Good day, ladies and gentlemen and welcome to the Q4 2015 L.B. Foster Earnings Conference Call. My name is Ashley, and I will be your operator for today. At this time, all participants are in listen-only mode. And we will conduct a question-and-answer session at the end of the conference. [Operator Instructions] I would now like to turn the call over to your host for today, David Russo, Chief Financial Officer. Please proceed.

Thank you, Ashley. Good morning, ladies and gentlemen. And, thank you for joining us for L.B. Foster Company’s earnings conference call to review the Company’s fourth 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. We do have a fourth quarter presentation on our website under our Investor Relations tab for those that have online access. This morning, Bob will review the Company’s fourth quarter performance and provide an update on significant business issues, as well as Company and market development. Afterward, I will review the Company’s fourth quarter financial results. And then, we will open up the session for questions. 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, cash flows, margins, operating costs, capital expenditures and other key business metrics, issues and projections. 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, except as required by securities laws. 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. We do intend to file our form 10-K a little later today. In addition to the results provided in accordance with United States Generally Accepted Accounting Principles, our commentary includes certain non-GAAP statements including EBITDA, adjusted EBITDA as well as results that exclude certain non-recurring items including an impairment charge, charges related to the Union Pacific Railroad Warranty Claim and the gain on the self concrete tie assets in Tucson, Arizona. Reconciliations of U.S. GAAP to these non-GAAP measurements have been included within the Company’s 8-K filing. Statements referring to EBITDA, adjusted EBITDA, adjusted gross margins are considered non-GAAP measurements. And while they are not intended to replace the presentation of our financial results in accordance with GAAP, the Company believes that the presentation of these metrics provides additional meaningful information for investors to facilitate the comparison of past, present and forecasted operating results. With that we will commence our discussion and I’ll turn it over to Bob Bauer.

Thank you, Dave, and good morning everyone. Thanks for joining us. First, I want to let you know that my comments are going to go in the order of the exhibits that we put on our website, if you are following along with some of those. The focus of my discussion is going to be aimed at our current business climate and the steps we are taking to adjusting to certain changing market conditions. I do want to start though by spending a moment just on a few of the facts for the full year, which are certainly key highlights for our business, the fact that we had a record year in sales of $625 million, held our adjusted gross profit margins flat at 21.6% in the face of some tough markets, lower sales volume, and declining steel prices through the year. And our adjusted EBITDA of $59 million along with $56 million in operating cash flow for the year that led to debt reduction, was certainly for us a great way to finish the year. Those are few of the highlights that represent some of our key accomplishments throughout the year, and a lot of credit goes to our management team for that. But of course, the center of attention will be on our deteriorating markets through the course of 2015 and certain operations, which have been undergoing changes, as a result of the declining sales volume. It has been a year of transition, as we pointed out earlier in the year when we saw changing conditions, particularly in the freight rail industry in North America as well, as a weakening ail market in Europe and the unfortunate loss of business from Union Pacific Railroad, all of which created a headwind for our Rail business that wasn’t anticipated as…

Thank you, Bob. As disclosed in our earnings release, L.B. Foster’s fourth quarter 2015 operating results did include $2.3 million pretax gain related to the sale of certain assets at our Tucson, Arizona concrete tie facility, which were sold during the fourth quarter. This gain favorably impacted EPS by approximately $0.13 per diluted share and was included in other income and expense. Similar to Bob, the order of my comments will follow the slide presentation that is on our website. So, I will start with the comparative P&L for the fourth quarter. Net sales for the fourth quarter 2015 were $139.1 million compared to $161.1 million in the prior year, a $22 million or 13.7% decline. Gross profit margin was 21.5% in the fourth quarter of 2015 compared to 19.6% last year. Last year, of course includes concrete tie warranty charges about $4.8 million. As a percentage of sales, SG&A increased to 17.6%. As a result of the lack of leverage from lower sales at our IOS test and inspection services business. Amortization expense increased by $2.1 million due to the acquisitions transacted since the fourth quarter of 2014. Interest expense increased due to increased borrowings. Due to the acquisitions that we’ve transacted recently, our revolving credit agreement is a $335 million facility, currently bearing interest at approximately 2% per annum. Other income expense was a favorable $4.3 million in the fourth quarter, principally due to a number of items, largely the $2.3 million gain on the sale of the concrete tie assets in Tucson, foreign exchange gains of approximately $600,000, proceeds from steel price fixing settlement of $400,000. So there’s a few items in there that tally up to that $4.3 million which certainly is favorable compared to the prior year. The next slide we look at our results…

[Operator Instructions] Your first question comes from the line of Brent Thielman of Davidson. Please proceed.

I just want to spend a minute on cash flow here, obviously great finish to the year. It sounds like Dave, I think I heard $6 million to $8 million in CapEx in ‘16, obviously below depreciation. Can you expand on that a little bit, why or how you can take it so low to the depreciation here in ‘16?

Well, 6 to 8, Brent, is still well above maintenance CapEx. So that has a couple of projects. And it’s certainly the continuation of our ERP implementation. It’s got a project in there for our coated pipe facility where we are completing an improvement program, so that we can much more efficiently and with better quality coat the inner dimension of pipe for large projects. So that’s certainly within our wheelhouse to bring CapEx that low -- or lower should we desire to but we still are looking at opportunities that are out there, for example the pipe coating business. So, we’re still investing where there’s pretty quick and good returns.

I would add to that Brent, that we spent quite a bit in the last two years, so we made a number of investments here in facilities and some programs. So that’s one of the ways that we’re able to bring it down as well.

Okay. So, the $6 million to $8 million in essence that a lot of growth projects could be kind of a recurring level going forward. Is that fair?

It’s probably fair, if you’re trying to say that could we stay in that range, if we didn’t have a lot of growth investments. I think on one hand I would say that I think we are going to have some of those, probably not to the extent we had in the past. But I’d probably broaden that range of maybe 6 to 10 that I think is probably a range we can stay in unless we have some other big facility investments, and we do have one that we’re thinking about on the horizon but it’s uncertain right now, as to when we’ll pull the trigger on that.

And then as far as using that cash, do you specific targets for debt or levels of leverage you feel the Company should be operating at in this environment?

Yes, I mean we do have. We had internal targets last year, we exceeded them. We have targets this year too. We’re not prepared at this point in time to come out with debt targets or free cash flow goals for the year but once again, more than paying for all of our debt service, CapEx, things like that and still delevering adequately we believe.

And then moving to rail, can you comment on some successes and I guess your ability to kind of find new customers and help offset the loss of business from UNP, particularly thinking about how 2016 develops there?

Well, I would say that you’re going to find that in a couple of areas. One will be in some of the programs we have underway with similar type Class One carriers in the freight rail industry in North America. We have a few programs underway on new products that are going fairly well. Our friction management business continues to grow and we’ve got a couple of new products in that area. And we have a few things that I can’t talk about right now, with some of them specifically that we think is going to improve penetration of a few of those accounts. I would then turn to the transit rail market, both in the U.S. -- or North America as well as in Europe. We have added focus on transit rail for U.S. projects, we’ve made some investments in selling activity there, and we think that’s going to help us here in our home area. But in addition to that two things going on in Europe. One, the focus on transit rail over there but coupled with our TEW Engineering acquisition, we now have these capabilities related to automation solutions for the rail industry, most of which is directed at transit where we’re bringing automation into a variety of different applications that can help transit rail carriers run more efficiently and reduce costs. So, those are a couple of the things that we’re going after there.

[Operator Instructions] Your next question comes from the line of Brady Cox with Stifel. Please proceed.

Thanks guys. I just wanted to follow up quickly on that rail question, I guess just to see, A, considering the CapEx outlook from the Class One being down about 15% and the 5% headwind still going this year from UP, we would have thought that maybe that revenue outlook for 2016 might have been a little bit lower. I know you said transit maybe a little better, Europe’s a little better and there’s some new products maybe on the freight side, but can you just help us bridge the gap between sort the Class One CapEx outlook and the 5% UP headwind and revenue maybe up -- or revenue maybe being flat in 2016?

Well, we provided the flat to down 5%. And of course when you take 5% off of our total Rail business, you get a pretty sizable number. So, I think the low end is certainly taking into -- well, all of -- both of them are taking into consideration what you just said about $15 million of UP business we’ve got to replace. We think that the market is going to be pretty strong right now in Europe. So, our plans at the moment have a nice increase there. We also are looking to the transit market in the U.S. for the plan that looks pretty good. So, there are some improvements that are coming from those couple of areas that we think are -- they are defiantly on the positive side for the year. Rail distribution is probably the one business that we do have to watch through the year and we’ve got to keep our eye on where steel pricing goes with that and how that might affect the top line. But we believe we are already operating at a low point coming out of Q4 here. And while we’ll still see some pressure on steel prices into 2016, we believe we’ve taken that into consideration as well. But keep in mind that capital spending that we talk about is Class One, it is a proxy we use for market strength, but that’s only about a third of our total Rail business sales. We’ve got some nice programs going on with the short line. And we get a fair amount of maintenance spending. So, it doesn’t have to just come from capital type projects. We are in that space where when the volume declines in the industry, they can spend a bit more time in maintenance and we get business from the maintenance budgets. So, all of those things were taking in the consideration with that forecast.

Okay, thanks for the detail. And can you just remind us about how much of your rail business is transit oriented?

That number -- it’s about a third.[Multiple Speaker]

Okay, perfect. And then next, I wanted to go I guess into the test and inspection business. I think in the press release, you talked about there being maybe some recovery in the second half of the year. Can you talk a little bit about what gives you confidence in the market improving in the second half? And if there is maybe sort of a price per barrel threshold baked into assumption, so say it will stay in the $30 to $35 per barrel range, which is still expected to improve in the second half?

Well, we keep our eye more on production than we do the price of oil. Of course, those two are going to be related but we are watching rig counts and we are watching production levels. There may not be as close a correlation between price and those number going into 2016 as production rolls over, and it has been rolling over meaning that is on the decline now in the U.S. And at some point, while there’s excess supply in the market and pretty high inventories, there is a point at which you’ve got to start the production -- the exploration and production activity again with new wells or that production is going to be on the decline. So, the forecasting in this business is very difficult at the moment. It is why we put such a wide range on it. I know if you look in the marketplace, you can find about as many people who think that the price has to be up substantially going out of the end of 2016 in the $40 to $50, even up near $60 a barrel range and there are people that think that the price is going to be depressed for quite a long time. So, we are going to avoid putting specifics out there that is tied to a certain price. We actually build the forecast from talking to certain customers and some assumptions that we make on production levels and prove that that we come up with our forecast. I would tell you that my personal view is that I think the logic I see on the forecast, it says that there will be some pick up in the second half of 2016, seems to be the most reasonable. But there have been a lot of forecast that have been incorrect over the last 12 months. And it’s clearly an environment that’s disruptive and difficult to forecast at the moment.

And as part of that maybe there is some sort of testing requirements that can only be delayed so long or is that not a big piece of it?

No. The better way to think about that is that we provide testing and inspection of drill pipe, casing pipe, all sorts of tubulars that are used in that E&P process that are needed all the time for those particular tubulars. There just happens to be an excess supply of inventory that the customers now have as a result of the fact that there is a lot less drilling activity. So, the need for the test and inspection doesn’t go away. It’s just down because of rig counts being down and drilling activity associated with that’s being down and inventory brought as a result.

And then maybe my last question here, I guess in the fourth quarter relative to at least where we had our numbers that one of the sort variances was SG&A being up a little bit from the third quarter level. Can you guys just talk about sort of what level of SG&A you are contemplating for 2016 or if there’s much in that cost structure that can be decreased in sort of the lower revenue environment?

Well, we are doing a lot to hold the line on increases. Part of the increase in that business when I look at it year-over-year has come from the fact that we had a loss of our base business that was replaced by acquired sales that came with higher SG&A, particularly when you put the interest and amortization costs with it. In Q4, we always deleverage on SG&A because our sales fall seasonally. And our SG&A doesn’t change seasonally like sales does. So, you are always going to see the some of that impact in there. But I would tell you that generally speaking we are paying extremely close attention to where that level is. We -- given our business conditions as you can imagine, we are not bringing new people into the Company at this time and we are looking for new ERP system and the number of other efficiency programs that we have to try to work that number down a little further. I would also add that two things were having an impact on SG&A that are of note for 2016. The ERP program and long with it comes amortization of the software that we purchased last year that’s not in significant; and the other item are the legal expenses that we are incurring due to the litigations with UP. So that one, one day I expect to go away. I’d like to have that sooner rather than later, but that’s there right now. But the added amortization with software system is a headwind that we are going to see from here going forward.

Your next question comes from the line of Beth Lilly of Gabelli Investors. Please proceed.

I have two questions. One is, can you even say much on the call about the UP and status of the ongoing litigation; can you give us any update on where things are at?

We didn’t provide any additional information on that because there really wasn’t anything of material information to present since our last call. The dispute continues to be in a litigation process. And so that processed is moving forward, as we attempt to resolve the issue. But there is nothing really to report that we can report on that subject.

What about the costs in the quarter that were incurred to legal expenses and such; could you break that out?

Well, we didn’t break out the legal. Let me make sure, I understand what detail. Ask the question again.

How much -- the legal expenses paid and then were there any other expense -- was there anything in the income statement related to the UP besides legal expenses?

Nothing beside -- well we have some G&A that relates to the ongoing litigation thus, whether it’s some legal fees and/or consulting fees, all rolling up in the G&A. But we have not disclosed that. In the past, we’ve given -- we actually had a sort of a delta quarter-over-quarter when this was ramping up. But what we can tell you is that the fourth quarter was around $450,000. And I think our estimates for 2016 are in the $1.2 million to $1.4 million range.

1.2 to 1.4 you said?

Yes.

Okay, got it. And then, can you talk about the addition of Brad Vizi to the board, and what do you think he brings to the board and what qualifications and why you decided to add him?

Well, Brad is associated with Legion Partners and together they have taken a position in the Company now that’s put them as our largest shareholder. And in recognition of that and his perspective on shareholders view of the Company along with his understanding of capital market and investments in companies like ours, he has been investing in small cap companies and analyzing companies like ours for a number of years. The board recognizing that we had a retirement that was also taking place with one of our directors that’s been around 10 years, have decided to add Brad to the board, I think before this retirement occurs. But to really get a good perspective on the shareholders point of view of things as well as again his understanding of looking at companies like ours and how we can create value, in addition to the things we know how to work on, day to day in our operations and design of new products and those sorts of things, there’s certainly an important element of understanding efficient uses of capital and looking at other means to create shareholder value that we believe Brad has some good ideas on and we have welcomed his participation on the board.

There are no more questions at this time, I will now turn the call back over to Robert Bauer, CEO.

Well thanks to everyone. I know we’re a little long winded this time due to the fact that not only do we have the quarter but the close of the year and so many different things that were moving around in 2015. But, we appreciate your attention and joining us on the call. And we look forward to talking with you next quarter. Thank you very much.