L.B. Foster Reports Strong Third Quarter Operating Results

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PITTSBURGH, Nov. 1, 2011 /CNW/ -- L.B. Foster Company (NASDAQ: FSTR), a leading manufacturer, fabricator, and distributor of products and services for rail, construction, energy and utility markets, today reported its 2011 third quarter operating results.

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    (Logo: http://photos.prnewswire.com/prnh/20101222/MM21387LOGO )

    Third Quarter Results
    --  Third quarter net income was $9.7 million or $0.95 per diluted share
        compared to $6.5 million or $0.63 per diluted share last year.
    --  Third quarter sales increased by $37.1 million or 29.6% due to the
        inclusion of Portec Rail Products Inc. sales, as well as an 8.5% sales
        increase in the legacy L.B. Foster business.
    --  Gross Profit margin was 18.9%, 290 basis points higher than the prior
        year, primarily as a result of:
        --  The inclusion of Portec's results in the current year.
        --  Partially offset by a 100 basis point decrease in L.B. Foster's
            legacy business gross profit margins.
            --  The legacy Foster gross profit margin was lower than the prior
                year quarter due to an unfavorable change in LIFO expense
                totaling 80 basis points.
    --  Selling and administrative expense increased by $7.6 million, due
        principally to the inclusion of Portec Rail Products in our results.
    --  Adjusted EBITDA (Earnings before taxes, interest, depreciation,
        amortization and other purchase accounting charges not considered
        amortization) was $17.4 million compared to $12.4 million in the prior
        year quarter.
    --  Third quarter bookings were $128.7 million compared to $124.8 million
        last year, an increase of 3.2%.  Excluding Portec, bookings were 14.2%
        lower than last year. At quarter end, our backlog was $153.0 million,
        25.3% lower than the prior year (33.2% lower without Portec).


    Product Claim Update
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On July 12, 2011 the Union Pacific Railroad ("UPRR") notified the Company and CXT Incorporated, a subsidiary of the Company (CXT), of a warranty claim under CXT's 2005 supply contract relating to the sale of prestressed concrete railroad ties to the UPRR. The UPRR has asserted that a significant percentage of concrete ties manufactured in 2006 through 2010 at CXT's Grand Island, Nebraska facility fail to meet contract specifications, have workmanship defects and are cracking and failing prematurely.

Since late July 2011, the Company and CXT have been working with material scientists and prestressed concrete experts, who have been testing a representative sample of Grand Island concrete ties. While this testing is not complete, we have not identified any appreciable defects in workmanship nor have we identified any material deviation from our contractual specifications for the concrete ties in question. We expect that the testing required to address the product claim will be completed sometime during the first quarter of 2012.

No adjustments have been recorded as a result of this claim as the impact, if any, cannot be estimated at this time. No assurances can be given regarding the ultimate outcome of this matter.

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    CEO Comments
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Stan L. Hasselbusch, L. B. Foster's president and chief executive officer, said, "Our performance in the third quarter was strong overall as we reported record earnings from operations. The Rail and Tubular segments reported strong sales and income, while the softness in the Construction segment that we discussed last quarter has continued. Our Rail business had an excellent quarter on the strength of Portec Rail Products and Rail Distribution as sales were up 67.3% and gross profit more than doubled." Mr. Hasselbusch went on to say, "We continue to be focused on the product claim made by the UPRR and completing the testing and evaluation process within the next 60 to 90 days continues to be a top priority." Mr. Hasselbusch concluded by adding, "The expired transportation bill was extended through March 2012 which is expected to approximate current spending levels. This lack of progress related to new transportation legislation and steadily decreasing government spending on infrastructure due to weak finances are perpetuating negative headwinds for our construction and transit markets. We expect to continue to experience a highly competitive market environment for the next nine months and we are concerned about the likelihood of a satisfactory resolution of transportation legislation as well as appropriate funding mechanisms for such a bill."

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    Nine Month Results
    --  Net sales for the first nine months of 2011 increased by $126.4
million
        or 38.7%, due to the inclusion of Portec Rail Product sales in 2011
and
        a 14.7% sales increase in the comparable L.B. Foster business.
    --  Gross profit margin was 16.4%, 40 basis points higher than the prior
        year period due to the inclusion of the results of Portec Rail
        Products, partially offset by unfavorable gross profit adjustments of
        $4.4 million related to costs incurred primarily to exit our Grand
        Island concrete tie facility and $2.6 million of increased unfavorable
        LIFO adjustments.
    --  Selling and administrative expenses increased $20.1 million or 67.7%
        from the prior year due primarily to the inclusion of Portec's
        operating costs.
    --  The Company's income tax rate was 31.2% compared to 35.6% in the prior
        year.  The rate reduction was due to the impact of Portec Rail
        Products' results and the lower effective tax rate applicable to its
        foreign operations as well as the receipt of state tax refunds.
    --  Net income for the first nine months of 2011 was $16.8 million or
$1.62
        per diluted share compared to net income of $14.3 million or $1.38 per
        diluted share in 2010.
    --  Adjusted EBITDA for the first nine months of 2011 was $36.2 million
        compared to $29.2 million in the prior year.
    --  Cash generated from operating activities was $20.4 million for the
        third quarter of 2011 compared to $15.9 million of cash provided from
        operating activities in 2010.  For the nine months, cash generated
from
        operating activities was $10.0 million in 2011 compared to $32.7
        million in 2010.
    --  The Company purchased 230,612 shares of its common stock during the
        third quarter of 2011 at an average cost of $21.39 per share for a
        total cost of approximately $4.9 million.

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L.B. Foster Company will conduct a conference call and webcast to discuss its third quarter 2011 operating results and business conditions on Tuesday, November 1, 2011 at 11:00 am ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations page. The replay can also be heard via telephone at (888) 286-8010 by entering pass code 49858712.

This release may contain forward-looking statements that involve risks and uncertainties. Statements that do not relate strictly to historical or current facts are forward-looking. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. Actual results could differ materially from the results anticipated in any forward-looking statement. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. 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 risks and uncertainties that may affect the operations, performance and results of the Company's business and forward-looking statements include, but are not limited to, an economic slowdown in the markets we serve; a decrease in freight or passenger rail traffic; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; resolution of the product claim; and those matters set forth in Item 22, "Commitments and Contingencies" and in Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2010, as updated by any subsequent Form 10-Qs. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company assumes no obligation and does not intend to update or revise these statements, whether as a result of new information, future events or otherwise.

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    Contact:
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    David Russo Phone: 412.928.3417        L.B. Foster Company
                 Email:
                 Investors@Lbfoster.com    415 Holiday Drive
                Website:  www.lbfoster.com Pittsburgh, PA  15220



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                          L.B. FOSTER COMPANY AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In Thousands, Except Per Share Amounts)
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                                         Three Months Ended               Nine
Months Ended
                                           September 30,                   
September 30,
                                           -------------                   
-------------
                                          2011           2010           2011  
2010
                                          ----           ----           ----  
----
                                            (Unaudited)                     
(Unaudited)
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    NET
     SALES                            $162,701       $125,561       $453,507  
$327,067
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    COSTS
     AND
     EXPENSES:
    Cost
     of
     goods
     sold                              131,921        105,519        378,968  
274,637
     Selling
     and
     administrative
     expenses                           17,365          9,763         49,691  
29,633
     Amortization
     expense                               706             95          2,116  
192
     Interest
     expense                               170            211            443  
697
    (Gain)
     loss
     on
     joint
     venture                            (287)         31         (570)        
272
     Interest
     income                                (74)          (114)          (224) 
(295)
    Gain
     on
     foreign
     exchange                             (715)             0           (505) 
0
    Other
     income                               (646)           (46)          (814) 
(199)
                                       148,440        115,459        429,105  
304,937
                                       -------        -------        -------  
-------
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    INCOME
     BEFORE
     INCOME
     TAXES                              14,261         10,102         24,402  
22,130
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    INCOME
     TAX
     EXPENSE                             4,521          3,589          7,611  
7,877
                                         -----          -----          -----  
-----
                                                                  .
    NET
     INCOME                             $9,740         $6,513        $16,791  
$14,253
                                        ======         ======        =======  
=======
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    BASIC
     EARNINGS
     PER
     COMMON
     SHARE                             $0.96       $0.64        $1.64        
$1.40
                                         =====          =====          =====  
=====
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     DILUTED
     EARNINGS
     PER
     COMMON
     SHARE                             $0.95       $0.63        $1.62        
$1.38
                                         =====          =====          =====  
=====
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     AVERAGE
     NUMBER
     OF
     COMMON
     SHARES
     OUTSTANDING
     -
     BASIC                              10,185         10,246         10,257  
10,203
                                        ======         ======         ======  
======
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     AVERAGE
     NUMBER
     OF
     COMMON
     SHARES
     OUTSTANDING
     -
     DILUTED                            10,293         10,354         10,366  
10,324
                                        ======         ======         ======  
======




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                          L.B. Foster Company and Subsidiaries
                         Condensed Consolidated Balance Sheets
                                     (In thousands)
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                                                 September 30,   December 31,
                                                           2011           2010
                                                           ----           ----
    ASSETS                                         (Unaudited)
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    CURRENT ASSETS:
    ---------------
       Cash and cash items                              $57,135        $74,800
       Accounts and notes receivable:
          Trade                                          80,514         66,908
          Other                                             743          2,789
       Inventories                                       93,880         90,367
       Current deferred tax assets                        1,698            911
       Prepaid income tax                                     0            972
       Other current assets                               2,156          2,535
                Total Current Assets                    236,126        239,282
                                                        -------        -------
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    OTHER ASSETS:
    -------------
       Property, plant & equipment-net                   46,896         46,216
       Goodwill                                          44,205         44,205
       Other intangibles - net                           43,591         45,429
       Investments                                        3,182          1,987
       Other non-current assets                           1,722          1,663
                                                          -----          -----
                 Total Other Assets                     139,596        139,500
                                                        -------        -------
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                                                       $375,722       $378,782
                                                       ========       ========
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    LIABILITIES AND STOCKHOLDERS'
     EQUITY
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    CURRENT LIABILITIES:
    --------------------
       Current maturities on other long-
        term debt                                        $2,377         $2,402
       Accounts payable-trade and other                  53,898         45,533
       Deferred revenue                                   8,273         16,868
       Accrued payroll and employee
        benefits                                          8,528          9,054
       Other accrued liabilities                         15,893         22,962
                Total Current Liabilities                88,969         96,819
                                                         ------         ------
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    OTHER LONG-TERM DEBT                                    407          2,399
                                                            ---          -----
    DEFERRED TAX LIABILITIES                             10,682         11,929
                                                         ------         ------
    OTHER LONG-TERM LIABILITIES                           9,876         11,888
                                                          -----         ------
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    STOCKHOLDERS' EQUITY:
    ---------------------
       Class A Common stock                                 111            111
       Paid-in capital                                   47,619         47,286
       Retained earnings                                249,303        233,279
       Treasury stock                                   (28,751)      
(23,861)
       Accumulated other comprehensive
        loss                                             (2,494)       
(1,068)
                                                         ------         ------
               Total Stockholders' Equity               265,788        255,747
                                                        -------        -------
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                                                       $375,722       $378,782
                                                       ========       ========




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                                  L.B. Foster Company
                 Reconciliation of GAAP to Non-GAAP Financial Measures
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    L.B. Foster (Foster) reports its financial results in accordance with
     generally accepted accounting principles (GAAP).  However, Foster
     believes that certain non-GAAP financial measures are useful in
     managing our performance.  One such non-GAAP measure is Adjusted
     EBITDA.
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    Adjusted EBITDA, which Foster defines as net income before interest,
     taxes, depreciation, amortization and other non-cash charges
     (principally related to purchase accounting adjustments, such as the
     $2.5 million charge taken in the first quarter of 2011 related to
     the write-up of inventory owned by Portec  to fair value less cost
     to sell on the date of acquisition) is used due to its wide
     acceptance as a measure of operating profitability before non-
     operating expenses (interest and taxes) and noncash charges
     (depreciation and amortization and other noncash charges).
     Additionally, Adjusted EBITDA is one of the performance measures
     used in Foster's debt covenant calculations and incentive
     compensation plan.
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    This non-GAAP financial measure is not a substitute for GAAP
     financial results and should only be considered in conjunction with
     Foster's financial information that is presented in accordance with
     GAAP. A quantitative reconciliation of GAAP net income to Adjusted
     EBITDA is provided in the table below.


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                   Reconciliation of GAAP Net Income to Adjusted EBITDA
                                      (in thousands)
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                                            Three Months Ended              
Nine Months Ended
                                               September 30,                  
September 30,
                                            2011           2010           2011
2010
                                            ----           ----           ----
----
                                                (Unaudited)                   
(Unaudited)
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Net income $9,740 $6,513 $16,791 $14,253

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    Income tax
     expense                               4,521          3,589          7,611
7,877
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Interest, net 96 97 219 402

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    Depreciation
     and
     amortization                          3,081          2,244          9,075
6,640
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    EBITDA, Non-
     GAAP                                 17,438         12,443         33,696
29,172
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    Adjustments
     or charges
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    Difference
     between net
     realizable
     value and                                 0              0          2,493
0
     cost basis of
      inventory
      sold due to
      purchase
    accounting
     step-up
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    Adjusted
     EBITDA                              $17,438        $12,443        $36,189
$29,172
                                         =======        =======        =======
=======





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SOURCE L.B. Foster Company

For further information: Web Site: http://www.lbfoster.com

Profil de l'entreprise

L.B. Foster Company

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