L.B. Foster — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 net sales increased 21.5% year-over-year to $168.0 million; first nine months sales increased 12.7% to $427.7 million.
• Third quarter gross profit rose 10.8% to $34.4 million; first nine months gross profit increased 10.8% to $91.0 million.
• Third quarter gross profit margin declined 200 basis points to 20.5% (vs. 22.5% in Q3 2025); first nine months margin declined 30 basis points to 21.3%.
• Third quarter operating income grew 21.5% to $10.1 million; first nine months operating income increased 30.1% to $18.3 million.
• Third quarter net income attributable to L.B. Foster Company grew 55.4% to $6.8 million; first nine months net income grew 121.8% to $11.4 million.
• Third quarter Adjusted EBITDA increased 15.1% to $13.1 million; first nine months Adjusted EBITDA rose 17.6% to $29.9 million.
• Third quarter operating cash flow was $23.6 million (down 19.3% from prior year); first nine months operating cash flow was $31.0 million (up 17.5% from prior year).
• Third quarter free cash flow was $20.8 million (down 21.0% from prior year); first nine months free cash flow was $27.1 million (calculated as $31.0M operating cash flow less $3.9M capital expenditures).
• Total debt decreased 51.1% to $28.7 million as of September 30, 2026, down from $58.7 million in the prior year quarter.
• Gross Leverage Ratio improved 1.0x year-over-year to 0.6x.
• Selling and administrative expenses as a percentage of sales declined 190 basis points to 14.1% in Q3 and 60 basis points to 16.6% for the first nine months.

Guidance and Future Outlook:

• Updated 2026 full-year net sales guidance to a range of $570.0 million to $590.0 million.
• Updated 2026 full-year Adjusted EBITDA guidance to a range of $42.0 million to $45.0 million.
• Updated 2026 full-year free cash flow guidance to a range of $20.0 million to $28.0 million.
• Updated 2026 full-year capital spending guidance to approximately 2.0% to 2.2% of sales.
• Management expects no material impact from the Dulworth acquisition on revised guidance and excludes purchase accounting adjustments and transaction costs.
• Management noted narrowing of the Adjusted EBITDA range and widening of the free cash flow range to reflect current business mix and operating conditions.

Business Segments and Product Lines:

• Rail, Technologies, and Services Segment: Sales increased 32.3% to $102.9 million; gross profit increased 13.7% to $20.2 million; segment operating income increased 33.8% to $7.9 million.
  • Rail Products sales grew 54.6% driven by higher volumes.
  • Technology Services and Solutions (TS&S) sales increased 22.7% due to short-term project work in the UK.
  • Global Friction Management sales declined 9.0% due to project timing.
  • New orders, net increased 0.9% to $87.1 million; backlog decreased 9.8% to $126.4 million.
• Infrastructure Solutions Segment: Sales increased 7.6% to $65.1 million; gross profit increased 6.9% to $14.2 million; segment operating income increased 5.4% to $4.4 million.
  • Precast sales grew 9.0% and Steel Products sales grew 4.1%.
  • New orders, net surged 141.6% to $68.7 million; backlog increased 1.0% to $108.3 million.
• New Orders and Backlog: Consolidated new orders, net increased 35.7% to $155.8 million; consolidated backlog decreased 5.1% to $234.7 million.
• Trailing Twelve Month Book-to-Bill Ratios: Consolidated 0.98:1.00; Rail, Technologies, and Services 0.96:1.00; Infrastructure Solutions 1.00:1.00.

Market and Competitive Landscape:

• Management cited healthy customer demand, particularly across Rail Distribution and UK businesses.
• Rail sales growth was driven by higher volumes across all Rail Products businesses.
• Infrastructure growth was driven by volume increases in Precast and Steel Products.
• The company operates in rail and infrastructure markets with locations in North America, South America, Europe, and Asia.

Risks and Challenges:

• Gross margin compression occurred due to business mix shifts toward lower-margin Rail Distribution and UK businesses.
• Selling and administrative expenses increased due to higher employment costs, including variable incentive-based compensation and medical costs.
• Forward-looking statements highlight risks including adverse economic conditions, government funding disruptions, interest rate volatility, project delays, budget shortfalls, environmental regulations, international market risks, labor disputes, cybersecurity risks, and supply chain disruptions.
• Specific risks include the ability to timely integrate acquired businesses (Dulworth) and realize synergies, and the impact of the exit of certain product lines in the Tew Engineering business.

Management Commentary and Tone:

• CEO John Kasel stated the company started the second half of the year with strong momentum, delivering meaningful growth in sales, profitability, and cash generation.
• Management expressed satisfaction with year-to-date sales growth of $48.1 million (12.7%) and Adjusted EBITDA expansion of $4.5 million (17.6%).
• Kasel noted the balance sheet strengthening provides financial flexibility to pursue strategic growth initiatives.
• Management emphasized a continued focus on disciplined execution, cash generation, and integrating the Dulworth acquisition.

Other Key Points:

• On October 28, 2026, the company completed the acquisition of the operating assets of the residential wastewater precast business and the Aeris aerobic treatment systems platform of Dulworth Enterprises Inc. for approximately $52.2 million.
• The company reduced total debt by $19.3 million during the quarter and $30.0 million compared to the prior year quarter, reaching the lowest debt level in over a decade.
• Strategic initiative costs included in the first nine months of 2026 totaled $0.6 million (including Dulworth acquisition costs), compared to $0.3 million in the prior year period.
• Adjusted EBITDA for the first nine months of 2026 excluded $2.3 million of Tew Exit costs and $0.4 million of strategic initiative costs; the prior year period excluded $1.4 million of AMH Exit costs.
• The company will host a conference call on November 4, 2026, at 8:30 AM ET to discuss results.