L.B. Foster Exceeds 2023 Guidance; Delivers Strong Cash Flow, Improves Leverage, and Returns Capital to Shareholders; Establishes 2024 Guidance and Reiterates 2025 Goals Aligned with Strategic Transformation
- Full year 2023 net sales of
$543.7 million up 9.3% over prior year (up 11.7% organically) and$3.7 million above the upper end of guidance range; gross margins expanded 270 basis points to 20.7%. - Fourth quarter net sales of
$134.9 million down 1.7% from prior year quarter (up 7.7% organically1); gross margins expanded 200 basis points to 21.5%. - Full year 2023 net cash flow from operations of
$37.4 million was favorable$48.0 million over 2022, with free cash flow1 totaling$33.0 million and$2.3 million in stock repurchases representing approximately 1.2% of its outstanding common stock. - Net debt1 declined
$36.3 million in 2023, finishing at$52.7 million and gross leverage per the Company’s credit agreement1 declined from 2.8x to 1.7x during the year. - Fourth quarter net loss of
$0.5 million , favorable$43.5 million over the prior year quarter; full year 2023 net income of$1.3 million , favorable$47.0 million over prior year. The year-over-year improvement for both periods included the impact of a$37.9 million deferred tax asset valuation allowance and asset impairment charges of$8.0 million in the fourth quarter of 2022. - Fourth quarter adjusted EBITDA1 of
$6.1 million , unfavorable$1.4 million versus the prior year quarter; full year 2023 adjusted EBITDA of$31.8 million , favorable$7.6 million over prior year and$0.8 million above the upper end of its guidance. - Fourth quarter new orders1 of
$105.5 million decreased 23.4% year over year (down 15.6% organically1); backlog1 of$213.8 million remains healthy, despite divestitures contributing a$23.2 million decline year over year. The 2023 book-to-bill ratio was 0.97:1:00. - The Company announced full year financial guidance for 2024 with net sales expected to range from
$525.0 million to$560.0 million (representing organic growth of approximately 0.0% to 6.0%), adjusted EBITDA ranging from$34.0 million to$39.0 million (representing approximately 6.5% to 7.0% of sales), and free cash flow ranging from$12.0 million to$18.0 million , with capital expenditures expected to represent approximately 2.0% to 2.5% of sales.
CEO Comments
Guidance Update
The Company's guidance is updated as follows (in thousands, except percentages and ratios):
2023 Full Year Financial Guidance and Results | Low | High | Results | ||||||
(Unaudited) | |||||||||
Net sales | $ | 530,000 | $ | 540,000 | $ | 543,744 | |||
Adjusted EBITDA | $ | 29,000 | $ | 31,000 | $ | 31,775 |
2024 Full Year Financial Guidance | Low | High | ||||||
Net sales | $ | 525,000 | $ | 560,000 | ||||
Adjusted EBITDA | $ | 34,000 | $ | 39,000 | ||||
Free cash flow | $ | 12,000 | $ | 18,000 | ||||
Capital spending as a percent of sales | 2.0 | % | 2.5 | % |
Fourth Quarter Consolidated Highlights
The Company’s fourth quarter performance highlights are reflected below in thousands, except percentages and ratios. During the years ended
Three Months Ended |
Change | Percent Change |
|||||||||||||
2023 | 2022 | 2023 vs. 2022 | 2023 vs. 2022 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 134,877 | $ | 137,173 | $ | (2,296 | ) | (1.7) % | |||||||
Gross profit | 29,043 | 26,774 | 2,269 | 8.5 | |||||||||||
Gross profit margin | 21.5 | % | 19.5 | % | 200 bps | 10.2 | |||||||||
Selling and administrative expenses | $ | 27,247 | $ | 23,347 | $ | 3,900 | 16.7 | ||||||||
Operating profit (loss) | 601 | (6,279 | ) | 6,880 | 109.6 | ||||||||||
Net loss attributable to |
(430 | ) | (43,931 | ) | 43,501 | 99.0 | |||||||||
Adjusted EBITDA | 6,099 | 7,478 | (1,379 | ) | (18.4 | ) | |||||||||
Adjusted EBITDA Margin1 | 4.5 | % | 5.5 | % | (100) bps | (18.3 | ) | ||||||||
New orders | $ | 105,509 | $ | 137,827 | $ | (32,318 | ) | (23.4 | ) | ||||||
Backlog | $ | 213,780 | $ | 272,251 | $ | (58,471 | ) | (21.5 | ) |
- Net sales for the 2023 fourth quarter were
$134.9 million , a$2.3 million decrease, or 1.7%, from the prior year quarter. Net sales increased 7.7% organically and decreased 9.4% due to divestitures. - Gross profit for the 2023 fourth quarter was
$29.0 million , an increase of$2 .3 million, or 8.5%, over the prior year quarter. Gross profit margin for the 2023 fourth quarter was 21.5%, a 200-basis point increase over the prior year quarter. The improvement in gross profit was due to the business portfolio changes in line with the Company's strategic transformation, along with an uplift in organic sales volumes, improved product mix, and pricing. - Selling and administrative expenses for the 2023 fourth quarter were
$27 .2 million, a$3 .9 million increase, or 16.7%, over the prior year quarter. The increase was primarily attributable to personnel expenses, including higher variable incentive expenses that will reset in 2024, a$1 .0 million increase in bad debt expense due to aUK customer that filed for administrative protection in the Rail, Technology, and Services segment, and$0 .7 million in restructuring expenses associated with ourUK business. Selling and administrative expenses as a percent of net sales increased to 20.2% compared to 17.0% in the prior year quarter. Excluding the$1.0 million in bad debt expense and$0.7 million in restructuring costs recorded during the quarter, selling and administrative expenses were 19.0% of sales. - Operating profit for the 2023 fourth quarter was
$0 .6 million, favorable$6 .9 million over the prior year quarter, primarily due to$8 .0 million in asset impairment charges in 2022, as well as gains year over year in gross profit, offset by increased selling and administrative costs. - Net loss attributable to the Company for the 2023 fourth quarter was
$0 .4 million, or$0.04 per diluted share, favorable$4.05 per diluted share over the prior year quarter, driven primarily by the$37.9 million net deferred tax asset valuation allowance and$8 .0 million in impairment charges in 2022. - Adjusted EBITDA for the 2023 fourth quarter, which adjusts for the impact of the exit of the bridge grid deck product line previously announced, bad debt expense due to the
UK customer that filed for administrative protection, andUK restructuring costs, was$6 .1 million, a$1 .4 million decrease, or 18.4%, from the prior year quarter. The decline in adjusted EBITDA is due to higher selling and administrative expenses, offset in part by higher gross profit. - New orders totaling
$105.5 million for the 2023 fourth quarter decreased 23.4% versus the prior year quarter (down 15.6% organically). Backlog totaling$213.8 million decreased by$58.5 million , or 21.5%, compared to the prior year,$31 .3 million of which is due to divestitures and a discontinued product line. - Cash provided by operating activities totaled
$22.1 million in the 2023 fourth quarter, a$13.8 million increase over the prior year quarter. - Net debt as of
December 31, 2023 was$52.7 million , representing a$16.0 million decline during the quarter and a$36.3 million decrease from the prior year quarter. The Company's gross leverage ratio per its credit agreement was 1.7x as ofDecember 31, 2023 , an improvement from 2.8x versus last year.
Fourth Quarter Business Results by Segment
The Company has historically reported under three reporting segments: (1) Rail, Technologies, and Services, (2)
Rail, Technologies, and Services Segment
The Rail segment's fourth quarter performance highlights are reflected below in thousands, except percentages and ratios:
Three Months Ended |
Change | Percent Change |
|||||||||||||
2023 | 2022 | 2023 vs. 2022 | 2023 vs. 2022 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 69,294 | $ | 77,735 | $ | (8,441 | ) | (10.9) % | |||||||
Gross profit | $ | 13,329 | $ | 17,935 | $ | (4,606 | ) | (25.7 | ) | ||||||
Gross profit margin | 19.2 | % | 23.1 | % | (390) bps | (16.9 | ) | ||||||||
Segment operating (loss) profit | $ | (940 | ) | $ | 5,877 | $ | (6,817 | ) | (116.0 | ) | |||||
Segment operating (loss) profit margin | (1.4) % | 7.6 | % | (900) bps | (119.0 | ) | |||||||||
New orders | $ | 60,058 | $ | 73,539 | $ | (13,481 | ) | (18.3 | ) | ||||||
Backlog | $ | 84,418 | $ | 105,241 | $ | (20,823 | ) | (19.8 | ) |
- Net sales for the 2023 fourth quarter were
$69.3 million , an$8.4 million decrease, or 10.9%, from the prior year quarter, primarily driven by the divestiture of the prestressed concrete railroad tie business ("Ties") which reduced sales by$5.3 million , or 6.9%. Organic sales were down 4.0% due to lower sales volumes in the Rail Products business, partially offset by sales increases in our Global Friction Management and domestic Technology Services and Solutions businesses. - Gross profit for the 2023 fourth quarter was
$13.3 million , a$4.6 million decrease, and gross profit margins decreased by 390 basis points to 19.2%. Gross profit was impacted by weaker commercial conditions in theUK -based Technology Services and Solutions business and the divestiture of the Ties business which reduced gross profit by$0.7 million . - Segment operating loss for the 2023 fourth quarter was
$0.9 million , unfavorable$6.8 million from the prior year quarter, due to the decline in gross profit as well as a$2.2 million increase in segment selling and administrative expenses. The increase in selling and administrative expenses was attributed to a$1 .0 million increase in bad debt expense due to a customer that filed for administrative protection and$0 .7 million in restructuring expenses associated with theUK business. - Orders decreased by
$13.5 million , driven primarily by Rail Products, which was partially offset by order growth in Technology Services and Solutions. Backlog of$84.4 million decreased$20.8 million from the prior year quarter driven by a decline in Rail Products and the divestiture of the prestressed concrete railroad tie business, partially offset by a 59.3% increase in Technology Services and Solutions.
Infrastructure Solutions Segment
The Infrastructure segment's fourth quarter performance highlights are reflected below in thousands, except percentages and ratios:
Three Months Ended |
Change | Percent Change |
|||||||||||||
2023 | 2022 | 2023 vs. 2022 | 2023 vs. 2022 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 65,583 | $ | 59,438 | $ | 6,145 | 10.3 | % | |||||||
Gross profit | $ | 15,714 | $ | 8,838 | $ | 6,876 | 77.8 | ||||||||
Gross profit margin | 24.0 | % | 14.9 | % | 910 bps | 61.2 | |||||||||
Segment operating profit (loss) | $ | 5,724 | $ | (8,377 | ) | $ | 14,101 | 168.3 | |||||||
Segment operating profit (loss) margin | 8.7 | % | (14.1) % | 2,280 bps | 161.8 | ||||||||||
New orders | $ | 45,451 | $ | 64,288 | $ | (18,837 | ) | (29.3 | ) | ||||||
Backlog | $ | 129,362 | $ | 167,010 | $ | (37,648 | ) | (22.5 | ) |
- Net sales for the 2023 fourth quarter were
$65.6 million , a$6.1 million increase, or 10.3%, over the prior year quarter. The increase in sales is attributed to bothPrecast Concrete Products and Steel Products business units, despite the offsetting impact from the divestiture of the Precision Measurement Products and Systems business ("Chemtec") in early 2023, which reduced sales by$7.6 million . Net sales increased 23.1% organically, and decreased 12.7% due to divestitures. - Gross profit for the 2023 fourth quarter was
$15.7 million , a$6.9 million increase, or 77.8%, and gross profit margins increased by 910 basis points to 24.0%. The increase in gross profit was driven by higher volumes, margin gains in both Precast Concrete and Steel Products businesses driven by volume, pricing, and mix, along with an uplift in margins from the sale of Chemtec and discontinuation of the bridge grid deck product line, both of which were dilutive to gross margins. - Segment operating profit for the 2023 fourth quarter was
$5.7 million , favorable$14.1 million over the prior year quarter, due to the increase in gross profit as well as the impact of$8.0 million in asset impairments recorded in 2022. - New orders decreased by
$18.8 million , driven entirely by Steel Products which includes the$10.3 million impact from the divestiture of Chemtec and a$5.0 million decline in orders associated with the exit of the bridge grid deck product line. Backlog of$129.4 million decreased$37.6 million from the prior year quarter,$20.9 million of which is due to the divestiture of the Chemtec business and$8.1 million of which stems from the bridge grid deck product line exit. The remaining decline in the backlog is attributed to the retained bridge forms product line.
Full Year Business Results
The Company’s full year 2023 performance highlights are reflected below in thousands, except percentages and ratios. Where meaningful, this release adjusts for the impact of strategic portfolio changes to highlight performance from ongoing operations. See “Non-GAAP Disclosures” below for a discussion of these non-GAAP adjustments.
Year Ended |
Change | Percent Change |
|||||||||||||
2023 | 2022 | 2023 vs. 2022 | 2023 vs. 2022 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 543,744 | $ | 497,497 | $ | 46,247 | 9.3 | % | |||||||
Gross profit | 112,810 | 89,611 | 23,199 | 25.9 | |||||||||||
Gross profit margin | 20.7 | % | 18.0 | % | 270 bps | 15.0 | |||||||||
Selling and administrative expenses | $ | 97,358 | $ | 82,657 | $ | 14,701 | 17.8 | ||||||||
Operating profit (loss) | 10,138 | (7,206 | ) | 17,344 | 240.7 | ||||||||||
Net income (loss) attributable to |
1,464 | (45,564 | ) | 47,028 | 103.2 | ||||||||||
Adjusted EBITDA | 31,775 | 24,179 | 7,596 | 31.4 | |||||||||||
Adjusted EBITDA Margin | 5.8 | % | 4.9 | % | 90 bps | 18.5 | |||||||||
New orders | $ | 529,030 | $ | 551,954 | $ | (22,924 | ) | (4.2 | ) | ||||||
Backlog | $ | 213,780 | $ | 272,251 | $ | (58,471 | ) | (21.5 | ) |
- Net sales for the year ended
December 31, 2023 were$543.7 million , a$46.2 million increase, or 9.3%, over the prior year. Net sales increased 11.7% organically and 4.0% from acquisitions, and decreased 6.4% from divestitures. Included in the organic sales was the adverse impact from the exit of the bridge grid deck product line in 2023 and the settlement of certain commercial contracts related to the Crossrail project in theUK in 2022 which reduced sales by$2.0 million and$4.0 million , respectively. - Gross profit for the year ended
December 31, 2023 was$112.8 million , an increase of$23.2 million , or 25.9%, over the prior year and gross profit margins expanded by 270 basis points to 20.7%. Gross profit includes the adverse impact from the exit of the bridge grid deck product line in 2023 and the settlement of the Crossrail commercial contracts in 2022 which reduced gross profit by$3.1 million and$4.0 million , respectively. Overall, gross profit was positively impacted by the business portfolio changes, improved product mix, and pricing. - Selling and administrative expenses for the year ended
December 31, 2023 were$97 .4 million, a$14 .7 million increase, or 17.8%, over the prior year. The increase was primarily attributable to$1.9 million of increased operational costs associated with portfolio changes, increased personnel expenses, including variable incentive expenses that will reset in 2024, a$1 .9 million increase in bad debt expense due to aUK customer that filed for administrative protection, andUK restructuring costs of$0 .7 million. Selling and administrative expenses as a percent of net sales increased to 17.9% compared to 16.6% in the prior year. Excluding the$1 .9 million in bad debt expense and$0.7 million in restructuring costs recorded during the year, selling and administrative expenses were 17.4% of sales in 2023 compared to 16.6% in the prior year. - Operating profit for the year ended
December 31, 2023 was$10 .1 million, favorable$17 .3 million over the prior year, due to improved gross profit from higher sales volumes coupled with the comparative impact of the$8 .0 million in impairment charges incurred in 2022, partially offset by increased selling and administrative expenses in 2023. - Net income attributable to the Company for the year ended
December 31, 2023 was$1 .5 million, or$0.13 per diluted share, favorable$4.38 per diluted share over the prior year, driven primarily by operating profit expansion and the$37.9 million net deferred tax asset valuation allowance and$8 .0 million impairment charges in 2022. - Adjusted EBITDA for the year ended
December 31, 2023 was$31 .8 million, a$7 .6 million increase, or 31.4%, versus the prior year. - New orders totaling
$529 .0 million for the year endedDecember 31, 2023 decreased 4.2% from the prior year (decreased 1.5% organically). Backlog totaling$213 .8 million decreased by$58 .5 million, or 21.5%, compared to the prior year,$31 .3 million of which was due to divestitures and a discontinued product line. - Net cash flow from operations in the year ended
December 31, 2023 totaled$37 .4 million, favorable$48 .0 million over the prior year. - Net debt as of
December 31, 2023 declined$36 .3 million during the year to$52.7 million , driven by the increase in operating cash and proceeds from divestitures used to pay down debt. The Company's gross leverage ratio per its credit agreement was 1.7x as ofDecember 31, 2023 , an improvement from 2.8x as of the prior year end.
Fourth Quarter Conference Call
Those interested in participating in the question-and-answer session may register for the call at https://register.vevent.com/register/BI053aa2332ae24ea49a3f3aa649146af3 to receive the dial-in numbers and unique PIN to access the call. The registration link will also be available on the Company’s Investor Relations page of its website.
About
Founded in 1902,
Non-GAAP Financial Measures
This press release contains financial measures that are not calculated and presented in accordance with generally accepted accounting principles in
The Company has not reconciled the forward-looking adjusted EBITDA and free cash flow to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are acquisition and divestiture-related costs, impairment expense, and changes in operating assets and liabilities. These underlying expenses and others that may arise during the year are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.
The Company defines new orders as a contractual agreement between the Company and a third-party in which the Company will, or has the ability to, satisfy the performance obligations of the promised products or services under the terms of the agreement. The Company defines backlog as contractual commitments to customers for which the Company’s performance obligations have not been met, including with respect to new orders and contracts for which the Company has not begun any performance. Management utilizes new orders and backlog to evaluate the health of the industries in which the Company operates, the Company’s current and future results of operations and financial prospects, and strategies for business development. The Company believes that new orders and backlog are useful to investors as supplemental metrics by which to measure the Company’s current performance and prospective results of operations and financial performance. The Company defines book-to-bill ratio as new orders divided by revenue. The Company believes this is a useful metric to assess supply and demand, including order strength versus order fulfillment.
The Company views its gross leverage ratio per its credit agreement, as defined in the Second Amendment to its Fourth Amended and Restated Credit Agreement dated
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements 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 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, L.B. Foster Company’s (the “Company’s”) 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: 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 continuation or worsening of the adverse economic conditions in the markets we serve, including recession, the continued volatility 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 decrease in freight or transit rail traffic; environmental matters, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, global shipping disruptions, 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 recent dispositions of the Track Components, Chemtec, and Ties businesses, and acquisitions of the
The forward-looking statements in this release are made as of the date of this release and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by the federal securities laws.
Investor Relations:
(412) 928-3417
investors@lbfoster.com
Suite 100
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended |
Year Ended |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
Sales of goods | $ | 113,580 | $ | 118,514 | $ | 475,350 | $ | 436,821 | ||||||||
Sales of services | 21,297 | 18,659 | 68,394 | 60,676 | ||||||||||||
Total net sales | 134,877 | 137,173 | 543,744 | 497,497 | ||||||||||||
Cost of goods sold | 85,236 | 96,193 | 367,431 | 355,106 | ||||||||||||
Cost of services sold | 20,598 | 14,206 | 63,503 | 52,780 | ||||||||||||
Total cost of sales | 105,834 | 110,399 | 430,934 | 407,886 | ||||||||||||
Gross profit | 29,043 | 26,774 | 112,810 | 89,611 | ||||||||||||
Selling and administrative expenses | 27,247 | 23,347 | 97,358 | 82,657 | ||||||||||||
Amortization expense | 1,195 | 1,690 | 5,314 | 6,144 | ||||||||||||
— | 8,016 | — | 8,016 | |||||||||||||
Operating profit (loss) | 601 | (6,279 | ) | 10,138 | (7,206 | ) | ||||||||||
Interest expense - net | 1,124 | 1,593 | 5,528 | 3,340 | ||||||||||||
Other expense (income) - net | 203 | (454 | ) | 3,666 | (1,550 | ) | ||||||||||
(Loss) income before income taxes | (726 | ) | (7,418 | ) | 944 | (8,996 | ) | |||||||||
Income tax (benefit) expense | (256 | ) | 36,544 | (355 | ) | 36,681 | ||||||||||
Net (loss) income | (470 | ) | (43,962 | ) | 1,299 | (45,677 | ) | |||||||||
Net loss attributable to noncontrolling interest | (40 | ) | (31 | ) | (165 | ) | (113 | ) | ||||||||
Net (loss) income attributable to |
$ | (430 | ) | $ | (43,931 | ) | $ | 1,464 | $ | (45,564 | ) | |||||
Basic (loss) earnings per common share | $ | (0.04 | ) | $ | (4.09 | ) | $ | 0.14 | $ | (4.25 | ) | |||||
Diluted (loss) earnings per common share | $ | (0.04 | ) | $ | (4.09 | ) | $ | 0.13 | $ | (4.25 | ) | |||||
Average number of common shares outstanding - Basic | 10,784 | 10,747 | 10,799 | 10,720 | ||||||||||||
Average number of common shares outstanding - Diluted | 10,784 | 10,747 | 10,995 | 10,720 |
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,560 | $ | 2,882 | ||||
Accounts receivable - net | 53,484 | 82,455 | ||||||
Contract assets | 29,489 | 33,613 | ||||||
Inventories - net | 73,496 | 75,721 | ||||||
Other current assets | 8,961 | 11,061 | ||||||
Total current assets | 167,990 | 205,732 | ||||||
Property, plant, and equipment - net | 75,999 | 85,344 | ||||||
Operating lease right-of-use assets - net | 14,905 | 17,291 | ||||||
Other assets: | ||||||||
32,587 | 30,733 | |||||||
Other intangibles - net | 19,010 | 23,831 | ||||||
Other assets | 2,715 | 2,379 | ||||||
TOTAL ASSETS | $ | 313,206 | $ | 365,310 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 40,305 | $ | 48,782 | ||||
Deferred revenue | 12,479 | 19,452 | ||||||
Accrued payroll and employee benefits | 16,978 | 10,558 | ||||||
Current portion of accrued settlement | 8,000 | 8,000 | ||||||
Current maturities of long-term debt | 102 | 127 | ||||||
Other accrued liabilities | 17,442 | 16,192 | ||||||
Total current liabilities | 95,306 | 103,111 | ||||||
Long-term debt | 55,171 | 91,752 | ||||||
Deferred income taxes | 1,232 | 3,109 | ||||||
Long-term portion of accrued settlement | — | 8,000 | ||||||
Long-term operating lease liabilities | 11,865 | 14,163 | ||||||
Other long-term liabilities | 6,797 | 7,577 | ||||||
Stockholders' equity: | ||||||||
Class A Common Stock | 111 | 111 | ||||||
Paid-in capital | 43,111 | 41,303 | ||||||
Retained earnings | 124,633 | 123,169 | ||||||
(6,494 | ) | (6,240 | ) | |||||
Accumulated other comprehensive loss | (19,250 | ) | (21,165 | ) | ||||
142,111 | 137,178 | |||||||
Noncontrolling interest | 724 | 420 | ||||||
Total stockholders’ equity | 142,835 | 137,598 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 313,206 | $ | 365,310 |
Non-GAAP Disclosures
(unaudited)
This earnings release discloses earnings before interest, taxes, depreciation, and amortization ("EBITDA"), adjusted EBITDA, net debt, and organic results adjusted for the impact of 2023 and 2022 acquisition and divestiture activity, which are non-GAAP financial measures. The Company believes that EBITDA 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 adjusts for certain charges to EBITDA that the Company believes are unusual, non-recurring, unpredictable, or non-cash. The Company also discloses Adjusted EBITDA margin, which is Adjusted EBITDA as a percent of net sales, which is useful to demonstrate Adjusted EBITDA levels and growth relative to net sales.
In the three months ended
The Company views net debt, which is total debt less cash and cash equivalents, as an important metric of the operational and financial health of the organization and believes it is are useful to investors as an indicator of its ability to incur additional debt and to service its existing debt.
Organic sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) excluding the effects of acquisitions and divestitures. Management believes this measure provides investors with a supplemental understanding of underlying trends by providing sales growth on a consistent basis. Management provides organic sales growth (decline) at the consolidated and segment levels. Portfolio changes are considered based on their comparative impact over the last twelve months, to determine the differences in 2022 versus 2023 results due to these transactions.
The Company defines new orders as a contractual agreement between the Company and a third-party in which the Company will, or has the ability to, satisfy the performance obligations of the promised products or services under the terms of the agreement, and discloses organic new orders to exclude the effects of acquisitions and divestitures. Management believes this measure provides investors with a supplemental understanding of underlying trends by providing new order growth on a consistent basis. Management provides organic new orders growth (decline) at the consolidated level. Portfolio changes are considered based on their comparative impact over the last twelve months, to determine the differences in 2022 versus 2023 results due to these transactions.
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, adjusted EBITDA, net debt, and organic sales and new orders growth (decline) to exclude divestiture and acquisition activity in 2023 and 2022 (in thousands, except percentages and ratios):
Three Months Ended |
Year Ended |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Adjusted EBITDA Reconciliation | ||||||||||||||||
Net (loss) income, as reported | $ | (470 | ) | $ | (43,962 | ) | $ | 1,299 | $ | (45,677 | ) | |||||
Interest expense - net | 1,124 | 1,593 | 5,528 | 3,340 | ||||||||||||
Income tax (benefit) expense | (256 | ) | 36,544 | (355 | ) | 36,681 | ||||||||||
Depreciation expense | 2,500 | 2,552 | 9,949 | 8,635 | ||||||||||||
Amortization expense | 1,195 | 1,690 | 5,314 | 6,144 | ||||||||||||
Total EBITDA | $ | 4,093 | $ | (1,583 | ) | $ | 21,735 | $ | 9,123 | |||||||
Loss (gain) on divestitures | — | — | 3,074 | (22 | ) | |||||||||||
Acquisition and divestiture costs | — | 420 | — | 2,235 | ||||||||||||
Commercial contract settlement | — | — | — | 3,956 | ||||||||||||
Insurance proceeds | — | — | — | (790 | ) | |||||||||||
VanHooseCo inventory adjustment to fair value amortization | — | 284 | — | 1,135 | ||||||||||||
VanHooseCo contingent consideration | — | 341 | (26 | ) | 526 | |||||||||||
Impairment expense | — | 8,016 | — | 8,016 | ||||||||||||
Bridge grid deck exit impact | 334 | — | 4,454 | — | ||||||||||||
Bad debt provision | 996 | — | 1,862 | — | ||||||||||||
Restructuring costs | 676 | $ | — | 676 | $ | — | ||||||||||
Adjusted EBITDA | $ | 6,099 | $ | 7,478 | $ | 31,775 | $ | 24,179 | ||||||||
Total sales, as reported | $ | 134,877 | $ | 137,173 | $ | 543,744 | $ | 497,497 | ||||||||
Adjusted EBITDA Margin | 4.5 | % | 5.5 | % | 5.8 | % | 4.9 | % |
2023 | 2022 | |||||||
Net Debt Reconciliation | ||||||||
Total debt | $ | 55,273 | $ | 91,879 | ||||
Less: cash and cash equivalents | (2,560 | ) | (2,882 | ) | ||||
Net debt | $ | 52,713 | $ | 88,997 |
Free Cash Flow Reconciliation | ||||
Net cash provided by operating activities | $ | 37,376 | ||
Proceeds from sales and disposals of property, plant, and equipment | 539 | |||
Less capital expenditures on property, plant, and equipment | (4,933 | ) | ||
Free cash flow | $ | 32,982 |
Change in Consolidated Sales | Three Months Ended |
Percent Change |
Year Ended |
Percent Change |
||||||||||
2022 net sales, as reported | $ | 137,173 | $ | 497,497 | ||||||||||
Decrease due to divestitures | (12,909 | ) | (9.4 | )% | (31,995 | ) | (6.4 | )% | ||||||
Increase due to acquisitions | — | — | % | 19,834 | 4.0 | % | ||||||||
Change due to organic sales | 10,613 | 7.7 | % | 58,408 | 11.7 | % | ||||||||
2023 net sales, as reported | $ | 134,877 | (1.7 | )% | $ | 543,744 | 9.3 | % | ||||||
Total sales change, 2022 vs 2023 | $ | (2,296 | ) | (1.7 | )% | $ | 46,247 | 9.3 | % |
Change in Consolidated New Orders | Three Months Ended |
Percent Change |
Year Ended |
Percent Change |
||||||||||
2022 new orders, as reported | 137,827 | 551,954 | ||||||||||||
Decrease due to divestitures | (10,760 | ) | (7.8 | )% | (42,491 | ) | (7.7 | )% | ||||||
Increase due to acquisitions | — | — | % | 27,937 | 5.1 | % | ||||||||
Change due to organic new orders | (21,558 | ) | (15.6 | )% | (8,370 | ) | (1.5 | )% | ||||||
2023 new orders, as reported | 105,509 | (23.4 | )% | 529,030 | (4.2 | )% | ||||||||
Total new orders change, 2022 vs 2023 | $ | (32,318 | ) | (23.4 | )% | $ | (22,924 | ) | (4.2 | )% |
Change in Rail Sales | Three Months Ended |
Percent Change |
Year Ended |
Percent Change |
||||||||||
2022 net sales, as reported | $ | 77,735 | $ | 300,592 | ||||||||||
Decrease due to divestitures | (5,341 | ) | (6.9 | )% | (15,976 | ) | (5.3 | )% | ||||||
Increase due to acquisitions | — | — | % | 1,504 | 0.5 | % | ||||||||
Change due to organic sales | (3,100 | ) | (4.0 | )% | 26,040 | 8.7 | % | |||||||
2023 net sales, as reported | $ | 69,294 | (10.9 | )% | $ | 312,160 | 3.8 | % | ||||||
Total sales change, 2022 vs 2023 | $ | (8,441 | ) | (10.9 | )% | $ | 11,568 | 3.8 | % |
Change in Infrastructure Sales | Three Months Ended |
Percent Change |
Year Ended |
Percent Change |
||||||||||
2022 net sales, as reported | $ | 59,438 | $ | 196,905 | ||||||||||
Decrease due to divestitures | (7,568 | ) | (12.7 | )% | (16,019 | ) | (8.1 | )% | ||||||
Increase due to acquisitions | — | — | % | 18,330 | 9.3 | % | ||||||||
Change due to organic sales | 13,713 | 23.1 | % | 32,368 | 16.4 | % | ||||||||
2023 net sales, as reported | $ | 65,583 | 10.3 | % | $ | 231,584 | 17.6 | % | ||||||
Total sales change, 2022 vs 2023 | $ | 6,145 | 10.3 | % | $ | 34,679 | 17.6 | % |
![](https://ml.globenewswire.com/media/ZjU4NWI5ZjEtNmU2Mi00NTNjLTk3ZDAtOWNhZGI0ZDUwNjBkLTEwMTk2NjQ=/tiny/L-B-Foster-Company.png)
Source: L.B. Foster Company