L.B. Foster Company (Nasdaq: FSTR), a global technology
solutions provider of products and services for the rail and
infrastructure markets (the "Company"), today reported its 2024
second quarter operating results.
CEO Comments
John Kasel, President and Chief Executive
Officer, commented "After a strong start to the year in the first
quarter, second quarter results were somewhat softer as compared to
last year. Sales were down 4.9%, with organic sales down 3.4% and
1.5% lower sales from portfolio actions completed last year. The
organic decline was realized primarily in the Rail segment, with
softness in the domestic rail market adversely impacting both
volumes and pricing. On a positive note, within our growth
portfolio, the technology and services components of the Rail
portfolio delivered solid gains year over year, including a
recovery in our UK business. Infrastructure organic sales were
essentially flat year over year, with continuing adverse weather
conditions in the south and mid-west hampering project deliveries.
Gross margins overall were 21.7%, down 10 bps versus last year,
with lower margins in the Rail segment largely offset by improved
margins in Infrastructure due primarily to our strategic portfolio
actions. Net income was $2.8 million, down $0.7 million from last
year, and Adjusted EBITDA was $8.1 million, down $2.5 million from
last year, with the decline due primarily to the lower sales and
margins in the Rail segment, along with $0.5 million in
professional service costs incurred associated with the announced
restructuring. We remain focused on executing our strategic
playbook to drive growth and shareholder returns while managing the
near-term headwinds we're currently experiencing."
Mr. Kasel continued, "As expected, our net debt
rose $8.2 million during the quarter to fund working capital needs,
capital spending for future organic growth, and our stock buyback
program. We've been active with our stock repurchase program since
it was announced in February 2023. Through the end of the 2024
second quarter, we've repurchased approximately 1.9% of shares
outstanding for $4.0 million, with $11.0 million of the original
$15 million authorization remaining. The modifications recently
approved by our Board of Directors provide us greater flexibility
to repurchase more shares through February 2025 in line with our
capital allocation priorities. The Gross Leverage Ratio per our
credit agreement was 2.7x at quarter end. While this ratio was up
from 2.5x last year, we expect it will decline through the balance
of 2024 as the working capital cycle turns and we generate free
cash flow in the second half. We have a demonstrated history of
successfully managing our leverage through challenging business
cycles and the prospects for improved cash flow generation continue
to improve as we move closer to wrapping up our Union Pacific
settlement obligation at the end of this year."
Mr. Kasel concluded, "Order intake levels were
up sequentially 29.2% over the first quarter; however, they were
flat year over year in the Rail segment and down approximately 20%
in Infrastructure. With the overall backlog down $40.3 million
(13.9%) versus this time last year and the uncertain market
conditions we currently see, we adjusted our 2024 financial
guidance by lowering the top end of the range for both sales and
adjusted EBITDA. While the revised outlook is lower than our
previous guidance, the new mid-point for adjusted EBITDA represents
growth of approximately 12% on essentially flat organic sales
growth, highlighting the structural improvement in the
profitability profile of the business achieved through our
portfolio work. In addition, while we expect to generate $25
million to $30 million in free cash flow in the second half of the
year, we are taking a more cautious view on cash generation for the
full year given the softer business conditions, expected timing of
larger orders in the Rail segment and funding needs for initiatives
including the announced restructuring program. We began
restructuring the business in the UK in the fourth quarter last
year, and we are seeing the positive benefits from those actions in
this year's results. With this new program, and in line with our
strategic roadmap, we are taking the necessary steps to enable
investment in our growth platforms and drive resource deployment
efficiency across the entire business. Excluding restructuring
charges, we expect savings from this program to be approximately
$2.0 million in 2024, with annual run rate savings of approximately
$4.5 million entering 2025. We look forward to driving
profitability expansion in the second half of 2024 as we strive to
build momentum toward our 2025 aspirational goals."
1 See "Non-GAAP Financial Measures" and
"Non-GAAP Disclosures" at the end of this press release for a
description of and information regarding organic sales, adjusted
EBITDA, Gross Leverage Ratio per the Company's credit agreement,
net debt, new orders, backlog, book-to-bill ratio, free cash flow,
and related reconciliations to their most comparable GAAP financial
measure.
2024 Financial Guidance
The Company is updating its 2024 financial
guidance as follows:
| |
|
Updated |
|
Previous |
| $ in thousands, unless
otherwise noted: |
|
Low |
|
High |
|
Low |
|
High |
| Net sales |
|
$ |
525,000 |
|
|
$ |
550,000 |
|
|
$ |
525,000 |
|
|
$ |
560,000 |
|
| Adjusted EBITDA |
|
$ |
34,000 |
|
|
$ |
37,000 |
|
|
$ |
34,000 |
|
|
$ |
39,000 |
|
| Capital spending as a percent of
sales |
|
|
2.5 |
% |
|
|
2.5 |
% |
|
|
2.0 |
% |
|
|
2.5 |
% |
| Free cash flow |
|
Breakeven |
|
$ |
12,000 |
|
|
$ |
18,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
Second Quarter Consolidated Highlights
The Company’s second quarter performance
highlights are reflected below:
| |
|
Three Months EndedJune 30, |
|
Change |
|
PercentChange |
| |
|
|
2024 |
|
|
|
2023 |
|
|
2024 vs. 2023 |
|
2024 vs. 2023 |
| |
|
|
|
|
|
|
|
|
| $ in thousands, unless
otherwise noted: |
|
(Unaudited) |
|
|
|
|
| Net sales |
|
$ |
140,796 |
|
|
$ |
148,034 |
|
|
$ |
(7,238 |
) |
|
(4.9) |
% |
| Gross profit |
|
|
30,523 |
|
|
|
32,252 |
|
|
|
(1,729 |
) |
|
(5.4 |
) |
|
Gross profit margin |
|
|
21.7 |
% |
|
|
21.8 |
% |
|
(10) bps |
|
(0.5 |
) |
| Selling and administrative
expenses |
|
$ |
24,896 |
|
|
$ |
24,528 |
|
|
$ |
368 |
|
|
1.5 |
|
|
Selling and administrative expenses as a percent of sales |
|
|
17.7 |
% |
|
|
16.6 |
% |
|
110 bps |
|
6.6 |
|
| Operating income |
|
$ |
4,504 |
|
|
$ |
6,349 |
|
|
$ |
(1,845 |
) |
|
(29.1 |
) |
| Net income attributable to
L.B. Foster Company |
|
|
2,847 |
|
|
|
3,531 |
|
|
|
(684 |
) |
|
(19.4 |
) |
| Adjusted EBITDA |
|
|
8,077 |
|
|
|
10,601 |
|
|
|
(2,524 |
) |
|
(23.8 |
) |
| New orders |
|
|
170,993 |
|
|
|
183,742 |
|
|
|
(12,749 |
) |
|
(6.9 |
) |
| Backlog |
|
|
249,805 |
|
|
|
290,076 |
|
|
|
(40,271 |
) |
|
(13.9 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales for the 2024 second
quarter were $140.8 million, down $7.2 million, or 4.9%, from the
second quarter of 2023. Net sales decreased 3.4% organically and
decreased 1.5% due to divestiture and product line exit activity.
The decline in organic sales was primarily in the Rail
segment.
- Gross profit for the 2024 second
quarter was $30.5 million, a $1.7 million decrease year over year,
or 5.4%, and gross profit margins decreased by 10 basis points to
21.7%. The decline in gross profit was driven primarily by lower
volumes and softer market prices in the domestic rail business
within the Rail segment. Margins within Infrastructure improved
year over year due primarily to portfolio transformation
activities, including a $0.8 million gain from the sale of an
ancillary property within the Steel Products business unit.
- Selling and administrative expenses
for the 2024 second quarter were $24.9 million, a $0.4 million
increase, or 1.5%, over the prior year quarter. The increase was
primarily attributed to $0.8 million in corporate legal expense
associated with an ongoing legal matter and $0.5 million in
professional services expenditures associated with the announced
enterprise restructuring. Selling and administrative expenses as a
percentage of net sales increased to 17.7% in the current quarter,
up from 16.6% last year.
- Operating income for the 2024
second quarter was $4.5 million, down $1.8 million from the prior
year quarter, due primarily to the lower sales volumes and prices
and the resulting impact on gross profit.
- Net income attributable to the
Company for the 2024 second quarter was $2.8 million, or $0.26 per
diluted share, down $0.7 million from the prior year quarter, or
19.4%. The change in net income attributable to the Company was due
to lower operating income partially offset by lower other expense.
In the 2023 second quarter, other expense included a $1.0 million
loss on the divestiture of the concrete Ties business.
- Adjusted EBITDA for the 2024 second
quarter, which adjusts for the $0.8 million gain on the sale of
fixed assets and $0.8 million for certain legal expenses, was $8.1
million, a $2.5 million decrease, or 23.8%, from the prior
year quarter. The decline in adjusted EBITDA is due primarily to
softer business conditions primarily in the Rail segment, coupled
with higher professional services costs associated with the
announced restructuring. Adjusted EBITDA for 2023 second quarter
adjusts for the loss on the Ties divestiture last year.
- New orders totaling $171.0 million
for the 2024 second quarter decreased $12.7 million, or 6.9%, from
the prior year quarter, $2.7 million of which was due to
divestiture and product line exit activity. Backlog totaling $249.8
million decreased by $40.3 million, or 13.9%, compared to the
record high prior year quarter, with $6.9 million of the decline
due to product line exit activity.
- Cash used by operating activities
totaled $5.0 million in the second quarter, an improvement of $5.3
million over a $10.3 million use in the prior year quarter.
- Net debt of $83.2 million as of
June 30, 2024 represents a decrease of $2.5 million from the
prior year quarter. The Gross Leverage Ratio of 2.7x as of
June 30, 2024 represents an increase of 0.2x compared to the
prior year quarter.
Second Quarter Business Results by Segment
Rail, Technologies, and Services Segment
| |
|
Three Months EndedJune 30, |
|
Change |
|
PercentChange |
| $ in thousands, unless
otherwise noted: |
|
|
2024 |
|
|
|
2023 |
|
|
2024 vs. 2023 |
|
2024 vs. 2023 |
| Net sales |
|
$ |
85,594 |
|
|
$ |
91,616 |
|
|
$ |
(6,022 |
) |
|
(6.6) |
% |
| Gross profit |
|
$ |
17,875 |
|
|
$ |
19,847 |
|
|
$ |
(1,972 |
) |
|
(9.9 |
) |
|
Gross profit margin |
|
|
20.9 |
% |
|
|
21.7 |
% |
|
(80) bps |
|
|
(3.6 |
) |
|
Segment operating income |
|
$ |
5,431 |
|
|
$ |
6,627 |
|
|
$ |
(1,196 |
) |
|
(18.0 |
) |
|
Segment operating income margin |
|
|
6.3 |
% |
|
|
7.2 |
% |
|
(90) bps |
|
|
(12.3 |
) |
| New orders |
|
$ |
116,996 |
|
|
$ |
115,985 |
|
|
$ |
1,011 |
|
|
0.9 |
|
| Backlog |
|
$ |
114,794 |
|
|
$ |
132,451 |
|
|
$ |
(17,657 |
) |
|
(13.3 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales for the 2024 second
quarter were $85.6 million, a $6.0 million decrease, or 6.6%, from
the prior year quarter, with 5.0% of the decline due to organic
sales and 1.5% from divestiture activity. The organic sales decline
was driven primarily by lower volumes and softer market prices in
the Rail Products business unit.
- Gross profit for the 2024 second
quarter was $17.9 million, a $2.0 million decrease, and gross
profit margins decreased by 80 basis points to 20.9%. The gross
profit decline was driven primarily by lower overall sales and
margins within Rail Products, partially offset by improved margins
in Global Friction Management and Technology Services and
Solutions, including a recovery in our United Kingdom
business.
- Segment operating income for the
2024 second quarter was $5.4 million, a $1.2 million decrease from
the prior year quarter, due to the decline in gross profit,
partially offset by lower selling and administrative expenses.
- Orders increased by $1.0 million,
despite a $3.4 million decline from the Ties divestiture in the
prior year. Strength in Rail Products more than offset order
declines in Global Friction Management and Technology Services and
Solutions. Backlog of $114.8 million decreased $17.7 million from
the prior year quarter driven primarily by Rail Products and lower
business activity in the United Kingdom, partially offset by
improvements in Global Friction Management and the domestic Total
Track Monitoring businesses. Second quarter orders and backlog
increased sequentially 39.7% and 33.4%, respectively.
Infrastructure Solutions Segment
| |
|
Three Months EndedJune 30, |
|
Change |
|
PercentChange |
| $ in thousands, unless
otherwise noted: |
|
|
2024 |
|
|
|
2023 |
|
|
2024 vs. 2023 |
|
2024 vs. 2023 |
| Net sales |
|
$ |
55,202 |
|
|
$ |
56,418 |
|
|
$ |
(1,216 |
) |
|
(2.2) |
% |
| Gross profit |
|
$ |
12,648 |
|
|
$ |
12,405 |
|
|
$ |
243 |
|
|
2.0 |
|
|
Gross profit margin |
|
|
22.9 |
% |
|
|
22.0 |
% |
|
90 bps |
|
|
4.2 |
|
|
Segment operating income |
|
$ |
3,618 |
|
|
$ |
2,752 |
|
|
$ |
866 |
|
|
31.5 |
|
|
Segment operating income margin |
|
|
6.6 |
% |
|
|
4.9 |
% |
|
170 bps |
|
|
34.9 |
|
| New orders |
|
$ |
53,997 |
|
|
$ |
67,757 |
|
|
$ |
(13,760 |
) |
|
(20.3 |
) |
| Backlog |
|
$ |
135,011 |
|
|
$ |
157,625 |
|
|
$ |
(22,614 |
) |
|
(14.3 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net sales for the 2024 second
quarter were $55.2 million, down $1.2 million, or 2.2%, from the
2023 second quarter. Product line exit activity contributed 1.4% of
the sales decline, while organic sales decreased 0.7%, both of
which are attributed to the Steel Products business unit.
- Gross profit for the 2024 second
quarter was $12.6 million, a $0.2 million increase, and gross
profit margins increased 90 basis points to 22.9% driven by Steel
Products, which included a $0.8 million gain associated with the
sale of fixed assets. Partially offsetting were slightly lower
margins in the Precast Concrete Products business.
- Segment operating income for the
2024 second quarter was $3.6 million, up $0.9 million over the
prior year quarter due primarily to higher gross profit levels,
including the $0.8 million fixed asset sale gain, and lower selling
and administrative expenses.
- Second quarter new orders were
$54.0 million, down $13.8 million from the prior year quarter. The
lower order rates are due to softer business activity in the Steel
Products business unit, primarily within the Protective Coatings
business. Precast Concrete Products orders were flat year over
year. Backlog of $135.0 million reflects a $22.6 million decrease
from the prior year quarter, $6.9 million of which was due to
product line exit activity. Second quarter orders increased 11.0%
sequentially while backlog declined 0.9%.
First Six Months Consolidated
Highlights
The Company's first six months performance
highlights are presented below.
| |
|
Six Months EndedJune 30, |
|
Change |
|
PercentChange |
| |
|
|
2024 |
|
|
|
2023 |
|
|
2024 vs. 2023 |
|
2024 vs. 2023 |
| |
|
|
|
|
|
|
|
|
| $ in thousands, unless
otherwise noted: |
|
(Unaudited) |
|
|
|
|
| Net sales |
|
$ |
265,116 |
|
|
$ |
263,522 |
|
|
$ |
1,594 |
|
|
0.6 |
% |
| Gross profit |
|
|
56,772 |
|
|
|
55,543 |
|
|
|
1,229 |
|
|
2.2 |
|
|
Gross profit margin |
|
|
21.4 |
% |
|
|
21.1 |
% |
|
30 bps |
|
1.4 |
|
| Selling and administrative
expenses |
|
$ |
47,645 |
|
|
$ |
45,951 |
|
|
$ |
1,694 |
|
|
3.7 |
|
|
Selling and administrative expenses as a percent of sales |
|
|
18.0 |
% |
|
|
17.4 |
% |
|
60 bps |
|
3.4 |
|
| Operating income |
|
$ |
6,787 |
|
|
$ |
6,852 |
|
|
$ |
(65 |
) |
|
(0.9 |
) |
| Net income attributable to
L.B. Foster Company |
|
|
7,283 |
|
|
|
1,379 |
|
|
|
5,904 |
|
|
** |
| Adjusted EBITDA |
|
|
14,010 |
|
|
|
15,083 |
|
|
|
(1,073 |
) |
|
(7.1 |
) |
| New orders |
|
|
303,378 |
|
|
|
323,258 |
|
|
|
(19,880 |
) |
|
(6.1 |
) |
| Backlog |
|
|
249,805 |
|
|
|
290,076 |
|
|
|
(40,271 |
) |
|
(13.9 |
) |
**Results of this calculation not considered
meaningful.
- Net sales for the first six months
of 2024 were $265.1 million, up $1.6 million, or 0.6%, over the
prior year period. Net sales increased 5.5% organically and
decreased 4.9% due to divestiture and product line exit activity.
Organic sales growth was driven by the Rail, Technologies, and
Services segment.
- Gross profit for the first six
months of 2024 was $56.8 million, a $1.2 million increase year over
year, or 2.2%, and gross profit margins increased by 30 basis
points to 21.4%. The improvement in gross profit in the first half
was due to the business portfolio changes in line with the
Company's strategic transformation along with overall higher sales
volumes and favorable mix realized in the first quarter.
- Selling and administrative expenses
for the first six months of 2024 were $47.6 million, a $1.7 million
increase, or 3.7%, over the prior year period. The increase was
primarily attributed to corporate legal costs and $0.8 million in
professional services expenditures associated with the announced
enterprise restructuring. Selling and administrative expenses as a
percentage of net sales increased to 18.0% in the first six months
up from 17.4% last year.
- Operating income for the first six
months of 2024 was $6.8 million, down $0.1 million from the prior
year period. The decrease in operating income was due to increased
selling and administrative expenses, partially offset by
improvement in gross profit and lower intangible amortization
expense.
- Net income attributable to the
Company for first six months of 2024 was $7.3 million, or $0.66 per
diluted share, favorable by $5.9 million to the prior year period.
The change in net income attributable to the Company was due to
favorable other income of $3.7 million in 2024 compared to other
expense of $2.5 million in 2023. Other income for the first six
months of 2024 included a net gain of $3.5 million on the sale of
the Company's former joint venture facility in this year's first
quarter. Other expense in the prior year included $3.1 million
associated with losses on divestitures.
- Adjusted EBITDA for the first six
months of 2024, which adjusts for the net gain on the sale of the
Company's former joint venture facility, gain on the sale of fixed
assets in the second quarter, and certain legal expenses, was
$14.0 million, a $1.1 million decrease, or 7.1%, from the
prior year period. Adjusted EBITDA for the first six months of 2023
adjusts for the loss on divestitures and acquisition-related
contingent consideration adjustments. The decrease in Adjusted
EBITDA is due primarily to higher professional services
expenditures associated with the announced enterprise
restructuring.
- New orders totaling $303.4 million
for the first six months of 2024 decreased $19.9 million, or 6.1%,
from the prior year period, $13.9 million of which was due to
divestiture and exit activity.
- Cash used by operating activities
in the six months ended June 30, 2024 totaled $26.8 million, an
increased use of $23.5 million over cash used by operating
activities of $3.3 million in the prior year period.
Second Quarter Conference Call
L.B. Foster Company will conduct a conference
call and webcast to discuss its second quarter 2024 operating
results on Tuesday, August 6, 2024 at 11:00 AM ET. The call
will be hosted by Mr. John Kasel, President and Chief Executive
Officer. Listen via audio and access the slide presentation on the
L.B. Foster website: www.lbfoster.com, under the Investor Relations
page. A conference call replay will be available through
August 13, 2024 via webcast through L.B. Foster’s Investor
Relations page of the company’s website.
Those interested in participating in the
question-and-answer session may register for the call at
https://register.vevent.com/register/BI47056dfe11f642159b92a1a547b561f1
to receive the dial-in numbers and unique PIN to access the call.
The registration link will also be available on the Company’s
Investor Relations page of its website.
About L.B. Foster Company
Founded in 1902, L.B. Foster Company is a global
technology solutions provider of engineered, manufactured products
and services that builds and supports infrastructure. The Company’s
innovative engineering and product development solutions address
the safety, reliability, and performance needs of its customers'
most challenging requirements. The Company maintains locations in
North America, South America, Europe, and Asia. For more
information, please visit www.lbfoster.com.
Non-GAAP Financial Measures
This press release contains financial measures
that are not calculated and presented in accordance with generally
accepted accounting principles in the United States ("GAAP"). These
non-GAAP financial measures are provided as additional information
for investors. The presentation of this additional information is
not meant to be considered in isolation or as a substitute for GAAP
measures. For definitions of the non-GAAP financial measures used
in this press release and reconciliations to the most directly
comparable respective GAAP measures, see the “Non-GAAP Disclosures”
section below.
The Company has not reconciled the
forward-looking adjusted EBITDA and free cash flow to the most
directly comparable GAAP measure because this cannot be done
without unreasonable effort due to the variability and low
visibility with respect to certain costs, the most significant of
which are acquisition and divestiture-related costs, impairment
expense, and changes in operating assets and liabilities. These
underlying expenses and others that may arise during the year are
potential adjustments to future earnings. The Company expects the
variability of these items to have a potentially unpredictable, and
a potentially significant, impact on our future GAAP financial
results.
The Company believes free cash flow is useful
information to investors as it provides insight on cash generated
by operations, less capital expenditures, which we believe to be
helpful in assessing the Company's long-term ability to pursue
growth and investment opportunities as well as service its
financing obligations and generate capital for shareholders.
Additionally, the Company's annual incentive plans for management
provide for the utilization of free cash flow as a metric for
measuring cash-generation performance in determining annual
variable incentive achievement.
The Company defines new orders as a contractual
agreement between the Company and a third-party in which the
Company will, or has the ability to, satisfy the performance
obligations of the promised products or services under the terms of
the agreement. The Company defines backlog as contractual
commitments to customers for which the Company’s performance
obligations have not been met, including with respect to new orders
and contracts for which the Company has not begun any performance.
Management utilizes new orders and backlog to evaluate the health
of the industries in which the Company operates, the Company’s
current and future results of operations and financial prospects,
and strategies for business development. The Company believes that
new orders and backlog are useful to investors as supplemental
metrics by which to measure the Company’s current performance and
prospective results of operations and financial performance. The
Company defines book-to-bill ratio as new orders divided by
revenue. The Company believes this is a useful metric to assess
supply and demand, including order strength versus order
fulfillment.
Organic order growth (decline) depicts new
orders excluding the effects of divestiture and product line exit
activities. Management believes this measure provides investors
with a supplemental understanding of underlying trends by providing
order growth on a consistent basis. Portfolio changes are
considered based on their comparative impact over the last three
months, to determine the differences in 2023 versus 2024 results
due to these transactions.
The Company views its Gross Leverage Ratio per
its credit agreement, as defined in the Second Amendment to its
Fourth Amended and Restated Credit Agreement dated August 12, 2022,
as an important indication of the Company's financial health and
believes it is useful to investors as an indicator of the Company's
ability to service its existing indebtedness and borrow additional
funds for its investing and operational needs.
Forward-Looking Statements
This release may contain “forward-looking”
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. Forward-looking statements provide
management's current expectations of future events based on certain
assumptions and include any statement that does not directly relate
to any historical or current fact. Sentences containing words such
as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,”
“anticipate,” “estimate,” “predict,” “project,” or their negatives,
or other similar expressions of a future or forward-looking nature
generally should be considered forward-looking statements.
Forward-looking statements in this earnings release are based on
management's current expectations and assumptions about future
events that involve inherent risks and uncertainties and may
concern, among other things, the Company’s expectations relating to
our strategy, goals, projections, and plans regarding our financial
position, liquidity, capital resources, and results of operations
and decisions regarding our strategic growth initiatives, market
position, and product development. While the Company considers
these expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic, competitive,
regulatory, and other risks and uncertainties, most of which are
difficult to predict and many of which are beyond the Company’s
control. The Company cautions readers that various factors could
cause the actual results of the Company to differ materially from
those indicated by forward-looking statements. Accordingly,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results. Among the factors
that could cause the actual results to differ materially from those
indicated in the forward-looking statements are risks and
uncertainties related to: a continuation or worsening of the
adverse economic conditions in the markets we serve, including
recession, the continued volatility in the prices for oil and gas,
project delays, and budget shortfalls, or otherwise; volatility in
the global capital markets, including interest rate fluctuations,
which could adversely affect our ability to access the capital
markets on terms that are favorable to us; restrictions on our
ability to draw on our credit agreement, including as a result of
any future inability to comply with restrictive covenants contained
therein; a decrease in freight or transit rail traffic;
environmental matters and the impact of recently-finalized
environmental regulations, including any costs associated with any
remediation and monitoring of such matters; the risk of doing
business in international markets, including compliance with
anti-corruption and bribery laws, foreign currency fluctuations and
inflation, global shipping disruptions, and trade restrictions or
embargoes; our ability to effectuate our strategy, including cost
reduction initiatives, and our ability to effectively integrate
acquired businesses or to divest businesses, such as the recent
dispositions of the Track Components, Chemtec, and Ties businesses,
and acquisitions of the Skratch Enterprises Ltd., Intelligent Video
Ltd., VanHooseCo Precast LLC, and Cougar Mountain Precast, LLC
businesses and to realize anticipated benefits; costs of and
impacts associated with shareholder activism; the timeliness and
availability of materials from our major suppliers, as well as the
impact on our access to supplies of customer preferences as to the
origin of such supplies, such as customers’ concerns about conflict
minerals; labor disputes; cybersecurity risks such as data security
breaches, malware, ransomware, “hacking,” and identity theft, which
could disrupt our business and may result in misuse or
misappropriation of confidential or proprietary information, and
could result in the disruption or damage to our systems, increased
costs and losses, or an adverse effect to our reputation, business
or financial condition; the continuing effectiveness of our ongoing
implementation of an enterprise resource planning system; changes
in current accounting estimates and their ultimate outcomes; the
adequacy of internal and external sources of funds to meet
financing needs, including our ability to negotiate any additional
necessary amendments to our credit agreement or the terms of any
new credit agreement; the Company’s ability to manage its working
capital requirements and indebtedness; domestic and international
taxes, including estimates that may impact taxes; domestic and
foreign government regulations, including tariffs; the results of
the United Kingdom's 2024 parliamentary election, uncertainties
related to the U.S. 2024 Presidential election, and any
corresponding changes to policy or other changes that could affect
United Kingdom or U.S. business conditions; other geopolitical
conditions, including the ongoing conflicts between Russia and
Ukraine and Israel and Hamas; a lack of state or federal funding
for new infrastructure projects; an increase in manufacturing or
material costs; the loss of future revenues from current customers;
any future global health crises, and the related social,
regulatory, and economic impacts and the response thereto by the
Company, our employees, our customers, and national, state, or
local governments, including any governmental travel restrictions;
and risks inherent in litigation and the outcome of litigation and
product warranty claims. Should one or more of these risks or
uncertainties materialize, or should the assumptions underlying the
forward-looking statements prove incorrect, actual outcomes could
vary materially from those indicated. Significant risks and
uncertainties that may affect the operations, performance, and
results of the Company’s business and forward-looking statements
include, but are not limited to, those set forth under Item 1A,
“Risk Factors,” and elsewhere in our Annual Report on Form 10-K for
the year ended December 31, 2023, or as updated and/or amended by
our other current or periodic filings with the Securities and
Exchange Commission.
The forward-looking statements in this release
are made as of the date of this release and we assume no obligation
to update or revise any forward-looking statement, whether as a
result of new information, future developments, or otherwise,
except as required by the federal securities laws.
Investor Relations:Stephanie
Schmidt(412) 928-3400investors@lbfoster.com
L.B. Foster Company415 Holiday DriveSuite
100Pittsburgh, PA 15220
|
L.B. FOSTER COMPANY AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except per share
data) |
| |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
| |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| |
|
|
|
|
|
|
|
|
| Sales of goods |
|
$ |
122,417 |
|
|
$ |
132,167 |
|
|
$ |
226,880 |
|
|
$ |
230,705 |
|
| Sales of services |
|
|
18,379 |
|
|
|
15,867 |
|
|
|
38,236 |
|
|
|
32,817 |
|
| Total net sales |
|
|
140,796 |
|
|
|
148,034 |
|
|
|
265,116 |
|
|
|
263,522 |
|
| Cost of goods sold |
|
|
93,705 |
|
|
|
101,069 |
|
|
|
175,174 |
|
|
|
179,134 |
|
| Cost of services sold |
|
|
16,568 |
|
|
|
14,713 |
|
|
|
33,170 |
|
|
|
28,845 |
|
| Total cost of sales |
|
|
110,273 |
|
|
|
115,782 |
|
|
|
208,344 |
|
|
|
207,979 |
|
| Gross profit |
|
|
30,523 |
|
|
|
32,252 |
|
|
|
56,772 |
|
|
|
55,543 |
|
| Selling and administrative
expenses |
|
|
24,896 |
|
|
|
24,528 |
|
|
|
47,645 |
|
|
|
45,951 |
|
| Amortization expense |
|
|
1,123 |
|
|
|
1,375 |
|
|
|
2,340 |
|
|
|
2,740 |
|
| Operating income |
|
|
4,504 |
|
|
|
6,349 |
|
|
|
6,787 |
|
|
|
6,852 |
|
| Interest expense - net |
|
|
1,493 |
|
|
|
1,574 |
|
|
|
2,618 |
|
|
|
2,962 |
|
| Other (income) expense - net |
|
|
(152 |
) |
|
|
719 |
|
|
|
(3,688 |
) |
|
|
2,546 |
|
| Income before income taxes |
|
|
3,163 |
|
|
|
4,056 |
|
|
|
7,857 |
|
|
|
1,344 |
|
| Income tax expense |
|
|
346 |
|
|
|
563 |
|
|
|
635 |
|
|
|
22 |
|
| Net income |
|
|
2,817 |
|
|
|
3,493 |
|
|
|
7,222 |
|
|
|
1,322 |
|
| Net loss attributable to
noncontrolling interest |
|
|
(30 |
) |
|
|
(38 |
) |
|
|
(61 |
) |
|
|
(57 |
) |
| Net income attributable to L.B.
Foster Company |
|
$ |
2,847 |
|
|
$ |
3,531 |
|
|
$ |
7,283 |
|
|
$ |
1,379 |
|
| |
|
|
|
|
|
|
|
|
| Per share data attributable to
L.B. Foster shareholders: |
|
|
|
|
|
|
|
|
| Basic earnings per common
share |
|
$ |
0.26 |
|
|
$ |
0.32 |
|
|
$ |
0.68 |
|
|
$ |
0.12 |
|
| Diluted earnings per common
share |
|
$ |
0.26 |
|
|
$ |
0.32 |
|
|
$ |
0.66 |
|
|
$ |
0.12 |
|
| |
|
|
|
|
|
|
|
|
| Average number of common
shares outstanding - Basic |
|
|
10,793 |
|
|
|
10,807 |
|
|
|
10,777 |
|
|
|
10,800 |
|
| Average number of common
shares outstanding - Diluted |
|
|
11,060 |
|
|
|
10,878 |
|
|
|
11,062 |
|
|
|
10,866 |
|
|
L.B. FOSTER COMPANY AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
| |
|
June 30,2024 |
|
December 31,2023 |
| |
|
(Unaudited) |
|
|
| ASSETS |
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,021 |
|
|
$ |
2,560 |
|
|
Accounts receivable - net |
|
|
75,889 |
|
|
|
53,484 |
|
|
Contract assets - net |
|
|
20,562 |
|
|
|
29,489 |
|
|
Inventories - net |
|
|
80,085 |
|
|
|
73,496 |
|
|
Other current assets |
|
|
10,912 |
|
|
|
8,961 |
|
|
Total current assets |
|
|
191,469 |
|
|
|
167,990 |
|
|
Property, plant, and equipment - net |
|
|
75,608 |
|
|
|
75,999 |
|
|
Operating lease right-of-use assets - net |
|
|
13,313 |
|
|
|
14,905 |
|
| Other assets: |
|
|
|
|
|
Goodwill |
|
|
32,019 |
|
|
|
32,587 |
|
|
Other intangibles - net |
|
|
17,078 |
|
|
|
19,010 |
|
|
Other assets |
|
|
3,774 |
|
|
|
2,715 |
|
| TOTAL ASSETS |
|
$ |
333,261 |
|
|
$ |
313,206 |
|
| LIABILITIES AND STOCKHOLDERS’
EQUITY |
|
|
|
|
| Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
45,920 |
|
|
$ |
40,305 |
|
|
Deferred revenue |
|
|
7,532 |
|
|
|
12,479 |
|
|
Accrued payroll and employee benefits |
|
|
7,921 |
|
|
|
16,978 |
|
|
Current portion of accrued settlement |
|
|
6,000 |
|
|
|
8,000 |
|
|
Current maturities of long-term debt |
|
|
167 |
|
|
|
102 |
|
|
Other accrued liabilities |
|
|
12,889 |
|
|
|
17,442 |
|
|
Total current liabilities |
|
|
80,429 |
|
|
|
95,306 |
|
|
Long-term debt |
|
|
87,006 |
|
|
|
55,171 |
|
|
Deferred tax liabilities |
|
|
1,173 |
|
|
|
1,232 |
|
|
Long-term operating lease liabilities |
|
|
10,497 |
|
|
|
11,865 |
|
|
Other long-term liabilities |
|
|
6,504 |
|
|
|
6,797 |
|
| Stockholders' equity: |
|
|
|
|
|
Common stock |
|
|
111 |
|
|
|
111 |
|
|
Paid-in capital |
|
|
42,612 |
|
|
|
43,111 |
|
|
Retained earnings |
|
|
131,916 |
|
|
|
124,633 |
|
|
Treasury stock |
|
|
(6,405 |
) |
|
|
(6,494 |
) |
|
Accumulated other comprehensive loss |
|
|
(21,156 |
) |
|
|
(19,250 |
) |
|
Total L.B. Foster Company stockholders’ equity |
|
|
147,078 |
|
|
|
142,111 |
|
|
Noncontrolling interest |
|
|
574 |
|
|
|
724 |
|
|
Total stockholders’ equity |
|
|
147,652 |
|
|
|
142,835 |
|
| TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
333,261 |
|
|
$ |
313,206 |
|
Non-GAAP
Disclosures(Unaudited)
This earnings release discloses earnings before
interest, taxes, depreciation, and amortization (“EBITDA”),
adjusted EBITDA, net debt, and organic results adjusted for the
impact of 2024 and 2023 divestiture and product line exit activity.
The Company believes that EBITDA is useful to investors as a
supplemental way to evaluate the ongoing operations of the
Company’s business since EBITDA may enhance investors’ ability to
compare historical periods as it adjusts for the impact of
financing methods, tax law and strategy changes, and depreciation
and amortization. In addition, EBITDA is a financial measure that
management and the Company’s Board of Directors use in their
financial and operational decision-making and in the determination
of certain compensation programs. Adjusted EBITDA adjusts for
certain charges to EBITDA from continuing operations that the
Company believes are unusual, non-recurring, unpredictable, or
non-cash.
In the three and six months ended June 30,
2024, the Company made adjustments to exclude the gain on an asset
sales and a legal settlement. In the three and six months ended
June 30, 2023, the Company made adjustments to exclude the
loss on a divestiture and contingent consideration adjustments
associated with the VanHooseCo acquisition. The Company believes
the results adjusted to exclude these items are useful to investors
as these items are non-routine in nature.
The Company views net debt, which is total debt
less cash and cash equivalents, as an important metric of the
operational and financial health of the organization and believes
it is useful to investors as indicators of its ability to incur
additional debt and to service its existing debt.
Organic sales growth (decline) is a non-GAAP
financial measure of sales growth (decline) (which is the most
directly comparable GAAP measure) excluding the effects of
divestiture and product line exit activities. Management believes
this measure provides investors with a supplemental understanding
of underlying trends by providing sales growth on a consistent
basis. Management provides organic sales growth (decline) at the
consolidated and segment levels. Portfolio changes are considered
based on their comparative impact over the last three months, to
determine the differences in 2023 versus 2024 results due to these
transactions.
Non-GAAP financial measures are not a
substitute for GAAP financial results and should only be considered
in conjunction with the Company’s financial information that is
presented in accordance with GAAP. Quantitative reconciliations of
EBITDA, adjusted EBITDA, net debt, and adjustments to segment
results to exclude portfolio actions and one-time adjustments made
(in thousands, except for percentages and ratios):
| |
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
| |
|
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
|
2023 |
|
| |
|
|
|
|
|
|
|
|
| |
|
(Unaudited) |
|
(Unaudited) |
| Adjusted EBITDA
Reconciliation |
|
|
|
|
|
|
|
|
| Net income, as reported |
|
$ |
2,817 |
|
|
$ |
3,493 |
|
$ |
7,222 |
|
|
$ |
1,322 |
|
| Interest expense - net |
|
|
1,493 |
|
|
|
1,574 |
|
|
2,618 |
|
|
|
2,962 |
|
| Income tax expense |
|
|
346 |
|
|
|
563 |
|
|
635 |
|
|
|
22 |
|
| Depreciation expense |
|
|
2,362 |
|
|
|
2,484 |
|
|
4,736 |
|
|
|
4,989 |
|
| Amortization expense |
|
|
1,123 |
|
|
|
1,375 |
|
|
2,340 |
|
|
|
2,740 |
|
|
Total EBITDA |
|
$ |
8,141 |
|
|
$ |
9,489 |
|
$ |
17,551 |
|
|
$ |
12,035 |
|
| Gain on asset sale |
|
|
(815 |
) |
|
|
— |
|
|
(4,292 |
) |
|
|
— |
|
| Legal expense |
|
|
751 |
|
|
|
— |
|
|
751 |
|
|
|
— |
|
| Loss on divestiture |
|
|
— |
|
|
|
1,041 |
|
|
— |
|
|
|
3,074 |
|
| VanHooseCo contingent
consideration |
|
|
— |
|
|
|
71 |
|
|
— |
|
|
|
(26 |
) |
|
Adjusted EBITDA |
|
$ |
8,077 |
|
|
$ |
10,601 |
|
$ |
14,010 |
|
|
$ |
15,083 |
|
| |
|
June 30,2024 |
|
June 30,2023 |
| Net Debt
Reconciliation |
|
|
|
|
| Total debt |
|
$ |
87,173 |
|
|
$ |
89,505 |
|
| Less: cash and cash
equivalents |
|
|
(4,021 |
) |
|
|
(3,880 |
) |
|
Net debt |
|
$ |
83,152 |
|
|
$ |
85,625 |
|
| Change in Consolidated
Sales |
|
Three Months EndedJune 30, |
|
PercentChange |
|
Six Months EndedJune 30, |
|
PercentChange |
| 2023 net sales, as
reported |
|
$ |
148,034 |
|
|
|
|
|
263,522 |
|
|
|
| Decrease due to divestitures
and exit |
|
|
(2,231 |
) |
|
(1.5)% |
|
|
(12,871 |
) |
|
(4.9) |
% |
| Change due to organic
sales |
|
|
(5,007 |
) |
|
(3.4)% |
|
|
14,465 |
|
|
5.5 |
% |
| 2024 net sales, as
reported |
|
$ |
140,796 |
|
|
|
|
|
265,116 |
|
|
|
| |
|
|
|
|
|
|
|
|
| Total sales change, 2023 vs
2024 |
|
$ |
(7,238 |
) |
|
(4.9)% |
|
$ |
1,594 |
|
|
0.6 |
% |
| Change in Rail,
Technologies, and Services Sales |
|
Three Months EndedJune 30, |
|
PercentChange |
|
Six MonthsEnded June 30, |
|
PercentChange |
| 2023 net sales, as
reported |
|
$ |
91,616 |
|
|
|
|
$ |
156,000 |
|
|
|
|
Decrease due to divestiture |
|
|
(1,413 |
) |
|
(1.5)% |
|
|
(2,114 |
) |
|
(1.4) |
% |
| Change due to organic
sales |
|
|
(4,609 |
) |
|
(5.0)% |
|
|
14,331 |
|
|
9.2 |
% |
| 2024 net sales, as
reported |
|
$ |
85,594 |
|
|
|
|
$ |
168,217 |
|
|
|
| |
|
|
|
|
|
|
|
|
| Total sales change, 2023 vs
2024 |
|
$ |
(6,022 |
) |
|
(6.6)% |
|
$ |
12,217 |
|
|
7.8 |
% |
| Change in
Infrastructure Solutions Sales |
|
Three Months EndedJune 30, |
|
PercentChange |
|
Six Months EndedJune 30, |
|
Percentchange |
| 2023 net sales, as
reported |
|
$ |
56,418 |
|
|
|
|
$ |
107,522 |
|
|
|
| Decrease due to divestiture
and exit |
|
|
(818 |
) |
|
(1.4)% |
|
|
(10,757 |
) |
|
(10.0) |
% |
| Change due to organic
sales |
|
|
(398 |
) |
|
(0.7)% |
|
|
134 |
|
|
0.1 |
% |
| 2024 net sales, as
reported |
|
$ |
55,202 |
|
|
|
|
$ |
96,899 |
|
|
|
| |
|
|
|
|
|
|
|
|
| Total sales change, 2023 vs
2024 |
|
$ |
(1,216 |
) |
|
(2.2)% |
|
$ |
(10,623 |
) |
|
(9.9) |
% |
Note percentages may not foot due to rounding.
L B Foster (NASDAQ:FSTR)
過去 株価チャート
から 10 2024 まで 11 2024
L B Foster (NASDAQ:FSTR)
過去 株価チャート
から 11 2023 まで 11 2024
