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L.B. Foster Company (FSTR - Analyst Report) reported earnings per share of 71 cents for second-quarter 2013, compared with a loss per share of 20 cents in the year-ago quarter. However, reported earnings comprehensively missed the Zacks Consensus Estimate of 98 cents by 27.6%.

On a non-GAAP basis, Foster generated earnings of 71 cents in the quarter, compared with 86 cents in the year-earlier quarter.

Revenues: In the second quarter of 2013, total sales were $149.9 million, down 8.1% year over year, primarily due to decline in the Rail and Construction segment’s sales. Revenues also missed the Zacks Consensus Estimate of $175.0 million. However, it registered a rise in sales in the Tubular segment.

Revenues from the Rail Products segment decreased 10.3% year over year to $90.9 million. This was a result of a drop in the concrete tie and rail technology businesses, which was partially offset by stronger sales in the transit products division.

Revenues from the Construction Products segment declined 8.7% year over year to $43.7 million, due to lower fabricated bridge business.

The Tubular Products segment generated revenues of $15.3 million, increasing 10.0% year over year due to inherent strength in the oil & gas, energy and agricultural end markets.

Costs/Margins: Adjusted gross profit margin in the quarter increased 26 basis points (bps) year over year to 19.5%. SG&A expenses in the quarter were recorded at $18.0 million, compared with $16.6 million in the year-ago quarter.

Rail Products recorded gross profit margin of 19.2%, increasing 1,740 bps year over year, due to a warranty charge incurred in the year-ago quarter. Construction Products’ gross profit margin increased 60 bps to 15.3% compared with the year-ago quarter. Tubular Products’ gross profit margin in the reported quarter was 34.1%, increasing 510 bps year over year.

Balance Sheet/Cash Flow: Exiting the second quarter of 2013, Foster’s cash and cash equivalents were approximately $94.7 million, compared with $81.4 million in the previous quarter. Total long-term debt balance stood at $15,000 versus $21,000 in the preceding quarter.

Cash provided from operations totaled $16.7 million in the second quarter, compared with $6.5 million used in the year-ago comparable quarter.

Outlook: With a continued decline in the Tubular segment orders, management expects deterioration in total revenue as well as margins in the coming quarters. However, the Construction segment is expected to continue improving in the quarters ahead. Foster is also hopeful of a rise in the Rail segment demand from all regions except Europe.

In the second half of 2013, the Rail segment is expected to contribute 67% to the total revenue, while Construction and Tubular segments are expected to generate 29% and 4%, respectively.

Other Stocks to Consider

Universal Stainless & Alloy Products Inc. (USAP - Snapshot Report) released its second-quarter results on Jul 31, 2013. The company reported earnings per share of 6 cents, missing the Zacks Consensus Estimate of 16 cents by 62.5%.

AK Steel Holding Corporation (AKS - Analyst Report) released its second-quarter results on Jul 23, 2013. The company reported loss per share of 15 cents, narrower than the Zacks Consensus Estimate of a loss of 55 cents by 57.1%.

Nucor Corporation (NUE - Analyst Report) released its second-quarter results on Jul 18, 2013. The company reported earnings per share of 27 cents, missing the Zacks Consensus Estimate of 30 cents by 10.0%.

Foster currently carries a Zacks Rank #3 (Hold).

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