What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 138 added, 111 removed, 486 unchanged (34% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2023 December 31,

30 unchanged sentences

Common stock, par value $ 0.01 , authorized 20,000,000 shares;

shares issued at June 30, 2023 and December 31, 2022, 11,115,779 ;

shares outstanding at June 30, 2023 and December 31, 2022, 10,816,902 and 10,776,827 , respectively

shares issued at September 30, 2023 and December 31, 2022, 11,115,779 ;

shares outstanding at September 30, 2023 and December 31, 2022, 10,804,800 and 10,776,827 , respectively

Paid-in capital 41,832 41,303

Retained earnings 125,063 123,169

Treasury stock - at cost, 298,877 and 338,952 common stock shares at June 30, 2023 and December 31, 2022, respectively

Treasury stock - at cost, 310,979 and 338,952 common stock shares at September 30, 2023 and December 31, 2022, respectively

( 5,062 ) ( 6,240 )

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

8 unchanged sentences

Amortization expense 1,379 1,599 4,119 4,454

Operating profit 6,349 2,480 6,852 193

Operating profit (loss) 2,685 ( 1,120 ) 9,537 ( 927 )

Interest expense - net 1,442 993 4,404 1,747

Other expense (income) - net 917 168 3,463 ( 1,096 )

Income before income taxes 4,056 2,797 1,344 703

Income tax expense 563 821 22 313

Net income 3,493 1,976 1,322 390

Income (loss) before income taxes 326 ( 2,281 ) 1,670 ( 1,578 )

Income tax (benefit) expense ( 121 ) ( 176 ) ( 99 ) 137

Net income (loss) 447 ( 2,105 ) 1,769 ( 1,715 )

Net loss attributable to noncontrolling interest ( 68 ) ( 28 ) ( 125 ) ( 82 )

Net income attributable to L.B.

Net income (loss) attributable to L.B.

Foster Company $ 515 $ ( 2,077 ) $ 1,894 $ ( 1,633 )

Basic earnings per common share $ 0.32 $ 0.18 $ 0.12 $ 0.04

Diluted earnings per common share $ 0.32 $ 0.18 $ 0.12 $ 0.04

Basic earnings (loss) per common share $ 0.05 $ ( 0.20 ) $ 0.18 $ ( 0.16 )

Diluted earnings (loss) per common share $ 0.05 $ ( 0.20 ) $ 0.17 $ ( 0.16 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income $ 3,493 $ 1,976 $ 1,322 $ 390

Other comprehensive income (loss), net of tax:

Net income (loss) $ 447 $ ( 2,105 ) $ 1,769 $ ( 1,715 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 1,651 ) ( 4,341 ) 852 ( 8,933 )

3 unchanged sentences

Reclassification of pension liability adjustments to earnings, net of tax expense of $ 1 , $ 8 , $ 5 , and $ 40 , respectively*

Total comprehensive income (loss) 5,282 ( 1,515 ) 3,984 ( 3,288 )

42 50 123 149

Total comprehensive (loss) income ( 1,161 ) ( 5,764 ) 2,823 ( 9,076 )

Less comprehensive (loss) income attributable to noncontrolling interest:

2 unchanged sentences

Amounts attributable to noncontrolling interest ( 89 ) ( 49 ) ( 113 ) ( 79 )

Comprehensive income (loss) attributable to L.B.

Comprehensive (loss) income attributable to L.B.

Foster Company $ ( 1,072 ) $ ( 5,715 ) $ 2,936 $ ( 8,997 )

4 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 1,322 $ 390

Adjustments to reconcile net income to cash used in operating activities:

Net income (loss) $ 1,769 $ ( 1,715 )

Adjustments to reconcile net income (loss) to cash used in operating activities:

Deferred income taxes ( 1,958 ) ( 962 )

1 unchanged sentence

Amortization 4,119 4,454

Equity in income of nonconsolidated investments ( 16 ) ( 87 )

Equity in loss (income) of nonconsolidated investments 6 ( 38 )

Gain on sales and disposals of property, plant, and equipment ( 366 ) ( 214 )

13 unchanged sentences

Other long-term liabilities ( 253 ) ( 1,816 )

Net cash used in operating activities ( 3,333 ) ( 13,382 )

Net cash provided by (used in) operating activities 15,310 ( 18,836 )

CASH FLOWS FROM INVESTING ACTIVITIES:

7 unchanged sentences

Proceeds from debt 129,853 197,926

Debt issuance costs — ( 182 )

Treasury stock acquisitions ( 1,193 ) ( 405 )

7 unchanged sentences

Interest paid $ 4,351 $ 1,337

Income taxes (received) paid $ ( 331 ) $ 389

Income taxes received $ ( 271 ) $ ( 5,151 )

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Stock Paid-in

4 unchanged sentences

Interest Total Stockholders’

Balance, March 31, 2023 $ 111 $ 40,951 $ 121,017 $ ( 5,174 ) $ ( 20,296 ) $ 405 $ 137,014

Balance, June 30, 2023 $ 111 $ 40,919 $ 124,548 $ ( 4,846 ) $ ( 18,536 ) $ 396 $ 142,592

Net income (loss) — — 515 — — ( 68 ) 447

8 unchanged sentences

Stock-based compensation — 928 — — — — 928

Balance, June 30, 2023 $ 111 $ 40,919 $ 124,548 $ ( 4,846 ) $ ( 18,536 ) $ 396 $ 142,592

Three Months Ended June 30, 2022

Balance, September 30, 2023 $ 111 $ 41,832 $ 125,063 $ ( 5,062 ) $ ( 20,123 ) $ 307 $ 142,128

Three Months Ended September 30, 2022

Stock Paid-in

4 unchanged sentences

Interest Total Stockholders’

Balance, March 31, 2022 $ 111 $ 42,153 $ 167,167 $ ( 9,200 ) $ ( 19,117 ) $ 583 $ 181,697

Balance, June 30, 2022 $ 111 $ 42,201 $ 169,177 $ ( 8,391 ) $ ( 22,547 ) $ 488 $ 181,039

Net income (loss) — — ( 2,077 ) — — ( 28 ) ( 2,105 )

6 unchanged sentences

Stock-based compensation — 387 — — — — 387

Balance, June 30, 2022 $ 111 $ 42,201 $ 169,177 $ ( 8,391 ) $ ( 22,547 ) $ 488 $ 181,039

Balance, September 30, 2022 $ 111 $ 42,608 $ 167,100 $ ( 8,351 ) $ ( 26,206 ) $ 439 $ 175,701

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Stock Paid-in

15 unchanged sentences

Stock-based compensation — 2,757 — — — — 2,757

Balance, June 30, 2023 $ 111 $ 40,919 $ 124,548 $ ( 4,846 ) $ ( 18,536 ) $ 396 $ 142,592

Six Months Ended June 30, 2022

Balance, September 30, 2023 $ 111 $ 41,832 $ 125,063 $ ( 5,062 ) $ ( 20,123 ) $ 307 $ 142,128

Nine Months Ended September 30, 2022

Stock Paid-in

14 unchanged sentences

Stock-based compensation — 1,570 — — — — 1,570

Balance, June 30, 2022 $ 111 $ 42,201 $ 169,177 $ ( 8,391 ) $ ( 22,547 ) $ 488 $ 181,039

Balance, September 30, 2022 $ 111 $ 42,608 $ 167,100 $ ( 8,351 ) $ ( 26,206 ) $ 439 $ 175,701

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

8 unchanged sentences

In the opinion of management, all estimates and adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in L.B.

12 unchanged sentences

Three Months Ended

June 30, 2023 Three Months Ended

June 30, 2022

Net Sales Segment Operating Profit Net Sales Segment Operating Profit (Loss)

September 30, 2023 Three Months Ended

September 30, 2022

Net Sales Segment Operating Profit (Loss) Net Sales Segment Operating Profit

Rail, Technologies, and Services $ 86,866 $ 3,865 $ 77,350 $ 539

2 unchanged sentences

Total $ 145,345 $ 5,733 $ 130,015 $ 2,087

Six Months Ended

June 30, 2023 Six Months Ended

June 30, 2022

Net Sales Segment Operating Profit Net Sales Segment Operating Profit (Loss)

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

Net Sales Segment Operating Profit (Loss) Net Sales Segment Operating Profit (Loss)

Rail, Technologies, and Services $ 242,866 $ 12,880 $ 222,857 $ 5,576

5 unchanged sentences

The expense allocation excludes certain corporate costs that are separately managed from the segments.

A reconciliation of reportable segment net profit to the Company’s consolidated total for the periods presented:

The following table demonstrates a reconciliation of reportable segment net profit to the Company’s consolidated total for the periods presented:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Unallocated corporate expenses and other unallocated charges ( 3,048 ) ( 3,207 ) ( 7,607 ) ( 5,749 )

Income before income taxes $ 4,056 $ 2,797 $ 1,344 $ 703

Income (loss) before income taxes $ 326 $ ( 2,281 ) $ 1,670 $ ( 1,578 )

The following table illustrates assets of the Company by reportable segment for the periods presented:

September 30,

2023 December 31,

4 unchanged sentences

Total $ 334,591 $ 365,310

On June 30, 2023, the Company sold substantially all the operating assets of the prestressed concrete railroad tie business operated by its wholly-owned subsidiary, CXT Incorporated (“Ties”), located in Spokane, WA, for $ 2,368 in proceeds, subject to final working capital adjustments, generating a $ 1,009 loss on the sale, which was recorded in “Other expense (income) - net”.

The Ties business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment.

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec Energy Services LLC business (“Chemtec”) for $ 5,344 in proceeds, subject to final working capital adjustments, generating a $ 2,065 loss on the sale, which was recorded in “Other expense (income) - net.” The Chemtec business was reported in the Coatings and Measurement business unit within the Steel Products and Measurement segment.

On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line.

The Bedford, PA based operations supporting the product line are expected to cease in the fourth quarter of 2023.

For the three months ended September 30, 2023 and 2022, the product line had $ 283 and $ 2,967 in sales, respectively, and for the nine months ended September 30, 2023 and 2022, the product line had $ 3,749 and $ 12,975 in sales, respectively.

The Company incurred $ 1,069 of exit costs recorded in “Other expense (income) - net,” which includes $ 345 in inventory write-downs, $ 462 in personnel expenses, and $ 262 in other exit costs.

The Company expects to incur an additional $ 520 of personnel expenses associated with the exit through 2024.

During the three months ended September 30, 2023 the Company also recorded a $ 1,977 reduction in net sales and a $ 3,051 reduction in gross profit stemming from changes in expected value of certain commercial projects associated with the exit of the product line.

The grid deck product line was reported in the Bridge Products business unit within the Steel Products and Measurement segment.

On June 30, 2023, the Company sold substantially all the operating assets of the prestressed concrete railroad tie business operated by its wholly-owned subsidiary, CXT Incorporated (“Ties”), located in Spokane, WA, for $ 2,362 in proceeds, subject to final working capital adjustments, generating a $ 1,009 loss on the sale, which was recorded in “Other expense (income) - net.” The Ties business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment.

On March 30, 2023, the Company sold substantially all the operating assets of its Precision Measurement Products and Systems business, Chemtec Energy Services LLC (“Chemtec”), for $ 5,344 in proceeds, subject to final working capital adjustments, generating a $ 2,065 loss on the sale, which was recorded in “Other expense (income) - net.” The Chemtec business was reported in the Coatings and Measurement business unit within the Steel Products and Measurement segment.

The following table summarizes the Company’s net sales by major product and service category for the periods presented:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

13 unchanged sentences

Net sales by the timing of the transfer of goods and services was as follows for the periods presented:

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Rail, Technologies, and Services Precast Concrete Products Steel Products and Measurement Total

2 unchanged sentences

Total net sales $ 86,866 $ 38,642 $ 19,837 $ 145,345

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Rail, Technologies, and Services Precast Concrete Products Steel Products and Measurement Total

2 unchanged sentences

Total net sales $ 77,350 $ 28,856 $ 23,809 $ 130,015

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Rail, Technologies, and Services Precast Concrete Products Steel Products and Measurement Total

2 unchanged sentences

Total net sales $ 242,866 $ 96,795 $ 69,206 $ 408,867

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Rail, Technologies, and Services Precast Concrete Products Steel Products and Measurement Total

2 unchanged sentences

Total net sales $ 222,857 $ 67,477 $ 69,990 $ 360,324

During the three and nine months ended September 30, 2023, the Company recorded a $ 1,977 reduction in net sales stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line.

The Company’s performance obligations under long-term agreements with its customers are generally satisfied over time.

4 unchanged sentences

Three Months Ended

June 30, Percentage of Total Net Sales

Three Months Ended June 30,

September 30, Percentage of Total Net Sales

Three Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total over time sales $ 34,565 $ 30,900 23.8 % 23.8 %

Six Months Ended

June 30, Percentage of Total Net Sales

Six Months Ended June 30,

Nine Months Ended

September 30, Percentage of Total Net Sales

Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Total over time sales $ 104,255 $ 97,305 25.5 % 27.0 %

The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (included in “Contract assets”), and billings in excess of costs (contract liabilities), included in “Deferred revenue” within the Condensed Consolidated Balance Sheets.

The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (included in “Contract assets - net”), and billings in excess of costs (contract liabilities), included in “Deferred revenue” within the Condensed Consolidated Balance Sheets.

The following table sets forth the Company’s contract assets:

3 unchanged sentences

Transfers from contract asset balance to accounts receivable ( 6,828 )

Balance as of June 30, 2023 $ 34,011

Balance as of September 30, 2023

The following table sets forth the Company’s contract liabilities:

4 unchanged sentences

Other adjustments, including business divestiture ( 1,904 )

Balance as of June 30, 2023 $ 4,319

Balance as of September 30, 2023

The Company records provisions related to the allowance for credit losses associated with contract assets.

2 unchanged sentences

These expectations are formed based on trends observed, as well as current and expected future conditions.

As of June 30, 2023, the Company had approximately $ 290,076 of obligations under new contracts and remaining performance obligations, which is also referred to as backlog.

Approximately 12.0 % of the June 30, 2023 backlog was related to projects that are anticipated to extend beyond June 30, 2024.

As of September 30, 2023, the Company had approximately $ 243,219 of obligations under new contracts and remaining performance obligations, which is also referred to as backlog.

Approximately 10.9 % of the September 30, 2023 backlog was related to projects that are anticipated to extend beyond September 30, 2024.

Goodwill and Other Intangible Assets

4 unchanged sentences

Foreign currency translation impact ( 119 ) — — ( 119 )

Balance as of June 30, 2023 $ 20,377 $ 11,027 $ — $ 31,404

Balance as of September 30, 2023 $ 19,829 $ 11,027 $ — $ 30,856

The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount.

1 unchanged sentence

However, these factors can be unpredictable and are subject to change.

No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of June 30, 2023.

However, future impairment charges could result if future projections diverge unfavorably from current expectations in the Rail Technologies and Precast Concrete Products reporting units.

As of June 30, 2023 and December 31, 2022, the components of the Company’s intangible assets were as follows:

June 30, 2023

No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of September 30, 2023.

However, future impairment charges could result if future projections diverge unfavorably from current expectations.

As of September 30, 2023 and December 31, 2022, the components of the Company’s intangible assets were as follows:

September 30, 2023

Weighted Average

8 unchanged sentences

$ 68,349 $ ( 48,343 ) $ 20,006

During the six months ended June 30, 2023, certain fully amortized intangible assets of $ 28 related to non-compete agreements were eliminated from gross intangible assets and accumulated amortization.

During the nine months ended September 30, 2023, certain fully amortized intangible assets of $ 27 related to non-compete agreements were eliminated from gross intangible assets and accumulated amortization.

December 31, 2022

12 unchanged sentences

On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast LLC (“VanHooseCo”).

As of June 30, 2023, the purchase accounting for these transactions is final.

As of September 30, 2023, the purchase accounting for these transactions is final.

Purchase accounting adjustments recognized during the nine months ended September 30, 2023 were immaterial.

Accounts Receivable

Changes in reserves for uncollectible accounts, which are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, were recorded as an expense of $ 256 and $ 150 for the three months ended June 30, 2023 and 2022, respectively, and an expense of $ 411 and $ 211 for the six months ended June 30, 2023 and 2022, respectively.

Changes in reserves for uncollectible accounts, which are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, were recorded as an expense of $ 763 and income of $ 40 for the three months ended September 30, 2023 and 2022, respectively, and an expense of $ 1,174 and $ 171 for the nine months ended September 30, 2023 and 2022, respectively.

The Company establishes the allowance for credit losses based on historical collection patterns and other subjective conditions as necessary, including current and expected market conditions.

6 unchanged sentences

Write-off against allowance ( 244 )

Balance as of June 30, 2023 $ 1,027

Balance as of September 30, 2023 $ 1,743

Inventory is valued at average cost or net realizable value, whichever is lower.

The Company’s components of inventory as of June 30, 2023 and December 31, 2022 are summarized in the following table:

The Company’s components of inventory as of September 30, 2023 and December 31, 2022 are summarized in the following table:

September 30,

2023 December 31,

5 unchanged sentences

Long-term debt consisted of the following:

September 30,

2023 December 31,

13 unchanged sentences

On August 12, 2022, the Company entered into a second amendment to its Credit Agreement (“Second Amendment”) to obtain approval for the acquisition of VanHooseCo Precast, LLC (“VanHooseCo”) and temporarily modify certain financial covenants to accommodate the transaction.

The Second Amendment permitted the Company to acquire the operating assets of VanHooseCo and modified the Maximum Gross Leverage Ratio covenant to 3.50 through June 30, 2023 to accommodate the transaction.

As of June 30, 2023, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $ 1,173 .

The Second Amendment permitted the Company to acquire the operating assets of VanHooseCo and modified the Maximum Gross Leverage Ratio covenant through June 30, 2023 to accommodate the transaction.

As of September 30, 2023, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $ 2,544 .

Earnings Per Common Share

(Share amounts in thousands)

The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:

The following table sets forth the computation of basic and diluted earnings (loss) per common share for the periods indicated:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Numerator for basic and diluted earnings per common share:

Net income $ 3,493 $ 1,976 $ 1,322 $ 390

Net income (loss) attributable to L.B.

Foster Company $ 515 $ ( 2,077 ) $ 1,894 $ ( 1,633 )

Weighted average shares outstanding 10,813 10,731 10,804 10,710

Denominator for basic earnings per common share 10,807 10,715 10,800 10,700

Denominator for basic earnings (loss) per common share 10,813 10,731 10,804 10,710

Effect of dilutive securities:

1 unchanged sentence

Dilutive potential common shares 160 — 91 —

Denominator for diluted earnings per common share - adjusted weighted average shares outstanding 10,878 10,814 10,866 10,809

Basic earnings per common share $ 0.32 $ 0.18 $ 0.12 $ 0.04

Diluted earnings per common share $ 0.32 $ 0.18 $ 0.12 $ 0.04

For the three months ended June 30, 2023 and 2022, the Company recorded an income tax expense of $ 563 and $ 821 , respectively, on pre-tax income of $ 4,056 and $ 2,797 , respectively, for an effective income tax rate of 13.9 % and 29.4 %, respectively.

For the six months ended June 30, 2023 and 2022, the Company recorded an income tax expense of $ 22 and $ 313 , respectively, on pre-tax income of $ 1,344 and $ 703 , respectively, for an effective income tax rate of 1.6 % and 44.5 %, respectively.

The Company's effective income tax rate for the three and six months ended June 30, 2023 differed from the federal statutory rate of 21% primarily due to the realization of a portion of its U.S.

deferred tax assets previously offset by a valuation allowance.

The Company continues to maintain a full valuation allowance against its U.S.

deferred tax assets, which is likely to result in significant variability of the effective tax rate in the current year.

Denominator for diluted earnings (loss) per common share - adjusted weighted average shares outstanding 10,973 10,731 10,895 10,710

Basic earnings (loss) per common share $ 0.05 $ ( 0.20 ) $ 0.18 $ ( 0.16 )

Diluted earnings (loss) per common share $ 0.05 $ ( 0.20 ) $ 0.17 $ ( 0.16 )

There were 109 and 108 anti-dilutive shares for the three and nine months ended September 30, 2022, respectively, excluded from the calculation.

For the three months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $ 121 and $ 176 , respectively, on pre-tax income of $ 326 and pre-tax losses of $ 2,281 , respectively, for an effective income tax rate of ( 37.1 %) and 7.7 %, respectively.

For the nine months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $ 99 and income tax expense of $ 137 , respectively, on pre-tax income of $ 1,670 and pre-tax losses of $ 1,578 , respectively, for an effective income tax rate of ( 5.9 %) and ( 8.7 %), respectively.

The Company's effective income tax rate for the three and nine months ended September 30, 2023 differed from the federal statutory rate of 21% primarily due to changes in the valuation allowance established against U.S.

and United Kingdom deferred tax assets.

Changes in pre-tax income projections, combined with the seasonal nature of our businesses, could also impact the effective income tax rate each quarter.

Stock-Based Compensation

The Company recorded stock-based compensation expense of $ 945 and $ 925 for the three months ended June 30, 2023 and 2022, respectively, and $ 1,829 and $ 1,183 for the six months ended June 30, 2023 and 2022, respectively, related to restricted stock awards and performance unit awards.

As of June 30, 2023, unrecognized compensation expense for awards that the Company expects to vest approximated $ 7,026 .

The Company recorded stock-based compensation expense of $ 928 and $ 387 for the three months ended September 30, 2023 and 2022, respectively, and $ 2,757 and $ 1,570 for the nine months ended September 30, 2023 and 2022, respectively, related to restricted stock awards and performance share units.

As of September 30, 2023, unrecognized compensation expense for awards that the Company expects to vest approximated $ 6,059 .

The Company will recognize this unrecognized compensation expense over the upcoming 2.4 years through March 1, 2026.

Shares issued as a result of vested stock-based compensation awards generally will be from previously issued shares that have been reacquired by the Company and held as treasury stock or authorized and previously unissued common stock.

Shares issued as a result of vested stock-based compensation awards generally will be issued from previously issued shares that have been reacquired by the Company and held as treasury stock or authorized and previously unissued common stock.

Restricted Stock, Performance Share Units, and Performance-Based Stock Awards

Under the 2022 Equity and Incentive Compensation Plan, successor to the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance share units.

Under the 2022 Equity and Incentive Compensation Plan, as amended, successor to the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance share units.

The forfeitable restricted stock awards granted generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock award agreement.

3 unchanged sentences

The Company has, on occasion, issued performance share units with longer performance periods as incentivization and retention tools.

If the Company’s estimate of the number of performance share units expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease.

If the Company’s estimate of the number of performance share units

expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease.

The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

Since 2017, non-employee directors have been permitted to defer receipt of annual stock awards and equity elected to be received in lieu of quarterly cash compensation.

If so elected, these deferred stock units will be issued as common stock six months after

separation from their service on the Board of Directors.

If so elected, these deferred stock units will be issued as common stock six months after separation from their service on the Board of Directors.

Since 2018, no non-employee directors have elected the option to receive deferred stock units of the Company’s common stock in lieu of director cash compensation.

In February 2023, the Compensation Committee approved the 2023-2025 Long Term Incentive Plan which includes grants of performance share units and restricted stock.

The following table summarizes the restricted stock, deferred stock units, and performance-based stock and share unit activity for the six months ended June 30, 2023:

The following table summarizes the restricted stock, deferred stock units, and performance-based stock and share unit activity for the nine months ended September 30, 2023:

Stock Deferred

6 unchanged sentences

Adjustment for incentive awards expected to vest — — 20,104 15.36

Outstanding as of June 30, 2023 267,720 12,404 496,140 $ 14.44

Cancelled and forfeited ( 2,750 ) — — 14.46

Outstanding as of September 30, 2023 264,970 12,404 496,140 $ 14.20

Fair Value Measurements

10 unchanged sentences

As such, the swap agreements are classified as Level 2 within the fair value hierarchy.

As of June 30, 2023 and December 31, 2022, the interest rate swaps were recorded in “ Other current assets ” when the interest rate swaps’ fair market value are in an asset position, and "Other accrued liabilities" when in a liability position within our Condensed Consolidated Balance Sheets.

As of September 30, 2023 and December 31, 2022, the interest rate swaps were recorded in “ Other current assets ” when the interest rate swaps’ fair market value are in an asset position, and “Other accrued liabilities” when in a liability position within our Condensed Consolidated Balance Sheets.

Fair Value Measurements at Reporting Date Fair Value Measurements at Reporting Date

September 30,

2023 Level 1 Level 2 Level 3 December 31,

4 unchanged sentences

The $ 20,000 interest rate swap agreements that became effective August 2022 are accounted for as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate on our debt.

The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated Balance Sheets and included in “Interest expense - net” in our Condensed Consolidated Statements of Operations as the interest expense from our debt is recognized.

For the three months ended June 30, 2023 and 2022, the Company recognized interest income of $ 295 and $ 19 , respectively, from interest rate swaps.

For the six months ended June 30, 2023 and 2022, the Company recognized interest income and interest expense of $ 540 and $ 78 , respectively, from interest rate swaps.

The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated

Balance Sheets and included in “Interest expense - net” in our Condensed Consolidated Statements of Operations as the interest expense from our debt is recognized.

For the three months ended September 30, 2023, the Company recognized interest income of $ 329 from interest rate swaps.

For the nine months ended September 30, 2023 and 2022, the Company recognized interest income and interest expense of $ 869 and $ 78 , respectively, from interest rate swaps.

Retirement Plans

9 unchanged sentences

United States Defined Benefit Plan

Net periodic pension costs for the United States defined benefit pension plan for the three and six months ended June 30, 2023 and 2022 were as follows:

Net periodic pension costs for the United States defined benefit pension plan for the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Net periodic pension cost $ 23 $ 1 $ 69 $ 1

The Company has made contributions to its United States defined benefit plan of $ 176 during the six months ended June 30, 2023 and expects to make total contributions of $ 400 during 2023.

The Company has made contributions to its United States defined benefit plan of $ 176 during the nine months ended September 30, 2023 and expects to make total contributions of approximately $ 400 during 2023.

United Kingdom Defined Benefit Plan

Net periodic pension costs for the United Kingdom defined benefit pension plan for the three and six months ended June 30, 2023 and 2022 were as follows:

Net periodic pension costs for the United Kingdom defined benefit pension plan for the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 unchanged sentences

United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans.

For the six months ended June 30, 2023, the Company contributed approximately $ 170 to the plan.

For the nine months ended September 30, 2023, the Company contributed approximately $ 260 to the plan.

The Company anticipates total contributions of approximately $ 347 to the United Kingdom pension plan during 2023.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

31 unchanged sentences

The Company does not have any individual risk sharing agreements in place with respect to the site, and was only associated with the site from 1976 to when it purchased the stock of a company whose assets it sold in 1982 and which was dissolved in 1994.

On March 26, 2020, the EPA issued a Unilateral Administrative Order to two parties requiring them to perform remedial design work for that portion of the Harbor Superfund Site that includes the area closest to the facility;

On March 26, 2020, the EPA issued a Unilateral

Administrative Order to two parties requiring them to perform remedial design work for that portion of the Harbor Superfund Site that includes the area closest to the facility;

the Company was not a recipient of this Unilateral Administrative Order.

2 unchanged sentences

As more information develops and the allocation process is completed, and given the resolution of factors like those described above, an unfavorable resolution could have a material adverse effect.

As of June 30, 2023 and December 31, 2022, the Company maintained environmental reserves approximating $ 2,447 and $ 2,472 , respectively.

As of September 30, 2023 and December 31, 2022, the Company maintained environmental reserves approximating $ 2,426 and $ 2,472 , respectively.

The Company is also subject to other legal proceedings and claims that arise in the ordinary course of its business.

Legal actions are subject to inherent uncertainties, and future events could change management’s assessment of the probability or estimated amount of potential losses from pending or threatened legal actions.

Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses having a material adverse effect on the Company’s financial position or liquidity as of June 30, 2023.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions, the Company discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made.

Based on the Company’s assessment as of June 30, 2023, no such disclosures were considered necessary.

Based on the Company’s assessment as of September 30, 2023, no such disclosures were considered necessary.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements