L.B. Foster Reports First Quarter Operating Results
- First quarter of 2021 net sales were
$116.1 million , a decrease of$5.8 million , or 4.8%, from the prior year quarter. - First quarter of 2021 gross profit was
$18.8 million , a decline of$4.3 million , or 18.6%, from the prior year quarter. Gross profit margin was 16.2% for the first quarter of 2021 versus 19.0% in the prior year quarter. - First quarter of 2021 selling and administrative expenses were
$18.0 million , a decrease of$2.3 million , or 11.4%, from the prior year quarter. Selling and administrative expenses as a percent of net sales decreased to 15.5% compared to 16.7% in the prior year quarter. - First quarter of 2021 net loss from continuing operations was
$1.3 million , or$0.12 per diluted share, a decrease of$0.12 per diluted share from the prior year quarter. - Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, and certain charges) from continuing operations1 for the quarter was
$2.7 million , a decrease of$2.1 million from the prior year quarter. - Net cash provided by continuing operating activities for the quarter totaled
$7.6 million , an increase of$12.5 million from the prior year quarter. - Net debt1 (total debt less cash and cash equivalents) decreased by
$5.7 million fromDecember 31, 2020 to$31.8 million as ofMarch 31, 2021 . Over the last year, the Company reduced its net debt1 by$26.0 million . The Company's adjusted net leverage ratio1 was 1.1x as ofMarch 31, 2021 , compared to 1.4x as ofMarch 31, 2020 . - Backlog increased by 14.6% to
$271.9 million compared to the prior year quarter, driven by significant increases in both the Rail Technologies and Services ("Rail") and Infrastructure Solutions segments. New orders for the first quarter of 2021 were$135.6 million , an increase of 3.7% from the prior year quarter.
1 See "Non-GAAP Disclosures" at the end of this press release for information regarding the following non-GAAP measures from continuing operations used in this release: EBITDA, adjusted EBITDA, net debt, adjusted net leverage ratio, free cash flow, adjusted net (loss) income, and adjusted (loss) earnings per diluted share.
CEO Comments
"Sales revenue in the first quarter also reflected seasonality in our business, with lower volume in January and February, followed by a strong month in March, which contributed 47.0% of first quarter sales. Backlog increased
First Quarter Results
- Net sales for the first quarter of 2021 was
$116.1 million , a$5.8 million decrease, or 4.8%, compared to the prior year quarter. The sales decrease was attributable to both of the Company's segments, with the Rail and Infrastructure Solutions segments declining by 5.7% and 3.6%, respectively, from the prior year quarter. The$4.0 million decline in the Rail segment was attributable to the Rail Products business unit due to the timing of deliveries and customer delays, including certain projects that did not ship due to weather conditions. The$1.9 million decline in the Infrastructure Solutions segment is wholly attributable to the Coatings and Measurement business unit, which continues to face a challenging environment in the midstream energy market due to excess infrastructure capacity. - Gross profit for the first quarter of 2021 was
$18.8 million , a$4.3 million decrease, or 18.6%, from the prior year quarter. The consolidated gross profit margin of 16.2% decreased by 280 basis points when compared to the prior year quarter, with the decline attributable to the Infrastructure Solutions segment. Gross profit increased in the Rail segment by$0.3 million , driven by the 150 basis point improvement in gross margin due primarily to increases in friction management consumable sales. In the Infrastructure Solutions segment, gross profit declined from the prior year quarter by$4.6 million , driven by the decline in revenues in the Coatings and Measurement business line. Infrastructure Solutions' gross margin was down 850 basis points compared to last year's first quarter. - Selling and administrative expenses in the first quarter decreased by
$2.3 million , or 11.4%, from the prior year quarter, primarily driven by decreases in personnel related costs of$1.8 million . Selling and administrative expenses as a percent of net sales decreased to 15.5%, down 120 basis points from the prior year quarter. - Net loss from continuing operations for the first quarter of 2021 was
$1.3 million , or$0.12 per diluted share, a reduction of$1.3 million , or$0.12 per diluted share, from the prior year quarter. - Adjusted EBITDA from continuing operations1 for the first quarter of 2021 was
$2.7 million , a decrease of 42.9% compared to the prior year quarter. - Free cash flow1 for the quarter was
$6.3 million , as compared to negative free cash flow1 of$7.7 million for the prior year quarter. The$14.0 million increase in free cash flow was primarily as a result of increased cash provided by accounts payables and deferred revenue when compared to the prior year quarter. - Over the last year, the Company reduced its net debt1 to
$31.8 million as ofMarch 31, 2021 from$57.7 million as ofMarch 31, 2020 , a reduction of$26.0 million . The Company's adjusted net leverage ratio1 was 1.1x, with total available funding capacity of$82.6 million as ofMarch 31, 2021 . - First quarter new orders were
$135.6 million , up$4.8 million , or 3.7%, from the prior year quarter. New orders in the Infrastructure Solutions segment increased by$11.5 million compared to the prior year quarter, partially offset by a decline in the Rail segment of$6.7 million .
Market Outlook
The Company’s backlog stood at
First Quarter Conference Call
About
This release may contain “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this earnings release are based on management's current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company’s expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: the COVID-19 pandemic, including the impact of any worsening of the pandemic on our financial condition or results of operations, and any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments; a continued deterioration in the prices of oil and natural gas and the related impact on the upstream and midstream energy markets; a continuation or worsening of the adverse economic conditions in the markets we serve, whether as a result of the current COVID-19 pandemic, including its impact on travel and demand for oil and gas, the continued deterioration in the prices for oil and gas, governmental travel restrictions, project delays, and budget shortfalls, or otherwise; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a continuing decrease in freight or transit rail traffic, including as a result of the COVID-19 pandemic; environmental matters, including any costs associated with any remediation and monitoring; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the 2020 disposition of the IOS Test and Inspection Services business and acquisition of
Investor Relations:
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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended |
||||||||||
2021 | 2020 | |||||||||
Sales of goods | $ | 100,546 | $ | 96,388 | ||||||
Sales of services | 15,534 | 25,519 | ||||||||
Total net sales | 116,080 | 121,907 | ||||||||
Cost of goods sold | 84,125 | 80,479 | ||||||||
Cost of services sold | 13,125 | 18,306 | ||||||||
Total cost of sales | 97,250 | 98,785 | ||||||||
Gross profit | 18,830 | 23,122 | ||||||||
Selling and administrative expenses | 18,026 | 20,337 | ||||||||
Amortization expense | 1,465 | 1,430 | ||||||||
Interest expense - net | 871 | 812 | ||||||||
Other expense - net | 59 | 606 | ||||||||
Loss from continuing operations before income taxes | (1,591 | ) | (63 | ) | ||||||
Income tax benefit from continuing operations | (321 | ) | (58 | ) | ||||||
Loss from continuing operations | (1,270 | ) | (5 | ) | ||||||
Net loss attributable to noncontrolling interest | (12 | ) | — | |||||||
Loss from continuing operations attributable to |
(1,258 | ) | (5 | ) | ||||||
Loss from discontinued operations before income taxes | — | (2,631 | ) | |||||||
Income tax benefit from discontinued operations | — | (770 | ) | |||||||
Loss from discontinued operations | — | (1,861 | ) | |||||||
Net loss attributable to |
$ | (1,258 | ) | $ | (1,866 | ) | ||||
Basic loss per common share: | ||||||||||
From continuing operations | $ | (0.12 | ) | $ | (0.00 | ) | ||||
From discontinued operations | 0.00 | (0.18 | ) | |||||||
Basic loss per common share | $ | (0.12 | ) | $ | (0.18 | ) | ||||
Diluted loss per common share: | ||||||||||
From continuing operations | $ | (0.12 | ) | $ | (0.00 | ) | ||||
From discontinued operations | 0.00 | (0.18 | ) | |||||||
Diluted loss per common share | $ | (0.12 | ) | $ | (0.18 | ) | ||||
Average number of common shares outstanding - Basic | 10,583 | 10,478 | ||||||||
Average number of common shares outstanding - Diluted | 10,583 | 10,478 |
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
2021 |
2020 |
|||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 5,015 | $ | 7,564 | ||||||
Accounts receivable - net | 65,660 | 58,298 | ||||||||
Inventories - net | 117,378 | 116,460 | ||||||||
Other current assets | 13,716 | 12,997 | ||||||||
Total current assets | 201,769 | 195,319 | ||||||||
Property, plant, and equipment - net | 61,583 | 62,085 | ||||||||
Operating lease right-of-use assets - net | 15,426 | 16,069 | ||||||||
Other assets: | ||||||||||
20,373 | 20,340 | |||||||||
Other intangibles - net | 35,477 | 36,897 | ||||||||
Deferred tax assets | 38,770 | 38,481 | ||||||||
Other assets | 1,078 | 1,204 | ||||||||
TOTAL ASSETS | $ | 374,476 | $ | 370,395 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 66,398 | $ | 54,787 | ||||||
Deferred revenue | 15,359 | 7,144 | ||||||||
Accrued payroll and employee benefits | 5,701 | 9,182 | ||||||||
Current portion of accrued settlement | 8,000 | 8,000 | ||||||||
Current maturities of long-term debt | 129 | 119 | ||||||||
Other accrued liabilities | 12,597 | 15,740 | ||||||||
Current liabilities of discontinued operations | 146 | 330 | ||||||||
Total current liabilities | 108,330 | 95,302 | ||||||||
Long-term debt | 36,664 | 44,905 | ||||||||
Deferred tax liabilities | 4,046 | 4,085 | ||||||||
Long-term portion of accrued settlement | 24,000 | 24,000 | ||||||||
Long-term operating lease liabilities | 12,938 | 13,516 | ||||||||
Other long-term liabilities | 11,612 | 11,757 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 111 | 111 | ||||||||
Paid-in capital | 43,943 | 44,583 | ||||||||
Retained earnings | 163,849 | 165,107 | ||||||||
(11,783 | ) | (12,703 | ) | |||||||
Accumulated other comprehensive loss | (19,588 | ) | (20,268 | ) | ||||||
|
176,532 | 176,830 | ||||||||
Noncontrolling interest | 354 | — | ||||||||
Total stockholders’ equity | 176,886 | 176,830 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 374,476 | $ | 370,395 |
Non-GAAP Disclosures
(Unaudited)
This earnings release discloses earnings before interest, taxes, depreciation, and amortization (“EBITDA”) from continuing operations, adjusted EBITDA from continuing operations, net debt, adjusted net leverage ratio, free cash flow, adjusted net (loss) income from continuing operations, and adjusted diluted (loss) earnings per share, which are non-GAAP financial measures. The Company believes that EBITDA from continuing operations is useful to investors as a supplemental way to evaluate the ongoing operations of the Company’s business since EBITDA may enhance investors’ ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization. In addition, EBITDA is a financial measure that management and the Company’s Board of Directors use in their financial and operational decision-making and in the determination of certain compensation programs. Adjusted EBITDA, adjusted net (loss) income, and adjusted diluted (loss) earnings per share from continuing operations adjusts for certain charges to EBITDA from continuing operations that the Company believes are unusual, non-recurring, unpredictable, or non-cash. The Company believes that adjusted net (loss) income from continuing operations is useful to investors as a supplemental way to compare historical periods without regard to various charges that the Company believes are unusual, non-recurring, unpredictable, or non-cash. In 2020, the Company made adjustments to exclude the impact of a non-recurring benefit from a distribution associated with the Company’s interest in an unconsolidated partnership and restructuring activities and site relocation. In 2019, the Company made adjustments to exclude the impact of the
Non-GAAP financial measures are not a substitute for GAAP financial results and should only be considered in conjunction with the Company’s financial information that is presented in accordance with GAAP. Quantitative reconciliations of EBITDA from continuing operations, adjusted EBITDA from continuing operations, net debt, adjusted net leverage ratio, and free cash flow are presented below (in thousands, except per share and ratio):
Three Months Ended |
Trailing Twelve Months Ended |
|||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Adjusted EBITDA From Continuing Operations Reconciliation | ||||||||||||||||||||
Net (loss) income from continuing operations, as reported | $ | (1,270 | ) | $ | (5 | ) | $ | 24,558 | $ | 44,048 | ||||||||||
Interest expense - net | 871 | 812 | 3,820 | 4,368 | ||||||||||||||||
Income tax benefit | (321 | ) | (58 | ) | (12,104 | ) | (24,767 | ) | ||||||||||||
Depreciation expense | 1,990 | 1,935 | 7,905 | 7,919 | ||||||||||||||||
Amortization expense | 1,465 | 1,430 | 5,764 | 6,196 | ||||||||||||||||
Total EBITDA from continuing operations | $ | 2,735 | $ | 4,114 | $ | 29,943 | $ | 37,764 | ||||||||||||
Relocation and restructuring costs | — | 677 | 1,868 | 2,445 | ||||||||||||||||
Distribution from unconsolidated partnership | — | — | (1,874 | ) | — | |||||||||||||||
— | — | — | 2,210 | |||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 2,735 | $ | 4,791 | $ | 29,937 | $ | 42,419 |
2021 |
2020 |
2020 |
|||||||||||||
Net Debt Reconciliation | |||||||||||||||
Total debt | $ | 36,793 | $ | 45,024 | $ | 64,155 | |||||||||
Less cash and cash equivalents | (5,015 | ) | (7,564 | ) | (6,418 | ) | |||||||||
Net debt | $ | 31,778 | $ | 37,460 | $ | 57,737 |
2021 |
2020 |
|||||||
Adjusted Net Leverage Ratio Reconciliation | ||||||||
Net debt | $ | 31,778 | $ | 57,737 | ||||
Trailing twelve month adjusted EBITDA from continuing operations | 29,937 | 42,419 | ||||||
Adjusted net leverage ratio | 1.1x | 1.4x |
2021 |
2020 |
|||||||||
Free Cash Flow Reconciliation | ||||||||||
Net cash provided by (used in) continuing operating activities | $ | 7,614 | $ | (4,902 | ) | |||||
Less capital expenditures on property, plant, and equipment | (1,327 | ) | $ | (2,806 | ) | |||||
Free cash flow | $ | 6,287 | $ | (7,708 | ) |
Three Months Ended |
||||||||||
2021 | 2020 | |||||||||
Adjusted Diluted (Loss) Earnings Per Share From Continuing Operations Reconciliation | ||||||||||
Net loss, as reported | $ | (1,270 | ) | $ | (5 | ) | ||||
Relocation and restructuring costs, net of tax benefit of |
— | 512 | ||||||||
Net (loss) income, as adjusted | $ | (1,270 | ) | $ | 507 | |||||
Average number of common shares outstanding - Diluted, as reported | 10,583 | 10,478 | ||||||||
Diluted loss per common share, as reported | $ | (0.12 | ) | $ | (0.00 | ) | ||||
Average number of common shares outstanding - Diluted, as adjusted | 10,583 | 10,668 | ||||||||
Diluted (loss) earnings per common share, as adjusted | $ | (0.12 | ) | $ | 0.05 |
Source: L.B. Foster Company