EX-99 2 exh991.txt 2007 FIRST QUARTER EARNINGS RELEASE PRESS RELEASE -------------------------------------------------------------------------------- L.B. Foster Company 415 Holiday Drive, Pittsburgh, PA 15220 Contact: Stan L. Hasselbusch Phone: (412) 928-3417 FAX: (412) 928-7891 Email: investors@LBFosterCo.com FOR IMMEDIATE RELEASE L.B. FOSTER REPORTS SURGE IN FIRST QUARTER INCOME FROM CONTINUING OPERATIONS PITTSBURGH, PA, April 26, 2007 - 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 that its first quarter earnings per diluted share from continuing operations increased to $0.28 from $0.11 in last year's first quarter, a 155% increase. This is the ninth consecutive quarter the Company has recorded an earnings increase over the prior year quarter. 2007 First Quarter Results In the first quarter of 2007, L.B. Foster had income from continuing operations of $3.1 million or $0.28 per diluted share compared to income from continuing operations of $1.2 million or $0.11 per diluted share in the first quarter of 2006. The Company reported no income from discontinued operations in the first quarter of 2007, compared to $2.7 million and $0.25 per diluted share in last year's first quarter, due to the sale of our former Geotechnical Division in that quarter. Income from discontinued operations in the first quarter of 2006 included the gain on the sale of this division of $3.0 million, reduced by a $0.2 million loss from operations during the period we owned the business as well as $0.1 million of taxes. Net income was $3.1 million or $0.28 per diluted share in 2007 compared to $3.9 million or $0.36 per diluted share in 2006. Net sales increased 31.5% to $110.7 million compared to $84.2 million in the prior year quarter. Gross profit margin was 12.8%, up 120 basis points from the prior year quarter primarily as a result of increased billing margins offset, in part, by increased net plant expenses. Selling and administrative expenses increased $0.7 million or 8.7% over last year's quarter due primarily to employee related costs and benefit expenses including incentive compensation. As a percentage of sales, selling and administrative expenses were 7.6% in the first quarter of 2007 compared to 9.2% of sales in the prior year quarter. First quarter interest expense increased $0.6 million or 84% over the prior year due primarily to increased borrowings and, to a lesser extent, increased interest rates. The increase in borrowings was primarily due to an increase in working capital requirements as well as significant capital investments made during the past year. The Company's income tax rate from continuing operations was 35.9% in the first quarter compared to 34.4% in the prior year quarter. "First quarter sales were very strong. This is historically our slowest quarter of the year as a large part of our products go into heavy civil construction projects and the weather in most parts of North America slows that activity significantly. This year's first quarter comes on the heels of an unusually strong fourth quarter last year," commented Stan Hasselbusch, President and Chief Executive Officer. "Our Construction and Tubular segments delivered strong sales and profits, and even though the Rail segment posted a 37% increase in sales, gross profit margins were disappointing, primarily due to poor productivity at our new Tucson concrete tie and Pueblo Allegheny Rail products facilities. Results at Tucson were the biggest drag on earnings as we continued to work with new materials to strike the right mix for our concrete ties. Our ARP insulated joint facility struggled to ramp up in February and March after coming off of a slow January. Our Construction Products segment surpassed last year's first quarter results due to continued across the board improvements in piling, fabricated products and concrete buildings," remarked Mr. Hasselbusch. After a soft 2006, our Tubular segment also experienced improvement in both business units, coated and threaded products," added Mr. Hasselbusch. Cash used by operations was approximately $7.8 million in the first quarter of 2007 and capital expenditures were $1.5 million. "We continue to expect to generate positive cash from operations in 2007 and also anticipate capital expenditures to be below $10 million," stated Mr. Hasselbusch, who concluded by reporting, "Overall business activity remains robust and is reflected in our order bookings. Bookings for the first quarter of 2007 were $172.5 million, 43% higher than last year. Backlog at March 31, 2007 was $195.8 million, 38% higher than last year. We believe this activity provides the appropriate momentum for a strong 2007." L.B. Foster Company will conduct a conference call and webcast to discuss its first quarter 2007 operating results on Thursday, April 26, 2007 at 11:00am ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via the internet on the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations page. 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, adequate funding for infrastructure projects, the potential value of the Dakota Minnesota & Eastern Railroad, production delays or problems encountered at our manufacturing facilities, and the availability of existing and new piling and rail products. In addition, neither backlog nor orders entered are necessarily indicative of future performance. Matters discussed in such communications are 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. CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS L. B. FOSTER COMPANY AND SUBSIDIARIES (In Thousands, Except Per Share Amounts) Three Months Ended March 31, ---------------------------- 2007 2006 ---------------------------- (Unaudited) NET SALES $110,666 $84,155 COSTS AND EXPENSES: Cost of goods sold 96,476 74,351 Selling and administrative expenses 8,401 7,731 Interest expense 1,222 665 Other income (258) (431) --------- -------- 105,841 82,316 --------- -------- INCOME FROM CONTINUING OPERATIONS, BEFORE INCOME TAXES 4,825 1,839 INCOME TAXES 1,733 633 --------- -------- INCOME FROM CONTINUING OPERATIONS 3,092 1,206 DISCONTINUED OPERATIONS: INCOME FROM DISCONTINUED OPERATIONS, BEFORE INCOME TAXES 12 2,819 INCOME TAXES 4 141 --------- -------- INCOME FROM DISCONTINUED OPERATIONS 8 2,678 NET INCOME $3,100 $3,884 ========= ======== BASIC EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.29 $0.12 FROM DISCONTINUED OPERATIONS 0.00 0.26 --------- -------- BASIC EARNINGS PER COMMON SHARE $0.29 $0.38 ========= ======== DILUTED EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.28 $0.11 FROM DISCONTINUED OPERATIONS 0.00 0.25 --------- -------- DILUTED EARNINGS PER COMMON SHARE $0.28 $0.36 ========= ======== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 10,555 10,195 ========= ======== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 10,898 10,654 ========= ======== L. B. Foster Company and Subsidiaries Consolidated Balance Sheet (In thousands) March 31, December 31, 2007 2006 -------- -------- ASSETS (Unaudited) CURRENT ASSETS: --------------- Cash and cash items $3,388 $1,309 Accounts and notes receivable: Trade 56,827 60,771 Other 360 779 Inventories 110,120 99,803 Current deferred tax assets 2,653 2,653 Other current assets 1,660 1,133 Prepaid income tax 691 836 Property held for resale 2,522 - -------- -------- Total Current Assets 178,221 167,284 -------- -------- OTHER ASSETS: ------------- Property, plant & equipment-net 46,791 49,919 Goodwill 350 350 Other intangibles - net 59 62 Investments 16,924 16,676 Deferred tax assets 1,242 1,149 Other non-current assets 367 393 -------- -------- Total Other Assets 65,733 68,549 -------- -------- $243,954 $235,833 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: -------------------- Current maturities on long-term debt $3,160 $3,105 Short-term borrowings 775 726 Accounts payable-trade and other 52,122 57,446 Accrued payroll and employee benefits 7,190 6,892 Current deferred tax liabilities 3,184 3,203 Other accrued liabilities 5,292 4,215 Current liabilities of discontinued operations 233 235 -------- -------- Total Current Liabilities 71,956 75,822 -------- -------- LONG-TERM BORROWINGS 50,882 39,161 -------- -------- OTHER LONG-TERM DEBT 14,281 15,112 -------- -------- DEFERRED TAX LIABILITIES 2,163 1,853 -------- -------- OTHER LONG-TERM LIABILITIES 3,401 5,852 -------- -------- STOCKHOLDERS' EQUITY: --------------------- Class A Common stock 106 105 Paid-in Capital 40,094 39,696 Retained Earnings 61,721 58,843 Accumulated Other Comprehensive Loss (650) (611) -------- -------- Total Stockholders' Equity 101,271 98,033 -------- -------- $243,954 $235,833 ======== ========