Back to top

Analyst Blog

Zacks Equity Research

L.B. Foster (FSTR) Q3 Earnings & Revenues Lag Estimates

EMN CE CDE FSTR

Trades from $3

Premium railroads company, L.B. Foster Company (FSTR - Free Report) posted disappointing results for third-quarter 2016. The company believes that continuing weakness in the energy and freight rail markets hurt the quarterly results. Moreover, weaker steel prices adversely affected the company’s distribution businesses and hence lowered the company’s aggregate revenue in the quarter.

The company reported adjusted earnings of less than 1 cent per share in third-quarter 2016, much lower than the Zacks Consensus Estimate of 14 cents. The bottom line also fell short of the year-ago tally of 67 cents per share.

Net sales in the quarter were $114.6 million, below the Zacks Consensus Estimate of $142 million. Also, the top line fell short of the year-ago figure by 34.9%.

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 $56.9 million, down 35.3% year over year. It represented 49.6% of revenues.

Construction Products revenues, representing 30.4% of revenues, were $34.9 million, down 35.5% year over year.

Revenues generated from Tubular and Energy Services segment totaled $22.9 million, down 32.7% year over year. It represented 20.0% of revenue.

Margins

In the reported quarter, L.B. Foster’s cost of sales was $94.8 million, down 32.3% year over year. Gross margin contracted 320 basis point (bps) year over year to 17.3%. Selling and administrative expenses were $19.8 million, down 8.3% year over year.

Adjusted earnings before interest, tax, depreciation and amortization in the quarter were $4.1 million, down 77.8% year over year.

Balance Sheet and Cash Flow

Exiting third-quarter 2016, L.B. Foster’s cash and cash equivalents were $3.7 million, down from $33.3 million recorded at the end of 2015. Long-term debt fell 19.8% sequentially to $134.3 million.

In the first nine months of 2016, L.B. Foster generated cash of $11.9 million from its operating activities, as against roughly $13.7 million generated in the year-ago period. Capital expenditure was $6.5 million at the end of first nine months of 2016, compared to $11.6 million recorded in the prior-year comparable period.  

Outlook

L.B. Foster aims at improving its profitability in the near term on the back of strategic cost management activities and greater operational efficiency. Through these initiatives, the company aims to accrue more than $12 million annualized expense reduction.

FOSTER LB CO Price, Consensus and EPS Surprise

 

FOSTER LB CO Price, Consensus and EPS Surprise | FOSTER LB CO Quote

Zacks Rank and Other Stocks

L.B. Foster currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks within the industry that warrant a look include:

Coeur Mining, Inc. (CDE - Free Report) currently carries a Zacks Rank #1 (Strong Buy) and has an average positive earnings surprise of 277.67% over the four trailing quarters.

Celanese Corporation (CE - Free Report) currently carries a Zacks Rank #2 (Buy) and has an average positive earnings surprise of 7.08% over the last four quarters.

Eastman Chemical Co. (EMN - Free Report) currently carries a Zacks Rank #2 and has an average positive earnings surprise of 5.99% over the trailing four quarters.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>