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: | November 1, 2018 | /s/ James P. Maloney | |
James P. Maloney | |||
Senior Vice President, | |||
Chief Financial Officer, and Treasurer | |||
(Duly Authorized Officer of Registrant) |
![]() | News Release |
• | Net income of $5.0 million, or $0.47 per diluted share, a 54.3% increase over the prior year quarter. |
• | Sales of $167.1 million, an increase of 27.1% over the prior year quarter. |
• | Gross profit of $29.6 million increased 12.3%, from the prior year quarter. |
• | New orders increased by 27.8% from the prior year quarter. |
• | Backlog ended at $251.6 million, an increase of 32.7% over the prior year. |
• | Debt reduction of $22.6 million from June 30, 2018 to $76.5 million. |
• | Net cash provided by operating activities for the quarter totaled $14.5 million. |
• | Third quarter net sales of $167.1 million increased by $35.6 million, or 27.1%, compared to the prior year quarter, which includes increases in each of our three business segments. Rail Products and Services (Rail) sales increased 36.1%, Tubular and Energy Services (Tubular) sales increased 35.5%, and Construction Products (Construction) sales increased 6.2% over the prior year quarter. |
• | Third quarter gross profit increased by $3.2 million, or 12.3%, over the prior year, to $29.6 million. Gross profit margin of 17.7% was 240 basis points lower compared to the prior year quarter. The gross profit margin was negatively impacted by distribution product mix within our Construction and Rail segments. |
• | Third quarter new orders were $186.0 million, a 27.8% increase from the prior year quarter, driven primarily by strong activity within the Construction segment and to a lesser extent, our Tubular segment. |
• | Backlog was $251.6 million at September 30, 2018, a 32.7% increase over the prior year period. Construction backlog increased $42.7 million, or 57.1%, while Rail backlog increased $23.1 million, or 26.9%. |
• | Net income for the third quarter 2018 was $5.0 million, or $0.47 per diluted share, compared to net income of $3.2 million, or $0.31 per diluted share, in the prior year quarter. |
• | Third quarter EBITDA1 (earnings before interest, taxes, depreciation, and amortization) was $10.6 million, an increase of 6.6% compared to the prior year quarter. |
• | Selling and administrative expenses in the third quarter increased by $1.4 million, or 7.1%, over the prior year period, largely driven by increased personnel-related expenses of $0.8 million, as well as increased external service costs of $0.8 million. Litigation costs related to the Union Pacific Railroad (UPRR) matter were approximately $0.6 million in the current year period and $0.5 million in the prior year period. |
• | Net interest expense was $1.3 million in the third quarter of 2018, compared to $2.0 million in the prior year quarter. The decrease was attributable to a reduction in debt levels as well as maintaining the lowest tier interest rate spread associated with our credit facility. |
• | Net cash provided by operating activities for the quarter totaled $14.5 million compared to use of $2.4 million in the prior year quarter. The $16.9 million increase is primarily a result of improvements in trade accounts receivable and inventory compared to the prior year quarter. |
• | Total debt decreased by $22.6 million, or 22.8%, in the third quarter to $76.5 million as compared to $99.0 million at June 30, 2018. |
• | The Company’s income tax benefit for the third quarter was $0.2 million, primarily related to changes in the estimated annual effective tax rate resulting from the realization of a portion of U.S. deferred tax assets previously offset by a valuation allowance. |
• | Net sales of $462.4 million for the first nine months of 2018 increased by $67.4 million, or 17.1%, compared to the prior year period due to increases in Tubular sales of 30.5% and Rail sales of 27.0%. These increases were partially offset by a reduction in Construction sales of 7.6%. |
• | For the first nine months of 2018, gross profit was $84.1 million, a $8.8 million, or 11.7%, increase from the prior year period. Gross profit margin was 18.2%, a reduction of 90 basis points compared to the first nine months of the prior year. Gross profit margin was negatively impacted by distribution product mix within the Rail and Construction segments. The reduction was partially offset by increased volume within the Tubular segment. |
• | New orders during the first nine months of 2018 improved by $112.8 million, or 25.8%, from the prior year period, with increases in each of our three segments. Rail new orders increased by 31.6%, Construction new orders increased by 28.6%, and Tubular new orders increased by 10.1% over the prior year period. |
• | Net income for the first nine months of 2018 was $7.9 million, or $0.75 per diluted share, compared to net income of $3.8 million, or $0.37 per diluted share, last year. |
• | EBITDA for the first nine months of 2018 was $27.7 million, a $2.1 million increase over the prior year period. |
• | Selling and administrative expenses in the first nine months of 2018 increased by $5.5 million, or 9.1%, largely driven by increases in personnel-related expenses of $3.3 million and litigation costs of $3.0 million related to the UPRR matter compared to the prior year period. Litigation costs related to the UPRR matter were approximately $4.5 million in the current year period and $1.5 million in the prior year period. |
• | Net interest expense was $4.8 million for the first nine months of 2018, compared to $6.1 million in the prior year period. The decrease was primarily attributable to a reduction in debt levels as well as maintaining the lowest tier interest rate spread associated with our credit facility. |
• | Net cash provided by operating activities for the first nine months of 2018 totaled $22.4 million compared to $27.5 million in the prior year period. Excluding the $11.8 million of operating cash provided by income tax refunds in the 2017 period, 2018 operating cash increased by $6.7 million over the prior year period. |
• | Total debt decreased by $53.5 million, or 41.4%, in the first nine months of 2018 to $76.5 million as compared to $130.0 million at December 31, 2017. The $31.5 million repatriation of international cash in 2018 as well as operating and investing cash flow activities contributed to the debt balance reduction. |
• | The Company’s income tax expense for the first nine months of 2018 was $1.0 million. The Company's estimated annual effective tax rate was primarily related to income taxes in foreign jurisdictions, but partially offset by a benefit from the realization of a portion of U.S. deferred tax assets previously offset by a valuation allowance. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Sales of goods | $ | 120,272 | $ | 103,058 | $ | 339,176 | $ | 318,414 | ||||||||
Sales of services | 46,822 | 28,434 | 123,262 | 76,640 | ||||||||||||
Total net sales | 167,094 | 131,492 | 462,438 | 395,054 | ||||||||||||
Cost of goods sold | 100,746 | 82,460 | 281,892 | 256,152 | ||||||||||||
Cost of services sold | 36,746 | 22,667 | 96,402 | 63,549 | ||||||||||||
Total cost of sales | 137,492 | 105,127 | 378,294 | 319,701 | ||||||||||||
Gross profit | 29,602 | 26,365 | 84,144 | 75,353 | ||||||||||||
Selling and administrative expenses | 21,662 | 20,218 | 65,488 | 60,023 | ||||||||||||
Amortization expense | 1,762 | 1,764 | 5,322 | 5,218 | ||||||||||||
Interest expense | 1,367 | 2,026 | 4,979 | 6,315 | ||||||||||||
Interest income | (71 | ) | (56 | ) | (166 | ) | (166 | ) | ||||||||
Equity in loss (income) of nonconsolidated investments | 4 | (50 | ) | 7 | 5 | |||||||||||
Other expense (income) | 153 | (551 | ) | (327 | ) | (564 | ) | |||||||||
24,877 | 23,351 | 75,303 | 70,831 | |||||||||||||
Income before income taxes | 4,725 | 3,014 | 8,841 | 4,522 | ||||||||||||
Income tax (benefit) expense | (246 | ) | (208 | ) | 952 | 698 | ||||||||||
Net income | $ | 4,971 | $ | 3,222 | $ | 7,889 | $ | 3,824 | ||||||||
Basic earnings per common share | $ | 0.48 | $ | 0.31 | $ | 0.76 | $ | 0.37 | ||||||||
Diluted earnings per common share | $ | 0.47 | $ | 0.31 | $ | 0.75 | $ | 0.37 | ||||||||
Average number of common shares outstanding — Basic | 10,365 | 10,341 | 10,361 | 10,332 | ||||||||||||
Average number of common shares outstanding — Diluted | 10,489 | 10,479 | 10,481 | 10,435 |
September 30, 2018 | December 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,586 | $ | 37,678 | ||||
Accounts receivable - net | 85,615 | 76,582 | ||||||
Inventories - net | 107,200 | 97,543 | ||||||
Prepaid income tax | 725 | 188 | ||||||
Other current assets | 7,402 | 9,120 | ||||||
Total current assets | 210,528 | 221,111 | ||||||
Property, plant, and equipment - net | 87,894 | 96,096 | ||||||
Other assets: | ||||||||
Goodwill | 19,449 | 19,785 | ||||||
Other intangibles - net | 51,801 | 57,440 | ||||||
Investments | 155 | 162 | ||||||
Other assets | 719 | 1,962 | ||||||
TOTAL ASSETS | $ | 370,546 | $ | 396,556 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 72,355 | $ | 52,404 | ||||
Deferred revenue | 12,384 | 10,136 | ||||||
Accrued payroll and employee benefits | 11,052 | 11,888 | ||||||
Accrued warranty | 9,363 | 8,682 | ||||||
Current maturities of long-term debt | 630 | 656 | ||||||
Other accrued liabilities | 9,157 | 9,764 | ||||||
Total current liabilities | 114,941 | 93,530 | ||||||
Long-term debt | 75,840 | 129,310 | ||||||
Deferred tax liabilities | 7,864 | 9,744 | ||||||
Other long-term liabilities | 16,813 | 17,493 | ||||||
Stockholders' equity: | ||||||||
Class A Common Stock | 111 | 111 | ||||||
Paid-in capital | 47,042 | 45,017 | ||||||
Retained earnings | 145,364 | 137,780 | ||||||
Treasury stock | (18,165 | ) | (18,662 | ) | ||||
Accumulated other comprehensive loss | (19,264 | ) | (17,767 | ) | ||||
Total stockholders' equity | 155,088 | 146,479 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 370,546 | $ | 396,556 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
EBITDA Reconciliation | ||||||||||||||||
Net income, as reported | $ | 4,971 | $ | 3,222 | $ | 7,889 | $ | 3,824 | ||||||||
Interest expense, net | 1,296 | 1,970 | 4,813 | 6,149 | ||||||||||||
Income tax (benefit) expense | (246 | ) | (208 | ) | 952 | 698 | ||||||||||
Depreciation expense | 2,803 | 3,178 | 8,685 | 9,705 | ||||||||||||
Amortization expense | 1,762 | 1,764 | 5,322 | 5,218 | ||||||||||||
Total EBITDA | $ | 10,586 | $ | 9,926 | $ | 27,661 | $ | 25,594 |