes forward-looking statements and information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and include known and unknown risks and uncertainties. Future actual results may differ greatly from these statements and expectations that are expressed today. All participants are encouraged to refer to L.B. Foster's annual report on Form 10-K for the year ended December 31, 2007 as well as to other documents filed with the Securities and Exchange Commission for additional information about L.B. Foster. With that, we will commence our discussion and I will turn it over to Stan Hasselbusch.

Thank you, David. And thanks to all of you for attending our second quarter 2008 earnings call on webcast. This morning, we announced record earnings for the second quarter. It was also the 14th consecutive quarter our company has recorded an earnings increase over the previous year. Sales were $129.8 million, compared to $148.5 million in the second quarter 2007. Income from continuing operations was $7.7 million, or $0.69 per diluted share, compared to income of $6.8 million, or $0.63 per diluted share in the second quarter of 2007. Of particular significance in the quarter was margin expansion. Gross profit margin was 16.9%, up 255 basis points from last year, the result of increased billing margins and improved plant performances. David will discuss the financials in detail later. But first, I'd like to talk about operational performance. To begin with, let me address overall activity as it relates to order entry. Order entry for the company in the second quarter was $164 million, 34% ahead of the same period last year. What we particularly like about this activity is that we saw growth in all three sectors. Tubular bookings were up 25%. Construction order entry was up 20%. And rail bookings were up 52%. The corresponding backlog from this is $192 million at quarter-end, compared to $179 million in 2007. We think this will bode very well for continued strong performance for the balance of this year. Okay, let's take a look at the products. And let's start with rail, where overall revenues were down 23%, largely due to a drop off in sales of new rail and concrete ties. While new rail sales were down 27% in the quarter, profits were equal due to increased margins. However, an active market and higher steel prices led to bookings in new…

Thank you, Stan. Sales for the second quarter of 2008 were $129.8 million compared to $148.5 million in the prior year, a 12.6% decrease, which we converted into a 14.6% increase in pre-tax income. This represents a record second quarter for L.B. Foster. The sales decrease was due to a 23% decline in rail product sales and a 14% reduction in tubular sales, partially offset by a 2% increase in construction product sales compared to last year's second quarter. The construction product sales increase was due to increases in our Fabricated Products and Pre-cast Buildings divisions, offset by a slight decline in piling sales. Second quarter tubular sales decreased due to a decline in coated product sales, offset by an increase in threaded product sales. The coated product sales decline is due more to the difficult comparison to record prior year results than anything else. During last quarter's webcast, we noted that the first quarter increase compared to the prior year would not continue into the second quarter, as our coated division went into a second shift throughout the summer and into September of 2007. After having said all of the above, this division is still having an excellent year. The energy market served by our coated division has been robust for the past two years and we expect that strength to continue throughout 2008 and beyond. Our threaded pipe division continues to address its core water well market and pursues additional opportunities in the OCTG and micro-power markets to expand its customer base and fully loaded facility. For the second straight quarter, the rail sales decline was driven by a meaningful reduction in rail distribution sales and, to a lesser extent, decreased CXT tie sales. Tie production was down slightly from the first quarter of 2008, but was down…

(Operator Instructions) Your first question comes from Rob Damron. You may proceed.

Well, hi, Stan. Hi, Dave. Excellent quarter.

Hi, Rob.

Thanks, Rob.

I wanted to, let's see, just start with the bookings and the backlog, both up nicely over last year. Could you talk a little bit about how much of that is volume and how much of that is price? And then give us also some color in terms of, when you get supplier price increases, how quickly are you able to pass those along?

Well, I've talked about the pricing. There is a certain amount of that and that is inflation due to the rising pricing. I think that if you take a look at, for example, in the rail products, where we talked about $50 million booking in the first quarter, to roughly 25% increases in the first half of the year. But you still discount that by the 25%, Rob, and you're still substantially ahead of where they were last year, which I believe was $21 million, $22 million in the second quarter. So, it's really real increases -- most of it is -- driven by increased activities. It's really a good booking month. A lot of activity, a lot of books, a lot of stuff came together. But most of it is real and we're seeing somewhat some of the same information coming out of piling for the increases we have there. As far as passing the increases along, we're doing a much better job in this than we did back in 2004. I believe our distribution groups are getting out in front of it. As soon as the pricing increases are announced, we're trying to take it to the business, to our customers. Inventories that we have, we are giving customers less time to move that. I think we're doing a much better job. But for the most part, we're able to pass most of those increases along pretty quickly. And I also alluded to fixed contracts which really hurt us significantly back in '04. I think that we're doing a better job with heavy price, and effective time of shipment. I think that some of the owners are giving that to the suppliers of contracts. We're starting to see that on some projects. We've actually seen it for the last couple of years. We've got indexes, which are on some of our long-term orders, which are really helping us out. And I think at some of our plants, we're doing a much better job of getting ahead and buying for material because we're getting paid for material and storage on some of our contracts also, Rob. So, all in all, I guess that the increases that we have, to summarize your questions, that we've seen in bookings, there's a lot of real increase. Yes, we've had some price increases. But the increases that we've had in the second quarter in bookings were more actual than what they were inflation from a costing. And as far as being able to pass increases to the customers, we're doing it much quicker. We're doing it as quickly as we hear from the mills, except sometimes, in fixed contracts that we have in our plants. But we're doing a much better job utilizing and handling those also.

So if we look at the bookings and the backlog and then being up on a year-over-year basis, so we start out the year showing a decline in revenue the first half of this year. Should we anticipate the revenue to actually should begin growing again, on a year-over-year basis, as we look into Q3 and Q4?

I think in the core Q3, we're seeing that. Yes, Rob, we are.

Yes.

Okay. And then, obviously, with the [DM&E] sale, you have all that cash on the balance sheet. Maybe you could just talk a little bit about the acquisition environment and maybe what we could anticipate in external growth going forward.

That, actually, is still a top priority of ours, Rob. We continue to look primarily in the rail and construction segments. But, really, most of the focus has been in rail at potential targets. There's certainly nothing imminent that we could discuss with a group today. But, it is definitely a priority of the company. And we actually had a session this past week and looking at a list of potential candidates and actually re-grading that list out based on some minor changes in the company's strategy. So, we're looking at it and we're contacting potential targets. You know, it's still a pretty good business in the rail segment, especially. So, there's a lot of companies that are out there that whether we compete with some of their complementary business, that are also doing well and many of them aren't interested in selling right now.

Okay, and then just lastly, with regards to the stock buyback, it looks like you've, I guess, bought back about half of what you have authorized. I mean is the plan to complete that program over the next three to six months?

You know, we're going to be -- I think when we first announced this, Rob, we mentioned the -- it's really up to the discretion of management. We're not under any predetermined conditions to buy X amount. It's based on how we feel about what's going on in the marketplace and what our stock's priced at. And we feel that we're going to take the opportunity when we can and be opportunistic about the buys. But, I would not be surprised if we complete the entire authorization before the timeframe that the Board allowed.

Okay, that's helpful. Thanks, again.

Thanks, Rob.

Your next question comes from Scott Blumenthal. You may proceed.

Good afternoon, gentlemen. Nice quarter.

Hi, Scott.

Hi, Scott. How are you? Thank you.

Fine. Thank you. Stan, can you give us an idea how much of the backlog you traditionally deliver within the next six to 12 months?

Yes, we typically will deliver within that timeframe, over 90% of our backlog. I think it's a safe assumption to me.

Okay. And I know that Rob, the previous caller, talked about acquisitions. And you've been mentioning over the last couple of calls that that's been a priority. When do you get to the point where you say okay, we really can't or we really haven't been able to find anything? Do we take a different tact and maybe start to discuss some other alternative things to do with this cash?

You know, Scott, I would tell you we're not even close to that level yet. There's still a number of companies out there that fit into our core competencies and the strategies that we have moving forward. And I know we're a public company and we've got a lot of cash, so there's sort of a spotlight on it. But, quite honestly, I mean, when we got the cash in October, maybe it's a good thing, because valuations have actually come down rather substantially since then. And we've been frustrated in the past because there's a couple of, we thought to be, very good potential targets that didn't work out for us. But we're not going to rush it. And we aren't going to change course just because we don't have one within the first nine months.

Just to follow-up on Dave's comments. I mean we have said all along that we're going to be very patient. We're going to be very disciplined. And we're not going to act, or react I should say, that we're going to continue to look. And we're going to be very involved in this and we are. It's really a top priority for senior management in this company. But we're not going to jump at anything quick. I mean it will work out. And we're not in any position, at this point, Scott, to pull back at all.

So, basically, Scott, we're staying the course.

Okay, Dave, you mentioned that you've been primarily focusing on rail service-type companies. And then, I guess, after that in your last answer, you said that the acquisition multiples have come down. Can you kind of reconcile the fact that the rails are, as Stan mentioned -- they're doing historically well with historically high profits. And you would imagine that the companies that are servicing them are experiencing the same type of thing. Do you think it's time to maybe switch gears and look more on the construction products area for possible acquisition candidates?

We haven't actually really ignored the construction side of it, Scott. When you look at our construction segment, it's a little bit of a hodge-podge. Businesses are operating well. We've got our Foundation business with Piling group. We've got a Pre-cast Buildings business and then, certainly, our Fabricated products group. So, we are looking, but it's a little more difficult in that group because we're looking some synergies out of our acquisitions and probably, more to complement with Piling and with the Fab group than any other. But we haven't really ignored it, but we've more potential opportunities in rail than we have construction.

Okay. And with the historically weak dollar, have you had inquiries for materials from customers that traditionally you wouldn't have seen -- overseas customers, for example?

You know, we have done fairly well, I think, in Mexico and Latin America this year. Starting to look at some work up in Canada. But, for the most part, that is, it's not been a big change from what we've done in the past, Scott.

Okay. And I guess my last one is, Stan -- I guess, anecdotally, we're hearing or we see some kind of hangover in commercial construction from residential. Although, when you look at the Dodge data, that would suggest otherwise. It would suggest that commercial construction is doing pretty well. Can you comment as to what you're seeing out there and if you've seen slowdown? And if so, how much in commercial construction activity, infrastructure activity, year-over-year?

Well, again mostly we do not really cover the residential side of our business. Ours is non-residential or heavy civil. And that continues to be remaining strong. I believe that I looked at some data earlier this month about where we were in the first six months. And I really do, I think that, that starts and work-in-processes is actually up 10% over last year. So, that business is still fairly strong. A lot of it's tied in. And all of the Combi-Wall and the Open Cell, or most of it that I discussed earlier, is all tied in with port work. So there's a lot of that that's still going on. And we still feel that that's a good market to be in, Scott.

Okay. Great. Thank you.

Your next question comes from Liam Burke. You may proceed.

Thank you. Stan, on the railroad products business, you talked about rail and tie. But how is the Allegheny product sector doing?

Allegheny had a very good second quarter, if I recall. I believe that revenues for Allegheny were actually up 15% from last year. And profits continue to be more. We're getting very good production out of both our Nile facility and our Pueblo facilities. And profits are up significantly more.

Good, thank you.

You're welcome.

Your next question comes from James Bank. You may proceed. James Bank - Sidoti & Co: Hi, how are you?

James. James Bank - Sidoti & Co: Let's see, the 255 basis point improvement in gross margin -- I was wondering, Dave, if you could split that between the productivity improvements, I guess, primarily in rail? And also the favorable billing margins you had in the quarter.

For the quarter, James, most of it came on the billing side. And then the secondary, although not a far second, would be productivity. And then, thirdly, we had small favorable comp in warranty expense because we took a warranty charge in the second quarter of 2007 for $300,000.

You know, I guess three areas from the productivity standpoint in the rail sector that have really contributed very nicely in the second quarter -- for the whole year. We've had very good performance out of Tucson. We have that plant up and running and we're cutting back, as David has indicated, we're running at about 50% capacity. But we're really getting a, really good performance out of Mark Reilly and his group down there. And both the two Allegheny parts have really had much better improvement this year over the second quarter last year, that being Pueblo and Niles. James Bank - Sidoti & Co: And which facility does UP pull from, primarily?

UP pulls from both -- it's been fairly equal between Grand Island and Tucson.

And from the joint side, they do a lot of business with our Pueblo facility.

And they do take -- to a limited extent, they take ties from Spokane. But, roughly, I would say it's probably about -- between 45/45/10. James Bank - Sidoti & Co: And is there any risk at all that would happen with the orders with them this year? I guess they had a problem on their Sunset line. Was that what it was called?

They've had some problems with permitting some of the same problems that we had down in Tucson. James Bank - Sidoti & Co: Now, is there any way that risk might carry over into '09 or maybe no?

There's always risk, James. James Bank - Sidoti & Co: Right

But I guess our expectation is that there will be some strength compared to this year. James Bank - Sidoti & Co: Okay. Very good. Do you think you would add another shift to that plant? Or no, it's not necessary? But then the leverage you should get from the productivity could be --

We're running one shift, I think, in both plants. And I really think that we've got it pretty much narrowed down to that, running, I think, at Tucson, for sure -- we're running four days a week, ten hours a day. And really, that's optimizing the quantity. And we'll adjust to optimize the quantity. I mean that's the name of the game there. James Bank - Sidoti & Co: Okay. And the SG&A, which I thought was pretty darn good, considering your sales came down 13%. Yet you only increased your SG&A by $1 million -- I guess 7.7% to sales, a 120 basis point increase. The question is, what's driving that, to me, improvement? Is it just tight selling controls? And is this something that we should expect, kind of, throughout the rest of this year?

James, there's a number of factors. But really, with the exception of bringing some people in for sales roles and a few other spots to accommodate not only volume but working on improvement initiatives, we've pretty much done a pretty good job of holding the line in other SG&A costs. So it's really been people motivated, but most everything else has been -- we've been holding the line pretty good across the board. And as far as expectations for the year, I think we were at 7.8% for the quarter. And for the entire year, we'd probably be looking in the 7.% to 8% range -- 8.1%, something like that. James Bank - Sidoti & Co: Okay. And let's see, you answered my question on construction backdrop. That's all I have. Thank you very much.

[You're welcome].

(Operator Instructions) Your next question comes from Tom Spiro. You may proceed.

Good afternoon.

Hi, Tom.

Hi, Tom.

Nice quarter. Congratulations.

Thank you.

The 16.9% gross margin in the quarter -- very robust. Stan, do you think there are further opportunities to improve the company's gross margin? Or are we operating at pretty close to a peak?

You know, never say never. I mean, no, we'll continue to work on it. Continuous improvement is one of our core values. And we are continuing to look at margin expansion, inventory management, process control in our plants. And we will continue to work on that, Tom. I can assure you.

Are there any lines of business, any facilities that are operating at substantially below standard, you know, big negative variances?

Not really. I think we've had a pretty good year in our Fab products group. We haven't had the load on Birmingham that we had last year, but we're still going to have a very good year there. Having a good year at the Langfield. The tie groups have adjusted. I mean we could really use more capacity. I think one thing that's nice, that, really, I'd like to mention is what's going on at Spokane. I think that we are always concerned about that. It's kind of out there in the Northwest. And we do some transit work and we do some industrial work. Doing some work into Canada with the two lines up there. But we've had a lot of success in the quarter, which probably is worth just mentioning. I believe we took five jobs from Los Angeles to California that really totaled about 75,000 ties, which we'll work in over the next three quarters. And we're going to make an announcement probably later on this week. But we just received a commitment on a large job in Montana, which we've been tracking for about seven years. And it's about 90,000 ties that we'll be making at Spokane over the next three quarters, also. So, there's nothing really out there that I think that's totally under -- we can always look for more business. And I think what we're getting from the operations group is that we will always find capacity. And so, we're always looking for more work.

The earlier caller inquired about the SG&A. I'll just pursue that for a moment. Actually, I thought it was running a little bit high. I was kind of curious, Dave. Are there some nonrecurring items running through it? Or are there significant expenses relating to the investigation of acquisitions, other kinds of things we should be thinking about?

You know, Tom, we have some of those items. We've had some relocation costs this year. We've obviously, as we -- a deal that doesn't occur, we walk away from that, that goes straight to the P&L. And we've had some of that, as well, both in the first and second quarters. But not to the point to where I'd call them extremely material. For the second quarter, we probably had $100,000 of deal costs flow through. So I'm not sure what you're definition of material is. And for the year, $160,000, $170,000 of relocation costs that we'll see every now and then, but a little more this year than we've seen in other years. But nothing that -- no one thing other than those type of things that I'd point to and say are unusual.

I see. Over on the tubular side, is tubular going to run a second shift in Q3?

We don't think so. No.

So I think, for Stan, or perhaps Dave, one of you guys mentioned that you're now beginning to book into '09 and you said '08 is fully booked. I gather you mean fully booked for the single shift?

You are right. I mean we can take more business. If [Mr. Forrester and Mrs. Brumbaugh] can give us some more business, we'll find a place to put it. But we're booked at, I should have said, one shift.

Okay. And lastly, I think in the commentary, it was mentioned that the margins in the backlog, I think, were described as improved margins in the backlog. I wasn't sure whether that was improved with respect to this time last year or with respect to earlier in this year. Improved versus what?

All right, Tom, the intention was to communicate improved compared to last year.

How do they stack up over the first few months? I mean are they sort of -- is margin staying fairly constant over the earlier part of this year? Are they changing much?

No, there hasn't been any real significant change.

Okay. Thanks a lot. And again, great quarter.

Thanks, Tom.

There are no further questions at this time. I'd like to turn the call back to Mr. David Russo. Please proceed, sir.

I don't think we had anything else. Thank you all for joining us.

We appreciate your time and have a good day.

Thank you for attending in today's conference. This concludes your presentation. You may now disconnect.