L.B. Foster Company reported progress in its post-restructuring phase at the 17th Annual Midwest IDEAS Conference, highlighting improved financial metrics and updated guidance for 2024. The Pittsburgh-based infrastructure manufacturer, with 1,200 employees, has focused on portfolio optimization over the past three years, including seven divestitures and product line exits.
Gross margins expanded to 21.4% on a trailing twelve-month basis, up from 16.8% in 2021, reflecting a 460-basis-point improvement. Adjusted EBITDA is guided to $41 million to $46 million for 2024, compared with $19 million in 2021. Year-to-date adjusted EBITDA rose 19.6% to $23.1 million, despite a sequential second-quarter decline of $575,000. Adjusted EBITDA as a share of sales improved to 7.5% from 3.6% in 2021.
Revenue guidance for 2024 is set at $540 million to $580 million, implying flat to 7.4% growth from 2023’s $540 million. Second-quarter sales fell 3.5% sequentially due to timing in the Rail Products division, though year-to-date sales increased 7.6% to $18.3 million year-over-year.
The company has reduced net debt to $42 million from $77 million in Q2 2023, with gross leverage at 1.0x within its target range of 1.0x to 1.5x. Available funding stands at $107.5 million, and second-quarter operating cash flow reached $17.9 million, the highest since 2017. Free cash flow is targeted at $20 million for 2024, with $5 million of incremental capital spending above historical levels.
L.B. Foster has repurchased 9.3% of outstanding shares since February 2023, with $28.7 million remaining under its buyback authorization. Growth capital spending is expected to equal 2.7% of sales in 2024, above the historical 2% to 2.5% range. The company also noted $71 million in federal net operating losses, targeting annual cash tax payments of about $2 million.
In its core Rail Technologies segment, the company holds approximately 42% market share in rail track infrastructure, with a total addressable market exceeding $1 billion. The Global Friction Management and Total Track Monitoring unit targets a $570 million market with an 18% share. The Infrastructure division, focused on precast concrete, holds a 14% share in a $600 million turnkey building market, described as the largest in the business.
