L.B. Foster Reports Strong Profitability Recovery in Q3 2024 Despite Sales Decline

L.B. Foster Company reported its financial results for the third quarter and nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the third quarter of 2024, total net sales decreased by $7.9 million (5.4%) to $137.5 million, down from $145.3 million in Q3 2023. The decline was primarily attributed to reduced sales in the Rail segment, which fell by $7.4 million (8.5%) to $79.5 million. Conversely, the Infrastructure Solutions segment saw a slight decrease of $0.5 million (0.9%) to $58.0 million. Despite the drop in sales, gross profit increased by $5.3 million (19.5%) to $32.8 million, driven by improved margins in the Infrastructure segment, which rose to 24.6%.

Operating income for Q3 2024 surged to $7.3 million, a significant increase of $5.7 million from $1.6 million in the prior year. This improvement was largely due to higher gross profit and lower amortization expenses. Net income for the quarter reached $35.9 million, a substantial increase from $447,000 in Q3 2023, resulting in diluted earnings per share of $3.27, compared to $0.05 in the same period last year.

For the nine months ended September 30, 2024, total net sales decreased by $6.3 million (1.5%) to $402.6 million. However, gross profit increased by $6.1 million (7.3%) to $89.4 million, with operating income rising to $17.5 million, up from $8.9 million in the prior year. Net income for the nine-month period was $43.1 million, compared to $1.8 million in 2023, with diluted earnings per share increasing to $3.91 from $0.17.

Strategically, L.B. Foster completed the acquisition of Cougar Mountain Precast, LLC on November 17, 2023, for $1.6 million, which is expected to enhance its Infrastructure segment. The company also announced an enterprise restructuring program in August 2024 aimed at reducing costs and enabling investment in growth platforms, projected to yield annual pre-tax savings of approximately $4.5 million.

The company reported a decrease in backlog to approximately $209 million as of September 30, 2024, down from $243 million a year earlier, primarily due to declines in the Steel Products business unit. Additionally, L.B. Foster is addressing a material weakness in internal controls over financial reporting, which has led to errors in previously issued financial statements.

Overall, L.B. Foster's financial performance in Q3 2024 reflects a strong recovery in profitability despite a decline in sales, supported by strategic acquisitions and cost-saving initiatives.