L.B. Foster Company (FSTR) Sidoti March Small-Cap Virtual Conference summary

Company Overview, Strategic Transformation, and Segment Strategy

• Operations are focused in North America, with two main segments: Rail, Technologies & Services and Infrastructure Solutions, emphasizing technology-driven rail solutions and proprietary precast products.

• Completed a multi-year strategic transformation, divesting lower-margin businesses and acquiring higher-margin rail technologies and precast concrete companies to enhance profitability and growth.

• Portfolio restructuring is largely complete, with future M&A targeted as tuck-ins for infrastructure and a focus on organic growth.

• Rail segment includes traditional and technology-driven offerings like Global Friction Management and Total Track Monitoring, while Infrastructure focuses on precast concrete and steel products for water management and civil construction.

• Restructuring and targeted investments have positioned the company for sustainable growth, with a capital-light model and disciplined capital allocation.

Market Position, Growth Opportunities, and Outlook

• Holds leading market shares: 42% in rail products ($450M TAM) and 44% in CXT buildings ($200M TAM), with technology and innovation in rail driving 15% growth versus 5% market growth.

• Precast concrete water management targets a $14B fragmented market, with expansion prioritized in the southern and eastern U.S.

• Federal funding and infrastructure investment cycles are expected to drive multi-year demand for rail and precast solutions.

• Energy sector demand is rising, especially for midstream pipe coating and related infrastructure.

• Book-to-bill ratio at 1.00:1.00 for Rail and 1.11:1.00 for Infrastructure as of Q4 2025, with consolidated backlog up ~15% year-over-year.

Financial Performance and Guidance

• EBITDA has doubled since 2021 on 5% sales growth, with margins expanding by 430 basis points; 2026 guidance projects revenue between $540M and $580M, adjusted EBITDA of $41M to $46M, and free cash flow of $15M to $25M.

• CapEx is increasing to support growth, especially in precast, with 2.7% of sales (~$15M) allocated.

• Gross leverage ratio improved to 1.0x, supported by strong free cash flow and diligent debt management.

• Free cash flow yield for 2026 is expected to be 5% to 9% at the current stock price.

• Active share repurchase program continues, with $28.7M authorization remaining through February 2028.