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L.B. Foster Company (FSTR - Analyst Report) posted adjusted earnings per share of 95 cents for third-quarter 2013, down from $1.00 per share in the year-ago quarter. Adjusted earnings, however, beat the Zacks Consensus Estimate of 88 cents by 8.0%. The year-over-year decline in adjusted earnings was due to lower sales in the Tubular products segment.

On a GAAP-basis, Foster reported earnings per share of 95 cents, compared with 83 cents in the prior-year quarter.

Revenues: In the third quarter of 2013, total sales were $162.2 million, down 4.8% year over year, primarily due to decline in the Rail and Tubular Products segment’s sales. Revenues also missed the Zacks Consensus Estimate of $172.0 million.

Revenues from the Rail Products segment decreased 4.9% year over year to $105.6 million. This was a result of softness in the concrete tie and rail distribution businesses, partially offset by strong sales in the Allegheny Rail Products and transit products divisions.

The Construction Products segment’s revenues rose 7.3% year over year to $49.3 million, driven by higher piling products and concrete building products sales.

The Tubular Products segment generated revenues of $7.4 million, a decline of 45.0% year over year due to lower coated products sales.

Costs/Margins: Adjusted gross profit margin in the quarter decreased 50 basis points (bps) year over year to 19.3%. Selling and administrative expenses in the quarter were recorded at $17.5 million, down from $16.6 million in the year-ago quarter.

The Rail Products segment recorded gross profit margin of 20.5%, expanding 330 bps year over year, attributable to a warranty charge incurred in the prior-year quarter. The Construction Products segment’s gross profit margin decreased 20 bps from the year-ago quarter to 15.4%, as a result of unfavorable product mix. The Tubular Products segment’s gross profit margin in the reported quarter was 21.8%, falling 1,100 bps year over year, due to planned expenditures on plant improvements.

Balance Sheet/Cash Flow: Exiting the third quarter of 2013, Foster’s cash and cash equivalents were approximately $96.0 million, compared with $94.7 million in the previous quarter. Total long-term debt balance stood at $19,000 versus $15,000 in the preceding quarter.

For the nine months ended Sep 30, 2013, Foster’s cash provided from operations totaled $2.5 million, down from $25.3 million in the year-ago comparable period, primarily as a result of working capital changes. For the first nine months of 2013, capital expenditure incurred by the company decreased to $5.6 million, against $6.3 million in the prior-year period.

Outlook: Management expects the Tubular Products segment’s sales to continue declining while sales in the Construction Products segment to improve in the fourth quarter of 2013. Foster predicts capital expenditure in 2013 to be in the range of $7.0 million­–$8.0 million.

Other Stocks to Consider

Foster currently carries a Zacks Rank #3 (Hold). Other stocks worth considering in the industry include Companhia Siderurgica Nacional (SID - Analyst Report), Shiloh Industries Inc. and United States Steel Corp. (X - Analyst Report). While Companhia Siderurgica andShiloh Industries carry a Zacks Rank #1 (Strong Buy), United States Steel holds a Zacks Rank #2 (Buy).

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