Greetings and welcome to L.B. Foster's First Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] This conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jim Maloney, Senior Vice President and Chief Financial Officer. Thank you. You may begin.

Thank you, and good evening, everyone. Welcome to L.B. Foster's first quarter earnings call. I am Jim Maloney, Senior Vice President and CFO. Before I begin, I want to introduce two people you may encounter as you interact with us on Investment Research or other IR matters. Jim Kempton joined us as Controller and Principal Accounting Officer. Jim has been with us for a quarter and has been getting up to speed on our company very quickly. And we also have Stephanie Listwak, who will assume the responsibilities previously held by Judy Balog who is returning to another role in our company. This evening, I will review the company's first quarter financial results. Afterward Bob Bauer, President and CEO 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 up for questions. Today's slide presentation along with our earnings release and financial disclosures were posted on our website earlier today and can be accessed on our Investor Relations tab at lbfoster.com. Some statements we are making are forward-looking and our best view of our markets and business today including comments related to COVID-19. 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. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements please see the disclosures in our earnings release and presentation and our 10-K. We will also discuss non-GAAP financial metrics such as adjusted EBITDA and net debt and encourage you to read our disclosures and reconciliation tables in the earnings release carefully as you consider these metrics. I'm…

Thank you, Jim, and hello, everyone. I appreciate everyone joining us today as we attempt to provide as much insight as possible around the recent quarter's results as well as how we see our markets being affected by the actions that have been taken around the world to stop the spread of the virus. Unfortunately, there's a lot of uncertainty but we'll do our best to help you understand what we're seeing. I want to start by giving you some insight into our operating environment and the changes that took place in March as news of the virus led to many countries declaring a state of emergency. Before I get into these details, I feel compelled to recognize all of those around us in the medical community that made it possible for us to operate and do our part in supporting the economies that depend on us. During the month of March, the company reacted to several stay-at-home orders across North America and Europe as well as recommended preventive measures to help stop the spread of the virus. L.B. Foster was widely considered an essential business and allowed to continue operating under these orders. We took a number of steps to follow recommendations on social distancing and reduced close interaction among employees while continuing to operate. Our employees did a terrific job adapting to the circumstances, working remotely in some cases and also making adjustments in operations to respect the health and well-being of their co-workers. We are extremely proud of our people and the efforts they made to put us in a position to continue supplying products and services to our customers. I can't say enough about the efforts everyone has made. Our people take great pride in continuing to operate for the very reasons we were deemed an…

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Chris Van Horn with FBR. Please proceed with your question.

Good afternoon, everyone. Thanks for taking my call and hope everyone one is well?

Hi, Chris. Thanks for joining us.

So thank you so much for all the color and some updates on kind of the real-time environment. Now how quickly is the environment changing for you? And it sounds like bid and proposal work is still happening. But kind of on a – from a real-time basis how quickly are things changing?

Well I think the best way to say that is probably a two-part answer. The parts that are being affected the most are changing rapidly. So for example, the changes that we're seeing in the Tubular and Energy segment where demand for oil has dropped precipitously, the adjustments being made in that industry are being made at a very, very rapid pace. On the other hand, we have those areas in construction and in our Rail business where many of the projects that we have been working on are continuing. This proposal activity that I spoke of is continuing. And so a number of things there almost feel like business as usual except for the adjustments that everyone had to make for these stay-at-home orders. And they were enacted quickly and people had to make adjustments to them quickly. So there's a lot of adjustments we're making pretty fast. But in terms of the market changes and the dynamics there, you got to judge that based on the ones that we're seeing that are being impacted the most by the pandemic. They're the ones where people are taking pretty quick action.

Okay. Got it. And you mentioned a lot of deferrals or delays in activity. Is there a range in the timing? Are you seeing any consistency or anything jumping out of you in terms of when things might start to come back?

I would say that, consistency is probably the one thing that is lacking in all of this. My sense of what's going on in the marketplace is that companies are all reacting in different ways to this issue. The dynamics of operating a railroad versus a highway a bridge and construction project versus an oil and gas pipeline and the dynamics are very different between all of those operating environments and the issues that they face in order to meet the requirements recommended by the CDC to protect your people. So, everybody is concerned with making sure that their people are safe. So, what you find is -- you find people taking different sorts of measures in order to make sure they can try to continue to operate in the new environment if you will. So, it's hard to say that there's any consistency with that. And as it specifically relates to your question about delays, these are also companies that are dealing with funding, traffic issues the manner in which they actually can pay for these projects, differ greatly as well. And so for that reason, across all of our different segments, I mean that's one reason why from time to time we're happy to be diversified and other times it might not be your friend. But that's also why we see some varying circumstances across our landscape.

Got it. Okay. How about from a competitive standpoint I imagine -- I know you -- I know there's a lot of smaller competitors in your markets. Have you seen some of those competitors either fall off, or are your customers coming to you for help due to some performance headwinds from some of their other providers?

I wouldn't say that I could point to anything yet on that. I'm anxious in a few areas where we do compete against private companies that probably don't have the kind of credit facility or banking support that we have to see how they do. There are probably some competitors that we have that could even qualify for the small business loans like the PPP support. And whether or not that's helping them get through this, we don't know at this point. So, I haven't heard any news stories that I could share with you that might lead you to think that that landscape is changing in any significant way. I really suspect it will probably be maybe at the end of next quarter, where we might be able to -- maybe draw a picture of what has changed if anything, but not at this point.

Okay. Got it. And then I just wanted -- just from a mechanical perspective, just to make sure I heard you correctly. The $5.5 million to $7 million charge you're expecting, you're expecting that each of the -- in each of the next three quarters, or is that a full year number? How does that kind of play out?

Chris, this is Jim. That would be the total impact.

Okay.

So, we were expecting the majority of it to be charged in Q2. Some will drag into Q3 and Q4.

Okay. Got it. And then just last from me. Really good working capital management. I'm wondering if you feel like the pieces are in place for that to continue throughout the year. And maybe any specific examples you could give us on how you were able to execute so well there?

Well, it has been an area of great focus for us for some time. I would tell you that the focus is getting to be more and more intense. We're particularly focused on our cash flow for the company in this quarter and in the coming quarters. So it's something that we work quite aggressively. Our collections team has done a terrific job. Some of the methods that they use have really helped us substantially here over the course of I'd say about the last 18 months that's really gone fairly well for us. But then between -- well actually I guess in all categories of working capital, I mean we pay attention to each of them. So, it's really a part of our business system and the reviews that we conduct routinely and the kinds of things that we ask all of our operating people to do. So, we will continue to focus on that.

Okay. Got it. Thank you so much for the time and stay safe and healthy.

Yeah, thank you. You do the same Chris.

Our next question comes from the line of Chris Sakai with Singular Research. Please proceed with your question.

Hi everyone. Just, I wanted to comment or ask about -- as states are now slowly reopening, are you guys seeing an uptick in new orders? Can you provide some insight there?

Well, of course that is just getting underway. And I think, the first thing I would probably point to is that, we haven't been able to really link our order input much to the closing or opening maybe of any given one state or two states here or there. Most of our end customers have been operating right? So, in the freight rail and transit rail space they continue to operate. There were Construction projects that were shut off in particular states and that's a part of the disruption that I spoke about. So, take our home state here for Pennsylvania. They shut down construction projects. And we had some trouble with deliveries and schedules in the Pennsylvania area which has now opened construction, but not other things. So, I mean it's a real mixed bag out there in terms of what states are doing. So, it's very difficult to correlate that to what's going on with orders. But we've stayed in touch with most of our customers. They've continued to operate. The energy customers they continue to go to work. So, we're not dealing with anybody that is completely shutdown so to speak like retail sectors and things like that. So, most of them have tried to keep their projects moving along to the extent that they could. But it was disruption because of these stay-at-home orders that caused us the most heartburn. We're working around and we'll continue to work around.

Okay. Thanks for that. And then, can you shed some light on why did Construction Products out of the three categories, I mean, it seemed to hold up the best as far as new orders was concerned?

Well, I would probably – if you're comparing it to the other three segments, I'd point to Tubular and Energy first as a comparison. Obviously that segment is hurting the most. So that's been a tough area for us. So that has everything to do with the demand for oil and how far that has declined. In comparison to the Rail business, I think the two of those, they weren't off from one another I think too much. Construction was down – you're talking orders I think you said. So Construction was down year-over-year 14% and I think I recall looking at that yes. And Rail, was down 24%. Now, the one thing that moves around a lot in there is the timing on some of these Rail projects and when the transit projects kind of get spun up. But the other thing is our service orders. They come in right, when we do that service work. And we did have a fair amount of service work stopped toward the end of the quarter both in the U.S. and in the U.K. But the other thing, you got to look at is also the prior year. And so our Piling and our Bridge business didn't have as much of a change Q1 to Q1. But also Precast Concrete continues to do pretty well and we had a pretty decent quarter the quarter that just ended for our Precast Concrete Products in Construction, which we expect for the year may be impacted among the least among all of our divisions.

Okay. Great. Well, hopefully that everything shapes up better in the coming quarters.

Yeah. Thank you.

Appreciate it.

Okay. Thanks.

Our next question comes from the line of Brett Kearney with GAMCO Investors. Please proceed with your question.

Hi, guys. Good evening. Thanks for taking my question.

Thanks, Brett.

Could you guys, just I guess, help me think through – back in 2009, 2010 when ultimately we saw I guess the last major federal infrastructure program pass-through the American Recovery and Reinvestment Act. Can you just help me think about – I'm sorry, from the obvious ones, I guess encompassing all of them really the parts of your business that might be tied to, if we were to get any kind of large federal infrastructure program here?

Well, if you go back to that point in time and there was money being thrown in a few areas, and they talked about shovel-ready projects, and things like that at that point in time, it really depended on where you could deploy money quickly. We saw a boost in the Piling division and in our Precast Concrete division are the two that, I would point to that were at the top of the list of those that benefited that, I think have more to do with the fact that, there were some projects that they could put that stimulus money toward and get a pretty quick bang for the buck. The Bridge business would be the other one. But if I spoke more broadly about stimulus money and it didn't quite take place back in 2009 and 2010 versus what would happen today, I think you would find that there would be generally speaking more highway bridge-type projects, because of the aging of the infrastructure with another decade on it of falling behind in that investment. I think that you would see more go towards transit rail, because of the pressures that we have around transit rail in many congested cities. We're actually seeing some of that in stimulus spending that is about to get underway in the U.K. where they're already pushing some of this forward and we think we're going to benefit, which our business is predominantly transit rail there, but some of the solutions that go around that the automation solutions, we're going to get some benefit from. So those are -- so in addition to I think, we'll get some Piling and Precast as well, I think those are other added areas where we would likely see some additional impact if there was any kind of bill put through for infrastructure.

Yep. Terrific. Thank you, guys. And I hope you and all the team stays healthy and safe.

Thank you. Thank you very much. Same to you.

Thanks.

[Operator Instructions] Our next question comes from the line of Peter Andreozzi [ph], private investor. Please proceed with your question.

Hello. Thank you for taking my call. The last question was actually what I also wanted to ask, but I wanted to dip into oil reserves, and since we have a shortage of capacity if you're seeing any possibility in the Tubular section on increasing oil reserve capacity? And second I wanted to ask about your relationship with Nippon Steel in Japan and if you had any projects upcoming in Japan.

As far as oil reserve capacity goes, if there were investments that were made in oil reserve capacity, if I think that's where you are going, that would not really -- directly benefit us in that, we don't make any products that would serve in expanding that capacity. Now if there was additional capacity and that allowed production to continue flowing, right, and minimize the decline in production then we would see some benefit to that, because as production does decline that means the drilling will decline. And where drilling of wells goes, that's where our business goes in the upstream segment at least. And then in the midstream segment that is all tied to the amount of oil and gas flowing through the pipelines. So as that moves through the system, revenue for the midstream operators comes through, and depending on the amount of capacity they have, our business there is proportional to the need for capacity in the pipelines. So I think if you were watching something, where somebody said, there's going to be a bit of an increase in capacity for oil reserves here short-term to store another, I'm not even sure what number to put on it anymore, I probably would not be pointing to much of an impact, it would have on our business. In terms of Nippon Steel, they're not a customer that we do a lot of work with. They from time-to-time do interact with us on some technologies that we provide. We do have some condition monitoring technologies in their system in Japan. It's not a large amount of work that we do. So it really is very, very small at this point.

Thank you so much for taking my call. It's good to hear that your collections team is doing well. If you need one more, I got laid off. So I'm looking for work.

Thank you for joining us on the call.

Thanks.

[Operator Instructions] Since there are no further questions left at this time, I would like to turn the call back over to Mr. Bob Bauer for any closing remarks.

Good. Thank you, operator. Well, thank you everyone for joining us. We appreciate the questions as well. We tried to do our best to help you understand the quarter that's got a lot of dynamics associated with it, and I'm sure next quarter, we'll be talking about some of the same things. But we look forward to catching you then and be safe and healthy in the meantime. Thank you very much.

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation. And have a wonderful day.