L.B. Foster Company (NASDAQ:FSTR) reported a fourth-quarter FY23 net sales decline of 1.7% to $134.9 million, beating the consensus of $129.4 million.

Net sales increased 7.7% organically and decreased 9.4% due to divestitures.

Rail segment’s revenue fell 10.9% Y/Y to $69.3 million owing to the divestiture of the prestressed concrete railroad tie business. Infrastructure segment’s revenue rose 10.3% Y/Y to $65.6 million, led by both Precast Concrete Products and Steel Products business units. 

The company’s new orders totaled $105.5 million in the quarter, down 23.4% Y/Y, while the backlog totaled $213.8 million (-21.5% Y/Y, partly due to divestitures and a discontinued product line).

Gross margins expanded 200 basis points Y/Y to 21.5% in the quarter. Adjusted EBITDA of $6.1 million, down $1.4 million Y/Y, due to higher variable incentive costs that will reset moving into 2024. 

EPS loss of $(0.04) missed the consensus for EPS of $0.01.

Operating cash flow stood at $22.1 million in the quarter, and net debt stood at $52.7 million as of December 31, 2023.

Outlook: For FY24, L.B. Foster expects net sales of $525 million-$560 million vs. consensus of $572.12 million, adjusted EBITDA Of $34 million-$39 million, and free cash flow of $12.0 million-$18.0 million.

John Kasel, President and Chief Executive Officer, said, “We continue to monitor the operating environment for our UK business which remains challenging, but is showing signs of bottoming. We completed a restructuring program in the UK in the fourth quarter and also reserved the remaining $1.0 million receivable balance owed from a UK customer that filed for administrative protection.” 

“Despite these isolated headwinds, we’re confident that our strategic transformation remains on track and is gaining momentum as reflected in our 2024 financial guidance and our 2025 goals of approximately $600 million in sales and $50 million in EBITDA.”

Price Action: FSTR shares are trading lower by 5.65% at $22.89 on the last check Tuesday.