Foster L B Co Q3 FY2022 Earnings Call

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

Thank you, operator. Good morning, everyone, and welcome to L.B. Foster's Third 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 third 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 third quarter performance, including market development. Bill will then review the company's third 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. The company also had a limited number of unusual adjustments during the quarter for which certain metrics have been adjusted in today’s presentation for purposes of more accurately communicating the company’s operating performance. These non-GAAP metrics are 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 and on August 1, 2022, we completed the sale of our track components business. Due to the nature of these sales, we have presented these businesses within the continuing operations in our financial statements. So with that, let me turn the call over to John.

Thanks, Stephanie, and hello, everyone. Thanks for joining us today for our third quarter earnings call. Before I turn it over to Bill for a financial review, I'd like to begin by covering the more significant takeaways from the quarter and recent activity starting with our strategic portfolio transformation accomplishments. As previously reported, we continued our portfolio transformation with the acquisitions of the VanHooseCo Company business on August 12 and the acquisition of Intelligent Video on July 6. Additionally, we completed the sale of the Track Components business on August 1. These transactions were well aligned with our strategic roadmap, and I'll cover these moves in a bit more detail in a moment. In our legacy business, we faced significant inflationary headwinds across most of the businesses that adversely impacted our margins in the first half of the year, particularly in the precast business. In the Q3 results, we're beginning to see the benefits of our mitigation efforts with adjusted margins year-over-year in all segments. We were particularly pleased with what we've seen, improved margins in our legacy precast business, which were up 410 basis points over last year. I should also highlight that we recorded a $4 million adjustment to sales in the quarter for the settlement of certain long-term contracts related to the Crossrail project in the United Kingdom. The adjustment reduced both sales and gross margin in the quarter. Ultimately, this came down to a business decision. But I'd like to add our performance on the Crossrail project has delivered significant value since 2015. And the settlement should allow us to benefit from increasing project opportunities we are seeing in the UK starting with HS 2, a 10-year project connecting the cities of London and Birmingham by high-speed transit system. Our adjusted EBITDA increased 111% from 4.4 million to 9.3 million on a 3% adjusted sales growth year-over-year. This is reflective of the portfolio moves we completed along with the improved performance in the legacy business. At quarter end, our backlog stood at approximately 273 million, a five-year high and up 17.7% year-over-year. Order intake levels for the quarter were slightly down from the prior year due to timing of some project orders in the rail segment. Finally, the order levels in the quarter do not include any significant business from the Infrastructure Investment and Jobs Act passed in Congress just over one year ago today. As Bill and I will cover the outlook for orders and demand at the end of our prepared remarks. As a reminder, Slide six reflects our strategic playbook with five of the initiatives highlighted representing our recent accomplishments. We have made significant progress on our strategic transformation that was outlined in December of 2021. Over the past year, we've completed five transactions comprising three acquisitions and two divestitures, positioning us for profitable growth in the future. We previously communicated our goal of transforming certain elements of our portfolio from slower growth commodity-like offerings to higher growth technology-focused solutions. The transactions on Slide seven represent our progress towards this transformation. On June 21, we completed the acquisition of Skratch with a purchase price of 7.4 million with annual revenues just under 8 million. Skratch is a UK industry leader in digital system integration, serving mainly retail markets with expertise in advanced digital display technologies and capabilities. We also completed the acquisition of Intelligent Video or IV. This purchase was completed at a total purchase price of approximately 1 million. IV is a UK developer of high-quality surveillance, security and safety solutions that align with our growth initiatives focused on remote condition monitoring and visual communication. Both Skratch and IV highlight our strategic core growth initiatives to transform LB Foster into a technology-focused high-growth infrastructure solutions company, thus enabling us access to a wider target markets in the United Kingdom and Western Europe. On the divestiture side, we completed the sale of our track components business in Canada for 7.8 million. This sale provides funding for investment in our growth platforms. Finally, on August 12, we completed the acquisition of VanHooseCo, which aligns with our strategic playbook initiative to double down on precast concrete. The VanHooseCo had over 28 million in sales in 2021 and meaningful profitability, which made the acquisition price of approximately 52 million very attractive. We have already seen the value potential advance from VanHoose Company coming together with our legacy precast business and occurs by the outlook of the combined business. In summary, these transactions and our legacy results demonstrate that we are transforming LB Foster with an eye towards achieving our aspirational goals and increasing shareholder value. Bill will cover the financials for Q3 and I'll come back at the end with some closing remarks on our overall market and business. Over to you, Bill?

Thanks, John, and good morning, everyone. I'll begin my comments by covering the third quarter highlights on Slide number nine. 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, we divested the Piling business since September of last year and Track Components in August of this year. These transactions are not being treated as discontinued operations. Accordingly, the amounts presented today include the Piling business within the Steel Products and Measurement segment and the Track Components business within the Rail Technologies and Services segment unless otherwise noted as adjusted for comparability purposes. Third-quarter sales were $130 million essentially flat with last year. As previously mentioned, net sales for the quarter included a $4 million adverse impact associated with the Crossrail settlement. This impact reduced both net sales and gross profit in the quarter. Gross profit increased by $800,000 or 70 basis points from the prior year quarter. The Crossrail settlement reduced gross profit margin by 240 basis points in the current quarter. In addition, a purchase accounting adjustment related to VanHooseCo acquired inventory adversely impacted reported gross margins by 70 basis points. Excluding these items, third-quarter gross margin was 20.8%, up 370 basis points over last year's third quarter. SG&A expense was up $2.6 million, due in part to $1.4 million in costs associated with the company's acquisition and divestiture activities and contingent consideration for the VanHooseCo acquisition. Adjusted EBITDA in Q3 increased $4.9 million to $9.3 million, a 111% increase year-over-year. I'll cover the drivers of this improved result on the next slide. Operating cash flow was a usage of $5.5 million in Q3, due primarily to higher working capital levels needed to deliver the robust organic sales and quarter-end backlog, which increased 9.1% from the second quarter. We expect to generate strong operating cash flow in Q4 as working capital requirements ease through the balance of the year. Third-quarter orders totaled $137.3 million down 1.1% from the prior year. Orders improved 5% organically and 5.6% from acquisitions but were offset by an 11.7% decline due to divestitures. Third-quarter backlog increased $41.1 million year-over-year due to a 12.7% organic increase and a 6.7% increase from acquisitions partially offset by a 1.6% decline as a result of divestitures. Slide 10 provides an overview of the drivers of our year-over-year performance in the third quarter. The Bridge on the left shows the overall change in sales, which reflects the strong organic growth of $15.3 million or 11.8% during the quarter. The impact driven by portfolio activity added $7.2 million from acquisitions that was more than offset by an $18.6 million reduction in sales related to businesses that were divested. The adjusted EBITDA chart reflects the impact of the legacy business growth and margin expansion and net portfolio activity impact on adjusted EBITDA results. Adjusted EBITDA for the current year third quarter removes the impact of the Crossrail settlement, acquisition and divestiture-related costs, the purchase accounting adjustment and contingent consideration expense related to VanHooseCo and the loss on the Track Components divestiture. Note that adjusted EBITDA for the prior year third quarter removes the $2.7 million gain on the divestiture of the Piling business. Adjusted EBITDA increased $4.9 million to $9.3 million year-over-year. The drivers of the improved performance include organic growth and margin expansion in our legacy business and the accretive effect of our portfolio moves. I'd emphasize that adjusted EBITDA from our portfolio reshaping efforts improved $1.5 million on $11.4 million less sales, highlighting the strong leverage delivered by this initiative. Adjusted EBITDA as a percentage of adjusted sales expanded from 3.4% last year to 6.9% in the current quarter. Margin expansion in our legacy business was driven primarily by our Precast business, but all segments contributed to the improved results. We previously communicated our goal to transform our portfolio from slower growth, commodity-like offerings to higher growth, more profitable technology-focused solutions. We are seeing early indications that we are on the right path in our reported results and look forward to continuing our value creation journey. Over the next three slides, I'll cover the performance of each of our segments starting with our rail segment on Slide 10. Third-quarter rail segment revenue increased $3.4 million year-over-year, driven by 11.8% organic growth, partially offset by a 1.9% reduction associated with acquisition and divestiture activity and a 5.3% reduction associated with the Crossrail settlement. Gross margins were also impacted $4 million due to Crossrail and excluding this settlement, rail gross profit margins expanded 250 basis points. New orders declined from the prior year due to the sale of the Track Components business and timing of orders primarily related to rail distribution.

As reflected on Slide 12, the Precast Concrete Products segment revenue increased $10.9 million or 60.6% year-over-year, organic sales increased 25.2% and the VanHooseCo acquisition contributed 35.4% year-over-year. Gross margins increased 450 basis points year-over-year driven by the legacy business and the impact of the VanHooseCo acquisition. Margin expansion in our legacy precast business, which was up 410 basis points year-over-year reflects the expected fulfillment of backlog generated ahead of pricing actions as well as increased volume year-over-year. The expansion and the overall segment margins includes $900,000 in inventory adjustments related to the VanHooseCo acquired inventory, which negatively impacted segment margins by 290 basis points. Orders and backlog levels remain robust in our Precast segment and we expect this favorable trend to continue with the VanHooseCo acquisition and the announced government funding programs. The Steel Products and Measurement segment revenues decreased $14.3 million or 37.6% year-over-year. The organic sales increase was 5.2% offset by a $16.3 million decline or 42.8% from the sale of the Piling business. Gross profit margins improved 230 basis points due to the sale of the dilutive Piling business as well as increased pricing and favorable business mix. Sequentially, Q3 margins were up 70 basis points reflecting our efforts to mitigate commodity inflationary headwinds, coupled with favorable business sales mix. Order rates in Q3 increased 58.8% while backlog increased 47.7% with both increases due primarily to a large order for coated pipe in our Birmingham, Alabama facility in support of a carbon capture and sequestration project.

The prior year orders included $13.2 million associated with the piling business that was divested. Our year-to-date results are reflected on Slide 14. Year-to-date sales decreased $40.3 million or 10.1%. The impact of divestitures contributed $61.6 million of the decline or 15.4%, partially offset by a 3.5% organic sales increase and 1.8% due to acquisitions. Steel products and measurement segment net sales declined $51 million or 42.1% due to the piling divestiture. The rail segment declined $6.1 million or 2.7%, driven by the track components divestiture accounting for $2.4 million of the decline, as well as the Crossrail settlement. These decreases were partially offset by increased sales in our global friction management business. The precast segment realized a $16.8 million increase, or 33% driven by $6.4 million from the VanHooseCo acquisition and strong sales in the Southern U.S. region. Gross profit in the current year-to-date period was $62.8 million, a $4.4 million decrease or 6.6%. The decrease in gross profit was driven primarily by the impact of the piling divestiture and the Crossrail settlement, partially offset by sales strength in precast. Precast gross profit increased by $2.3 million, including gross profit of $1.3 million from the VanHooseCo acquisition, which included the $900,000 inventory purchase accounting expense. Rail gross profit declined $1.8 million due to the Crossrail settlement and steel products and measurement gross profit declined by $4.9 million driven primarily by the sale of the piling business. Selling and administrative expenses for the year-to-date period increased $1.5 million or 2.5%, including $2 million associated with the company's current year transformation activities. Adjusted EBITDA year-to-date, which is adjusted for the impact of the Crossrail settlement, acquisition and divestiture-related items and non-routine insurance proceeds was $16.7 million, a 7.8% increase compared to the prior year period. Our liquidity metrics are reflected on Slide 15. As expected, our net debt increased during the third quarter to $94 million, with the closing of the $52 million VanHooseCo acquisition. On August 12, 2022, we amended our credit facility to obtain approval for the VanHooseCo acquisition and temporarily modified certain financial covenants to accommodate the transaction. The amendment modified the maximum gross leverage ratio covenant through June 30, 2023. The maximum ratio through December of 2022 is 4x. As of September 30, our gross leverage ratio was 3.3x. With expected cash generation from operating activities, we expect our gross leverage ratio will improve in the fourth quarter and moving into 2023. Also, in the third quarter, we generated approximately $7.8 million in cash from the track components divestiture, and we finally received the $5.6 million federal income tax refund. Both items were accretive to our leverage ratio at the end of the quarter, and we are now pursuing an additional $2.8 million federal tax refund. As we've indicated in the past, we will strive to maintain a balanced level of indebtedness relative to our overall profitability, cash generation and capital structure with a long-term target of around 2x net leverage. My closing comments will refer to the Slides 16 and 17 covering orders, revenue and backlog by segment. The book-to-bill ratios on Slide 16 reflect the increasing strength we've seen in our business through the third quarter. Rail technologies and services orders were softer in Q3, but this is just timing of orders. Over the trailing 12-month period, sales and orders are approximately $300 million. We continued to see strong order intake in our precast concrete business with Q3 orders totaling $31 million, up approximately 31% versus last year, driven by the VanHooseCo acquisition, which added $7.1 million in orders since we took ownership. Steel products and measurement orders increased significantly due to the coatings order previously mentioned. And lastly, our consolidated backlog on Slide 17 reflects robust growth across the portfolio, particularly in the precast concrete and steel products and measurement segments. Our quarter-end backlog is at a five-year high and is up 17.7% versus this time last year. Backlog was impacted by a 12.7% organic increase and a 6.7% increase associated with acquisitions, partially offset by a 1.6% decline due to divestitures. 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, we remain optimistic about the long-term prospects for the growth in our served markets.

Thank you for your time. And I'll now hand it back over to John for his closing remarks. Thanks, Bill. Please turn to Slide 19. We will provide some closing remarks on the overall market and business outlook. The portfolio moves we covered during today's call demonstrate our commitment to executing the strategy and investing in our growth platforms. We are currently focused on ensuring a seamless integration for the acquired businesses while evaluating the growth opportunities that our combined businesses present, while more to say on those opportunities in the coming quarters. As Bill indicated, our backlog is at a five-year high, and this is not including any significant business related to the Infrastructure Investment and Jobs Act. We do, however, have line of sight to significant infrastructure projects across the portfolio that are well aligned to our growth strategy and quotation activity is increasing. We believe these programs will provide some degree of demand support should market conditions deteriorate. As Bill mentioned, our steel products and measurement business has seen an uptick in order activity in the third quarter. This has resulted in a 63% increase of backlog during that period. And while overall operating conditions are expected to remain challenging for the foreseeable future, we are confident in our ability to navigate these headwinds as we demonstrated in our third quarter results. In summary, we remain cautiously optimistic that recessionary headwinds may be tempered by the government infrastructure spending programs analyzed over the last couple of years. As a result, we expect the prospects for stable to improving demand for our products and services in the future to remain promising. In the meantime, we have been laser-focused on executing our strategy, which was rolled out during Investor Day in December of 2021. As demonstrated in our actions and our results, we are transforming LB Foster into a technology-focused high-growth infrastructure solutions provider. Guided by our strategy, we remain committed to delivering our aspirational goals of approximately 600 million revenue and 50 million EBITDA by 2025. While this quarter's results are encouraging, these are the early days in our journey to restore and improve shareholder returns. As we actively integrate our recent acquisitions, we plan to further leverage our growth platforms and rail technologies, precast concrete and at the same time, continue to optimize the performance and the returns portfolio. In closing, I’m very proud of what our team has accomplished in such a short period of time. Their energy and commitment make all the difference. I look forward to continuing the journey with them and reporting our progress in the quarters to come. I will now turn it back to the operator for the Q&A session.

Thank you. Our first question comes from Alex Rygiel with B. Riley. Please go ahead.

Thank you, gentlemen. A couple of quick questions here. Backlog looks fantastic. Can you talk a little bit about the implied profit margin in close today? Obviously, that is suggesting sort of what margins could look like as we proceed into 2023.

Thank you, Alex, for being with us today. We truly appreciate it. Our backlog is strong, reaching a five-year high in activity, and we are confident about it. Additionally, we anticipate improvements in profitability. Bill, could you provide some more details on the backlog?

Yes. Morning, Alex. I guess the thing we would highlight is that early in the year we were emphasizing that the precast backlog had a bit of depressed margins in it relative to business that was booked ahead of our price increases that we were able to realize within that segment. And we started to see that abate as we got into Q3, and you can see that we had a really strong performance in margins in our precast business, both year-over-year and sequentially. I'd add that on top of that, VanHooseCo, which we had for about half the quarter in 2022 also had very strong margins and were accretive to even the precast margins, including the $851,000 adjustment that we had in the purchase accounting adjustment related to the acquired inventory. So, as we looked at our mitigation actions that we've taken over the year, it took time for it to ultimately manifest itself in our margins. And this quarter was the first that we really saw that come through, obviously adjusting for the Crossrail settlement, which was a bit of a depression to the margins in the quarter, but we view that more as a non-routine item that should be behind us at this point. So overall, I would say that our expectation on margins is that Q3 was solid, and that we should continue to see improvement from there.

Yes. I would just reiterate what you said there. We had to work through that GSA contracts on the precast side, that's a good part of our backlog, Alex was related. And we just didn't have the ability to pull levers on that because those revenues were constrained. So we were able to work through that first half of the year, a good part of that backlog. So we're in pretty good shape heading into Q4 and beyond.

And then, as we think about the recent press releases regarding the carbon pipeline, can you think about how to quantify that from a revenue basis and what the timeline of revenue recognition could look like on that?

We experienced a significant increase in our backlog, which was something we had anticipated and are very excited about. We want to express our gratitude to John Doe and his team as well as our colleagues in Birmingham who worked diligently to make this possible. Under Brian Friedman's leadership, we've made remarkable strides. This project will be extensive, covering 2000 miles of piping, and it is one of the largest orders we have ever secured. Our share will involve about 500 miles of 24-inch pipe, which we will coat on the outside diameter. We aim to begin production in early Q2 of 2023, expecting around 20 million in sales from this undertaking. It's been a while since we've encountered something of this scale.

Fantastic. Congratulations.

Thanks, Alex.

Thank you. One moment for our next question, please. It comes from the line of John Bair with Ascend Wealth Advisors. Please go ahead.

Got a couple of questions here. In the past, you had mentioned that there were some bottlenecks with delivery of precast products that the end user didn’t, you had to keep them on your own site, basically. Have you seen any easing of that situation?

Yes. So, John, thanks, again, for joining us today and your questions. It's getting better; the disruption we're having with COVID getting the permits as well as the sites ready has improved. And the weather is also helping us in the third quarter as well. So the situation is much better than we've seen just in the last 120 days.

That's good. Another question. Turning to the recent summit carbon solutions award. That's a fairly controversial project. From what I have read, they have about 50% of the rights of way secured or signed up by landowners. But there's quite a bit of controversy around that. So the question is, at what point will American cast iron begin to manufacture pipe? Do they have to wait until this is completely locked up? Or is it your understanding that portions of that pipeline will in fact get built where they have the rights of way?

I think it's all or none honestly because of what the scope of the project is and 37 different facilities that they're tying together and then moving that over 2000 miles of distributed pipe. I hear you, but having said that, there have been major progress is privately funded. Sipco is ramping up right now. We're getting their second mill online, and we're doing the same. So we're very bullish and optimistic that it's going to go forth as outlined.

It seemed like a lot of these green energy related projects really want them, but they don't want them in their own backyard. So it seems that kind of gums the workshop a little bit there. Last question, I have, and that is how rapidly do you believe you can pay down that debt load? Sounds like you have pretty good cash flow coming in from VanHooseCo's acquisition and so forth. What's your timeline on that or what's your outlook on how quickly you might be able to whittle that debt level down?

Yes. Again, thanks. So, I'm going to turn it over to Bill. But we knew we were going to do this. So this was planned. But we are pleased with the cash generation that we're getting from our new companies coming in. We don't want to be running too high. We've been there before. We learned our lessons. And also, we got a little run-up of inventories going on now to protect and make sure that we're getting product out to our customers. Bill, you want to give a little more color on?

Certainly. Regarding the third quarter, we experienced strong results from our acquisition, leading to robust revenue and organic growth, which also bolstered our working capital. Additionally, we have some inventory to support revenue generation as we head into the fourth quarter, and we anticipate strong cash flow during that time. Looking ahead to 2023, we plan to be careful about paying down debt throughout the year. Additionally, John mentioned that we see promising growth opportunities related to the VanHooseCo acquisition, and as we enter 2023, we will consider the capital needed for those initiatives while being cautious about the debts incurred to support them. Our aim is to systematically reduce our debt level in light of our profitability and cash flow. I want to remind everyone that our long-term goal is a leverage ratio of around 2x, and although we are currently above that due to the acquisition, we aim to return to that 2x leverage ratio over time.

Right. Do you have any other divestiture possibilities that might help you generate cash that, lightly used that way? Or what's your thoughts in that area?

So, if you go back and look at the playbook that I laid out today, and we laid out back in Investor Day, that's an ongoing process that we have in our returns portfolio, looking at those businesses how to generate cash, as well as the business viability in the future. So that's an ongoing process.

All right. Thank you very much for taking my questions. Have a good rest of the year.

Thank you. One moment for our next question, please. And it comes from the line of Chris Sakai with Singular Research. Please proceed.

What are you seeing in the South as far as increased building sales are concerned in precast? And has this trend entered into the fourth quarter?

Yes, that's a great question. We closely monitor that situation. With our acquisition of VanHooseCo, we are now part of that business sector. Tennessee is a strong market for us, and North Carolina is performing well too. Additionally, the area near Texas is emerging as one of the largest residential growth spots we observe. We are also considering entering the Florida market in the future, despite the recent hurricane event. This region is showing significant strength, which makes us optimistic about the VanHooseCo operation. I want to remind everyone that we currently have one facility operational and are in the process of launching a second one. We anticipate major developments on the horizon. By merging our existing 60 businesses with what we can offer, we see promising opportunities to establish our brand and products effectively in the southern marketplace.

Okay, right. And then, precast, what drove the gross margin expansion in the base business?

We discussed this earlier with Alex. Historically, we have around $70 million in backlog for that business, primarily related to our buildings and restrooms, much of which involves state or federal contracts. These projects typically have long lead times, often ranging from six months to a year. In 2021, we secured several of these jobs but had limited ability to raise prices, so we focused on processing them through our backlog in the fourth quarter and continuing through the first and second quarters of this year. Currently, we are in a good position, able to secure prices as needed and reduce the constrained backlog. We are optimistic about the future of that business.

Okay, sounds good. And last one for me. What do you think for new orders and steel products in measurement business? And is this a growing trend or not?

So that group has many contributing factors right now. The most significant is what's happening in coding. Our other coding business has had a very strong year, particularly with the Willis Ball Winch acquisition. We have been very pleased with their performance. On the steel side, we divested the piling group last September, which leaves us with the fab site. That area is a bit more volatile, but we are anticipating infrastructure funding to start having an impact this year into next year. We are beginning to see that in our bridge formwork business, which has been performing very well. Bidding activity is extremely high, and we expect grid work to increase in 2023, 2024, and beyond. Infrastructure will play a significant role. As Will and I mentioned during the call, we are observing considerable bidding and coding activity related to the Infrastructure Jobs Act from just over a year ago. However, we haven't started implementing that in our facility yet, but we expect it to begin in the first and second quarters of next year.

Okay. Thanks for your answers.

Thank you. I will turn the call back to John Kasel for final remarks.

Thank you very much, Carlisle. We really appreciate everybody joining us today. Thanks for hanging in there. We had a little bit longer pitch today. But we thought it was important to really demonstrate and come out and share with you how we feel the company was going on and really get into the adjusted side of the company. And the fact is, I think we've come a long way. Very pleased with the team's work here with the five acquisitions we have done over the last 12 months. And I think the transformation we're doing related to the playbook and specifically on the growth side is really coming together nicely. Driving tour is aspirational goals that we laid out there in 2025. So thanks again, everybody. Go out and vote. Have a good day. Be safe. Thank you.

And with that, we conclude today's conference call. Thank you for your participation, and you may now disconnect. Good day.