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L.B. Foster (FSTR) Posts Q2 Earnings on Robust Revenues

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Premium railroads service provider, L.B. Foster Company’s second-quarter 2017 adjusted earnings came in at 29 cents per share, as against the loss of 11 cents per share reported in the year-ago period.

Net sales in the reported quarter came in at $144.9 million, up 6.5% year over year. The upside was driven by improved sales accrued from Construction, Tubular and Rail segments.

Quarter in Details

Sales of goods in the second-quarter were $117.7 million, marginally down 0.3% year over year. However, sales of services surged 51.4% year over year to $27.1 million.

The company existed the quarter with a backlog of $176 million, up 17.9% year over year.

Costs and Margins

Total cost of sales during the quarter was $117.1 million, up 8.3% year over year. Gross profit margin in the reported quarter came in at 19.1%, contracting 140 basis points year over year. This downside was stemmed by weaker margins accrued from the Construction and Rail businesses.

Selling, generate and administrative expenses dropped 11.7% year over year to $20.6 million. Interest expenses in the quarter came in at $2.2 million compared with $1.7 million incurred in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting second-quarter 2017, the company had cash and cash equivalents worth $35.5 million, up 16.8% at the end of 2016. Long-term debt came in at $127.9 million compared to $149.2 million recorded on Dec 31, 2016.

In first-half 2017, L.B. Foster generated cash worth $29.9 million, as against $6.6 million cash used in the year-ago period.

Outlook

L.B. Foster is well poised to reinforce its business on the back of robust sales, diligent cost-control measures and greater operational efficacy.

Our Take

Over the last six months, L.B. Foster’s shares yielded a return of 19.10%, outperforming 2.22% growth recorded by the industry.

Companies like ArcelorMittal (MT - Free Report) , Nucor Corporation (NUE - Free Report) and Acerinox, S.A. (ANIOY - Free Report) are some other major stocks in the industry.

L.B. Foster intends to boost its competency on the back of greater operational efficacy and solid Construction businesses sales.

However, on the other hand, headwinds such as stiff industry rivalry, challenging conditions in the energy markets or sudden input price inflation might mar th company’s near-term prospects.

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