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L.B. Foster Company (FSTR - Analyst Report) posted adjusted earnings per share of 71 cents for fourth-quarter 2013, up from 67 cents in the year-ago quarter. Adjusted earnings also beat the Zacks Consensus Estimate of 63 cents by 12.7%. The year-over-year increase in earnings was mainly a result of increased sales.

For 2013, L.B. Foster reported adjusted earnings per share of $2.85, compared with $2.72 in 2012. Reported earnings also beat the Zacks Consensus Estimate of $2.78 per share.

Revenues: In the fourth quarter of 2013, total sales were $156.5 million, up 11.2% year over year, primarily due to a rise in sales of the Construction segment, partially offset by a decline in the Rail and Tubular Products segment’s sales. Revenues were almost in line with the Zacks Consensus Estimate of $157.0 million.

Revenues from the Rail Products segment decreased 6.0% year over year to $85.8 million. This was a result of softness in the rail distribution businesses, partially offset by strong sales in the Rail Technology and Transit Products divisions.

The Construction Products segment’s revenues rose 67.0% year over year to $61.9 million, driven by higher piling products and concrete building products sales.

The Tubular Products segment generated revenues of $8.7 million, 29.3% year-over-year decline due to lower coated products sales.

For 2013, the company reported revenues of $598.0 million, up 1.6% year over year. Revenues were marginally below the Zacks Consensus Estimate of $599.0 million.

Costs/Margins: Adjusted gross profit margin in the quarter was almost flat year over year at 19.6%. Selling and administrative expenses in the quarter were recorded at $18.6 million, up from $16.5 million in the year-ago quarter.

The Rail Products segment recorded gross profit margin of 22.0%, expanding 310 basis points (bps) year over year, attributable to a decline in the plant expense in concrete tie business. The Construction Products segment’s gross profit margin improved 30 bps from the year-ago quarter to 16.1%, as a result of increased sales. The Tubular Products segment’s gross profit margin in the reported quarter was 25.5%, falling 740 bps year over year, due to de-leverage of volume along with a reduction in price.

Balance Sheet/Cash Flow: Exiting the fourth quarter of 2013, L.B. Foster’s cash and cash equivalents were approximately $64.6 million, compared with $96.0 million in the previous quarter. Total long-term debt balance stood at $25,000 versus $19,000 in the preceding quarter.

For 2013, L.B. Foster’s cash generation from operations was $13.9 million, down from $27.0 million in 2012, primarily as a result of working capital changes.

Outlook: Management expects a favorable business environment for all the segments in 2014. However, Transit Products and concrete ties business are expected to decline. First-quarter 2014 sales are expected in the $123.0–$128.0 million range. L.B. Foster predicts net income in 2014 in the range of $5.5–$5.9 million. In 2014, capital expenditure is expected in the range of $18.0–$22.0 million. The increase in capital expenditure is expected to support the company’s growth plans.

Other Stocks to Consider

L.B. Foster currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the industry include AK Steel Holding Corporation (AKS - Analyst Report), Olympic Steel Inc. (ZEUS - Snapshot Report) and United States Steel Corp. (X - Analyst Report). All these stocks sport a Zacks Rank #2 (Buy).