L.B. Foster (FSTR) Q4 Earnings Beat Estimates, Revenues Lag

Zacks Equity Research
·4 min read

L.B. Foster Company FSTR logged earnings (as reported) from continuing operations of 21 cents per share for the fourth quarter of 2020, down from $2.83 per share a year ago.

Barring one-time items, earnings were 24 cents per share for the quarter, topping the Zacks Consensus Estimate of 7 cents.

The company recorded revenues of $115.6 million for the quarter, down around 18% year over year. It lagged the Zacks Consensus Estimate of $123.5 million. The decline is attributable to the impacts of the coronavirus pandemic. L.B. Foster faced disruptions in supply chains and general weakness in demand due to the pandemic in the fourth quarter.

New orders were $134.4 million in the fourth quarter, down around 23% year over year.

L.B. Foster Company Price, Consensus and EPS Surprise

L.B. Foster Company Price, Consensus and EPS Surprise
L.B. Foster Company Price, Consensus and EPS Surprise

L.B. Foster Company price-consensus-eps-surprise-chart | L.B. Foster Company Quote

Segment Highlights

Sales from Infrastructure and Rail segments dropped 25% and roughly 13% year over year, respectively, in the fourth quarter. New orders fell around 34% year over year in the Infrastructure segment and also declined roughly 15% in the Rail segment.

A slump in oil demand resulting from lower travel due to the pandemic led to a significant decline in demand for certain products and services offered by the company’s Infrastructure segment. Moreover, lower demand for friction management consumables and delays in new rail and transit projects and services impacted the company’s Rail segment.

Stay-at-home and work-from-home orders by governments across the globe led to lower traffic and demand for the company’s products and services. Containment measures also resulted in delays or deferrals of many public works projects, affecting its business.

FY20 Results

Earnings (as reported) for full-year 2020 were $2.42 per share, compared with earnings of $4.51 per share a year ago. Revenues dropped around 19% year over year to $497.4 million for the full year.

Financials

L.B. Foster ended 2020 with cash and cash equivalents of around $7.6 million, down around 47% year over year. Long-term debt was $44.9 million, down roughly 19% year over year.

Net cash provided by continuing operating activities was $20.5 million for 2020, down 22% year over year.

Outlook

The company envisions sustained disruptions due to the pandemic at least through the first half of 2021 as various restrictive measures remain in place in the major markets it serves. It also expects sales to decline significantly on a year-over-year basis for its Coatings and Measurement business unit this year due to the challenges in the midstream energy market. While the company sees continued recovery in Rail Technologies, sustained lockdowns in the United Kingdom due to the pandemic may impact recovery in the near term.

Price Performance

L.B. Foster’s shares have gained 2.7% in the past year compared with the industry’s 59.9% growth.

Zacks Rank & Key Picks

L.B. Foster currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Fortescue Metals Group Limited FSUGY and BHP Group BHP, Impala Platinum Holdings Limited IMPUY.

Fortescue has a projected earnings growth rate of 95.4% for the current fiscal. The company’s shares have surged around 179% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP Group has a projected earnings growth rate of 69.3% for the current fiscal year. The company’s shares have shot up around 77% in a year. It currently carries a Zacks Rank #1.

Impala Platinum has an expected earnings growth rate of 187% for the current fiscal. The company’s shares have rallied around 105% in the past year. It currently carries a Zacks Rank #2 (Buy).

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