L.B. Foster Reports First Quarter
Operating Results and Provides 2015 Outlook
PITTSBURGH, May 6, 2015 (GLOBE NEWSWIRE) -- 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 2015
operating results, including:
- Sales increased by 23.8% to $137.9
million
- Diluted EPS increased by 17.1% to $0.41 per
diluted share
- Gross profit margin improved to 22.2%, an
increase of 60 basis points
- Recent acquisitions contributed $20.0 million of
sales at 22.9% gross profit margins in the first quarter
- Due to the recent acquisitions of Chemtec Energy
Services ("Chemtec"), Inspection Oilfield Services ("IOS") and TEW
Engineering (TEW), the Company has renamed its Tubular and Rail
segments to Tubular and Energy Services and Rail Products and
Services, respectively.
First Quarter Results
- First quarter net sales of $137.9 million
increased by $26.5 million, or 23.8%, compared to the prior year
quarter due to a 146.2% increase in Tubular and Energy Services
("Tubular") segment sales, a 5.7% improvement in Rail Products and
Services ("Rail") segment sales and a 25.2% increase in
Construction segment sales. The improvement in Tubular sales
was due to a 74.0% increase in our coatings sales as well as
contributions from our recent acquisitions, partially offset by a
decline in Threaded Products sales. The Rail segment sales
increase was driven principally by increases in our Rail
Distribution, Allegheny Rail Products and concrete rail products
businesses. The Construction segment sales improvement was due
to increased sales in our Piling and concrete construction products
businesses.
- Gross profit margin was 22.2%, 60 basis points
higher than the prior year quarter. This improvement was due
principally to increased specialty coatings product margins,
improved Rail margins as well as a positive contribution from our
March 2015 IOS acquisition. Gross margin declined in the
Construction Products segment due principally to a reduction in our
Bridge Products division as 2014 was a record year for this
business.
- First quarter net income was $4.3 million, or
$0.41 per diluted share, compared to $3.6 million, or $0.35 per
diluted share, last year.
- Selling and administrative expense increased by
$4.2 million, or 23.4%, due principally to costs of businesses
acquired after the first quarter of 2014 as well as
acquisition-related activity costs.
- Earnings before interest, taxes, depreciation and
amortization1 ("EBITDA")
was $12.0 million in the first quarter of 2015 compared to $8.2
million in the prior year quarter, a 46.3% increase.
- First quarter bookings were $163.3 million, a
9.2% decrease from the prior year first quarter, due to 6.1% and
30.3% declines in Rail and Construction segment orders,
respectively, driven by Rail Distribution and Piling
reductions. This was partially offset by a 43.9% increase in
Tubular and Energy Services segment orders which were fueled by
orders generated by our newly acquired energy
businesses.
- The Company's effective income tax rate for the
first quarter was 35.7% compared to 31.4% in the prior year
quarter. The increase in the rate was principally due to the
recognition of favorable uncertain state tax positions during the
prior year quarter.
- Cash flow from operating activities for the first
quarter of 2015 used $7.4 million of cash compared to $32.2 million
of cash provided in the first quarter of 2014. The first
quarter of 2014 was favorably impacted by improved working capital
management that largely corrected issues encountered in the second
half of 2013.
CEO Comments
Robert P. Bauer, L.B. Foster Company's President
and Chief Executive Officer, commented, "Operating results in Q1
were driven by solid gross margin performance. We realized
year over year gross margin improvements in our Tubular and Rail
Products businesses which helped drive the 60 basis point
improvement to 22.2%. Operating expenses in the quarter were
impacted by acquisition costs related to TEW Engineering and IOS,
and to a lesser extent Chemtec Energy Services. These three
acquisitions were completed in a 90 day period requiring
considerable resources for evaluation and closing, with less than a
full quarter impact on Q1 sales. Despite the increased
expenses, EPS improved 17% to $0.41 per share."
Mr. Bauer went on to say, "We are very anxious to
begin working on the growth programs that these new businesses can
bring. Also, the Company restructured its credit facility in
Q1 providing the necessary borrowing capacity to complete the
acquisitions, while still providing financial flexibility. As
such, we finished the quarter with over $218 million of
debt. The financial picture of the company is now beginning to
reflect the anticipated changes driven by our strategic plan
including a more aggressive acquisition strategy and the move into
adjacent markets that will provide attractive growth and value
creation."
Q1 Business
Segment Highlights
($000's)
Rail Products and Services Segment
Rail sales increased 5.7% due principally to
increases in our Rail Distribution, Allegheny Rail Products and
Concrete Tie businesses, partially offset by a decline in Transit
Products sales. The 2015 gross profit margin was favorably
impacted by improvements in our Rail Distribution, Transit and
Allegheny Rail Products businesses.
|
2015 |
2014 |
Variance |
Sales |
$77,676 |
$73,496 |
5.7% |
Gross
Profit |
$18,143 |
$16,430 |
|
Gross
Profit % |
23.4% |
22.4% |
|
Construction Products Segment
Construction sales increased by 25.2% in the
quarter due to sales improvements across all divisions except for
the Bridge Products business. Gross profit margins declined
180 basis points due to reductions in the Bridge Products and
Piling divisions.
|
2015 |
2014 |
Variance |
Sales |
$34,290 |
$27,383 |
25.2% |
Gross
Profit |
$6,562 |
$5,712 |
|
Gross
Profit % |
19.1% |
20.9% |
|
Tubular and Energy Services Segment
Sales for this segment increased by 146.2% in the
quarter due principally to increased revenues from recent
acquisitions as well as improved sales of our coatings
businesses. Tubular gross profit margins increased due
principally to volume-related leverage in our specialty coatings
business as well as our recent acquisitions of higher margin
businesses.
|
2015 |
2014 |
Variance |
Sales |
$25,941 |
$10,535 |
146.2% |
Gross
Profit |
$6,034 |
$2,130 |
|
Gross
Profit % |
23.3% |
20.2% |
|
2015 Outlook
Overall market conditions are expected to be
favorable across our business segments in 2015 with the exception
of certain areas in the energy market which are likely to
experience short term volatility. Capital spending plans for
many of the pipeline customers we serve have remained in place,
while the E&P firms reduced capital spending aimed at drilling
operations appear to have reached a conclusion for 2015. We are
also reducing expectations for sales to Union Pacific Railroad
based on the ongoing litigation over concrete tie warranty
claims. In addition, headwinds from a strong dollar are likely
to have a negative impact on sales.
The Company expects 2015 sales to be in the range
of $770.0 million to $780.0 million. Pretax income is expected to
range between $51.5 million to $53.0 million while diluted EPS is
expected to range from $3.20 to $3.30. We forecast EBITDA to be in
the range of $84.5 to $86.0 million for the year.
L.B. Foster Company will conduct a conference call
and webcast to discuss its first quarter 2015 operating results on
Wednesday May 6, 2015 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
800-299-9086 and providing access code 11643536.
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; the
risk of doing business in international markets; our ability to
effectuate our strategy including evaluating potential
opportunities such as strategic acquisitions, joint ventures, and
other initiatives, and our ability to effectively integrate new
businesses and realize anticipated benefits; a decrease in freight
or passenger rail traffic; the timeliness and availability of
material from our major suppliers; labor disputes; changes in
current accounting estimates and their ultimate outcomes; the
adequacy of internal and external sources of funds to meet
financing needs; the Company's ability to manage its working
capital requirements and indebtedness; domestic and international
taxes; foreign currency fluctuations; inflation; domestic and
foreign government regulations; sustained declines in energy
prices; a lack of state or federal funding for new infrastructure
projects; increased regulation including conflict minerals; 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
as well as the outcome of the lawsuit filed by the UPRR and a
reduction of future business with the UPRR; risks inherent in
litigation 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,
2014 as updated by any subsequent Form 10-Qs. 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.
1
Reconciliations of non-GAAP amounts are set forth on the attached
financial tables.
L.B. FOSTER COMPANY AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share data) |
|
|
|
|
Three Months Ended |
|
March
31, |
|
2015 |
2014 |
|
(Unaudited) |
|
|
|
Net
sales |
$ 137,907 |
$ 111,414 |
Cost
of goods sold |
107,254 |
87,287 |
Gross
profit |
30,653 |
24,127 |
|
|
|
Selling and administrative expenses |
22,251 |
18,025 |
Amortization expense |
2,157 |
1,141 |
Interest expense |
613 |
123 |
Interest income |
(57) |
(144) |
Equity
in income of nonconsolidated investments |
(173) |
(204) |
Other
income |
(803) |
(135) |
|
23,988 |
18,806 |
|
|
|
Income
before income taxes |
6,665 |
5,321 |
|
|
|
Income
tax expense |
2,380 |
1,672 |
|
|
|
Net
income |
4,285 |
3,649 |
|
|
|
Basic
earnings per common share |
$ 0.42 |
$ 0.36 |
|
|
|
Diluted earnings per common share |
$ 0.41 |
$ 0.35 |
|
|
|
Dividends paid per common share |
$ 0.04 |
$ 0.03 |
|
|
|
Average number of common shares outstanding - Basic |
10,259 |
10,197 |
|
|
|
Average number of common shares outstanding - Diluted |
10,359 |
10,292 |
|
L.B. FOSTER COMPANY AND SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In thousands) |
|
|
|
|
March
31, |
December 31, |
|
2015 |
2014 |
|
(Unaudited) |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash
and cash equivalents |
$ 37,550 |
$ 52,024 |
Accounts receivable - net |
93,468 |
90,178 |
Inventories - net |
105,686 |
95,089 |
Current deferred tax assets |
4,440 |
3,497 |
Prepaid income tax |
3,190 |
2,790 |
Other
current assets |
8,334 |
4,101 |
Total current assets |
252,668 |
247,679 |
|
|
|
Property, plant and equipment - net |
125,141 |
74,802 |
|
|
|
Other
assets: |
|
|
Goodwill |
215,130 |
82,949 |
Other
intangibles - net |
93,646 |
82,134 |
Investments |
5,907 |
5,824 |
Other
assets |
3,234 |
1,733 |
Total Assets |
$ 695,726 |
$ 495,121 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable |
$ 56,764 |
$ 67,166 |
Deferred revenue |
8,010 |
8,034 |
Accrued payroll and employee benefits |
9,984 |
13,419 |
Accrued warranty |
10,344 |
11,500 |
Current maturities of long-term debt |
675 |
676 |
Current deferred tax liabilities |
77 |
77 |
Other
accrued liabilities |
11,892 |
7,899 |
Total current liabilities |
97,746 |
108,771 |
|
|
|
Long-term debt |
217,560 |
25,752 |
Deferred tax liabilities |
27,990 |
10,945 |
Other
long-term liabilities |
16,934 |
13,765 |
|
|
|
Stockholders' equity: |
|
|
Class
A Common Stock |
111 |
111 |
Paid-in capital |
46,966 |
48,115 |
Retained earnings |
326,541 |
322,672 |
Treasury stock |
(21,932) |
(23,118) |
Accumulated other comprehensive loss |
(16,190) |
(11,892) |
Total stockholders' equity |
335,496 |
335,888 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 695,726 |
$ 495,121 |
This earnings release contains certain non-GAAP
financial measures. These financial measures include earnings
before interest, taxes, depreciation and amortization. The
Company believes that these non-GAAP measures are useful to
investors in order to provide a better understanding of the ongoing
operations of the Company's business. These supplemental financial
measures are useful to management and external users to assess
financial performance of our assets without regard to financing
methods, capital structure or historical cost basis. EBITDA is also
a financial measurement that is utilized in the determination of
certain compensation programs.
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) |
|
|
|
|
Three months ended |
|
March 31, |
|
2015 |
2014 |
Net
income |
$ 4,285 |
$ 3,649 |
Interest |
556 |
(21) |
Provision for income taxes |
2,380 |
1,672 |
Depreciation |
2,619 |
1,761 |
Amortization |
2,157 |
1,141 |
Total
EBITDA |
$ 11,997 |
$ 8,202 |
CONTACT: David Russo
Phone:
412.928.3417
Email:
Investors@Lbfoster.com
Website:
www.lbfoster.com
L.B. Foster
Company
415 Holiday
Drive
Pittsburgh, PA
15220
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: L.B. Foster Company via Globenewswire
HUG#1919341
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