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OFFON

L.B. FOSTER COMPANY

(FSTR)
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3Q21 Earnings Presentation

11/02/2021 | 07:40am EST

L.B. Foster

Q3 2021 Earnings Presentation

November 2, 2021

John Kasel - President and Chief Executive Officer

Bill Thalman - Senior Vice President and Chief Financial Officer

Safe Harbor Disclaimer

Safe Harbor Statement

Non-GAAP Financial Measures

This release may contain "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as "believe," "intend," "plan," "may," "expect," "should," "could," "anticipate," "estimate," "predict," "project," or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this earnings release are based on management's current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company's expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: the COVID-19 pandemic, including the impact of any worsening of the pandemic, or the emergence of new variants of the virus, on our financial condition or results of operations, and any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments; the volatility in the prices of oil and natural gas and the related impact on the upstream and midstream energy markets, which could result in further cost mitigation actions, including additional shutdowns or furlough periods; a continuation or worsening of the adverse economic conditions in the markets we serve, whether as a result of the current COVID-19 pandemic, including its impact on travel and demand for oil and gas, the volatility in the prices for oil and gas, governmental travel restrictions, project delays, and budget shortfalls, or otherwise; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a continuing decrease in freight or transit rail traffic, including as a result of the COVID-19 pandemic; environmental matters, including any costs associated with any remediation and monitoring; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the third quarter of 2021 disposition of the Piling Products business, 2020 disposition of the IOS Test and Inspection Services business and acquisition of the LarKen Precast business, and to realize anticipated benefits; costs of and impacts associated with shareholder activism; continued customer restrictions regarding the on-site presence of third party providers due to the COVID-19 pandemic; the timeliness and availability of materials from our major suppliers, including any continuation or worsening of the disruptions in the supply chain experienced as a result of the COVID-19 pandemic, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers' concerns about conflict minerals; labor disputes; cyber-security risks such as data security breaches, malware, ransomware, "hacking," and identity theft, including as experienced in 2020, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the significant disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation; the effectiveness of our continued implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, and reforms regarding the use of LIBOR as a benchmark for establishing applicable interest rates; the Company's ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom's exit from the European Union; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the loss of future revenues from current customers; and risks inherent in litigation and the outcome of litigation and product warranty claims. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company's business and forward-looking statements include, but are not limited to, those set forth under Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2020, or as updated and/or amended by our other current or periodic filings with the Securities and Exchange Commission. All information in this presentation speaks only as of November 2, 2021, and any distribution of the presentation after that date is not intended and will not be construed as updating or confirming such information. L.B. Foster Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events, or otherwise, except as required by securities laws. The information in this presentation is unaudited, except where noted otherwise.

This investor presentation discloses the following non-GAAP measures:

  • Earnings before interest, taxes, depreciation, and amortization ("EBITDA") from continuing operations
  • Earnings before interest, taxes, depreciation, amortization, and certain charges ("Adjusted EBITDA") from continuing operations
  • Adjusted net income from continuing operations
  • Adjusted diluted earnings per share from continuing operations
  • Net debt
  • Adjusted net leverage ratio

The Company believes that EBITDA from continuing operations is useful to investors as a supplemental way to evaluate the ongoing operations of the Company's business since EBITDA may enhance investors' ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization. In addition, EBITDA is a financial measure that management and the Company's Board of Directors use in their financial and operational decision-making and in the determination of certain compensation programs. The Company believes that adjusted net income from continuing operations is useful to investors as a supplemental way to compare historical periods without regard to various charges that the Company believes are unusual, non-recurring, unpredictable, or non-cash. Adjusted net income from continuing operations, adjusted diluted earnings per share from continuing operations, and adjusted EBITDA from continuing operations adjusts for certain charges to net income from continuing operations and EBITDA from continuing operations that the Company believes are unusual, non-recurring, unpredictable, or non-cash. In 2020, the Company made an adjustment for a non-recurring benefit from a distribution associated with the Company's interest in an unconsolidated partnership. In 2020 and 2019, the Company made adjustments to exclude the impact of restructuring activities and site relocation. In 2019, the Company made adjustments to exclude the impact of the U.S. pension settlement expense. In 2018, the Company made adjustments to exclude the impact of the UPRR litigation settlement. The Company views net debt, which is total debt less cash and cash equivalents, and the adjusted net leverage ratio, which is the ratio of net debt to the trailing twelve-month adjusted EBITDA from continuing operations, as important metrics of the operational and financial health of the organization and are useful to investors as indicators of our ability to incur additional debt and to service our existing debt

Non-GAAP financial measures are not a substitute for GAAP financial results and should only be considered in conjunction with the Company's financial information that is presented in accordance with GAAP. Quantitative reconciliations of EBITDA from continuing operations, adjusted EBITDA from continuing operations, adjusted net income from continuing operations, net debt, and adjusted net leverage ratio are included within this presentation.

2 | L.B. Foster

Q3 3021 Earnings Presentation November 2, 2021

Company Overview

A global solutions provider of engineered and manufactured products and services to build and support infrastructure

Who we are

  • Headquartered in Pittsburgh, Pennsylvania
  • Locations throughout North America, South America, Europe, and Asia
  • Critical infrastructure solutions provider focused on growing our innovative, technology-based offering to address our customer's most challenging operating and safety requirements

NASDAQ: FSTR

1902

39

~1,000

PLANTS,

EMPLOYEES

FOUNDED

YARDS &

WORLDWIDE

OFFICES

Information above as of 12/31/2020.

Presented on a continuing operations basis.

2020 Net Sales by Region

($ in millions)

$0.981

$44.6

2020 DILUTED

$398.3

$497

ADJ. EPS

$34.5

$20.0

United States

United Kingdom

Canada

Other

Segments

  • Rail Technologies and Services
  • Infrastructure Solutions

3 | L.B. Foster

Business System

Focus

Strategy

Customer

Rail Technologies innovation

Centric

Precast Concrete expansion

Talent

People

Prioritization of core

Management

competencies

Business

Improvements to financial

Performance

CSI

flexibility

Management

Information presented on a continuing operations basis.

Financials

  • $130.1M - Q3 2021 Revenue
  • $4.4M - Q3 2021 Adj. EBITDA1
  • $229.8M - Sept. 30, 2021 Backlog2
  • $125.6M - Q3 2021 New Orders2

Q3 3021 Earnings Presentation

(1)

See non-GAAP reconciliation tables at the end of this presentation regarding non-GAAP measures used herein.

November 2, 2021

(2) Note orders and backlog have been adjusted to exclude the recently divested steel Piling business.

Executive Summary - Company Update

Comprehensive Strategy Assessment

  • Six-monthproject completed in Q3 2021.
  • Identification of growth and returns businesses, establishing basis for strategic growth and capital allocation.
  • Multi-stepplaybook created to execute strategic growth, initiated with the divestiture of the steel Piling Products business.

Steel Piling Products Divestiture

  • Sold to a third party buyer, realizing approximately $24 million in proceeds and an approximate $3 million gain on sale.
  • Strategic decision to shift away from commodity business; focus future capital allocation to core growth platforms.

Amended and Extended Credit Agreement

  • Extended term to 2026, expanded facility commitment $15 million to $130 million and improved pricing and covenant package.
  • Provides additional flexibility to execute strategic growth initiatives.

Supply Chain Challenges and Inflation

  • Escalated throughout the quarter, impacting nearly all areas of the Company.
  • Inflationary environment adding pressure on margins.
  • Raw material, labor, supply chain, service partner, and other lingering Covid-related disruptions presents challenging operating environment.

Coatings and Measurement

  • Activity in pipeline infrastructure investment continues to be depressed, adversely impacting the Coating and Measurement business.
  • No meaningful recovery expected in the foreseeable future.

4 | L.B. Foster

Q3 3021 Earnings Presentation November 2, 2021

Executive Summary - Quarterly Results

Revenue

  • Revenues for the September quarter were $131 million, a $12 million, or 10%, increase over the prior year quarter.
  • Revenues year to date through September 2021 were $401 million, a $19 million, or 5%, increase over the prior year- to-date period.

Segment Revenues

  • Rail Technologies and Services revenue increased by 16% and 10%, respectively, for the quarter and year to date period versus the respective prior-year periods.
  • Infrastructure Solutions revenues were up 3% for the quarter and down slightly for the year-to-date period despite the challenges faced in the energy markets served.

Gross Profit

  • Gross profit for the quarter was up slightly year over year, with higher Rail margins offsetting lower margins in Infrastructure segment.
  • Gross profit declined $6 million on a year-to-date basis, wholly attributable to the Coatings and Measurement business, which was down $12 million versus last year.

Orders

  • Rail segment orders in the third quarter were a robust $84 million, a 19% sequential increase and a 23% increase versus the third quarter of 2020.
  • Infrastructure Solutions orders, adjusted for the divestiture of the Piling Products business, were down 2% sequentially, but up 11% year-over-year.

Backlog

  • September 30, 2021 backlog, adjusted for the divestiture of the Piling division, increased 5% during the third quarter and is up 10% over last year.

5 | L.B. Foster

Q3 3021 Earnings Presentation November 2, 2021

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

L.B. Foster Company published this content on 02 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2021 12:39:05 UTC.


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Financials (USD)
Sales 2021 528 M - -
Net income 2021 5,66 M - -
Net Debt 2021 - - -
P/E ratio 2021 28,9x
Yield 2021 -
Capitalization 166 M 166 M -
Capi. / Sales 2021 0,31x
Capi. / Sales 2022 0,32x
Nbr of Employees 1 130
Free-Float -
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Number of Analysts 1
Last Close Price 15,34 $
Average target price 21,00 $
Spread / Average Target 36,9%
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Managers and Directors
John Francis Kasel President, Chief Executive Officer & Director
William M. Thalman Chief Financial Officer & Senior Vice President
Lee B. Foster Chairman
Brian H. Kelly Senior VP-Human Resources & Administration
Diane B. Owen Independent Director
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