Foster reported disappointing results for the first quarter of
2014, with year-over-year decline in earnings as well as revenues.
Earnings decreased 27% to $0.35 per share while revenues slipped
14% to $111.4 million. Exiting the quarter, backlog in the Tubular
and Construction Products segments increased year over year while
declined for the Rail segment. For the quarters ahead, management
anticipates to benefit from a favorable business environment, which
will lead to a rise in sales and earnings. Also, we believe that
the acquisition of Ball Winch will prove beneficial for the company
and add to its inorganic growth. However, the presence of many
players in the industry endangers the company's growth prospects.
Based on these factors, we prefer to have a balanced view on the
stock with a Neutral recommendation.
L.B. Foster Company (FSTR) based in Pittsburgh, PA, offers a
variety of products and services to the rail, construction, energy
and utility markets. Foster also has a joint venture, L B Pipe
& Coupling Products, LLC, with LB Industries Inc. This joint
venture is responsible for the production, marketing and selling of
products for the energy, utility and construction markets. Foster
had roughly 830 employees as on Dec 31, 2013. The company operates
in mainly three segments: Rail Products, Construction Products and
The segment details are provided below:
The Rail Products segment manufactures primarily for transit
authorities, railroads, industrial companies and mining
applications, mainly in North America and the U.K. This segment
mainly comprises the rail manufacturing and distribution, rail
technology and concrete products business units. The segment's
revenues are derived from rail accessories like trackwork, bolts,
angle bars, rail joints, rail anchors, track spikes and track
fasteners, among others. The activities associated with this
segment generally pertain to lowering fuel usage, improving
train-operating efficiency along with reducing operating costs for
The Construction Products segment supports an assortment of
construction projects through its varied offerings. Its business
units are classified into piling, fabricated products and precast
concrete buildings. Piling products include sheet piling, bearing
piling, pipe piling and beam piling. Fabricated products unit
provides steel and aluminum products for the highway, bridge and
transit industries. The sales in this segment are related to the
construction industry activities.
The Tubular Products segment deals with the supply of pipe
coatings for natural gas pipelines and utilities. Along with this,
it produces threaded pipe products. The products include column
pipe, couplings and related products for agricultural, municipal
and industrial water wells.
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