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L.B. Foster (FSTR) Posts Q2 Loss on Weak Segmental Sales
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Premium railroads company L.B. Foster Company (FSTR - Free Report) posted disappointing results for second-quarter 2016. The company recorded adjusted loss of 11 cents per share. The Zacks Consensus Estimate was earnings of 19 cents per share. Also, the bottom line compared unfavorably with the year-ago tally of earnings of 52 cents per share.
Talking about L.B. Foster’s top-line results, net sales in the quarter were $136 million, below the Zacks Consensus Estimate of $152.7 million. Also, the top line declined 20.7% from $171.4 million generated in the year-ago quarter. The year-over-year fall was triggered by weak sales in all business segments. The quarter’s booking decreased 14.1% year over year to $140.1 million.
Segmental Revenues
L.B. Foster reports its top-line results under three heads/segments, including Rail Products and Services, Construction Products and Tubular and Energy Services. The segmental quarterly results are briefly discussed below:
Revenues from Rail Products and Services segment totaled $67.5 million, down 22.3% year over year. It represented 49.6% of revenues.
Construction Products revenues, representing 29.7%, were $40.3 million, down 18.5% year over year.
Revenues generated from Tubular and Energy Services segment totaled $28.1 million, down 19.6% year over year. It represented 20.7% of revenue.
Margins
In the quarter, L.B. Foster’s cost of sales decreased 19.5% year-over-year, representing 79.5% of net sales, up from 78.4% in the year-ago quarter. Gross margin decreased 110 basis point (bps) year over year to 20.5%. Selling and administrative expenses, as a percentage of revenue, increased 290 bps year over year to 17.1%.
Adjusted earnings before interest, tax, depreciation and amortization in the quarter were $7.5 million, down 55.1% year over year.
Balance Sheet and Cash Flow
Exiting second-quarter 2016, L.B. Foster’s cash and cash equivalents were $32.8 million, up from $30.9 million in the preceding quarter. Long-term debt fell 3.8% sequentially to $167 million.
In the first half of 2016, L.B. Foster generated cash of $6.6 million from its operating activities, as against roughly $1.9 million used in the year-ago period. Investment in property, plant and equipment decreased 38.5% year over year to $5.1 million.
Outlook
L.B. Foster aims at improving its profitability by streamlining its existing cost structure for adjusted niche market business challenges and lower volumes. Reduction of salaried workforce in the second half of 2016 is likely to bring $6 million in annualized savings. In addition, other cost-cutting measures will likely result in $1 million in annualized savings.
With a market capitalization of $97.6 billion, L.B. Foster Company presently carries a Zacks Rank #5 (Strong Sell). Though the stock’s performance has been weak over the past few quarters, we believe other stocks in the industry that are performing well have gained high investment value. Better-ranked stocks include ArcelorMittal (MT - Free Report) , Schnitzer Steel Industries, Inc. and ThyssenKrupp AG (TYEKF - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
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L.B. Foster (FSTR) Posts Q2 Loss on Weak Segmental Sales
Premium railroads company L.B. Foster Company (FSTR - Free Report) posted disappointing results for second-quarter 2016. The company recorded adjusted loss of 11 cents per share. The Zacks Consensus Estimate was earnings of 19 cents per share. Also, the bottom line compared unfavorably with the year-ago tally of earnings of 52 cents per share.
Talking about L.B. Foster’s top-line results, net sales in the quarter were $136 million, below the Zacks Consensus Estimate of $152.7 million. Also, the top line declined 20.7% from $171.4 million generated in the year-ago quarter. The year-over-year fall was triggered by weak sales in all business segments. The quarter’s booking decreased 14.1% year over year to $140.1 million.
Segmental Revenues
L.B. Foster reports its top-line results under three heads/segments, including Rail Products and Services, Construction Products and Tubular and Energy Services. The segmental quarterly results are briefly discussed below:
Revenues from Rail Products and Services segment totaled $67.5 million, down 22.3% year over year. It represented 49.6% of revenues.
Construction Products revenues, representing 29.7%, were $40.3 million, down 18.5% year over year.
Revenues generated from Tubular and Energy Services segment totaled $28.1 million, down 19.6% year over year. It represented 20.7% of revenue.
Margins
In the quarter, L.B. Foster’s cost of sales decreased 19.5% year-over-year, representing 79.5% of net sales, up from 78.4% in the year-ago quarter. Gross margin decreased 110 basis point (bps) year over year to 20.5%. Selling and administrative expenses, as a percentage of revenue, increased 290 bps year over year to 17.1%.
Adjusted earnings before interest, tax, depreciation and amortization in the quarter were $7.5 million, down 55.1% year over year.
Balance Sheet and Cash Flow
Exiting second-quarter 2016, L.B. Foster’s cash and cash equivalents were $32.8 million, up from $30.9 million in the preceding quarter. Long-term debt fell 3.8% sequentially to $167 million.
In the first half of 2016, L.B. Foster generated cash of $6.6 million from its operating activities, as against roughly $1.9 million used in the year-ago period. Investment in property, plant and equipment decreased 38.5% year over year to $5.1 million.
Outlook
L.B. Foster aims at improving its profitability by streamlining its existing cost structure for adjusted niche market business challenges and lower volumes. Reduction of salaried workforce in the second half of 2016 is likely to bring $6 million in annualized savings. In addition, other cost-cutting measures will likely result in $1 million in annualized savings.
FOSTER LB CO Price, Consensus and EPS Surprise
FOSTER LB CO Price, Consensus and EPS Surprise | FOSTER LB CO Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $97.6 billion, L.B. Foster Company presently carries a Zacks Rank #5 (Strong Sell). Though the stock’s performance has been weak over the past few quarters, we believe other stocks in the industry that are performing well have gained high investment value. Better-ranked stocks include ArcelorMittal (MT - Free Report) , Schnitzer Steel Industries, Inc. and ThyssenKrupp AG (TYEKF - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click here to get this free report >>