Greetings. And welcome to the L.B. Foster Second Quarter 2016 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now pleasure to introduce your host Mr. David Russo, CFO of L.B. Foster. Thank you. You may begin.

Thank you. 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 2016 operating results. My name is David Russo and I’m 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 first quarter presentation on our website under the Investor Relation’s tab for those that have online access. This morning, Bob will review the company’s second quarter performance and provide an update on significant business issues, as well as company and market developments. Afterward, I will review the company’s second 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 certain 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 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 law. All participants are encouraged to refer to L.B. Foster's Annual Report on Form 10-K for the year ended December 31, 2015, as updated by subsequent Form 10-Qs or other pertinent items filed with the Securities and Exchange Commission for additional information about the risk factors that may affect our results. In addition to the results provided in accordance with United States Generally Accepted Accounting Principles, our commentary includes certain non-GAAP statements, including EBITDA,…

Thank you, Dave. Good morning, everyone. Thank you for joining us. I will begin by providing an overview of our operational highlights in the second quarter, I am going to discuss segment results and then provide my perspective on the current market environment, and when I am finished I'll turn it back over to Dave to discuss more detail about our financial results. We wanted to help him open up with the impairment charge, so that as I go through my comments and he goes through his, later we won't continue to talk about the exception of the impairment charge. So my comments regarding some of our performance are going to exclude the impairment charge. So during the second quarter, we delivered sales of $136 million, gross profit margin of 20.5%, our adjusted EBITDA was $7.5 million and adjusted net loss of $0.11 per diluted share, each of these results was unfavorable to prior year quarter. We continue to face challenges in many of the markets we serve, including the headwinds driven by the current commodity cycle, along with industrial market weakness, a weakness that we experienced in the first quarter continued into the second quarter and that’s reflected in our sales and bookings. Profitability in the quarter was impacted by deleverage on lower volume, as well as pressure on gross margins, particularly in the tubular and energy services segment. We were encouraged by our gross margins in rail and construction which remained stable despite the lower sales volume, reflecting the continued actions we have taken to improve our operational efficiency. I am going to go through each of the reporting segments, and I'll begin with the rail products and services business segment. Rail sales of $67.5 million decreased 22.3%. The decline was driven by lower sales in three areas,…

Thank you, Bob. Net sales for the second quarter of 2016 were $136 million, a decrease of 20.7%, as compared to $171.4 million in the prior year. Gross profit margin was 20.5%, a decrease of 120 basis points, as compared to 21.6% last year. We experienced margin compression in our tubular and energy services segment and to a lesser extent the rail products and services segment, while the construction product segment improved by 120 basis points over the prior year second quarter. Moving on to expenses, consolidated SG&A decreased by $961,000 or 4% to $23.3 million due to our ongoing cost reduction initiatives and also due to $700,000 of lower acquisition and integration expenses, which were partially offset by increased litigation expenses of $850,000 and increased ERP cost of $800,000. As a percentage of sales, SG&A increased by 300 basis points to 17.2% driven by the lack of leverage from the declined in sales. Amortization expense decreased by $667,000 million to $2.8 million in second quarter, due principally to the impairment charge. Interest expense increased by $364,000, due principally to the write-off of deferred financing cost as a result of the amendment to our credit agreement. Our amended revolving credit agreement is a $275 million facility currently bearing interest at approximately 2.5% per annum. Other expense increased by $300,000, due principally to an operating loss incurred by a joint venture where the company is a 45% partner. The effective tax rate for the second quarter of 2016 was 28.9% compared to 31.5% in the second quarter of last year. The effective rate was significantly impacted by the asset impairment charges, which related to both tax deductible and non-deductible assets. The second quarter net loss was $92 million or $8.96 per diluted share compared net income of $5.4 million or $0.52…

Thank you. [Operator Instructions] Our first question comes from the line of Mike Baudendistel from Stifel. Please go ahead.

Hi, thanks. Good morning. Just wanted to ask you, I guess, on the impairments, I am just looking at what you just reported and what you reported for the impairments in the third quarter '15 and is it safe to say that given where the purchase price was there really shouldn’t be any further impairments if you taken down the goodwill and - at least IOS fully?

Well, certainly a lot less likely Mike, there does remain goodwill and intangible on our books. We did a - what we consider to be a pretty thorough review this quarter and its substantially complete, but there could be a couple of small adjustment in Q3 as we finalize. We don’t expect anything too significant though.

Okay. And then just wanted to ask you, you had your cash flow statement in the press release. But I think as you said operating cash flow in the quarter is about $11 million and that was from improvements in working capital. I mean, is that really a one quarter boost to working capital, I mean, could you tell us what it would be without that in if there is further improvement from working capital to have on cash flow from operations next few quarters?

Yes, I mean, I just consider that basic just good working capital management, there wasn’t any really one time significant adjustments to working capital, to the extent that sales are weak, we continue to work that and will get some working capital held, that sales should obviously start to improve, as typically they do in the summer months, especially Q3. We do everything we can to keep the increase in working capital down, as low percentage of sale – of the sales increase.

Okay. And Bob I think you mentioned that you are still investing in some new products, could you just give us more detail on what those are exactly?

Yes, I'll say the primary areas where you see that activity. First in our automation solutions, which are aimed at largely the transit markets, there is a number of projects going on there that are all intended to enhance products for controls and displays and connection in the signaling systems, as well as safety systems like our lidar [ph] detection system. So that’s one area where we have a fair amount of engineering. The second is in rail technologies. We continue to move our product line forward in the area of production management, and including other lubrications and products that are all aimed at reducing ware and tare on the rail. So we're constantly launching some new products there. And even in some of our traditional product lines, like our insulated joint product line and our rail products business, product such as our indoor joint and taper joints. And so products only we provide into the market with some of the unique equipment that we have. Our products that we just launched and there is some new fastener systems that are also aimed at transit products in there as well. So those is a fair amount going on in the rail business there. Even in our tubular and energy services, you know, we're launching a new strainer product and the new measurement system in the Chemtec business. And then probably the last one is in our precast concrete products. There is a number of new solutions, they are more into solutions than they are new products. So they are products that are essentially aimed at taking our core confidence of all things that we put inside the concrete buildings, like lighting, electrical, plumbing, egress systems, safety systems, those sorts of things and incorporating those into different types of active gears. So we want to take advantage of those opportunities whenever we can. We're trying to protect those investments, while we're being very sharply focused on what our spending looks like.

Sounds good. Thank you.

Yes. Thank you, Mike.

Thank you. Our next question comes from the line of Brent Thielman from D. A. Davidson. Please go ahead.

Thanks, good morning. Question on the $7 million in annualized cost savings, when does that start to take effect?

It has already started to effect. The bulk of the actions that contribute to that started to take place in April and they took place over the course of April and May. There are some of those that are still underway. I can tell you there is a few reductions for example that have to worked their way out of the system. And those are particularly in areas where we provided some notice to people that are going to work their way out of employment with us. So some of those will go into Q4 and we continue to ramp down some of the spending that’s in the discretionary spending area for that. But the bulk of it you know, the actions are completed on the bulk of it and as we move into the third quarter here, with the far, far majority of it those already been completed.

Okay. And then the 28% decline in - I believe it was the distribution businesses, how much of that is changed in steel prices versus volumes?

So Mike, that depends on which business obviously. Rail distribution business is more significantly impacted, pricing is down about 19% in the second quarter, while volumes were up slightly, piling has been much more of project business, less impacted by price, but however prices were still down as were volumes. But I would say piling was more impacted by volume than price.

Okay. And then you guys have a lot of moving pieces just within the three segments and which seem to be getting or doing a little better in some or little worse, maybe at a higher level, can you talk about how you see the shifts in mix I guess, across the company affecting your margins, are you getting some benefit, because distribution is a little smaller as a percentage of sales, just how do we think about that?

Well, anytime distribution declines for us and that being rail distribution and piling. We do get some favorable mix from that because those are our lowest margin products, whether you are talking about gross margin or on the pretax income line. However, they are significant in dollars and there isn’t a whole lot of spending that comes out with them. So you know, it starts to have a substantial impact on the EPS line, but that business very attractive. But that’s probably the most significant aspect of mix. You know, within all of our other product lines, of course, we have gross margins that do vary some, there is some of our businesses like rail technologies that are in the higher margins versus something like concrete ties or other rail products that are little bit on the lower side. I think the way you got to think about it going forward is we've got to get our tubular and energy services growth margins restored and that probably - I mean, that will have more impact than any mix item I could point to you towards, other than what I said about the distribution businesses. Once that happens that will move that number up substantially more then any kind of I think product mix forward.

Okay. Well, maybe, then just kind of rolling right into that, the comments on the signs of maybe some stabilization there in the test business, what were the biggest challenges there, what's the competitive environment look like in terms of your ability to get those margins back up?

Well, as far as the competitive environment goes, it continues to be very competitive. The market has shaken out a few players, but there is still more than enough out there. Our price levels remain depressed, as they declined during the period when the market was falling rapidly. I believe that is going to take some time for those prices to recover and what I mean by that is that’s not in the next couple of quarters, I think it is going to take more than that for us to get prices back. But we would like to see the beginning of that taking place here in the next quarter or two. The thing that I pointed out there, that I thought was most significant is the fact that we're seeing some increased activity in backlog grow and primary facility in Channelview, Texas, that’s one of the firs signs that we look for and its improving there and it looks like there is some customers that have work through all of their tubular inventories that were gaining some additional business from that. But I see us having the ability for margins to improve substantially when volume comes back because it’s where we've gotten our cost structure and we're going to continue to keep that cost structure in line and continue to even work on it further. But the first thing that I always point too in a situation like this, is you've got to see the market stop declining is the firs sign that we are looking for. And we feel like we are at that point, given the history in the last five months here, exactly how rapidly its going to turn up is what everybody is looking for, so it’s kind of hard to put our finger on at the moment. But that coupled with the fact that there looks like there maybe some price pressure building, puts us in a position where we're going to be very focused on trying to go out and get some incremental business here to get that volume back up.

Okay. Thank you.

Yes. Thank you, Brent.

Thank you. [Operator Instructions] Ladies and gentlemen, we have no further questions in queue at this time. I would like to turn the call back over to Mr. Robert Bauer for closing comments.

All right. Thank you, everyone for joining us. If you have anything else you'd like to follow up on, please get in contact with us here, otherwise we'll look forward to catching up with you here next quarter. Thank you very much. Bye-bye.

Thank you. This does conclude the teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.