L.B. Foster Q1 Earnings Call Highlights

Key Points

• Sales rose 23.9% year‑over‑year, led by Rail where revenue jumped 38.4% while Infrastructure grew 5.9% driven by Precast Concrete.
• Profitability and the balance sheet improved — gross profit was up 27.5%, EBITDA increased 183% to $5.2M, net debt fell $24.2M and gross leverage fell from 2.5x to 1.2x.
• Orders and backlog declined year‑over‑year (backlog -11.7%, Infrastructure backlog down $38M partly due to a prior project cancellation), but April order intake reportedly added about 15% to backlog and the company reaffirmed full‑year guidance.

L.B. Foster NASDAQ: FSTR reported a strong start to fiscal 2026, with first-quarter results reflecting what management described as a return to more normal demand conditions in rail and continued momentum in its precast concrete growth platform. Executives highlighted broad-based sales growth, sharply higher EBITDA, and improved leverage, while noting that orders and backlog declined year over year largely due to infrastructure-related comparisons and a previously disclosed project cancellation.

Strong first-quarter sales growth led by Rail segment

President and CEO John Kasel said the company “carried positive momentum generated at the end of last year into the first quarter,” pointing to a 23.9% year-over-year increase in sales. Growth was most pronounced in the Rail segment, where sales rose 38.4% and management said all business units improved. The Infrastructure segment posted 5.9% sales growth, driven primarily by demand in Precast Concrete.

CFO William Thalman reported consolidated net sales of $121.1 million. He reiterated that year-ago rail sales were “weaker than normal due to a pause in government funding programs that delayed customer project work,” creating an easier comparison as those delays resolved over 2025.

Profitability improved; leverage reduced

Thalman said first-quarter gross profit rose 27.5%, with gross margin improving 60 basis points to 21.2%. He noted that both segments delivered double-digit gross profit growth, which he said underscored “the broad improvement realized in our results.”

EBITDA was $5.2 million, up 183% from the prior year quarter, driven by higher sales and improved gross profit. Kasel highlighted operating leverage as selling, general and administrative expenses declined as a percentage of sales by 240 basis points.

SG&A totaled $23.0 million, up $2.1 million, which Thalman attributed mainly to higher employment costs. He cited a $1.2 million increase in incentive compensation expense, as well as $0.7 million of “accelerated stock compensation expense associated with annual incentive plan grants awarded to retirement-eligible employees.” Even with the increase, SG&A improved to 19% of sales due to higher revenue.

On the balance sheet, management emphasized improved leverage. Kasel said gross leverage was “cut in half from 2.5 times last year to 1.2 times at quarter end.” Thalman reported net debt of $55.7 million, down $24.2 million from the prior year, attributing the improvement to better profitability and lower working capital levels. He added that the company expects seasonal working capital needs to increase debt in the second quarter as it supports customers’ construction season, but said leverage should remain within the company’s targeted range.

Segment details: Rail growth, Infrastructure mix and margin gains

In the Rail segment, Thalman reported first-quarter revenue of $74.8 million, up 38.4% year over year. Rail Products sales increased 40.8% on “higher demand for rail distribution and transit products.” Global Friction Management sales rose 39.5%, which management characterized as continued strong performance in a key growth platform. Technology Services and Solutions sales increased 29.1%, driven by short-term project work in the U.K.

Rail segment margin was 21.6%, down 70 basis points. Thalman attributed the decline primarily to “unfavorable sales mix with the higher rail distribution volumes this year.”

Infrastructure Solutions sales rose $2.6 million, or 5.9%, with Precast Concrete up 17.2%. Steel product sales declined $2.3 million, which Thalman said was mainly due to lower bridge forms volumes. Infrastructure gross margin improved 200 basis points to 20.6%, supported by favorable mix and improved manufacturing execution in Precast Concrete.

Thalman also flagged freight-related cost pressure: “one cost driver we’re starting to see elevate is fuel charges within our freight costs.” He said it was not a significant impact in the first quarter but was something the company was working to mitigate beginning in the second quarter.

Orders and backlog declined year over year; management points to April order strength

Thalman said consolidated orders and backlog were lower year over year, down 4.7% and 11.7%, respectively. He described orders as “choppy” due to the project-based nature of the business, noting that most orders are fulfilled within a year and only about 10% of backlog extends beyond a year.

By segment:

• Rail orders declined 3.2%, driven by lower Friction Management orders after what Thalman described as a very strong level last year; Rail Products and TS&S orders were “relatively flat.” Rail backlog increased 11.3% due to a large multi-year U.K. order secured late last year.
• Infrastructure orders declined $4.4 million due to lower pipeline coatings intake after a strong year-ago quarter, partially offset by a 5.5% increase in Precast Concrete orders.

Infrastructure backlog totaled $107.4 million, down $38 million year over year. Thalman said about $30 million of the decline was in steel products, including $19 million tied to the previously announced Summit pipeline coatings order cancellation in the third quarter of last year. He added that Precast Concrete backlog was down $8 million due to reduced open orders for CXT Buildings.

In closing remarks later in the call, Kasel said the company saw a rebound in order activity after quarter end, stating that April order intake “added to our backlog” by about 15% across the company.

Outlook: normalizing rail demand, continued precast growth; guidance reaffirmed

Kasel said federal funding programs supporting rail repair and maintenance remain active with “no significant disruptions evident as of today,” which he said should benefit Rail Products. He also outlined growth priorities in Friction Management, including domestic market penetration and expansion into Western Europe. Responding to an analyst question, Kasel said the company has been working for years on European adoption and is pursuing acceptance through Germany, including work with a large German transit authority. He said management was looking for “continued interest as well as actual orders and sales happening this year, end of this year as well as going to next year,” while acknowledging adoption is slower due to brand recognition being primarily in North America.

In Infrastructure, Kasel said civil construction activity remains robust and is helping offset lower CXT Buildings backlog following a record 2025. He also cited increasing demand for the Envirokeeper water management solution and said the company is making capital investments to support growth. In steel products, he said market conditions were improving with a recovery in oil and gas investment, and while Protective Coatings bookings were softer, bidding activity remained robust and management expected the energy and pipeline recovery to support backlog improvement.

Kasel also said the “volatile geopolitical environment has not had a significant impact to date” on end markets or demand.

On guidance, Kasel said the strong first quarter allowed the company to reaffirm its full-year financial outlook. He pointed to trailing twelve-month metrics of $563.4 million in sales and $42.4 million in adjusted EBITDA, which he said were “already at or near the midpoints” of the company’s 2026 guidance range, adding that the company would revisit its outlook after the second quarter.

About L.B. Foster NASDAQ: FSTR

L.B. Foster Company is a diversified infrastructure solutions provider offering products and services to the transportation, energy, and construction markets. Founded in 1902 and headquartered in Pittsburgh, Pennsylvania, the company has built a reputation for delivering specialty materials and engineering solutions that support critical infrastructure projects across various industries.

The company's operations are organized into three primary segments: Rail Products & Services, Construction Products, and Tubular & Energy Products.

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