L.B. Foster Company (FSTR) Q2 2022 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Q2 2022 L.B. Foster Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephanie Listwak, Investor Relations Manager. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to L.B. Foster's Second Quarter of 2022 Earnings Call. My name is Stephanie Listwak, the company's Investor Relations Manager. Our President and CEO, John Kasel; and our Chief Financial Officer, Bill Thalman, will be presenting our second quarter operating results, market outlook and business developments this morning. We'll start the call with John providing his perspective on the company's two recent acquisitions and one divestiture and also the second quarter performance, including market development. Bill will then review the company's second quarter financial results. John will provide perspective on company outlook and his closing comments. 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 this morning and can be accessed on our Investor Relations page at lbfoster.com. Our comments this morning will follow the slides in the earnings presentation. Some statements we are making are forward-looking and represent our current 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. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and reconciliation tables provided within today's earnings release and within our accompanying earnings presentation carefully as you consider these metrics. For the purpose of helping you understand the underlying performance of the company, we will be referring to adjusted EBITDA, net debt and adjusted net leverage ratio during the presentation today as reflected in the reconciliation tables included in the appendix to the earnings presentation. Additionally, in September of 2021, we announced the asset sale of our Piling Products division. Due to the nature of the sale, we have presented the Piling Products within the continuing operations in our financial statements, but we have adjusted certain metrics as annotated in our presentation slides to reflect the sale for purposes of an even comparison. So with that, let me turn the call over to John.

Thanks, Stephanie, and hello, everyone. Thanks for joining us today for our second quarter earnings call. I'll begin today's call by covering the more significant takeaways from the quarter and recent activity, starting with our portfolio accomplishments. Last week, we announced the completion of two acquisitions in our Technology, Services and Solutions business in the United Kingdom. The first being Skratch Enterprises Ltd. I will refer to them as Skratch. The second being Intelligent Video Ltd., and I'll refer to them as IV. Both Skratch and IV demonstrate our commitment to invest in technology-based solutions, providing access to resources and channels to accelerate our growth and serve in adjacent markets. Also last week, we announced the divestiture of our Rail Products' track components business in Canada. I'll cover these three portfolio moves in a bit more detail in a moment. Now on to the Q2 highlights. We continue to be encouraged by our strong order intake levels we are achieving across the business. Our backlog stood at $251 million at quarter end, which is a five-year high, and order intake levels were up 25% compared to last year. It should be noted that both of these metrics are excluding the Piling divestiture we completed last September. It should also be highlighted that our [order growth] achieved did not include any significant business from the Infrastructure and Jobs bill passed in November of last year. The second quarter revenues and profitability improved sequentially, and the year-over-year comparisons also improved versus the first quarter. While we made progress on improving our revenue and profitability metrics in Q2, we still have work to do, particularly in the Precast Concrete business. Bill will cover off these details in his financial review. Overall, we continue to build momentum by executing our strategic playbook while also proactively managing the business in this challenging operating condition. As a reminder, Slide 6 reflects our strategic playbook workstreams with three of the initiatives highlighted representing our recent accomplishments. We previously communicated our goal to transform certain elements of the portfolio from slower growth, commodity-like offerings to higher-growth, technology-focused solutions. The transactions on Slide 7 reflect our progress towards this transformation. On June 21, 2022, we completed the acquisition of Skratch with a purchase price of approximately $7.8 million. With annual revenues just under $8 million, Skratch is the U.K. industry leader in digital system integration with expertise in advanced digital display technologies and capabilities, currently serving retail markets. We have collaborated with Skratch on projects in the past and believe the joining of our two companies will unlock the broader market potential for our respective solutions in the visual communications space. We also announced the acquisition of IV, which was completed just after the end of the quarter on July 06, 2022 at a total purchase price of approximately $1 million. IV is a U.K. developer of high-quality surveillance, security and safety solutions that align well with our growth initiatives, focused on our remote condition monitoring and visual communication businesses. Both Skratch and IV highlight our strategic core growth actions to transform the L.B. Foster Company into a technology-focused, high-growth infrastructure solutions company, enabling access to a wider target markets in the United Kingdom and Western Europe. On the divestiture side, we completed the strategic sale of our track components business in Canada for approximately $7.8 million. As you recall from prior discussions, this business was part of our Rail Products business unit within the returns portion of our portfolio. We are pleased with the results achieved and satisfied the business was acquired by Gerdau, a well-respected industry participant. Proceeds from the sale were used to reduce borrowings outstanding on our revolving credit facility, which will help to fund anticipated investments and growth initiatives to come. In summary, these transactions demonstrate that we are making progress towards transforming L.B. Foster, increasing shareholder value for years to come. Bill will be covering the detailed financials for Q2, and I'll come back at the end with some closing remarks on our overall market and business outlook.

Thanks, John, and good morning, everyone. I'll begin my comments by covering the second quarter highlights on Slide 9. Note that the schedules in the appendix provide more detailed information on our financial results, including the non-GAAP measures Stephanie referenced. As a reminder, our Piling business was divested in September of last year and is not being treated as a discontinued operation. Accordingly, the amounts presented today include the Piling business within the Steel Products and Measurement segment unless otherwise noted as adjusted for comparability purposes. Also, the Skratch acquisition was completed at the end of the second quarter, and our balance sheet information reflects the acquired business. Both the IV acquisition and track components divestiture were completed after the end of the second quarter. Second quarter sales were $131.5 million, down $23 million or 14.9% from Q2 last year. Adjusting for the Piling divestiture, sales declined 0.7% year-over-year with the sales decline driven by project delivery timing, primarily in our Rail segment. Gross profit declined due to the Piling divestiture, coupled with raw material and labor inflation. Gross profit margins improved by 80 basis points on a reported basis due to the favorable mix as a result of the divestiture of the less profitable Piling business offset in part by higher raw material and labor costs, coupled with unfavorable building sales mix in our Precast Concrete segment. Gross profit margins adjusted for Piling were down 50 basis points year-over-year due to higher input costs and unfavorable building sales mix in Precast Concrete. I would highlight that the 17.7% reported gross profit margin in Q2 was an increase of 110 basis points compared to 16.6% in Q1 of 2022 with the improvement resulting from increased volume and improved price realization, partially offset by unfavorable building sales mix in Precast Concrete. In addition, the 50 basis point year-over-year decline in Q2 is an improvement to the 190 basis point decline reported in Q1. So we are making progress on margins, but we still have significant work to do. As we've indicated in the past, some parts of the business have been more successful in achieving price realization and this is due to certain contractual obligations and other market considerations. We expect to see further progress from our pricing and margin improvement actions and believe we will continue to see improvements in our margins going forward. Adjusted EBITDA in Q2 declined $2.2 million to $6.1 million, with $1.1 million due to the Piling divestiture and the balance due to lower gross profit and slightly higher SG&A costs in the remaining business, largely related to our transformation initiatives. Operating cash flow was a usage of $5.7 million in Q2 due to higher working capital levels needed to deliver the 33% sequential sales increase in the second quarter and prepare to fulfill the robust backlog in coming quarters. We expect operating cash flow to improve as the year progresses. As mentioned earlier, second quarter orders adjusted for the Piling divestiture totaled $141.4 million, up 24.7% versus last year and backlog finished at a robust $250.8 million. Over the next three slides, I'll cover the performance of each segment, starting with our Rail segment on Slide 10. Second quarter Rail segment revenue decreased $7 million year-over-year, largely driven by lower volumes and timing of orders in the Rail Products business unit. The decline in Rail Products was offset in part by higher sales in our Friction Management business unit. Despite the lower sales, gross margins increased 30 basis points year-over-year due to the higher volume and the more profitable Friction Management business unit, coupled with improved margins within Technology, Services and Solutions. As reflected on Slide 11, Precast Concrete Products segment revenue increased $3.5 million or 17.6% year-over-year as demand levels remain strong. However, gross margins were down 530 basis points year-over-year due primarily to higher raw material and labor costs coupled with an unfavorable building sales mix compared to last year's quarter. Sequentially, Q2 margin dollars increased approximately $1 million on improved volumes but the margin percent was down 210 basis points due primarily to unfavorable building sales mix. The Precast business has been actively working off its backlog of orders booked in 2021 at lower margin levels given the run-up in material and labor cost in today's inflationary environment. The absolute value of orders at lower margin levels in the backlog continues to decline, and we expect to see Precast margins begin to improve as we ship the more orders booked in 2022. Orders and backlog levels remain robust in our Precast segment, and we expect this favorable trend to continue with the announced government funding programs. The strong demand level, coupled with our margin improvement actions, should result in improved profitability in Precast as the year progresses. The Steel Products and Measurement information on Slide 12 has been adjusted to remove the impact of the Piling divestiture for comparability purposes. Overall, revenues increased $2.5 million or 10.7% year-over-year, with the increase primarily attributable to both volume and pricing gains in threaded, fabricated bridge and protective coatings product lines. Gross profit margins improved 140 basis points due to improved volumes and pricing, coupled with favorable business mix. Sequentially, Q2 margins were up 900 basis points reflecting the increased fixed cost absorption due to the higher volumes as well as favorable business sales mix. Order rates are essentially flat year-over-year, while the backlog is down due to working through long-term bridge projects, which tend to be lumpy in the order book. Our year-to-date results are reflected on Slide 13. Year-to-date sales decreased $40.3 million as a result of the sale of the Piling business. In the prior year period, the Piling division contributed $42.9 million to our sales. Adjusting for the Piling divestiture, sales increased $2.6 million or 1.1% year-over-year. Sales in the Rail business declined $9.5 million or 6.1% due to the timing of customer shipments, primarily in our Rail Products business unit. The Precast business sales increased by $5.9 million or 17.9% driven by continued strong end market demand. Excluding the Piling divestiture, Steel Products and Measurement sales increased by $6.2 million or 15.6% with growth realized across all product categories. Reported gross margins were favorable to last year, primarily due to the Piling divestiture. Adjusted for Piling, year-to-date gross margins were down 100 basis points due to the higher input costs, primarily in our Precast and Steel Products and Measurement segments. Margins in our Rail business were up approximately 40 basis points year-over-year. Excluding the Piling business, selling and administrative as a percentage of sales increased 10 basis points year-over-year driven by higher personnel, transformation and acquisition-related costs. Adjusted EBITDA declined $3.7 million to $7.4 million with $1.4 million due to the Piling divestiture and the balance due to lower gross profit and slightly higher SG&A costs in the remaining business. Our liquidity metrics are reflected on Slide number 14. Through the end of 2021, we systematically reduced our net debt and maintained a very conservative leverage ratio ranging between 0.9x and 1.3x. This was during a period when our business was contracting and EBITDA was declining due primarily to weaknesses in demand in our energy-related businesses. Excluding the effect of the Piling divestiture, order intake levels have improved significantly year-over-year and revenue levels are recovering, requiring working capital investment to fund the growth. In addition, the net debt balance at the end of the second quarter includes approximately $5.7 million in funding for the Skratch acquisition without any trailing 12 months of EBITDA, adding to the elevated level of the metric 2.8x at the end of the second quarter. Lastly, we've generated approximately $11.9 million in cash after the end of the second quarter from the track components divestiture as well as receipt of a portion of our federal income tax refund, which also improves our leverage ratio. We will continue to maintain a conservative approach to our debt levels and capital allocation as we transition to funding the growth contemplated in our strategic playbook. My closing comments will refer to Slides 15 and 16, covering orders, revenues and backlog by business. The book-to-bill ratios on Slide 15 reflects the increasing strength we've seen in all of our businesses through the end of the second quarter. Rail Technologies and Services orders over the first two quarters of the year have been robust, particularly in Rail Products and second quarter orders were up 31.1% year-over-year. We continue to see strong order intake in Precast Concrete products with Q2 orders totaling $22.9 million, up over 39% versus last year. And Steel Products and Measurement orders remain at approximately $95 million per year run rate adjusting for the Piling divestiture and were essentially flat with Q2 last year. And lastly, our consolidated backlog on Slide 16 reflects the robustness of the Precast and Rail Technologies and Services businesses. Our quarter end backlog is at a five-year high and is up approximately 14% versus this time last year, excluding Piling. The robust order intake and backlog levels demonstrate the ongoing strength in the business and commercial markets we serve. While recessionary market conditions remain a broader macro risk in the short-term, we remain optimistic in the longer-term prospects for the growth in our served markets. Thank you for your time this morning, and I'll now turn it back to John for his closing remarks. John?

Thanks, Bill. Please turn to Slide 18. I'll provide some closing remarks on the overall market and business outlook. As previously mentioned during our update calls, our businesses have benefited from significant government funding in infrastructure projects in the past. And funding levels approved over the last several years are greater than we've seen before. While it's difficult to predict the magnitude of the impact on our markets and the demand for our products and services, we're optimistic we'll be seeing improving demand over time. I would say the operating conditions in today's market have resulted in delays in project identification, budgeting and commissioning. But we're starting to see some quotation activities increase in certain product categories. It should be highlighted that our order rates and backlog achieved to date do not include any significant business related to the Infrastructure Investment and Jobs Act passed last November. Also, as mentioned last quarter, we do not expect to see any meaningful revenue from the IIJA in 2022. We expect revenues from this funding program to come in 2023 and beyond. We continue to have line of sight to significant infrastructure projects across the portfolio that are well aligned with our growth strategy, and quotation activity is starting to increase. Our energy-related business has appeared to have bottomed out to historically low levels of demand, some minor improvement in our protective coatings product line, which was realized in the second quarter. While there continues to be increased discussion around U.S. energy security in the market today, we do not expect to see any meaningful improvement in demand for our energy-related product lines for the foreseeable future. Thus, we remain focused on taking our coatings and measurement applications to new markets where possible. While we made some progress in our margins in the quarter, they're still well below our expectations, and improving our operating margins remains a top priority for us. Our team continues to be creative in solving labor and supply chain constraints, and we are raising prices for products and services where warranted. We've also been adding inventory where appropriate to reduce the impact of supply chain disruptions and identifying alternative sourcing arrangements to get back cost escalation. We expect these challenges to remain foreseeable in future, and we're also aware that the risk of recessionary environment is elevated if not already present. With these challenges in mind, we remain focused on executing our strategy and managing our way through these headwinds as we aspire to transform L.B. Foster to generate long-term shareholder value. The portfolio moves we covered during today's call demonstrate our commitment to executing the strategy, investing in our growth platform prudently given the volatile environment. In conclusion, I would personally like to thank the L.B. Foster employees who did an excellent job in the quarter and are focused and energized by the challenges and opportunities that lie ahead. I look forward to providing an update on our progress during the next call. Thanks again for your interest in L.B. Foster Company. I'll now turn it back to the operator for the Q&A session.

[Operator Instructions] Our first question comes from the line of Alex Rygiel from B. Riley.

Hi, Alex.

Thanks for taking my question here. A couple of things. First, in the past, you've helped us to sort of understand what your long-term targets were for gross margins by segment, and I think you've suggested that Rail could be 20 to 22; Precast, exiting 2022, could be near 2020; Steel could finish the year in the mid-teens. Can you give us a little update on sort of your thought process as to where we stand on kind of achieving those in light of the challenging environment?

Sure, Alex. First of all, thanks for joining us today, and I appreciate the questions. And as I mentioned, in our talk today, margins are not where we necessarily want to be, but the team is working very hard at – working on the cost side as well as raising pricing, and we definitely have been getting after the price side on the Rail and Precast side. Precast has impacted us a little bit more than we'd like, but much of that was related to our $50 million of backlog that we entered the year with that we call constrained orders that we're – we jus – we did not have the ability to raise pricing as fast as we'd like to see. And then we've had a number of issues related to steel and rising pricing on steel. But maybe I'll flip it over to Bill, and he can give just a little bit more color on the segment side as well. Bill?

Yes, sure, John. Hi, Alex. Yes, on Slide 10, we tried to give a little bit of a profile of the breakdown on each of the components on Rail Technologies and Services. We were down a little bit from Q1 from 19.7% down to 19.1%. A big driver of that, though, was the very strong robust volume that we had in our Rail Products business that was a major driver in terms of the sequential improvement. And as we also indicated, the order book for that portion of the business has grown significantly, both in Q1 and Q2. So we expect to have the volumes continue there as well as help to contribute to improving margins in that piece overall. So I think that there's probably some shorter-term headwinds, but those longer-term goals, particularly in Rail Technologies as well – Rail Segment overall. And when you think about the Rail Technologies component of the business, the addition of Skratch, the deduction of track components, those are all the kind of moves that we're looking to make to expand the margins into those low 20% for that the Rail portion of the business. On the Precast side, the Precast side is a bit more of a timing issue related to the order book as it existed as we entered 2022. The fact that we've got, as John indicated, some constrained contracts where we had to push through volume and were locked in on pricing. What we can tell you is that we have been more aggressive on pricing moves in that business in 2022. The older portions of the order book are starting to abate. So we expect to see those margins expanding as we continue, and we feel good about the position that we've been able to achieve on the price moves relative to cost for Precast going forward. It's more of a matter of working off the order book. And then again, we – there's a little bit of lumpiness in the Steel Products and Measurement business. We are seeing some improvements in some of the more profitable product lines in the group, not significant, but we expect that also to be continuing to make improvements going forward in line with our expectations.

Very helpful. And then more broadly speaking, can you talk about project delivery timing in particular? Are delays similar to what you've seen over the last couple of quarters? Are they abating a bit? How is the market there?

Yes. So most of the work sitting in our yards and plants, we're making it happen. In fact, we just had a tour of our facility, our new Boise, Idaho precast. And as we brought our directors out there, we had to navigate our way through the parking lot to move around our finished product. So we've done a very good job of bringing in our components and supply components and putting the labor to it to make it happen from our end. The disruption we're getting is just the site availability. Much of the stuff has to go to a location that's prepared, and we don't ship to a dock. We ship to a yard or we ship to a location or we ship to an actual project – infrastructure project. So that's really where we're seeing the delays and the impact from. Now I will tell you, it has improved. And I do see it improving in Q3 and hopefully into Q4 as well.

And then lastly, congratulations on the acquisitions and the divestiture, looks very attractive. Can you talk about sort of the growth rate expectation, long-term, across your U.K. Rail Technologies platform?

So we are excited about it. We've been working with Skratch now for a number of years and IV. Both are excellent companies, excellent people, excellent products. It really gives us the opportunity to expand into some adjacent spaces. So if you think as simple as a train platform today, we're working off the platform. This gives us the ability to work throughout the entire site, working into all the retail space around the platform as well as just a better opportunity to reach out to the passenger as well as the end OEM as well. So we're very excited about this. It's also given the opportunity now in those markets to bring our telecoms business and our contract services business to bear. I'm not sure where the ending is honestly. We're pretty excited about the opportunities to take this, first, from a margin point of view, we're very excited about it. And second of all, I think the opportunities for scaling up in Western Europe as well as right there in the United Kingdom is going to be somewhat significant for us. So at least that's what we believe we're building the building blocks to make – over the coming years.

Very helpful. Thank you very much.

Thanks, Alex.

Thank you. Our next question comes from the line of Chris Sakai from Singular Research.

Good morning, Chris.

Hi. Good morning, John and Bill. Just had a question on your two acquisitions. If you could provide any color, how would these improve gross margin?

I'm sorry. So your question is how do they improve our gross margin? Is that the question, Chris?

Right. I mean do they have any effect on that at all? Or could you provide some color there?

Yes, sure. Well, first of all, so these businesses really put us into the condition monitoring as well as the telecommunications space. And much of what we're working on today related to ESG with our partners over in the U.K., it gives the opportunity for them to have a whole different price point for us to give to them as well as them to give to their customers. So it's a completely different sales cycle for us, honestly. And it's something that we're excited about because we can keep adding layers of value throughout the whole supply chain, if you will, between the design side and now we bring the actual application to bear. We're producing the product. And that will be the opportunity, as you know, to already install it. So we can control what we used to have to give up margin throughout the supply chain, we now have really the ability to manage it all the way through the cycle. So we're very excited about that. Bill, do you want to add any color from your point of view?

Yes. Yes. What I would add, Chris, if you turn to Slide 7, you just think about how these transactions align well with our strategy. We had a Rail Products division that we – the track components portion of the business that was divested post the quarter, of course. And that was a lower margin business on a return on sales point of view. And we basically monetized that asset and redeployed the cash into what we feel is going to be a robust growth platform for the company, where we've got the opportunity to access other elements of the market that we don't currently touch with our current technologies plus it introduces some new capabilities. And when you think about the service model component of those two businesses, both Skratch as well as the condition monitoring portions of the business, it's basically taking a slow growth, lower growth, lower margin business and redeploying the capital into higher growth, more services-oriented and value-added businesses. And we think just over time, that will help to drive margin expansion as those two platforms grow. So hopefully, that helps to – help you think through how we see margin expansion over time with those acquisitions.

Thanks, Bill. Yes, that's helpful. And then – and as we've seen some recession indicators, and you guys have had good growth in new orders, what are you seeing in the third quarter as far as how are new orders coming along now?

Yes. So as I mentioned, we're at $251 million in backlog at the quarter that – which is a five-year record high for us. I mentioned that our bidding activity is extremely high right now. So it is a tough time out there in the recessionary environment. But I will tell you, infrastructure is something that we feel that we're in a very good position to be in right now. And we feel – and I feel the activity is going to continue in Q3 and Q4.

Okay. All right. Thanks for that. And then lastly, you mentioned coatings and measurement, you're going to start to use it in other areas. Can you sort of talk about what other industries you'd use it in?

Yes, I'll do that. So before – the other thing I want to mention, I did in my remarks, I talked about the IIJA and we do – that's out there, and that was approved last November. But to date, we have seen no significant work at all related to that. So in your thoughts or Chris, keep that in mind that someday that will – activity will be let. So we are starting to see some quoting activity related to that. But none of that is in our backlog or projected even to be in our revenue stream in 2022. So all that is yet to come. As far as coatings and measurement, we are pleased with the little uptick that we're seeing on the coated side, specifically our Ball Winch facility that does special ID and OD coating in Texas is having a strong year. And they picked up significantly from where they were at last year. And we've been able to get price. So our margin has reflected that as well. It's something that is being – that we looked at is a very positive move. Our in-line coating business, [indiscernible] has also picked up work. We picked up more work in the last couple of months than we had for the whole second half of last year. So we're in good shape, at least keeping the staff that we have today busy through the balance of the year. So that's been a positive sign for us of work that is coming through that facility. So we clearly have bottomed – we come off the bottom from where we were at this time last year and into the third and fourth quarter of last year as well. Our Measurement business is the one that's being impacted more significant. And Bill and I have been talking about that for the last couple of quarters. We continue to look at other opportunities in adjacent spaces where metering a measurement is required. And our team has done a great job of continuing to reinvent themselves. And we are starting to see some activity right now in adjacent spaces right now, more on the carbon sequestration and other types of work. So there's been a lot of activity of trying to find work related to some of the core competence work we have today. But it's got a long way to go. We're nowhere near the record numbers that we had back in 2019. But the team remains poised and very focused on pivoting that business with the market conditions that we have today.

Okay. Thanks for the answers.

You’re welcome. Thanks for joining us today. We really appreciate it.

Thank you. [Operator Instructions] I would now like to turn the conference back to John Kasel, President and CEO, for closing remarks.

Thanks, Gigi. I really appreciate it. And I'd like to close today with just a tribute to two people. The first being Lee Foster. Lee stepped off, retired from Chair as the Board in June 2 of this year. Lee was a friend, mentor, my boss, and Lee always had the back of all employees of the company. He really set the tone for the culture of the company, and he's the grandson of the Founder of the company. And he will be missed. And the good news is we'll hopefully get to see Lee once in a while since his name is still on the door. But we really appreciate all the service that Lee has done for the company. And it's an honor to be named President and CEO last year from Lee by Lee to carry on the strategy and the vision that he has for the company and make sure that we're around for another 120 years. So thanks again for Lee, all you've done, much appreciated. And speaking on behalf of our 1,300 employees, you will be missed. So it's a new transition, and we moved on to Ray Betler. I've been working with Ray now for the last 18 months. And Ray was obviously just a Board member and then he was nominated and head up the Board as Chair. And I am very excited working with Ray. We kind of – I think Ray finishes, we finish each other's sentence related to kind of some of the background we've had in the rail space, on the operating side. And he also has that passion and vision and the work that he did throughout his career of putting the Wabtec business on the map. He is focused on doing the same thing and returning shareholder return for the L.B. Foster Company. And so I am very excited that we are sitting in excellent shape with our Board of Directors and our Chair of the Board that Ray Betler is going to continue to take this company into the future and driving our strategy and making things happen. As you have seen in the last quarter, with a number of things that the company is making happen, I feel very good about where we're at related to our respective playbook. We're checking things off. We still have work to do, and we're going to be really honing in on margins in the balance of this year with that order book we have and driving profitability. So thanks again for everybody today. Really appreciate it and look forward to have our individual calls with you next week. Take care.

This concludes today's conference call. Thank you for participating. You may now disconnect.