L.B. Foster’s third quarter results were met with a negative market reaction as the company’s revenue and profit both came in below Wall Street’s expectations. Management attributed the flat sales largely to timing-related deferrals in its Rail segment, with CEO John Kasel pointing to “continued planned downsizing of our U.K. business and timing of rail distribution sales.” While Infrastructure sales grew, Rail revenues declined, and higher production costs weighed on profitability. The company did highlight strong operating cash flow and an 18% increase in backlog, but overall, management acknowledged that some anticipated revenue was pushed into future periods.
Is now the time to buy FSTR? Find out in our full research report (it’s free for active Edge members).
L.B. Foster (FSTR) Q3 CY2025 Highlights:
- Revenue: $138.3 million vs analyst estimates of $154.4 million (flat year on year, 10.4% miss)
- EPS (GAAP): $0.40 vs analyst expectations of $0.62 (35% miss)
- Adjusted EBITDA: $11.36 million vs analyst estimates of $14.55 million (8.2% margin, 21.9% miss)
- The company dropped its revenue guidance for the full year to $540 million at the midpoint from $545 million, a 0.9% decrease
- EBITDA guidance for the full year is $41 million at the midpoint, in line with analyst expectations
- Operating Margin: 6%, in line with the same quarter last year
- Backlog: $247.4 million at quarter end, up 18.4% year on year
- Market Capitalization: $281.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From L.B. Foster’s Q3 Earnings Call
- Julio Romero (Sidoti & Company, LLC) asked about the company’s ability to meet fourth quarter sales and EBITDA guidance given the ongoing government shutdown. CEO John Kasel stated that funding was “flowing” and backlog was sufficient to deliver expected results, but acknowledged risks if disruptions persist.
- Julio Romero (Sidoti & Company, LLC) inquired about the sustainability of total track monitoring sales growth. Kasel credited strong customer adoption of new monitoring products and indicated confidence in continued demand for these solutions.
- Liam Burke (B. Riley Securities, Inc.) questioned the impact of product mix and U.K. operations on profit margins within Rail. CFO William Thalman explained that while friction management provided some margin lift, overall profitability was offset by weakness in the U.K. business.
- Liam Burke (B. Riley Securities, Inc.) also probed the outlook for precast acquisitions. Kasel confirmed active pursuit of tuck-in opportunities, particularly in the southern U.S., but emphasized a current focus on ramping up organic volumes in new facilities.
- Unknown Analyst (GAMCO) pressed for details on the rationale behind lowering full-year guidance. Kasel attributed the change to realistic assessments of delivery capacity, rather than a lack of demand, and said any undelivered backlog will likely benefit early 2026.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the conversion of backlog into revenue, especially in the Rail segment, (2) the pace of margin recovery as cost controls and improved mix take hold, and (3) progress in ramping up new precast and steel facilities. Additionally, sustained strength in rail monitoring and safety technologies, as well as the impact of government infrastructure funding, will be important performance indicators.
L.B. Foster currently trades at $27.10, down from $27.52 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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