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Jun 30, 2024
Foster Q2 2024 Earnings Report
Reported tempered results due to softness in the domestic rail market, with strategic actions and restructuring underway.
Key Takeaways
L.B. Foster Company reported a 4.9% year-over-year decrease in second-quarter net sales, with organic sales down 3.4%. Net income decreased by 19.4% to $2.8 million, and adjusted EBITDA fell by 23.8% to $8.1 million. The company is implementing restructuring efforts to reduce costs and enable growth, while adjusting its full-year financial guidance to reflect uncertain market conditions.
Net sales decreased by 4.9% year over year, with organic sales down 3.4%, primarily in the Rail segment.
Net income decreased by 19.4% to $2.8 million, and adjusted EBITDA decreased by 23.8% to $8.1 million.
New orders decreased by 6.9% year over year to $171.0 million, while backlog decreased by 13.9% to $249.8 million.
Full-year 2024 financial guidance was adjusted, with net sales expected to range from $525.0 million to $550.0 million and adjusted EBITDA expected to range from $34.0 million to $37.0 million.
Foster
Foster
Foster Revenue by Segment
Revenue by Segment
Rail, Technologies, and Services Revenue
CapyFin.comInfrastructure Solutions Revenue
CapyFin.com Forward Guidance
The Company is updating its 2024 financial guidance. Net sales are now expected to range from $525.0 million to $550.0 million and adjusted EBITDA is expected to range from $34.0 million to $37.0 million. Free cash flow is expected to be breakeven with capital spending at 2.5% of sales
Positive Outlook
- Restructuring program expected to improve profitability.
- Focus on strategic playbook to drive growth and shareholder returns.
- Flexibility to repurchase more shares through February 2025.
- Expectation of improved cash flow generation as Union Pacific settlement obligation wraps up.
- Positive benefits seen from restructuring actions in the UK business.
Challenges Ahead
- Uncertain market conditions impacting financial guidance.
- Softer business conditions and expected timing of larger orders affecting cash generation.
- Overall backlog down $40.3 million versus last year.
- Lower order rates due to softer business activity in the Steel Products business unit.
- Net debt rose $8.2 million during the quarter to fund working capital needs, capital spending, and stock buyback program.
Revenue & Expenses
Visualization of income flow from segment revenue to net income