Shares of L.B. Foster Co. (FSTR, Financial), a transportation and energy infrastructure products and service provider, have risen from $16.98 a share to $21.15 a share, an increase of over 24%, since November 1. The company’s initial rally to start the month came as third-quarter 2018 earnings were released.
The company posted net income of $5 million with profits of 47 cents a share. The manufacturer reported revenue of $167.1 million. Prior to the earnings release, the company’s shares had slumped, losing over 37% of value since the start of 2018.
Gross profits rose 12.3% year-over-year to $29.6 million.
New orders are rising, up 27.8% from the same period a year prior, as consumers flock to the company’s products for their construction needs. L.B. Foster provides industrial solutions and will be a beneficiary of infrastructure products. The company’s construction products, which offers plumbing, concrete, bridge and other products, had sales increase 6.2% compared to the same period a year prior.
Rail products and services experienced a 36.1% increase in sales, as the tubular and energy services products had a sales increase of 35.5% year-over-year.
Backlog data shows that the company’s sales are rising and should remain stable in the fourth quarter of the year. There is a $251.6 million backlog as of Sept. 30, up 32.7% from the same period a year prior. Construction backlogs rose 57.1%, or $42.7 million.
Improvement in operating performance remained impressive, with operating cash flow reaching $22.4 million year-to-date. Working capital balances are lower compared to last year, and debt has been reduced to $76.5 million. Debt has decreased by 41.4% in the first nine months of the year.
Administrative and selling expenses rose $5.5 million year-to-date, or 9.1% compared to the same period a year prior. Personnel-related expenses are to blame for the rise in overhead, and the Union Pacific Railroad (UPRR) matter cost the company $3.0 million. Litigation for UPRR is around $4.5 million in 2018. UPRR filed a lawsuit against L.B. Foster over faulty railroad ties, which the company started to supply in accordance with a 2012 agreement.
Momentum from new orders continues to push the company’s revenue higher. The company suggests that expenditures in both civil construction and transit rail infrastructure drove a significant portion of the company’s increase. Capital spending is expected to increase, as the company views next year as offering attractive growth opportunities.
