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Jun 30, 2020
Foster Q2 2020 Earnings Report
Reported a decrease in net sales and net income compared to the prior year quarter, but showed sequential improvement from the first quarter.
Key Takeaways
L.B. Foster Company reported a decrease in net sales by 27.5% and net income decreased to $0.5 million, or $0.05 per diluted share, compared to the prior year quarter. However, net sales increased from the first quarter of 2020 by 13.2%. The company experienced disruptions due to the COVID-19 pandemic, but order activity in the Rail and Construction segments remained steady.
Net sales decreased by 27.5% year-over-year to $145.8 million, but increased 13.2% from the first quarter of 2020.
Net income was $0.5 million, or $0.05 per diluted share, a decrease of $0.85 per diluted share from the prior year quarter.
New orders decreased by 15.7% year-over-year to $138.3 million, but backlog increased by 7.9% to $225.9 million.
Adjusted EBITDA was $11.8 million, a decrease of $5.4 million from the prior year quarter and an increase of $8.7 million from the first quarter of 2020.
Foster
Foster
Forward Guidance
The Company anticipates continued disruption in the third quarter of 2020 and possibly beyond as various restrictive measures have remained in effect in the major markets we serve.
Positive Outlook
- Order activity in both the Rail and Construction segments remained steady during the second quarter.
- Backlog continues to be very robust, increasing by approximately $16.6 million on a consolidated basis.
- Backlog increasing $29.7 million in the combined Rail and Construction segments as compared to the second quarter of 2019.
- Strong balance sheet and solid operating cash flow performance to help us effectively deal with the current environment.
- Actions undertaken in the Test, Inspection, and Threading Services division of the Tubular and Energy segment during the second quarter will reduce the unfavorable impact this division has been having on operating results.
Challenges Ahead
- Continued disruption in the third quarter of 2020 and possibly beyond as various restrictive measures have remained in effect in the major markets we serve.
- The energy market continues to have an unfavorable outlook.
- The industry expects significant difficulties in funding ongoing development activity that requires the Company's services.
- The Company has revised its outlook for the energy market and is forecasting sales to decline significantly year-over-year for its Tubular and Energy segment.
- Minimal disruption with its on-premise workforce up to this point, and the Company expects to continue to operate under its pandemic protocols with minimal changes.