PITTSBURGH, Aug. 6, 2013 /PRNewswire/ -- L.B. Foster
Company (NASDAQ: FSTR), a leading manufacturer, fabricator, and
distributor of products and services for rail, construction, energy
and utility markets, today reported its second quarter 2013
operating results, which included income from continuing operations
of $0.71 per diluted share. The
second quarter results were highlighted by strong cash flow of
$16.7 million. The Company also
announced updated full year 2013 earnings guidance.
(Logo:
http://photos.prnewswire.com/prnh/20101222/MM21387LOGO)
Second Quarter Results
- Second quarter net sales of $149.9
million decreased by $13.2
million or 8.1% compared to the prior year quarter due to a
10.3% decline in Rail segment sales and an 8.7% reduction in
Construction segment sales, partially offset by a 10.0% increase in
Tubular segment sales.
- Gross profit margin was 19.5% compared to 7.6% in the prior
year quarter. The significant increase was due to a
$19.0 million warranty charge
recorded in the prior year quarter. The warranty provision
was required due to the previously reported product claim related
to concrete railroad ties manufactured in our Grand Island, NE facility that was shut down
in February 2011. Excluding the warranty charge, prior year
second quarter gross margin would have been 19.2%.
- Second quarter income from continuing operations was
$7.3 million or $0.71 per diluted share compared to a loss from
continuing operations of $3.3 million
or $0.33 per diluted share last
year. Excluding concrete tie charges from the prior year
period, second quarter earnings from continuing operations would
have been $8.7 million or
$0.86 per diluted share.
- Second quarter bookings were $119.7
million, a 43.2% decline from the prior year second quarter
which represented a record quarter for order entry. During
the prior year period, the Company received the $60 million Honolulu Transit order, and orders
for concrete ties and coated pipe products were very strong.
June 2013 backlog was $220.3 million, 12.6% lower than June 2012.
- Selling and administrative expense increased by $1.3 million or 8.0%, due principally to
increases related to salaried headcount, partially offset by a
reduction in concrete tie testing costs.
- The Company's income tax rate from continuing operations was
34.6% compared to 27.6% in the prior year. The income tax
rate from continuing operations in the prior year quarter was
significantly impacted by discrete tax items due to the impact of
the $19.0 million warranty charge on
pre-tax income.
- Cash provided from continuing operating activities for the
second quarter of 2013 was $16.7
million compared to $6.5
million in the second quarter of 2012. Working capital
improvements represented $7.1 million
of the cash flow in the quarter. Inventory levels have
declined $8.5 million since the
beginning of the year.
- The Company sold the assets and liabilities of its railway load
securement business during the second quarter of 2012 to Holland
L.P. The operating results of this division as well as a
$3.5 million pre-tax gain on the sale
were classified as discontinued operations.
CEO Comments
Robert P.
Bauer, L.B. Foster Company's President and Chief Executive
Officer, commented, "This year continues to unfold in a very
different way than 2012. Our strong 1st quarter
coupled with our lower second quarter has resulted in a
1st half with sales marginally ahead of last year, and
gross profit and pre-tax profit margins 25 basis points better than
prior year 1st half results on an adjusted basis.
While year-to-date earnings per share are below our expectations,
EPS did grow 3.5% on an adjusted basis to $1.19 for the 1st half. This was
also a quarter in which we saw changing order patterns.
Construction segment orders turned positive, after the prolonged
weakness in the construction market, and Tubular segment orders
declined after what had been very strong activity for several
quarters. These patterns have caused us to change our outlook
for the year, particularly in light of the declining Tubular
segment products orders which have above average profit
margins. We expect to see a choppy order environment from
quarter to quarter as customers react to changing market conditions
and the swings in steel pricing that are occurring."
Mr. Bauer went on to say, "Cash generation was strong this
quarter as we improved on a few areas of working capital
performance and believe there is more improvement to be
achieved."
Q2 Business Segment
Highlights
($000)
Rail Segment
Rail sales decreased 10.3% due to sales reductions in our concrete
tie and rail technology businesses, partially offset by stronger
sales in our transit products division. The second quarter
2012 $19.0 million warranty charge
related to concrete ties negatively impacted prior period gross
profit.
|
2013
|
2012
|
Variance
|
Sales
|
$90,892
|
$101,369
|
(10.3%)
|
Gross
Profit
|
$17,466
|
$1,798
|
|
Gross Profit
%
|
19.2%
|
1.8%
|
|
Construction Segment
Construction sales declined 8.7% in the quarter due to reductions
in the fabricated bridge business as well as the piling product
line. Despite the difficult market conditions, all three
businesses in this segment reported improved gross profit
margins.
|
2013
|
2012
|
Variance
|
Sales
|
$43,697
|
$47,862
|
(8.7%)
|
Gross
Profit
|
$6,665
|
$7,019
|
|
Gross Profit
%
|
15.3%
|
14.7%
|
|
Tubular Segment
Tubular product sales remained strong in the second quarter as end
markets in oil & gas and water well applications are driven by
energy and agriculture. The favorable year over year
comparisons in our energy business are expected to turn negative in
the second half of the year, given our significantly reduced
backlog. Gross profit margins reached 34.1% reflecting considerable
leverage on the higher sales and our ability to efficiently run our
manufacturing facilities.
|
2013
|
2012
|
Variance
|
Sales
|
$15,347
|
$13,949
|
10.0%
|
Gross
Profit
|
$5,237
|
$4,039
|
|
Gross Profit
%
|
34.1%
|
29.0%
|
|
First Half 2013 Results
- Net sales for the first six months of 2013 increased by
$1.8 million or 0.6%, due to a 2.6%
increase in Rail segment sales and a 13.8% improvement in Tubular
segment sales, partially offset by a 6.6% decline in Construction
segment sales.
- Gross profit margin was 19.3%, 710 basis points higher than the
prior year period due to the aforementioned concrete tie warranty
charge recorded in the second quarter of 2012. Excluding this
charge, the gross profit margin would have been 19.1%.
- Selling and administrative expenses increased $1.5 million, or 4.5% from the prior year due
primarily to increases related to salaried headcount, partially
offset by a reduction in concrete tie testing costs.
- Income from continuing operations was $12.2 million or $1.19 per diluted share compared to a loss of
$0.3 million or $0.03 per diluted share in 2012.
- The Company's income tax rate from continuing operations in the
current six month period was 34.1%. The income tax rate from
continuing operations in the prior year was significantly impacted
by discrete tax items as a result of the impact of the $19.0 million warranty charge on pre-tax
income.
- Cash used by continuing operating activities was $0.5 million for the first half of 2013 compared
to $3.6 million of cash generated by
continuing operating activities in 2012.
2013 Outlook
- Orders for the Construction segment turned positive in Q2
boosting our confidence that the 2nd half will be
considerably better than the 1st half of the
year.
|
2013
|
2012
|
Variance
|
Construction
|
|
|
|
Orders
|
|
|
|
Q1
|
$41,379
|
$42,393
|
(2.4%)
|
Q2
|
$51,879
|
$42,630
|
21.7%
|
6 Month
Total
|
$93,258
|
$85,023
|
9.7%
|
- Orders for the Tubular segment reversed course in Q2 as
customers reacted to changing steel prices, inventory levels, and
natural gas prices. As a result of the reduction in orders
and backlog levels, we are revising our forecast downward.
|
2013
|
2012
|
Variance
|
Tubular
Orders
|
|
|
|
|
|
|
|
Q1
|
$10,147
|
$10,518
|
(3.5%)
|
Q2
|
$7,957
|
$15,023
|
(47.0%)
|
6 Month
Total
|
$18,104
|
$25,541
|
(29.1%)
|
- The changing mix in order patterns and resulting sales
forecast, coupled with the varied profitability of our business
segments, has led us to revise our full year forecast. Sales
are expected to finish the year between $600
and $610 million. Our pre-tax profit margins will
decline largely due to the reduced Tubular segment volume.
Pre-tax profit is expected to be between $42.4 million and $44.0 million. This
should result in EPS in the range of $2.70
to $2.80.
L.B. Foster Company will conduct a conference call and webcast
to discuss its second quarter 2013 operating results on
Tuesday, August 6, 2013 at
11:00am ET. The call will be
hosted by Mr. Robert Bauer,
President and Chief Executive Officer. Listen via audio on
the L.B. Foster web site: www.lbfoster.com, by accessing the
Investor Relations page. The replay can also be heard via
telephone at (888) 286-8010 by entering pass code 53429500.
This release may contain forward-looking statements that
involve risks and uncertainties. Statements that do not relate
strictly to historical or current facts are forward-looking. When
we use the words "believe," "intend," "expect," "may," "should,"
"anticipate," "could," "estimate," "plan," "predict," "project," or
their negatives, or other similar expressions, the statements which
include those words are usually forward-looking statements. Actual
results could differ materially from the results anticipated in any
forward-looking statement. Accordingly, investors should not
place undue reliance on forward-looking statements as a prediction
of actual results. The Company has based these forward-looking
statements on current expectations and assumptions about future
events. 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 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, an economic slowdown in the
markets we serve; a decrease in freight or passenger rail traffic;
a lack of state or federal funding for new infrastructure projects;
an increase in manufacturing or material costs; the ultimate number
of concrete ties that will have to be replaced pursuant to the
product claim; the outcome of the Inspector General subpoena; and
those matters set forth in Item 8, Footnote 21, "Commitments and
Contingent Liabilities" in Item 1A, "Risk Factors" of the Company's
Form 10-K for the year ended December 31,
2012 and in Part II, Item1A of the Quarterly Report on Form
10-Q for the period ended March 31,
2013. The Company urges all interested parties to read these
reports to gain a better understanding of the many business and
other risks that the Company faces. The forward-looking
statements contained in this press release are made only as of the
date hereof, and the Company assumes no obligation and does not
intend to update or revise these statements, whether as a result of
new information, future events or otherwise.
Contact:
|
|
|
David
Russo
|
Phone:
412.928.3417
|
L.B. Foster
Company
|
|
Email:
Investors@Lbfoster.com
|
415 Holiday
Drive
|
|
Website:
www.lbfoster.com
|
Pittsburgh,
PA 15220
|
L. B. FOSTER COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
149,936
|
$
|
163,180
|
$
|
279,257
|
$
|
277,471
|
Cost of goods
sold
|
|
120,761
|
|
150,846
|
|
225,234
|
|
243,485
|
Gross
profit
|
|
29,175
|
|
12,334
|
|
54,023
|
|
33,986
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expenses
|
|
17,951
|
|
16,628
|
|
35,081
|
|
33,558
|
Amortization
expense
|
|
700
|
|
697
|
|
1,401
|
|
1,394
|
Interest
expense
|
|
125
|
|
123
|
|
258
|
|
263
|
Interest
income
|
|
(139)
|
|
(94)
|
|
(345)
|
|
(194)
|
Equity in income of
nonconsolidated investment
|
|
(420)
|
|
(309)
|
|
(596)
|
|
(332)
|
Other
income
|
|
(137)
|
|
(121)
|
|
(315)
|
|
(606)
|
|
|
18,080
|
|
16,924
|
|
35,484
|
|
34,083
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes
|
|
11,095
|
|
(4,590)
|
|
18,539
|
|
(97)
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
3,838
|
|
(1,269)
|
|
6,331
|
|
245
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
|
7,257
|
|
(3,321)
|
|
12,208
|
|
(342)
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Income from
discontinued operations before income taxes
|
|
62
|
|
3,543
|
|
23
|
|
4,147
|
Income tax
expense
|
|
24
|
|
2,293
|
|
9
|
|
2,507
|
Income from
discontinued operations
|
|
38
|
|
1,250
|
|
14
|
|
1,640
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
7,295
|
$
|
(2,071)
|
$
|
12,222
|
$
|
1,298
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
From continuing
operations
|
$
|
$0.71
|
$
|
($0.33)
|
$
|
$1.20
|
$
|
($0.03)
|
From discontinued
operations
|
|
0.00
|
|
0.12
|
|
0.00
|
|
0.16
|
Basic earnings (loss)
per common share
|
$
|
$0.72
|
$
|
($0.20)
|
$
|
$1.20
|
$
|
$0.13
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
From continuing
operations
|
$
|
$0.71
|
$
|
($0.33)
|
$
|
$1.19
|
$
|
($0.03)
|
From discontinued
operations
|
|
0.00
|
|
0.12
|
|
0.00
|
|
0.16
|
Diluted earnings
(loss) per common share
|
$
|
$0.71
|
$
|
($0.20)
|
$
|
$1.19
|
$
|
$0.13
|
|
|
|
|
|
|
|
|
|
Dividends paid per
common share
|
$
|
0.030
|
$
|
0.025
|
$
|
0.060
|
$
|
0.050
|
|
|
|
|
|
|
|
|
|
Average number of
common shares outstanding - Basic
|
|
10,173
|
|
10,121
|
|
10,165
|
|
10,105
|
|
|
|
|
|
|
|
|
|
Average number of
common shares outstanding - Diluted
|
|
10,258
|
|
10,121
|
*
|
10,243
|
|
10,194
|
|
|
|
|
|
|
|
|
|
* - The Company
incurred a loss applicable to common shareholders in the three
months ended June 30, 2012. The inclusion of dilutive
securities in the calculation of weighted average common
shares is anti-dilutive and there is no difference between basic
and diluted earnings per share.
|
L. B. FOSTER COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
2013
|
|
2012
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
94,678
|
$
|
101,464
|
Accounts receivable -
net
|
|
78,749
|
|
59,673
|
Inventories -
net
|
|
98,609
|
|
107,108
|
Current deferred tax
assets
|
|
4,585
|
|
4,585
|
Prepaid income
tax
|
|
3,731
|
|
1,195
|
Other current
assets
|
|
2,586
|
|
1,903
|
Current assets of
discontinued operations
|
|
195
|
|
464
|
Total current
assets
|
|
283,133
|
|
276,392
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
41,640
|
|
42,333
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
Goodwill
|
|
41,237
|
|
41,237
|
Other intangibles -
net
|
|
38,808
|
|
40,165
|
Investments
|
|
4,460
|
|
4,332
|
Other
assets
|
|
1,594
|
|
1,663
|
Total
Assets
|
$
|
410,872
|
$
|
406,122
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable - trade
|
$
|
52,546
|
$
|
50,454
|
Deferred revenue
|
|
9,893
|
|
7,447
|
Accrued payroll and employee benefits
|
|
6,418
|
|
9,604
|
Accrued
warranty
|
|
11,815
|
|
15,727
|
Current maturities of long-term debt
|
|
23
|
|
35
|
Other accrued liabilities
|
|
7,804
|
|
8,596
|
Liabilities of discontinued operations
|
|
37
|
|
106
|
Total current
liabilities
|
|
88,536
|
|
91,969
|
|
|
|
|
|
Long-term debt
|
|
15
|
|
27
|
Deferred tax liabilities
|
|
11,728
|
|
12,140
|
Other long-term liabilities
|
|
13,596
|
|
14,411
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Class A Common Stock
|
|
111
|
|
111
|
Paid-in capital
|
|
46,329
|
|
46,290
|
Retained earnings
|
|
281,913
|
|
270,311
|
Treasury Stock
|
|
(24,556)
|
|
(25,468)
|
Accumulated other comprehensive loss
|
|
(6,800)
|
|
(3,669)
|
Total
stockholders' equity
|
|
296,997
|
|
287,575
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
410,872
|
$
|
406,122
|
|
L.B. Foster
Company
|
Non-GAAP Financial
Measures
|
|
This earnings release
contains certain non-GAAP financial measures. These financial
measures include gross profit margins excluding concrete tie costs
and earnings per share from continuing operations excluding
concrete tie costs. The Company believes that these non-GAAP
measures are useful to investors in order to provide a better
understanding of these measures excluding certain costs incurred in
2012. The costs incurred were associated to concrete ties
manufactured at its Grand Island facility which was closed in
2011.
These 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 the GAAP measures
are presented below:
|
|
|
|
|
|
|
L.B. FOSTER
COMPANY AND SUBSIDIARIES
|
Reconciliation of
Non-GAAP Financial Measures
|
(In Thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
Gross profit
margins excluding concrete tie charges
|
2013
|
2012
|
|
2013
|
2012
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
Net sales, as
reported
|
$
149,936
|
$
163,180
|
|
$
279,257
|
$
277,471
|
Cost of goods
sold, as reported
|
120,761
|
150,846
|
|
225,234
|
243,485
|
Gross
profit
|
29,175
|
12,334
|
|
54,023
|
33,986
|
|
|
|
|
|
|
Product warranty
charges, before income tax
|
-
|
19,000
|
|
-
|
19,000
|
|
|
|
|
|
|
Gross profit,
excluding certain charges
|
$
29,175
|
$
31,334
|
|
$
54,023
|
$
52,986
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
percentage, as reported
|
19.46%
|
7.56%
|
|
19.35%
|
12.25%
|
Gross profit
percentage, excluding certain charges
|
19.46%
|
19.20%
|
|
19.35%
|
19.10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
Income (loss) from
continuing operations (including diluted earnings
|
June
30,
|
|
June
30,
|
per
share) excluding concrete tie charges
|
2013
|
2012
|
|
2013
|
2012
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
Income (loss) from
continuing operations, as reported
|
$
7,257
|
$
(3,321)
|
|
$
12,208
|
$
(342)
|
|
|
|
|
|
|
Product warranty
charges, net of income tax
|
-
|
12,827
|
|
-
|
12,827
|
|
|
|
|
|
|
Incentive
compensation, net of income tax
|
-
|
(781)
|
|
-
|
(781)
|
|
|
|
|
|
|
Income from
continuing operations, excluding certain charges
|
$
7,257
|
$
8,725
|
|
$
12,208
|
$
11,704
|
|
|
|
|
|
|
DILUTEDEARNINGS (LOSS) PER COMMON
SHARE:
|
|
|
|
|
|
FROM
CONTINUING OPERATIONS, as reported
|
$0.71
|
($0.33)
|
|
$1.19
|
($0.03)
|
DILUTEDEARNINGS PER COMMON SHARE:
|
|
|
|
|
|
FROM
CONTINUING OPERATIONS, excluding certain charges
|
$0.71
|
$0.86
|
|
$1.19
|
$1.15
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES
|
|
|
|
|
|
OUTSTANDING -
DILUTED, as reported
|
10,258
|
10,121
|
|
10,243
|
10,194
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES
|
|
|
|
|
|
OUTSTANDING -
DILUTED, excluding certain charges
|
10,258
|
10,191
|
|
10,243
|
10,216
|
|
|
|
|
|
|
SOURCE L.B. Foster Company