Oct. 23, 2009 (PR Newswire) --

PITTSBURGH, Oct. 23 /PRNewswire-FirstCall/ -- L.B. Foster Company (Nasdaq: FSTR), a leading manufacturer, fabricator, and distributor of products and services for rail, construction, energy and utility markets, today reported that third quarter 2009 net sales decreased 36.5% to $92.4 million compared to $145.6 million in the prior year quarter. Gross profit margin was 19.2%, an increase of 360 basis points from the prior year quarter primarily as a result of a favorable LIFO credit partially offset by negative variances caused by reductions in inventory values, increased unfavorable manufacturing variances and increased charges for slow moving and obsolete inventory.

2009 Third Quarter Results

In the third quarter of 2009, L.B. Foster had net income of $6.1 million or $0.60 per diluted share compared to net income of $8.1 million or $0.76 per diluted share in the third quarter of 2008.

Included in third quarter 2009 results was a pretax gain on the sale of marketable securities of $1.2 million ($0.07 per diluted share), $1.0 million of charges ($0.06 per diluted share) related to slow moving inventory and a $0.2 million charge ($0.01 per diluted share) related to a reduction in salaried workforce.

Selling and administrative expenses decreased $1.0 million or 10.2% from last year's quarter due primarily to lower incentive compensation expense as well as decreased bad debt and travel and entertainment expenses. Third quarter interest expense was $0.3 million, a 34.4% decrease from the prior year quarter due principally to decreased borrowings and, to a lesser extent, lower interest rates. The Company's income tax rate was 37.6% in the third quarter compared to 35.9% in the prior year quarter.

"All of our segments posted significant declines in net sales for the third quarter. Tubular sales were down 69.1%, Rail sales declined 37.2% and Construction Products sales declined by 31.1%. While we have won several significant orders this quarter, business activity is inconsistent in our Rail and Construction businesses and weak in our Tubular divisions. Our sales force has done a good job finding and winning available business in a very competitive environment. Our manufacturing and yard operations continue to seek and implement cost reduction opportunities, but certain facilities cannot cover their fixed costs at these low volumes. Accordingly, we had further reductions in plant personnel and we implemented a reduction in our salaried workforce as well," stated Stan Hasselbusch, President and Chief Executive Officer.

Mr. Hasselbusch also commented, "Bookings for the quarter were $107.5 million compared to $115.8 million last year, a 7.2% decline while year-to-date bookings were down 23.4%. Backlog was $155.5 million, an increase of 10.7% over June 2009, but 13.0% lower than last year, an indication of continued weakness."

Mr. Hasselbusch added, "We continue to see opportunities generated from the Federal stimulus legislation primarily in our transit and precast concrete building businesses and expect further increases in activity as funding progresses, but this activity will not compensate for the shortfalls created by the current economic downturn."

2009 Nine Month Results

For the nine months ended September 30, 2009, L.B. Foster reported net income of $11.8 million or $1.15 per diluted share compared to net income of $22.1 million or $2.01 per diluted share in 2008. In addition to the 2009 third quarter adjustments described above, we also recorded warranty charges of $2.7 million ($0.17 per diluted share) and $2.6 million ($0.16 per diluted share) of unfavorable gross profit adjustments including a sales reversal and inventory write-downs related to our concrete tie business during the first half of 2009. The 2008 results included a pretax gain related to additional proceeds from the October 2007 sale of the Company's investment in the DM&E Railroad of $2.0 million, as well as a $1.5 million pretax gain on the sale and lease-back of our threaded products facility in Houston, Texas. Excluding the current and prior year gains noted above, 2009 earnings per diluted share was $1.08 compared to $1.82 last year.

Net sales for the first nine months of 2009 decreased 23.0% to $283.9 million compared to $368.8 million in 2008.