- Company Provides 2014 Outlook
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.
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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
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$73,496
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$81,399
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(9.7%)
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Gross Profit
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$16,430
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$17,033
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Gross Profit %
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22.4%
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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
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2013
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Variance
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Sales
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$27,383
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$36,811
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(25.6%)
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Gross Profit
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$5,712
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$4,972
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Gross Profit %
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20.9%
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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
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2013
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Variance
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Sales
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$10,535
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$11,111
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(5.2%)
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Gross Profit
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$2,130
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$3,215
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Gross Profit %
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20.2%
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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.
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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
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CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
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(In
thousands, except per share data)
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Three Months
Ended
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March
31,
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2014
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2013
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(Unaudited)
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Net sales
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$
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111,414
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$
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129,321
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Cost of goods sold
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87,287
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104,473
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Gross profit
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24,127
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24,848
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Selling and administrative
expenses
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18,025
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17,130
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Amortization expense
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1,141
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701
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Interest expense
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123
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133
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Interest income
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(144)
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(206)
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Equity in income of
nonconsolidated investment
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(204)
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(176)
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Other income
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(135)
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(178)
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18,806
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17,404
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Income from continuing
operations before income taxes
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5,321
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7,444
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Income tax expense
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1,672
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2,493
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Income from continuing
operations
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3,649
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4,951
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Discontinued
operations:
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Loss from discontinued
operations before income taxes
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-
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(39)
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Income tax benefit
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-
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(15)
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Loss from discontinued
operations
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-
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(24)
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Net income
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$
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3,649
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$
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4,927
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Basic earnings per common
share:
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From continuing
operations
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$
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0.36
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$
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0.49
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From discontinued
operations
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-
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(0.00)
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Basic earnings per common
share
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$
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0.36
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$
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0.49
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Diluted earnings per common
share:
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From continuing
operations
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$
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0.35
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$
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0.48
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From discontinued
operations
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-
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(0.00)
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Diluted earnings per common
share
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$
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0.35
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$
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0.48
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Dividends paid per common
share
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$
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0.03
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$
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0.03
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Average number of common shares
outstanding - Basic
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10,197
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10,158
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Average number of common shares
outstanding - Diluted
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10,292
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10,247
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L.B. FOSTER
COMPANY AND SUBSIDIARIES
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CONDENSED
CONSOLIDATED BALANCE SHEETS
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(In
thousands)
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March
31,
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December
31,
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2014
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2013
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash
equivalents
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$
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91,131
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$
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64,623
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Accounts receivable -
net
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66,771
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98,437
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Inventories - net
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77,644
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76,956
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Current deferred tax
assets
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461
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461
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Prepaid income tax
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3,977
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4,741
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Other current assets
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4,445
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2,000
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Current assets of discontinued
operations
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88
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149
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Total current
assets
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244,517
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247,367
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Property, plant and equipment -
net
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51,478
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50,109
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Other assets:
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Goodwill
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57,781
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57,781
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Other intangibles -
net
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50,705
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51,846
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Investments
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5,204
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5,090
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Other assets
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1,480
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1,461
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Total Assets
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$
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411,165
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$
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413,654
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LIABILITIES AND STOCKHOLDERS'
EQUITY
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Current liabilities:
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Accounts payable
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$
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43,617
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$
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46,620
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Deferred revenue
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7,130
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5,715
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Accrued payroll and employee
benefits
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5,753
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8,927
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Accrued warranty
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7,010
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7,483
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Current maturities of long-term
debt
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114
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31
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Current deferred tax
liabilities
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179
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179
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Other accrued
liabilities
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7,013
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6,501
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Liabilities of discontinued
operations
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26
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26
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Total current
liabilities
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70,842
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75,482
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Long-term debt
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319
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25
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Deferred tax
liabilities
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11,591
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11,798
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Other long-term
liabilities
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10,472
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9,952
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Stockholders' equity:
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Class A Common Stock
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111
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111
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Paid-in capital
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46,565
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47,239
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Retained earnings
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301,701
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298,361
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Treasury stock
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(24,144)
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(24,731)
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Accumulated other comprehensive
loss
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(6,292)
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(4,583)
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Total stockholders'
equity
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317,941
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316,397
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
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$
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411,165
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$
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413,654
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