L.B. Foster Company (FSTR) Q2 2016 Earnings Report, Transcript and Summary

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, adjusted EBITDDA and certain other metrics where we have added back the effect of an impairment charge. Reconciliations of US GAAP to non-GAAP measurements have been included in the company's 8-K filing. Statements referring to EBITDA, adjusted EBITDA, as well as certain measures, excluding the impairment charge are considered non-GAAP measures, 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 measures provides additional meaningful information for investors to facilitate the comparison of past, present and forecasted operating results. Our discussion will also include segment gross profit metrics, which are considered non-GAAP measures, upon review of the Securities and Exchange Commissions, recently updated compliance and disclosure interpretations, the company concluded that segment gross profit measures are considered non-GAAP measures. We have not modified in any way the assumptions, allocations or calculations of gross profit in any period. However, we feel oblige to indicate that they are non-GAPP. Our company earnings presentation reconciles these non-GAAP measures to the corresponding GAAP segment cost measure. As disclosed in our earnings press release, in the second quarter we recorded $128.9 million charge to write-down certain assets that were deemed to be impaired. The assessment of impairment was due to continued weaker than expected performance and downward revisions to projections of certain of our reporting units, especially those included in company's tubular and energy services segment and the rail products and services segment. These factors, as well as the significant reduction in the company's stock price, during the second quarter impacted our decision to perform and impairment analysis as of June 1, and the following reporting units were impacted. We'll start in the tubular segment. We wrote down $42.9 million of intangible assets and IOS, as well as $15 million of IOS property, plant and equipment. At Chemtec we wrote off the remainder of Chemtec's goodwill totaling a $11.9 million, as well as $14.2 million of Chemtec's intangible assets. The company took a charge for the coated products and services reporting unit related to goodwill of $16.6 million leaving no remaining goodwill at this reporting unit. Lastly, in the rail segment we wrote the rail technologies reporting unit goodwill by $28.3 million, leaving $18.8 million of goodwill at this reporting unit. These items totaled $128.9 million, the tax benefit on these charges was $38 million, leaving an after tax impact of $90.9 million $8.86 per diluted share. And $57.2 million of the impairment adjustments related to definitive lived intangible assets and $15 million related to property, plant and equipment, there was a $611,000 favorable pretax adjustment to amortization and depreciation expense for the month of June. As a reminder, these charges are non-cash charges that do not impact our EBITDA, cash flows or bank covenants. With that, we will commence our business review discussion, and I will turn it over to Bob Bauer.

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, concrete ties, rail distribution and rail technologies, with rail distribution and concrete ties accounting for 85% of the decline. Sales to Union Pacific rail road were down approximately $5 million year-over-year which had an impact on both the concrete tie and the rail technologies divisions. Our rail distribution business is largely being affected by both market weakness and the price of steel. Gross profit margins in this segment 22.1% decreased by only 60 basis points. As we experienced reduced sales volume in most divisions in this segment, our operations team did a great job lower cost and focusing on productivity. Several actions we took last year to improve productivity through capital investments and lean initiatives are paying off and I am proud of the results our operations people have accomplished to protect margins despite soft sales. The North America freight rail market continues to struggle, with lower traffic as carriers make adjustments to react to an environment where coal has declined substantially and many other commodities are under significant pressure as well. As a result of that, I want to spend a minute going through a few of the highlights of the numbers for the North America Class One carriers. This is US and Canada reporting. In the second quarter total North America traffic down 8.7%, intermodal shipments down 5.6% and the big story is the commodity car loads which were down a 11.6%. And as is been the case, coal led the way with the commodity car loads, coal declining 27% and not far behind it was petroleum products which declined 22%. On a year-to-date basis, total North America traffic is down 7.5%, intermodal down 2.3% and commodity car loads down 12%. If you remove coal from the second quarter numbers, commodity car loads were still down 7.1% versus the 11.6%. So it’s not just a coal story. Motor vehicles, they were up 1%. This was the only category all the time to increase in the second quarter. So we anticipate that there will be continued restructuring by all freight rail road carriers, we do not anticipate coal volume returning to prior year levels, given the transition that’s underway toward natural gas and the regulatory environment that has made coal unattractive. In my opinion the North America freight rail market is headed for a new level of capital spending and operating expenses that recovers from the industrial recession it now faces. There is no change in our optimistic outlook for transit system investment and that’s worldwide. We continue to devote more attention to this market and specifically investing in unique systems, projects and technology that’s emerging from our European business. With such a heavy emphasis on transit rail in Europe, we are sharply focused on ways to improve safety and efficiency for trains and operators through our automation solutions. Similarly, we have some great opportunities in new markets for our precast concrete solutions, given our concrete tie volume decline, these opportunities represented a great way for us to offset the loss volume in ties, which I'll comment on as I address the construction segment. So let me move into that segment now. Construction sales decreased 18.5% in the second quarter due to lower sales, but then piling in bridge products with piling accounting for 90% of the year-over-year decline in this segment. Included in the 18.5% decrease, our sales of our precast concrete products division which were up 15%. This is an incredibly positive result helping a business segment that’s been dominated by difficult conditions in piling products, brought about by very soft steel prices. Construction gross profit margins ended at 22% increased by 120 basis points which was driven by the sales increase in precast concrete products and favorable mix in piling products, as well as our team doing a very good job of price and cost management in the rest of the construction business segment. Our booking in the quarter included two significant bridge decking projects, which boosted backlog for the bridge division, but not enough to overcome the continued weak order activity within the piling product line that’s led to lower backlog for the construction segment. Our piling business continues to be impacted by depressed steel prices that are affecting both our top line revenue and our ability to secure business. Our share of pipe and H pile has declined as intense price competition has made this a difficult environment. However, we're starting to see some firming on steel prices, excess global capacity in the steel industry, it seems like its being absorbed as US mill capacity averaged about 74% utilization during the quarter and the scrap prices have increased over the course for the last two quarters as well. All signs that the steel industry is seeing conditions that typically are favorable to increasing prices. I'll finish now with the tubular and energy services segment. In this segment sales declined to 19.6% in the second quarter. This was all driven by a decrease in sales of test and inspection services to customers in the upstream E&P market. We had a great quarter in precision measurement systems which grew 45% over the second quarter last year. The backlog and measurement systems that we discussed earlier this year is now moving through our operations. But in the end this was really tough quarter for gross margins which declined 660 basis point due to the continued weakness in upstream energy markets. We have been discussing the restructuring taken place in this business for several quarters which is been substantially completed now through consolidation and facility closures, as well as downsizing our central office. Since we started the restructuring effort we reduced total headcount by 656 people or 76% from the end of 2014 when this business reached its peak. The salary portion of the headcount reduction is down 55% and our field technicians which dominate the staffing and our service business are down 78%. While our operating cost are down substantially, the business continued to under-perform during the quarter reporting a pretax loss of $3.7 million on sales of $4.7 million and again that’s excluding the impairment charge. While the current business climate in the upstream oil and gas market remains challenged, we are encouraged by recent order activity. Orders for test and inspection services over the past five months had found of level of activity that looks flat month-over-month. Our backlog is improving and our primary Houston facility which is now working seven days a week, we believe our backlog is increasing as a result of the increasing rig count, along with early signs of specific customers have worked through their excess tubular inventory. So we're seeing some signs of a recovery market. While these recent trends my signal a bottom in the upstream market, we will continue to make decisions as if a very slow recovery will unfold. We are confident that the actions we've taken and the footprint we have remaining leave us more nimble to serve customers as the market recovers. And I believe we are well positioned to drive rapid gross margin expansion with expected added sales volume once the recovery is underway. As mentioned previously, the backlog for our measurement systems business is been associated with one of the stronger activity levels this year in mid stream applications. Our backlog is solid through the fourth quarter. We are anxious to see whether this activity will carry into 2017. Its too early to predict whether mid stream market will make downward adjustments to capital spending in 2017, therefore we will remain diligent around cost control in all divisions as we watch activity levels closely. I want to make a couple more comments about restructuring beyond when I said about the specific actions taken in IOS, the test and inspection services business. The company has taken many actions beyond those that I mentioned. As we discussed last quarter, we have implemented several additional restructuring initiatives on top of the actions we took last year, as part of our ongoing effort to rationalize our expense structure to adjust to lower volume. During the second quarter, we reduced our headcount of salaried employees which resulted in severance expense of 536,000. But ultimately will result in annual cost savings of $6 million. And in addition, during the second quarter we identified an incremental $1 million in annual cost savings from discretionary spending. Our effort is consistent and ongoing and we have already identified several meaningful opportunities for further cost reductions this year and next. So we remain extremely focused on identifying and driving greater efficiencies throughout our organization to reduce operating expenses and SG&A and restoring our profitability. Our SG&A declined this quarter despite the added expenses we've been facing from our ERP implementation and legal cost for the ongoing Union Specific Litigation. And during the second quarter we also divested our railcar repair division, which made fixtures that were sold to Class One freight rail operators for the purposes of repairing railcars. We identified the railcar repair division is non-core as it operated as a standalone business without any synergies with our other divisions and it struggled the performance levels that will be accretive to earnings. So I'll briefly summarize some of the most important comments that I've made. It’s been a difficult first half of the year, as challenges in our markets drove under performance across all of our business segments. We are very focused on restoring profitability and we've taken several actions already to deal with the declining volume. While there is quite a bit of uncertainty around commodity market forecast for steel and oil, its worth noting again that there are signs of improvement for that the worst is behind us. In some cases, steel prices are showing signs of improvement with industry trends off and associated with a recovering market and our backlog is improving in the test and inspection services division, something we haven’t seen long time. While these recent trends may signal to bottom, we remain conservative in our outlook. We will continue to make decisions as if a very recovery will unfold. We're going to remain extremely focused on driving operational and cost efficiencies at all levels of our organization and we've already identified additional cost savings for 2017. There is one change that I want to point out, that we plan to make before I close. Given the lack of visibility and market volatility, along with the uncertainty around our timing for further restructuring actions and charges, we've decided not to provide guidance for the balance of this year and likely into next year and we're withdrawing our prior guidance for fiscal 2016. We will do our best to provide as much outlook information and detailed of substitute for guidance in an effort to help you with future expectations. So with that, I am going to turn it back over to Dave who will walk through details of our financial results.

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 per diluted share in the prior year. Excluding the impairment charge, the net loss was $1.1 million or $0.11 per diluted share. As Bob mentioned, the adjusted EBITDA was $7.5 million in the second quarter, a decrease of 55.1% compared to $16.7 million last year. The 20.7% second quarter sales decline was due to a 22.3% decline in the rail products and services segment, a 19.6 decrease in the tubular and energy services segment and an 18.5% decline in the construction product segment. The rail sales decline was due to reductions in concrete tie sales, rail distribution sales and in rail technologies. The Union Pacific rail road accounted for $5.2 million of the $19.4 million sales decline and most of our product categories were impacted by the continuing decline in North American car loadings which were down by 11.6% and the related capital spending reductions by the Class One rail roads, which was approximately 10% lower than the prior year second quarter. This is the last quarter that the decline in the Union Pacific rail road sales would be of any significance. The reduction in construction sales was caused by declines in piling and fabricated bridge products, partially offset by an increase in precast concrete products. In piling products, we continue to experience very competitive markets due to taper [ph] demand, as well as declining steel prices that make us less competitive in the pipe piling and H beam categories. The tubular products and energy services sales decline was driven by decreases in all product categories with the exception of the precision measurement systems business where we are staying market competitive, but at the expense of margins. Test and inspection service sales reported the most substantial sales reduction of the segment. As a percentage of second quarter 2016 sales, rail accounted for 49.6%, construction was 29.7% and tubular and energy services was 20.7%. Turning to the balance sheet, working capital, net of cash decreased by $5.9 million compared to the first quarter of 2016. Accounts receivable increased by $6.6 million during the second quarter. Consolidated DSO declined by 2 days to 47 days at June 30 compared to 49 days at March 31 and 56 days at December 31, 2015. Inventory increased by $2.9 million compared to March of 2016, as accounts payable and differed revenue increased by $12.8 million. Cash provided by operating activities in the second quarter was $11.7 million compared to $5.5 million in the prior year quarter. Capital expenditures were $1.9 million compared to $3.8 million in the prior year. We continue to expect to generate free cash flow in 2016 as working capital initiatives continue and we expect capital expenditures to be in the range of $7 million to $8 million this year. Our capital investments are focused on providing new and expanded manufacturing capabilities, improving service and product availability to our customers and increasing operating efficiencies in future periods that we believe will improve shareholder value on a longer term basis. While our capital allocation protocols have been solid, potential returns on projects and softer markets become less attractive and much easier to cancel or differ, except for a couple of capital programs that we expect will have swift paybacks due to their correlation to business already secured or driven by longer term strategic growth. We expect to be prudent with our capital spend this year say for these projects mentioned earlier that we deemed to be priorities. Moving into the second half 2016, spending should be well below the first half spend and the 2017 capital spend should be well below 2016. We continue to anticipate the cash generated from operating activities in 2016 will exceed our capital expenditures, debt service payments, dividends and share repurchases, thereby allowing us to continue to deliver. As Bob mentioned, we will continue to identify and take cost out as we move forward and we continue to target further cost reductions in order to improve profitability and cash flow. As mentioned in our earnings release, second quarter 2016 bookings were $140.1 million, a decline of 14.1% compared to last year’s second quarter, due to an 18.2% reduction in rail bookings, as well as 38% decline in tubular bookings, partially offset by 12.7% increase in construction segment orders. Q2 orders for the rail segment were weaker than 2015 due to lower order volumes for concrete ties and track components, targeted principally for freight rail markets, as well as a reduction in transit product orders. Reductions in tubular orders were mostly attributable to coated type products and services, as well as test and inspection services order reduction for the quarter. Construction product order bookings increased due to fabricated bridge products, strong order entry, partially offset by piling and precast concrete product order reductions. Las quarter we indicated that bridge products order entry was down and described that market as lumpy, while we booked bridge order totaling $22 million in the second quarter just – in 2016. Order backlog stood at $149.2 million at the end of the second quarter, down $58.5 million or 28.2% from the prior year quarter backlog of $207.8 million. The decrease was due to a decline in 45%, 8.4% and 5.8% in the rail, construction and tubular segments respectively. Debt at the end of second quarter was $168.4 million, compared to $174.9 million at March 31, a reduction of $6.5 million, while cash increased by $1.9 million. Maximizing free cash flow in 2016 continues to be a primary focus of this management team. Our primary use of capital is to delever the company during this period of weak operating results. That concludes my comments on the second quarter of 2016. I'll now send it back to the moderator and open up the session for questions.

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.