L.B. Foster (NASDAQ:FSTR) reported higher third-quarter sales and adjusted EBITDA, supported by volume growth in both of its operating segments, while raising its full-year sales and free-cash-flow outlook.
Net sales for the third quarter totaled $168 million, an increase of 21.5% from the prior-year period. Adjusted EBITDA rose 15.1% to $13.1 million. President and CEO John Kasel said the company generated $23.6 million in quarterly operating cash flow and reduced debt, while maintaining a backlog that management said supports visibility through the rest of the year.
“We delivered another strong quarter,” Kasel said, citing broad-based segment growth, cash generation and a healthy backlog of $234.7 million.
Margins Reflect Rail and U.K. Sales Mix
Gross profit increased by $3.4 million from the year-ago quarter, though gross margin declined 200 basis points to 20.5%. CFO Sean Reilly attributed the margin decrease primarily to a larger contribution from lower-margin Rail Distribution and U.K. operations.
Selling, general and administrative expenses rose $1.7 million, or 7.5%, reflecting higher employment-related expenses, including incentive compensation and medical costs. However, SG&A as a percentage of sales fell 190 basis points to 14.1%.
For the first nine months of 2026, sales increased 12.7% to $427.7 million and adjusted EBITDA grew 17.6% to $29.9 million. Year-to-date gross margin was 21.3%, down 30 basis points, as unfavorable rail sales mix more than offset improvements in manufacturing execution within Infrastructure Solutions.
The company ended the quarter with net debt of $21.4 million, down $20.8 million from the end of the second quarter. Reilly said L.B. Foster’s gross leverage ratio improved to 0.6 times from 1.6 times a year earlier. The company also has about $64 million in federal net operating losses available, which management expects will help minimize cash taxes for several years.
Rail Sales Rise as Distribution Demand Strengthens
Sales in the Rail, Technologies and Services segment increased 32.3% to $102.9 million. Rail Products sales rose $24.4 million, or 54.6%, led by customer demand in the Rail Distribution business.
Technology Services and Solutions revenue increased $2.7 million, or 22.7%, because of short-term project work in the company’s U.K. business. These gains were partly offset by a 9% decline in Global Friction Management sales, where certain projects were concentrated in the first half of 2026. On a year-to-date basis, Global Friction Management revenue was up 13.8%.
Rail segment margins declined 320 basis points, reflecting the higher mix of Rail Distribution and U.K. business. Segment backlog declined 9.8%, primarily due to higher quarterly sales volumes, Reilly said.
During the question-and-answer session, Kasel said Global Friction Management is experiencing growth opportunities outside North America, particularly in Western Europe. He said the company was beginning to see the benefits of that expansion in the third quarter and expects it to continue into 2027.
Infrastructure Solutions Gains Led by Precast Concrete
Infrastructure Solutions sales increased 7.6% to approximately $65.1 million. Precast Concrete revenue rose $3.9 million, or 9%, reflecting continued demand in the company’s growth platform. Steel Products sales increased $700,000, or 4.1%, primarily on higher volumes in Protective Coatings.
Infrastructure gross profit increased $900,000 on higher sales volumes, while gross margin edged down to 21.9%. Segment backlog was $108.3 million at quarter-end, up $1.1 million from a year earlier, as demand in Protective Coatings offset a $10 million reduction in Precast Concrete backlog tied to quicker-turn projects.
Kasel said L.B. Foster has seen strong performance in its legacy precast business and in operations acquired through VanHooseCo more than four years ago. He added that data-center-related work represents less than 2% of companywide sales, though Precast Concrete has the company’s greatest exposure to that end market.
Dulworth Acquisition Expands Wastewater Precast Presence
On Oct. 28, L.B. Foster completed its acquisition of Dulworth Enterprises, a Rice, Texas-based producer of residential precast concrete wastewater products and the Aeris aerobic treatment system.
Kasel said the transaction expands the company’s manufacturing capabilities, adds proprietary technology and strengthens its position in the precast wastewater market in a strategic geography. Dulworth is expected to generate roughly $18 million in annual revenue and contribute approximately $6.5 million to $7.5 million of EBITDA, including synergies, after integration activities are completed over an estimated 12 to 18 months.
Management said the expected synergies are primarily cost-related rather than revenue-based. The company’s 2026 guidance assumes no material fourth-quarter contribution from Dulworth because the acquisition closed during a seasonally slower construction period and the company is focused on integration.
Outlook Raised for Sales and Free Cash Flow
L.B. Foster raised its full-year sales outlook to approximately $570 million to $590 million and increased its free-cash-flow forecast to $20 million to $28 million. The company narrowed its adjusted EBITDA outlook to a range of $42 million to $45 million.
Management said rail market conditions remain stable, aided by federal programs supporting customer infrastructure, maintenance and safety initiatives. It also cited favorable Infrastructure Solutions conditions, active bidding activity, healthy project pipelines and continuing customer investment.
“Healthy backlog levels, active project pipelines, and continued customer investment support our confidence in the outlook for the business,” Kasel said.
About L.B. Foster (NASDAQ:FSTR)
L.B. Foster Company (NASDAQ: FSTR) is a Pittsburgh-based manufacturer and supplier of products, technologies and services used in transportation and industrial infrastructure. The company serves customers primarily in the rail, construction and energy markets, providing solutions designed to support the construction, maintenance and operation of critical infrastructure.
In its rail business, L.B. Foster offers rail and track products such as rail joints, fastening systems, track components and related maintenance solutions.
