Greetings. Welcome to the L.B. Foster Company First Quarter 2019 Results Conference Call. [Operator Instructions]. Please note this conference is being recorded. I will now turn the conference over to your host, Judy Balog, Investor Relations Manager. Thank you. You may begin.

Good evening, ladies and gentlemen. Thank you for joining us for L.B. Foster Company's Earnings Conference Call to review the company's first quarter 2019 operating results. My name is Judy Balog, and I am the Investor Relations Manager of L.B. Foster. Hosting the call today is Mr. Robert Bauer, L.B. Foster's President and CEO. Also on the call is Mr. James Maloney, L.B. Foster's CFO and Treasurer. In addition to our press release, we have a first quarter presentation on our website under the Investor Relations tab for those who have online access. This evening, Jim will review the company's first quarter financial results. Afterwards, Bob will review the company's first quarter performance and provide an update on significant business issues and market developments. We will then open 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, 2018 as updated by subsequent items filed with the Securities and Exchange Commission for additional information regarding 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 non-GAAP earnings before interest, tax, depreciation and amortization, or EBITDA statements. A reconciliation of net income or loss to non-GAAP EBITDA has been included within the company's 8K filing. Statements referring to EBITDA 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 this measure provides additional meaningful information for investors to facilitate the comparison of past, present and forecasted operating results. Our company's earnings presentation reconciles these non-GAAP measures to the corresponding GAAP measure. With that, we'll commence our financial review discussion, and I'll turn it over to Jim.

Thank you, Judy. Thank you, everyone, for joining us today. Our net sales for the 2019 first quarter were $150 million compared to $122 million in the prior year quarter, an increase of $28 million or 22.9%. The sales increase was due to improvements within each of our three reporting segments. Starting with the Construction segment. Sales increased from the prior year quarter by $8 million or 29.2%. The increase was supported by each division within the segment led by Fabricated Bridge, with an increase of 39.6%; Precast Concrete Products, with an increase of 35.6%; and Piling Products, with an increase of 20.4%. The increase was driven by the strong backlog in the segments accumulated entering 2019. The Rail sales improvement of $14 million or 21.8% was driven by both the Rail Products and Rail Technologies business units. Our Rail Products business saw a sales increase of 28.2%, mainly due to demand in new rail products and expanding transit projects. Our Rail Technologies sales increased 12.8% as European transit market activity remained strong during the quarter, and friction management sales in North America remained strong. The Tubular and Energy Services sales increase of $6 million or 19.3% was driven by growth in each of our business units within the segment, with Protective Coatings and Measurement Systems increasing 32.2% and Test and Inspection and threaded services increasing 3.6%. As a percentage of first quarter 2019 consolidated sales, Rail accounted for 50.3%, Tubular and Energy Services was 24.9% and Construction was 24.8%. Now looking at gross profits. There were a number of encouraging results in gross profit performance. Consolidated gross profit increased $7 million over the prior year quarter to $29 million, with each of the reporting segments contributing to the increase, resulting in gross profit margin of 19.4%, an increase of…

Thank you, Jim. And hello, everyone. I'm going to begin today with comments on operational performance for the quarter and provide more background on what was a great start to the year. Then I'll comment on the market and specific actions that have been helping fuel our growth. The year-over-year profit improvement in Q1 finished above our expectations on volume that was stronger than any first quarter on record. Our gross margin performance and operating expenses finished better than we projected on $150 million of sales, which was close to expectations given our starting backlog. In addition to benefitting from the sales volume, we saw a contribution from operational efficiency programs in a number of areas as well. Our operational execution was excellent. And it was particularly encouraging to see all three reporting segments increase profit as well as segment profit margins that help drive significant profit margin improvement for the total company. The year-over-year segment profit improvement for the Tubular and Energy segment continues to be driven by strength in midstream energy projects that include protective coatings for pipelines and increasing demand for measurement systems for those pipelines. We're benefitting from market investment going into pipeline capacity as needed for continued oil and gas production growth in the U.S. shale territories. In addition, our Test Inspection and threading services for energy tubulars has improved profit margins, despite the pressure that still exists on suppliers serving the upstream market. The 70% segment profit growth in the Rail segment was excellent, being driven by very strong sales growth in Rail products. The backlog for transit projects has remained strong. New Rail sales are well above prior year. And steel prices remain steady at levels above last year. The construction segment made a much smaller contribution to the quarter's results. But the…

[Operator Instructions]. Our first question is from Chris Van Horn with B. Riley.

Congrats on the quarter. You continue to see really impressive topline growth across all three segments. I'm just wondering, can you give us some perspective on how you see 2019 and maybe some of the out years playing out? Do you see this growth continuing? And what's kind of your outlook there?

Well, I like to usually take that on by commenting on the market outlook as an indicator for what we think our business activity will look like. As I mentioned in some of my comments, I think our markets continued to remain strong. There are a few areas where we've got a couple of headwinds out there along the lines of my comments on foreign pipe, for example. But largely speaking, our markets are in good shape. Exactly how strong they'll be and how much they'll drive sales growth, I'm going to stop short of quoting a number on exactly where we're going to -- we think orders or sales will come in this year, and how strong that growth will be. But that's one of the reasons we provided the trailing 12-month order rate as well. Because from one quarter to the next, that might give you the wrong impression of what things look like out there. But I'd just wrap up by saying this. The quarter was strong. Our orders at $180 million reflect a really good Q1. We've got still great backlog. So we have every reason to believe this is going to turn out to be a good year.

And then, if I try to qualitatively think about your growth, are you taking share? Are you seeing just an expansion in the right products that you're in? Any sort of color around that?

Yes. I think that there are pockets of the market where we're winning more than our fair share. I think some of these new programs that we have started are helping us. I would tell you -- maybe I'll start in the international areas. The growth programs that we established in Europe that relate to some of our automation solutions over there in our Transit Rail Services business, that's absolutely growing faster than the market. So we are -- if we want to call it picking up share, or the fact that we're entering markets that we hadn't been in before, I mean, that kind of goes hand in hand. But that has absolutely fueled some of our growth. I think we're gaining more than our fair share in on-track Rail Services in North America, a business model we stabilized a little more than a year ago. I believe that's helping us. I feel like we are growing faster than everyone else in the markets we serve for Precast Concrete Products, both our buildings business, as well as other Precast Products. I just don't see anybody out there, I think, doing what we're doing there, which has kind of in the last couple of years been a good, sustainable high single-digit number. And I don't think our competitors are picking up maybe that much business. And finally, this midstream area, where we put Protective Coating on pipelines tubulars, as well as our measurement systems -- it's kind of hard to put a figure on that right now, because we don't get actual market share data on that. But sure seems like our business feels like it's doing maybe better than others. So there's, what, four or five areas that I would say have better than market growth.

Just moving to margins -- very impressive expansion here. Is there a way to kind of think about it in terms of -- is product mix helping? Is it a volume, leveraging that fixed cost line? Are there other things? Maybe there's some things on the efficiency side? Any further color on what's driving the expansion?

Well, when we get sales growth that's in the order of 23%, 24%, we are definitely going to leverage some of our overhead costs, both facility overhead as well as just our general SG&A expenses, corporate expenses, that sort of thing. There's some areas where mix actually was a bit of a headwind this quarter. And in fact, Jim was commenting on that, that we have really strong growth in Rail Products. And that margin has been lower than other products in the Rail segment, such as Rail Technologies. But there are margin cost-reduction programs that helped this quarter. We're constantly working on continuous improvement programs that help deliver better margin. And we've got some good customer mix, I would say, going on, where we have some customers that we're just able to see some better margins on than others that helped us in a few areas of our business. But I'd say one other thing. I think our execution was really, really clean this quarter. You look up last year, there were a few things we were wrestling with operationally. We got those behind us. And so with this backlog that we have, we're able to operate very efficiently. It allows us to really be efficient at what we schedule. So those sorts of things help us as well.

And then, any update on Union Pacific and the conversations you're having with them about becoming a customer again? Any update there?

Well, as we talked about last time we were on the phone call, we of course resolved that matter. And at the same time, we put together an agreement with Union Pacific to begin doing business with us again, starting this year. There's a number of things that we have to work through to make that happen, which include some testing and other kind of supplier approval processes that we need to go through. So a number of things are underway to restore the business activity between the two companies. But they're in various stages of progress with regard to restoring the supplier approval and doing the sort of testing that needs to be done and other things they need to be assured that our products are still meeting their specification. So activity has started. Think of it as very, very early stages. There's really nothing of significance to report yet. But I certainly hope that by the time we get to the second half this year we can give you a little bit more of a report that would talk about order activity and where some of that is coming from.

Congrats again on the quarter.

[Operator Instructions]. Our next question is from Brett Carney with Camco Investments.

Just wanted to ask, I know you mentioned it in your prepared remarks -- if you could talk a little bit more about the new Rail Products that are driving some of the growth in that part of the business, and then also the services that you're providing on the London cross-rail project, if you see opportunities for that solution in other parts of the transit market in Europe in North America?

Yes. Well, maybe I'll start with the latter there. That cross-rail project is one of the largest projects that going on anywhere in the European area. We are working on multiple-platform stations simultaneously where we're doing a lot of integration work with regard to things such as security, access control video, audio, PA systems; all of those kinds of things. They're solutions that are in the area that help passengers as well as interfaces into the signaling systems and such. We're really busy with that. We're largely focused right now on that program, which is of course in the greater London area. So we have not stepped into other parts of Europe at this time. We feel like there is enough opportunity just in the U.K. for those kinds of services. And even in markets that are parallel to the rail market, where automation solutions for people that are moving about are things that we can help with. At this point in time, I think we're going to continue to focus just on the U.K., although we do have products that we sell into other European markets and offices outside of the U.K. But I think as far as the service initiative goes, at least near term, it's going to be focused more on the U.K. market. In the new products area, one of the things we've been talking about now for a number of quarters is the strength in the Transit area. We've got a number of large projects that we booked in that area. Our fastening systems and some of the things that we're doing with those Transit fastening systems is one of our core products in that space. We continue to innovate in the area of our insulated joint products, which are products that manage the interface to the signaling systems at crossings. And one of the things that we're really excited about going forward, and we're really just getting started with this one, is obstacle detection in level crossing areas. We also have some systems out there that are working with avalanche detection, where you have a rock fall detection that's a more accurate one, where we've got some systems now being tested in a lot of areas, where you can find debris on a freight rail line. We're working on detection of those sorts of things. And those are in the early stages. But they're going well. And then, in the on-track services that you asked about, that's really all about bringing services on track to managing friction management solutions. So we're dealing with maintenance and repair of all of the electronics and mechanical systems for those. We are dealing with refilling the consumables for those. And we're managing hundreds of miles of track these days for mostly large freight rail operators who are now using us to deal with those kinds of services to keep the uptime going from our friction management product.

We have reached the end of the question-and-answer session. And I will now turn the call back to Bob Bauer for closing remarks.

All right, thank you, operator. Thank you, everyone, for joining us. We're really pleased with how things turned out, as you can probably tell by the enthusiasm in the comments. Appreciate the questions, and we'll look forward to catching up with you next quarter. Thank you.

This concludes today's conference. You may disconnect your lines at this time. And thank you for your participation.