Varie
L.B. Foster Reports Third Quarter Operating Results
PITTSBURGH, Nov. 09, 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 third quarter 2015 operating results, which included a tax-effected non-cash charge of $63.9 million ($80.3 million before tax) or $6.23 per diluted share, for the impairment of a significant portion of the goodwill related to the Company's Inspection Oilfield Service (IOS) and Chemtec Energy Services (Chemtec) subsidiaries, which was driven by the effects of weak energy markets. Excluding the charge and certain warranty related items, adjusted EPS was $0.67 per diluted share compared to $0.88 per diluted share in the prior year quarter. Other noteworthy items in the third quarter are:
Robert P. Bauer, L.B. Foster Company's President and Chief Executive Officer, commented, "Even though little time has elapsed since our energy businesses were acquired, the extent of the weakness in the markets they serve prompted the Company to perform an interim test for goodwill impairment. The results of the test demonstrate these businesses have lost value as the effect of discounting future forecasted cash flows to assess value makes the current market weakness more impactful than the future potential of these businesses. Even though we took this charge, I remain confident that, as energy markets improve, these businesses will contribute to our future profitability and cash flows that enable future growth and enhance shareholder value for the long term. I want to emphasize that this charge was non-cash in nature and will not affect the Company's liquidity, cash flows from operating activities or debt covenants."
Mr. Bauer continued, "Our operating results for the quarter and the nine month period reflect the unfavorable impact the commodity cycle has had on the markets we serve. As we continue to work through the challenges of weak market conditions coupled with the loss of business from the UPRR, we will rely on our operating strengths to maximize profitability and cash flow. The loss of rail product sales has made this a difficult year, however, we have worked through the changes needed to adjust to lower volumes and have taken the opportunity to create a renewed focus on cost reductions and integration of acquired businesses. Similarly, we have taken actions to protect operating efficiency in our energy segment businesses where specific markets remain at depressed spending levels. While the Company is not performing at the levels we expected this year, it is worth noting that year-to-date adjusted gross margins have expanded by 40 basis points and adjusted EBITDA has grown by 11.6%. Gross margin expansion in the Rail and Construction segments reflect strong management actions. And while energy market acquisitions may struggle to be accretive to earnings until the market improves, we have numerous opportunities for new business especially in the midstream pipeline market that we will develop.
Over the next several quarters, we will look to accelerate certain integration activity that results in greater efficiency. We have taken cost reduction measures in various areas of the business and are pursuing further actions to cut operating costs to be in line with expected demand levels. We also intend to reduce capital spending by investing only in the most attractive programs after re-evaluating returns given recent changes in certain market sectors.
We are also reviewing more aggressive company-wide restructuring opportunities where cost reductions and/or entity consolidations will improve efficiency, reduce costs and allow us to improve profit goals over historic margins when conditions improve."
Mr. Bauer concluded by remarking, "In addition to our forecasts for continued positive cash flow, we have a strong financial position and anticipate ample liquidity to weather a continued downturn in the cyclical markets where we participate."
($000's)
Rail Products and Services Segment
Rail sales decreased 13.8% due to lower sales across our rail divisions with the exception of Transit Products as a result of lower sales volumes and lower steel prices. Reduced sales to the Union Pacific Railroad accounted for a large portion of the decline. Despite the reduced volumes in 2015, the current quarter adjusted gross profit margin improved by 10 bps from the prior year quarter, after excluding the impact of the current quarter warranty related charges of $0.7 million, due to improved margins in certain product categories as well as an improved product mix.
Construction Products Segment
Construction sales increased by 8.4% in the quarter due to increases across all divisions in this segment, highlighted by stronger sales of our precast buildings division. Gross profit margins improved due to increased margins in our Piling Products and Fabricated Bridge Products divisions.
Tubular and Energy Services Segment
Tubular sales improved by 115.4% in the quarter due to sales from our acquired energy businesses, partially offset by softer Threaded Products sales. Tubular gross profit margins declined due principally to lower blended margins by the acquisitions, partially offset by stronger Coated Products margins.
The Company is expecting fourth quarter results to be in the area of $150 million to $154 million in sales and EPS of $0.30 per diluted share. This forecast represents our current view of the market which is factoring in less favorable year-end spending patterns. It is possible that we could still fall short of this forecast as customers in the upstream market sector consider temporary shutdowns for the last several weeks of the year. We are closely monitoring customer intentions and their potential actions to preserve cash in the final period of the year. If a portion of our customers decide to shutdown or severely cut back on upstream development and production activity, it could have a further $0.10 to $0.20 unfavorable impact on EPS for the quarter. We also expect to see year-end cash flow management by our railroad customers as well. In a similar manner, if these customers decide to more aggressively preserve cash in the fourth quarter, it could unfavorably affect our results.
L.B. Foster Company will conduct a conference call and webcast to discuss its third quarter 2015 operating results on Monday, November 9, 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 866-318-8611 and providing access code 21337957.
See non-GAAP reconciliations below
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
Copyright GlobeNewswire
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: %s via Globenewswire