L.B. Foster Reports Improved Third Quarter Results
By L.b. Foster Company, PRNEMonday, October 25, 2010
PITTSBURGH, October 26, 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 that 2010 third quarter net income increased
by 6.0% to US$6.5 million or US$0.63 per diluted share, compared to US$6.1
million or US$0.60 per diluted share in the third quarter of 2009. The prior
year third quarter results included a pretax gain on the sale of marketable
securities of US$1.2 million or US$0.07 per diluted share.
2010 Third Quarter Results
Third quarter 2010 net sales increased 28.3% to US$125.6 million compared
to US$97.9 million in the prior year quarter. Gross profit margin declined by
210 basis points to 16.0% from the prior year quarter due principally to
decreased LIFO income of US$4.2 million, partially offset by improved
manufacturing variances of US$1.4 million and reduced scrap and obsolescence
charges of US$0.8 million.
Selling and administrative expenses increased by US$0.8 million or 8.7%
from last year's quarter due primarily to US$0.5 million of increased
incentive compensation expense and increased bad debt expense of US$0.3
million. The negative bad debt comparison is due primarily to a US$0.3
million credit recorded in last year's third quarter as opposed to any
problems in our current receivable portfolio. The Company's effective income
tax rate was 35.5% in the third quarter compared to 37.6% in the prior year
quarter primarily due to an increased domestic manufacturing deduction.
"Sales and profitability were up across all segments in the third 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 and heavy civil markets, we continue to see a moderate
strengthening in most of our businesses," stated Stan Hasselbusch, President
and Chief Executive Officer. "Bookings for the quarter were US$124.8 million
compared to US$114.3 million last year, a 9.2% increase and backlog was
US$204.9 million, up 23.6% from last year," noted Mr. Hasselbusch as he
added, "With regard to the Portec acquisition, we are moving forward with a
process to divest the assets employed in Portec's insulated bonded rail joint
business in order to satisfy the concerns of the Antitrust Division of the
Department of Justice and gain its approval to close the acquisition."
2010 Nine Month Results
For the nine months ended September 30, 2010, L.B. Foster reported net
income of US$14.3 million or US$1.38 per diluted share compared to net income
of US$11.8 million or US$1.15 per diluted share in 2009. Included in the
prior year nine month period were unfavorable gross profit adjustments of
US$5.3 million (US$0.33 per diluted share) related to concrete tie issues
discovered in 2009. Additionally, as previously mentioned, the prior year
results included a pretax gain on the sale of marketable securities of US$1.2
million, or US$0.07 per diluted share.
Net sales for the first nine months of 2010 increased 9.4% to US$327.1
million compared to US$298.8 million in the prior year. Gross profit margin
was 16.0%, up 120 basis points from 2009, primarily as a result of last
year's concrete tie adjustments as well as improved manufacturing variances,
partially offset by decreased LIFO credits.
Selling and administrative expenses increased US$3.1 million or 11.7%
from the prior year due primarily to acquisition costs of US$1.3 million as
well as increased incentive compensation costs of US$1.3 million and bad debt
expense of US$0.9 million, partially offset by reduced salaries. Interest
expense decreased US$0.3 million from the prior year due to decreased
borrowings and, to a lesser extent, lower interest rates. Interest income
declined by US$0.4 million due to lower interest rates. The Company's income
tax rate was 35.6% compared to 37.5% 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$15.9 million for the
third quarter compared to US$7.2 million last year. Cash generated from
operations for the first nine months of 2010 was approximately US$32.7
million compared to US$18.0 million in 2009. Capital expenditures for the
three and nine months of 2010 were US$1.4 million and US$4.1 million,
respectively, compared to US$2.5 million and US$4.8 million, respectively, in
the prior year. "We have already generated cash flow significantly in excess
of our expected capital expenditures and debt service for 2010. As we operate
our business through 2010 and into 2011, we expect to continue to be
challenged by a weak economy and a highly competitive business environment
and as such, we 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 third quarter 2010 operating results and general market activity and
business conditions on Tuesday, October 26, 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 83833550.
There are no assurances regarding the timing of the closing of the merger
agreement involving L. B. Foster and Portec or the expected benefits of the
transaction, including potential synergies and cost savings or 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 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.
(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 Nine Months Ended
September 30, September 30,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited) (Unaudited)
NET SALES $125,561 $97,888 $327,067 $298,849
COSTS AND EXPENSES:
Cost of goods sold 105,519 80,130 274,637 254,577
Selling and administrative
expenses 9,858 9,068 29,825 26,707
Interest expense 211 328 697 989
Loss on joint venture 31 - 272 -
Gain on sale of marketable
securities - (1,194) - (1,194)
Interest income (114) (169) (295) (676)
Other income (46) (116) (199) (445)
------- ------ ------- -------
115,459 88,047 304,937 279,958
------- ------ ------- -------
INCOME BEFORE INCOME TAXES 10,102 9,841 22,130 18,891
INCOME TAX EXPENSE 3,589 3,697 7,877 7,076
----- ----- ----- -----
NET INCOME $6,513 $6,144 $14,253 $11,815
====== ====== ======= =======
BASIC EARNINGS PER COMMON SHARE $0.64 $0.60 $1.40 $1.16
===== ===== ===== =====
DILUTED EARNINGS PER COMMON
SHARE $0.63 $0.60 $1.38 $1.15
===== ===== ===== =====
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC 10,246 10,160 10,203 10,170
====== ====== ====== ======
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - DILUTED 10,354 10,292 10,324 10,315
====== ====== ====== ======
L.B. Foster Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2010 2009
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
---------------
Cash and cash items $144,183 $124,845
Accounts and notes receivable:
Trade 62,355 59,062
Other 32 2,116
Inventories 94,688 98,982
Current deferred tax assets 3,671 3,678
Prepaid income tax 711 248
Other current assets 1,220 1,161
------- -------
Total Current Assets 306,860 290,092
------- -------
OTHER ASSETS:
-------------
Property, plant & equipment - net 35,453 37,407
Goodwill 3,211 350
Other intangibles - net 1,663 25
Deferred tax assets 1,573 1,574
Investments 4,053 3,358
Other non-current assets 1,320 362
----- ---
Total Other Assets 47,273 43,076
------ ------
$354,133 $333,168
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
--------------------
Current maturities on other long-term
debt $2,745 $2,787
Current maturities on long-term
debt, term loan 10,952 2,619
Accounts payable-trade and other 43,549 52,777
Deferred revenue 25,309 9,062
Accrued payroll and employee benefits 6,283 6,106
Other accrued liabilities 6,025 6,409
------ ------
Total Current Liabilities 94,863 79,760
------ ------
LONG-TERM DEBT, TERM LOAN - 10,476
--- ------
OTHER LONG-TERM DEBT 2,702 2,721
----- -----
DEFERRED TAX LIABILITIES 1,956 1,893
----- -----
OTHER LONG-TERM LIABILITIES 5,559 5,726
----- -----
STOCKHOLDERS' EQUITY:
---------------------
Class A Common stock 111 111
Paid-in capital 47,109 47,660
Retained earnings 227,040 212,787
Treasury stock (24,929) (27,574)
Accumulated other comprehensive loss (278) (392)
---- ----
Total Stockholders' Equity 249,053 232,592
------- -------
$354,133 $333,168
======== ========
L.B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: David J. Russo
Phone: +1-412-928-3417
FAX: +1-412-928-7891
Email: investors@LBFosterCo.com
David J. Russo, L.B. Foster Company, +1-412-928-3417, or FAX: +1-412-928-7891, investors at LBFosterCo.com
Tags: L.b. Foster Company, October 26, Pennsylvania, Pittsburgh, United Kingdom
