EX-99 2 exh991.txt 3Q 2006 EARNINGS RELEASE PRESS RELEASE -------------------------------------------------------------------------------- L. B. Foster Company 415 Holiday Drive, Pittsburgh, PA 15220 Contact: Stan L. Hasselbusch Phone: (412) 928-3417 FAX: (412) 928-7891 Email: investors@LBFosterCo.com FOR IMMEDIATE RELEASE L. B. FOSTER COMPANY REPORTS CONTINUED STRONG EARNINGS IMPROVEMENT IN THIRD QUARTER PITTSBURGH, PA, October 26, 2006 - L.B. Foster Company (NASDAQ: FSTR), a leading manufacturer, fabricator, and distributor of rail, construction, and tubular products, today reported that its third quarter earnings per diluted share from continuing operations increased to $0.32 from $0.21, a 52% increase, the seventh consecutive quarter the Company has recorded an earnings increase over the prior year quarter. 2006 Third Quarter Results In the third quarter of 2006, L. B. Foster had earnings per diluted share of 34 cents and net income of $3.7 million compared to 22 cents per diluted share and net income of $2.3 million in the third quarter of 2005. The Company reported $0.3 million of income from discontinued operations, which reflects the winding down of our former Geotechnical Division, that was sold in the first quarter of 2006. Diluted earnings per share from continuing operations were 32 cents on earnings of $3.4 million compared to 21 cents on earnings of $2.2 million in 2005. Net sales increased 5% to $95.9 million compared to $90.9 million in the prior year quarter. Gross profit margin was 14.5%, up 260 basis points from the prior year quarter primarily as a result of increased billing margins. Selling and administrative expenses increased $0.9 million or 13% over last year's quarter due primarily to employee related costs and benefit expenses. Third quarter interest expense increased $0.1 million over the prior year due to increased interest rates and increased borrowings. The increase in borrowings was due primarily to an increase in working capital requirements as well as higher than typical capital investments made during the past three quarters. The Company's income tax rate from continuing operations was 32.2% in the third quarter compared to 31.5% in the prior year quarter. "Rail Products continued to deliver strong sales and more importantly, improved gross profit margins. Our concrete tie business results improved over last year due to strong activity at our Spokane and Grand Island facilities. Our precast buildings business also contributed significantly improved margins on moderately increased sales and our Fabricated Products Division continued its improvement over last year's third quarter as well as the first two quarters of this year," remarked Stan Hasselbusch, President and Chief Executive Officer. "We are also pleased to report that our Tucson concrete tie facility has recently ramped up production of concrete ties as it nears the completion of its commissioning period." added Mr. Hasselbusch. 2006 Year-to-Date Results In the first nine months of 2006, L.B. Foster had income from continuing operations of $7.7 million or 72 cents per diluted share compared to $4.4 million or 42 cents per diluted share for the first nine months of 2005. Income from discontinued operations for the first nine months of 2006 was $2.8 million which includes the gain on the sale of our former Geotechnical Division of $3.0 million, reduced by a $0.2 million loss from operations and wind down costs. The discontinued operations income tax provision was favorably affected by the release of a valuation allowance recorded in 2003 related to a capital loss carryforward. Net sales for the first nine months of 2006 increased 12% to $279.3 million compared to $249.3 million in 2005. Gross profit margin was 13.3%, up 190 basis points from the first nine months of 2005, primarily as a result of increased billing margins. Selling and administrative expenses increased $3.5 million or 16% over the same prior year period due primarily to employee related costs and benefit expenses. Interest expense increased $0.6 million over the prior year due to increased interest rates and increased borrowings. The Company's income tax rate from continuing operations was 31.3% compared to 32.5% in the prior year. Cash used by operations was approximately $7.0 million for the first nine months of 2006, due to an expected ramp up in activity in anticipation of a seasonally strong spring/summer period, however third quarter cash generated from operations was $7.3 million. Capital expenditures for the first nine months were $12.8 million as we have substantially completed the construction of our Tucson concrete tie facility. Mr. Hasselbusch concluded, "Overall business activity remains strong and is reflected in our third quarter order bookings. Bookings for the first nine months were $344 million, 24% higher than the same period last year. Backlog at September 30, 2006 was $171 million, 62% higher than last year, which we expect to translate into a strong fourth quarter." L. B. Foster Company will conduct a conference call and webcast to discuss its third quarter operating results on Thursday, October 26, 2006 at 11:00am ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations page. The Company wishes to caution readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements in news releases, and other communications, including oral statements, such as references to future profitability, made from time to time by representatives of the Company. Specific risks and uncertainties that could affect the Company's profitability include, but are not limited to, general economic conditions, adequate funding for infrastructure projects, the potential value of the Dakota Minnesota & Eastern Railroad, delays or problems encountered during construction or implementation at our concrete tie facilities, and the continued availability of existing and new piling and rail products. Matters discussed in such communications are forward-looking statements that involve risks and uncertainties. Sentences containing words such as "anticipates," "expects," or "will," generally should be considered forward-looking statements. More detailed information on these and additional factors which could affect the Company's operating and financial results are described in the Company's Forms 10-K, 10-Q and other reports, filed or to be filed with the Securities and Exchange Commission. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. CONDENSED STATEMENTS OF CONSOLIDATED INCOME L. B. FOSTER COMPANY AND SUBSIDIARIES (In Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------ 2006 2005 2006 2005 ------------------------ ------------------------ (Unaudited) (Unaudited) NET SALES $95,868 $90,915 $279,336 $249,260 COSTS AND EXPENSES: Cost of goods sold 81,978 80,079 242,197 220,952 Selling and administrative expenses 8,245 7,316 24,661 21,194 Interest expense 892 778 2,415 1,775 Other income (322) (478) (1,186) (1,205) -------- -------- --------- --------- 90,793 87,695 268,087 242,716 -------- -------- --------- --------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 5,075 3,220 11,249 6,544 INCOME TAXES 1,635 1,013 3,524 2,125 -------- -------- --------- --------- INCOME FROM CONTINUING OPERATIONS, NET OF TAX 3,440 2,207 7,725 4,419 DISCONTINUED OPERATIONS: INCOME FROM DISCONTINUED OPERATIONS 495 206 3,196 232 INCOME TAXES 237 65 357 77 -------- -------- --------- --------- INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX 258 141 2,839 155 NET INCOME $3,698 $2,348 $10,564 $4,574 ======== ======== ========= ========= BASIC EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.33 $0.22 $0.75 $0.44 FROM DISCONTINUED OPERATIONS 0.02 0.01 0.27 0.02 -------- -------- --------- --------- BASIC EARNINGS PER COMMON SHARE $0.35 $0.23 $1.02 $0.45 ======== ======== ========= ========= DILUTED EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.32 $0.21 $0.72 $0.42 FROM DISCONTINUED OPERATIONS 0.02 0.01 0.26 0.01 -------- -------- --------- --------- DILUTED EARNINGS PER COMMON SHARE $0.34 $0.22 $0.98 $0.44 ======== ======== ========= ========= AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 10,510 10,150 10,360 10,101 ======== ======== ========= ========= AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 10,872 10,534 10,780 10,453 ======== ======== ========= =========

L. B. Foster Company and Subsidiaries Consolidated Balance Sheet (In thousands)

September 30, December 31, 2006 2005 ------------- ----------- ASSETS (Unaudited) CURRENT ASSETS: --------------- Cash and cash items $3,764 $1,596 Accounts and notes receivable: Trade 50,407 44,087 Other 480 1,354 Inventories 80,410 67,044 Current deferred tax assets 1,779 1,779 Other current assets 1,219 703 Prepaid income tax 2,901 582 Current assets of discontinued operations - 3,867 ------------- ----------- Total Current Assets 140,960 121,012 ------------- ----------- OTHER ASSETS: ------------- Property, plant & equipment-net 49,891 38,761 Goodwill 350 350 Other intangibles - net 83 144 Investments 16,429 15,687 Deferred tax assets 1,228 1,183 Other non-current assets 384 177 Assets of discontinued operations - 1,554 ------------- ----------- Total Other Assets 68,365 57,856 ------------- ----------- $209,325 $178,868 ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: -------------------- Current maturities on long-term debt $2,169 $1,759 Short-term borrowings 8,059 5,881 Accounts payable-trade and other 45,643 41,087 Accrued payroll and employee benefits 5,410 5,875 Current deferred tax liabilities 4,845 4,845 Other accrued liabilities 2,002 3,710 Current liabilities of discontinued operations 285 1,760 ------------- ----------- Total Current Liabilities 68,413 64,917 ------------- ----------- LONG-TERM BORROWINGS 30,625 20,848 ------------- ----------- OTHER LONG-TERM DEBT 9,773 8,428 ------------- ----------- DEFERRED TAX LIABILITIES 1,615 1,615 ------------- ----------- OTHER LONG-TERM LIABILITIES 4,134 3,071 ------------- ----------- STOCKHOLDERS' EQUITY: --------------------- Class A Common stock 105 102 Paid-in Capital 39,698 35,598 Retained Earnings 55,877 45,313 Treasury Stock - (126) Accumulated Other Comprehensive Loss (915) (898) ------------- ----------- Total Stockholders' Equity 94,765 79,989 ------------- ----------- $209,325 $178,868 ============= ===========