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L.B. Foster (FSTR) Loss Narrows Y/Y, Sales Improve in Q1
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Premium railroads service provider L.B. Foster Company (FSTR - Free Report) reported narrower loss on a year-over-year basis in first-quarter 2018. The company believes the improving U.S. energy market conditions will help strengthen its competency. Moreover, L.B. Foster remains on track to deleverage its balance sheet, over the long run.
Top- and Bottom-Line Results
In the first quarter, L.B. Foster posted an adjusted loss of 20 cents per share, narrower than the loss of 23 cents per share reported in the year-earlier quarter.
Net sales in the first quarter came in at $122.4 million, up 3.2% year over year. This upswing stemmed from stronger Tubular and Rail segments revenues.
Total sales of goods were $91.8 million, down 6% year over year. However, aggregate sales of services jumped 45.4% to 30.6 million.
L.B. Foster Company Price, Consensus and EPS Surprise
Total cost of sales in the reported quarter came in at $100.4 million, as against $97.5 million recorded in the comparable period last year. Gross profit margin in the first quarter was 18%, up 10 basis points (bps) year over year. This uptick was primarily supported by wider margins in the Tubular segment which benefited from the robust midstream and upstream businesses.
Selling, general and administrative expenses totaled $20.5 million, as against $19.2 million incurred in the prior-year quarter. Reduced debt burden helped lower the company’s interest expense by 4.8%, year over year, in the quarter under review. Adjusted Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the reported quarter came in at $5.1 million, flat year over year.
Exiting the first quarter, L.B. Foster had cash and cash equivalents of $11 million, down from $37.7 million recorded at the end of the prior year. Long-term debt was $101.8 million, lower than $129.3 million recorded as of Dec 31, 2017. The company reduced its debt with the cash repatriated from overseas end-markets.
During the Jan-Mar quarter, the company generated $2.6 million cash from operating activities, lower than $10.7 million recorded in the year-earlier period. Rise in inventory expenses and bonus payments during the quarter resulted in the downtrend.
Outlook
We believe the company’s ongoing modernization programs and lean projects will boost L.B. Foster’s near-term profitability. The company is also focused at lowering its debt burden and strengthening balance sheet, over the long run. Also, elevated sales of the recently-launched solutions and products are anticipated to boost the company’s revenues and profitability in the near term.
However, it should also be noted that L.B. Foster conducts its business in a highly competitive industry. Companies like Angang Steel Co. , Olympic Steel, Inc. (ZEUS - Free Report) and Schnitzer Steel Industries, Inc. are some major peer companies in this space. The company might lose market share due to competitive pressures. Moreover, other headwinds such as sudden input price inflation or a supply change challenge remain causes of concern.
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L.B. Foster (FSTR) Loss Narrows Y/Y, Sales Improve in Q1
Premium railroads service provider L.B. Foster Company (FSTR - Free Report) reported narrower loss on a year-over-year basis in first-quarter 2018. The company believes the improving U.S. energy market conditions will help strengthen its competency. Moreover, L.B. Foster remains on track to deleverage its balance sheet, over the long run.
Top- and Bottom-Line Results
In the first quarter, L.B. Foster posted an adjusted loss of 20 cents per share, narrower than the loss of 23 cents per share reported in the year-earlier quarter.
Net sales in the first quarter came in at $122.4 million, up 3.2% year over year. This upswing stemmed from stronger Tubular and Rail segments revenues.
Total sales of goods were $91.8 million, down 6% year over year. However, aggregate sales of services jumped 45.4% to 30.6 million.
L.B. Foster Company Price, Consensus and EPS Surprise
L.B. Foster Company Price, Consensus and EPS Surprise | L.B. Foster Company Quote
Other Financial Fundamentals
Total cost of sales in the reported quarter came in at $100.4 million, as against $97.5 million recorded in the comparable period last year. Gross profit margin in the first quarter was 18%, up 10 basis points (bps) year over year. This uptick was primarily supported by wider margins in the Tubular segment which benefited from the robust midstream and upstream businesses.
Selling, general and administrative expenses totaled $20.5 million, as against $19.2 million incurred in the prior-year quarter. Reduced debt burden helped lower the company’s interest expense by 4.8%, year over year, in the quarter under review. Adjusted Earnings before interest, taxes, depreciation, and amortization (EBITDA) in the reported quarter came in at $5.1 million, flat year over year.
Exiting the first quarter, L.B. Foster had cash and cash equivalents of $11 million, down from $37.7 million recorded at the end of the prior year. Long-term debt was $101.8 million, lower than $129.3 million recorded as of Dec 31, 2017. The company reduced its debt with the cash repatriated from overseas end-markets.
During the Jan-Mar quarter, the company generated $2.6 million cash from operating activities, lower than $10.7 million recorded in the year-earlier period. Rise in inventory expenses and bonus payments during the quarter resulted in the downtrend.
Outlook
We believe the company’s ongoing modernization programs and lean projects will boost L.B. Foster’s near-term profitability. The company is also focused at lowering its debt burden and strengthening balance sheet, over the long run. Also, elevated sales of the recently-launched solutions and products are anticipated to boost the company’s revenues and profitability in the near term.
However, it should also be noted that L.B. Foster conducts its business in a highly competitive industry. Companies like Angang Steel Co. , Olympic Steel, Inc. (ZEUS - Free Report) and Schnitzer Steel Industries, Inc. are some major peer companies in this space. The company might lose market share due to competitive pressures. Moreover, other headwinds such as sudden input price inflation or a supply change challenge remain causes of concern.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>