First off, thank you for everyone who's joined us here in person today. Really appreciate it. Those on the webcast, we also appreciate you joining. My name is Joe Noyans. I'm a three-part advisor. Up next, we have one of our investor relations clients, LB Foster Company. LB Foster is traded on the NASDAQ under the symbol FSTR, the company's technology-enabled infrastructure solutions provider that's well-positioned to benefit from ongoing rail modernization trends here in the U.S., as well as strong infrastructure demand. And, excuse me, presenting on behalf of the company today is going to be the chief operating officer, Bill Tallman, and its chief financial officer, Sean Riley. My apologies. I can go ahead and take it from there, Bill.
Morning, everyone. Yeah, as Joe indicated, my name is Bill Tallman. Recently announced as chief operating officer with LB Foster. I've been with the company since 2021, so a little over five years, and with me today is Sean Riley, who's been on the job as Chief Financial Officer for about 10 days. Sean's been with the company for about four years, and so we're going to take you through our story just to get started on slide four in the materials. L.B. Foster's been around for just shy of 125 years. it's based in western Pennsylvania our headquarters is in Pittsburgh it's largely a North American business we have a little bit of exposure in the UK and Western Europe but just over 90% of the businesses in North America we have about 1,200 employees and we are organized around two operating segments rail and infrastructure which you'll see here on the next slide we'll cover a couple of the particulars for those two segments so in terms of revenue you can see the rail segment is larger about 325 million in revenue and infrastructure is about 235 million in revenue so just over 560 million in revenue on a trailing 12-month basis. Margin profiles of both businesses, this is gross margin, are similar, a little bit better in infrastructure on a trailing basis. We'll spend a little time on the components of the business, which drives the margin profile. The margins have been improving significantly, especially over the last five years, as we've executed our strategy, and we've seen improvements in both sides of the business in terms of a margin profile improvement spending a little more time on the rail segment we have three business units within rail the rail products business unit is just around 200 million in revenue and that is as you would expect it's rail products a large portion of that business is distributed rail that we sell to the regional railroads transit authorities were basically an extension of sdi their commercial arm in that product line we also have insulated rail joints and transit direct fixation fasteners for the transit authorities that's a product line again about 200 million pretty steady business for us we also have global friction management the friction management product line is one of our growth platforms it's been growing nicely over the last three to five years margin profiles of that business are a bit higher than rail products capital deployed also is relatively reasonable lower as a relative position within the portfolio and again it's a technology-based product line that's been growing nicely helps the railroads with their safety initiatives as well as fuel efficiency and operating cost performance. And that's just right around $85 million in revenue. And then technology services and solutions, which is the smallest component of that business, just over $40 million. There's two primary elements. We have a contract services piece of the business that sits over in the UK. That is exactly as you would expect it's contract work that we're doing with the railroad entities over there to support their maintenance work and then we have about a 15 million dollar revenue component for track monitoring solutions that we produce here out of the US and that helps with everything related to rockfall for wheel impact load detection a variety of different monitoring solutions that assist the railroads with again safety performance monitoring uptime reduced dwell time and improvements in operating efficiencies pretty wide margin profile of the business within rail but again what we're seeing is the technology oriented pieces of that business are improving at a faster pace which has been helping our our margin profile the addressable market for both of those elements of the portfolio rail products again it's going to be relatively low single-digit growth rates it's basically driven by maintenance work that's required to be done by the different railroad customers that we sell to it's pretty steady demand last year was an unusual year where there was a bit of a pause in funding from government agencies that impacted the first quarter and the and to some degree the second quarter revenue last year but we've returned to a more normal demand profile this year, and so we're seeing an improvement there. We would expect our sales to grow at a reasonable pace, pretty close to the market. And then for the rail technology side, there we're really seeing a significant improvement in our growth rates. The biggest driver of that from a volume point of view is in friction management. We still have more room to grow there, we believe. we have a solid market position but there is more room to grow and the other element of that growth expectation has to do with the the amount of deployment that there is of these technologies over the rail network so with respect to friction management only 5% of the North American rail network is treated with friction management and so there's opportunities for that to continue to expand which creates additional market opportunity and we think we're in a strong position to capture that. Turning over to the infrastructure side, there's two business units within infrastructure. First of all, the largest piece is precast concrete. It's about $170 million in sales. That's been growing very nicely with strong margins, and that has been one of our growth platforms that we've got in the business. There's been a combination of organic and inorganic growth in precast concrete and you know we're continuing to invest in that product line to see further growth in the future within steel products we've got a handful about three or four different product lines within that business it's the the biggest component of that is pipeline coding we have two facilities where we do pipeline coding for the oil and gas industry as you can imagine there it was on a a bit of a back burner for a number of years about a year and a half ago we started to see a more significant improvement in demand and investment activity in pipelines that's resulted in some recovery in that product line which has helped the margin profile and the sales growth overall for steel products over the last couple years looking at the addressable market primarily for precast concrete we focus the infrastructure growth opportunities specifically in in precast concrete so we have two primary product lines within precast concrete we're well known in the marketplace for our CXT buildings these are concrete structures that are produced in our plant and then set in our plants we have multiple plants where we produce them and they are set in place ready to be hooked up to utilities and operational with a hint within a handful of days of being delivered with the labor shortages that there has been in the last several years this is an opportunity for this product line to be a viable solution for for continuing growth for those needs and you can see that we've been growing at a fairly fast pace pretty much in line with where the market is again we have a pretty significant share and one of the things that we're doing is looking at ways to expand our own production capabilities to be able to produce more CXT buildings and capture more share where that's possible then on the precast side so this is precast forms box culverts water retention systems manholes pipe so on and so forth. So those precast products are the other half of the precast business. And you can see we only have about a 1% market share. So this is a very fragmented market. It's largely regionally deployed. You have competitors in various regions. It can ship 150 to 200 miles around the operating facility and compete in that space effectively. And so, you know, we've been growing that part of the business we had a large acquisition back in 2022 in in tennessee that we are also investing capital to help us grow in that space as well and to the extent that we are going to see accelerated growth within infrastructure it's largely going to be driven by our efforts to grow precast concrete both organic and inorganic opportunities there next two slides i'm going to cover give you a different perspective of how we look at the portfolio so obviously we have our sec reporting which drives the segment performance and the segment reporting but we're also looking at the portfolio from a a returns and a growth platform point of view so when we launched our strategy back in 2021 we started making very purposeful decisions about where we were going to allocate capital we were going to pull capital away from the returns platforms which to the large degree what remains is pretty steady cash generating businesses and we'll be investing in our growth platforms so within the rail business we have two graph growth platforms we have the global friction management product line and our total track monitoring product line both of those product lines have been growing at a much faster pace we've put investment dollars into those those product lines to allow them to grow and we expect that there will be more opportunity there to grow as well the other growth platform that we have is precast concrete as I mentioned earlier that's an opportunity for us to grow from an M&A point of view but it's also one where we're investing capex dollars at a faster pace to drive growth in the precast precast product space so that strategy over the last three to five years has translated into extraordinary growth in the growth platform so about 115 percent growth over the last five years from a top line point of view the margin profile of those businesses that have been growing at that much faster pace has accelerated about a 400 basis point improvement in our gross margins and you'll see in a few charts here with Sean will review that that's translated into a much greater financial return for the business both in terms of a lower invested capital overall because of the pruning work we did in the return side of the portfolio plus the improved profitability of the business driven by investing in our growth platforms it's been a nice strategy it's worked out really really well we're excited about our financial performance and sean's going to cover the financial slides over the next five to six slides to give you some history on how we've
performed. I'll turn it over to Sean. Sean. Thank you, Bill, and good morning, everyone. My name is Sean Raleigh. I'm the CFO, newly promoted, but as we'll see, I'm walking into a really good start, nice first quarter. When we take a look at our first quarter, we had 23.9 percent total top-line growth. Now, I do have to note, though, that prior year was impacted, as Bill articulated, to weaker than normal government spending that occurred, but now we're more aligned to what will be normal spending that being said our rail segment increased 38 percent in the quarter our infrastructure was up just under six percent and our ebeta expanded 3.3 million dollars or 183 percent in the quarter net debt was down 24 million dollars year over year our gross leverage ratio was 1.2 times compared to 2.5 times in the prior year and when we take a look at our backlog our backlog was down but that was primarily driven by a 19 million dollar order that was canceled in q3 of the prior year and our cxt buildings also had declined in backlog but that's on top of an outstanding 2025 year as we take a look at the current quarter our q2 we continue to see the backlog building from q1 going on to the next one bill touched upon this the transformation that we did in the business if you take a look on the left hand side there's six divestitures product line exits that occurred what that transpired to was sales over that period are up 10 but gross margin expanded 440 basis points that's the power of that transformation that occurred i'm going to go on to the next one this is also leveraging off of the strategic transformation that occurred over that period of time, but I want to draw your attention to the adjusted EBITDA. Same thing here. Over that period of time, sales up 10%, but the adjusted EBITDA, the dollars doubled, and from a basis point perspective, it's up 390 basis points. So it shows you the impact that taking businesses that had lower profitability and were more commodity-based have had on our financial results. And then we'll talk net debt, leverage, and our cash flow. And I first want to draw your attention to the bottom right, the two black bars. When you take a look at Q4, and then you take a look at Q1, this is normal. This is the seasonality of the business. Our net debt will increase in Q1. And our growth leverage will also increase in Q1. That will happen again in Q2 as well. This is all part of the seasonality of the business where working capital demands in the first half of the year are high and free cash flow really generates in the second half of the year. When we take a look at our gross leverage ratio for Q2, last year it was right around 2.2 times. We would expect to end this year below that amount. And then we talked net debt down 30% year over year. The other items I want to point out are funding capacity. We got $94 million in available funding. So when we talk about capital allocations and the opportunities for M&A that positions us well we also have a capital light business model so the cash flow that's generated from this business is very impressive we have 28 28 million of annual free cash flow that this business generated over the last three years we have 75 million dollars in NOLs what that means is our cash taxes paid and 25 and 24 and 25 were under two million dollars so utilizing that nol saves us cash taxes paid and finally we have repurchased nine percent of our outstanding shares since 2023 i'm going to start here and just leverage off the share repurchase discussion we just had we still have 28.7 million of authorized and remaining share buyback under our program now the stock price has moved up so we're being a little more conservative with that buyback as it is today over the last couple months that stock by the stock price has increased relatively significantly we expect to maintain our gross leverage ratio at one times to 1.4 1.5 times however depending on any tuck-in acquisitions that can move in our capital expenditures capital expenditures are higher in 26 expected to be higher in 26 but much of that is driven by growth opportunities or investment opportunities that we have in the business and those are organic growth and then once again acquisitions when we take a look at acquisitions we're always looking for a creative acquisition so we can add to the portfolio to enhance our product offerings and then valuation there's just two or three things i want to point out here as it relates to valuation our trading volumes are up almost 50% in 2026. So as we all know, as investors, that adds liquidity to the stock. We're targeting a free cash flow yield of four to 6%, even with elevated capital spend in 2026. And our enterprise value to adjusted EBITDA is at 10 times. That's up from 8.5 times at year end but what we're focused on is to increase our ebitda and grow into the valuation with that being said i'll turn it over to bill for closing comments thanks sean spending a couple minutes on the
market outlook that we have at the moment uh as sean mentioned first quarter last year and frankly the first half of last year was very unusual for those that recall there was some disruption in government funding that occurred in early part of 2025 i think we all remember the doge impact on a variety of different government agencies that flowed through to the fra which impacted chrissy grant availability chrissy grants are funds that are used grant grant programs that provide funds that are used by our customers to do repair work and there's been significant funding that's occurred over the last several years from Chrissy Grants but last year in the first half there was a pause in that funding that didn't release until the back half of 2025. So as a result of that our year-over-year performance last year in Q1 and to a certain degree Q2 was very poor in the rail business. The inverse of that, of course, is that we're kind of in a normal year at this point. And so as a result, we saw a much significant improved rail business in the first quarter of this year. The rail business, as Sean mentioned, was up 38% in the first quarter compared to last year. But we would say that that was because we returned to a normal period of time and a normal period of demand for the rail business. The other thing I would want to highlight there is during 2025, that disruption in funding had zero impact on friction management demand. We were up 19% in total revenue in friction management. So that emphasizes the value proposition that that product line offers to our railroads, because even though their capital was constrained, they continued to invest money in that friction management program. And friction management also had a very strong first quarter result this year, so we feel really good about that. We expect that over time there will be continuing adoption of these rail technologies to assess with rail safety, operating ratios, wear and tear on the rail network, and the track monitoring benefits that our solutions provide in terms of operating ratios. So overall, we think 2026 is more of a normal year for the rail business, and that will be much better than what we experienced in 2025. Turning our sights to the precast market, the precast market was up strong, about 17% revenue growth in the first quarter this year, and we're continuing to see significant civil projects across North America, primarily in the U.S., where our product lines will go. A lot of that is centered around water retention, any highway construction, building construction, factory construction. Our product lines are going to be used any time that earth is being moved and water needs to be managed to allow there to be a site that can perform with the overall utilities that are needed for that site. So we're centered in very hot spots. We're in Texas, Hillsboro, Boise, Idaho, which is a booming area of the country. We're also in Tennessee, just outside of Nashville and Knoxville. And so our facilities are positioned well to see that growth or capture that growth and participate in that growth. And as I mentioned earlier, we're investing a larger portion of our capital spending. I think Sean mentioned 2.7 times, which is about $15 million. dollars about half of that would be maintenance and the other half would be investment capital both sales growth and cost out but the majority of that eight million of of investment capital is going to be around precast concrete growth initiatives that we think will pay off this year and and in the years to come turning to to the pipeline story as i mentioned earlier that's a product line that we we do coding services in two facilities one in birmingham alabama the other one outside of houston the birmingham facility is a inline coder for a sipco long-term partner with with a sipco as you can imagine there was a period of time prior to covid where that business was booming in terms of pipeline investment after covet it took a break for about four years and then starting in 2025 has been begun to recover we're seeing that recovery continue now and we're pleased with what we're seeing there in terms of market demand and outlook for coding services with the cipco and then lastly the facility in willis texas which again is north of of houston we've made some investments in that facility modest investments which has increased the growth potential and the volume that can be serviced out of that facility. It's more of a quick-turn facility where products will show up, need a quick solution to be able to solve a particular need. We're seeing actually that product line being utilized for water transmission. One of the things we like to say is that we're seeing some work being done in the SpaceX space with the launch pads. Those product lines are helping with that particular initiative, so we're seeing some nice growth there. We expect that to continue here in the years to come. So the investment thesis for L.B. Foster really hasn't changed. We've done a lot of work over the last five years to transform the portfolio to a much more profitable product line and set of products and services that we think are in high demand from our customers. the strategy of having returns platforms which are generating cash that allows us to invest in our growth platforms has worked out very well and we expect that to continue the organic growth drivers are in place I think we believe that there's going to be an infrastructure super cycle for years to come we're participating in that in multiple different ways and the the results show that thus far and we think there's more runway ahead of us these businesses historically have been strong cash generators and Shawn mentioned that we generated 28 million and adjusted free cash flow over the last three years we expect that to continue to grow our outlook for 2026 is a midpoint of 20 million dollars of free cash flow that's a little less than the historical average because we're investing a bit more capital because we think there's opportunities to grow particularly in the precast space and then lastly we we have a very disciplined approach on capital allocation sean mentioned what those are we're going to target one to one and a half times on on on leverage we're going to be opportunistic on stock buybacks we have been very successful with our stock buyback program over the last three years we have some m a targets that we're target they're looking at particularly in the precast space and then finally the capex rate normal maintenance would be about eight million dollars but we're going to look at additional incremental capital where it's appropriate to be able to drive returns and profitable growth primarily in the precast space last slide is just a little bit of a journey and uh some closing comments regarding what we've accomplished over the last few years so i mentioned earlier that in 2021 john castle was named as ceo of the company we refreshed the board i joined the company in march of 2021 and we uh we set up on executing a strategy and we've been i'd say pretty successful in getting that strategy executed and we're seeing the financial reserve returns as a result of that what i can tell you is that that strategy is still intact as it exists today but there's going to be a variety of different emphasis we're going to look at less portfolio pruning there's always going to be some opportunities to look at minor elements of the portfolio that can generate capital to allow us to invest further in our growth platforms we are going to be focusing on continuing the organic growth investments primarily in precast but we see opportunities also in friction management we're looking at growing further in western europe with some partnerships over there and then with the uh with the ttm part of the business the track monitoring component those adoption rates continue to improve we have new product offerings that are coming forward so we feel like there's the opportunity to continue to see some nice growth there as well our outlook for the year we'd say is pretty reasonable at uh you know just under 44 million as a midpoint for 2020 uh 2026 uh you can see what the growth rates uh translate into 560 uh compared to 540 last year i will highlight that as of the end of the first quarter our trailing 12 month results are basically at our 2026 guidance so that tells you that if you think we can hold serve for the balance of the year compared to last year we should have a pretty good shot of hitting the guidance that's out there for 2026 and obviously we'll see how things transpire here over the next couple quarters and see if there's an opportunity to make an adjustment there so we're really pleased with the results that we've made achieved over the last several years we think there's more room to go and we're going to be very disciplined about our approach with a focus on driving shareholder value so with that i'll close up the presentation and see if there's any questions from the group on
on anything we've discussed or anything else yeah yeah so uh the question uh was about friction
management and uh how it's done well over the last several several years and that's the value to the customer so uh we sell our friction management solutions to all elements of the North America and frankly Europe market. So friction management is its wayside units, so units that sit alongside the track and it's also on board solutions where we have stick friction management product lines that assist with the wheel track interface. So And it's funny, when a lot of people think about friction management, they're thinking about reducing friction, right? And that's a lot of times what we're doing there. Friction, when you hear squealing in a transit authority, when you're in the middle of the city and you hear squealing, that's friction. And that's deteriorating the wheels, and it's deteriorating the track. we have friction management solutions that we deploy at that particular site on the direct network that eliminates that squeal eliminates that wear and tear and reduces wear and replacement cost for wheels as well as the track itself the other thing to consider is that not only does it reduce friction at times we have to add friction there might be a particular element of the track network that needs friction added because of need to stop the train a grade that is difficult to depends on the environment that you're in so we'll have we'll work with the customers to add a friction modifier that actually adds friction at that spot that will allow them to operate better in that particular location so what it does for the customer is it saves three to three to five percent fuel cost which when they spend billions of dollars on diesel fuel it's a significant cost savings the wear and tear tear on the wheels as well as the track and then obviously it also helps out with safety because you're not deteriorating the track you know less opportunities for failure in the track and derailments that could occur as a result of that Yeah, we get that question all the time. How big do you think it can be? It is something where the 5% deployment is over the areas of the network that are the most challenged, that absolutely need it to perform properly in that area. but our value proposition and our selling point is that it can save fuel savings significantly so there's an opportunity for there to be increased deployments over the network and over time we just feel like that's something that will continue to grow as you saw the growth rates for friction management. Sure yeah well so friction management it's the tracks the primary product line is a trackside unit and then the consumable so razor razor blade we sell the consumable as well as the trackside units so it's a the higher margin profile comes from the consumables and so that's a recurring revenue stream of ours yes yes sir yeah yeah so the question was promised around residential housing so about this time last year we set up a facility in florida to produce precast walls for the residential housing market and that facility is up and running we are generating revenue nowhere near what we expected to be generating it's a facility where we feel like we have a nice value proposition when the housing market recovers and at the moment you know we're obviously just running it very closely tightly to manage costs while the housing market has been a bit softer you know we'll look at strategic options for that facility there's other things we can do there if we need to in the short term but the long-term thesis is still solid it's just the housing market has been a bit of a challenge here over the last year we have time for
maybe one more question hey Justin yeah yeah so the question for the group is
what what is the TAM for international on the condition monitoring the track monitoring solutions friction management oh okay okay yeah yeah so friction management specifically I would say a large portion of the friction management off market opportunity I'm not going to give you don't not going to know the number off the top my head but what I can tell you is that in Europe they use very little friction management today and we just are work we're working with deutsche bond over in germany uh to get accredicate accreditation on their network we believe that'll open and we're on the cusp of receiving that that'll open up that market significantly pretty much untouched at this point yes yeah okay i think we're out of time thanks a lot appreciate it and enjoy the conference