L.B. Foster Company (NASDAQ:FSTR) Q2 2023 Earnings Call Transcript

L.B. Foster Company (NASDAQ:FSTR) Q2 2023 Earnings Call Transcript August 11, 2023

Operator: Good day, and thank you for standing by. Welcome to the Second quarter 2023 L.B. Foster’s Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded I would now like to hand the conference over to your speaker today, Stephanie Schmidt, company’s Investor Relations Manager. Please go ahead.

Stephanie Schmidt: Thank you, operator. Good morning, everyone, and welcome to L.B. Foster’s second quarter of 2023 earnings call. My name is Stephanie Schmidt, the company’s Investor Relations Manager. Our President and CEO, John Kasel; and our Chief Financial Officer, Bill Thalman, 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 presentation carefully as you consider these metrics.

So with that, let me turn the call over to John.

John Kasel: Thanks, Stephanie, and hello, everyone. Thanks for joining us today on our second quarter earnings call. It’s been 2 years since I was appointed President and CEO, and we began a strategic transformation here at L.B. Foster. And I’m very proud of the progress our team has made in such a short period of time. In summary, we completed 7 strategic portfolio transactions, growth of 3 acquisitions and 4 divestitures in a very challenging operating environment. We have also implemented profitability improved 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 of robust infrastructure markets we serve.

As you can see on Slide 5, 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 of 2020. We continued our portfolio work with the divestiture of the CXT Concrete Ties business, which provided $2.4 million of 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 2.5x, representing a modest increase during the quarter. Order rates totaled nearly $184 million for the quarter with our book-to-bill ratio standing at 1.24:1. And despite the concrete ties divestiture, 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 $1 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 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 outlook. Over to you, Bill? William Thalman Thanks, John, and good morning, everyone. I’ll begin my comments covering the consolidated highlights of our second quarter on Slide 7. As always, the schedules in the appendix provide more detailed information on our financial results, including the non-GAAP measures Stephanie referenced.

As John mentioned in his opening remarks, the Ties divestiture was completed at the end of the second quarter. So their operating results are included in our Q2 numbers. Q2 results also include 2022 additions to the portfolio, VanHooseCo and Skratch, but exclude the e Track Components and Chemtec businesses that were divested over the last 12 months. Second quarter sales were $148 million, up $16.5 million or 12.6% over last year. Overall, the sales increase was driven by our legacy business with organic growth coming in at 13.3%. The impact of portfolio activity largely offset year-over-year. Higher sales volumes, coupled with improvements in business mix and price realization increased gross profit by 38.5%. As a result of the organic revenue growth, together with the accretive benefits of portfolio initiatives and portfolio profitability actions, gross profit margins expanded 410 basis points to 21.8%.

During our first quarter call back in May, we highlighted that we expected the favorable trend in margin performance realized in Q1 to continue as volumes improved in our seasonally strong second and third quarters. We’re happy to see the results come through in the second quarter, and we remain optimistic for continuing favorable trends in Q3. The $1 million transaction loss on the Ties divestiture reduced net income to $3.5 million in Q2. However, adjusted EBITDA improved $4.5 million year-over-year to $10.6 million, with the EBITDA margin improving 250 basis points to 7.2%, with EBITDA operating leverage at 27.1%. It’s been 3 years since we’ve seen this level of profitability from the business, which is attributable to our portfolio transformation, profitability and improvement initiatives and robust infrastructure end markets.

John covered consolidated orders, backlog and net debt performance in his opening remarks, and I’ll provide some more additional color on these items later in the presentation. We’ve been showing the sales and adjusted EBITDA bridges on Slide 8 over the last several quarters to highlight the performance within our legacy business and the benefits of our portfolio transformation. The chart on the left highlights the strong organic growth realized in Q2, with the $17.6 million sales increase representing 13.3% organic sales growth. The net impact of M&A decreased revenue by $1 million, or approximately 0.8%. As John highlighted in his opening remarks, we have a record backlog, and we expect organic growth rates to remain favorable moving through 2023.

The net impact of M&A will present a tougher comparison in the second half due to the [Chemtec and Ties divestitures, coupled with lapping the Skratch and VanHooseCo acquisitions that were completed last year. With our business portfolio work largely complete, we are now focused on executing the organic growth opportunities we see across the business, particularly those within our growth platforms and acquisitions. The chart on the right highlights the continuing progress we’ve achieved in improving profitability in our legacy business, with adjusted EBITDA improving $3.7 million year-over-year, representing 21% operating leverage in the quarter. M&A activities also contributed favorably to EBITDA growth year-over-year, despite the net sales decline.

The impact from M&A was somewhat tempered due to soft volumes in VanHooseCo and Skratch in Q2, and we expect this improvement — this impact to improve in the coming quarters. Slide 9 provides an important perspective on the progress we’ve made in our sales growth and profitability over the last 2 years. The net impact of our strategy execution resulted in 12% sales growth for the trailing 4 quarters ended June 30, 2023, with double-digit sales growth achieved over the last 3 quarters. Over the same time period, gross profit increased 30%, resulting in a 270 basis point improvement in gross profit margin to 19.9%. This achievement was despite the Crossrail contract settlement charge taken last year, as well as the VanHooseCo purchase accounting impacts that reduced gross margin by 100 basis points during the most recently completed trailing 4-quarter period.

In summary, we believe our business portfolio transformation organic growth and focused profitability initiatives have resulted in a structural improvement in the gross margin profile of the business that should be sustainable with the long-term demand prospects from our infrastructure end markets. Over the next 3 slides, I’ll cover our segment performance, starting with the Rail segment on Slide 10. Second quarter Rail segment revenues were up 12% year-over-year at $91.6 million, with 17% organic growth partially offset by the net impact of M&A. Strong organic sales growth realized in both Rail Products and Global Friction Management was partially offset by continuing softness in the Technology Services and Solutions business in the U.K., and the impact of the Track Components divestiture.

Rail margins expanded 260 basis points to 21.7% on improved pricing and business mix across the portfolio, coupled with the favorable impact from the Track Components divestiture. Partially offsetting improvements in Rail margins were headwinds from weakness in the U.K. Rail orders and backlog were up year-over-year, with new orders increasing a robust 24.8% and backlog increasing over 6%, excluding the impact of the Track Components and Ties divestitures. As reflected on Slide 11, Precast Concrete segment revenue increased $10.3 million, or 43.4% year-over-year. Revenues were up 12.8% organically, and the VanHooseCo acquisition contributed $7.2 million, representing growth of 30.6%. Gross margins were up 850 basis points to 22.7% due to improved volumes, price realization and strong operating performance in the legacy business, as well as the accretive impact of the VanHooseCo acquisition.

Orders and backlog remain robust in our Precast segment, with VanHooseCo contributing $15.8 million and $20.2 million, respectively. The Steel Products and Measurement segments results on Slide 12 reflect a 13.6% decrease in revenues as a result of the Chemtec divestiture. Organic growth of 2.4% was realized as a result of a 93.5% increase in Protective Coatings sales, partially offset by weaker volumes in Fabricated Steel Products. Improved gross margins, which were up 460 basis points to 21%, were driven by higher volumes in Protective Coatings as well as the favorable impact of the Chemtec divestiture. Orders and backlog were up 17% and 39.4%, respectively, with Protective Coatings business recovery more than offsetting the impact of the sale of Chemtec.

The year-to-date results on Slide 13 highlights the structural and profitability improvements we’ve established in our business in the first half of 2023. Sales are up 14.4% year-over-year, and margins have expanded 380 basis points to 21.1% thus far in 2023. Adjusted EBITDA is up over 104% with the EBITDA margin of 5.7% up 250 basis points versus last year. While year-to-date operating cash flow is a use of $3.3 million due primarily to working capital needs in the second quarter, it’s favorable to last year by $10 million. And orders are up nearly 17% year-to-date due to our M&A work, the strength of our offering and strong end markets. Turning to liquidity and leverage metrics on Slide #14. As expected, net debt increased $8.2 million during the quarter, as we funded working capital needed to support the robust growth in sales and backlog.

As a result, our gross leverage ratio, per our credit agreement, increased slightly from 2.4x to 2.5x during the quarter. While free cash flow has been a use of $4.8 million year-to-date, we’ve actually reduced our net debt by $3.4 million so far this year, as a result of our divestiture proceeds. In fact, the divestitures improved our gross leverage ratio, as they were essentially breakeven businesses at an EBITDA level that were dilutive to the ratio. We expect to generate positive free cash flow in the second half of 2023, which should allow us to further reduce our net debt. As a reminder, our Union Pacific warranty settlement obligation will be fully satisfied in 2024, and we have $100 million in federal NOLs that should minimize our cash taxes for the foreseeable future.

Both of which should contribute to improving free cash flow in the near future. And with our capital-light business model, improving profitability and beneficial free cash flow drivers in place, we believe a favorable free cash flow inflection point is imminent. In summary, we’re pleased with the progress we’ve made reducing our net debt and leverage following the acquisitions completed last year, and further improvement remains a top priority. Our capital allocation priorities are outlined on Slide #15. As I just mentioned, we continue to focus on deleveraging, while cautiously investing in organic growth opportunities we see in Rail Technologies and Precast Concrete. Capital spending is expected to run at approximately 1.5% to 2% of sales, which is slightly higher than our typical level due to the organic growth investments we see with high returns and quick paybacks.

We also continue to evaluate opportunities to return cash to shareholders through our stock repurchase program, which was initiated in Q2 with a 0.5% reduction in the shares outstanding. We continue to evaluate small tuck-in acquisitions that would extend our product portfolio within our growth platforms of Precast Concrete and Rail Technologies. And while distributing value to shareholders through a dividend is not a current priority, we’re keeping it on our radar as the prospects for stronger, stable free cash flow improves in the coming years. My closing comments will refer to Slides 16 and 17, covering orders, revenues and backlog by business. The book-to-bill ratios on Slide 16 reflect the continuing strength we’ve seen across the business, with a step change increase realized in the second quarter.

The book-to-bill ratio over the trailing 12 months was 1.13:1, with orders outpacing sales by $70 million. The consolidated book-to-bill ratio in the second quarter was particularly strong at 1.24:1, which was up from 1.21:1 in the first quarter, with all segments increasing their order books in the quarter. And lastly, our consolidated backlog on Slide 17 reflects the robustness of the commercial activity across the majority of the business and net benefits of the M&A actions completed over the last 12 months. The Precast Concrete business backlog increase, which was up 28% over last year, is attributed to the VanHooseCo acquisition, while order rates remain robust across the legacy Precast business. Backlog in Steel Products and Measurement was up nearly 40% versus last year, despite the impact of the Chemtec divestiture, highlighting the continuing improved demand in our Protective Coatings product line with a $30 million increase in their backlog.

Finally, our Rail segment backlog was flat year-over-year at $132 million, despite the divestiture of the Track Components and Ties businesses, which reduced the order book by approximately $8 million. The order book reduction from divestitures was offset by an increase in Friction Management and Technology Services and solutions, signaling some level of recovery in the U.K. In summary, our second quarter and year-to-date results highlight the momentum we’re seeing in the business and reinforce our confidence in our strategic playbook. We look forward to reporting continuing progress through the balance of 2023 and beyond. And thank you for your time this morning. I’ll now hand it back to John for his closing remarks. John?

John Kasel: Thanks, Bill. Please refer to Slide 19 for an overview of our key business and market drivers underpinning our outlook. We mentioned in the past week that we expect to announce the government infrastructure funding programs to provide tailwinds for our business. And we are pleased to say that we are finally seeing some of the expected benefits coming through in our order book. I’ll cover some of those details in a moment. We also remain optimistic in longer-term prospects for growth in Rail Technologies, particularly given emphasis on rail safety, fuel savings and operating efficiency. It’s important to highlight the business is going through a soft patch because of recent economic turmoil driven by high inflation in that area.

Having said that, we’re pleased to see that inflation rates in the U.K. are beginning to soften. Their order book is up 81% year-over-year, and with a significant pipeline of opportunities, we’re cautiously optimistic that recovery is on the horizon. Our Precast Concrete business remains strong, and the strategic acquisition of VanHooseCo made just over 1 year ago has bolstered the order book, expanded the technology offering and increased our geographic reach in Precast. We’ve also seen a partial recovery in Protective Coatings business with a renewed investment pipeline projects. The same can be said in increased emphasis on bridge repairs in the U.S. We believe this is a part of our broader infrastructure spending plan that bodes well for our Bridge Forms product line now and into the future.

Slide 20 reflects some of the more significant customer orders received that we can broadly attribute to infrastructure spending. Of course, not all of these orders are directly associated with the U.S. government infrastructure funding currently in place. However, a significant portion can be attributed to those federal programs. Being that our business portfolio is becoming more and more an infrastructure pure play with a broad exposure to major infrastructure markets, we remain optimistic in the longer-term prospects for continuing growth. In summary, we believe that we are in the early stages of an infrastructure investment super cycle. That could provide a strong tailwind for years to come. I’ll close on our prepared (inaudible) comments with a perspective on our near-term goals depicted on Slide number 21, a slide titled innovating to solve global infrastructure challenges.

In December of ’21, we established aspirational goals of approximately $600 million in sales and approximately $50 million of EBITDA by 2025. We’re beginning to refine our outlook as the majority of our business portfolio work is behind us, and we have a clear line of sight to the organic growth and profitability drivers that we are designed — that are designed to achieve our goals. As previously mentioned, we increased our profitability guidance for 2023, while holding the sales guidance unchanged despite the divestiture of the concrete Ties business. From the midpoint of our ’23 guidance, our 2025 goals imply an annual sales growth rate of approximately 6%, with EBITDA operating leverage around 30% on the sales growth over the 2-year period.

We believe these underlying growth and profitability assumptions are reasonable, based upon 3 key factors. First, our organic growth platform, so Rail Technology and Precast, are technology-based and realize a higher margin profile within our portfolio. Second, we expect benefit from the ongoing profitability improvement initiatives across the portfolio to maintain and expand the margins we achieved thus far. And lastly, we expect to realize fixed cost leverage, particularly in back-office SG&A, with the projected volume increases over the coming years. In summary, as I mentioned in my opening comments, I’m very proud of what we accomplished thus far. But we remain very focused. In fact, laser-focused on the growth and profitability expansion to enhance shareholder value for the years to come.

Thank you for your time and continuing interest in L.B. Foster. And I’ll turn it back to the operator for the Q&A session.

Q&A Session

Operator: [Operator Instructions] Our first question is going to come from the line of Alex Rygiel with B. Riley Securities.

Q – Alex Rygiel: Thank you. Very nice quarter. Congratulations. A couple of quick questions here. Can you comment on backlog and the potential for price realization?

John Kasel: Well, first of all, thanks for the question, and thanks for participating today, Alex. We’re — our backlog with stand [indiscernible] I shared with you, $290 million. We have a very nice balance between both Rail and our Precast side right now. And then a really growing SPM, the Steel Products and Measurement side, specifically what we’re seeing on the coatings side. So it’s something we’re — we don’t really have a leg or a dog in the game anymore. We feel really good about the contribution margins that’s coming all the way through our backlog. And something that even on the U.K. side, when I mentioned 81% on a year-over-year basis, even that is growing at a nice rate, respective to what we’re going to see in future margins.

Q – Alex Rygiel: And as it relates to the near-term goals in 2025, gross profit of 22% to 23%, it’s definitely kind of a step-up from what you reported in this quarter of 21.8%. But to me, it looks maybe a little bit conservative? So if you could comment on that.

John F. Kasel: Yes. Well, originally, our aspirational goals if you recall, were 21%, so — for 2025. So we punched through that target already. Yes. I guess we are conservative in what we do and how we do things at the company. We’ve got a lot of shareholder value that we need there. We’re in the process of restoring. So — and our process and our thinking is we’re hopeful that it will get there. We’re sure we have confidence we can get there, but we also want to be — not overshoot the target, and really give people an expectation of what we’re going to deliver on. And then if anything, hope we go exceed those targets that we’re putting out there.

Q – Alex Rygiel: And lastly, you talked about a little bit of a rebound in pipeline projects. Can you expand upon that a little bit? And is that just short-term visibility? Or is that intermediate and long-term visibility?

John Kasel : Yes, they’re going to have a really good year, a much better year than anything we’ve seen going back to pre-COVID. But specifically, we’re basically just a midstream company now, right? Anything we’ve done outside of that, we divested upstream and markets specifically. The Summit order, which has been on our books now for going on almost a year, which was a $19 million order is — we’re excited about that opportunity coming into 2024 and beyond. So that’s been shored up. And we’re just seeing a lot of smaller projects that are being let and are happening in the midstream market right now, is keeping 2 mills up and running at a [SEPCO], which we haven’t seen in a very long period of time. So — and the bidding activity is very, very strong as well. So we said partial recovery is definitely that, and hopefully, that will improve in the coming months and years as well.

Operator: [Operator Instructions] Our next question is going to come from the line of Brett Kearney with Gabelli Funds.

Brett Kearney: Congrats on continued momentum.

William Thalman: Thanks, Brett.

John Kasel: Thanks, Brett.

Brett Kearney: Also, thank you for the slide deck accompanying earnings. Really comprehensive and helpful from an investor standpoint. Wanted to pick up — John, you touched on the portfolio of Rail Tech, you have — addressing increasing focus on safety, fuel efficiency, cost efficiency as well. Just kind of general sentiment you’re hearing from your customers, I guess, on the freight and passenger side. And your latest, I guess, estimation on anything that could still come out of Congress in terms of rail safety? Or I guess just general, even outside of that trend you’re seeing from customers on that piece of the portfolio?

John Kasel: Okay. First of all, shout out to Stephanie here. Stephanie Schmidt, formally Stephanie Listwak, that has put together these materials with the team here. She’s done a fantastic job. So thanks, Stephanie, for all the work you do. You make our jobs much easier. As far as Congress, I can hit that first. They’re in recess, the bill itself has been kicked around between the House and Senate. Right now, it’s under rewrite related to safety measures that’s going on there. I’m not going to predict what’s happening there. But what I’ll tell you, there’s been quite a bit of renewed interest related to our products and our technology, unrelated to what’s actually going on in Congress, specifically with our launch of our Wheel Impact Load Detector, the Mark IV.

And so that second half year looks very good to us, and our bidding activity going into next year looks very, very strong. As far as the focus on Rail and if you look at the last quarter, the commodity carloads, especially when you look year-over-year, it’s about 50% on the freight side. So there’s quite a few headwinds going on in the freight markets today. The flip side of the transit side, it has improved. Ridership has improved, but it’s still way off of the market. It’s still about 25% off of pre-pandemic levels. But there’s definitely a focus and interest about fuel efficiency as well as having their assets live long — last longer as well. It’s just the ride and comfort on the transit side that gives us a real nice competitive niche today and visibility going forward.

The real focus on ESG that the railroads have, specifically as their fuel savings and their carbon footprint. Our Friction Management is just a perfect application for them to get their arms around something that they can do and be able to manage for years to come. So we have a lot of activity right now here in the States as well as abroad, their product lines. And this year is going to be the best year since we bought the Portec operations as far as the Friction Management business. So we feel very, very good as well as the customers are really figuring out the value and importance of it, I guess, and really driving their operation ratios as well as what they can do and manage with our products and services.

Brett Kearney: Excellent. Very helpful. And then on the Precast side, you noted, I guess, continued strong momentum on the legacy business. I know that business is coming off, all the demand from the American Outdoors Act. Just curious, kind of the end markets and continued strength you’re seeing there.

John Kasel: Well, legacy, first of all, had a really bad — if you will go back the last couple of years, because we had quite a bit of orders on the books that were constrained, right? So we didn’t have the ability to get that price in line with cost. Our team has done a fantastic job of working the supply chain, bringing in products as well as going back and getting a market price that gives us a competitive — a much better margin profile going forward. And then if you look at our VanHooseCo operation, which I mentioned is coming out of the year. In fact, this — on Friday will mark the 1-year Anniversary, and a lot has changed. But one thing that hasn’t changed with VanHooseCo is the markets in the South and Southeast, how strong they are.

They’re above pre-pandemic levels as far as housing starts and what’s going on related to civil infrastructure work there. So we’re very excited about what we have accomplished in a very short period of time and continuing to grow this Precast base now into the future.

Operator: [Operator Instructions] Our next question is going to come from the line of Chris Sakai with Singular Research.

Chris Sakai: Yes. And nice quarter. Just interested in the Coatings section. I wanted to see what’s driving the rebound there. And do you foresee that continuing?

John Kasel: Yes. Thanks, Chris. I appreciate you joining us today, and I know you guys are all busy out there. A lot of people are reporting today. A lot of things going on in the marketplace. Yes, Coatings one of the things we were not really counting on rebounding now, specifically this year into next year, but we’re pleasantly surprised and with the rebound that we’re seeing in the midstream markets. We do anticipate just based on the bidding activity that will continue into next year. And of course, we’re hopeful that we will be producing that Summit order, which I mentioned just earlier, was a $19 million order book. Hopefully, we’ll get that started in the first or second quarter of next year, which will give us a great start to next year as well.

Chris Sakai: Okay. Sounds good. And then on Slide 8, you have the changes to adjusted EBITDA for M&A at 0.8. I was wondering, in the future, where would you guys see that as far as that number? And if you could shed some light there, that would be great.

John Kasel: Yes, sure. I’ll start, and then I’ll flip it over to Bill. But what I’m most excited about is that number to the left of it, that legacy number of the business, $3.7 million. So when we established our playbook, we talked a lot about where our future growth is going to come from on the M&A side and then taking that organically. But that really got our legacy group really charged up, where they want to be able to contribute and also be part of the future, related to the growth of the company. So they’ve done a tremendous job of really getting engaged and really taking value and profitability. So my hat’s off to the legacy group. On the M&A side, of course, we’ve done a couple of divestitures 2 over in the U.K. and then 1 here in the States.

With any M&A type thing, there’s that growing pains as well as getting the 2 — the businesses, our cultures coming together into one. We made a number of really, really solid changes. The order books and all those businesses look very, very strong. And of course, that’s going to be a big part of what we do into the future, including the organic programs that we have set. A lot much of that comes from our M&A work that we’ve just done over the last 2 years. Bill, would you want to add anything to that?

William Thalman: Yes. The only thing I’d add to it, Chris, is that number itself, obviously, we start to lapse the VanHooseCo and the Skratch acquisitions on a year-over-year basis. I think that will become the — part of the legacy at that point in time. And we’ll call out specific items that are specific to them in terms of growth, performance. But it wouldn’t be part of the M&A bridge going forward. And then the other thing is that we have our Track Components and our Chemtec divestitures and the Ties divestiture. Those remain in that column. And as we mentioned in the past, those businesses were pretty close to breakeven level on EBITDA basis. So we wouldn’t see a significant impact there. So as we’ve said all along, we’re now turning our attention to organic growth programs across the portfolio, particularly in Precast Concrete and Rail Technologies. And we expect to see organic growth expansion become the primary driver for profitability going forward.

Chris Sakai: Okay. Great. Yes. So to get back on to that organic growth you’re talking about. So should we not be expecting any more new acquisitions? And then can you talk about any more future divestitures? Would that — are there more planned?

John Kasel: Yes. Well, as you continue to ask me these questions, I really do appreciate it. Our playbook has evolved over time, and our focus on our business has changed as well. We have 13.3% organic growth in the quarter. We feel very, very good coming off with the overall growth of 12.6%. So that is — we really got some nice programs going on right now. And we’re trying to save as much dry powder as we can to be able to derisk the company of not doing any large acquisitions, but being able to take something that’s very, very core to us in our core markets and be able to expand it into new geographic space with new product lines. So having said that, as Bill and I both said, much of the portfolio work that we’ve done over the last 2 years, a good part of it is done except for what we actually anticipated to do.

But that doesn’t mean that we’re not keeping the sharp and being able to look at product lines and some other things to make sure that we’re being competitive as possible, and really looking at our economic profit and to offset it’s really what’s going to be driving the shareholder value now into the future. As far as acquisitions, I would think the company, we’re always in the market looking at things. But as I said, they’d be small, and they’ll be really tuck-ins to be able to expand our product lines or move us into other geographies. So — but think about the 5 that we’ve done over such a short period of time. We’re also digesting what we were doing. We’re keeping the culture in mind with the legacy L.B. Foster Company and bringing these other companies up to — up to speed of how we do things and make sure that value is going to be there for a long period of time.

Operator: And I’m showing no further questions. And I’d like to hand the conference back to John Kasel for any further remarks.

John Kasel: Thanks, Michelle. Really appreciate it. Thanks for joining us today. So I do want to mention, Bill and I will be presenting at several investor conferences in the coming weeks, actually the coming months. So look for those out there. But in connection with that, we completed an update to our Investor Relations deck, which we will be publishing on our website by the end of this week. So go out and take a look at that. But in there, you’ll find revised documents. We’ll share with you our compelling investment thesis, our growth drivers for the business that are in place today. And as importantly, what our capital allocation priorities will be. So you can see where we’re going to spend our money and our focus to increase shareholder return now and into 2025 and beyond.

So again, thank you for your time today and your interest in L.B. Foster Company. Take care. Operator This concludes today’s conference call. Thank you for participating. You may now disconnect.+