Good day, ladies and gentlemen, and welcome to the L.B. Foster Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the call over to Mr. David Russo, Chief Financial Officer. You may proceed.

Thank you, Francis. Good morning, ladies and gentlemen. Thank you for joining us for L.B. Foster Company’s earnings conference call to review the company’s third quarter 2012 operating results. My name is David Russo and I am the Chief Financial Officer of L.B. Foster. Hosting the call today is Mr. Robert Bauer, L.B. Foster’s President and CEO. This morning, Bob will provide an overview of the company’s third quarter performance, give an update on critical business issues and discuss market conditions. Afterward, I will review the company's third quarter financial performance and then we will 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 7 days. During today’s call, our commentary and responses to your questions may contain forward-looking statements, including items such as the company's outlook for the remainder of 2012 and beyond, our thoughts regarding the concrete tie warranty claim, cash flows, margins, and capital expenditures. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. These forward-looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release the results of any revisions to these statements in light of new information or future events. All participants are encouraged to refer to L.B. Foster’s annual report on Form 10-K for the year ended, December 31, 2011, as well as to other documents filed with the Securities and Exchange Commission for additional information about L.B. Foster, and to learn more about the risk factors that may affect our results. Additionally, while forward-looking statements will be made today, L.B. Foster does not provide specific earnings guidance. With that, we will commence our discussion. And I will turn it over to Bob Bauer.

Thank you, Dave. Good morning, everyone, and thank you for joining us. I am going to focus on 2 significant messages from our announcement this quarter. First, our Rail and Tubular businesses are having a very good year and are really driving the overall performance of the company. And second, we have made substantial progress on resolution of the Union Pacific warranty claim. I'll provide you with details on the approach to begin putting this behind us. I want to begin my comments with the Union Pacific and concrete tie warranty claim status since it did have an impact on the quarter's results and since it's reached the point where I can give you a clear explanation of how we'll resolve this. But before I go into it, I do want to mention the headlines of our press release that start with $170.3 million in sales, which was up 7.6%. That was driven by a 24% increase in the Rail segment sales and a 53% increase in our Tubular segment sales. This is driven by strong order input in the quarter for these 2 businesses, which I am happy to say more than offset the weakness that has continued in our Construction business. We did take a $3 million charge in the quarter to accurately reserve for the concrete tie warranty claims. This brought our reported earnings per share to $0.83, but without the charge, we met $1 even in our EPS number. Order entry in the quarter was good, $140.8 million. That was 12.5% above last year's third quarter. And cash flow was also solid at $21.6 million for the quarter, which has further strengthened our balance sheet as the company also remains virtually debt free. So those are the headlines. Let me start with this Union Pacific claim…

Okay. Thank you, Bob. As a backdrop to the financial review, the following items I believe are noteworthy related to our third quarter performance. As noted in our earnings release and discussed by Bob, we recorded an additional $3 million warranty charge related to concrete ties manufactured in our Grand Island, Nebraska facility prior to its decommissioning, which occurred in February of 2011. And save for the warranty charge, we recorded as Bob discussed, the company turned in another strong performance in the third quarter, including a solid sales performance, good margins, robust order entry and cash flows. And lastly, also as mentioned, we sold the assets and liabilities of our Precise Structural Products division in the third quarter. The operating results of Precise as well as a $300,000 pre-tax loss on the sale have been classified as discontinued operations for all periods presented in our earnings release. Moving to the financial review, sales for the third quarter of 2012 were $170.3 million compared to $158.3 million in the prior year, a 7.6% increase. The sales improvement was due to a 53% increase in Tubular segment sales, 24% increase in Rail segment sales, partially offset by a 24% decline in Construction segment sales. The Rail segment sales improvement was principally due to a 32% increase in rail distribution, as Bob mentioned, we had small downward impact on margins and a 78% increase in concrete tie sales. These increases were largely due to unit sales increases. The Tubular segment sales increase was attributable to both tubular divisions, especially coated products, and these increases were also principally volume related. The Construction sales decline was due to across the board decreases incurred by all the divisions in that segment: piling products, fabricated bridge products as well as concrete buildings. As mentioned in our…

Thank you. [Operator Instructions] Our first question is from the line of Robert Kosowsky from Sidoti.

Yes. I was wondering, first off to Dave, could you do the backlog numbers again? I think I missed it.

Yes, sure. The backlog at the end of Q3…

25 right, 25.8.

Yes, 25.7 at the end of the quarter, and that was up…

What was it in our Rail and Tubular?

Well, we actually - we don't usually disclose that on the call, Rob, but I think we can go ahead and give that to you. Backlog for Rail was about $155 million.

Okay. And then I guess just does that include the Honolulu project and kind of how do we think about the Honolulu project, I guess heading into the election next week?

It does include Honolulu, because obviously it's - we have a contract with a contractor performing the majority of the work there. So it does included it and it includes it to the tune that we did actually incur or report about $4 million of revenue as we had in our release from the Honolulu project. And we are certainly cognizant of the issue there. There is some political issues related to candidates that are running for the mayoral election in Honolulu. One is obviously pro this project and one is against it. And we are obviously anxiously awaiting the outcome of that election.

Okay. But no, I guess in the sense -- if he does elected, do you think that the project would probably be curtailed?

That -- there is a risk of that, Rob, but we just - we couldn't tell you right now .

Okay. And then secondly with regards to the progress you are making on the UP claim is you said you made an offer to them about changing the warranty from 1.5 replacement to 1 and extending the term. Was this offer accepted and kind of just $27 million been agreed upon by all the parties? Kind of where does that stand with kind of how firm the liability is?

Well, let me comment on the warranty policy first. When you look at all the product we shipped out of Grand Island, there was a transition that was made back in the early 2000 period around 2003. We used to have a 15-year warranty policy with a 1-to-1 replacement ratio and we went down to a 5-year warranty with a 1.5-to-1 replacement ratio. It's all of those ties that had a 5-year warranty policy attached to them that we have made an offer to revert back to the 15-year warranty protection policy and a 1-to-1 replacement ratio. And Union Pacific has agreed that, that is a direction that they want to take, and we are working out the details and using that as the premise from which we are proceeding. It is also the basis upon which we are evaluating our exposure in the reserve, but the reserve that we have taken, kind of Part 2 of your question there, we don't discuss that with anybody outside of the company so we are - that reserve is based on our anticipated claims from all customers based on the rate at which we think we are going to see field failures occur. So there isn't a dollar amount that we are negotiating with Union Pacific. We are moving forward on the basis that they will have - that we’ll have a warranty policy, that will protect them and that we’ll stand behind our product and we are beginning to very soon now move into the phase of managing the replacements in the field .

[Operator Instructions] Your next question is from the line of Brent Thielman from D.A. Davidson.

Yes. I guess, any initial indications or expectations you could offer for the Rail business into 2013 just based on kind of what you are hearing maybe from the Class 1s and elsewhere?

Well, the Class 1s have not published anything at this point and they typically don’t until we get into the year. Probably what we are focusing on more than anything else as this year was a significant year in terms of increased capital spending, on top of 2011 being a significant increase in capital spending over 2010. So they have certainly restored their capital spending to a level which is pretty high compared to what they will normally spend. So at this point in time to think that 2013 will be another banner year would probably be too early to tell. And I think 3 years in a row on that might be a little too bullish for how things are going. I like the fact that these guys are winning business. When you look at the petroleum products that they beginning to carry, the crude oil they are beginning to carry, all these things that are making up for some of the coal that’s gone down, if you think that maybe there will be a little bit more restored in coal traffic next year, a lot of things are pointing in a good direction for them. So I don’t think that they are going to have a tough year next year or be curtailing anything, but it’d be hard to sit here to say that they are going to boost it again by a considerable amount after 2 years of some really strong increases .

Sure, that’s helpful. And then I guess with regard to the balance sheet, cash around $10 a share, what’s your plans initially that you are looking at here.

Well, I gather that’s an acquisition question.

Could be.

We are always, through, our strategic planning process looking at ways to utilize that cash and invest it in the right areas for the company. Of course, I wouldn’t be able to share anything with you in terms of acquisition activity, but I think you know from the discussions that we do have publicly that it is a key part of our growth strategy going forward. We have our eyes wide opened and are looking for opportunities in the marketplace, but we also want to be prudent and not act too quickly and we are not anxious to just go out and do a deal for the sake of boosting our top line. We are very much focused on a strategy that we have in the company right now. We have some particular areas that are much more attractive to us than less and we are working them. And the timing of those sorts of things is always difficult to predict.

Okay. And then just kind of the housekeeping question, Dave. Any significant expenses in SG&A related to the UNP claim this quarter that shouldn’t be there going forward?

Just some concrete tie testing costs, Brent, but that’s really about it. And those are – you know, on a year-to-date basis, they were somewhat significant, just probably a little under $2 million, but for the quarter less so, we spent a lot less in Q3 as we were obviously spending more time analyzing the results of all the work that the material scientists have done for us over the past 16, 17 months.

At this time, we have no other questions in the queue. I would like to turn the call back over to Mr. Robert Bauer for your closing remarks.

Okay, great. That was a short one. I gather that comes from having a good explanation maybe along the way here, but thank you for joining us. We appreciate your interest, as always, in the company and in how well our business is going, and we'll look forward to the next time we meet to close out the year here, which, with the way things are going, we will have a good news report, I am sure for 2012. So thanks for joining us. Bye-bye.

Ladies and gentlemen, this concludes your presentation. You may now disconnect and have a good day.