L.B. Foster Reports Improved Second Quarter Results
By L.b. Foster Company, PRNEMonday, July 26, 2010
PITTSBURGH, July 27, 2010 - 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 net income increased by 125.8% to US$6.0
million or US$0.58 per diluted share in the second quarter of 2010, compared
to US$2.7 million or US$0.26 per diluted share in the second quarter of 2009.
2010 Second Quarter Results
Second quarter 2010 net sales increased 20.3% to US$119.5 million
compared to US$99.3 million in the prior year quarter. Gross profit margin
was 17.0%, an increase of 410 basis points from the prior year quarter
principally due to negative adjustments totaling US$3.7 million made last
year related to concrete tie problems encountered during 2009. Additionally,
a US$2.1 million improvement in manufacturing variances in the current
quarter was partially offset by a US$1.1 million reduction in favorable LIFO
adjustments.
Selling and administrative expenses increased US$2.2 million or 25.1%
from last year's quarter due primarily to US$1.0 million of additional
incentive compensation expenses, costs incurred related to our acquisition
efforts of approximately US$0.7 million and increased bad debt expense of
US$0.5 million. The Company's effective income tax rate was 36.1% in the
second quarter compared to 38.1% in the prior year quarter primarily due to
an increased domestic manufacturing deduction.
"Sales were up across all segments in the second quarter of 2010 and our
backlog continued at a substantially higher level than it was a year ago.
While business activity continues to be inconsistent, especially in the
industrial markets, we continue to see a general strengthening in activity in
most of our businesses," stated Stan Hasselbusch, President and Chief
Executive Officer. "Bookings for the quarter were US$120.6 million compared
to US$115.0 million last year, a 4.9% increase and backlog was US$207.2
million, up 41.1% from last year," noted Mr. Hasselbusch as he added, "With
regard to the Portec acquisition, we were pleased to learn that the courts
had lifted the preliminary injunction that had enjoined the completion of our
tender offer. However, after working with the Antitrust Division of the
Department of Justice ("DOJ"), we believe that the DOJ will seek some type of
restructuring 'solution' to alleviate their concern that the acquisition, as
proposed, would have an anti-competitive effect with respect to the insulated
bonded rail joint product."
2010 Half Year Results
For the six months ended June 30, 2010, L.B. Foster reported net income
of US$7.7 million or US$0.75 per diluted share compared to net income of
US$5.7 million or US$0.55 per diluted share in 2009. In addition to the
aforementioned second quarter 2009 charges taken in our concrete tie
business, we also recorded a related US$1.6 million (US$0.10 per diluted
share) warranty expense in the first quarter of 2009.
Net sales for the first half of 2010 were US$201.5 million, flat with
2009. Gross profit margin was 16.1%, up 290 basis points from 2009, primarily
as a result of last year's concrete tie adjustments as well as decreased
unfavorable manufacturing variances, partially offset by decreased LIFO
credits.
Selling and administrative expenses increased US$2.3 million or 13.2%
from the prior year due primarily to acquisition costs of US$1.2 million,
incentive compensation costs of US$0.8 million and bad debt expense of US$0.5
million. Interest expense decreased US$0.2 million from the prior year due to
decreased borrowings and, to a lesser extent, lower interest rates. Interest
income declined by US$0.3 million due to lower interest rates. The Company's
income tax rate was 35.7% compared to 37.3% in the prior year primarily due
to an increased domestic manufacturing deduction and reversal of a reserve
previously recorded for an uncertain tax position.
Cash generated from operations was approximately US$16.7 million for the
first six months of 2010 compared to US$10.8 million in 2009. Capital
expenditures were US$2.7 million compared to US$2.3 million in the prior
year. "We continue to expect that in 2010, we will generate positive cash
flow in excess of our capital expenditures and debt service. As we operate
our businesses through 2010, we expect to be challenged by a difficult,
highly competitive business environment and will review measures to win new
sales opportunities, control costs and improve our operational processes
while we continue to look for opportunities to leverage our strong balance
sheet," noted Mr. Hasselbusch as he concluded, "We have strong liquidity and
access to credit and we continue to look for value through synergistic and
accretive acquisitions."
L.B. Foster Company will conduct a conference call and webcast to discuss
its second quarter 2010 operating results and general market activity and
business conditions on Tuesday, July 27, 2010 at 11:00am ET. The call will be
hosted by Mr. Stan Hasselbusch, 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
+1-888-286-8010 by entering pass code 33596402.
There are no assurances regarding the timing of the closing of the merger
agreement involving L. B. Foster and Portec and the expected benefits of the
transaction, including potential synergies and cost savings, future financial
and operating results, and the combined company's plans and objectives. Risks
and uncertainties include the satisfaction of closing conditions for the
acquisition, including clearance under the Hart-Scott-Rodino Antitrust
Improvements Act; the tender of sixty-five percent of the outstanding shares
of common stock of Portec Rail Products, Inc., calculated on a fully diluted
basis; the possibility that the transaction will not be completed, or if
completed, not completed on a timely basis; the potential that market segment
growth will not follow historical patterns; general industry conditions and
competition; business and economic conditions, such as interest rate and
currency exchange rate fluctuations; technological advances and patents
attained by competitors; and domestic and foreign governmental laws and
regulations. L.B. Foster can give no assurance that any of the transactions
related to the tender offer will be completed or that the conditions to the
tender offer and the merger will be satisfied.
The Company wishes to caution readers that various factors could cause
the actual results of the Company to differ materially from those indicated
by forward-looking statements in news releases, and other communications,
including oral statements, such as references to future profitability, made
from time to time by representatives of the Company. Specific risks and
uncertainties that could affect the Company's profitability include, but are
not limited to, general economic conditions, sudden and/or sharp declines in
steel prices, adequate funding for infrastructure projects, production delays
or problems encountered at our manufacturing facilities, additional concrete
tie defects and the availability of existing and new piling and rail
products. There can be no assurances that the purchase of IDSI will result in
improved operating results. There are also no assurances that the Canadian
Pacific Railway will proceed with the Powder River Basin project and trigger
any contingent payments to L.B. Foster related to the Company's sale of its
investment in the DM&E.
Matters discussed may include forward-looking statements that involve
risks and uncertainties. Sentences containing words such as "anticipates,"
"expects," or "will," generally should be considered forward-looking
statements. More detailed information on these and additional factors which
could affect the Company's operating and financial results are described in
the Company's Forms 10-K, 10-Q and other reports, filed or to be filed with
the Securities and Exchange Commission. 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 undertakes no obligation to update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise.
Contact: David J. Russo
Phone: +1-412-928-3417
FAX: +1-412-928-7891
Email: investors@LBFosterCo.com
(All currency is in US$ unless otherwise specified)
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited) (Unaudited)
NET SALES $119,504 $99,348 $201,506 $200,961
COSTS AND EXPENSES:
Cost of goods sold 99,189 86,516 169,118 174,447
Selling and
administrative
expenses 10,774 8,612 19,967 17,639
Interest expense 241 333 486 661
Loss on joint
venture 94 - 241 -
Interest income (107) (212) (181) (507)
Other income (51) (186) (153) (329)
110,140 95,063 189,478 191,911
------- ------ ------- -------
INCOME BEFORE
INCOME TAXES 9,364 4,285 12,028 9,050
INCOME TAX EXPENSE 3,377 1,633 4,288 3,379
----- ----- ----- -----
NET INCOME $5,987 $2,652 $7,740 $5,671
====== ====== ====== ======
BASIC EARNINGS PER
COMMON SHARE $0.59 $0.26 $0.76 $0.56
===== ===== ===== =====
DILUTED EARNINGS
PER COMMON SHARE $0.58 $0.26 $0.75 $0.55
===== ===== ===== =====
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING - BASIC 10,190 10,148 10,181 10,176
====== ====== ====== ======
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING - DILUTED 10,313 10,275 10,304 10,318
====== ====== ====== ======
L.B. Foster Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2010 2009
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
---------------
Cash and cash items $131,318 $124,845
Accounts and notes
receivable:
Trade 61,616 59,062
Other 319 2,116
Inventories 94,164 98,982
Current deferred tax assets 3,671 3,678
Prepaid income tax - 248
Other current assets 1,240 1,161
Total Current Assets 292,328 290,092
------- -------
OTHER ASSETS:
-------------
Property, plant & equipment-
net 36,226 37,407
Goodwill 3,210 350
Other intangibles - net 1,757 25
Deferred tax assets 1,554 1,574
Investments 3,739 3,358
Other non-current assets 1,348 362
----- ---
Total Other Assets 47,834 43,076
------ ------
$340,162 $333,168
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
--------------------
Current maturities on other
long-term debt $3,099 $2,787
Current maturities on long-
term debt, term loan 11,667 2,619
Accounts payable-trade and
other 40,111 52,777
Deferred revenue 22,149 9,062
Accrued payroll and employee
benefits 5,077 6,106
Other accrued liabilities 5,334 6,409
Total Current Liabilities 87,437 79,760
------ ------
LONG-TERM DEBT, TERM LOAN - 10,476
--- ------
OTHER LONG-TERM DEBT 3,047 2,721
----- -----
DEFERRED TAX LIABILITIES 1,870 1,893
----- -----
OTHER LONG-TERM LIABILITIES 5,695 5,726
----- -----
STOCKHOLDERS' EQUITY:
---------------------
Class A Common stock 111 111
Paid-in capital 46,709 47,660
Retained earnings 220,527 212,787
Treasury stock (24,929) (27,574)
Accumulated other
comprehensive loss (305) (392)
---- ----
Total Stockholders' Equity 242,113 232,592
------- -------
$340,162 $333,168
======== ========
David J. Russo, +1-412-928-3417, Fax, +1-412-928-7891, investors at LBFosterCo.com
Tags: July 27, L.b. Foster Company, Pennsylvania, Pittsburgh, United Kingdom
