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L.B. Foster (FSTR) Incurs Loss in Q4 as Revenues Plunge Y/Y
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Premium railroads company, L.B. Foster Company (FSTR - Free Report) posted disappointing results for fourth-quarter 2016.
Over the last one month, L.B Foster’s shares recorded a loss of 1.39%, as against 11.80% gain provided by the Zacks categorized Steel Producers industry.
Earnings
The company posted an adjusted loss of $3.97 per share in fourth-quarter 2016, as against the adjusted earnings of 32 cents per share recorded in the year-ago period.
Full-year 2016 adjusted loss of $13.79 per share was wider than the loss of $4.33 per share reported at the end of 2015.
Revenues
Net sales in the quarter came in at $106.6 million, down 23.4% year over year. The downside was stemmed by poor segmental performances.
Full-year 2016 net sales totaled $483.5 million as against $624.5 million reported in the comparable period last year.
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 discussed below in details:
Revenues from Rail Products and Services segment totaled $50.4 million, plummeting roughly 34% year over year. It represents 47.4% of revenues.
Construction Products revenues, representing 36.1% of revenues, remained flat year over year at $38.5 million.
Revenues generated from the Tubular and Energy Services segment summed $17.6 million, down 27.2% year over year, representing 16.5% of revenues.
Margins
In the reported quarter, L.B. Foster’s cost of sales was $87.8 million, down 19.7% year over year. Gross margin contracted 390 basis point (bps) year over year to 17.6%. Selling and administrative expenses came in at $20 million, down 18.3% year over year.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were $3 million, slumping 78% year over year.
Full-year 2016 gross margin was 18.7% compared to the year-ago figure of 21.4%. Adjusted EBITDA for the full year came in at $18.5 million as against $60.6 million reported at the end of 2015.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2016, L.B. Foster’s cash and cash equivalents were $30.4 million, down from $33.3 million recorded at the end of 2015. Long-term debt dropped 10.9% year over year to $149.2 million.
In 2016, L.B. Foster generated cash of $19.9 million from its operating activities, as against $56.2 million generated in the prior-year period. Capital expenditure was $7.7 million at the end of 2016, compared to $14.9 million recorded in the comparable period last year.
Outlook
L.B. Foster is poised to boost its business on the back of its restructuring initiatives. These efforts, along with reduction in capital expenditure, are likely to drive free cash flow generation in 2017. Notably, the company believes that solid sales generated from the Concrete Products, Fabricated Bridge and European rail business divisions would bolster its top-line performance in the quarters ahead.
Our Take
Dismal rail pricing, reduced capital expenditure in rail business and overall poor demand for key products have been hurting L.B. Fosters’ top- and bottom-line performances. Further, headwinds such as input price inflation or a stronger U.S. currency might weigh near-term revenues and profitability over the long term. The company also offers its services in a highly competitive market. Major bigwigs such as Angang Steel Company Limited , Aperam (APEMY - Free Report) and Ternium S.A. (TX - Free Report) are some major competitors of L.B. Foster. Any sort of strategic progress made by these behemoths, might considerably lower the company’s market demand in the quarters ahead.
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L.B. Foster (FSTR) Incurs Loss in Q4 as Revenues Plunge Y/Y
Premium railroads company, L.B. Foster Company (FSTR - Free Report) posted disappointing results for fourth-quarter 2016.
Over the last one month, L.B Foster’s shares recorded a loss of 1.39%, as against 11.80% gain provided by the Zacks categorized Steel Producers industry.
Earnings
The company posted an adjusted loss of $3.97 per share in fourth-quarter 2016, as against the adjusted earnings of 32 cents per share recorded in the year-ago period.
Full-year 2016 adjusted loss of $13.79 per share was wider than the loss of $4.33 per share reported at the end of 2015.
Revenues
Net sales in the quarter came in at $106.6 million, down 23.4% year over year. The downside was stemmed by poor segmental performances.
Full-year 2016 net sales totaled $483.5 million as against $624.5 million reported in the comparable period last year.
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 discussed below in details:
Revenues from Rail Products and Services segment totaled $50.4 million, plummeting roughly 34% year over year. It represents 47.4% of revenues.
Construction Products revenues, representing 36.1% of revenues, remained flat year over year at $38.5 million.
Revenues generated from the Tubular and Energy Services segment summed $17.6 million, down 27.2% year over year, representing 16.5% of revenues.
Margins
In the reported quarter, L.B. Foster’s cost of sales was $87.8 million, down 19.7% year over year. Gross margin contracted 390 basis point (bps) year over year to 17.6%. Selling and administrative expenses came in at $20 million, down 18.3% year over year.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were $3 million, slumping 78% year over year.
Full-year 2016 gross margin was 18.7% compared to the year-ago figure of 21.4%. Adjusted EBITDA for the full year came in at $18.5 million as against $60.6 million reported at the end of 2015.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2016, L.B. Foster’s cash and cash equivalents were $30.4 million, down from $33.3 million recorded at the end of 2015. Long-term debt dropped 10.9% year over year to $149.2 million.
In 2016, L.B. Foster generated cash of $19.9 million from its operating activities, as against $56.2 million generated in the prior-year period. Capital expenditure was $7.7 million at the end of 2016, compared to $14.9 million recorded in the comparable period last year.
Outlook
L.B. Foster is poised to boost its business on the back of its restructuring initiatives. These efforts, along with reduction in capital expenditure, are likely to drive free cash flow generation in 2017. Notably, the company believes that solid sales generated from the Concrete Products, Fabricated Bridge and European rail business divisions would bolster its top-line performance in the quarters ahead.
Our Take
Dismal rail pricing, reduced capital expenditure in rail business and overall poor demand for key products have been hurting L.B. Fosters’ top- and bottom-line performances. Further, headwinds such as input price inflation or a stronger U.S. currency might weigh near-term revenues and profitability over the long term. The company also offers its services in a highly competitive market. Major bigwigs such as Angang Steel Company Limited , Aperam (APEMY - Free Report) and Ternium S.A. (TX - Free Report) are some major competitors of L.B. Foster. Any sort of strategic progress made by these behemoths, might considerably lower the company’s market demand in the quarters ahead.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>