L.B. Foster (NASDAQ:FSTR) executives highlighted a sharp fourth-quarter finish to 2025, driven by strong sales growth in both operating segments, improved SG&A leverage, and meaningful cash generation that reduced net debt and supported ongoing share repurchases.
Fourth-quarter results: strong sales, mixed margins
President and CEO John Kasel said the company entered the quarter expecting its higher backlog to drive a strong finish, and management characterized the fourth quarter as an “exceptional” close to the year.
Gross profit increased 10.6%, but gross margin declined 260 basis points to 19.7%. Management attributed the margin decline primarily to weaker Rail margins tied to the TS&S business in the U.K., as well as an unfavorable mix shift from higher Rail product volumes. The company also reported strong SG&A leverage: SG&A expense declined $1.3 million, and SG&A as a percentage of sales improved 470 basis points to 14.4%.
Adjusted EBITDA for the quarter was $13.7 million, up $6.4 million, or 89%, from the prior year. CFO Bill Thalman said the improvement was driven by higher sales volumes, increased gross profit, and lower SG&A.
Rail and Infrastructure: drivers and headwinds
In Rail, fourth-quarter revenue was $98.0 million, up 23.7% year over year. The increase was driven by higher volumes in Friction Management (up 41.6%) and Rail Products (up 31.1%). Thalman said Rail Products posted its highest fourth-quarter sales on record, and Friction Management delivered 19% sales growth for full-year 2025.
Rail margins were 17.8%, down 440 basis points. Management cited lower sales volume, higher costs, unfavorable mix, and $1.0 million of restructuring costs related to the U.K. downsizing, as well as the “dilutive impact” of higher Rail product sales volumes. Rail orders were described as softer during the quarter, but Rail backlog increased 55.3% year over year, with gains across all three Rail business units.
Infrastructure Solutions revenue rose $13.4 million, or 27.3%, with growth in both business units. Steel Products sales increased 58.2%, led by a 206.5% improvement in Protective Coatings. Precast Concrete sales rose 18.7% for the quarter and 19.9% for the year.
Infrastructure gross margin was 22.8%, up 20 basis points. Higher sales volumes and improved mix helped Steel Products margins, while Precast Concrete margins were weaker due to unfavorable sales mix and $600,000 of higher startup costs tied to the company’s new Florida facility.
Infrastructure backlog remained lower versus the prior year, reflecting a $19 million Summit order cancellation reported in the third quarter and lower open orders for bridge forms and Precast Concrete. Thalman said the company began 2025 with an elevated Infrastructure backlog and expects backlog to increase as the construction season approaches.
Restructuring actions, cash flow, leverage, and capital allocation
Management said it completed an additional restructuring of its U.K. Rail business in the fourth quarter. The program resulted in a $2.2 million charge, including $1.0 million in gross margin and $1.2 million in SG&A. The company expects the restructuring—staff reductions and two facility closures—to generate $1.5 million to $2.0 million in run-rate savings in 2026.
Operating cash flow in the fourth quarter was $22.2 million, consistent with the company’s typical seasonal working capital unwind, with capital expenditures of $2.4 million. The company repurchased $3.3 million of stock in the quarter and reduced net debt by $16.9 million, ending the quarter with net debt of $38.4 million. Gross leverage improved to 1.0x, down from 1.6x at the start of the quarter and 1.2x a year earlier.
For the full year, operating cash flow was $35.6 million and free cash flow was $25.2 million. Thalman said the company’s capital-light model and modest cash tax requirements supported financial flexibility. Full-year 2025 capital spending totaled $10.4 million, or 1.9% of sales, and management expects CapEx to rise to about 2.7% of sales in 2026 to support targeted organic growth programs, primarily in Precast Concrete.
Share repurchases remained a key priority. The company bought back $14.4 million of stock in 2025, reducing shares outstanding by 5.4%. Management said $28.7 million remained under the most recent authorization approved in February 2025, and noted that since restarting the program three years ago, the company has repurchased just over 1 million shares, or about 9% of shares outstanding, at an average price of just under $23 per share.
Full-year 2025: segment divergence and order activity
Full-year 2025 sales were $540 million, up 1.7%, with management emphasizing that growth for the year was delivered by the strong fourth quarter. Infrastructure sales increased 14.9%, while Rail sales declined 6.5%, which management attributed to U.S. government funding impacts at the start of 2025 and continued actions to scale down the U.K. business.
Adjusted EBITDA for 2025 was $39.1 million, up $5.5 million from the prior year, driven by lower SG&A expense and partially offset by slightly lower adjusted margins. Thalman noted the year included approximately $2.2 million in startup costs for the new Florida precast facility, as well as charges related to the U.K. automated material handling product line exit announced in the second quarter ($1.4 million) and the U.K. restructuring completed in the fourth quarter ($2.2 million).
New orders net of $540.9 million increased 6.8% year over year, and year-end backlog rose 1.8% to $189.3 million. Thalman said the trailing 12-month book-to-bill ratio ended the quarter at 1.0x, with Rail at 1.11x and Infrastructure at 0.87x. He highlighted that Friction Management orders increased 58.4% in the fourth quarter.
Market commentary and 2026 guidance
Kasel said bidding activity in Rail has improved, and management expects federal programs that fund customers’ repair and maintenance projects to provide a tailwind for U.S. Rail products demand “for the foreseeable future,” while noting the company will monitor Washington developments. In Rail Technologies, management expects improved demand for Total Track Monitoring in 2026, supported by the commercialization of new safety technologies. On the U.K. market, Kasel described conditions as “extremely challenging,” but said actions taken over the last three years to reposition the business should lead to improved results in 2026. Thalman added that fourth-quarter U.K. margin pressure also reflected manufacturing deleveraging, higher costs, and the resolution of “longer-term legacy commercial contracts,” while management said it was already seeing run-rate improvement moving into 2026.
In Infrastructure, management said civil construction activity remains robust, particularly in the southern U.S., supporting Precast Concrete demand. The company said demand is increasing for its Envirokeeper water management solution with large project wins in backlog, while softer demand for CXT buildings is offsetting some improvements after a record year for that product line in 2025. Kasel also said the softer residential real estate market has pressured demand for the Envirocast wall system at the new Florida facility, but management remains optimistic longer term. In Steel, management said Protective Coatings sales improved 42.7% in 2025 amid renewed interest in U.S. oil and gas production and expects favorable trends to continue in 2026.
Kasel also addressed tariffs, saying their impact has been “minor” and is being managed by supply chain and commercial teams.
For 2026, management guided to 3.7% sales growth and 11.3% adjusted EBITDA growth at the midpoints of the range, with free cash flow expected to be $20 million at the midpoint. Kasel said the start of 2026 is expected to be stronger than last year, with backlog shifts supporting a better early-year outlook for Rail. He said Rail backlog increased by $34.5 million year over year, including higher North American demand for Rail Products (up $10.6 million) and Friction Management (up $7.6 million), as well as a $20 million multi-year TS&S order in the U.K. Infrastructure backlog declined by $31.1 million, largely due to the Summit cancellation, while Precast Concrete backlog was down $5.4 million.
Management added that during the first two months of 2026, overall backlog was up about 15% from year-end, with gains in both segments.
About L.B. Foster (NASDAQ:FSTR)
L.B. Foster Company is a diversified infrastructure solutions provider offering products and services to the transportation, energy, and construction markets. Founded in 1902 and headquartered in Pittsburgh, Pennsylvania, the company has built a reputation for delivering specialty materials and engineering solutions that support critical infrastructure projects across various industries.
The company’s operations are organized into three primary segments: Rail Products & Services, Construction Products, and Tubular & Energy Products.
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