L.B. Foster Reports Improved Third Quarter Results
</pre>
<p><span class="xn-location">PITTSBURGH</span>, <span class="xn-chron">Oct. 26</span> /CNW/ -- 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 <span class="xn-money">$6.5 million</span> or <span class="xn-money">$0.63</span> per diluted share, compared to <span class="xn-money">$6.1 million</span> or <span class="xn-money">$0.60</span> 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 <span class="xn-money">$1.2 million</span> or <span class="xn-money">$0.07</span> per diluted share.</p>
<pre>
2010 Third Quarter Results
</pre>
<p>Third quarter 2010 net sales increased 28.3% to <span class="xn-money">$125.6 million</span> compared to <span class="xn-money">$97.9 million</span> 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 <span class="xn-money">$4.2 million</span>, partially offset by improved manufacturing variances of <span class="xn-money">$1.4 million</span> and reduced scrap and obsolescence charges of <span class="xn-money">$0.8 million</span>.</p>
<p/>
<p>Selling and administrative expenses increased by <span class="xn-money">$0.8 million</span> or 8.7% from last year's quarter due primarily to <span class="xn-money">$0.5 million</span> of increased incentive compensation expense and increased bad debt expense of <span class="xn-money">$0.3 million</span>. The negative bad debt comparison is due primarily to a <span class="xn-money">$0.3 million</span> 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.</p>
<p/>
<p>"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 <span class="xn-money">$124.8 million</span> compared to <span class="xn-money">$114.3 million</span> last year, a 9.2% increase and backlog was <span class="xn-money">$204.9 million</span>, up 23.6% from last year," noted <span class="xn-person">Mr. Hasselbusch</span> 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."</p>
<pre>
2010 Nine Month Results
</pre>
<p>For the nine months ended <span class="xn-chron">September 30, 2010</span>, L.B. Foster reported net income of <span class="xn-money">$14.3 million</span> or <span class="xn-money">$1.38</span> per diluted share compared to net income of <span class="xn-money">$11.8 million</span> or <span class="xn-money">$1.15</span> per diluted share in 2009. Included in the prior year nine month period were unfavorable gross profit adjustments of <span class="xn-money">$5.3 million</span> (<span class="xn-money">$0.33</span> 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 <span class="xn-money">$1.2 million</span>, or <span class="xn-money">$0.07</span> per diluted share.</p>
<p/>
<p>Net sales for the first nine months of 2010 increased 9.4% to <span class="xn-money">$327.1 million</span> compared to <span class="xn-money">$298.8 million</span> 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.</p>
<p/>
<p>Selling and administrative expenses increased <span class="xn-money">$3.1 million</span> or 11.7% from the prior year due primarily to acquisition costs of <span class="xn-money">$1.3 million</span> as well as increased incentive compensation costs of <span class="xn-money">$1.3 million</span> and bad debt expense of <span class="xn-money">$0.9 million</span>, partially offset by reduced salaries. Interest expense decreased <span class="xn-money">$0.3 million</span> from the prior year due to decreased borrowings and, to a lesser extent, lower interest rates. Interest income declined by <span class="xn-money">$0.4 million</span> 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.</p>
<p/>
<p>Cash generated from operations was approximately <span class="xn-money">$15.9 million</span> for the third quarter compared to <span class="xn-money">$7.2 million</span> last year. Cash generated from operations for the first nine months of 2010 was approximately <span class="xn-money">$32.7 million</span> compared to <span class="xn-money">$18.0 million</span> in 2009. Capital expenditures for the three and nine months of 2010 were <span class="xn-money">$1.4 million</span> and <span class="xn-money">$4.1 million</span>, respectively, compared to <span class="xn-money">$2.5 million</span> and <span class="xn-money">$4.8 million</span>, 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 <span class="xn-person">Mr. Hasselbusch</span> as he concluded, "We have strong liquidity and access to credit and we continue to look for value through synergistic and accretive acquisitions."</p>
<p/>
<p>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 <span class="xn-chron">Tuesday, October 26, 2010</span> at <span class="xn-chron">11:00am ET</span>. The call will be hosted by <span class="xn-person">Mr. Stan Hasselbusch</span>, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: <a href="http://www.lbfoster.com">www.lbfoster.com</a>, by accessing the Investor Relations page. The replay can also be heard via telephone at (888) 286-8010 by entering pass code 83833550.</p>
<p/>
<p>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.</p>
<p/>
<p>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.</p>
<p/>
<p>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.</p>
<pre>
</pre>
<p> </p>
<pre>
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months
Ended Nine Months Ended
September 30, September 30,
------------- -------------
2010 2009 2010 2009
---- ---- ---- ----
(Unaudited) (Unaudited)
</pre>
<p> </p>
<p>NET SALES <span class="xn-money">$125,561</span> <span class="xn-money">$97,888</span> <span class="xn-money">$327,067</span> <span class="xn-money">$298,849</span></p>
<p> </p>
<pre>
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
------- ------ ------- -------
</pre>
<p> </p>
<p>INCOME BEFORE INCOME TAXES 10,102 9,841 22,130 18,891</p>
<p> </p>
<pre>
INCOME TAX EXPENSE 3,589 3,697 7,877 7,076
----- ----- ----- -----
</pre>
<p> </p>
<pre>
NET INCOME $6,513 $6,144 $14,253 $11,815
====== ====== ======= =======
</pre>
<p> </p>
<pre>
BASIC EARNINGS PER COMMON
SHARE $0.64 $0.60 $1.40 $1.16
===== ===== ===== =====
</pre>
<p> </p>
<pre>
DILUTED EARNINGS PER COMMON
SHARE $0.63 $0.60 $1.38 $1.15
===== ===== ===== =====
</pre>
<p> </p>
<pre>
AVERAGE NUMBER OF COMMON
SHARES
OUTSTANDING - BASIC 10,246 10,160 10,203 10,170
====== ====== ====== ======
</pre>
<p> </p>
<pre>
AVERAGE NUMBER OF COMMON
SHARES
OUTSTANDING - DILUTED 10,354 10,292 10,324 10,315
====== ====== ====== ======
</pre>
<p> </p>
<pre>
L.B. Foster Company and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
September December
30, 31,
2010 2009
---- ----
ASSETS (Unaudited)
</pre>
<p> </p>
<pre>
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
------- -------
</pre>
<p> </p>
<pre>
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
------ ------
</pre>
<p> </p>
<pre>
$354,133 $333,168
======== ========
</pre>
<p> </p>
<p> LIABILITIES AND STOCKHOLDERS' EQUITY</p>
<p> </p>
<pre>
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
------ ------
</pre>
<p> </p>
<pre>
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
----- -----
</pre>
<p> </p>
<pre>
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
------- -------
</pre>
<p> </p>
<pre>
$354,133 $333,168
======== ========
</pre>
<p> </p>
<p> </p>
<pre>
L.B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: David J. Russo
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: [email protected]
For further information: David J. Russo, L.B. Foster Company, +1-412-928-3417, or FAX: +1-412-928-7891, [email protected] Web Site: http://www.lbfoster.com
Share this article