Commercial and Structural’s North America business struggled to build momentum in the US during the third quarter. There were four main reasons for this: (1) lower workable backlog at the beginning of the quarter from a stall in sales activity that is being addressed by the ongoing investment in our sales organization; (2) project performance issues from inadequate cost estimation on several key projects in late 2012; (3) customers are taking more time to finalize the award of new contracts and issuing work releases; and (4) certain delays in the setup of new projects in hand, which delayed project execution. Investments to enhance our sales organization are beginning to payoff as the bid table for near term opportunities approached $100 million at the end of the third quarter compared to $40 million at June 30, 2013. Our efforts to enhance the sales organization will continue in the coming months to properly resource and align the organization in its primary end markets: pipelines, buildings and transportation. The second phase of our strategic investments has been accelerated to institute best-in-class project management to ensure consistency in execution on all projects. Global backlog for Commercial and Structural was $48.2 million as of September 30, 2013. We expect a return to profitability in the fourth quarter.
Mr. Burgess commented, “We’ve stated our intention since the acquisition of the Fyfe businesses to make the necessary investments to expand our leadership position in the rapidly growing global fiber-reinforced polymer market. Although these enhancements to our operations have taken more time to complete, we are committed to these markets and believe in their growth potential. The lower than expected results in the third quarter are expected to result in full year 2013 global Commercial and Structural revenues of between $75 to $80 million with gross margins of 35 to 40 percent. We expect a return to profitability in the fourth quarter and view 2014 as a year for Commercial and Structural to recover and grow from 2013. We believe this business can grow revenues 20 to 25 percent annually over the longer term and achieve gross margins in the range of 35 to 40 percent.”