L.B. Foster (FSTR) to Discontinue Bridge Grid Deck Product Line
L.B. Foster Company FSTR has decided to discontinue the manufacturing and commercial operations of its fabricated bridge grid deck product line in Bedford, PA. This move comes in response to challenging market conditions and a dim outlook for the bridge grid deck industry, as customers are adopting newer technologies that replace the grid deck solution. As a result of this decision, the company will also separate specific union and non-union employees in Bedford and Greentree, PA.
The discontinuation of the bridge grid deck operations is expected to occur in the fourth quarter of 2023. In the past 12 months, the product line represents approximately $9 million in sales. The company has chosen to focus on its expanding bridge forms product line, which will continue manufacturing at the Bedford facility.
The company stated that this decision aligns with its transformation objectives and aims to enhance the overall health and prospects of its bridge business located in Bedford. The bridge operation has been a part of the Bedford community for over half a century, and while the grid decking solution has a legacy in the market, the company's focus now lies in the growth of its bridge forms product line in Bedford.
Financially, discontinuing the bridge grid decking product line is not expected to affect the company's 2023 financial guidance. The company anticipates net sales for the year to range between $520 million and $550 million, with adjusted EBITDA expected to fall within the $28 million to $32 million range. The estimated costs of exiting the grid deck product line are projected to range between approximately $2.6 million and $2.9 million, encompassing both cash and non-cash exit expenses.
Shares of L.B. Foster have gained 38.4% in the past year against a 43.7% rise of the industry.
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FSTR currently carries a Zacks Rank #2 (Buy).
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