L.B. Foster reported weak third-quarter 2014 results. Earnings came
in at $0.88 per share, down 7.4% year over year and missed the
Zacks Consensus Estimate of $0.99. High costs of acquisitions and
ERP implementation had dampened the company's earnings. However,
revenues increased by 3.4% on the back of improved Tubular
segments' business. Bookings increased 7% whereas backlog at
quarter-end improved 13%. The company is efficiently utilizing its
cash for acquisitions and capital expenditure. It has also extended
its credit resources for funding future growth plans. However,
presence of many players in the industry and external market
uncertainties endanger 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. The company has a joint venture (JV) with
Lally Pipe & Tube, L B Pipe & Coupling Products, LLC,
holding 45% ownership interest. This JV is responsible for the
production, marketing and selling of precision couplings and other
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 of this segment generally
pertain to lowering fuel usage, improving train-operating
efficiency and reducing operating costs for customers.
The Construction Products segment supports an assortment of
construction projects through its varied offerings. Its business
units are classified into piling and 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 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 manufactures threaded pipe products, which include column pipe,
couplings and related products for agricultural, municipal and
industrial water wells.
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