CHICAGO L.B. Foster Co.s outlook is mixed for the rest of the year and into 2014.
Generally, construction market demand will see some improvements while energy will remain inconsistent, according to the company, which manufactures and distributes steel-based products for the rail, construction, energy and utility markets.
"Construction orders have been positive for two quarters now and are well ahead of prior-year levels," president and chief executive officer Robert P. Bauer said during the Pittsburgh-based companys Nov. 5 earnings call.
Lower than expected order input for coated pipe products resulted in a 45-percent decrease in tubular product revenue in the third quarter, he said.
Separately, L.B. Foster will expand its steel pipe coating facility in Birmingham, Ala., to improve manufacturing throughput and increase production capacity. The expansion was necessary after American Steel Pipe, a division of Birmingham-based American Cast Iron Pipe Co. and a key L.B. Foster customer, announced plans to increase production capacity to nearly 700,000 net tons per year (amm.com, Oct. 30).
L.B. Foster applies protective fusion bond epoxy and abrasion resistant coatings on 10.75-inch to 24-inch-diameter electric-resistant weld (ERW) steel line pipe for American Steel Pipe.
"It is not uncommon to see energy market customers make rapid changes in project priorities and take actions (that) have favorable impact on their cost, which is why we (noted that) when sales were up 50 percent year over year, we didnt see this rate actually continuing. (It) was just too steep of an increase," Bauer said.
However, "I do see us returning to (higher) sales volume levels at some point. We remain bullish on the oil and gas markets, particularly the segment serving shale production, which is driving demand for coated pipe and (oil country tubular goods) products," he said.
Construction orders increased 59 percent during the quarter and rose 25 percent year to date, Bauer said. "This is really the best indication of the strengthening thats taking place in the markets that we serve."
L.B. Fosters backlog grew 53.7 percent to a little more than $83 million in the third quarter vs. the same period last year. The backlogs have improved for bridge decking and sheet piling products, he said.
The company also said it plans to open up new opportunities by moving into the corrugated bridge market, but Bauer provided no additional details.