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Jun 30
Foster Q2 2025 Earnings Report
L.B. Foster announced strong second quarter results with organic growth and profitability expansion, driven by robust order rates and improved operating leverage.
Key Takeaways
L.B. Foster reported a strong second quarter in 2025, with net income up 1.3% to $2.8 million and Adjusted EBITDA increasing by 51.4% to $12.2 million, primarily due to 2.0% organic sales growth led by the Precast Concrete business unit. The company's backlog grew by 8.1% to $269.9 million, setting a solid foundation for anticipated strong sales growth in the second half of 2025.
Net income increased by 1.3% to $2.8 million, while Adjusted EBITDA surged by 51.4% to $12.2 million, reflecting strong profitability expansion.
Total net sales grew by 2.0% to $143.6 million, driven by a 22.4% increase in the Infrastructure Solutions segment, despite a decline in the Rail segment.
Backlog reached $269.9 million, an 8.1% increase over the prior year, with Rail backlog up 13.9%, indicating strong future demand.
Selling and administrative expenses as a percentage of sales improved by 200 basis points to 15.6%, demonstrating significant operating expense leverage.
Foster
Foster
Foster Revenue by Segment
Revenue by Segment
Rail, Technologies, and Services Revenue
CapyFin.comInfrastructure Solutions Revenue
CapyFin.com Forward Guidance
L.B. Foster expects strong organic sales growth and profitability improvement to continue in the second half of 2025, driven by North American demand recovery in the Rail segment and continued SG&A constraints. The company anticipates significant free cash flow generation and further reduction in leverage.
Positive Outlook
- Revised 2025 guidance mid-points assume a 25.1% increase in Adjusted EBITDA versus last year.
- 2025 second half Adjusted EBITDA is anticipated to be up 42.8% on 14.3% sales growth.
- Increased Rail backlog (up 13.9% over last year) sets a solid foundation for expected robust sales growth in the 2025 second half.
- Margin profiles within the backlog continue to improve, aligning with the company's strategy.
- Anticipates $41 million in free cash flow in the second half of 2025 and expects to continue share buybacks and further reduce leverage to a target range of 1.0x - 1.5x by year end.
Challenges Ahead
- The company recorded income tax expense of $3.4 million on pre-tax income of $6.3 million, for an effective income tax rate of 54.8%, compared to 10.9% in the prior year quarter.
- The effective income tax rate was impacted by pre-tax losses in the United Kingdom with a full valuation allowance for which no income tax benefit was recognized.
- Technology Services and Solutions backlog declined 37.9% due to continued right-sizing of the UK portion of this business.
- The company incurred a $1.4 million restructuring charge related to the UK business right-sizing.
- Rail sales remained soft in the quarter, down 11.2% versus last year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income