Foster L B Co Q2 FY2020 Earnings Call

Greetings! Welcome to L.B. Foster Company’s Second Quarter 2020 Results Conference Call. Please note this conference is being recorded. At this time, I’ll turn the conference over to Jim Kempton, Controller and Principal Accounting Officer. You may begin, sir.

Thank you, Operator. Good evening, everyone, and welcome to L.B. Foster’s Second Quarter Earnings Call. I am Jim Kempton, the Company’s Corporate Controller and Principal Accounting Officer. Also with me today is our President and CEO, Bob Bauer. I will be covering the Company’s second quarter financial highlights today following our previous CFO, Jim Maloney’s decision to leave the Company to pursue other opportunities. This evening, I will review the Company’s second quarter financial results. Afterward, Bob will review the Company’s second quarter performance and provide an update on significant business issues and market developments. Then, we will open up the session 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 page at lbfoster.com. Some statements that 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. 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 security laws. For more detailed risks, uncertainties, and assumptions related 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. I’m going to cover the second quarter results this evening. But before I do that, I would like to discuss several other items. At the end of June, we executed an amendment to our credit facility. The amendment provides for, among other changes, adjustments to the financial covenants and expands the definition of adjusted EBITDA in the agreement. We determined that given the uncertainty of the current environment due to the COVID-19 pandemic and our desire to take the appropriate restructuring actions to address related issues that this was the prudent course of action. While we’re cautiously optimistic about the Company’s near-term outlook, these changes will provide us with the necessary flexibility to fund actions intended to improve profitability and maintain the appropriate liquidity if difficult conditions persist. For further information regarding the amendments and the credit agreement, please reference our Form 8-K filed on July 1st and our 10-Q to be filed tomorrow. I also wanted to remind you of our relocation of our Precast Concrete facility from Spokane, Washington to Boise, Idaho. As you may recall, this relocation is part of an initiative focused on regional growth opportunities and logistical savings associated with a more centralized location that moves us closer to the Company’s existing and prospective customer base. While we incurred no further non-recurring costs related to this relocation and start-up, on a net basis during the quarter, the facility has not yet achieved full operational efficiency and significant start-up costs and inefficiencies are in the Construction segment’s six months result. Finally, as we’ve discussed on previous calls, in the fourth quarter of 2019, we took a number of actions aimed at reducing cost and risk in our Tubular and Energy Services segment by closing three service centers and reducing headcount in our Test, Inspection, and Threading Services division. During the quarter and year-to-date period, we had trailing costs totaling $67,000 and $271,000 respectively related to these actions. These measures are now completed and we do not anticipate any further charges to come through related to these activities. However, on May 4th, 2020, the company announced the closure of three additional Test, Inspection, and Threading Services facilities and other cost-cutting measures related to this business. These actions, coupled with other cost reduction measures taken in other parts of the Company resulted in approximately $7 million in non-recurring restructuring charges during the quarter, of which approximately $4.5 million were non-cash impairment charges. The operational results of the sites closed during the quarter negatively impacted adjusted EBITDA by approximately $400,000 for the quarter and by $1.2 million for the year-to-date period. We believe that these actions will help mitigate the negative impact that this division has been having on our company’s results and will better position the Tubular and Energy segment to navigate the current challenging dynamics in the oil and gas market caused by the COVID-19 pandemic. The Company is continuing to evaluate strategic alternatives for this business, including closing sites or idling operations at additional locations. Bob will be touching on the impact of the COVID-19 pandemic on our business, and specifically, the resulting effects on our operating segments later on in the presentation. So, with that, I will start my financial review. For the purposes of helping you understand the underlying business performance, many of our comments today will be based on the second quarter results, excluding the non-recurring restructuring charges of approximately $7 million that I just discussed and a $1.9 million benefit related to a non-recurring distribution associated with our interest in the non-consolidated partnership. As a result, I will refer to adjusted EBITDA, adjusted net income and adjusted diluted EPS during the presentation today. During the second quarter, our sales were $145.8 million compared to $200.9 million in Q2 2019, a $55.2 million or 27.5% decrease. Consolidated gross profit decreased by $10.1 million over the prior year quarter. Gross profit margin of 18.6% was an increase of 10 basis points from Q2 of 2019. The decreases in sales and gross profit in the quarter were due to several reasons. Even though the business was generally considered an essential business and allowed to operate during the pandemic, COVID-19 negatively affected our operating results in Q2. During this time, the company experienced disruptions in our supply chain and in customer acceptance of products and services as well as general weakness in demand as stay-at-home orders were enacted or remained in place. Our Rail Products and Services segment was primarily impacted in our Rail Products business and our Rail Technologies business in both North America and Europe. The Rail Products business declined by approximately $16 million, driven by lower demand quarter-over-quarter, resulting from declines in freight rail procurements and decreased transit rail deliveries. The Rail Technologies business had a decline of approximately $10.7 million in revenues. These results were driven by weakened demand for our solid consumable offerings in North America, due to the lower rail traffic volumes driven by the pandemic. In addition, the London Crossrail project was impacted by a work stoppage caused by stay-at-home orders in the U.K. We are anticipating on-site services for the Crossrail project to resume in the third quarter. The declines in revenues drove the decline in gross profit quarter over quarter. However, I would note that gross profit margins for the Rail segment increased by approximately 130 basis points quarter-over-quarter based on higher margin product mix. From a Tubular and Energy segment perspective, the challenging dynamics in the oil and gas market caused by the COVID-19 pandemic have caused U.S. exploration and production companies to significantly decrease activity and implement spending cuts. These events have driven the 34.7% decrease in revenue volumes quarter-over-quarter. These decreases in sales, coupled with weakness in the upstream energy market and its impact on the Test, Inspection, and Threading Services division drove the decline in gross profit in the Tubular and Energy segment of $4.4 million versus Q2 of 2019. During the quarter, the Construction Products segment was primarily impacted by reduced volumes in our piling business driven by the Q2 2019 contributions of the Port Everglades project, which was completed in the fourth quarter of 2019. In addition, during Q2, our new Precast Concrete Boise facility had approximately $4.1 million less revenue when compared to its Spokane, Washington facility in the second quarter of 2019. We do expect this plant to reach full operational efficiency during the third quarter. While gross profit declined due to the decreases in revenue volume, gross margins for the segment were up approximately 30 basis points for the quarter, despite the impact of the Boise facility ramp-up. Now, moving on to expenses. Our consolidated selling and administrative expenses decreased by over $3.3 million or 14.4% to approximately $19.6 million in the second quarter. Net interest expense was reduced by $507,000 or 31.7% for the second quarter due to a $35.5 million reduction in outstanding debt at June 30th, 2020 when compared to June 30th, 2019. Our income tax expense was $1.1 million in Q2 of 2020, resulting in an effective tax rate of 67.6%. Our provision for income taxes included $2.6 million of tax expense on $8.1 million of ordinary income generated in the quarter, offset by a $1.5 million discrete tax benefit related to the $6.5 million Test, Inspection, and Threaded Services’ exit charges and asset impairments taken during the quarter. Our second quarter net income was $523,000 or $0.05 per diluted share compared to income of $9.6 million or $0.90 per diluted share last year. Excluding the impact of restructuring costs of approximately $7 million incurred during the quarter, the benefit of approximately $1.9 million for non-recurring distribution associated with our interests in an unconsolidated partnership, and the related tax effects associated with these adjustments resulted in adjusted net income for the quarter of $4.4 million or $0.41 per diluted adjusted diluted share. Adjusted EBITDA totaled $11.8 million in the second quarter, a decrease of $5.4 million compared to Q2 of 2019. However, it is an increase of approximately $8.7 million from the first quarter of 2020. Now, turning to the balance sheet. Our trade working capital decreased by $6.8 million compared to December 31st, 2019 due mainly to a decrease in inventory of $5.6 million. The decrease in inventory in 2020 was due to better inventory management in our Rail Distribution business. Our net debt was $48.2 million at June 30th, 2020 compared to $79.1 million at June 30th of 2019. Our leverage ratio for the trailing 12-month period is 1.5 times as of June 30th, 2020. Over the last several years, we have strengthened our balance sheet, which should help us manage through these challenging times and position us well to execute on our strategic initiatives. Our current ratio as of June 30th, 2020 is a very healthy 1.86. Our total available funding capacity; that is the available capacity under our revolving credit facility, plus our cash was approximately $71.1 million as of the end of the quarter. From a cash flow perspective, our cash provided by operating activities in the second quarter was $13 million compared to $4.1 million in 2019. The $8.9 million period-over-period improvement in operating cash flow was primarily related to our continued focus on trade working capital improvements. I’d also like to note that this reflects operating cash flow of approximately $44.9 million in the last 12-month period. Our capital expenditures during that time period were approximately $12.4 million, which derives free cash flow of approximately $32.5 million. Based on our closing stock price of $12.77 per share as of June 30th, that would imply a free cash flow yield of approximately 24%. During the second quarter, our capital expenditures were $3 million. The second quarter expenditures primarily relate to the continuous weld railcar and unloader within our Rail segment and continued investments in our Precast Concrete Products business, including our Boise, Idaho facility as well as our existing Hillsboro, Texas plant. I would note that the continuous weld railcar and unloader is a very infrequent capital requirement for the company as these have a very long useful life associated with them. To date, we’ve spent $4.1 million on this railcar, of which $2.3 million has been spent year-to-date in 2020. We anticipate spending an additional $1.5 million in Q3 on this railcar which will be the final payment related to this asset at which time this railcar will be placed into service. We are anticipating our capital spend to be approximately $9 million to $11 million for the entire year. Now on to new orders and backlog. In Q2, overall orders were $138.3 million compared to $164.1 million last year, with the decline primarily attributable to the Tubular and Energy segment. Order volume increased as the quarter progressed and certain pandemic-related restriction orders were lifted or softened. Rail segment orders were marginally below the first quarter by $1.5 million and Construction segment orders increased $12.9 million sequentially from the first quarter of 2020. Tubular and Energy segment orders declined $10.1 million sequentially from the first quarter of 2020. Backlog stood at $225.9 million at the end of the second quarter, an increase of $16.6 million or 7.9% compared to June 30th, 2019 backlog. Most notably, backlog increased by approximately $29.7 million in the Rail and Construction segments versus June 30th, 2019, which is a positive sign in these businesses as we move into the back half of the year. That concludes my comments on the second quarter results. So with that, I will now turn it over to Bob.

Thank you, Jim, and hello, everyone. Jim covered a lot of ground in his report since this was a quarter where significant focus would be on our ability to navigate a difficult market and determine where the impact would be greatest as a result of the pandemic environment. We were closely watching order input rates to assess the impact of the pandemic and whether there were signals of how a recovery might unfold. As you’ll hear in our report, we saw new orders actually improving as the quarter progressed and helped by some key projects, as is typical. Among the other key results to discuss are the sequential improvement in profit from the first quarter and the significant difference in our underlying segment performance when comparing Rail and Construction to the Tubular and Energy segment. These changes helped shed light on the current environment and may be more relevant than the second quarter year-over-year comparisons that were expected to reflect a decline after many shutdown orders. You’ll see a distinct difference in the impact the pandemic is having on our Tubular and Energy segment, highlighting the fact that the energy-related activity in the U.S. has been hit very hard and has taken a more significant toll on our results than the softness in transportation markets has. I’m not going to spend time talking about what I think investors already know as it relates to people all over the world exploring alternatives to public forms of transportation or avoiding them altogether and the subsequent severe decline in demand for oil that resulted. This is reflected in our second quarter year-over-year results, especially in our energy-related businesses. What became clearer to us as the pandemic unfolded was that the impact from the big drop in demand for oil was going to be far worse on our energy-related businesses compared to the impact that the pandemic would have near term on our other transportation-focused businesses. Our drilling and production customers in the U.S. turned off production about as fast as they could. And our upstream Tubular, Test, and Inspection Services saw a dramatic decline. On the other hand, as ridership on transit rail systems plummeted at the same time, transit rail operators did not turn off all the long-term infrastructure projects underway. And when looking at freight rail, although volumes declined due to recession-like conditions, they continued to support maintenance and other programs although at lower levels as capital spending and other measures were taken similar to what you would see them take during a recession. Before I go into comparing some numbers on this subject, I want to expand on our actions that led to the decision to take the charges in our Tubular and Energy segment. The decline in production of oil and gas in the U.S. was more severe than what we saw in the 2015 to 2016 timeframe as global demand fell and drillers headed for another round of cash flow and capital preservation to stay alive. This immediately impacted our upstream services division and signs were emerging that midstream operators weren’t far behind as constraints on transport volume would be pushed out. We had sufficient backlog going into the second quarter for midstream customers that ordered coated pipe and measurement systems. But the upstream services business is not a backlog-driven business. Our backlog there is measured in days and order input can and did fall fast. A 35% decline in segment year-over-year sales came from all the energy-focused divisions with the worst decline coming from the Test and Inspection Services division serving drilling customers. The total segment decline was tough to overcome, but we managed to keep the gross margins for the entire Tubular segment above 20%. Of the $7 million in charges we took this quarter for actions related to lowering cost, $6.5 million was related to shutting unprofitable service centers with poor forward-looking forecasts in the Test and Inspection division. These actions are in line with previous comments we’ve made about continuing to deal with locations where the market is not showing signs of a recovery any time soon. Our view of the overall upstream market is that it will continue to struggle as operators strive to achieve cash flow objectives. Our goal following these actions is to minimize and hopefully eliminate losses from the Test and Inspection division. Having shuttered the locations that didn’t have a path to profitability, we have also been rightsizing the balance of the business, which is today positioned in markets that should have the best chance of recovering when production increases, assuming that the supply chain isn’t pressured more from customers. Let’s look at the other pieces now. First, year-over-year consolidated sales for the quarter were down as expected, particularly with having a record level of sales last year in Q2. But in contrast to the 28% decline in year-over-year sales is a lower 16% decline in consolidated orders, almost all of which is from the Tubular and Energy segment, leaving the year-over-year orders for rail and construction to be relatively flat with prior year. Considering the current environment, we consider this among the more promising signs. As we analyze the year-over-year sales change, it’s difficult to separate the impact from the virus versus a recession driven by the virus. The accumulation of reasons that range from work from home orders, slowing of programs, strain on government budgets, and intentional delays in spending are all surfacing as reasons for business activity that has declined from quarters prior to the emergence of the pandemic. North America freight rail traffic is down from a year ago and transit ridership is well off normal use all over the world, especially in our key markets. This is having a direct impact on consumable sales for friction management and lubricants that manage the wheel rail interface, which are well off last year’s pace. The decline in consumables and related service work, coupled with the service work in London that has been shut down accounts for nearly all of the year-over-year sales decline in our Rail Technologies business in Q2. There are several examples of expansion and maintenance of transit rail networks that have not slowed significantly and have kept our core Rail Products backlog above prior-year June levels. While year-over-year sales in the quarter for Rail Products are lower, the order volume and increase in backlog have been a signal to us that these operators continue to move forward with programs that have a long-term view of infrastructure needs and are assuming ridership will return in the future. To further help you understand our consolidated results and the stark difference between rail and construction combined versus Tubular, here are some data for comparison. For Q2 sales, Rail and Construction is down 25%, Tubular is down 35%. Consolidated gross profit declined by $10 million of which $4.4 million came from Tubular, a disproportionate amount. Orders for Rail and Construction were flat with prior year Q2. In Q1, they were down 20%, another solid sequential improvement. The consolidated backlog increase of $17 million was driven by a $30 million increase in Rail and Construction, bringing the backlog for these combined segments up 16% over the prior year. Not only are these results among the segments very different, but our outlook is also very different over the balance of the year, which I'll address momentarily. Turning now to profitability; among the most significant developments in our results is the sequential quarterly improvement in profit. Our adjusted EBITDA improved by $8.7 million over the first quarter to $11.8 million. Sales volume in the second quarter was better than Q1 by $17 million, but that would normally produce an $8.7 million increase in EBITDA. Sequentially, gross margins improved from 16.8% in the first quarter to 18.6% in the second quarter. Every segment improved with Rail better by 220 basis points; Construction better by 60 basis points; and Tubular better by 320 basis points. Yes, I did say Tubular better by 320 basis points. In this sequential comparison, you can see how the restructuring actions in Tubular helped improve results from the first quarter. The other factor helping sequential profit improvement is the increasing productivity at the new Precast plant in Boise, Idaho. This plant move was still underway in Q1 as start-up activity and training of a new workforce was occurring. As productivity has been improving and is expected to get even better, we expect it to have a positive impact on sequential results. And there was favorable pricing and customer mix, on certain product lines, along with our ability to plan for service and delivery interruptions that helped produce the improvement in gross margins. The improvement translated into adjusted net income of $4.4 million after removing the $7 million in restructuring charges and the $1.9 million of income from the unconsolidated partnership, along with their related tax effects, and the increase in profit was the big factor in driving the $13 million in operating cash flow for the second quarter. We had another quarter of contribution from working capital management and we were able to pay down debt by $8.6 million. On a year-to-date basis, we've spent $7.4 million on capital spending. We have a front-end loaded spending rate. Jim described the plant move to Boise and the new train added to our Rail Distribution fleet that all started last year and cash for this work was expected to be in the first half of 2020. Our Capex plans for the balance of the year are much lower and would like to bring this number in close to the midpoint of Jim's range. My last subject is turning to the second half of the year. There is still a fair amount of uncertainty about what's ahead, and most of our customers are struggling to forecast the next few quarters. So much hinges on whether traffic improves on freight and transit rail lines and unprecedented conditions make that difficult to predict. On the other hand, numerous transit rail projects are expected to continue, certain stimulus money is being directed to transit rail agencies and more may be coming. In the freight rail market, we expect volume to struggle and we expect these operators to trim expenses. I believe our current volume reflects this environment. I don't expect an increase in our consumables driven friction management business until volume from freight railroads gets better and transit operators see more traffic. On the other hand, we do expect increases in services that were stopped in some sites in Q2, especially in Europe where the decline was more severe. This is expected to give us a boost in revenue in this category. As attention turns to a recovery, we are ending the quarter with a strong backlog and we also have some new products we've launched that have helped fill the market void in addition to increasing staffing levels in the service business as work resumes. Turning to construction, certain construction projects have not moved forward at the normal pace as getting projects from the bid stage to closing an order is taking longer than normally planned. We believe that certain engineering firms and government operations involved in transportation-related projects struggle to work effectively in the current environment. This is likely to get better only when the virus outlook and related safe working environments improve. However, we did end the first half of the year with a backlog of $107 million, up 16% from year-end and 20% from June 30, 2019, which should help mitigate some of the effects of these delays in projects. Our outlook for Tubular and Energy is that a challenging environment will continue, although there are numerous predictions that the price of oil will improve and it already has. We do not expect drillers to run back out and resume prior activity. Consolidations have already started to occur among E&P companies in the current challenging environment. We expect there to be fewer upstream operators and the price of oil to remain volatile for some time with lower travel volume expected into 2021. We expect pipeline projects to slow down, but not much more from the current pace. Keep in mind, we're still working off some backlog in our Coated Products and Measurement Systems business. In summary, as we think about the second half, the positives seem to outweigh the negatives across our entire business and there is a real solid chance we'll have positive year-over-year orders next quarter if the market doesn't have further pandemic-related disruption. This could keep our backlog up over $200 million, which would be nice to see going into the fourth quarter. Finally, it's reassuring when you have a team of people that can deal with difficult issues in the most complicated environments. We have great partners we go to market with, that we're coordinating activities with. We have relied on our proven business processes and our business system during these challenging times. But most of all, we have people who jump in and help one another when the need arises, and for that, the senior management team is grateful for their efforts. I'm going to end my comments there and return the call to the operator and we can take your questions.

Thank you. Our first question is from Alex Rygiel with B. Riley. Please proceed with your questions.

Thank you. Good afternoon, gentlemen.

Hello, Alex. Thanks for joining us.

Absolutely. Could you give us a little bit more of an update on the London Crossrail project?

Certainly. I can provide some updates regarding what occurred in the second quarter. The outbreak in that region was quite severe during this period, which led to us having to send our field technicians home for most of the quarter. This was a significant project for us, involving nearly 200 field techs who could have been working on it. Most of them were at home during the second quarter, but they're now being brought back on-site at two locations. These sites are the stations where we are implementing automation work for the London underground project. We are engaged in extensive systems integration, linking systems related to passenger information, access control, video monitoring, and other advanced equipment. While not all of our team is back yet, we are gradually ramping up operations and expect to return to our previous work rate, although we may not fully understand the situation until after the third quarter.

And you also mentioned that you had a number of new product launches in the Rail business, can you go a little bit deeper into what those were?

Yes. The developments were not limited to Rail; they spanned our entire business. I'll begin with some examples outside of Rail and then cover the ones related to it. In our Precast Concrete sector, we've made several advancements, enhancing our flagship Precast Concrete buildings. We've also expanded into new product lines, particularly in bridge beams, as well as septic systems and related products for residential and light commercial applications. Our work on the buildings product line is ongoing. In the Rail sector, we introduced new technology in our Allegheny Rail products aimed at managing signaling systems. Additionally, we have launched new offerings in disruption management within our controls and displays business. These include newer product lines that are being deployed for rock fall detection, avalanche detection, and modern display systems for managing disruptions in transit stations, providing passenger information. These solutions are also making their way into airports and other venues, where we are optimistic about securing projects. These multifunctional displays, for which we supply both software and hardware, are opening opportunities in markets we haven't previously served.

And then as it relates to the new facility in Boise, you mentioned that it would be up to full operational efficiency in the third quarter. Help me to better understand that comment. Does that mean it's going to be up to full revenue-generating piece in the quarter as well as profitability into a quarter as the Spokane facility was a number of quarters ago?

Yes, there are two key factors to consider. The second quarter fell short compared to Spokane, with about a $4 million difference in year-over-year sales. The main issue is that we are not yet achieving the same productivity in terms of labor hours per unit of production as we did in Spokane. Most of our new workforce in Boise is inexperienced, and they are still in the learning phase. However, we are seeing rapid progress in their training. We anticipate that by the end of the third quarter, the labor efficiency per unit will align with our other facilities, including Spokane. Predicting exact sales levels is more challenging due to current business conditions, but we are noticing an uptick in order rates and improvements in our backlog, which makes me optimistic about closing the sales gap.

That's great. One last question, could you give us a little bit of comment or color on cash flow expectations in the second half of the year and prioritize the uses?

We generally do not forecast cash flow, but we may provide some insights during presentations about our expectations. However, I won't predict cash flow for the second half of the year. Our focus regarding cash flow, particularly free cash flow, starts with operating cash flow. Most of our capital expenditure occurred in the first half of the year, so while we will have some additional capital expenses in the second half, the remaining funds will likely be used to pay down debt, which remains a priority for us. We are pleased with our progress in reducing debt on our balance sheet and improving our leverage ratio over the past few years, and we wish to continue that trend. We are also exploring a few other opportunities where we might invest in organic growth, such as a small bolt-on acquisition in the Precast Concrete segment that we are currently considering.

Yes. To add to what Bob mentioned regarding our capital expenditures, we have spent approximately $7.4 million year-to-date and expect to be between $9 million and $11 million. We anticipate that this capital expenditure will decrease in the latter half of the year. Additionally, I want to highlight our strong focus on managing working capital. We have recently conducted business reviews with all our business units, and working capital management continues to be a top priority for us to ensure that each unit focuses on it effectively.

Very helpful, thank you gentlemen.

Thank you.

Yes. Thank you, Alex.

Thank you. Our next question comes from Chris Sakai with Singular Research. Please go ahead with your questions.

Hi. I have a question regarding the Fabricated Bridge and Precast Concrete Products divisions. Can you provide some insights into what is happening there? I'm curious about the strong increases in backlog.

I'll start with Fabricated Bridge. We began the year with a solid backlog, which has since improved. We expected to see some major projects commence during the year, and one has started—specifically, we booked the second phase of the Newberg Beacon project, which was a valuable addition later in the quarter. The bridge decking business can be somewhat cyclical at times. However, 2020 is shaping up to be a strong year for this division, with a backlog that should keep us very busy throughout the year, predominantly focusing on Grid Decking, our top product line. Our Bridge forms business is performing well too, supported by funding for bridge rehabilitation projects. In the Precast area, our Precast business has been one of our stronger growth segments in recent years. As I mentioned earlier when discussing new products, we've been expanding our product lines in Precast Concrete. We’re also exploring new geographic markets that we haven't previously served. Our eastern location, established over five years ago, continues to be a significant growth area. It's important to note that Precast Concrete Products are less connected to transportation than many of our other businesses, so they haven't faced the same challenges. I want to recognize our team for successfully launching growth programs in that sector. We are gaining market share and finding new opportunities to enter different markets.

Okay, great. Thanks for that.

Yep. You're welcome.

I would like to turn the floor back over to Mr. Bob Bauer for closing remarks.

All right. Well, thank you, operator. Well, thanks everyone for joining us today. We appreciate your interest and we look forward to catching up with you next quarter. Thank you very much. Bye-bye.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. And we thank you for your participation.