PITTSBURGH, April 24 /PRNewswire-FirstCall/ -- L.B. Foster Company (NASDAQ:FSTR), a leading manufacturer, fabricator, and distributor of products and services for rail, construction, energy and utility markets, today reported that its first quarter earnings per diluted share from continuing operations were $0.57. These results include a pretax gain related to additional proceeds from a favorable working capital adjustment pursuant to the prior year sale of the Company's investment in the DM&E Railroad of $2.0 million, as well as a pretax gain on the sale and lease-back of our threaded products facility in Houston, Texas. Excluding these gains, earnings per diluted share from continuing operations were $0.36 compared to $0.28 in last year's first quarter, a 29% increase. This represents record first quarter earnings for the Company and marks the thirteenth consecutive quarter the Company has recorded an earnings increase over the prior year quarter.
2008 First Quarter Results In the first quarter of 2008, L.B. Foster had income from continuing operations of $6.3 million or $0.57 per diluted share compared to income from continuing operations of $3.1 million or $0.28 per diluted share in the first quarter of 2007.
Net sales decreased 15.6% to $93.4 million compared to $110.7 million in the prior year quarter. Gross profit margin was 16.7%, up 390 basis points from the prior year quarter primarily as a result of increased billing margins, decreased unfavorable manufacturing variances and, to a lesser extent, decreased warranty expense.
Selling and administrative expenses increased $1.0 million or 11.5% over last year's quarter due primarily to increased employee related costs including salaries and benefits. First quarter interest expense was $0.6 million, a 55% decrease from the prior year quarter due principally to decreased average borrowings as the Company generated strong positive cash flows in 2007. Interest income was $0.8 million and $0.0 million in the first quarter of 2008 and 2007, respectively. The Company's income tax rate from continuing operations was 36.1% in the first quarter compared to 35.9% in the prior year quarter.
"Consolidated sales declined 15.6% and we anticipate that trend to continue; however, margins were up substantially and we expect that trend to continue as well," commented Stan Hasselbusch, President and Chief Executive Officer. "Tubular product sales were strong, although tubular operating margins declined in the first quarter. Construction Product sales were solid but below last year due primarily to decreased Piling sales. Rail product sales were softer but their operating margins improved due to improved billing margins, a favorable product mix and enhanced operating efficiencies. CXT concrete tie sales decreased from the prior year quarter due to lower sales at our Spokane and Grand Island facilities. Allegheny Rail Products sales increased substantially over last year and our facility in Pueblo, Colorado performed well," remarked Mr. Hasselbusch.
Cash used by operations was approximately $9.2 million for the first quarter of 2008 compared to a $7.8 million use of cash in the first quarter of 2007. Capital expenditures were $2.1 million in 2008 compared to $1.5 million during the prior year quarter. "We continue to expect to generate positive cash flows from operations in excess of our capital expenditures in 2008," commented Mr. Hasselbusch, who continued by reporting, "Bookings for the first quarter were $132.8 million, 23% lower than last year, although the gross profit margins inherent in those orders were improved. Our backlog at March 31, 2008 was $173.7 million, 11% lower than last year while, again, the gross profit margin is higher in the 2008 backlog. While we currently anticipate that the energy, rail and construction markets we participate in will be favorable, we continue to expect that 2008 sales and earnings will be challenged by: (i) expectations that our Coated product volumes will be lower than 2007; (ii) reduced concrete tie production and sales at our Grand Island and Tucson tie facilities due to diminished demand by the Union Pacific Railroad and (iii) a reduction of Rail Distribution sales to the DM&E Railroad." Mr. Hasselbusch concluded, "We continue to undertake initiatives across the organization to improve our core businesses while we pursue synergistic and accretive acquisitions." L.B. Foster Company will conduct a conference call and webcast to discuss its first quarter 2008 operating results and general market activity and business conditions on Thursday, April 24, 2008 at 11:00am ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: http://www.lbfoster.com/, by accessing the Investor Relations page.
The Company wishes to caution readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements in news releases, and other communications, including oral statements, such as references to future profitability, made from time to time by representatives of the Company. Specific risks and uncertainties that could affect the Company's profitability include, but are not limited to, general economic conditions, sudden and/or sharp declines in steel prices, adequate funding for infrastructure projects, production delays or problems encountered at our manufacturing facilities, and the availability of existing and new piling and rail products. There are also no assurances that the Canadian Pacific Railway will proceed with the Powder River Basin project and trigger any contingent payments to L.B. Foster. Matters discussed in such communications are forward-looking statements that involve risks and uncertainties. Sentences containing words such as "anticipates," "expects," or "will," generally should be considered forward-looking statements. More detailed information on these and additional factors which could affect the Company's operating and financial results are described in the Company's Forms 10-K, 10-Q and other reports, filed or to be filed with the Securities and Exchange Commission. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
L. B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts) Three Months Ended
March 31,
2008 2007
(Unaudited) NET SALES $93,441 $110,666 COSTS AND EXPENSES:
Cost of goods sold 77,820 96,476
Selling and administrative expenses 9,366 8,401
Interest expense 555 1,222
Gain on sale of DM&E investment (2,022) -
Gain on sale of property (1,486) -
Interest income (815) (2)
Other expense (income) 151 (256)
83,569 105,841
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 9,872 4,825 INCOME TAX EXPENSE 3,566 1,733 INCOME FROM CONTINUING OPERATIONS 6,306 3,092 DISCONTINUED OPERATIONS:
INCOME FROM DISCONTINUED OPERATIONS BEFORE
INCOME TAXES - 12
INCOME TAX EXPENSE - 4 INCOME FROM DISCONTINUED OPERATIONS - 8 NET INCOME $6,306 $3,100
BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.57 $0.29
FROM DISCONTINUED OPERATIONS 0.00 0.00
BASIC EARNINGS PER COMMON SHARE $0.57 $0.29 DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.57 $0.28
FROM DISCONTINUED OPERATIONS 0.00 0.00
DILUTED EARNINGS PER COMMON SHARE $0.57 $0.28
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- BASIC 10,977 10,555 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- DILUTED 11,141 10,898 L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
(In thousands) March 31, December 31,
2008 2007
ASSETS (Unaudited) CURRENT ASSETS:
Cash and cash items 117,199 121,097
Accounts and notes receivable:
Trade 45,234 52,856
Other 453 754 Inventories 100,705 102,447
Current deferred tax assets 3,572 3,615
Other current assets 1,701 1,131
Property held for resale - 2,497
Prepaid income tax 329 -
Total Current Assets 269,193 284,397
OTHER ASSETS:
Property, plant & equipment-net 44,129 44,136
Goodwill 350 350
Other intangibles - net 47 50
Deferred tax assets 1,416 1,411
Other non-current assets 409 428
Total Other Assets 46,351 46,375 315,544 330,772
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES:
Current maturities on long-term debt 6,184 6,191
Accounts payable-trade and other 39,907 53,489
Accrued payroll and employee benefits 5,041 11,490
Current deferred tax liabilities 3,541 3,541
Other accrued liabilities 5,058 8,841
Current liabilities of discontinued operations 200 200
Total Current Liabilities 59,931 83,752 LONG-TERM DEBT, TERM LOAN 15,476 16,190
OTHER LONG-TERM DEBT 11,038 11,866
DEFERRED TAX LIABILITIES 1,638 1,638
OTHER LONG-TERM LIABILITIES 5,405 3,500
STOCKHOLDERS' EQUITY:
Class A Common stock 110 109
Paid-in capital 46,994 45,147
Retained earnings 175,620 169,314
Accumulated other comprehensive loss (668) (744)
Total Stockholders' Equity 222,056 213,826
315,544 330,772
Contact: David J. Russo
Phone: (412)928-3417
Fax: (412)928-7891
DATASOURCE: L.B. Foster Company CONTACT: David J. Russo of L.B. Foster Company, +1-412-928-3417, Fax, +1-412-928-7891, Web site: http://www.lbfoster.com/
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