PITTSBURGH, Nov. 5, 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 third quarter 2013 operating results,
which included income from continuing operations of $0.95 per diluted share.
(Logo: http://photos.prnewswire.com/prnh/20101222/MM21387LOGO
)
Third Quarter Results
- Third quarter net sales of $162.2
million decreased by $8.1
million or 4.8% compared to the prior year quarter due to a
4.9% decline in Rail segment sales and a 45.0% reduction in Tubular
segment sales, partially offset by a 7.3% increase in Construction
segment sales.
- Gross profit margin was 19.3% compared to 18.0% in the prior
year quarter. The increase was due to a $3.0 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 third quarter
gross margin would have been 19.8%.
- Third quarter income from continuing operations was
$9.8 million or $0.95 per diluted share
compared to $8.5 million or
$0.83 per diluted share last
year. Excluding concrete tie charges from the prior year
period, third quarter income from continuing operations would have
been $10.2 million or $1.00 per diluted share. Third quarter 2013
income from continuing operations was adversely affected by the
lower volume of Tubular segment sales as compared to the prior year
period.
- Third quarter bookings were $133.1
million, a 5.5% decline from the prior year third quarter,
due principally to reductions in Tubular and Rail segment orders,
partially offset by an increase in Construction segment
orders. September 2013 backlog
was $197.5 million, 12.5% lower than
September 2012.
- Selling and administrative expense increased by $1.0 million or 5.8%, 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
30.2% compared to 35.4% in the prior year. The income tax
rate from continuing operations in the current year quarter was
favorably impacted by discrete tax items related to certain state
income tax matters.
- Cash provided from continuing operating activities for the
third quarter of 2013 was $3.0
million compared to $21.6
million in the third quarter of 2012. Working capital
fluctuations represent a large portion of the quarter over quarter
change.
CEO Comments
Robert P. Bauer, L.B. Foster
Company's President and Chief Executive Officer, commented, "This
quarter unfolded much like we projected in our last update when we
discussed changing order patterns as Construction turned positive
after a prolonged market weakness and Tubular segment orders
declined after several strong quarters. These changing order
patterns had an unfavorable impact on profit margins which we
discussed in our outlook last quarter. Year-to-date earnings per
share were $2.15 and while this is
flat with the prior year adjusted results, it's a pretty good story
given the lower Tubular segment volume." Mr. Bauer concluded by
saying, "News from the marketplace remains positive long term.
Indicators for the construction market have all improved, and the
oil and gas industries remain healthy."
Q3 Business Segment Highlights
($000)
Rail Segment
Rail sales decreased 4.9% due to sales reductions in our concrete
tie and rail distribution businesses, partially offset by stronger
sales in our transit products and Allegheny Rail Products
divisions. The third quarter 2012 $3.0
million warranty charge related to concrete ties negatively
impacted prior period gross profit margins, however, third quarter
2013 Rail segment margins were 60 basis points better than the
prior period on an adjusted basis.
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|
2013
|
2012
|
Variance
|
|
Sales
|
$105,552
|
$110,993
|
(4.9%)
|
|
Gross Profit
|
$21,647
|
$19,111
|
|
|
Gross Profit %
|
20.5%
|
17.2%
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| |
Construction Segment
Construction sales increased by 7.3% in the quarter due to stronger
piling products sales and, to a lesser extent, improved sales in
concrete buildings. Gross profit margins held relatively flat
despite the negative change to product mix.
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|
|
2013
|
2012
|
Variance
|
|
Sales
|
$49,320
|
$45,948
|
7.3%
|
|
Gross Profit
|
$7,614
|
$7,183
|
|
|
Gross Profit %
|
15.4%
|
15.6%
|
|
|
|
|
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| |
Tubular Segment
Tubular sales declined by 45.0% in the quarter due to softer coated
products sales. We believe that reduced order entry and backlog in
the oil and gas markets were impacted by project delays as end
users reacted to changing market conditions. Gross profit margins
declined due principally to volume related de-leveraging, and our
decision to work on plant improvements during lower volume
production periods.
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2013
|
2012
|
Variance
|
|
Sales
|
$7,376
|
$13,405
|
(45.0%)
|
|
Gross Profit
|
$1,608
|
$4,401
|
|
|
Gross Profit %
|
21.8%
|
32.8%
|
|
|
|
|
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| |
Nine Month Results
- Net sales for the first nine months of 2013 decreased by
$6.3 million or 1.4%, due to a 7.7%
decline in Tubular segment sales, a 1.8% decrease in Construction
segment sales and a 0.4% reduction in Rail segment sales.
- Gross profit margin was 19.3%, 490 basis points higher than the
prior year period due to the aforementioned $3.0 million third quarter concrete tie warranty
charge as well as a $19.0 million
second quarter 2012 warranty charge. Excluding these charges,
the 2012 gross profit margin would have been 19.4%.
- Selling and administrative expenses increased $2.5 million, or 5.0% from the prior year due
primarily to personnel related costs associated with higher
salaried headcount, partially offset by a reduction in concrete tie
testing costs.
- Income from continuing operations was $22.0 million or $2.15 per diluted share compared to $8.1 million or $0.80 per diluted share in 2012. Excluding
the 2012 warranty related adjustments, income from continuing
operations would have been $21.9
million or $2.14 per diluted
share.
- The Company's income tax rate from continuing operations in the
current nine month period was 32.4% compared to 37.6% in the prior
year. The 2013 income tax rate from continuing operations was
favorably impacted by certain state income tax matters and the 2012
rate was negatively impacted by discrete tax items as a result of
the impact of the $22.0 million
warranty charge on pre-tax income.
- Cash provided by continuing operating activities was
$2.5 million for the nine month
period of 2013 compared to $25.3
million in 2012. The reduction in cash flows relates
primarily to changes in working capital, including increased cash
payments for taxes, as well as a reduction in depreciation and
amortization expense.
L.B. Foster Company will conduct a conference call and webcast
to discuss its third quarter 2013 operating results on Tuesday, November 5, 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 58963254.
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 June 30,
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:
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David
Russo
|
Phone:
412.928.3417
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L.B. Foster
Company
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Email:
Investors@Lbfoster.com
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415 Holiday Drive
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Website:
www.lbfoster.com
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Pittsburgh, PA
15220
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L. B. FOSTER
COMPANY AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
162,248
|
$
|
170,346
|
$
|
441,505
|
$
|
447,817
|
|
Cost of goods sold
|
|
130,943
|
|
139,634
|
|
356,177
|
|
383,117
|
|
Gross profit
|
|
31,305
|
|
30,712
|
|
85,328
|
|
64,700
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative
expenses
|
|
17,547
|
|
16,581
|
|
52,628
|
|
50,142
|
|
Amortization expense
|
|
701
|
|
703
|
|
2,102
|
|
2,097
|
|
Interest expense
|
|
118
|
|
141
|
|
376
|
|
405
|
|
Interest income
|
|
(149)
|
|
(126)
|
|
(494)
|
|
(319)
|
|
Equity in income of
nonconsolidated investment
|
|
(296)
|
|
(310)
|
|
(892)
|
|
(643)
|
|
Other (income)
expense
|
|
(638)
|
|
612
|
|
(953)
|
|
4
|
|
|
|
17,283
|
|
17,601
|
|
52,767
|
|
51,686
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
|
14,022
|
|
13,111
|
|
32,561
|
|
13,014
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
4,229
|
|
4,647
|
|
10,560
|
|
4,892
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
9,793
|
|
8,464
|
|
22,001
|
|
8,122
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations before income taxes
|
|
-
|
|
(343)
|
|
23
|
|
3,805
|
|
Income tax expense
(benefit)
|
|
-
|
|
(104)
|
|
9
|
|
2,403
|
|
Income (loss) from discontinued
operations
|
|
-
|
|
(239)
|
|
14
|
|
1,402
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
9,793
|
$
|
8,225
|
$
|
22,015
|
$
|
9,524
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common
share:
|
|
|
|
|
|
|
|
|
|
From continuing
operations
|
$
|
0.96
|
$
|
0.83
|
$
|
2.16
|
$
|
0.80
|
|
From discontinued
operations
|
|
-
|
|
(0.02)
|
|
0.00
|
|
0.14
|
|
Basic earnings per common
share
|
$
|
0.96
|
$
|
0.81
|
$
|
2.16
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per
common share:
|
|
|
|
|
|
|
|
|
|
From continuing
operations
|
$
|
0.95
|
$
|
0.83
|
$
|
2.15
|
$
|
0.80
|
|
From discontinued
operations
|
|
-
|
|
(0.02)
|
|
0.00
|
|
0.14
|
|
Diluted earnings per common
share
|
$
|
0.95
|
$
|
0.81
|
$
|
2.15
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per common
share
|
$
|
0.030
|
$
|
0.025
|
$
|
0.090
|
$
|
0.075
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares
outstanding - Basic
|
|
10,182
|
|
10,141
|
|
10,171
|
|
10,117
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares
outstanding - Diluted
|
|
10,281
|
|
10,206
|
|
10,255
|
|
10,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
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|
L. B. FOSTER
COMPANY AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
95,997
|
$
|
101,464
|
|
Accounts receivable -
net
|
|
88,430
|
|
59,673
|
|
Inventories - net
|
|
93,497
|
|
107,108
|
|
Current deferred tax
assets
|
|
4,585
|
|
4,585
|
|
Prepaid income tax
|
|
5,547
|
|
1,195
|
|
Other current assets
|
|
3,439
|
|
1,903
|
|
Current assets of discontinued
operations
|
|
167
|
|
464
|
|
Total current
assets
|
|
291,662
|
|
276,392
|
|
|
|
|
|
|
|
Property, plant and equipment -
net
|
|
42,672
|
|
42,333
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
Goodwill
|
|
41,237
|
|
41,237
|
|
Other intangibles -
net
|
|
38,145
|
|
40,165
|
|
Investments
|
|
4,666
|
|
4,332
|
|
Other assets
|
|
1,536
|
|
1,663
|
|
Total Assets
|
$
|
419,918
|
$
|
406,122
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable -
trade
|
$
|
56,874
|
$
|
50,454
|
|
Deferred revenue
|
|
3,981
|
|
7,447
|
|
Accrued payroll and employee
benefits
|
|
7,014
|
|
9,604
|
|
Accrued warranty
|
|
7,761
|
|
15,727
|
|
Current maturities of long-term
debt
|
|
29
|
|
35
|
|
Other accrued
liabilities
|
|
10,642
|
|
8,596
|
|
Liabilities of discontinued
operations
|
|
26
|
|
106
|
|
Total current
liabilities
|
|
86,327
|
|
91,969
|
|
|
|
|
|
|
|
Long-term debt
|
|
19
|
|
27
|
|
Deferred tax
liabilities
|
|
11,584
|
|
12,140
|
|
Other long-term
liabilities
|
|
13,448
|
|
14,411
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Class A Common Stock
|
|
111
|
|
111
|
|
Paid-in capital
|
|
47,107
|
|
46,290
|
|
Retained earnings
|
|
291,395
|
|
270,311
|
|
Treasury Stock
|
|
(24,825)
|
|
(25,468)
|
|
Accumulated other comprehensive
loss
|
|
(5,248)
|
|
(3,669)
|
|
Total stockholders'
equity
|
|
308,540
|
|
287,575
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
419,918
|
$
|
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
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
Gross profit margins excluding
concrete tie charges
|
2013
|
2012
|
|
2013
|
2012
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net sales, as
reported
|
$ 162,248
|
$ 170,346
|
|
$ 441,505
|
$ 447,817
|
|
Cost of goods sold, as
reported
|
130,943
|
139,634
|
|
356,177
|
383,117
|
|
Gross profit
|
31,305
|
30,712
|
|
85,328
|
64,700
|
|
|
|
|
|
|
|
|
Product warranty charges, before
income tax
|
-
|
3,000
|
|
-
|
22,000
|
|
|
|
|
|
|
|
|
Gross profit, excluding certain
charges
|
$ 31,305
|
$ 33,712
|
|
$ 85,328
|
$ 86,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit percentage, as
reported
|
19.29%
|
18.03%
|
|
19.33%
|
14.45%
|
|
Gross profit percentage,
excluding certain charges
|
19.29%
|
19.79%
|
|
19.33%
|
19.36%
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Income from continuing
operations (including diluted earnings
|
September
30,
|
|
September
30,
|
|
per share) excluding concrete
tie charges
|
2013
|
2012
|
|
2013
|
2012
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Income from continuing
operations, as reported
|
$ 9,793
|
$ 8,464
|
|
$ 22,001
|
$ 8,122
|
|
|
|
|
|
|
|
|
Product warranty charges, net of
income tax
|
-
|
1,780
|
|
-
|
14,607
|
|
|
|
|
|
|
|
|
Incentive compensation, net of
income tax
|
-
|
-
|
|
-
|
(781)
|
|
|
|
|
|
|
|
|
Income from continuing
operations, excluding certain charges
|
$ 9,793
|
$ 10,244
|
|
$ 22,001
|
$ 21,948
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER COMMON
SHARE:
|
|
|
|
|
|
|
FROM CONTINUING OPERATIONS, as
reported
|
$0.95
|
$0.83
|
|
$2.15
|
$0.80
|
|
DILUTED EARNINGS PER COMMON
SHARE:
|
|
|
|
|
|
|
FROM CONTINUING OPERATIONS,
excluding certain charges
|
$0.95
|
$1.00
|
|
$2.15
|
$2.14
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF COMMON
SHARES
|
|
|
|
|
|
|
OUTSTANDING - DILUTED, as
reported
|
10,281
|
10,206
|
|
10,255
|
10,211
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF COMMON
SHARES
|
|
|
|
|
|
|
OUTSTANDING - DILUTED, excluding
certain charges
|
10,281
|
10,230
|
|
10,255
|
10,233
|
|
|
|
|
|
|
|
|
| |