L.B. Foster pany(US:FSTR)2024-11-07 21:01Financial Performance - Net sales for the three months ended September 30, 2024 decreased by $7,879, or 5.4%, compared to the prior year quarter, driven by organic sales declines in the Rail and Infrastructure segments [112]. - Gross profit for the three months ended September 30, 2024 increased by $5,341, or 19.5%, with gross profit margins improving by 490 basis points to 23.8% [113]. - Selling and administrative expenses decreased by $132, or 0.5%, due to lower employment costs and bad debt expense, partially offset by higher legal and restructuring costs [114]. - Net income attributable to the Company for the three months ended September 30, 2024 increased by $35,390, or $3.22 per diluted share, driven by a favorable tax valuation allowance adjustment and gross profit improvement [117]. - Net income attributable to the Company for the nine months ended September 30, 2024 was $43,188, an increase of $41,294, or $3.74 per diluted share, over the prior year period [138]. Tax and Interest - The effective income tax rate for the three months ended September 30, 2024 was (483.4%), primarily due to a $30,045 income tax benefit from a change in valuation allowance against deferred tax assets [116]. - The Company's effective income tax rate for the nine months ended September 30, 2024 was (207.8%), compared to (5.9%) in the prior year period, primarily due to a significant income tax benefit [136]. - Net interest expense decreased by $84, with the outstanding debt balance at $68,544 as of September 30, 2024, down from $71,689 a year earlier [115]. Segment Performance - Rail segment net sales for the three months ended September 30, 2024 decreased by $7,368, or 8.5%, compared to the prior year quarter, primarily due to weaker domestic market conditions [118]. - Infrastructure segment net sales for the three months ended September 30, 2024 decreased by $511, or 0.9%, driven by a decline in the Steel Products business unit [122]. - Rail segment gross profit increased by $1,242, or 7.2%, with gross profit margins improving by 340 basis points to 23.2% [119]. - Infrastructure segment gross profit increased by $4,099, or 40.2%, with gross profit margins improving by 720 basis points to 24.6% [124]. - Segment operating income for the Rail segment increased by $1,067, with operating income margins improving by 170 basis points to 6.2% [120]. - Infrastructure segment operating income increased by $4,311 compared to the prior year quarter, reflecting higher gross profit and lower amortization expenses [125]. Orders and Backlog - New orders in the Rail segment for the current quarter were $52,675, an increase of $2,857, or 5.7%, compared to the prior year quarter [121]. - Infrastructure segment new orders decreased by $7,147, or 14.2%, driven entirely by the Steel Products business unit [126]. - New orders in the Rail segment were $253,412, an increase of $13,886, or 5.8%, compared to the prior year period [142]. - Infrastructure segment new orders decreased by $38,056, or 20.7%, primarily due to short-term constrained demand in the Steel Products business unit [146]. - Total backlog as of September 30, 2024, was $209,005, a decrease of $34,214 compared to the prior year quarter, driven by constrained demand in the Steel Products business unit [168]. Acquisitions and Divestitures - The Company sold the Chemtec business for $5,344, resulting in a $2,065 loss on sale, and the Ties business for $2,362, resulting in a $1,009 loss on sale [106][107]. - The Company acquired Cougar Mountain Precast, LLC for $1,644, expanding its Precast Concrete Products business unit within the Infrastructure segment [109]. - The Company announced the discontinuation of the Bridge Products grid deck product line due to weak market conditions, with sales of $921 and $283 for the three months ended September 30, 2024 and 2023, respectively [108]. Debt and Cash Management - The Company reported total debt of $68,544 as of September 30, 2024, an increase from $55,273 as of December 31, 2023 [152]. - The Company experienced an increase in outstanding debt of $12,162 for the nine months ended September 30, 2024, compared to a decrease of $20,262 in the prior year, primarily due to higher working capital needs [161]. - As of September 30, 2024, the Company had $3,135 in cash and cash equivalents and $59,707 available under its revolving credit facility, subject to covenant restrictions [164]. - The Company had $62,842 available funding capacity as of September 30, 2024, subject to covenant restrictions [153]. Restructuring and Operational Focus - The Company expects annual run-rate pre-tax savings of approximately $4,500 from its restructuring program, with $2,000 to be realized in 2024 [148]. - Capital expenditures for the nine months ended September 30, 2024, were $7,834, compared to $2,784 in the same period of 2023, indicating a focus on operational improvements and organic growth initiatives [160]. Internal Control and Governance - A material weakness in internal control over financial reporting was identified, impacting the effectiveness of the Company's disclosure controls and procedures as of September 30, 2024 [181]. - The company is committed to continuous improvement of its internal control over financial reporting, addressing identified material weaknesses [184]. - There were no changes to internal control over financial reporting that materially affected the company during the three and nine months ended September 30, 2024 [185]. - Management acknowledges that controls and procedures can only provide reasonable assurance of achieving desired control objectives due to resource constraints [186].