L.B. Foster (FSTR) Completes Sale of Concrete Rail Tie Business
L.B. Foster Company FSTR, a leading global technology solutions provider for the rail and infrastructure markets, has announced the completion of the sale of substantially all the assets of its prestressed concrete railroad tie business in Spokane, WA to voestalpine Railway Systems Nortrak, LLC. The transaction is expected to generate around $3 million in cash proceeds, subject to customary working capital adjustments. The divested business was part of the company’s Rail, Technologies, and Services segment.
The sale of the concrete rail tie operations was executed through L.B. Foster's subsidiary, CXT, Incorporated. The divestment includes all owned inventory associated with the business and related fixed assets, while the company retains pre-closing accounts receivable and liabilities. This strategic move aligns with L.B. Foster's strategic transformation initiatives.
Although the concrete rail tie business generated revenues of roughly $9 million over the trailing 12 months ended Jun 30, 2023, the divestment will not materially impact L.B. Foster's financial guidance for the fiscal year ending Dec 31, 2023. The company continues to project net sales in the band of $520-$550 million, with adjusted EBITDA expected between $27 million and $31 million.
By shedding this business, L.B. Foster can streamline its operations and further concentrate on its key growth areas within the Rail, Technologies, and Services segment. This strategic realignment allows the company to focus on its core competencies and pursue opportunities that offer higher growth potential.
The move demonstrates L.B. Foster’s commitment to optimizing its portfolio and maximizing shareholder value. With a minimal impact on the company's financial guidance, this strategic move positions FSTR for long-term success in the rail and infrastructure markets.
FSTR’s shares have gained 9.7% in the past year against the 46.9% rise of its industry. The Zacks Consensus Estimate for the company’s current-year earnings has been stable in the past 60 days. The consensus estimate for current-year earnings is currently pegged at 53 cents, suggesting year-over-year growth of around 112.5%.
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The company benefited from its strategic transformation in the first quarter of 2023, reflected by a double-digit organic growth in revenues and expanded operating margins. Order rates and backlog remain robust across most of its business, underscoring the strength of its major end markets.
L.B. Foster also completed the sale of Chemtec Precision Measurement Products and Systems business during the first quarter, generating $5.3 million in proceeds. FSTR reduced its net debt by $11.5 million using these proceeds along with $6.2 million in free cash flow in the quarter. It remains focused on lowering debt and improving leverage metrics.
L.B. Foster Company Price and Consensus
L.B. Foster Company price-consensus-chart | L.B. Foster Company Quote
Zacks Rank & Key Picks
FSTR currently has a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth a look in the basic materials space include PPG Industries, Inc. PPG, Koppers Holdings Inc. KOP and Linde plc LIN.
PPG Industries currently carries a Zacks Rank #1. The Zacks Consensus Estimate for PPG's current-year earnings has been stable over the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG shares have gained around 23% in a year.
The Zacks Consensus Estimate for Koppers’ current-year earnings has been stable over the past 60 days. KOP currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for current-year earnings for KOP is currently pegged at $4.40, indicating year-over-year growth of 6.3%. Koppers’ shares have rallied roughly 52% in the past year.
Linde currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 0.7% upward in the past 60 days.
Linde beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN shares have risen roughly 34% in the past year.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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