L.B. Foster (NASDAQ:FSTR) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.
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Summary
L.B. Foster reported robust Q1 2026 financial performance with a 23.9% increase in net sales, primarily driven by a 38.4% growth in the rail segment.
The company achieved a significant improvement in profitability, with EBITDA up 183% and gross margins improving by 60 basis points to 21.2%.
Strategic focus remains on organic growth within the precast concrete business, with capital investments targeted to support this area.
Despite a seasonal increase in total debt by $16.9 million, the company reduced its overall debt by $22.8 million compared to last year, improving its leverage ratio to 1.2 times.
Management reaffirmed its full-year financial guidance, expressing optimism for continued growth, supported by a strong order intake in April and a robust bidding environment.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the Q1 2026 LB Foster Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker’s presentation, there will be a question and answer sess. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised to withdraw your question. Please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Lisa Durante, Director of Financial Reporting and Investor Relations. Please go ahead.
Lisa Durante (Director of Financial Reporting and Investor Relations)
Thank you operator. Good morning everyone and welcome to L.B. Foster’s first quarter of 2026 earnings call. My name is Lisa Durante, the company’s Director of Financial Reporting and Investor Relations. Our President and CEO Jon Castle and our Chief Financial Officer Bill Tallman will be presenting our first quarter operating results, market outlook and business developments this morning. We’ll start the call with John providing his perspective on the company’s first quarter performance. Bill will then review the company’s first quarter financial results. John will provide perspective on market developments and company outlook in his closing comments. We will then open up the session for questions. Today’s slide presentation along with our earnings release and financial disclosures were posted on our website this morning and can be accessed on our Investor Relations page at lbfoster.com our comments this morning will follow the slides in the earnings presentation. Some statements we are making are forward looking and represent our current view of our markets and business today. These forward looking statements reflect our opinions only as of the date of this presentation and we undertake no obligation to revise or publicly release the results of any revisions to these statements in light of new information, except as required by securities laws. For more detailed risks, uncertainties and assumptions relating to our forward looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non-GAAP financial metrics and encourage you to carefully read our disclosures and reconciliation tables provided within today’s earnings release and presentation as you consider these metrics. So with that, let me turn the call over to John.
Jon Castle (President and CEO)
Thanks Lisa and hello everybody. Thanks for joining us today for our first quarter earnings call. I’ll begin with slide 5 covering the key drivers for our results of the quarter. As you can see from earnings release, we carry positive momentum generated at the end of last year into the first quarter, delivering strong results across the board. Robust sales growth in Q1 was as expected of 23.9% over last year. The growth was highest in the rail group which was up 38.4% over last year with all business units delivering significant improvements. Sales for infrastructure segment were also up 5.9% driven by continuing demand on our precast concrete business. The strong sales growth translated into significant improvement in profitability, with EBITDA up 183% over last year. Improved profitability was realized within our margins with gross profit up 27.5% and gross margins improving 60 basis points to 21.2%. We also continue to leverage our operating structure with SG&A as a percent of sales declining 240 basis points compared to last year. Our normal working capital cycle increased total debt $16.9 million during the quarter as we prepared to support our customers construction season. However, disciplined capital allocation approach reduced total debt $22.8 million compared to last year, coupled with significant improvement in profitability during the quarter. Our gross leverage was cut in half from 2.5 times last year to 1.2 times at quarter end. So in summary, we’re really pleased with the strong start to the year and we remain optimistic about our prospects for continued progress in 2026. I’ll cover the market outlook and our financial guidance for the year after Bill runs through the financial details for the quarter. Over to you Bill.
Bill Tallman (Chief Financial Officer)
Thanks John and good morning everyone. I’ll begin my comments on Slide 7 covering the consolidated results for the first quarter. Reconciliations for non GAAP information and other financial details are included in the appendix of the presentation. Net sales for the quarter were $121.1 million, up 23.9% over last year, primarily due to the strong growth in the rail segment. As a reminder, last year sales in rail were weaker than normal due to a pause in government funding programs that delayed customer project work. As John mentioned, the consolidated gross profit was up 27.5% in the quarter, with gross margins improving 60 basis points to 21.2%. Both segments realized double digit increases in gross profit in the quarter, highlighting the broad improvement realized in our results. I’ll provide more color on segment sales and margins later in the presentation. SG&A expenses totaling $23 million were up $2.1 million or 9.9% compared to last year. The primary driver was higher employment costs, including a $1.2 million increase in incentive compensation expense with the improved results in Q1 compared to last year. This year’s incentive expense also includes $0.7 million in accelerated stock compensation expense associated with annual incentive plan grants awarded to retirement eligible employees. Despite the higher expenses year over year, The SG&A percent of sales improved 240 basis points to 19%. EBITDA was $5.2 million, up 183% versus last year driven by the sales growth and improved gross profit. First quarter cash flow improved over last year with operating cash flow favorable 15.7 million million on improved profitability and lower working capital needs. And lastly, consolidated orders and backlog were both lower compared to last year, 4.7% and 11.7% respectively. I’ll cover segment specific drivers later in the presentation. The financial profile of Our results on slide 8 highlights the seasonality in the business over the last three years. We’re entering the construction season for our customers, which typically translates to higher sales and profitability. During our second quarter third quarters last year, First quarter sales were unusually low due to a pause in government funding impacting rail demand early in the year. These delays were resolved throughout 2025 resulting in an unusually strong fourth quarter last year. So while 2025 looks relatively normal compared to the averages, the quarterly splits last year were far from normal. This year’s first quarter results represent a typical level of demand and we expect the phasing of business to follow a more normal pattern in 2026. I’ll cover the segment specific performance on the next couple of slides starting with rail on slide 9, first quarter revenues were 74.8 million, up 38.4% compared to last year’s soft start primarily in rail products. The improvement was strongest for Rail products with sales up 40.8% due to higher demand for rail distribution and transit products. Global Friction Management sales were up 39.5% as this growth platform continues to perform well. Technology, services and solutions sales were also up 29.1% due to short term project work. In our UK business, rail margins of 21.6% were down 70 basis points driven primarily by unfavorable sales mix with the higher rail distribution volumes this year. Turning to rail orders and backlog, Q1 orders were down 3.2% due to lower orders for Friction Management after a very strong level attained last year. Rail product and TS and S orders were relatively flat compared to last year and the rail backlog was up 11.3% due to a large multi year order secured in our UK business late last year. Turning to Infrastructure Solutions On Slide 10, net sales increased $2.6 million or 5.9%. The improvement was realized in precast …
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