Good day, ladies and gentlemen and welcome to the quarter one 2015 L.B. Foster earnings conference call. My name is Emma and I will be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question and answer session toward the end of this conference. [Operator Instructions]. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Mr. David Russo, Chief Financial Officer. Please proceed, sir.

Thank you, Emma. Good morning, ladies and gentlemen. Thank you for joining us for L.B. Foster Company's earnings conference call to review the company's first quarter 2015 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 review the company's first quarter performance and provide an update on significant business issues and company developments. Afterward, I will review the company's fist quarter financial performance and then we will then 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 30 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 our businesses and markets in 2015, cash flows, margins, operating costs, capital expenditures and other key business issues. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from statements we make today. 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, except as required by law. All participants are encouraged to refer to L.B. Foster's annual report on Form 10-K for the year ended December 31, 2014, as updated by any subsequent Form 10-Qs or other pertinent items 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. In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles, our commentary includes certain non-GAAP statements which present earnings before interest, taxes, depreciation and amortization or EBITDA. A reconciliation of U.S. GAAP to this non-GAAP measurement has been included within the company's 8-K filing. Statements referring to EBITDA are considered non-GAAP measurements and while it is not intended to replace the presentation of our financial results in accordance with GAAP, the company believes that the presentation of the EBITDA, especially after the recent acquisitions will provide additional meaningful information to investors to facilitate the comparison of past and present and forecasted operating results. With that, we will commence our discussion and I will turn it over to Bob Bauer.

Thank you, Dave, and good morning, everyone. Thank you for joining us today. I am pleased to be discussing the company's results with you today. It was an exceptional quarter for us because not only are the financial results in line with our expectations, it had several accomplishments that support our initiatives aimed at creating long-term value for our shareholders. Some of the financial highlights for the quarter include sales increasing 24%, our gross margin is up over prior year, EPS growth came in at 17% and the EBITDA growth came in at 46% in the quarter. And among our strategic highlights that include completing the acquisitions of to TEW Engineering and Inspection Oilfield Services, which I will refer to as IOS throughout the remainder of the call and that follows the December 30 completion of Chemtec Energy Systems. So it's been a busy time for us. This is change in the mix of company sales in a way that will increase our exposure, particularly to long-term energy investments as well as increasing our mix toward service business models which has been our intent. We will have more solutions capabilities for pipeline customers and much deeper solutions capabilities for rail customers, especially in Europe. We have added engineering talent with these and we have created the kind of scale we needed in Europe to reach more customers. And we now have a footprint of service centers across the U.S. in key energy development areas from which we can launch additional services. We are particularly excited about that. And we have expanded the number of customers we do business with, again, particularly in the energy markets. Completing these acquisitions in such a condensed period of time was a significant accomplishment for us. Some of this was guided by the need to…

Thank you, Bob. Net sales for the first quarter of 2015 were $137.9 million compared to $111.4 million in the prior year, a 23.8% increase. Net sales increase was due to a 146% increase in tubular and energy services, a 5.7% increase in rail products and services segment and a 25.2% improvement in our construction segment. The rail segment sales increase was due principally to improved sales in the Rail Distribution, Allegheny Rail Products and concrete tie businesses, partially offset by a decline in our transit products business as activity related to the Honolulu Transit Project is all but complete. It was less than $2.5 million of revenue left to recognize. Sales were negatively impacted in the rail segment by approximately $1.3 million in the quarter due to the strength of the dollar as compared to last year. The tubular segment sales improvement was mostly due to our recent acquisition of Chemtec and IOS, as Bob discussed, as well as increased coated products sales fueled by our ball winch specialty coatings business. This was partially offset by a decline in our threaded products business. Our legacy coated business also reported increased sales over the prior year, even though our Birmingham facility stopped production for the first three weeks of the first quarter to complete the installation of new production equipment which we expect will improve capacity and efficiency of that plant. This improvement was completed successfully and is up and running and meeting all of our expectations thus far. The construction segment sales increase was due to a volume related increase in sales of piling products as well as increases on the concrete buildings division and a contribution from our Carr Concrete products acquisition. This was partially offset by a decline in our fabricated bridge product business sales. As a…

[Operator Instructions]. Okay. The first question comes from the line of Mike Baudendistel from Stifel. Your line is open. Please go ahead.

Thanks and good morning. Just wanted to ask you with the comments on Union Pacific, can you just remind us or give us some guidance as to how big of a customer they are, maybe the 2014 revenue from UP?

Yes. In the past, Mike, on an annual basis, we would do roughly in the neighborhood of about $40 million a year with UP. That has been declining somewhat here lately. And as I mentioned, while we are still making some concrete ties for them, we have removed substantially all of the other business from our forecast. So that wouldn't be in there going forward and wouldn't be something that you had to take into consideration.

Okay. And I think you said on earlier calls that there were certain contracts with Union Pacific that rolled over later in 2015. Is UP under obligation to purchase concrete ties in a certain volume from you? And have they already gone ahead and not renewed those contracts? Just any details on how those things work?

Yes. I will separate the concrete tie from the rest of the business. So with the rest of the business, they can take that business to whomever they want to and there isn't really any contract in place that would assure us that we will retain the business from here going forward. With regard to concrete ties, there is a supply contract in place for revenue ties that they would purchase from us that pertains to our Tucson facility. And so that remains in place. It was the contract that was renewed in 2012 that had a five year term on it. So that meant 2013 through 2017 is the term on that contract.

Great. That's helpful. I also want to ask you on the SG&A. That increased sequentially. I know you said that a lot of that was due to acquisition related costs. I just wanted to get a sense for were any of those acquisition related costs that showed up in the SG&A line, one-time in nature and are likely to go down? Or is the 1Q a good run rate?

Well, we incurred approximately, I would say, $350,000 of just straight acquisition cost, Mike. And then, probably another $150,000 or so of, what we would probably call, integration costs. So both, certainly acquisition costs are behind us. We will certainly continue to spend a little bit of money on integration. And then the rest of it was just, it was a significant amount of SG&A that's just the current run rates of our new acquisitions that will continue.

Okay. And in your press release, you talked about continuing the aggressive acquisition strategy. I was thinking maybe you would take a little bit of a breather now, with lot of the recent acquisitions. It sounds like you are still pursuing them aggressively. Am I interpreting that correctly? And are those likely also be related to energy?

No. I think, Mike, I’d go with what you started off saying earlier in your point, we do need to take a little bit of a breather and digest what we have. So what we tried to say in our earnings release and comments is that we have previously talked about having a more aggressive acquisition strategy. And I think it's pretty fair to say that we have done that and we have got a lot completed. I am incredibly excited about the companies that are now a part of L.B. Foster. And it took a lot of effort to get this done in the last 90 to 120 days. It would be good for us to just settle in here right now and work on those. And that's where our concentration is focused. And beyond that, I will just say that when you have a more aggressive strategy, your funnel tends to get more full of prospects. And so we see more deals out there now than we had in the past. So that means that if you were still always coming across our desk from time to time, but if I could control the timing I would certainly like to take a little bit of a breather right now and get these integrated. But we will see one unfolds and we will see what comes across our desk here the balance of 2015.

Great. That's helpful. And then the last one from for me is, IOS' gross margin. It looked like those were a little bit higher than L.B. Foster's legacy business gross margins. Can you just talk about how that margin has trended for the IOS business, since it's new to us? Is that down substantially, because of the lower energy prices?

Well, let me say this. We are not going to put up a full profit numbers on IOS. But in order to help you try to put together a model, the IOS business is off about 30% from prior year, as we anticipated. And we think that is very much in line with what the rest of the industry has seen and given the fact that it is a service business model but it actually helps operators cut costs. We are actually seeing new business come to us as a means that end users are using to actually reduce costs on their tubular assets in lieu of buying new products. As a service business, they can adjust their headcount and it is largely a labor related business with a service model as opposed to manufactured products. So there is bit less overhead as well. They have been able to do that and they have been able to keep their gross margins at a pretty good rate and that rate would be a bit better than the L.B. Foster Company average, yes.

Okay. Great. That's all from me. Thank you.

Yes.

The next question comes from the line of Brent Thielman of D.A. Davidson. Your line is open. Please go ahead.

Hi, Brent.

Good morning, Brent.

Hi. Good morning. Bob or Dave, on your revenue guidance, can you just walk me through the expectations by segment? Are you assuming roughly flattish or lower year for rail and construction with the growth principally coming from tubular and energy services?

Well, I will answer that, Brent, I guess from the base company standpoint. Rail is the least affected by the acquisitions. TEW Engineering was the meaningful one that we got done there in January, but if you look at the base company, the marketplace is still in good shape and we expect continued spending there as well as project activity in the transit space. So as we began the year, we expected that the sales would be up modestly meaning few to mid-single-digit percent, but we have made adjustments to that now because we have removed Union Pacific business from those sales. So that's what would be affecting the rail business. Construction is going to be up nicely in our forecast because piling should rebound. Piling was, we didn't have a great year last year and so we are back to thinking that we ought to have double-digit growth in the piling segment. The bridge segment in construction will be roughly flat year-over-year. But our concrete buildings business is actually looking very good right now and that also includes our adding Carr Concrete acquisition earlier in 2014. So the full year impact of that is not so great, but the integration and synergies and just the rest of the activity in the marketplace, including our organic growth programs, I think are going to result, right now, looks like in a double-digit year for that. So, construction, I have hopes to continue reporting positive news on that. And then tubular, yes, there is so much impact from the acquisitions we are now referring to as the tubular and energy services segment that most of it will be impacted by that. But our core coated products business is doing good, but that's offset a little bit by threaded products, which is probably going to have a little bit of a down year single digit because there isn't much of a drought in the Southeast like there is on the West Coast.

All right. That's very helpful. When you look at all these deals you have done, any thoughts or estimate for cost synergies you think you will realize over the next 12 months or beyond that?

Well, we have some that we are working on. Of course, we are not in a position to really put out a number on that right now. We are still working through some of that. I would tell you that from a cost standpoint, it wouldn't be a very substantial number because we are not consolidating factories. These aren't companies that are going to be smashed together with existing companies. Some more of our synergies are ones that are out in the marketplace and using an IOS service platform to launch new service offerings to customers, things of that nature. We have some facility expansion to do in some cases like for Chemtec. They are already at capacity. So the kinds of things that we are going to get some cost benefit from or in the back office side, some of that infrastructure, but some of it is not going to go down because these companies need a little bit more support from that standpoint. So don't think of that being a real big number anyway.

Okay. And then any, I guess, thoughts on the run rate for amortization and interest costs going forward, just with all these deals combined?

For interest, Brent, our forecast for this year is right around $4.6 million, give or take a little bit depending on where rates may go and when our cash flow will enable us to maybe accelerate some debt pay down versus not, but about $4.6 million. And right now, it's a little difficult to give you a good amortization run rate because we really have not put the IOS excess purchase price allocation into our numbers from the amortization side. We are still working on the valuation and the allocation of purchase price. But the amortization will be in that $12 million range probably this year.

Got you. And just last clarification, the $18 million to $22 million in CapEx this year is inclusive of IOS?

Yes.

Okay.

It includes all the acquisitions, the whole company.

Great. Thank you.

Yes.

I would not like to turn the call over to Mr. Bauer for closing remarks.

Well, all right, great. Well, sounds like the questions were brief this time around. I guess that's good. I will take that as a message that we had a thorough report. Again, I appreciate you joining us today and we will look forward to catching up with you next quarter. Thank you very much.