L.B. Foster Company

Second-quarter net sales were $138.6 million, down 3.5% year over year. Consolidated gross profit was flat, with gross margin improving 80 basis points to 22.3%; gross profit included a $2.1 million charge tied to the TEW product line exit. SG&A was $24.1 million, up $1.7 million or 7.7%, and adjusted EBITDA was $11.7 million, down 4.7% year over year. For the first half, sales rose 7.6% to $259.7 million, gross profit increased $5.5 million, gross margin expanded 60 basis points to 21.8%, and adjusted EBITDA rose 19.6% to $16.8 million. Operating cash flow was $7.4 million year to date, and second-quarter cash generation was $17.9 million. Net debt was $42.2 million, down $35.2 million year over year, and gross leverage fell to 1.0x from 2.2x. Management held guidance and said free cash flow remains targeted at $15 million to $25 million, with capital spending expected at approximately 2.7% of sales in 2026.

John Kasel framed the quarter as another solid period and emphasized strong year-to-date execution, robust backlog, and confidence in the second half. He highlighted demand strength across Rail and Infrastructure, said the company has not seen a material demand impact from broader macro or geopolitical conditions, and noted that federal rail funding and civil construction trends remain supportive. He also pointed to the company’s internal promotions and people-first culture as a key execution strength.

Sean Reilly focused on the financial quality of the quarter: revenue of $138.6 million, gross margin of 22.3%, adjusted EBITDA of $11.7 million, and cash flow of $17.9 million. He said higher SG&A, including $1.1 million of variable incentive compensation in the quarter, pressured EBITDA, but year-to-date profitability and cash generation remained strong. He also underscored balance-sheet improvement, with net debt at $42.2 million, gross leverage at 1.0x, about $71 million in federal NOLs, a leverage target of 1.0x to 1.5x, and $28.7 million remaining under the buyback authorization.

Analysts pressed on how much of the backlog can convert in the second half and how much of the guidance depends on Rail timing versus Infrastructure/Precast demand. Management said at least 80% of backlog should be executed this year and stressed that bidding activity is strong across the board, with Precast, protective coatings, and energy-related work also supporting the outlook. On cash flow, management kept full-year free cash flow guidance at $15 million to $25 million and said most of that will come in the second half, while maintaining CapEx at about 2.7% of sales. They also said the Rockfall monitoring product line is progressing behind the scenes, with two sites operating well and the bigger revenue contribution likely coming in 2027 and beyond.