John Kasel: I mentioned in my remarks very strong performance on the Rail and actually very good performance on the entire Rail segment, including UK. I haven’t said that in quite a while. I say a year, it might have been even longer. So UK year-over-year is really stabilized and something that we feel much better about conditions going forward. The team over there has done a great job of just right sizing as to what the market’s going on and what we saw that come through in the first quarter. Our acquisition we made over there, scratch has been, also had a very, very good quarter with nice profitability. So that came through. And the other piece that really is jumping off the page is our condition monitoring here in North America related to our salient business, specifically with the WILD-IV introduction of that product in the market, specifically helping our customers, the freight customers as well as the transit customers with safety and safety measures that are going on, keeping the trains on the track, as well as really looking at their operational efficiencies and effectiveness of how they run and manage their train operations.
They’ve had a very, very strong start to the year. Yes. And they’re going to continue to have a fantastic year as far as we can see. So, we’re very excited about the technology, the innovation, the things that the company has really been working on the last couple of years of moving, just migrating this technology from the UK and Western Europe and North America, and we’re really seeing the fruits of our labor right now in the rail space. So that’s really exciting us as much as anything else. It may not be coming through and per se order backlog and dollars of dollars, but it’s coming through a profitable backlog with gross margin and giving us the opportunity to really grow this business and do something significant with. So from that point of view, we’re where we expected to be at this time and we’re looking to put together a strong Q2 and beyond.
Chris Sakai: Okay, great. Thanks for the answers.
Operator: Thank you. One moment for the next question. And our next question is coming from Justin Bergner from Gabelli Funds. Your line is open.
Justin Bergner: Good morning. Nice quarter.
John Kasel: Thank you.
Bill Thalman: Appreciate it. Justin.
Justin Bergner: Just a couple questions. On the Infrastructure side, any sort of estimated quantification of the impact of tough weather on sales and EBITDA in the quarter?
John Kasel: Yes, we really didn’t put a pencil to paper on that. I was out there myself in that geography this spring, between the rain and it actually had snow and talking to the customers. It was just a lousy quarter related to. We built quite a bit of product. We have it ready to go, and as the construction areas kind of dry out, things will improve. I really couldn’t put a number to it. Maybe Bill you could give a…
Bill Thalman: And just to get – hi, Justin. Just to give you order of magnitude, the precast business unit was down about 13% on a year-over-year basis, which is just about $3 million. And we would say the lion’s share of that was due to the weather impact. We’ve got a good order book position for the business. We feel like, we’re going to get back on track in the second quarter. But that was the year-over-year decline attributable to the precast business within Infrastructure.
Justin Bergner: Okay. And are you seeing any macro impacts on precast, positive or negative? I guess the negative side might be higher interest rates or is that still very manageable?
Bill Thalman: No, no, very manageable. And the supply chain, as I mentioned, on the Rail side getting back to normal, the supply chain related to concrete and availability of cement is getting back to normal. So that’s very, very good for us. The allocations that were there in the past kind of limited our ability to perform. That situation is proved improved dramatically. Our markets are booming, doing very, very well down in Texas and the southeast related to the need for concrete. So we don’t see any pushback on concrete or the type of products that we’re providing in the marketplace. To the contrary, it’s the opposite. We’ll be running at full capacity as long as we can see.
Justin Bergner: Okay, that’s great. On the Rail side, help me understand, there wasn’t much gross margin, I guess, or there’s modest gross margin improvement on sales being very strong. Is that just a function of some mix? Or would you expect margins to be flat with this type of sales growth normally?
John Kasel: Yes, that’s right. I’ll let Bill give you the details, actual numbers of it he can share. But it’s definitely a mixed play that we see came through this year, which is typical in the Rail with the project type work that we do. If we get a big Rail Products type work that’s, moving around components, rail components, we’ll bring down, the revenue will be up in the respective margin we’ll be a little bit dilutive on the bigger picture. But nice thing is, after we supply that, you got the other products coming right behind it. But the friction management and the condition monitoring, things like that, that really help boast up the profitability. And that’s the nice thing about our company, is we give them the whole package now, it’s not just selling the components anymore.
It’s about providing the chemicals and the treatments and now the monitoring devices for them to run effectively. So that mix will come in and out. But as we get into more of the actual rail season, which is Q2 and Q3, where most of the work is done, that’s where we’ll see the really uplift and leveraging of the business even more. It will be more impactful. Bill, any color you want to add to that?
Bill Thalman: Yes, thanks, John. I guess what I would highlight is the growth that we saw within the Rail segment was highlighted by Rail Products, where they were up in terms of dollars, $13 million on a year-over-year basis, about 33%. And across the portfolio, that’s the business that’s going to have the lowest gross profit profile, which would have tempered the margin growth that we saw on a year-over-year basis. On the other hand, steel product, sorry, TS&S, which is the technology element of the portfolio, had really strong growth on a year-over-year basis, about 100%. Now, from a dollar’s point of view, they’re a much smaller component of the business and their margins are stronger as well. So that contributed to the lift that we saw. But from a percentage point of view, the strength in the Rail Products portion of the business is really what tempered the margin performance on a year-over-year basis.
Justin Bergner: Okay, got it. And then just one last question on Rail. So it seems like what you’re saying is there’s very good growth in Rail, but some of the revenue increase in the first quarter was a function of working down backlog as lead times returned to normal, but amidst still a good.
