L.B. Foster Company

Good day and thank you for standing by. Welcome to the second quarter 2023 LB Foster's Earning Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.

would now like to hand the conference over to your speaker today stephanie schmidt company's investor relations manager please go ahead thank you operator good morning everyone and welcome to lb foster's second quarter of 2023 earnings call my name is stephanie schmidt the company's investor relations manager Our president and CEO, John Castle, and our chief financial officer, Bill Tolman, will be presenting our second quarter operating results, market outlook, and business developments this morning. We'll start the call with John providing his perspective on the company's second quarter performance. Bill will then review the company's second quarter financial results. John will provide perspective on market developments and company outlook in 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. 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 presentations carefully as you consider these metrics. So, with that, let me turn the call over to John.

Thanks, Stephanie, and hello, everyone. Thanks for joining us today on our second quarter earnings call. It's been two years since I was appointed president and CEO, and we've gained a strategic transformation here at LV Foster. And I'm very proud of the progress our team has made in such a short period of time. In summary, we completed seven strategic portfolio transactions, priced at three acquisitions and four divestitures in a very challenging operating environment. We have also implemented profitability improvement initiatives across the portfolio to overcome a persistent inflationary environment. Capital allocation levers were also managed to secure our dry powder required to capture the growing demand and robust infrastructure markets we serve. As you can see on slide five, the impacts of our efforts really came through in second quarter results. Q2 sales of 148 million were up 12.6% year-over-year, with organic growth coming in at 13.3%. The impact of our portfolio work and profitability initiatives resulted in a 410 basis point improvement in gross margins. finishing at 21.8% for the quarter. Adjusted EBITDA was $10.6 million, or 7.2% of sales, up nearly 73% over last year. In fact, this quarter's adjusted EBITDA, measured both on dollars and percent of sales, was the highest level achieved since the second quarter in 2020. We continued our portfolio work with the investiture of the CXT Concrete Ties business, which provided $2.4 million in proceeds, which were used to pay down debt. As expected, net debt did increase $8.2 million to fund working capital needs in the business. And we finished the quarter with a gross leverage ratio of 2.5 times, representing a modest increase during the quarter. Order rates totaled nearly $184 million for the quarter, with our book-to-bill ratio standing at 1.24 to 1. And despite the concrete ties to Vestor, our order book stood at a new record of $290 million at quarter end. These results speak to the strength of our performance in our end markets and the impact of government infrastructure funding. Based on the strength of our performance and our favorable outlook as reflected in our order book, we have increased our full year EBITDA guidance by one million at both ends of the range, while maintaining our sales guidance despite the divestiture we made in the quarter. As the seasonal working capital cycle moves into the second half of the year, we expect to see improvements in free cash flow and further reduction of our leverage, which will provide the financial flexibility to fund our organic growth programs. In summary, we are pleased with the continuing progress in executing our strategic playbook and the results we have achieved to date and our prospects for the future. Next, Bill will cover the detail of financials for Q2, and I'll come back at the end with some closing remarks on our offer. Over to you, Bill.