Summary of L.B. Foster Company Conference Call (December 10, 2025) Company Overview - **Company Name**: L.B. Foster Company (Ticker: FSTR) - **Founded**: 1902, with 123 years of history - **Primary Markets**: Transportation and civil construction in North America, with approximately 90% of sales generated in this region [2][3] Financial Performance - **Sales Guidance**: Expected sales of just over $500 million with EBITDA between $40-42 million [3] - **Stock Performance**: Stock price has increased by about 40% since spring 2025 [3] - **Recent Growth**: The company reported modest organic growth for three consecutive quarters, with a strong expectation for Q4 [17][19] - **Cash Flow**: Cash flow for Q3 was $29.2 million, an increase of $4.4 million year-over-year, with a focus on debt reduction [19][24] - **Backlog**: Backlog increased by over 18%, with a book-to-bill ratio of 1.08, indicating strong future sales potential [20][26] Business Segments - **Rail Products**: Represents just over 50% of sales; focus on efficiency and innovation in rail operations [5][6] - **Infrastructure**: Rapid growth, particularly in precast products, which account for 70% of infrastructure sales; recent acquisition of VanHooseCo expanded product offerings and geographic reach [10][11] - **Global Friction Management**: A key growth area, providing solutions that enhance operational efficiency and reduce maintenance costs for rail operators [8][34] - **Total Track Monitoring (TTM)**: Focused on safety and operational insights for rail systems, enhancing customer efficiency [34] Strategic Focus - **Capital Allocation**: Emphasis on debt reduction and share buyback programs, with a target leverage ratio of 1-1.5 times [28][24] - **Innovation and Technology**: Continuous investment in technology to improve product offerings and operational efficiency [28] - **Market Demand**: Strong demand for infrastructure products due to aging infrastructure in North America, positioning the company for long-term growth [41] Key Takeaways - **Organic Growth**: Significant organic growth of 25% expected in Q4, continuing a trend of consecutive quarters of growth [32] - **Valuation**: The company presents an attractive investment opportunity with a free cash flow yield around 6% [27] - **Future Outlook**: Anticipation of strong performance in 2026, driven by infrastructure needs and operational efficiencies [41] Additional Insights - **Market Conditions**: The company is navigating through a recovery phase post-DOGE impacts, with a strong second half of 2025 expected [29] - **Customer Needs**: The shift in customer perception regarding the necessity of friction management products indicates a growing market acceptance and demand [34][37] This summary encapsulates the key points discussed during the conference call, highlighting L.B. Foster Company's strategic direction, financial performance, and market opportunities.

Financial Data and Key Metrics Changes - The company reported a 2% year-over-year increase in revenues for Q2 2025, marking a return to sales growth after a period of decline [6][10] - Adjusted EBITDA increased by 51.4% compared to the previous year, driven by improved margins in the infrastructure segment and lower SG&A spending [7][12] - Net debt decreased to $77.4 million, with gross leverage improving to 2.2 times compared to 2.7 times last year [8][21] Business Line Data and Key Metrics Changes - Infrastructure segment sales rose by 22.4%, primarily due to a 36% increase in precast concrete sales [6][16] - Rail revenues declined by 11.2%, although friction management sales within the rail segment increased by 17.2% [7][14] - The backlog for rail products increased by 42.5% during the quarter, indicating strong future demand [7][15] Market Data and Key Metrics Changes - The backlog for infrastructure solutions totaled $139.2 million, with a 36.8% increase in protective coatings demand [17][25] - The overall backlog improved by 42.5% during the quarter, with significant gains in both rail products and global friction management [15][24] - The company noted that federal project funding began to release in Q2, positively impacting rail customer demand [26] Company Strategy and Development Direction - The company is focusing on organic growth and capital allocation towards growth projects, while also maintaining a stock buyback program [39][21] - The strategic execution in the infrastructure segment is expected to drive continued growth, particularly in precast concrete due to government funding programs [27][28] - The company is also exploring tuck-in acquisitions to support its long-term strategy while managing existing operations effectively [39] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding steady rail customer demand through the remainder of 2025, supported by federal funding [26] - The UK market remains challenging, but the company is taking steps to right-size its operations there [26] - The company anticipates a strong second half of 2025, with a solid order book and favorable business mix [30] Other Important Information - The company successfully negotiated an amendment to its revolving credit facility, increasing borrowing capacity and extending the facility tenure to June 2030 [22] - The effective tax rate for the quarter was reported at 55%, but management expects this to improve as profitability in the UK increases [70][72] Q&A Session Summary Question: Are there high return opportunities in acquisitions or reinvesting in growth projects? - Management indicated a focus on organic growth and capital allocation towards existing operations, while also being open to acquisitions that align with their strategy [39] Question: Is there follow-through on backlog composition for infrastructure and rail products? - Management confirmed strong growth in friction management and precast concrete, with positive backlog support for the second half of the year [41][42] Question: What is the status of the UK business and remaining exposure? - Management acknowledged ongoing challenges in the UK but expressed confidence in the right-sizing efforts and the strength of the US operations [50][52] Question: How does the company envision sales growth across segments in the second half? - Management expects strong seasonal performance in Q3 and Q4, supported by a solid backlog and improved gross profit margins [54][55] Question: What is the focus on the EnviroCast business and its expected contribution? - Management emphasized a cautious approach to entering the new market, focusing on quality and productivity, with expectations for long-term growth rather than immediate contributions [58][60]