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Sep 30, 2020
Foster Q3 2020 Earnings Report
L.B. Foster's Q3 2020 performance reflected a decrease in net sales and gross profit compared to the prior year quarter.
Key Takeaways
L.B. Foster reported a decrease in net sales and gross profit for the third quarter of 2020, primarily due to the impact of the COVID-19 pandemic and weakness in the energy market. However, backlog increased driven by the Rail and Construction segments, and the company reduced its net debt.
Net income from continuing operations was $16.6 million, or $1.56 per diluted share.
Net sales decreased by 18.3% to $118.4 million compared to the prior year quarter.
Backlog increased by 21.7% to $235.2 million compared to the prior year quarter.
Net debt decreased by $8.4 million from June 30, 2020, to $39.8 million as of September 30, 2020.
Foster
Foster
Forward Guidance
The company anticipates continued disruption for the remainder of 2020 and beyond due to COVID-19, with the energy market expected to remain unfavorable. The Rail and Construction segments are expected to continue spending.
Positive Outlook
- Rail segment anticipates further recovery in Rail Technologies.
- Rail Distribution bookings were strong in the third quarter of 2020.
- Concrete ties for transit systems experienced a significant increase in order activity.
- The Piling division had a strong quarter of order activity.
- The Fabricated Bridge and Precast Concrete Products divisions experienced substantial year-over-year increases in backlog.
Challenges Ahead
- Consumable products are usually correlated to traffic volume for the remainder of 2020 and into 2021 given the on-going depressed travel volume driven by the COVID-19 pandemic, which the Company expects to continue
- Severe decline in travel due to the COVID-19 pandemic has led to significant reductions in the production of oil as demand for fuel has declined by record amounts.
- This has led to the Company projecting material declines in sales for this segment for the remainder of 2020 and into 2021.
- Management is continuing to take actions to align the costs associated with this segment to the projected revenue streams.
- The pandemic also impacted the Rail segment, causing reduced demand for its friction management consumables and delays in new rail and transit projects.