PITTSBURGH, May 5, 2014 /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 first quarter 2014
operating results, which included income from continuing operations
of $0.35 per diluted share, a 27.1%
decrease from the first quarter of 2013. The Company reported
that new orders increased by 10.1% and year over year backlog
improved, while sales were below expectations due to project delays
in all business segments. Cash flow provided by continuing
operations was very strong at $32.1
million.
First Quarter Results
- First quarter net sales of $111.4
million declined by $17.9
million or 13.8% compared to the prior year quarter due to a
25.6% decrease in Construction segment sales, a 9.7% reduction in
Rail segment sales and a 5.2% decline in Tubular segment
sales. All three business segments were impacted by customer
delays as many struggled with weather issues.
- Gross profit margin was strong at 21.7%, 245 basis points
higher than the prior year quarter. Gross profit margin
improved in the Construction and Rail segments, which was partially
offset by a decline in the Tubular segment.
- First quarter income from continuing operations was
$3.6 million or $0.35 per diluted share
compared to $5.0 million or
$0.48 per diluted share last
year. First quarter 2014 income from continuing operations
was unfavorably affected by lower sales across all business
segments as well as lower Tubular gross profit margins. These
unfavorable items were partially offset by improved gross profit
margins in the Construction and Rail segments.
- First quarter bookings were $179.9
million, a 10.1% increase over the prior year first quarter,
due to improvements in Tubular and Construction segment orders,
including strong activity in Coated Products and Piling
Products. March 2014 backlog
was $253.3 million, 2.1% higher than
March 2013 and 38.3% higher than
December 31, 2013.
- Selling and administrative expense increased by $0.9 million or 5.2%, due principally to cost
increases related to salaried headcount.
- The Company's income tax rate from continuing operations was
31.4% compared to 33.5% in the prior year quarter. The income
tax rate from continuing operations compares favorably to the prior
year quarter as the current year was positively impacted by certain
state income tax matters.
- Cash flow from continuing operating activities for the first
quarter of 2014 provided $32.1
million compared to a $17.2
million use of cash in the first quarter of 2013. The
current year quarter was favorably impacted due to a significant
reduction in accounts receivable, which was anticipated as we
focused on action plans to resolve slow receivable collections in
the second half of 2013.
CEO Comments
Robert P.
Bauer, L.B. Foster Company's President and Chief Executive
Officer, commented, "As our customers struggled with weather
related problems in the first quarter, our shipments were adversely
affected. Several planned shipments have moved from Q1 to Q2
as our backlog in the quarter increased. Order activity was
strong, and we were very pleased with the first quarter gross
profit margins and the improvements made in working capital
management. I am also encouraged by the strong customer
inquiry activity and order entry in the first quarter which has
continued through April. The strong Tubular segment bookings
and backlog should result in improved performance by that segment
in the second half of 2014. In addition, our Construction
segment continues to see a favorable market outlook and we
anticipate 2014 gross profit margins to continue to exceed those
generated in 2013." Mr. Bauer concluded by saying, "We
continue to see strength in our markets and expect our customers
that were negatively impacted by the severe weather conditions in
the first quarter to recover during the remainder of the year.
Our full year outlook is positive for all three business
segments, and our full year forecast has not been affected by the
slow start to the year."
Q1 Business Segment Highlights
($000's)
Rail Segment
Rail sales decreased 9.7% due to sales reductions in our Rail
Distribution and Transit businesses, partially offset by stronger
sales in our Rail Technology division. First quarter gross
profit margins improved due to improved execution and leverage from
the increase in sales in our rail technologies business.
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2014
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2013
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Variance
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|
|
|
|
|
Sales
|
$73,496
|
$81,399
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(9.7%)
|
|
|
|
|
|
Gross
Profit
|
$16,430
|
$17,033
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|
|
|
|
|
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Gross Profit
%
|
22.4%
|
20.9%
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Construction Segment
Construction sales declined by 25.6% in the quarter due principally
to weak Piling Products sales, partially offset by improved sales
in Fabricated Bridge Products. Gross profit margins improved
significantly due to margin improvement in all businesses in this
segment as well as a favorable product mix.
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2014
|
2013
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Variance
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|
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Sales
|
$27,383
|
$36,811
|
(25.6%)
|
|
|
|
|
|
Gross
Profit
|
$5,712
|
$4,972
|
|
|
|
|
|
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Gross Profit
%
|
20.9%
|
13.5%
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Tubular Segment
Tubular sales declined by 5.2% in the quarter due to softer Coated
Products sales and lower Threaded Products sales, partially offset
by sales of our Ball Winch acquisition, which closed in the fourth
quarter of 2013. While Coated Products bookings and backlog
have improved substantially, production and sales activity did not
accelerate in the first quarter. Tubular gross profit margins
declined due principally to volume related de-leveraging.
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2014
|
2013
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Variance
|
|
|
|
|
|
Sales
|
$10,535
|
$11,111
|
(5.2%)
|
|
|
|
|
|
Gross
Profit
|
$2,130
|
$3,215
|
|
|
|
|
|
|
Gross Profit
%
|
20.2%
|
28.9%
|
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2014 Outlook
We anticipate that overall market
conditions will be favorable across all three of our business
segments in 2014 and expect to see continually increasing
investment in transportation and energy infrastructure.
During 2014, L.B. Foster expects to see most businesses grow and
will continue to work off the Honolulu project related backlog in our
Transit business. The favorable order patterns seen in the
latter part of 2013 and the first quarter of 2014 for Piling and
Coated Products are expected to continue as the construction and
gas pipeline markets grow. The net result should be a
positive year for sales growth.
The Company expects 2014 sales to be in the range of
$620 million to $630 million.
Pretax income is expected to range between $43 million and $47 million and we anticipate
diluted EPS to be between $2.80 and
$3.00.
As previously mentioned, the Company is planning to increase
capital spending in 2014 to a range of $18.0
million to $22.0 million. This is a substantial
increase over the normal rate of annual spending as a result of
several growth programs that are launching simultaneously.
This does not represent a new level of ongoing annual
spending.
We anticipate the increased capital spending in 2014 will be
offset by improved cash flow from operating activities as
demonstrated by our first quarter success derived from programs
focused on working capital improvement.
L.B. Foster Company will conduct a conference call and webcast
to discuss its first quarter 2014 operating results on Monday, May 5, 2014 at 11:00 am 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 conference call can be accessed by dialing
800-299-8538 and providing access code 24084416.
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
previously disclosed product warranty claim of the Union Pacific
Railroad and an overall resolution of the related contract claims;
and those matters set forth in Item 8, Footnote 20, "Commitments
and Contingent Liabilities" and in Item 1A, "Risk Factors" of the
Company's Form 10-K for the year ended December 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, except as required by securities laws.
Contact:
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David Russo
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Phone:
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412.928.3417
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L.B. Foster
Company
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Email:
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Investors@Lbfoster.com
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415 Holiday
Drive
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Website:
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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
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
|
|
|
Net sales
|
$
|
111,414
|
$
|
129,321
|
Cost of goods
sold
|
|
87,287
|
|
104,473
|
Gross
profit
|
|
24,127
|
|
24,848
|
|
|
|
|
|
Selling and
administrative expenses
|
|
18,025
|
|
17,130
|
Amortization
expense
|
|
1,141
|
|
701
|
Interest
expense
|
|
123
|
|
133
|
Interest
income
|
|
(144)
|
|
(206)
|
Equity in income of
nonconsolidated investment
|
|
(204)
|
|
(176)
|
Other
income
|
|
(135)
|
|
(178)
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|
|
18,806
|
|
17,404
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
|
5,321
|
|
7,444
|
|
|
|
|
|
Income tax
expense
|
|
1,672
|
|
2,493
|
|
|
|
|
|
Income from
continuing operations
|
|
3,649
|
|
4,951
|
|
|
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Discontinued
operations:
|
|
|
|
|
Loss from
discontinued operations before income taxes
|
|
-
|
|
(39)
|
Income tax
benefit
|
|
-
|
|
(15)
|
Loss from
discontinued operations
|
|
-
|
|
(24)
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Net income
|
$
|
3,649
|
$
|
4,927
|
|
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Basic earnings per
common share:
|
|
|
|
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From continuing
operations
|
$
|
0.36
|
$
|
0.49
|
From discontinued
operations
|
|
-
|
|
(0.00)
|
Basic earnings per
common share
|
$
|
0.36
|
$
|
0.49
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|
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Diluted earnings per
common share:
|
|
|
|
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From continuing
operations
|
$
|
0.35
|
$
|
0.48
|
From discontinued
operations
|
|
-
|
|
(0.00)
|
Diluted earnings per
common share
|
$
|
0.35
|
$
|
0.48
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|
|
|
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Dividends paid per
common share
|
$
|
0.03
|
$
|
0.03
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|
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|
Average number of
common shares outstanding - Basic
|
|
10,197
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|
10,158
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|
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Average number of
common shares outstanding - Diluted
|
|
10,292
|
|
10,247
|
L.B. FOSTER COMPANY
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
91,131
|
$
|
64,623
|
Accounts receivable -
net
|
|
66,771
|
|
98,437
|
Inventories -
net
|
|
77,644
|
|
76,956
|
Current deferred tax
assets
|
|
461
|
|
461
|
Prepaid income
tax
|
|
3,977
|
|
4,741
|
Other current
assets
|
|
4,445
|
|
2,000
|
Current assets of
discontinued operations
|
|
88
|
|
149
|
Total current
assets
|
|
244,517
|
|
247,367
|
|
|
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Property, plant and
equipment - net
|
|
51,478
|
|
50,109
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|
|
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Other
assets:
|
|
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|
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Goodwill
|
|
57,781
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|
57,781
|
Other intangibles -
net
|
|
50,705
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|
51,846
|
Investments
|
|
5,204
|
|
5,090
|
Other
assets
|
|
1,480
|
|
1,461
|
Total
Assets
|
$
|
411,165
|
$
|
413,654
|
|
|
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|
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LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
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|
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Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
43,617
|
$
|
46,620
|
Deferred
revenue
|
|
7,130
|
|
5,715
|
Accrued payroll and
employee benefits
|
|
5,753
|
|
8,927
|
Accrued
warranty
|
|
7,010
|
|
7,483
|
Current maturities of
long-term debt
|
|
114
|
|
31
|
Current deferred tax
liabilities
|
|
179
|
|
179
|
Other accrued
liabilities
|
|
7,013
|
|
6,501
|
Liabilities of
discontinued operations
|
|
26
|
|
26
|
Total current
liabilities
|
|
70,842
|
|
75,482
|
|
|
|
|
|
Long-term
debt
|
|
319
|
|
25
|
Deferred tax
liabilities
|
|
11,591
|
|
11,798
|
Other long-term
liabilities
|
|
10,472
|
|
9,952
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Class A Common
Stock
|
|
111
|
|
111
|
Paid-in
capital
|
|
46,565
|
|
47,239
|
Retained
earnings
|
|
301,701
|
|
298,361
|
Treasury
stock
|
|
(24,144)
|
|
(24,731)
|
Accumulated other
comprehensive loss
|
|
(6,292)
|
|
(4,583)
|
Total
stockholders' equity
|
|
317,941
|
|
316,397
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
411,165
|
$
|
413,654
|
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SOURCE L.B. Foster Company