On August 6, 2024, L.B. Foster Co (FSTR, Financial) released its 8-K filing for the second quarter of 2024. The company, a U.S.-based firm engaged in the manufacturing, fabrication, and distribution of products and services for the rail, construction, energy, and utility industries, reported a decline in both net sales and net income compared to the same period last year.
Company Overview
L.B. Foster Co operates through three segments: Rail Technologies and Services; Precast Concrete Products; and Steel Products and Measurement. The company generates the majority of its revenues from the Rail Technologies and Services segment, providing new and used rail, trackwork, and accessories, among other products.
Performance and Challenges
For the second quarter of 2024, L.B. Foster Co reported net sales of $140.8 million, a 4.9% decrease year-over-year. The company's gross profit also declined by 5.4% to $30.5 million, with gross margins remaining flat at 21.7%. Net income for the quarter was $2.8 million, down 19.4% from the previous year.
The decline in sales was primarily attributed to the Rail segment, which experienced lower volumes and softer market prices in the domestic rail market. Despite these challenges, the technology and services components of the Rail portfolio showed solid gains year-over-year, including a recovery in the UK business.
Financial Achievements
Despite the overall decline, L.B. Foster Co achieved several financial milestones. The company reported a sequential increase in net sales by 13.3% over the first quarter. Additionally, the company's net debt decreased by $2.5 million from the prior year quarter end, and the Gross Leverage Ratio increased slightly to 2.7x.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change | Percent Change |
|---|---|---|---|---|
| Net Sales | $140.8 million | $148.0 million | $(7.2) million | (4.9)% |
| Gross Profit | $30.5 million | $32.3 million | $(1.8) million | (5.6)% |
| Net Income | $2.8 million | $3.5 million | $(0.7) million | (20.0)% |
| Adjusted EBITDA | $8.1 million | $10.6 million | $(2.5) million | (23.6)% |
CEO Commentary
"After a strong start to the year in the first quarter, second quarter results were somewhat softer as compared to last year. Sales were down 4.9%, with organic sales down 3.4% and 1.5% lower sales from portfolio actions completed last year. The organic decline was realized primarily in the Rail segment, with softness in the domestic rail market adversely impacting both volumes and pricing." - John Kasel, President and Chief Executive Officer
Segment Performance
In the Rail, Technologies, and Services segment, net sales for the second quarter were $85.6 million, a 6.6% decrease from the prior year. The segment's gross profit also declined by 9.9% to $17.9 million, with gross profit margins decreasing by 80 basis points to 20.9%.
In the Infrastructure Solutions segment, net sales were $55.2 million, down 2.2% from the previous year. However, gross profit increased by 1.6% to $12.6 million, with gross profit margins improving by 90 basis points to 22.9%.
Updated Financial Guidance
L.B. Foster Co has updated its financial guidance for the full year 2024, reflecting uncertain market conditions and the timing of larger orders. The company now expects net sales to range from $525.0 million to $550.0 million and adjusted EBITDA to range from $34.0 million to $37.0 million. Free cash flow is expected to be breakeven, with capital spending at 2.5% of sales.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from L.B. Foster Co for further details.
