L.B. Foster Reports Improved Second Quarter Results


    



    
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<p><span class="xn-location">PITTSBURGH</span>, <span class="xn-chron">July 27</span> /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 net income increased by 125.8% to <span class="xn-money">$6.0 million</span> or <span class="xn-money">$0.58</span> per diluted share in the second quarter of 2010, compared to <span class="xn-money">$2.7 million</span> or <span class="xn-money">$0.26</span> per diluted share in the second quarter of 2009.</p>
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    2010 Second Quarter Results
    
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<p>Second quarter 2010 net sales increased 20.3% to <span class="xn-money">$119.5 million</span> compared to <span class="xn-money">$99.3 million</span> in the prior year quarter.  Gross profit margin was 17.0%, an increase of 410 basis points from the prior year quarter principally due to negative adjustments totaling <span class="xn-money">$3.7 million</span> made last year related to concrete tie problems encountered during 2009.  Additionally, a <span class="xn-money">$2.1 million</span> improvement in manufacturing variances in the current quarter was partially offset by a <span class="xn-money">$1.1 million</span> reduction in favorable LIFO adjustments.</p>
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<p>Selling and administrative expenses increased <span class="xn-money">$2.2 million</span> or 25.1% from last year's quarter due primarily to <span class="xn-money">$1.0 million</span> of additional incentive compensation expenses, costs incurred related to our acquisition efforts of approximately <span class="xn-money">$0.7 million</span> and increased bad debt expense of <span class="xn-money">$0.5 million</span>.  The Company's effective income tax rate was 36.1% in the second quarter compared to 38.1% in the prior year quarter primarily due to an increased domestic manufacturing deduction.</p>
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<p>"Sales were up across all segments in the second quarter of 2010 and our backlog continued at a substantially higher level than it was a year ago.  While business activity continues to be inconsistent, especially in the industrial markets, we continue to see a general strengthening in activity in most of our businesses," stated Stan Hasselbusch, President and Chief Executive Officer.  "Bookings for the quarter were <span class="xn-money">$120.6 million</span> compared to <span class="xn-money">$115.0 million</span> last year, a 4.9% increase and backlog was <span class="xn-money">$207.2 million</span>, up 41.1% from last year," noted <span class="xn-person">Mr. Hasselbusch</span> as he added, "With regard to the Portec acquisition, we were pleased to learn that the courts had lifted the preliminary injunction that had enjoined the completion of our tender offer.  However, after working with the Antitrust Division of the Department of Justice ("DOJ"), we believe that the DOJ will seek some type of restructuring 'solution' to alleviate their concern that the acquisition, as proposed, would have an anti-competitive effect with respect to the insulated bonded rail joint product."</p>
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    2010 Half Year Results
    
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<p>For the six months ended <span class="xn-chron">June 30, 2010</span>, L.B. Foster reported net income of <span class="xn-money">$7.7 million</span> or <span class="xn-money">$0.75</span> per diluted share compared to net income of <span class="xn-money">$5.7 million</span> or <span class="xn-money">$0.55</span> per diluted share in 2009.  In addition to the aforementioned second quarter 2009 charges taken in our concrete tie business, we also recorded a related <span class="xn-money">$1.6 million</span> (<span class="xn-money">$0.10</span> per diluted share) warranty expense in the first quarter of 2009.</p>
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<p>Net sales for the first half of 2010 were <span class="xn-money">$201.5 million</span>, flat with 2009.  Gross profit margin was 16.1%, up 290 basis points from 2009, primarily as a result of last year's concrete tie adjustments as well as decreased unfavorable manufacturing variances, partially offset by decreased LIFO credits.</p>
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<p>Selling and administrative expenses increased <span class="xn-money">$2.3 million</span> or 13.2% from the prior year due primarily to acquisition costs of <span class="xn-money">$1.2 million</span>, incentive compensation costs of <span class="xn-money">$0.8 million</span> and bad debt expense of <span class="xn-money">$0.5 million</span>.  Interest expense decreased <span class="xn-money">$0.2 million</span> from the prior year due to decreased borrowings and, to a lesser extent, lower interest rates.  Interest income declined by <span class="xn-money">$0.3 million</span> due to lower interest rates.  The Company's income tax rate was 35.7% compared to 37.3% in the prior year primarily due to an increased domestic manufacturing deduction and reversal of a reserve previously recorded for an uncertain tax position.</p>
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<p>Cash generated from operations was approximately <span class="xn-money">$16.7 million</span> for the first six months of 2010 compared to <span class="xn-money">$10.8 million</span> in 2009.  Capital expenditures were <span class="xn-money">$2.7 million</span> compared to <span class="xn-money">$2.3 million</span> in the prior year.  "We continue to expect that in 2010, we will generate positive cash flow in excess of our capital expenditures and debt service.  As we operate our businesses through 2010, we expect to be challenged by a difficult, highly competitive business environment and will review measures to win new sales opportunities, control costs and improve our operational processes while we continue to look for opportunities to leverage our strong balance sheet," noted <span class="xn-person">Mr. Hasselbusch</span> as he concluded, "We have strong liquidity and access to credit and we continue to look for value through synergistic and accretive acquisitions."</p>
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<p>L.B. Foster Company will conduct a conference call and webcast to discuss its second quarter 2010 operating results and general market activity and business conditions on <span class="xn-chron">Tuesday, July 27, 2010</span> at <span class="xn-chron">11:00am ET</span>.  The call will be hosted by <span class="xn-person">Mr. Stan Hasselbusch</span>, President and Chief Executive Officer.  Listen via audio on the L.B. Foster web site: <a href="http://www.lbfoster.com">www.lbfoster.com</a>, by accessing the Investor Relations page.  The replay can also be heard via telephone at (888) 286-8010 by entering pass code 33596402.</p>
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<p>There are no assurances regarding the timing of the closing of the merger agreement involving L. B. Foster and Portec and the expected benefits of the transaction, including potential synergies and cost savings, future financial and operating results, and the combined company's plans and objectives. Risks and uncertainties include the satisfaction of closing conditions for the acquisition, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act; the tender of sixty-five percent of the outstanding shares of common stock of Portec Rail Products, Inc., calculated on a fully diluted basis; the possibility that the transaction will not be completed, or if completed, not completed on a timely basis; the potential that market segment growth will not follow historical patterns; general industry conditions and competition; business and economic conditions, such as interest rate and currency exchange rate fluctuations; technological advances and patents attained by competitors; and domestic and foreign governmental laws and regulations. L.B. Foster can give no assurance that any of the transactions related to the tender offer will be completed or that the conditions to the tender offer and the merger will be satisfied.</p>
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<p>The Company wishes to caution readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements in news releases, and other communications, including oral statements, such as references to future profitability, made from time to time by representatives of the Company. Specific risks and uncertainties that could affect the Company's profitability include, but are not limited to, general economic conditions, sudden and/or sharp declines in steel prices, adequate funding for infrastructure projects, production delays or problems encountered at our manufacturing facilities, additional concrete tie defects and the availability of existing and new piling and rail products.   There can be no assurances that the purchase of IDSI will result in improved operating results.  There are also no assurances that the Canadian Pacific Railway will proceed with the Powder River Basin project and trigger any contingent payments to L.B. Foster related to the Company's sale of its investment in the DM&E.</p>
<p>Matters discussed may include forward-looking statements that involve risks and uncertainties. Sentences containing words such as "anticipates," "expects," or "will," generally should be considered forward-looking statements.  More detailed information on these and additional factors which could affect the Company's operating and financial results are described in the Company's Forms 10-K, 10-Q and other reports, filed or to be filed with the Securities and Exchange Commission.  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 undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.</p>
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    Contact:    David J. Russo
    Phone: (412) 928-3417
    FAX: (412) 928-7891
    Email: investors@LBFosterCo.com



    
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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          Six Months Ended
                                June 30,                   June 30,
                                --------                   --------
                            2010           2009      2010            2009
                            ----           ----      ----            ----
                              (Unaudited)                 (Unaudited)
    
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<p>NET SALES           <span class="xn-money">$119,504</span>        <span class="xn-money">$99,348</span>  <span class="xn-money">$201,506</span>        <span class="xn-money">$200,961</span></p>
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    COSTS AND EXPENSES:
    Cost of goods sold    99,189         86,516   169,118         174,447
    Selling and
     administrative
     expenses             10,774          8,612    19,967          17,639
    Interest expense         241            333       486             661
    Loss on joint
     venture                  94              -       241               -
    Interest income         (107)          (212)     (181)           (507)
    Other income             (51)          (186)     (153)           (329)
                         110,140         95,063   189,478         191,911
                         -------         ------   -------         -------
    
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    INCOME BEFORE
     INCOME TAXES          9,364          4,285    12,028           9,050
    
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    INCOME TAX EXPENSE     3,377          1,633     4,288           3,379
                           -----          -----     -----           -----
    
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    NET INCOME            $5,987         $2,652    $7,740          $5,671
                          ======         ======    ======          ======
    
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    BASIC EARNINGS PER
     COMMON SHARE          $0.59          $0.26     $0.76           $0.56
                           =====          =====     =====           =====
    
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    DILUTED EARNINGS
     PER COMMON SHARE      $0.58          $0.26     $0.75           $0.55
                           =====          =====     =====           =====
    
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    AVERAGE NUMBER OF
     COMMON SHARES
    OUTSTANDING - BASIC   10,190         10,148    10,181          10,176
                          ======         ======    ======          ======
    
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    AVERAGE NUMBER OF
     COMMON SHARES
    OUTSTANDING -
     DILUTED              10,313         10,275    10,304          10,318
                          ======         ======    ======          ======




    
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              L.B. Foster Company and Subsidiaries
              Condensed Consolidated Balance Sheets
                         (In thousands)
    
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                                                          December
                                         June 30,            31,
                                               2010            2009
                                               ----            ----
      ASSETS                           (Unaudited)
    
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      CURRENT ASSETS:
      ---------------
         Cash and cash items               $131,318        $124,845
         Accounts and notes
          receivable:
            Trade                            61,616          59,062
            Other                               319           2,116
         Inventories                         94,164          98,982
         Current deferred tax assets          3,671           3,678
         Prepaid income tax                       -             248
         Other current assets                 1,240           1,161
      Total Current Assets                  292,328         290,092
                                            -------         -------
    
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      OTHER ASSETS:
      -------------
         Property, plant & equipment-
          net                                36,226          37,407
         Goodwill                             3,210             350
         Other intangibles - net              1,757              25
         Deferred tax assets                  1,554           1,574
         Investments                          3,739           3,358
         Other non-current assets             1,348             362
                                              -----             ---
      Total Other Assets                     47,834          43,076
                                             ------          ------
    
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                                           $340,162        $333,168
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      LIABILITIES AND STOCKHOLDERS'
       EQUITY
    
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      CURRENT LIABILITIES:
      --------------------
         Current maturities on other
          long-term debt                     $3,099          $2,787
         Current maturities on long-
          term debt, term loan               11,667           2,619
         Accounts payable-trade and
          other                              40,111          52,777
         Deferred revenue                    22,149           9,062
         Accrued payroll and employee
          benefits                            5,077           6,106
         Other accrued liabilities            5,334           6,409
           Total Current Liabilities         87,437          79,760
                                             ------          ------
    
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      LONG-TERM DEBT, TERM LOAN                   -          10,476
                                                ---          ------
      OTHER LONG-TERM DEBT                    3,047           2,721
                                              -----           -----
      DEFERRED TAX LIABILITIES                1,870           1,893
                                              -----           -----
      OTHER LONG-TERM LIABILITIES             5,695           5,726
                                              -----           -----
    
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      STOCKHOLDERS' EQUITY:
      ---------------------
         Class A Common stock                   111             111
         Paid-in capital                     46,709          47,660
         Retained earnings                  220,527         212,787
         Treasury stock                     (24,929)        (27,574)
         Accumulated other
          comprehensive loss                   (305)           (392)
                                               ----            ----
           Total Stockholders' Equity       242,113         232,592
                                            -------         -------
    
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                                           $340,162        $333,168
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For further information: For further information: David J. Russo, +1-412-928-3417, Fax, +1-412-928-7891, investors@LBFosterCo.com Web Site: http://www.lbfoster.com

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