L.B. Foster Company | ||||
(Exact name of registrant as specified in its charter) | ||||
Pennsylvania | 000-10436 | 25-1324733 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
415 Holiday Drive, Pittsburgh, Pennsylvania | 15220 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code (412) 928-3400 | ||||
(Former name or former address, if changed since last report.) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | ||||
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||
☐ Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Exhibit Number | Description |
99.1 |
L.B. FOSTER COMPANY | |||
(Registrant) | |||
Date: | May 1, 2018 | /s/ James P. Maloney | |
James P. Maloney | |||
Senior Vice President, | |||
Chief Financial Officer, and Treasurer | |||
(Duly Authorized Officer of Registrant) |
![]() | News Release |
• | Sales increased by 3.2% from the prior year quarter to $122.5 million. |
• | Gross profit margin of 18.0% compared to 17.9% in the prior year. |
• | New orders increased by 8.1% from the prior year quarter. This is the highest level of new orders since the three months ended March 31, 2014. |
• | An increase in backlog of 32.0% from December 31, 2017 to $220.3 million. This is the highest level of backlog since September 30, 2014. |
• | Debt was reduced by $27.6 million during the quarter to $102.4 million. |
• | Net cash provided by operating activities for the quarter totaled $2.6 million compared to $10.7 million in the prior year quarter. The $8.2 million decline is primarily a result of the increase in bonus payments in the amount of $4.1 million compared to the prior year and inventory increases of $3.8 million in the first quarter of 2018 due to stronger anticipated revenue outlook for the second quarter of 2018. |
• | First quarter net sales of $122.5 million increased by $3.8 million, or 3.2%, compared to the prior year quarter due to increases in Tubular and Energy Services (Tubular) sales of 26.0% and Rail Products and Services (Rail) of 10.1%. These increases were partially offset by a reduction in Construction Products (Construction) sales of 22.6%. |
• | Gross profit margin was 18.0%, 10 basis points higher than the prior year quarter. The Tubular segment increased 290 basis points over the prior year period from strength within the midstream and upstream markets we serve. This increase was offset by reductions within the Construction segment of 220 basis points and the Rail segment of 60 basis points compared to the prior year. |
• | First quarter new orders were $176.0 million, an 8.1% increase from the prior year quarter, due to increases in each of the three segments: Rail new orders increased 10.2%, Tubular new orders increased 9.6%, and Construction new orders increased 3.0%. This resulted in the highest level of new order activity since the three months ended March 31, 2014. |
• | Backlog was $220.3 million at March 31, 2018, a 12.8% increase that was supported by increases in each of the three segments. Rail segment backlog increased $13.3 million, or 14.5%, Construction segment backlog increased $6.6 million, or 8.3%, and Tubular segment backlog increased $5.2 million, or 21.1%, compared to the prior year period. This is the Company's highest reported backlog level since September 30, 2014. |
• | Net loss for the first quarter 2018 was $2.0 million, or $0.20 per diluted share, compared to a net loss of $2.4 million, or $0.23 per diluted share, last year. |
• | First quarter EBITDA1 (earnings before interest, taxes, depreciation, and amortization) was $5.1 million which was flat to the first quarter of 2017. This includes increased litigation costs of $1.2 million related to the Union Pacific Rail Road (UPRR) matter compared to the prior year period. |
• | Selling and administrative expenses in the first quarter increased by $1.2 million, or 6.4%. The increase was comprised of an increase in litigation costs of $1.2 million related to the UPRR matter. |
• | Interest expense was $2.0 million in the first quarter of 2018, compared to $2.1 million in the prior year quarter. The decrease was attributable to a reduction in debt levels. |
• | Net cash provided by operating activities for the quarter totaled $2.6 million compared to $10.7 million in the prior year quarter. The $8.2 million decline is primarily a result of the increase in employee bonus payments of $4.1 million and inventory increases of $3.8 million to support our first quarter order activity and stronger anticipated revenue outlook for the second quarter of 2018. |
• | The Company’s income tax expense for the first quarter was $0.5 million, which primarily related to income taxes in foreign jurisdictions. The Company has a full valuation allowance against its U.S. deferred tax assets; therefore, no tax benefit was recorded on domestic operations. |
• | Total debt decreased by $27.6 million, or 21.3%, in the first quarter to $102.4 million as compared to $130.0 million at December 31, 2017. The decrease was primarily related to the $24.7 million repatriation of international cash that was applied against the debt balance. |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(Unaudited) | ||||||||
Sales of goods | $ | 91,811 | $ | 97,629 | ||||
Sales of services | 30,643 | 21,073 | ||||||
Total net sales | 122,454 | 118,702 | ||||||
Cost of goods sold | 75,300 | 79,401 | ||||||
Cost of services sold | 25,126 | 18,049 | ||||||
Total cost of sales | 100,426 | 97,450 | ||||||
Gross profit | 22,028 | 21,252 | ||||||
Selling and administrative expenses | 20,458 | 19,227 | ||||||
Amortization expense | 1,785 | 1,759 | ||||||
Interest expense | 1,958 | 2,108 | ||||||
Interest income | (71 | ) | (56 | ) | ||||
Equity in loss of nonconsolidated investments | 3 | 200 | ||||||
Other (income) expense | (608 | ) | 5 | |||||
23,525 | 23,243 | |||||||
Loss before income taxes | (1,497 | ) | (1,991 | ) | ||||
Income tax expense | 525 | 431 | ||||||
Net loss | $ | (2,022 | ) | $ | (2,422 | ) | ||
Basic loss per common share | $ | (0.20 | ) | $ | (0.23 | ) | ||
Diluted loss per common share | $ | (0.20 | ) | $ | (0.23 | ) | ||
Dividends paid per common share | $ | — | $ | — | ||||
Average number of common shares outstanding — Basic | 10,351 | 10,319 | ||||||
Average number of common shares outstanding — Diluted | 10,351 | 10,319 |
March 31, 2018 | December 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,984 | $ | 37,678 | ||||
Accounts receivable - net | 76,828 | 76,582 | ||||||
Inventories - net | 101,052 | 97,543 | ||||||
Prepaid income tax | 246 | 188 | ||||||
Other current assets | 12,418 | 9,120 | ||||||
Total current assets | 201,528 | 221,111 | ||||||
Property, plant, and equipment - net | 93,892 | 96,096 | ||||||
Other assets: | ||||||||
Goodwill | 20,129 | 19,785 | ||||||
Other intangibles - net | 56,001 | 57,440 | ||||||
Investments | 159 | 162 | ||||||
Other assets | 1,711 | 1,962 | ||||||
Total assets | $ | 373,420 | $ | 396,556 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 63,595 | $ | 52,404 | ||||
Deferred revenue | 10,221 | 10,136 | ||||||
Accrued payroll and employee benefits | 6,282 | 11,888 | ||||||
Accrued warranty | 8,706 | 8,682 | ||||||
Current maturities of long-term debt | 652 | 656 | ||||||
Other accrued liabilities | 10,197 | 9,764 | ||||||
Total current liabilities | 99,653 | 93,530 | ||||||
Long-term debt | 101,752 | 129,310 | ||||||
Deferred tax liabilities | 8,554 | 9,744 | ||||||
Other long-term liabilities | 17,661 | 17,493 | ||||||
Stockholders' equity: | ||||||||
Class A Common Stock | 111 | 111 | ||||||
Paid-in capital | 45,307 | 45,017 | ||||||
Retained earnings | 135,453 | 137,780 | ||||||
Treasury stock | (18,180 | ) | (18,662 | ) | ||||
Accumulated other comprehensive loss | (16,891 | ) | (17,767 | ) | ||||
Total stockholders' equity | 145,800 | 146,479 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 373,420 | $ | 396,556 |
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(Unaudited) | ||||||||
EBITDA Reconciliation | ||||||||
Net loss, as reported | $ | (2,022 | ) | $ | (2,422 | ) | ||
Interest expense, net | 1,887 | 2,052 | ||||||
Income tax expense | 525 | 431 | ||||||
Depreciation expense | 2,944 | 3,282 | ||||||
Amortization expense | 1,785 | 1,759 | ||||||
Total EBITDA | $ | 5,119 | $ | 5,102 |