Morning everyone and on behalf of Lytham Partners and L.B. Foster management, welcome to the L.B. Foster Company Virtual Investor Day presentation. My name is Robert Blum of Lytham Partners, and I will be serving as the moderator today. Today's presentation will consist of a company introduction and overview of the recently completed strategic assessment, presentations on the company's lines of business, a discussion of growth initiatives, a financial review, and the final section today will be the Q&A session. You can submit questions at any time during today's presentation by using the Questions box you see on your screen. Today's presentation, slide presentation was posted on the L.B. Foster website this morning and can be accessed on the investor relations page at lbfoster.com. Before I turn things over to today's host, Mr.
John Kasel, L.B. Foster's President and CEO, I want to cover the safe harbor disclaimer shown in this slide. Some statements being made are forward-looking and represent management's current view of the L.B. Foster Company's markets and business today, including comments related to COVID-19. These forward-looking statements reflect management's opinions only as of the date of this presentation, and management undertakes 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 these forward-looking statements, please see the disclosures shown in this presentation. Management will also discuss non-GAAP financial metrics and encourages you to read the disclosures and reconciliation tables provided within today's presentation carefully as you consider these metrics.
Also note that in September 2020, L.B. Foster announced the equity sale of the IOS Test and Inspection Services division. As a result of this divestiture, the company has presented the test and inspection services business as a discontinued operation, including within today's presentation, and have recast prior periods to reflect this change. Comments today will be focused on the company's continuing operations. Further, in September 2021, management announced the asset sale of the Piling Products division. Due to the nature of the sale, the company has presented the Piling Products within continuing operations, including in this presentation, but has adjusted certain metrics as annotated in the presentation slides to reflect the sale for purposes of an even comparison. With that, let me turn things over to Mr. John Kasel, L.B. Foster's President and Chief Executive Officer.
Welcome to the L.B. Foster Investor Day. I'm John Kasel, President and CEO. With me today is our Chairman of the Board, Mr. Lee Foster. Welcome, Lee.
Good to be here.
Both Lee, the management team and I are excited to show you the behind-the-scenes look at the transformation underway at L.B. Foster. If you take anything away from today's event, it should be that. First, we have a comprehensive strategy with a highly skilled organization aligned to focus to deliver it. Second, we have established two platforms of the company to drive value. Third, we are transforming the business into a technology-oriented infrastructure solutions provider. Today, I have assembled members of our leadership team to take you through the highlights of their business with a recently established strategic roadmap. The focus of today's event is to showcase our business with the significant growth opportunities that make L.B. Foster a compelling investment. Before we jump into the details, our path forward, I'd like to spend some time on our rich tradition.
To do that, I'll turn it over to Lee Foster, our Chairman of the Board.
Thank you John. I'm really pleased to be joining you and the team today to talk a bit about the company's history and, more importantly, our future. The company was founded in 1902 by my grandfather, Lee B. Foster. He was only 20 at the time, but he was a true entrepreneur. He identified the need for low-cost, reconditioned rail to support transportation for mines, logging camps, and quarries near his home in Titusville, Pennsylvania. One of my grandfather's keys to success was his commitment to customer satisfaction. To encourage the sale of used material, he initiated a guarantee that set L.B. Foster Company apart from others and contributed greatly to his success. If the material is not up to the standard represented, ship it back and we will pay the freight both ways.
The dedication to customer satisfaction became a core company value and remains today among the values which drive a culture of customer service. This belief is a cornerstone to L.B. Foster's future strategy that John and the team will cover today. Seeing his success, my grandfather's three brothers joined him in running the business, and they worked very well together. Growth was fueled by infrastructure investment in the U.S. throughout the industrial boom, and we're seeing similar development in our markets today. Personally, I joined the company in 1974 in a commercial role, became CEO in 1990, and assumed the chairman's role in 2002. Over my 47 years with the company, I've seen some challenging times similar to that which we face over the last several years. The company culture we've established is one of hard work and resilience.
With our new re-energized strategy and the market tailwinds we see, I'm more confident than ever in the future of L.B. Foster under your leadership, John.
I too am excited about our future and look forward to sharing our plans with the investment community today. You're one of the first people I spent time with when I moved my family here from Minneapolis to Pittsburgh back in 2003. With a background in operational manufacturing excellence in the appliance automotive industries, I was able to hone my Lean Six Sigma skills to oversee the company's manufacturing locations. I immediately saw the company had great people and a culture with a desire to improve, but needed some guidance on techniques. I knew I could help. You've been a great mentor to me over my 19 years journey with L.B. Foster. I've been able to build my professional experience and your guidance that led every aspect of the company's commercial, manufacturing, and supply chain functions. We built a great team here at L.B. Foster.
I've had the privilege of working directly with many of them over my career. Most recently, Chief Operating Officer, I was responsible for all aspects of the business, including being named the executive sponsor of the board strategy initiative. This experience, along with my 19 years with the company, has prepared me well to lead the company into the future.
John, as I'm sure you know, the board went through an intensive succession process that constituted the formation of a strategy committee of the board, the retention of TRC as a consultant, and your selection to lead the development of a strategic plan. The board has full confidence in your leadership and the ability of your team to implement this transformational strategic plan.
Thanks Lee. To our investors, we're excited about this opportunity, and before we jump into the strategy in further detail, this is a quick video of the impressive capabilities we at L.B. Foster have built and how we keep our world moving.
From the minute you wake to the moment you sleep, L.B. Foster keeps your world moving. We turn great ideas into brilliant solutions. Improving how we live, how we travel, how we make things. We're always two steps ahead, imagining what the future will look like, identifying incremental improvements that have a big impact, freeing up space to focus on what matters. Every time you leave home, you come face-to-face with L.B. Foster. Turn on the lights, jump in your car, check your train, treat yourself, treat someone else. Enjoy your next adventure. What we do impacts positively on everyday life in so many unseen ways. Our expertise touches transit, energy, manufacturing, housing, and more. We are experts at taking the friction out of movement, smoothing your journey, guiding you on your way, maintaining a watchful eye, always keeping you informed. Our name is synonymous with success.
Delivering countless smart solutions, keeping the wheels of industry turning, safeguarding critical infrastructure, owning the future. We reach into worldwide markets with the sensitivity and insight that only comes from local understanding. We are L.B. Foster. We keep your world moving.
To kick off this section, I'd like to introduce you to the newest member of our executive team at L.B. Foster, Mr. Bill Thalman. Bill, introduce yourself.
Thanks John. Yeah, my name is Bill Thalman. I joined L.B. Foster back in March of this year. I've had a 33-year career thus far, working in a variety of different positions, finance positions, corporate finance, as well as operational finance. I spent some time in public accounting early in my career. I had an international assignment at one point in my career, working in Europe. I actually also ran a division of a company that I was with recently, so it gave me a unique perspective on the finance lens when it comes to operations. When I had the opportunity to think about joining L.B.
Foster, it was very exciting because I could see a very clear alignment in terms of what they were looking for in a finance leader, and I really felt like that I could help. I've been in Pittsburgh my entire career, except for that time in Europe. What attracted me to L.B. Foster initially was just getting to know the leadership team and the culture that's been established here. I really felt like it was a place that I would fit in well. I will say that you know, with some of the recent challenges that the company had gone through, you know, there were certainly some thought put behind that.
I will say what excited me is what I could see starting to build up within the organization when it comes to redeveloping a strategy and starting to move that forward. In fact, one of the first conversations that I had with John when I joined the organization, in fact, the very first day, was that I had learned about the TRC project, and I had experience with that, so I was excited about that. John needed to get me up to speed quickly on the business to make sure I was in a position to support that project. It was an exciting time, and it's been a great ride so far.
Yeah. Well, we're sure excited to have you. We mentioned TRC, so I'll come back and kind of give you an idea of what he's referring to in the strategy build-up. As far as Bill, you know, we did a long, extensive nationwide search, and he hit on it. Most people don't necessarily see it, but now that he's been here long enough, he could appreciate it is about the people and it's about the culture of the company. We needed to get this one right.
At the time, I was chief operating officer with the company, and knowing that, you know, working with the Bob Bauer at the time and our board of directors, knowing that someday I would be CEO, I knew the CFO role was very important, not just to the company, but to myself and having a strong business partner. We looked around the country, and interestingly enough, we found Bill right here in Pittsburgh. We were very fortunate to make that happen. And he's come in and really got up to speed quick. He's everything and more than I expected, so we're very lucky to have him. Now back to the strategy. The strategy was a big part, I think getting Bill up to speed.
It started even before he like as he mentioned in March. It goes all the way back to about a year ago. It was a recognition, as you'll look at this chart, that we had a burning platform, and we needed to change. The company absolutely needed to fundamentally transform. We went through a very tough patch in 2015 and 2016. I call it the perfect storm. In that perfect storm, we got hit with our largest customers had filed a complaint against us. We lost that work at that time. We went off into energy space that maybe wasn't really tied to our strategy that we knew or really was core to the company at that time.
What was core was the rail business to us in North America, was in a somewhat of a micro recession. All those things coming together really destroyed value in a very short period of time. The good news is, the management team that you're gonna speak to today or hear from today, with the exception of Bill, have all hung together. We went through a really tough patch. What doesn't kill you makes you stronger, and we learned a lot. We needed to be humble. Part of that humble process was this committee that was created by our directors, which I was a part of, and Bob Bauer was a part of, and we had three external directors who were a part of it.
It was about, well, where do we go from here? We clearly understood in the near future that we needed to get some outside help. When Bill referenced TRC Advisory, that's a firm that's based out of Chicago, led by Tim Bromberger, that clearly fit our boutique-type company that we were looking for. With that, it was a humbling experience but a great experience because we clearly knew, or we thought we knew what it was that was adding value to our shareholders and to our customers. We were not aligned. The management team wasn't aligned, our board of directors weren't aligned, and we really needed to get some objective evidence in what we were and more importantly, where we needed to go.
Knowing that we were a great investment in the past, how do we restore that value? We went through that process, and that process is what we're gonna be sharing with you today of how we're gonna differentiate ourselves from what we were to more importantly, where we're heading. Before I get into the exciting things of the roadmap, giving the details of the examples, and my staff will be coming to talk to you today about those specific details. I wanna give you something that we call my aspirational goals, what we really aspire to be. It's one thing setting aside strategies, it's another thing saying we wanna really become something significant. The reality is, what you see on this page is meaningful.
We're a different company when you look at this page three-four years from now, and that's what we aspire to be. I do believe that's obtainable. We have been there before, but it's gonna take a strategy with an excited, motivated team that you see here with Bill and others to follow that are gonna make this happen. With that, coming into the strategy itself, we had some objectives that we wanted to nail. I'm gonna hit on what was core specific objectives, and I would like Bill to look at the financial evaluation that came through this TRC modeling that happened over the last six-nine months. First and foremost, we wanted to really understand what was core to our business. We thought we knew.
We wanted to assure that we really understood what was core and non-core and where we could grow. If it was growable, where would it be growable? Was there head space or a value that we could make happen, not just in North America, but across the globe, with the products and offerings we had? We wanna look from our customer's lens point of view and really understand what the value offerings we had today. We really wanna understand their willingness to pay. Much of our business has been commoditized. There's a lot of products we make today. There are a lot of components we make today, and we wanted to get them excited about a value offering and what their willingness to pay.
To make that happen, all had to be based on technology innovation, that when I came to the company back 19 years ago, as I mentioned earlier, is something I really wanted to make forefront of the company. Now I have the opportunity through the strategy and the executive team to really start pulling this thing together. Those were significant parts of it. Bill, how about on the financial considerations?
Yeah. The financial considerations piece of this was a pretty extensive evaluation, historical perspective evaluation of the value detractors as well as the value generators of the company over time. It was interesting because I had experience in doing a very similar analysis in a previous role with another company. As I came into the organization, I started to get engaged with what TRC was doing to evaluate the business. I immediately knew the path forward in terms of doing that financial evaluation. You'll hear us talk a bit more about economic profit in the future. That's a major element of how we're evaluating our portfolio going forward.
This was more of an understanding of that historical profitability and returns evaluation of each component of the business and determining which businesses were detracting from generating value as well as ones that were generating significant value. That gave us a lens to be able to evaluate which businesses, why did they generate those values versus creating a detraction from value, and having an opportunity to say, "Okay, this is what we do well.
Why do we do it well, and how can we leverage that as a platform for growth in the future?" As opposed to those businesses that were detracting from value and resulted in a situation where we maybe we were not as competitive as we needed to be or market forces went against us over time and there was no longer a need for us to be in that business where we weren't the rightful owners for those businesses. We're gonna talk a little bit about the Piling divestiture in the coming segments, and that'll be a good example of where we took an action based on that analysis. It was a really granular analysis led by the modeling that TRC helped us perform, and it really opened our eyes on where our path forward could be.
It's kinda interesting. We're sitting in the office and, our offices are separated by maybe 50 feet, and we maybe end up in the coffee area, together, and I just see a smile on his face. The things I talked about, his interpersonal skills and his ability to really fit in was great, but the experience of what he's talking about and adding that value of looking at things differently was awesome. It's really got us moving in a fast direction, and he's done a great job of educating and training others of looking at things completely different through a different lens. That's been a great add, that we've really built on. It's building a different core competence that we have really, quite honestly, haven't had.
When you look at the strategic outcomes, I was excited because you know, I led the strategic committee, if you will, and I had my preconceived notions of what our strategy should be and what our outcomes hopefully would be, but I never led the witness, if you will. I just let the process run its course. The outcome, you know, when the sausage was made and sausage came out, all of a sudden it was about we got significant value here, and we need to continue to transform our company into a high-growth infrastructure solutions provider. That was. I'm like, music to my ears. I'm like, you know, this is really, really good news to me because I really believed in that long before we started this process.
To make that happen, the pieces that we didn't quite understand is what was our platforms. When you look at our platforms, we didn't understand at the time, but we have platforms that contribute growth, and we have platforms that are a returns business. They're both very, very important. The returns businesses are ones that we really, really were spending a lot of time on and maybe more energy and maybe more capital, but they weren't showing the returns or the value to our customer. In the meantime, maybe some of the growth areas were being impacted by that. This gave us real line of sight, and we're gonna be sharing those with you, which ones are growth and which ones are returns in the coming presentations. You'll get a better feel from that.
The next part of it was we believe this. Again, we didn't know. We believed it, that Precast was an area that we wanted to continue to invest in. We also believe the technology side, be it over in Europe or here in Rail, was another area we wanna invest in. This process nailed it. One of the outcomes was continue to invest in those areas. You saw that probably firsthand.
Yep.
The next piece of this, and part of it was with Bill and what Bill was doing, is what we did, and especially in my role as the chief operating officer at the time, we weren't aligned to success. We weren't aligned to driving strategy. The other outcome we're gonna share with you today is how we repositioned the management team, leadership team to make this happen. You'll see that coming up in the future exhibits and future presentations. At the end, we are absolutely on a path to transforming ourselves into something that we actually started. We just didn't have the focus and strategy to make it happen.
Yeah, maybe I'll add one thing there John. The thing that, also as an outsider coming in, a significant opportunity to improve our execution is the whole idea of complexity reduction.
Yeah.
Now, we have a very complex business in some ways, sometimes a little bit difficult to understand. We experience that during our investor calls at times. I think this strategy, and starting with this messaging today, will help us to educate the investment community the direction that we wanna go and also take those steps, be committed to taking those steps to reduce the complexity in our business.
Absolutely. You know, portfolio manager as well as product management, very good part, and we really didn't appreciate that.
Mm-hmm.
We try to be all things to all people and all customers. The reality is that's not the best thing for us, nor is it for our investment community. The next page, to get into this thing, this is. I wanted to have strategy on one page. If you can't put strategy on one page, you really don't have a strategy. That was my thinking. What you see here is really clear delineation of who we are and more importantly, where the portfolio fits and where we're gonna be spending our money and time in the future. As you see here, technologies and precast is a big, big piece of that.
The rail products, which is core to our company, legacy to the company, so steel, fabricated steel, and then where we had the headwinds in the last couple of years on coatings and measurements are very important businesses. The monies that we're reporting in the company are going to the growth side, underpinned by what we have on the return side. The lens we were not looking through is what Bill had experience with in the past, as well as what TRC brought us. That was really balancing the working capital with the P&L. We really didn't have a good appreciation for that. I wanted Bill to share with you how we're looking at the company different lens through economic profit.
Economic profit is a newer term that a lot of the investment community uses today, but it's really no different than return on invested capital and generating returns above your cost of capital in the business. Basically, there's a lot of companies will have an evaluation on return on sales and how much are we growing. There is generally some focus on working capital efficiency and things like that. When you put all those pieces together and you're taking a look at how the business is performing from a profit point of view against the invested capital, and then comparing that return to the cost of capital that each component of the business has, then you're able to assess, is this slice of the business generating economic profit each and every year?
There's a very high correlation between economic profit generation and stock price appreciation over time. With the lens of economic profit and dissecting the performance of each individual business, we looked at the different elements of the portfolio and identified those components that were substantially generating very strong economic profit over time and understand what that division did to generate that profit, and other ones that were detracting. The ones that were detracting, in some cases, they were detracting because of a certain temporary market condition or temporary operating condition that we think that we can improve.
Right.
A good example of that is our energy business. We think that there's opportunities to improve that. It was significantly a value generator in the past, not so much at the moment, but there's opportunities to return that, right? The precast concrete business and the rail technologies or, more broadly, the technologies component, those are businesses with significant headroom. There's gonna be a market pull for those technologies, and they can generate significant economic returns and economic profit. You know, we made it very clear that we're gonna establish the portfolio break between those two platforms, and there is going to be a goal of maintaining and stabilizing the performance of our returns business such that they're economic profit neutral to as high as they can get with limited capital.
The balance of that capital is gonna be more so deployed to our growth platforms where we generate strong economic profit and there's headroom for growth, so we can see a path to creating value in the future.
Yeah, absolutely right on. You know so far, we've been really talking about kind of a high level. You know, Lee introduced the company. We talked about myself. Here we are now talking about strategy, and the reality is, so what? It's about making it happen, right? It's about execution. That's the thing that the TRC Advisory really nailed with us. As I explained to you earlier, you know, my background being manufacturing operations, I need something to look at, something to follow, and something to hold people accountable. To me, it's not about three years. It's about what we're gonna do today and tomorrow to make it happen for the future. What you see here is our playbook.
This was a tool that our friends at TRC brought to us, and it's well-balanced. As you see on the top, there's four growth initiatives and specifically what we're gonna do in each one of those growth initiatives. On the bottom side is the return side. Again, we need a balance here, right? The returns are very important to capitalize and fund what we wanna get done on the growth side. If you look at one of those return businesses, number five is exiting the piling group. I guess what we're sharing with you today is this is already in motion. The pilings business, we exited that on September 24, and other actions in the playbook are in motion as well.
The last item in the playbook is about aligning and moving SG&A and readdressing the executive team. There's two pieces of that I wanna share with you today. The first part is a lot of the money that we spend, we spend significant money on SG&A, and a lot of that is kinda behind the scenes. If you look at our restaurants, maybe the back of the office, the restaurant, if you will, back of the office is where the cooking happens and stuff like that, versus you know, greeting the people and really figuring out what you wanna do and taking the orders. Well, we do a lot of back office stuff, and we do a lot of back of the restaurant type stuff.
It was, how do we take that money, energy, and time and put it in the front of the office, front of the restaurant? That's not necessarily who we've been, but it's absolutely where we're going. A lot of that's happening through the tools and technology. We've talked to you about SAP deployment and all the other things that we're doing with innovation technology to really get the focus energy on the front of the restaurant, the front of the office. The second part of that is I'm excited to introduce you to somebody who's been with the company for quite a while. He's been running a business for us. His name's Bill Treacy. I asked Bill in this role to do something different.
In the past, he was doing some engineering work for me. He was running our energy business, and most recently, he was heading up working with our precast facility. He had a broad understanding of the business, but I knew he had more to offer, and I wanted to do something different and get him looking at the future of the company. Bill and I are doing that all the time, but I wanted somebody else at the executive level looking forward and operating and managing that playbook that we talked about and looking at those growth initiatives. Later today, I'll be introducing you to Bill, and he'll walk you through what we're doing in an office called the Chief Growth Office. Many of you may think of it as a chief commercial officer.
That's really what it is, but I changed this, the commercial part to growth 'cause I wanted a clear signal to Bill as well as the team. His job is to help us align ourselves to growth now and growth in the future, driving shareholder return and value. Exciting stuff. You're gonna hear from all these folks today, but I wanna take a step back before I introduce you to Greg Lippard and the products side will be our next stop. That's to look at the company from maybe 30,000 feet. The exhibit that you see next is looking at the company through a different lens, and it's looking at our product offerings and where we go to market and the diverse offering that we have.
When we talk about transforming ourselves into an infrastructure company providing, you know, engineering solutions and service offerings, look at it through this lens and look at what we have to offer the marketplace today and our shareholders. It's significant. It's about really harnessing that, understanding it, how the pieces come together, really understand what's growth to the company, what's core and non-core. Obviously, piling was non-core business, you know, that's been addressed, and where we take it from here. With that, next up will be Greg Lippard in the product side. Thanks Bill for your time today.
Yeah, enjoyed it John.
Welcome back. As I mentioned earlier in the segment with Bill Thalman, we talked about the high-level strategy, and we're gonna break it down into the vertical businesses and products now. With me is the longest-tenured executive we have in the company, Greg Lippard. Greg, if you introduce yourself.
Thank you John. My name's Greg Lippard. I've been with the company almost 29 years. I started with the company in the international sales office down in Houston. I took on increasing responsibility over the course of time, and today I have responsibility for our growth business, which is global Friction Management, as well as our returns business, which is rail products.
Yeah.
First and foremost though John, I'd like to answer some questions about what my businesses do.
Your business today is rail products, and then you have the technology side as well, right? Can you walk us through the product side?
Sure John.
First and foremost?
Within products, which is our returns business, we have five product lines. We have rail distribution, where we buy, stock, process, and distribute to our freight railroads and passenger transit companies, as well as contractors, both stick rail, which is 80-foot lengths and continuously welded rail. Our continuously welded rail with our partner, SDI, is unique in the marketplace, because it's rolled into 320-foot lengths. When we weld that into 1,600-foot lengths, we have fewer welds.
Mm.
which provide our customers a better ride quality and minimizes the opportunity for rail break. We also provide a service to unload, which is an advantage compared to our competitors. In transit products, we make the refixation fasteners to affix rail to concrete slab track, and we have accessories that go with that as well. We have power rail cover boards and appurtenances that propel, electrify the system. We make track spikes and anchors up at our place in Saint-Jean. We make concrete turnout ties out in Spokane. You know, we are the global leaders in heavy haul freight insulated rail joints that provide central train control signaling and broken rail detection.
You know, we were talking to Lee Foster a few minutes ago, and he talked about his grandfather starting with the company and products businesses. That's definitely a nice continuation of the story that's gone on for over 120 years. Back in 2010, we purchased another company, which really had a nice addition to the rail side, and that was the Portec company that brought us Friction Management. Can you walk us through that? Is that a different value proposition for our customer?
Yeah, 100%. You know Friction Management is all about delivering value that's measurable in terms of fuel savings, asset life, expansion to the wheels and the rail, and I'd love to talk about that. But first, we have a pretty neat little video that we can show about the Friction Management product line.
At L.B. Foster Friction Management, we keep our world moving. We thrive on challenges. We are experts in the science and application of friction management, innovating solutions for our freight and transit customers, investing continuously, improving what we do. Our leading-edge global research laboratory is home to much more than a center of excellence. It's where we constantly push the boundaries, gaining valuable insight into the wheel-rail interface, creating unrivaled solutions, making transport more efficient. We drive operational excellence throughout our business. It's at the heart of everything we do, but it's our focus on the small details that really make a big difference. Increasing fuel efficiency, minimizing track and wheel wear, reducing maintenance costs, improving track availability, increasing safety, reducing environmental impact. We are committed to excellence through traditional engineering solutions and the application of new technologies to conventional challenges.
What we do sets the benchmark for others to follow. Our Friction Management solutions keep our heavy haul and transit customers moving, and we do that by partnering with original equipment manufacturers, railroad operators, and network owners around the world, helping the railways run better for everyone. We are now one truly global family with local understanding and a shared purpose, bringing together our Friction Management experts in a single worldwide business, joining up what we do, sharing ideas and expertise, creating innovative solutions. That's what it is to be part of L.B. Foster, a business that values our people, a business where anything is possible, a business with the scale to make things happen. L.B. Foster, that's how we keep our world moving.
Wow, that was amazing video. Can you boil it down what it really means to our investors today?
Sure. I'll try to keep this in sort of kindergarten language for the investors. What we have here is really four sort of buckets of product and services offerings, right? We have wayside equipment, which are physical tanks into which either a gauge face grease or synthetic grease goes or a top-of-rail friction modifier. That wayside unit allows the greases and the top-of-rail modifiers to get to the rail where it's supposed to be applied. We also have a full complement of consumables. We have top-of-rail friction modifiers. We have gauge face lubricants, as I previously stated. We also have a product called Alleviate that in the fall and into winter, when the leaf canopy falls
Mm-hmm
... and lands on the rails, actually creates traction for the trains so that they don't slip through and slide through stations or tear up the wheel and the rail as they're slipping on leaves. In addition to that, we have our field services group, which is unique in the industry. We provide total Friction Management services in differing aspects to different railroads. We can measure and perform validation of our offerings in the field with tribometer readings and so on and so forth. We bulk fill the equipment that I told you. We have big bulk fill trucks.
Mm-hmm
... that go out and fill the tanks with the consumables, and we use that as a service as well. When we package that all together, we believe we have what we call Total Friction Management, which is a complete service and product offering to our customers. Lastly, we have our onboard solutions. We have solid stick friction modifiers, and two of the most exciting growth opportunities for us, which are gonna manifest themselves down the road, are onboard spray systems, both for freight and passenger transit systems. Obviously, those will be able to apply the top-of-rail consumables more accurately than the wayside equipment. We're working on that, and we're really excited about getting that product, you know, finished and finalized from a technical perspective so that we can really commercialize it.
Oh, that's very helpful. That's clearly a growth platform for us that we can bring some scale. It sounds like not just here in North America, but global. Is that right?
100%, John. You know, we have a big presence in North America, but in Western Europe, on closed loop passenger transit systems, there's gonna be a real play for the onboard spray solutions. You know, to talk about this and sort of wrap it up, you know, the advantages of our returns platform, which are the five businesses within rail products, you know, we have longstanding customer relationships. You know, we have product and service offerings within for new construction, out of phase work, as well as maintenance. What we attempt to do, as you know, is package these products and services together.
Mm-hmm
... to differentiate ourselves from the competition. One of the things that our customer satisfaction surveys say is that our project management responsiveness is second to none in the industry. Those businesses you know, focus on cash generation to be able to fund the growth in the other areas of opportunity within Friction Management and other parts of the technology plays that we have. In Friction Management, which is a growth platform, you know, we enhance safety, reliability. The consumables that we use are environmentally friendly, so we're playing our part in the new world order of governance and safety and so on and so forth.
We provide measurable cost savings in terms of reduced asset wear, rail and wheel, but we also, with these products, we're able to reduce fuel consumption and fuel emissions from the locomotive. You know, our strategy and the growth piece is to drive the mobile solutions, the onboard spray solutions I talked about, expand into new geographies and territories, you know, where it makes sense.
Mm-hmm.
Try to identify and acquire some tuck-in acquisitions that will be complementary to what we're doing. Lastly, you know, we're gonna focus on the technology in this business to continue forward, which is a nice segue into your next chat with our European colleagues, because they have a lot of interesting technology offerings as well.
Yeah.
We're looking at all these technology plays and the data recording and keeping of them as a play for our customer base.
Clearly you have something that you're building off the rail product side, and it sounds like the Friction Management is adding increased value to our customers. You have a nice complement between a returns platform business and a growth platform business.
Absolutely.
Are you enjoying it? Are you having fun?
Love it.
Yeah.
I love it. It's, you know, we've just come through, you know, a two-year pandemic, which has made particularly the international business complicated. We're starting to see passenger ridership recover. It's not where it was pre-pandemic levels but, you know, particularly with these growth businesses and the consumables we talked about, the consumption is based on passenger or train trips, I should say. We're excited about seeing on a global basis a return to hopefully pre-pandemic levels of ridership, which will drive the consumable sales. Very excited, John, and, you know, look forward to finishing out the technology piece of the onboard solutions and then getting a commercialized product out there in the marketplace that we know is gonna have a global.
Yeah
play and is gonna be a success.
Thanks. Thanks for joining us today.
Yeah, my pleasure. Thank you.
As Greg mentioned, let me turn it over to Neil and Pete in the U.K., and they'll walk us through the technologies and the exciting opportunities we have in Greater Europe. Pete?
Thanks John, and hello everyone. My name is Peter Jones, and I am the Vice President of L.B. Foster Technology Services and Solutions. I'm also the Managing Director of L.B. Foster group of companies here in the U.K. and in Germany. Joining me today is Neil Sheffield. Neil is the Commercial Managing Director of the European business, and he leads our organic growth programs for contract services and technology solutions. The technology services and solutions business comprises two core elements. Our contract services business, which provides specialist contract services in telecoms, mechanical and electrical, fire and security, and our technology solutions business comprising visual communications, signaling and control rooms, remote condition monitoring, electrical wiring, and automated handling. Looking first at our contract services business, this activity is provided by our TEW Plus business. Neil, can you provide a little more color on the activities this business is involved in?
Thanks Pete for the introduction. We pride ourselves on being the integrator of specialist technical elements across the transport, utility, and construction sectors. The specialist services range from telecoms, which includes CCTV, customer information systems and radio, Wi-Fi and fixed communication networks, all the way to fire safety systems, where we provide fire detection and suppression expertise, and to specialist mechanical and electrical systems and services which cover building management systems and SCADA.
You and the team set up Two Plus in 2006, and the business was acquired in 2015. Neil explain how the business has changed since it was acquired by L.B. Foster?
The time of our acquisition was ideal, as being backed by a larger parent allowed us to bid for major government infrastructure contracts. We were successful on the Crossrail project, which is consequently seen as rightly recognized as a high-performing service provider. Our team has developed accordingly, while our revenue and profit has grown substantially in that period.
Clearly, the business has been transformed in the last three-four years. What are you focusing on now for the next phase of growth?
The Crossrail projects allowed us to extend our portfolio of services to include fire and specialist mechanical electrical activity. We'll be focusing on expanding this offer, specifically on the Transport for London, Network Rail, and power utility sector, where these services are most in demand. We're also focusing on stretching our geographic reach beyond the southeast of the U.K., taking our specialist services to the areas of the country which are supported most by government investment. This year, we obtained a telecoms principal contractor license with Network Rail, which will enable us to bid for multi-year national and regional framework contracts, which is a significant enabler for geographic growth. And if we can, we would like to add some bolt-on acquisitions to help accelerate our plans.
You seem rightly excited by the future of our service business.
Yes, we have a fantastic team of talented and highly capable people, Pete. Having been the main telecom provider on all six new stations on Crossrail in Central London is a huge reference for us, and we're rightly acknowledged to be a leading player in this field. We want to build on this and continue to enhance our reputation as we grow the business further.
As we've seen, Inform is an impressive solution and has really been a success story.
Yes, Pete. It's part of our wider visual communications portfolio, and so now that continues to grow from strength to strength. The way that travel has changed over the last 20 months means that rail and airport operators need as much assistance as possible to manage passenger flows through their stations and airport concourses. We're delivering real-time journey and way-finding information via a range of mobile and fixed displays. These displays provide enhanced support in what are really challenging times for our customers.
One of Inform Media's firsts is the newly developed sign language application.
Yes, that's something we're really proud of Pete. We've worked with organizations who represent people with hearing loss or impairment to develop a sign language solution that's not previously been available. We provide on-demand sign language assistance in both British Sign Language and American Sign Language formats to help hearing impaired passengers access journey information. The response from the British Deaf Association, Network Rail, and on social media has actually been amazing.
Michael O'Connell will be joining the broadcast shortly to talk about opportunities in North America for our technology solutions and specifically condition monitoring. For everyone's benefit, can you give an outline of the condition monitoring solutions we provide?
Yes Pete. Our smart remote condition monitoring technologies, which we call Total Track Monitoring, is an advancement from the conventional rail products that L.B. Foster are known for into the new high-tech digital monitoring solution market. It's really about providing our customers with data to help improve asset performance. This data will drive cost efficiencies, enhance safety, and assist security. Our customers are actually benefiting from early detection of events on their networks and operating sites. One of the systems is the Insight LiDAR obstacle detection system, which provides protection for those locations prone to rockfall. Insight also provides enhanced safety at level crossings or grade crossings as they're known in North America, and our in-line flood detection system provide early warning of localized flood events that could lead to transport disruption.
Neil, anything you would like to add?
Yes, there were lots of really exciting things happening at the moment, Pete. I feel really positive about the year ahead and as market optimism improves, I think we'll see technology playing an ever-increasing role in our own and our customers' strategic plans.
Switching gears now to our technology solutions, and before Neil provides more detail on the activities in this area, we would like to show you a short video on our Inform Media range. Inform is one of our visual communication solutions. It is a combined hardware and software solution wholly designed and developed by L.B. Foster. Here is the video.
In today's world of information overload, how do we keep our world moving for passengers, travelers, and commuters? The answer is Inform Media, a new kind of digital travel and disruption information experience that places important details at customers' fingertips, positively influencing and enhancing the journey experience. Designed and developed by L.B. Foster, Inform Media delivers real-time information where and whenever it's needed, important travel disruption details through visualized route maps, journey-specific content based on passenger behavior, personalized messages making customers feel confident and cared for, simple dynamic way-finding and accessibility information. It's the most comprehensive multi-modal travel and disruption display solution available. Inform Media aggregates data feeds from a variety of sources to influence decision-making on the move. Integrated hardware and software solutions combine the latest in high-definition touchscreen technology with tailored travel and disruption information for all types of journeys.
Based on detailed analysis of actual passenger behavior, Inform Media focuses on the total journey line, identifying critical touch points at which customers access information. As customers arrive, automatic number plate recognition identifies their vehicles. Inform Media greets them with an on-screen welcome. As they head for onward connections, Inform Media screens and totems help them plan their journey, providing useful travel updates. Using integrated near-field grab capability, customers can choose to download important details to their smartphone or mobile device. Intelligent way-finding also helps them find what they're looking for, while travel disruption details keep customers updated throughout their journey. Useful details about onward travel can also be accessed via Inform Media. Important messages such as public information and health notifications help smooth their entire journey. Inform Media delivers a range of easy-to-understand analytics
Giving operators awareness and strategies to cope with travel disruption, capacity, extreme weather events, and queue management. Applications include interactive customer information system, wayfinding, live route status maps, rainbow boards, operational messaging, and social media, plus journey planning, local maps, and onward travel. In fact, it's the single most powerful solution for communicating all travel disruption issues for any transit operator. Inform Media by L.B. Foster. The power to deliver critical journey information to customers wherever and whenever it's needed. L.B. Foster, keeping your world moving.
Michael O'Connell will be joining the broadcast shortly to talk about opportunities in North America for our technology solutions and specifically condition monitoring. Before I hand over the discussion to Michael O'Connell, I wanted to add that this is just a sample of the great work that we do here in the U.K. We have many other opportunities in the rail signaling, rail and power generation control rooms, and electrical wiring solution area. By way of an example, we are currently the primary supplier of wiring harnesses for the new fleet of Dreadnought-class nuclear submarines being provided via Rolls-Royce to the U.K. Ministry of Defence. That's everything from us now, so I'll hand over to Michael O'Connell, our American lead for technology solutions, who will share more insight on those opportunities he sees in front of him.
Thanks Peter. Hi, my name is Michael O'Connell. I've been at L.B. Foster for 12 years. I'm the business development, sales, and product manager for technologies. In condition monitoring, what we have branded Total Track Monitoring, we are focusing on big problems that infrastructure faces globally. Initially, we are aligning with the class one railroads on problems that affect network velocity, which ultimately impacts their pursuit for better operating margins. Rockfalls pose a great danger to railroads. The current slide fence solution utilizes an electrified wire fence. When broken, it signals to the railroads that the fence has been breached. The solution is rife with problems and boasts a 97% false positive rate. The direct costs to the railroads are significant. There are thousands of miles of traditional slide fences across North American freight railroads that need to be replaced by modern, reliable technology.
L.B. Foster's rockfall monitoring reduces false positives to near zero, helping our customers save money and increase speed throughout their rocky and dangerous terrain. Rockfall monitoring is one of our most exciting technology systems for railroads. We also have technologies like flood monitoring that have broader appeal. It is a wireless system that monitors water levels in normally dry areas that are prone to flooding. The system's in-line flood pole precisely measures water levels down to the inch, providing the ability to preset alarms at various steps for early detection. We have multiple instances where our flood monitoring system has found flooding in remote areas, and railroads have stopped and slowed trains as a result, to the alarms. It's always hard to paint a picture with words. Let me show you a video of these two solutions.
Total Track Monitoring by L.B. Foster creates a smart interface between conventional rail products and intelligent digital performance monitoring technologies. Our unique insight and in-line portfolio of monitoring solutions includes detection of flood, rockfall, and earthworks events. Plus, our monitoring technologies help prevent damage to vehicles and infrastructure using rail crack cameras, vehicle wheel impact load detection, and weigh-in-motion sensors. Total Track Monitoring is our unique portfolio of high-performance monitoring solutions that deliver extended asset life and improved asset performance. L.B. Foster's Insight Rockfall Monitoring System uses state-of-the-art pulsed laser technology to identify rockfall that may be hazardous to the railroad. This safety-critical system comprises multiple light detection and ranging units known as LIDAR. Each LIDAR unit detects individual rock sizes and maps their exact location on a 100-foot monitoring plane on a 190-degree arc.
The detection zone is a critical area within the monitoring plane that sets off an alarm if predetermined hazard criteria are met, including size or position of the object. The system's transient object elimination capability distinguishes between moving objects such as animals and people, and actual obstacles such as rocks, boulders, and landslides. The system automatically closes mechanical shutters before a passing train enters the monitoring zone and reopens once the train has passed, protecting the scanner from debris. Where optional CCTV cameras are included, live video can be reviewed on request, so you can quickly determine the extent of the event and identify appropriate actions.
L.B. Foster's wire-free flood pole detectors contain sophisticated electronics using state-of-the-art sensor technology to determine if water is present. When floodwater rises to the zero alert level at the base of the post, it triggers the first warning and puts the system into depth measurement mode. If the floodwater continues to rise and reaches the alarm depth specified by the user, the system automatically sends notification texts and emails to management and maintenance teams via L.B. Foster's Total Flood Monitoring Information Gateway. Nominated staff log on to L.B. Foster's unique online portal to view real-time flood depth information. The portal's alarm summary page shows the system status and actual flood depth from a network of installed flood poles. A recommended optional solar-powered CCTV system can also capture event footage. Now comes the really smart bit, anatomy. Total Track Monitoring by L.B. Foster provides sophisticated data management software.
Event data resulting from rockfall or flood is captured, stored, and examined, providing detailed intelligence on event regularity and severity. This allows railroad operators to build a detailed event profile and identify actions to offset or prevent future events, saving time, preventing disruption, reducing costs, and protecting reputation. Total Track Monitoring by L.B. Foster.
Those are just two examples of where we are solving large problems with technology. We also have solutions for grade crossing safety, bridge strike monitoring, measuring the wheel impacts onto the rail, and more. In the coming years, we are focused in on customer adoption of our technology portfolio, which enables the digital railway, supporting a needed transformation to the industry. Once the technology is proven out, we can sell our solutions into adjacent markets across the globe. The way the systems are being built with a unifying web platform allows easier integration of acquisitions that can bolster the portfolio. Thanks for your attention. I hope you find this business as exciting as I do. Now I'll hand it over to Bill Thalman, who's sitting down with our leader of Fabricated Steel Products and Measurement Solutions, Brian Friedman.
All right, with the next section, we're gonna be introducing Brian Friedman, who's the business leader for our Fabricated Steel and Measurement Solutions business. Brian recently joined the organization, relatively recently. Brian, why don't you tell us a little bit about yourself and your background?
Thanks Bill. I joined L.B. Foster in 2019, and originally joined the Coatings group. That's morphed into now I'm responsible for the Fabricated Steel Products and Measurement group. Prior to L.B. Foster, I spent just under 20 years at Hunter Fan Company and at ABB, various roles in engineering, sales and marketing, and operations.
Great. We both, again, joined relatively recently.
Yeah.
I joined in March of this year, so I guess I'm a little bit newer member of the team. As we've been rolling out the strategy, your business obviously is playing a very important role in our returns platform. Why don't you tell us a little bit more about your business?
Fabricated Steel Products and Measurement is really the non-rail legacy piece of L.B. Foster. There are five businesses inside of it. They're focused on a couple of different end markets. There are three focused on energy. We have two coating facilities that apply fusion bonded epoxy to line pipe, which becomes a pipeline typically. It can have a lot of different things in it, liquids, gases, water.
Mm-hmm.
We have a business in Houston, it's called Chemtec, that builds metering and measurement skids. These are highly engineered, big projects, all weather, high pressure, you know, really can do a lot. The capabilities in that group, working with the customers to customize what they need is really great. We have a very small niche little business that's a water well products business that's in Houston. They're making components for water wells. This is not your residential water well, this is heavy agriculture, this is municipal water wells. With the drought that's going on in parts of the country, that business has been seeing a lot of demand recently. Finally over in Bedford Pennsylvania, just a couple hours from here, we have a business that makes bridge products. They make bridge decking.
It's a highly engineered, prefabricated product. We'll talk about it in a minute, what that kinda looks like. They're focused obviously on the, you know, general infrastructure, roads and bridges part of our America.
Yes, that piece is certainly gonna have some significant tailwind. Being the part of the returns portion of our portfolio isn't necessarily a bad thing, right?
No, absolutely not. I mean, if you look at a sports car, one of the most important pieces of it, if not the most important piece, is the engine. We really view ourselves as the engine to help provide resources, a base business, and these other things that can help the other parts of L.B. Foster that are focused on technology and high-growth markets be successful.
Yeah. Great. Your business obviously has had a very important part of our past and certainly can be an important part of the future as well. Tell us a bit more about the bridge business that has some tailwinds associated with it, right?
Yep. Yep. You have these iconic bridges around America, like the Ambassador Bridge, which we're seeing some video of right here. These bridges, they're a key part of the fabric of a community, and they're part of the arteries and the veins of how people get to their jobs, to their homes.
Yeah
to their places of worship. These bridges need to be maintained and repaired. Right? Over time, things need to be done to them. We build the bridge decking that can go on the top of the bridge, and we build it in a way working with the engineers very closely who are designing the bridge, such that it can be brought and dropped in very quickly. When you look at how do you repair a bridge, you wanna minimize the disruption to the local community. Our product, in a lot of cases, allows you to replace the bridge decking without ever shutting down the bridge. It's very powerful in terms of how these projects are approached.
That's a great value proposition for the contractors that we-
Yeah
... work with. Obviously, we've all been frustrated with some slowdowns that occur with road construction and bridge construction that certainly the infrastructure bill that was recently passed is going to provide some injection of funding for new projects in the future. Tell us a bit about how you think that's gonna benefit our bridge business.
There's over $100 billion that was passed in the recent infrastructure bill for roads and bridges. We're in the bridge space, and we will expect that the number of repairs of bridges that takes place over the next two-10 years will increase as a result. We do expect to see some lift in our demand that will come through that. What that means specifically and what that looks like specifically is still uncertain.
Certainly a tailwind. One of the headwinds recently we've been challenged with is the commodity pricing cycle and supply chain challenges associated with steel, which is a major raw material input for your business. Why don't you tell us a bit about what you're doing to mitigate that?
Yeah. Certainly, we've had to kind of reimagine for our bridge product business how we approach this. The volatility in steel has been historic, and making sure that we're understanding what risk we're carrying and getting paid for that risk has been a key part of what we've done. We've got the right things in place contractually and the processes around order taking to be able to handle that moving forward. We look at our Piling business, we were not able to find that viable path, and so that was one of the key pieces of the decision to exit the Piling business recently.
We're gonna cover that divestiture here in a little bit, but certainly a major part of our strategy in terms of a step forward for funding for future growth in our business was that Piling divestiture. Getting back to the energy market a little bit, the downturn in the business over the last couple of years has been significant. I know you guys have done a lot to try to organize and set up the business to be operating at a neutral level from a cash point of view here more recently. Why don't you tell us a bit about the impact on the business and what you guys have been doing?
Yeah. The last two years have seen, you know, a huge decline in the demand in the end market for our energy products. We've had to aggressively manage, take cost and capacity out to be able to adapt to that. We had benefited historically from the 10- 15-year fracking boom in America as you had places like Eagle Ford Shale and the Permian Basin really needed a lot of takeaway capacity. That had driven a lot of demand for our products. These businesses historically have contributed to the profitability of L.B. Foster in a very substantial way. Losing that and having to manage that down to get to a cash neutral standpoint really is a step change.
At this point, we have reached that level where we can operate at the current situation, without, you know, using up resources that are needed in other parts of the business. We're able to continue on a go-forward basis at this level sustainably. We do see that there is some modest improvement that we could see over the next couple of years. We're very well-positioned that these businesses will become very profitable again very quickly. There's upside there if we do see, some, you know, additional investment in America in things like pipelines and exploration and production. However, we also have the opportunity to try to diversify the end markets of these businesses.
Yeah.
We weren't able to do that before. One of the things we're looking at is the opportunities that exist in the green economy.
Oh, okay. Green economy, that should pique everybody's interest, in terms of supporting the company's ESG initiatives. Why don't you share a bit more about what you're trying to do there with that energy-related business?
Yeah. Our Chemtec, our measuring business, is the most applicable here. Their capability and competencies are really around measuring with precision, what comes through a pipeline, custody transfer, that sort of thing. When we look at what's gonna be needed to capture carbon, move it, sequester it, replace natural gas with hydrogen, all of these things will have a lot of touch points that require the products and services that Chemtec can provide for these customers. We're already working with our existing customers who are trying to make this pivot as well. We're picking up new customers who are coming into this space.. That doesn't even count in the short term, we've already started to win orders for renewable biodiesel infrastructure.
Okay.
That's something that people are investing in as well. We really see that we have a lot of room to maneuver here, but really a lot of opportunity for us as we go forward into this. If you build a small hydrogen fuel station, we touch where the natural gas comes in, we touch where the carbon is captured and goes out, we touch where the hydrogen goes to the vehicles.
Mm-hmm.
A lot of touch points as we go into this infrastructure build-out that really will be needed in America, with opportunity for Chemtec.
Well, that's great. It sounds like we have a fantastic opportunity there on the measurement side of the business in the ESG space. What about the coatings side of the business? Do we have any opportunities there?
Yeah. Certainly in the short term, we have picked up some water business as infrastructure is being built around the water market. In the short term, you know, it's a very tough environment for pipelines right now, so we probably expect the current environment to continue at least for a while. In the green economy, we certainly see that there's a possibility that quite a bit of carbon capture and sequestration infrastructure will be built that potentially contains a lot of miles of pipeline. If that comes to pass, then that would be something we'd be looking to participate in.
Great. That sounds like it's a fantastic opportunity to help bolster some demand for your business-
Mm-hmm.
-here in the short term, while the other elements of the demand stream could improve-
Mm-hmm.
over time.
Yes.
I guess to summarize, you've got an exciting business that's had its challenges, but in the meantime, you're operating at a cash neutral position and looking for opportunities to drive profitable growth where you can. On the bridge side of the business, you've got infrastructure investment that's gonna be coming in the future years to help support demand there. In the meantime, you'll also continue to run a very capital light business that will help to throw off cash to fund the greater enterprise growth strategy. Important part of the portfolio, and great to have you here today to share some of your thoughts with us.
Thanks Bill.
Thanks Brian. The next section, we're gonna turn it over to Bob Ness, who is gonna give us an update on his precast concrete business.
Hi, I'm Bill Treacy, Chief Growth Officer, and I'll be talking to you a little later here more specifically about my role and responsibility. I'd like to introduce Bob Ness. Bob leads our precast business. Bob, you've been at it now for about 11 months. Why don't you tell us a little bit about yourself and a little bit more about the business?
Well, thanks Bill. Yeah, I've been with L.B. Foster for about 15 years now. I've had multiple different roles, a lot of them on the financial side and on the operational side, and recently welcomed the opportunity to lead such a fantastic CXT division. CXT is the leader in the industry when it comes to prefabricated concrete buildings. These buildings, they look great. They're built to last. They come in multiple different configurations, so they're really customizable to what the customer would really like. Different types of siding on them, whether it be wood or rock. So we really have quite an offering for our customer, and that's what really makes us a leader in the industry today.
The really nice feature about these buildings Bill is that, they come with plumbing and electrical options as well, full packages. These are installed in our manufacturing setting. When that building goes to the job site, it's fully compliant with state and local building codes. It meets all relevant ADA requirements, and it can be installed in one day, which is a really nice feature that the customers like.
Bob, I love the diversity in these pictures. Can you kinda give us a little more detail about what they represent?
Yeah, Bill, you know, our buildings are tough, as I said earlier. We like to say that they're as tough as Mother Nature. In fact, as an example, in 2008, when Hurricane Ike surged through Texas, when that storm passed, we received a comment from a customer. That customer stated, "The impacts were both impressive to see Mother Nature's power or depressing to see the place you work leveled. But standing firm by the entrance road was the CXT concrete building. The force of the water and waves moved the building approximately six-nine feet, but other than the plumbing being broken, the restrooms were fine. Not a vent or window damaged." I mean, that's really impressive.
Now, whether that be fires, landslide, snow, trees falling on the buildings, we've proven that our buildings are tough, and they do stand the test of time.
Thanks Bob. Obviously, buildings aren't our only product lines. Maybe you can speak to us about some of the other areas that we're also involved with.
Well Bill I tell you, the most exciting part about where we're going, what we're doing now is growing the precast product offering. We believe that is our next big growth platform. We already have a pretty impressive array of products. We have the bridge beams or box culvert, wall panels, all those things that are sold into the bridge and highway sector, which of course will benefit from the passage of this infrastructure bill. We also have manholes, catch basins, lamp pole bases, all that type of infrastructure that goes into commercial and residential land development. We have good product offerings there. What's really exciting is the opportunities that we have in the precast sector based off the geographic location of our facilities. We're gonna talk about that next.
That's great Bob. Maybe you can speak a little more broadly about our growth opportunities, particularly in the precast area.
Yeah. Well Bill you know, I tell you, even though we've got strong product knowledge and we're looking to grow, we're looking to do all this type of stuff, I tell you, it'd be of no value if we didn't have some world-class operations to support it. We have facilities in Boise, Idaho, Hillsboro, Texas, and Waverly, West Virginia, with just a fantastic manufacturing team. They're world-class manufacturing facilities that produce a superior product. More importantly, they utilize environmentally friendly manufacturing practices, as well. I tell you, over the last 28 years, they've perfected the manufacturing process of our concrete buildings, and that's a process that'd be very difficult for anybody else to replicate. As I said earlier, what's really exciting is the location of these facilities. They're in high-growth markets. Take Boise, Idaho, for example.
Two years ago, we made a decision to shut down our Spokane office and relocate it to Boise, Idaho. We did that for a couple different reasons. One of them was we wanted to get closer to the customer from a freight line, a freight transportation point of view on our concrete buildings. The other thing is that we wanted to be in a region where we could expand and grow our precast product offerings. I tell you, Bill, you know over the last couple of years, Boise, Idaho, the Treasure Valley, has been a hot market. The new home construction
New homes stay on the market for about a month. Bill, they can't build homes fast enough. That's why I believe that our product offering, especially into the commercial and the residential land development, is a perfect fit for that particular location. We believe that we're well-positioned to be successful there for several years to come. The same thing could be said about Hillsboro, Texas. It's located between Dallas and Houston. As you know, that corridor has experienced explosive growth as well. Our wall panel sales there are strong. Our septic tank sales are experiencing year-over-year growth, and we're looking for other opportunities within that particular market. What product lines can we bring in, you know, again, to capitalize on that growth in that particular region.
The other location Waverly West Virginia, was an acquisition about 10 years ago by L.B. Foster and CXT. What they did was they brought to the product family the bridge beam business and box culverts. Again, two products that we believe are going to be in high demand in the infrastructure build.
Bob, sounds like a lot of exciting things are going on in the business.
Yeah, you know, there is, Bill. We've got a lot of opportunity to grow, but growth is not our primary objective, as crazy as that might sound. We believe that if we do everything else right, growth is naturally gonna happen. We have a lot of opportunities. I've talked to them over the last little bit here. But what my message to the team is, we have to deliver a great experience to our customers each and every time. What does that mean? Well, that means we need to be responsive to them. It means that we have to do what we say we're going to do. We have to deliver a high quality product to our customers each and every time. You know, if we do these things, then our customers are going to be successful.
If our customers are successful, then we're gonna be successful. I believe we've got the talent in the organization to do this, and we're really excited for the opportunity that we're gonna have in the regions that we live and work is to, you know, have a role in building the infrastructure at these particular locations in the Treasure Valley and down in Texas and the Waverly, West Virginia area.
Bob, thanks for sharing some of the exciting opportunities related to Precast. Next, I'll turn it over to John Kasel, who's gonna have a chance to talk with me a little bit more about my role in terms of supporting growth as well.
Thank you Bill.
Earlier today, I mentioned that we were realigning the management team to make strategy happen, and a new role is the addition of a Chief Growth Officer, and that's Bill Treacy. I'd like to introduce Bill and have him walk through what that means to him as well as what he can do to drive growth in the company. Bill?
John, thanks. As you know, the chief growth officer is a newly created position. It's designed to keep the company looking ahead two-three years while providing both the strategic, commercial, and marketing presence for the entire portfolio. At the same time, it's also intended to bring intense focus to the execution of our key growth playbook initiatives as well as select return playbook initiatives. I'm well prepared for this role. You know, my background includes deep knowledge across the L.B. Foster portfolio of businesses. You know, I've led our Precast, as well as our coating and measurement businesses in the past. Prior to that, I had responsibilities on the rail side, both from a P&L and engineering perspective with several of those businesses.
In addition to that, in a prior life, I led a corporate development function at a Fortune 250 company. We circle back to the playbook. Let's talk briefly about my role with each element of the growth playbook. For playbook item number one, Precast, we talked recently with Bob Ness. You know, I'm working closely with him on the Precast growth plans, both organically through entry into adjacent market segments as well as acquisitions that provide either geographic coverage, transferable product lines, or expand our regional site capabilities. In terms of playbook item number two, I'm working with the Friction Management team. They're focusing on certain growth objectives, and I'm heavily involved in the mobile solutions area, along with driving complementary tuck-in acquisitions where those make sense.
For playbook item number three, our European business, most of my role there is around exploring smaller acquisitions that'll enhance their technology and capabilities. Last, around our playbook item number four, the technology businesses, in that particular area, I'm very hands-on at both the strategy and execution level, aligning both our technical and commercial resources with the applications that have attractive value propositions, and most importantly to us, are scalable, we believe. If we turn to the playbook area around returns, in the case of playbook item number five, in that particular opportunity, I negotiated and led the sale of the Piling Products business. This important divestiture enabled us to exit a business that was increasingly commoditized at a point in the cycle where we're able to take advantage of very favorable steel prices that helped boost the value of the inventory.
More broadly, the general message around the business portfolio is we're gonna continue to reshape it. It should also be mentioned that we're in the process of building a strategic pricing capability. The intent here is to ensure that we capture appropriate value from our new products and also to maximize gross profit from our existing products. Finally, to pull all this together, we've created a project management office, or internally a PMO, as we call it, with an experienced leader reporting to me. The purpose of the PMO is to ensure that we have robust action plans for each growth and returns initiative. John, it's an exciting time to be a part of the company. Each day, I come to work energized and focused on delivering against our growth initiatives.
That's fantastic Bill. You know, it's really been exciting to watch you grow and develop and really nurture the company and the roles you had in the past and the excitement and enthusiasm in really defining the markets as we move forward and drive our strategy. I'm really looking forward to see that come together.
Thanks John.
With that, I will turn it over to Bill Thalman for a financial review.
Okay. In this section, I'm going to be spending a little bit of time on our key financial results over the last several years, and provide a little bit of perspective of, you know, what the company's been doing in terms of performance, as well as some of the opportunities that we have in the future related to some of the recent government legislation. As John mentioned earlier, we do have some longer-term aspirations financially, and we think our strategies will get us there for sure. We also wanna set the stage on what we've been through over the last couple years and make sure there's a clear understanding of where we are at the moment.
This first slide that we're sharing provides a perspective of our sales and our gross profit in 2019 trailing twelve months ended September, which is meant to be an indication of pre-pandemic levels. It's comparing those results to the trailing twelve months for September of 2021. There's a breakdown of the sales and gross profits by two segments of the business. The first segment is the light blue section, which is our coatings and measurement business. As you know, you've heard a lot from Brian Friedman earlier on regarding the challenges that we've been having in that business. The balance of the business is reflected in our dark blue section. That's everything excluding coatings and measurement.
As you can see, we're very pleased that the balance of the business, excluding coatings and measurement, is nearing pre-pandemic levels. Sales and gross profit are only off about 8% when you compare it into the trailing twelve-month period in 2019. We think this highlights the resiliency of these businesses, as well as the tailwinds that we're starting to see, translating into demand for some of those businesses. Throughout 2021, we've been highlighting the fact that the coatings and measurement business has been seeing a significant impact on demand, largely related to the challenges in the midstream energy market, and very specifically, the impact on infrastructure pipeline investment here in the U.S. The coatings and measurement downturn that you can see on this chart is significant.
The top line sales are down 62% from pre-pandemic levels, and more importantly, the gross profit is down $27 million or approximately 84%. While we've taken some actions to be able to mitigate the SG&A impact on that downturn in gross profit, the volume decline has been a significant impact on our infrastructure business segment specifically, and it's expected to be a persisting headwind for the foreseeable future. We will see a modest uptick in the business in coatings and measurement will translate into a meaningful profit improvement, but we don't believe that we're gonna be getting back to what we would have seen in the pre-pandemic levels. But we do think there's opportunities to improve, and we're exploring other options, other end markets for those solutions.
Despite those challenges that we've had in the last several years, particularly related to coatings and measurement, we've been able to be successful in meaningfully reducing our debt levels over that timeframe period. You can see our debt level reduction over the last 4 years has been meaningful. We've been successful in reducing debt every single year, including during the pandemic period, where we generated positive free cash flow, and we were able to pay down our debt. At the same time, you also see that despite the contraction in EBITDA, we've had improving leverage metrics, and we're down to 1.2 times for the most recent trailing 12-month period.
We have a very strong business model that generates a significant amount of cash, and we're successfully been able to keep our leverage metrics and our financials intact by being very disciplined in our capital deployment. We'll continue to maintain that disciplined financial allocation methodology in place. Those principles are gonna be critical to maintain our strong financial position that we have. We certainly wanna fund our growth and do so in a disciplined way. Our growth will be funded by strong free cash flow generation, very reasonable debt levels, and the portfolio reshaping that we referred to earlier as part of our overall strategy. On the next slide, I'll cover some of the more recent financial investment highlights that we've been able to achieve over the last 12 months.
More recently, in August of 2021, we were able to renew our revolving credit facility with PNC as our agent lead. We extended the maturity of that facility to 2026. We increased our borrowings by $115 million up to $130 million. We were successful in improving pricing in the facility, and we were able to negotiate a more accommodating covenant package. That renegotiation was critical in terms of our ability to gain access to the capital that we'll need to be able to execute our strategy. We're very pleased with the outcome of those negotiations and very happy to have PNC and our partner banks supporting us in our strategy.
John mentioned earlier, we were successful in divesting our piling business back in September. We sold the business for approximately $24 million, and we were able to generate a $3 million pre-tax gain on that divestiture. As we had disclosed at that time, we sold substantially all of the piling inventory as well as operating facilities. We were actually able to retain the accounts receivable and payable associated with the business, which provides also a little bit of cash upside associated with that divestiture. As we mentioned before, working capital intensity in that business was significant. It was somewhat commoditized over the position of our business over the last several years, as well as some of those partnerships.
The piling business, when you look at it, among the balance of the L.B. Foster business, it was dilutive to our gross profit by approximately 130 basis points, as well as our primary working capital as a percentage of sales by about 200 basis points. When you think about the impact of that divestiture, it's gonna have an improvement in our overall returns going forward, and we'll be able to use that capital to redeploy it to other, more attractive growth options within the company. In the short term, we paid down debt, created additional capacity in our revolving credit facility, and we're certainly looking for the opportunities for investment that will help us grow in the future.
The last area I'd like to cover in terms of investment is the progress that we're making in our SAP implementations. We're successful in getting three locations already live in 2021, and we have a fourth that will be going live here by the end of this year. We also have three more locations that'll be going live in 2022. Once we complete that last set of implementations in 2022, we will be able to retire our JD Edwards ERP system, which will bring us down to two that we'll have going forward, SAP and VISUAL. We're in the process of evaluating our platform going forward with respect to the ERP systems. The VISUAL platform would be the next one in play.
We're in the process of determining the best approach to take with respect to that platform, and there'll be more to come on that in the coming quarters. In addition, one of the projects that I'm very excited about is the Planful implementation that we have teed up here for the end of this fiscal year and then moving into 2022. Planful is a financial reporting, consolidation, planning, and forecasting platform. It's something that the company has frankly needed for a number of years. I was very excited to see that the need was there because it's something that I've been familiar with and involved in projects like this in the past and I 've seen firsthand the significant efficiencies that can be gained when you implement a reporting and platform like this.
One of the things I first told John when I joined the organization is that I'm absolutely amazed about what the finance team has been able to do in terms of producing the financial information that we use to run the business, despite being a bit hampered in terms of the systems. I'm really excited about this platform. I think it'll be a big step forward for the entire organization, and there'll be some gains being achieved here very soon with that project. In summary, we've been taking some significant enabling steps here over the last several months, and we're laying that foundational set of blocks that will be helpful in enabling our strategy execution going forward. On slide number 43, we spend a little bit of time talking about our capital-light business model.
You've heard us say this in the past, we have an overall business model that does not require a significant amount of CapEx, nor does it require a substantial investment in our working capital. Both of those things are very helpful in terms of driving economic profit. Capital spending for this business over the last 3 years has averaged about $6 million per year, but there was some significant one-time investments in those spending levels, so the average normalized run rate over that same timeframe would be $4 million-$5 million. With our SAP implementations as well as some of the growth programs that we have coming up, as well as cost savings projects, we would say that our run rate capital spending will range between $4 million and $6 million or approximately 1% of sales.
For an industrial company, 1% of sales capital spending is a very attractive capital-light business need. The timing of projects, of course, might result in a year or two where that number's slightly above or slightly below that $4 million-$6 million range, but we're very comfortable with a 1% of sales CapEx rate. The trade working capital metrics, you can see that we've been working at levels that are running between the mid- to high teens. The piling divestiture made a significant improvement, as I mentioned earlier, about 200 basis points. Those metrics are very attractive for a business of our size working in the industrial market. We're very confident that we'll be able to make improvements in that over time.
The most recent years have had some challenges a bit in terms of working capital net investment needed, largely related to some of the project business that we have in Europe, which should be coming to an end next year. So, you know, we see more things to come favorably in that direction, as we move forward and start to de-emphasize the investment needed in our working capital supporting the business growth going forward. Then the last slide I'd like to cover is gonna spend a little bit of time talking about the most recent U.S. government legislation. As everyone can imagine, this represents a fairly significant tailwind for our business. There's been several rounds of funding by Congress over the last several years.
It started as early as July of 2020, where the Great American Outdoors Act, I think, that was mentioned by Bob Ness earlier on. The Great American Outdoors Act is a set of legislation that was passed to provide $1.9 billion per year of funding investment in our national parks. In our Precast Concrete business, we have the buildings, we have box culverts, and other underground structures, which will stand to benefit from that level of investment over that next five years. We also have two safety net programs that were passed in 2020 and 2021.
It created funding available to our transit customers that was able to help support operating shortfalls, operating cash shortfalls, as well as investment shortfalls due to the drop in fares that we're seeing as a result of lower riderships during the pandemic. The ridership levels have started to improve and are certainly not back to where they were pre-pandemic levels, but they are improving. These funding bills provided an important bridge to help support some of our key customers. Lastly, and probably most importantly, everybody's aware that in mid-November, there was the $1 trillion infrastructure bill that was passed by Congress. It provides about $0.5 trillion worth in new spending on top of spending levels that were already authorized for the next 5 years.
Specifically, there's $109 billion that'll be allocated to new spending for highways and bridges, and $105 million in new spending for freight, passenger, and transit rail customers. Our served end markets will benefit significantly from this spending improvement. One question obviously is going to be what the allocation of that spending is going to be from those customers in terms of where they wanna spend their money.
Yeah.
For that additional funding. In the past, we've had similar programs. During the Great Recession, there was a program that was similar to what's been just enacted. This one is certainly much bigger. We certainly expect to see an improvement there.
Absolutely.
As a result. One example there is for the transit authorities. We're expecting to see over the next five years a 2x level increase in the amount of funding that is available to those transit authorities versus what they would've had available over the last five years. That will do nothing but provide additional funding available to make L.B. Foster purchases and support programs for investment, as well as new technologies that we're offering to the market over the next five years. Okay, you can see from the tailwinds that we've described today, as well as the refresh strategy that we've got established here at L.B. Foster, we've brought forward a case of a very compelling investment opportunity with our company. It's an exciting time to be with L.B. Foster.
I'm really glad to be with the team here, and certainly very happy to have spent the time with you today, reviewing our opportunities. With that, I'm gonna turn it over to John for his closing remarks. John?
Thank you Bill. As you have seen today, we're building momentum here at L.B. Foster. We have shared with you a lot of business updates and unveiled a new company strategy that we are very excited and energized by. All this wouldn't be possible without the leadership of everyone who's presented here today and everybody who was not on camera. I'd like to special shout out to Jake, Caroline, and Stephanie. With the actionable plan we have surrounding our growth and returns businesses, we are on our way to transforming the company and restoring shareholder value. We are committed to keeping the momentum going. A way to receive updates on how we are doing is to subscribe to our newsletter appropriately named Momentum. We share quarterly highlights of business news about our people, and news on environmental responsibility we have as a company. Sign up, please.
Stay in touch. Go to our website and look under News. You'll find past issues as well. Follow us on LinkedIn, Twitter, and ongoing, for our ongoing updates. That concludes our formal presentation, and now I'll turn it over to the moderator, who will be happy to take your questions.
All right. Thank you very much, John. We will now begin the Q&A session. As a reminder to everyone participating, if you would like to ask a question, please type it into the question box on your screen. We will look to take as many questions as time will permit. Once again, to ask a question, please type it into the question box on your screen there. We'll pause for just a moment while the team assembles for the Q&A session. As a note, Peter Jones, Vice President and Group Managing Director of Europe, and Neil Sheffield, Commercial Managing Director, European Technologies, are available for Q&A via the phone. We will now assemble the questions and begin the Q&A session momentarily. All right.
John, before we begin with the questions, let me turn it over to you first to make some few additional introductions.
That's great. Thanks Robert. Thanks for everybody coming back and hanging with us over the last 90 minutes or so. As you can see, we got a great story and really what I wanna do is unveil the company through the lens of my management team. There's two individuals that are very key to our success that were not on the screen earlier today, and I wanna draw attention to them as well. First and foremost, Mr. Brian Kelly here. Brian is Senior Vice President of the company. He is over the HR, Human Resource group as well as the administration group. Welcome Brian. Over to my left over here is Patrick Guinee, as well as Senior Vice President of the company, and he is our General Counsel.
They are available as well through the Q&A session today for that. With that, Robert, I'll turn it back to you, and we're anxious to take some questions from our investors.
All right. Sounds good. The first question we have here is, what are some of the key elements of the L.B. Foster culture that will help enable the execution of this new strategy?
Wow. Great question. Thanks for whoever put that in. That's, you know, that's really our secret sauce. That's really what differentiate ourselves. That's what gave us the staying power of being around for 120 years. I've talked a lot about that today, but I think I'll turn that over to Brian Kelly in his role and how he really understands the fabric of the company and the levers we're pulling related to that. Brian?
Thanks John. As you know, I love to get the opportunity to talk about our culture because we have the culture here I think any company would want. It's a great place to be, and there are absolutely attributes of our culture that I think will play a large role in achieving our strategy. The first one that I would point to is exactly what Lee Foster began this whole thing with, this whole presentation, and that's the focus on the customer and the customer service. We are not a company more than 100 years who just sells a product. We work with the customer. We get to know the customer. We find out the customer's need. We deliver that product. We follow up. We support that customer.
I think going that extra mile, which is just a part of who we are, will make a big difference. Another thing that comes to mind for me is innovation. Innovation is a part of who we are. Often we think of innovation as a R&D thing, and of course that's a big part for us, too. I'm talking about every day-to-day, just employees resolving issues. Everybody here knows we have to get things done. We have to be solution finders and problem solvers, and that's a part of who we are. The final thing I guess I would point to is the teamwork and collaboration. We're a very different company than we were three years ago, five years ago, 10 years ago, and we'll be different going forward.
People know here that today you have a certain role, tomorrow you may have to step up and do something a little different. Employees embrace it. They know it's development for them. They know it's good for the company, and it's just part of who we are. When I look at those are some of our primary components of our culture, I feel very confident about the ability to execute this strategy going forward.
Thanks Brian.
Okay great.
Next question Robert.
Let's move on to the next question. All right, great. I'll sort of combine a couple together here. How quickly do you think you can climb the curve to achieve the aspirational goals and some of the key financial assumptions underlying this transformation?
Well, that's a very good question. When we built this thing, we talked about earlier in the chart, the aspirational chart, you know, I mentioned 2015. I thought that was a realistic timeframe for us to pull all these things together. The key, what we're really focusing on is how do we make these things through the playbook happen with four growth areas, initiatives, which are not really a part of the measurement business, the coatings business, the midstream energy side. That has really contributed a lot to our past, and some of that may be there, may not be there in the future. We don't control it. It's about pulling those levers and really, and pulling on the things that Brian was talking about, and we talked about earlier today is that technology innovation piece.
What might also be helpful is maybe we could break that into pieces so you can kinda understand the flow of what we're looking at, the puts and the takes, and maybe Bill could walk through that.
Yep, sure John. When you think about the journey that we're about to undertake, there's a significant amount of transformational moves that we're going to be executing. First and foremost, the highlight of the growth platforms that we're going to invest in, you know, we expect those to have an above average or higher than market growth rate over that timeframe. We're looking at that component of the business being about a 6% organic growth rate. Different elements of the business are gonna have different performance against that average. The Precast Concrete business as an example, we think we have a significant opportunity there to help accelerate growth within infrastructure the rail side of the business.
The growth platforms there might be a little bit less than that 6% average, but you got the rail products business that's within that portfolio that's bringing down the overall average and the growth platforms that we've identified for the rail business are really accelerating within that model. You know, we feel good about that organic growth target. We've talked also about the acquisitions. We noted in our slides that we're targeting about $150 million worth of acquisitions. We would see that number split roughly between the rail and the Precast Concrete businesses. You know, we're looking for $25 million businesses plus or minus, mid- to high-teens EBITDA businesses and multiples in the range of 8x plus or minus, depending on the portfolio profile of that particular business.
Obviously, ones that align well with what we've laid out in the way of our strategy and the growth platforms that we wanna add to. Then implicit in the math is also some level of divestitures. We had about $150 million targeted. We've got about half of that solved with our piling business, and we'll continue to evaluate the entire portfolio to get a feel for which ones are advancing, and frankly, may tweak our strategy roadmap along the way, if things change. Roughly right, that's what we're thinking today, moving from a $500 million business at $22 million of EBITDA trailing twelve months to a $600 million business at about $50 million of EBITDA by 2025.
Thank you Bill. Robert, next question please.
Okay. All right, our next question here is, within the strategy statement, and in particular the playbook, I didn't see an item that focused on achieving adequate economic return. You know, just sort of expand upon that just a bit there.
Yeah. Okay. I think we briefly touched on that. That's, I appreciate the question 'cause it's a really important part of how we're looking at the business through a different lens. Maybe Bill, if you could add a little color to that as well.
Sure. Yeah no problem. Yeah, economic profit, as we discussed, is gonna be a critical metric for us to evaluate going forward. I think our overall goals are to drive economic profit expansion in the growth platforms that we've established. I think we've articulated how we're planning on doing that today. We have other elements of the returns platform. The goal there is to be at least economic profit neutral and work on operational excellence programs to drive reduced capital investment, cost reductions, and remain competitive with a limited amount of capital deployment to those businesses. Because we want those businesses that frankly generate very strong cash flows to be able to fund the growth opportunities on the growth side of the business.
The plans there are to ensure that the returns portfolio is generating at least its own cost of capital and maybe slightly a bit more based on the limited opportunities they may have.
Yeah. Great. You can see how fast, Bill, I mentioned that earlier today, but how fast he's got up to speed and in this whole process of strategy and economic profit and the new lens that we're looking through, how important it's been just for the team to get aligned and Bill to really be driving that messaging as well. Thank you Bill. Robert, next question please.
All right, next question here is when will Crossrail be wrapping up, and what are the key growth drivers in the future for your contract services business?
All right. Great. Yeah, we get that question all the time, and actually the last three years, I think we get that question in every earnings call, and it's a very good question. We're pretty excited about wrapping that up, but we're even more excited about what the future looks like. You know, we kept Pete and Neil, I believe are still with us via audio here. Pete and Neil, can you chime in, help us out here?
Sure John. Crossrail project is in the final phase, although the nature of the services that we provide dictates that we will be one of the last contracting companies on site. Of course, as things get closer to completion, there's always a possibility that additional work packages may come our way. As it stands today, we anticipate that our involvement in the project will be winding down by the end of 2022. Looking further ahead, primary growth drivers for contract services, they're very much geared to building on the reputation we've developed over the last four years working on Crossrail, as well as exploiting our newly acquired principal contractor status. We envisage that rail will continue to be a core market for us.
High Speed Two works are commencing, and there are a number of telecoms renewals projects at major U.K. stations that we've identified as targets. We're also targeting framework agreements for telecoms and fire renewals programs. Outside of rail, I think we'd like to grow our specialist service activity in the power generation and supply market. As well as that, we'd like to use our technology solutions reach to access opportunities for our contract services in airports, manufacturing and logistics applications.
Yeah, that's great Pete. Could you maybe give a little more color to HS2, High Speed Two, and what that is and what it means?
High Speed Two is the new high-speed line linking the south of the U.K. to the Midlands. At the first phase, the enabling works have commenced on that project, particularly in and around the London area. Neil, do you wanna add a little bit more?
No, it is a high-speed line which is faster than any of the train services we've currently got in the U.K. It will cut journey times down significantly. It's one of the biggest construction projects in the U.K., and it'll last probably for the next five or six years on site. We've actually started our work there now at Euston Station on the enabling phase, and obviously, we hope to grow that significantly in the next year.
Yeah. Thanks guys. An exciting project, and you know, it's been two years since I've been over to see you guys. You know, we got a trip planned in January. I hope that comes together, so. Okay, Robert, next question.
All right. Next question here is, what are customers saying about the Total Track Monitoring suite of products?
You know, you saw, I think quite a great pitch today by Michael in a video that really puts it together. You know, through the customer's lens, and that's really what we're focusing on today. You know, it's about the investors, but first and foremost, we gotta hit the needs of our customer and really increase our value offering to them. The returns will come to our investors and our shareholders as of late. This is one of the more exciting things. We got our playbook item related to this item, where this is where we're doing a lot of our funding, and we put somebody sitting with me here today, and maybe you could add just a little more color.
If I'm sitting in the customer's chair, Michael. What does it mean to me, and how can it help me with making a maybe a better, more efficient, more environmentally friendly railroad or transit line?
Yeah, absolutely. I mean, the customers what they see in our products is that they've got a lot of issues that they're facing today, where we can deploy technology that replace antiquated solutions that they have out there. We've been in discussions with customers all along the way, and we've made sure that they've been at the table shaping these solutions as we've been developing them as well.
I think, you know, this is really the future of the rail business, between the FM business with Greg and what Michael's got. You know, it's not Lee Foster's, you know, grandfather's business. It's a different business. In the next hundred years, we're gonna be entirely different. That business, the TTM, as well as all rail technologies, is really gonna be what's driving our business into the future. Thanks for that question. Robert?
Okay. The next question here is, talk about some of the key growth drivers for Friction Management business into the future here.
Well, I just mentioned that, so, let's give some more color to that. I'll turn it over to Greg Lippard. Greg?
Yeah. Thank you John. There are three primary and critical growth drivers within the Friction Management business to execute our strategy. The first is growth in our mature markets, but by converting low-cost buyers to the total Friction Management model that I alluded to earlier, where we add a value. There's a value proposition not only for us but for our customer base. We have a lot of tools that help us do that, right? We have an applications team that goes out into the field and identifies where wayside equipment should go. We have a really high-tech testing laboratory in our Vancouver office that can dial in friction modifiers as well as gauge face greases, both synthetic and oil-based.
There's a lot of opportunity there in our, you know, predominantly mature North American markets. The second piece of it is, I would say surgical growth, geographic growth in DACH and parts of Asia-Pac. I say surgical because, as I answered your question before, you know, we're not shotgunning this. We're gonna make sure that we understand the markets that we're entering into. You know, Germany, Austria, Switzerland, and parts of Asia-Pac growth there. Then lastly, and as I touched on in my previous comments, you know, we've gotta get these onboard spray solutions commercialized. Although they won't contribute, I don't believe that they will contribute until later in the strategic window that we talk about.
We've gotta get those perfected and finalized, and that will be the third key component to the growth within the Friction Management business.
Yeah. Thanks Greg. You know, when we bought the Portec business back in December of 2010, that was a game-changing acquisition for our company. We really didn't understand the value of it ourselves at that time. In fact, this Friction Management thing was looked at, even by us and even our customers as a little bit of black magic. Well, I will tell you it's anything but. It's about science, and it's about, in the one case, it was maybe nice to have. Today, it's about it. They need to have it. From a whole environment footprint, from driving fuel efficiency to making sure they have traction when they want it, to reduce the traction of friction when it's not required, it's just part of the way the railroads run their business today.
We get this thing mechanized, which we will get done over time, and bringing the solution on board, that will be a disruptive technology that will continue to separate ourselves from our competition. Thanks, Greg. Next question, please, Robert.
Okay. There's a few questions here, sort of, and looks like some clarification is needed. Could you clarify on the long-term vision outlook forecast? Is that $600 million of revenue and $50 million of adjusted EBITDA inclusive of the $150 million of potential M&A, or is that the core business?
I'll turn that right over to Bill.
Yeah. Maybe I can walk through a bit just to create the bridge. You start with our trailing twelve months ended September. We're a little over $500 million business. But in that number is a $70 million piling business that was divested already, so that drops us down to $450 million. We have another $70 million of potential divestitures that we would be targeting potentially over the next several years.
When you start with that lower base, and then you add on top of that $150 million worth of acquisitions, $100 million worth of organic growth, you get to that $600 million business. We think the portfolio transformation that's going to occur, investing in high growth, high margin businesses that we have as our growth platforms, looking at other elements of the portfolio that will potentially come out, being at the lower end of that scale in terms of EBITDA performance, that will create that walk from $22 million today up to the $50 million that we're targeting in 2025. Hopefully that helps to clarify.
All right. Thanks, Bill. Robert, next question.
All right. Great. Let's combine a couple here. Do you see some potential opportunities to expand into water-related services for your coatings and measurement business? And, you know, has that been hurt by the pandemic? And sort of talk about the rebound you sense you could achieve there over the next couple of years.
Thanks. Thanks for that question. It's you know, it's about pivoting and evolving that we have to do, especially in the businesses that are struggling a little bit today with the various things that are coming at them and the market's headwinds that we have. That's what we talked earlier, and that first question was excellent about the strategy and innovation, 'cause we don't sit here and just wait for things to happen. We find a way to contribute that extra value. In the case of the coatings and measurement business, we've got a number of businesses that basically went from full-on production to nothing literally overnight. That started at the fall of last year, fourth quarter of last year into where we're at all the way through this year.
The team has been pretty energized about reinventing themselves and taking some great core competencies that we have of technology innovation and being able to bring that into new product offerings to service either markets we're in today or adjacent spaces. Maybe, Brian, if you would add a little more color on specifically what you're doing in your division.
Yeah. Thanks, John. As mentioned earlier, our primary end market around energy was severely impacted over the last few years and really put us in a mode where we had to aggressively start to pivot, not only manage capacity and cost down in the short term to minimize the damage, but aggressively start to pivot those businesses as much as we can towards markets that we think have a potential to be more attractive over the next few years. A lot of our capabilities are agnostic in terms of what goes through them, whether it's liquid or gas, whether it's petrochemical, whether it's water or hydrogen. Really, we're in the process of scoping those markets out. We've made progress in some of them. As I mentioned earlier, we're already winning orders around biodiesel. Water is one that's certainly attractive.
There's a lot of infrastructure that's being built around residential. Our Magnolia water well threaded products business has benefited from that infrastructure build-out already. The question is: where else can we tap into it? That's a process that's underway that we'll continue to see progress on hopefully over the next couple of years.
Yeah. Thanks Brian. I'm glad I did an interview, by the way, earlier today with those socks. I could have struggled with that. I love them, though. Thanks, Robert. Next question please.
All right, John next question here. What examples do you have for organic growth in your current Precast Concrete markets?
All right. Thanks for that. You know, we talked about our two platforms, right? With rail technologies and precast. You know, precast is significant. We spent a lot of time, the bulk of it, on rail today. With the acquisition of CXT Ties, go back 20+ years ago, we picked up this real neat little business in precast. At the time, we really didn't think much of it. There was people that were around at the time thinking about it was all about the rail and the tie play. What we found out is it's a gem, and it's something that we actually took some time. We had to get good at it. And then we figured out from getting good at it, how do you expand?
If you've been following us, we opened a new facility in Boise in the last two years. It's going well. We had a new acquisition back in 2014 with the Waverly group down in West Virginia. It's been a great acquisition for the company. Then we have our Hillsboro facility, which started around 2000. It's just south of Dallas. That's led by Jason Busby and his team. They are doing an absolutely fantastic job. We got some great pieces that are really put together. This question, I think, really talks to what we wanna do, and it's our playbook item number one, and that's the continued growth of this business and a real core platform for our business. Maybe, Bob, if you give a little more color to maybe help with that question.
Yeah. Thanks John. You know, as I mentioned earlier, we're fortunate that we have operations already in some really high growth parts of the country. You know, in these parts of the country, there's quite a bit of commercial and residential land development going on. So we're exploring opportunities, what we can do to expand our capacity, expand our product offerings, and really to serve that growth. There's a lot of activity happening right now. On the concrete building side, you know, we're always looking for adjacent markets that are served right now by site-built buildings. We believe we have an alternative solution that we believe is better. It's a better product.
We will continue to attack the adjacent market space as well to expand our building offerings as well.
That's good. You can clearly see, you know, like, excitement and what Bob put together today is something that started very small, but it's something that's been very profitable and some opportunities for us to continue to grow. It really speaks to us being the infrastructure provider of products and solutions. It just ties nicely and has nice adjacent space growth as well in the rail space too.
Yes.
Which we have a couple of projects today making those things happen. They really tie together very nicely. Thanks Bob. Robert, next question.
Okay. I think we'll make this the last question given timing here, and there's a few of them I'll combine together, sort of surrounding M&A. Can you provide some color around the M&A process, how it has recently evolved, maybe some of the criteria you are utilizing to evaluate M&A opportunities in both the rail and infrastructure segments there and sort of that general M&A focus?
Yeah, thanks for all those questions that combine that. You know, it's not about where we are today, it's where we're going in the future. These little tuck-ins and bolt-on opportunities are significant for us. It's about getting it right. You know, in the last couple of years, whether we got it right or wrong, the rallies were humbled by it. Through that process, you learn and you get better. That's why I created the chief growth office. Somebody I talked about earlier today introduced you to Bill Treacy. That's really important part of us defining and creating markets that we're either in today or we need to expand to the future. It's an area that, honestly, we haven't done a lot of work on in the past.
A lot of times some of the things we did was more reactive in nature, and we're changing that. With the strategy, the playbook, and now the focus on markets today as well as in the future, I feel very good about it in that aspirational chart. I'd like maybe Bill could give some color on that because you're living it today, and you've done a lot of the work of really cleaning up our back office and focusing on our processes as we move forward.
Yeah. I guess just to highlight quickly, it starts with having a very effective process. Bill Thalman and I led a small group that really reviewed our process from top to bottom, looking at all the elements, the due diligence, valuation, and integration, and some of the lessons learned from some of the past transactions, really changing that process where it needed to be changed. We feel really good, I think, that we have a world-class process right now. There's a few of us that have done this in prior lives, and so we've brought some of that experience with us. The process is where it needs to be. I think you heard a lot of discussion around where we're gonna focus from the acquisition strategy side.
We like the precast space a lot, and there's a lot of different places we can go with that. Then on the rail technology side, again, we're looking for small bolt-on opportunities that can really enhance the positions we have today. I think we have a process and a strategy that's very well aligned with what we've laid out today. Again, the process is focused around making sure that we eliminate all mistakes that can be eliminated as part of a transaction.
Yeah. Great. Thanks for that. You know, we're passionate about it, and we're passionate about getting it right. It's an important part of where we're going. With the new credit agreement we have, the strong balance sheet, and now with the strategy and playbook, you know, my closing remarks are we're there. We're ready to transform the company. It is gonna take some time, but we're in the process of making that happen today. I'd like to thank everybody. I think around 180 folks participated today, and which I believe to be is our very first Investor Day. I thank Lee Foster for coming in and, you know, spending time with us earlier today. It's meaningful.
You know, it's about the future, it's about the legacy of Lee and his family, but more importantly, it's about our investors and restoring that trust and confidence in them and regaining, you know, returns to our shareholders. I'd like to thank all the L.B. Foster employees going into the holiday season. It's been a tough year with a lot of headwinds coming our way and managing ourselves very effectively through the pandemic. We've had a tough time, and every day is a new challenge with inflation, supply chain issues. Having said that, there's no better time to have a strategy than today. There's no better time to have a playbook than today. There's no better time to have a leadership team like I have today.
We're in good shape, and we're gonna see our way through the future, and we're gonna hit those aspirational goals. I'd like to thank everybody today for tuning in, and I know we'll be talking to a number of you with one-on-one meetings over the next few days. Bill and I and Stephanie look very forward to that. Happy holidays to everybody, and thanks for joining us.