L.B. Foster Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 11, 2025

Key Takeaways

  • Positive Sentiment: Returned to organic sales growth with revenues up 2% led by a 36% increase in precast concrete and a 42.5% rise in rail backlog.
  • Positive Sentiment: Adjusted EBITDA increased 51.4% year-over-year, driven by favorable infrastructure margins and strong SG&A leverage.
  • Positive Sentiment: Net debt decreased to $77.4 million with gross leverage improving to 2.2×, and free cash flow is expected around $41 million for 2025.
  • Negative Sentiment: Exit of the UK automation and material handling business resulted in a $1.1 million charge and contributed to a 55% effective tax rate on UK pretax losses.
  • Positive Sentiment: Backlog growth remains robust in key platforms, with strong demand and government funding supporting continued expansion in friction management and precast concrete.
AI Generated. May Contain Errors.
Earnings Conference Call
L.B. Foster Q2 2025
00:00 / 00:00

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Operator

Good day and thank you for standing by. Welcome to the L. B. Foster Second Quarter twenty twenty five Earnings Call. At this time, participants are in a listen only mode.

Operator

After the speakers' presentation, there will be a question and answer session. Please be advised today's conference is being recorded. I would now like to turn the call over to your speaker today, Lisa Durante. Please go ahead.

Lisa Durante
Lisa Durante
Director - Financial Reporting & IR at L.B. Foster Company

Thank you, operator. Good morning, everyone, and welcome to L. B. Foster's second quarter of twenty twenty five earnings call. My name is Lisa Duranty, the company's Director of Financial Reporting and Investor Relations.

Lisa Durante
Lisa Durante
Director - Financial Reporting & IR at L.B. Foster Company

Our President and CEO, John Castle, and our Chief Financial Officer, Bill Tommen, 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 up the session for questions.

Lisa Durante
Lisa Durante
Director - Financial Reporting & IR at L.B. Foster Company

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 and 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, so 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.

Lisa Durante
Lisa Durante
Director - Financial Reporting & IR at L.B. Foster Company

We will also discuss non GAAP financial metrics and encourage you to carefully read our disclosures and reconciliation tables provided within today's earnings release and presentation as you consider these metrics. So with that, let me turn the call over to John.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thanks, Lisa, and hello, Thanks for joining us today for our second quarter review. I'll begin with slide five covering the key drivers of our results for the quarter. We're very pleased with our performance in the quarter with improvements delivered broadly across the business. First of all, we returned to sales growth in the second quarter, with revenues up 2% over last year. The growth was achieved in the infrastructure segment, with sales up 22.4%, led by a 36% increase in our precast concrete business.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Rail revenues, on the other hand, remained soft in the quarter, declining 11.2% from last year. However, the rail sales included 17.2% increase in friction management sales over last year. In addition, demand rates for our rail offering increased significantly in the quarter as evidenced by a 42.5% increase in our backlog from the start of the quarter. This sets a solid foundation for our growth outlook in the back half of the year. Highlighting the benefits of our strategic execution, we delivered a 51.4% increase in adjusted EBITDA over last year, despite the modest sales growth in the quarter.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

The improvement was driven by favorable margins in the infrastructure segment and strong SG and A leverage across the enterprise. Our net debt decreased to 77,400,000.0 at quarter end with gross leverage improving to 2.2 times compared to 2.7 times last year. And finally, the order rates for the quarter drove a solid increase in our backlog for both segments, with an improved business mix versus last year. I'll turn it over to Bill now to cover the financials for the quarter, and I'll come back at the end with some color on our market outlook and financial guidance for the year. Over to you, Bill.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Thanks, John, and good morning, everyone. I'll begin my comments on Slide seven, covering the consolidated results for the second quarter. As always, the schedules in the appendix provide details on the financial results covered in today's call, including reconciliations for non GAAP information. As John mentioned in his opening remarks, we returned to organic sales growth in the quarter for the first time since 2024. Net sales grew 2% year over year driven by strong growth in precast concrete within infrastructure.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Reported gross profit was up $400,000 with the gross margin down 20 basis points to 21.5%. The reported Q2 gross profit includes a $1,100,000 charge related to the exit of an automation and material handling product line in The UK. Also, last year's gross profit included a $800,000 property sale gain. Adjusting for these two items, gross margins were up 120 basis points versus last year on improved business mix primarily within the infrastructure segment. SG and A costs decreased $2,400,000 due to lower personnel, insurance and professional services costs in the quarter.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

The current quarter includes a $300,000 charge for the AMH exit. With the higher revenues and lower spending levels, the SG and A percentage of sales improved 200 basis points to 15.6%. Adjusted EBITDA was $12,200,000 up 51.4% versus last year, driven by improved margins in infrastructure and lower SG and A spending across the business. Cash provided by operating activities was $10,400,000 favorable $15,400,000 versus last year due to improved profitability and lower working capital needs. I'll cover the favorable developments in orders and backlog later in the presentation.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Slide eight provides a reminder of our typical business seasonality and the related financial profile. Sales and EBITDA levels are normally higher in the second and third quarters as they represent the primary construction season for our customers. As a result, our free cash flow normally follow a pattern of consumption in the first half of the year with a reversal in the back half of the year as the construction season winds down. Since the 2025 was weaker for our Rail business, the working capital needs this year are somewhat deferred to the back half. This is supported by the higher order book exiting Q2 as well as the sales growth implied by our guidance in the 2025.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

I'll highlight that the assumed free cash flow at the midpoint of our guidance is approximately $41,000,000 for the 2025. Over the next couple of slides, I'll cover our segment performance in the quarter, starting with Rail on slide nine. Second quarter Rail revenues were $76,000,000 down 11.2% due to delayed order development primarily in rail distribution coupled with reduced activities in The UK. Rail product sales were down 15.5 due to the softer rail distribution demand in the quarter. And Technology Services and Solutions sales were also down 32.6%, including the decline in The UK business.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

I'll mention here that The UK automation and material handling product line we're exiting had 3,100,000 in sales and $600,000 of an operating loss for the trailing twelve month period. As John mentioned, global friction management sales were up 17.2% versus last year as this growth platform continues to perform well. Rail margins of 19.9 were down 100 basis points driven primarily by the $1,100,000 AMH exit charge. Excluding this impact, rail margins were up 40 basis points. Rail orders decreased 2.3% versus last year, but increased 37.3% sequentially, reflecting the strong order book development we expected for rail distribution.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Backlog levels increased 42.5% during the quarter and 13.9% versus last year. The backlog improvement was realized in both rail products and global friction management, while TS and S backlog declined driven primarily by The UK. Turning to Infrastructure Solutions on Slide 10. Net sales increased $12,400,000 or 22.4% due to the strength in our Precast Concrete business, which increased 36% over last year. Steel product sales were up $200,000 with improved protective coatings and threaded volumes offsetting lower bridge volumes.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Gross profit margins improved 40 basis points to 23.3% due to higher sales volumes in Precast and improved margins in steel products due to our portfolio work. Excluding the $800,000 favorable impact from the Bedford property sale last year, infrastructure margins were up 190 basis points year over year. Infrastructure orders remained robust at $61,400,000 up 13.7% over the prior year with solid gains in precast concrete. Backlog totaling $139,200,000 is up $4,200,000 over last year, including $7,900,000 or 36.8% from improved protective coating demand. I'll next cover some of the key takeaways from our year to date results on Slide 11.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Net sales in the first half of the year were down 9% due to weaker demand in the Rail segment, primarily in Rail Distribution, coupled with reductions in The UK. Partially offsetting were sales gains in our growth platforms of Precast Concrete, up 35.1 and Friction Management, up 14.4%. Year to date gross profit reflects the lower rail sales volumes with margins of 21.2%, down 20 basis points. SG and A costs decreased $4,400,000 from the prior year with lower personnel and professional service costs as the primary drivers. Adjusted EBITDA was $14,100,000 essentially flat with the prior year despite the 9% decline in sales.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

I'll mention here that the higher effective tax rate for both the quarter and year to date period was due to our not recognizing a tax benefit on UK pretax losses. I'll emphasize that the higher rate is not reflective of our cash tax requirements, which remain extremely low at approximately $2,000,000 per annum. We expect a lesser impact on our effective tax rate in future quarters, given our improvement efforts in The UK, as well as our overall improving profitability outlook. Operating cash flow was a $15,700,000 use, favorable $10,700,000 compared to last year on lower working capital needs. And orders were up 7.1% due to strong infrastructure demand.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

I'll now cover liquidity and leverage on slide 12. Net debt levels of $77,400,000 decreased $6,600,000 compared to last year, with the gross leverage ratio improving to 2.2 times at quarter end. As mentioned earlier, we expect approximately $41,000,000 in free cash flow in the 2025. We expect to deploy these funds to lower debt levels while also improving leverage both sequentially and year over year. We also plan to continue our stock buyback program with 36,700,000 remaining authorized and approximately 6.5% of outstanding shares repurchased over the last two point five years.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

A highlight of the quarter was successful negotiation of an amendment to our revolving credit facility. We increased the borrowing capacity and extended the facility tenure to June 2030, while also reducing borrowing costs and relaxing restrictions. This achievement highlights the confidence our banking partners have in our strategic execution and prospects for the future, and we thank them for their continuing support. I'll briefly touch on our capital allocation priorities outlined on slide 13. Maintaining our financial flexibility with reasonable debt and leverage levels remains a top priority.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

We also continue to invest CapEx in our growth platforms and return capital to our shareholders through our share repurchase program. In summary, we have multiple levers available to drive shareholder value and we remain prudent in our approach. My closing comments will refer to slides fourteen and fifteen covering orders, revenues and backlog by segment. The book to bill ratio for the trailing twelve months was a favorable 1.04 to one with positive developments realized in both segments. The rail segment ratio improved to 1.06 to one with increasing order rates realized for three straight quarters.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

The infrastructure ratio also remained positive at 1.02:one with solid year over year growth in both orders and revenue in the second quarter. And finally on slide 15, it's clear that the greatest improvement in our backlog was achieved in our Rail segment with a 13.9% increase year over year. I'll again highlight that the gains were realized in Rail Products up 28.4% and friction management up 22.1%. Partially offsetting was the lower backlog for TS and S due primarily to The UK. This should improve our overall profitability mix for rail in the coming quarters.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

And the infrastructure backlog remains healthy at $139,200,000 with increased protective coatings demand driving the improved business mix. Thanks for your time this morning. I'll now hand it back to John for his closing remarks. Back to you, John.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thanks, Bill. I'll begin my closing remarks covering the recent market developments and outlook on slide 17. Starting with rail, the federal project funding that was previously curtailed the start of the year began to release in the second quarter, which helped drive the backlog increase. We're cautiously optimistic that rail customer demand will remain steady through the balance of 2025, with expectations that federal funding will continue as is. We built a solid backlog in our friction management solutions, and we're also making further advances in our total track monitoring product lines.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Our customers see the value in these solutions supporting the most challenging and operating safety requirements. And lastly, The UK market demand remains challenged as we are taking the steps necessary to right size this business to a smaller technology based offering with improved demand economic return profiles. Turning to the infrastructure segment, our Precast backlog remains solid at nearly $95,000,000 Precast has also benefited from the government funding programs, particularly the Great American Outdoors Act and highway and civil construction projects are also driving our demand levels. We previously mentioned the commissioning of our purpose built precast facility in Central Florida. We're pleased to report that we have successfully manufactured and installed our first NevarroCast insulated wall system during the second quarter.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

And as expected, interest in our solution is growing with labor shortages prevalent in the local market. Overall, we remain bullish for a robust demand to continue for our precast concrete growth platform. Turning to steel products, second quarter results were flat overall and the business mix improved substantially with the recovery of our pipeline coatings business, which was up 47% year over year. With the renewed interest in energy investment in The US as evidenced in the second quarter sales growth of 37% higher backlog for coatings, we believe that we are in a favorable recovery trend for this product line. In summary, we believe that demand drivers supporting steady growth through the year end and beyond remain intact, with increasing demand expected for our growth platforms of rail technologies and precast concrete.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Switching topics, I'll provide a brief comment on tariffs. As previously mentioned, our supply chains are primarily sourced from within The US, with some minor exceptions for certain electronics and other sources sourced outside The US. Thus far, tariffs have not had a significant impact to our product costs or ability to secure the materials needed to serve our customers. I'll wrap up today's call covering our updated twenty twenty five financial guidance on slide 18. Second quarter results were largely in line with our expectations, delivering strong improvement both sequentially and year over year.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

We're entering the back half of the year with a solid order book, favorable business mix and lower operating cost structure, which supports our expectations for a strong 2025. Our revised full year guidance is slightly lower due primarily to the Rail segment H1 performance. While strong orders were secured in Q2, the Rail sales uplift was deferred to the back half of the year, reducing our full year outlook for the Rail segment. Having said that, our revised guidance midpoint still assume a 25.1% increase in adjusted EBITDA, a relatively modest sales growth of 2.7% for 2025. And the midpoints assume a 42.8% increase in adjusted EBITDA year over year on a 14.3% sales growth for the 2025.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

And finally, the free cash flow outlook for the full year was also reduced slightly due primarily to the timing of working capital needs for rail at the 2025. I'll note that our revised free cash flow midpoint outlook is still an attractive yield at approximately 8%. So, as you can see, we're well positioned to deliver solid sales growth, strong profitability expansion, and robust cash generation, as we strive to maintain momentum through the balance of 2025 and beyond. In summary, we're very pleased with our team's performance and the favorable track we are on. So with that, thank you for your time and continuing interest in the L.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

B. Foster. I'll turn it back to the operator for the Q and A session.

Operator

Thank you.

Operator

Our first question comes from Liam Burke with B. Riley Securities. Your line is open.

Liam Burke
Liam Burke
Managing Director at B. Riley Financial

Thank you. Good morning, John. Good morning, Bill.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Hi, Hi, Liam.

Liam Burke
Liam Burke
Managing Director at B. Riley Financial

On the capital allocation front, are you seeing return high return opportunities in acquisitions or possibly reinvesting in growth projects or would you be leaning more towards repurchases and debt reduction?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thanks, Liam, the question. First of all, have first organic growth we've seen now in five quarters. So we're very pleased about that. So we've been plowing our available capital into our organic programs and we're starting to see the benefit of that. As I mentioned, the Florida new operations up and running, we feel very good about that and we're continuing to put more money in our precast operations because that growth has really, really taken off as I mentioned through the Great American Outdoors Act, we're also seeing a lot of highway civil type work with that.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

As you know, we are buying and we have approval to buy shares in the company, dollars 40,000,000 repurchase program over three year periods. We've been very active in that and We were very bullish about where we're at today and we're continuing to make those that capital towards that. As far as acquisitions, we've quite a bit going on organically right now. We're very happy with what's going on with the most recent acquisition of Van Husco. We're really making strides in that area as well.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

But we're also being mindful of trying to find some tuck in and other type acquisitions to support our strategy for the years to come. Our pipeline is active. We've been actively looking at opportunities out there but we're also making sure that we're executing on what's in front of us right now. And that's where we're feeling very strong about the second half of the year supported by that significant backlog growth that we've seen sequentially and solid year over year performance.

Liam Burke
Liam Burke
Managing Director at B. Riley Financial

Great. And my next question is, if I look at the backlog composition, both infrastructure and rail products and services, are you seeing follow through infrastructure side on precast concrete and on rail on the friction management side in the backlog for the rest of the year?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, absolutely. Friction management, now thanks for mentioning that's been absolutely tremendous year that we put together Q2 and we had the best month we've ever had Q2 related to friction management and that growth just keeps coming. We feel very good about that. And our TTM work which was a little soft at the beginning of the year, a lot of that is a flow through from the larger class ones or also comes from the government, types funding and spending. And we've seen that those appropriations change and the need for that activity in the second half of the year.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

So we feel very good about that. It's coming into backlog. As I mentioned, we were concerned in the first half of the year where they're now we're going to have the backlog support our guidance and we do. And it came through the rail side in a big way. And then precast has just been humming along very, very well.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

And of course we mentioned in the broadcast well what's going on with coatings. That's been a good year over year improvement as well. So all in all we feel very good where we're at right now related to the work we have in hand. We just need to perform the second half of the year.

Liam Burke
Liam Burke
Managing Director at B. Riley Financial

Great, thank you, John.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, thanks Liam.

Operator

One moment for our next question. Our next question comes from Julio Romero with Sidoti and Company. Your line is open.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

Thanks. Hey, good morning, John and Bill. Thanks for taking questions.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Hey, Good morning, Julio.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

I wanted to start off with a clarification question. With the AMH exit of The UK business, do you have any remaining UK exposure within rail? And then what's remaining within TS and S would be purely The US portion?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, so thanks for your question. The UK as we mentioned is the headwinds are there. We've been working on right sizing that business for a period of time. We didn't just take action in Q2. We're just announcing that action.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

So AMH was the significant piece of that. And then related to our telecommunications work, we're just getting it in line with the activity and the type of work that we like to produce in the market. So there'll be ongoing focus area for us for the balance of the year, but we got the right team working on it right now in The UK and with the oversight here in The US. So we feel good we're going to be in a pretty good position here by year's end. As far as the greater TSS, is that your question related to back in North America?

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

I asking if the remaining business within TS and S would be purely US but it sounds like there's a little bit left of UK in there.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, little bit UK but the greater work in The US has been very very strong, very buoyant.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

Okay, that's very helpful. And on guidance, I think the updated sales range implies second half sales growth of 10 to 18% at the low and high ends of the guidance. Can you maybe discuss how you envision that growth across the two segments? And then also from a cadence perspective with regards to the third and the fourth quarter?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yes, well third and fourth quarter, first of all from a seasonality point of view, it's very, very strong. Q3 is typically the best quarter that we see in the year. We expect that to continue this year and in Q4 we just got so much work to do that Q4 should be in good order and good standing for that. What we really are happy about is our gross profit. We ended the quarter at 30.9% gross profit in dollars and 21.5% in profit margin.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

That's going to continue. We expect that to continue to grow through the balance of the year. And our work that we did a year ago on SG and A has really positioned ourselves well to lever up the cost side of the business in the second half of the year. Backlog is supportive of what we need to get done in the second half of the year. So the numbers that we put out there, the five thirty five to five fifty five sales is an area that we feel strongly that we will finish and then of course is adjusted EBITDA numbers will flow accordingly.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

Yeah, very fair. And that's even the gross profit dollars you're hitting is without even the rail business really working on all cylinders.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

That's exactly right. We really performed very, very well the first half of the year in Q2 with what we had to work on. We feel very good about now we have the work really performing.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

Very good. Last one if I May is just on the EnviroCast business. Congratulations on manufacturing and installing your first EnviroCast precast wall system. Can you just talk about progress in that business and how much contribution if any is expected in the second

John Kasel
John Kasel
President & CEO at L.B. Foster Company

This is about getting it right. So we're entering a new market, new space with a product line that we know and we performed in other parts of The US. So we're starting slow but it's meeting our expectations. We're working very closely with contractors and home builders and our first job as well as bringing the best workforce we can focus on our quality, focus on productivity and most of all focus on safety. So we were very pleased to date where we're at.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

I'll be down there next month to see it firsthand again as we start moving product out to sites and talking directly with customers. But as far as the balance of the year, we're not expecting that much. This is really a growth organic growth opportunity that we're putting in place for years to come. And we're focused on just making sure we're doing it right this year.

Julio Romero
Equity Research Analyst at Sidoti & Company, LLC

Very helpful. Thanks very much.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thanks, Julio.

Operator

Your line is open.

John Bair
President at Ascend Wealth Advisors, LLC

Hey, good morning, John and Bill.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Hi, John.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Hi, John.

John Bair
President at Ascend Wealth Advisors, LLC

A couple of questions. How much of The UK business has sort of been cleaned up? You took a pretty significant hit there with the tax situation. Can we expect that to be lesser impact going forward?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, definitely. We've taken a large hit that we were expecting to do and then we'll talk about the tax. And of course there's cash part of the tax that is probably the most important. But maybe Bill can add a little color on some of those details that we could share.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Yeah. Morning, John.

John Bair
President at Ascend Wealth Advisors, LLC

Hi.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Yeah. So in the quarter, we reported a 55% effective rate.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

And it's basically a mathematical impact because we didn't have a tax benefit that we would record on the loss that we incurred in The UK on a pretax basis because of the cumulative losses that we had there, as well as the restructuring charge that we took in the quarter. What we would expect going forward is the profitability will improve in The UK, and our overall profitability will also improve. So the impact of that situation in The UK will become lesser as the year progresses. And we're expecting an effective rate for the quarters between 30% to 35%, and then a blended effective rate for the full year between 3540%. But those are again just P and L drivers for the effective tax rate and EPS.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

The important thing for us, first of all, was obviously turning The UK business around and we think we're getting to that pivot point there. But then also on a consolidated basis, we're paying somewhere around $2,000,000 per year in global cash taxes. And that will be the case for the foreseeable future.

John Bair
President at Ascend Wealth Advisors, LLC

Okay. And then so then going forward in, say, '26, will those tax rates in the 30%, 35% range come down?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yes. Okay.

John Bair
President at Ascend Wealth Advisors, LLC

So you'd be more more normalized.

William Thalman
William Thalman
EVP & CFO at L.B. Foster Company

Migrate closer to the upper 20s, which is what we've expected it to be from an overall jurisdictional mix of taxes point of view.

John Bair
President at Ascend Wealth Advisors, LLC

Okay. And then switching over to Precast with the EnviroCast. What is the emphasis on residential versus commercial? What do you see as the more positive uptake of that? Or is there? Is it too early in the game yet?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Well, don't think it's too early. The initial thinking was residential. We could do light commercial, light industrial type work as well. But the real market that we're serving in the area we went to is very heavy focused on residential. And so that's the contractors and the home builders that we're working directly with today.

John Bair
President at Ascend Wealth Advisors, LLC

Is there any legislation or anything like that that would drive potential sales and adoption of this technology?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yes, the hurricanes and the effect of the weather had a dramatic impact on home builders regulatory requirements and so we are seeing and of course the ability to pay, be able to afford to pay for insurance. So in the event that you cannot afford insurance or it's very expensive there is a big significant draw towards building a home out of concrete today. The thing that we really did not anticipate going into this, we knew that we had an impact related to labor, but with everything else going on across the country now related to building construction and labor market, that's where we're really seeing an uptick in the need for our product. The availability of labor is just shrinking in that part of the country. And what our product is able to do is we build in the factory.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

So labor is in the factory environment and the erection of a home is literally in days versus weeks or potentially months. So that's been a real significant draw is being able to manage expectations with our customer because of the inability for them to bring labor, secure labor in the market down there.

John Bair
President at Ascend Wealth Advisors, LLC

Okay, well that raises another interesting question then. How are you focused or not focused, but how are you what is your situation with your own labor force at say Van Cusco and elsewhere?

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yeah, very good. We've been working on that. First of all, beauty of L. B. Foster is our people.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

That's really what drives our company and profits come from our people. So we spend a lot of time supporting and nurturing our culture. So we've become the place to work in the markets we serve and we've been working on that talent pool in that workforce of Florida long before we made any product. Bringing them on board, bringing them into the culture, understanding how we do things And for them to really have that ownership related to building a factory and now building a product. That's a significant part of how we do things.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

So we have a very very good workforce and we feel very fortunate, but also we work on it each and every day to make it the way it is today.

John Bair
President at Ascend Wealth Advisors, LLC

Yep, very good. Thanks for taking my questions.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thanks John. You take care.

John Bair
President at Ascend Wealth Advisors, LLC

Yep, yeah we'll see you soon. Bye.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Yep.

Operator

And I'm not showing any further questions at this time. I'd like to turn the call back to John for any further remarks.

John Kasel
John Kasel
President & CEO at L.B. Foster Company

Thank you everybody. Thanks for joining us today. And we again wrap up, we feel very good about the quarter, where we're at the build of the backlog supporting our margin, the SG and A that we're now dealing with that we're now able to really leverage that second half year. It's really tariffs I mentioned in the call really have little to no impact and the freeing up of government funding specifically on the rail side is really giving us opportunity to feel very excited about what's in front of us for the second half of the year. So thanks for your ongoing support of the company and that we look forward to talking to you after we post the next quarter results. Take care.

Operator

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Executives
    • Lisa Durante
      Lisa Durante
      Director - Financial Reporting & IR
    • John Kasel
      John Kasel
      President & CEO
    • William Thalman
      William Thalman
      EVP & CFO
Analysts
    • Liam Burke
      Managing Director at B. Riley Financial
    • Julio Romero
      Equity Research Analyst at Sidoti & Company, LLC
    • John Bair
      President at Ascend Wealth Advisors, LLC
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