L.B. Foster Reports First Quarter Operating Results

First Quarter Highlights

• Sales of $126.3 million, a decrease of 8.4% from the prior year quarter
• Gross profit margin was 19.0% compared to 22.2% in the prior year quarter
• EBITDA¹ was $4.0 million compared to $12.0 million in the prior year quarter
• Announced further cost reduction initiatives to drive profitability and cash flow         

Consolidated Results

First quarter net sales of $126.3 million decreased by $11.6 million, or 8.4%, compared to the prior year quarter due to a 17.2% decrease in Rail Products and Services ("Rail") segment sales and a 7.0% decline in Construction segment sales, partially offset by a 16.2% increase in Tubular and Energy Services ("Tubular") segment sales. 

Gross profit margin of 19.0% compared to 22.2% in the prior year quarter, a decrease of 326 basis points.  The decrease was driven by lower margins across each of the segments with the most significant reduction coming from the Tubular segment. 

First quarter net loss of $2.8 million, or $(0.28) per diluted share, compared to net income of $4.3 million, or $0.41 per diluted share, in the prior year quarter.   

First quarter bookings were $118.0 million, a 27.8% decrease from the prior year quarter, due to 40.8%, 13.2% and 9.3% declines in Rail, Tubular and Construction segment orders, respectively.

Cash flow from operating activities for the first quarter of 2016 used $5.1 million of cash compared to $7.4 million of cash used in the first quarter of 2015. 

Robert P. Bauer, L.B. Foster Company's President and Chief Executive Officer, commented, "The weakness that we experienced in the first quarter was driven by the ongoing challenges we face in many of the markets we serve, in addition to the headwinds driven by the current commodity cycle.  While the first quarter is traditionally our seasonally weakest quarter, the year got off to a particularly slow start, driven by reduced spending in the North American freight rail market and softer than expected spend on highway and other civil construction projects.  Profitability in the quarter was impacted by de-leverage on lower volume which also put pressure on gross margins."

Mr. Bauer continued, "As part of our plan to achieve our targets, today we announced a new restructuring initiative aimed at improving profitability.  While we have taken steps since the beginning of last year to rationalize our expense structure to adjust to lower volumes, ongoing market conditions have caused us to further scrutinize our expense structure throughout the organization to drive greater efficiencies.  We plan to defer expenses that are not related to either cost reductions or securing new business.  We are confident that these additional steps will better position L.B. Foster to deliver solid results when demand improves."

Business Segment Results
($ in thousands)

Rail Products and Services Segment
Rail sales decreased 17.2% in the quarter due to lower sales across all significant rail divisions, with the exception of transit products, as a result of reduced volumes.  Reduced sales to Union Pacific Railroad accounted for more than half of the decline.  Gross profit margin was negatively impacted by reduced sales volumes, partially offset by manufacturing efficiencies and cost reductions.

Construction Products Segment
Construction sales decreased 7.0% in the quarter due to lower sales across our product lines.  Gross profit margin was negatively impacted by a decline in margins for precast concrete products, partially offset by improved margins in fabricated bridge products.

Tubular and Energy Services Segment
Tubular sales improved by 16.2% in the quarter due to sales from coated products, precision measurement systems and sales from test and inspection services, which was acquired in March 2015.  Tubular gross profit margins declined principally due to lower margins in our test and inspection services business, partially offset by improved margins in coated products.

Earnings Conference Call and Audio Webcast

L.B. Foster will host a conference call to discuss fiscal first quarter 2016 operating results on Tuesday, May 3, 2016 at 5:00 p.m. Eastern Time.  Those wishing to participate via the webcast should access the call through L.B. Foster's website at www.lbfoster.com.  Those wishing to participate via the telephone may dial in at (877) 793-4346 and provide the access code: 96971797.  Presentation slides will be available on the L.B. Foster Company investor relations website.  The conference call replay will be available via webcast through L.B. Foster's Investor Relations website.

About L.B. Foster Company

L.B. Foster is a leading manufacturer, fabricator, and distributor of products and services for the rail, construction, energy and utility markets with locations in North America and Europe.  For more information, please visit www.lbfoster.com.

This release may contain forward-looking statements that involve risks and uncertainties. Statements that do not relate strictly to historical or current facts are forward-looking. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. Actual results could differ materially from the results anticipated in any forward-looking statement.  Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. 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 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, an economic slowdown or a continuation of the current economic slowdown in the markets we serve; the risk of doing business in international markets; our ability to effectuate our strategy including evaluating potential opportunities such as strategic acquisitions, joint ventures, and other initiatives, and our ability to effectively integrate new businesses and realize anticipated benefits; costs of and impacts associated with shareholder activism; a decrease in freight or passenger rail traffic; the timeliness and availability of material from our major suppliers; labor disputes; the effective 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; the Company's ability to manage its working capital requirements and indebtedness; domestic and international taxes; foreign currency fluctuations; inflation; domestic and foreign government regulations; continued and sustained declines in energy prices; a lack of state or federal funding for new infrastructure projects; increased regulation including conflict minerals; an increase in manufacturing or material costs; the ultimate number of concrete ties that will have to be replaced pursuant to the previously disclosed product warranty claim of the Union Pacific Railroad ("UPRR") and an overall resolution of the related contract claims as well as the possible costs associated with the outcome of the lawsuit filed by the UPRR; risks inherent in litigation and those matters set forth in Item 8, Footnote 19, "Commitments and Contingent Liabilities" and in Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2015 as updated by any subsequent Form 10-Qs. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces.  The forward-looking statements contained in this press release are made only as of the date hereof, and the Company assumes no obligation and does not intend to update or revise these statements, whether as a result of new information, future events or otherwise, except as required by securities laws.

¹ See non-GAAP reconciliation at the end of this press release.

Investor Relations:
David Russo
(412) 928-3417
investors@lbfoster.com

L.B. Foster Company
415 Holiday Drive
Pittsburgh, PA  15220