What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-08 · 197 added, 178 removed, 173 unchanged (68% of the section changed)

3 unchanged sentences

This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended.

Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”).

Forward-looking statements provide management’s current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

Many of the forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements.

15 unchanged sentences

labor disputes;

cyber-security risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation;

cybersecurity risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation;

the continuing effectiveness of our ongoing implementation of an enterprise resource planning system;

5 unchanged sentences

economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union;

geopolitical conditions, including the conflict in Ukraine;

geopolitical conditions, including the conflict in Ukraine and Israel;

a lack of state or federal funding for new infrastructure projects;

8 unchanged sentences

Three Months Ended

June 30, Percent

Change Percent of Total Net Sales

Three Months Ended

September 30, Change

2023 2022 2023 vs.

2022 2023 2022

Net sales $ 145,345 $ 130,015 $ 15,330

Gross profit 28,224 23,097 5,127

Gross profit margin 19.4 % 17.8 % 160 bps

Selling and administrative expenses $ 24,160 $ 22,618 $ 1,542

Selling and administrative expenses as a percent of sales

16.6 % 17.4 % (80) bps

Amortization expense 1,379 1,599 (220)

Operating profit 6,349 2,480 156.0 4.3 1.9

Operating profit (loss) $ 2,685 $ (1,120) $ 3,805

Operating profit (loss) margin

1.8 % (0.9) % 270 bps

Interest expense - net $ 1,442 $ 993 $ 449

Other expense (income) - net 719 (701) 202.6 0.5 (0.5)

Income before income taxes 4,056 2,797 45.0 2.7 2.1

Income tax expense 563 821 (31.4) 0.4 0.6

Net income 3,493 1,976 76.8 2.4 1.5

Other expense - net 917 168 749

Income (loss) before income taxes $ 326 $ (2,281) $ 2,607

Income tax benefit (121) (176) 55

Net income (loss) $ 447 $ (2,105) $ 2,552

Net loss attributable to noncontrolling interest (68) (28) (40)

Net income attributable to L.B.

Net income (loss) attributable to L.B.

Foster Company $ 515 $ (2,077) $ 2,592

Diluted earnings per common share $ 0.32 $ 0.18

** Results of the calculation are not considered meaningful for presentation purposes.

Diluted earnings (loss) per common share $ 0.05 $ (0.20) $ 0.25

Foster Company is a global technology solutions provider of engineered, manufactured products and services that builds and supports infrastructure.

3 unchanged sentences

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

On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line which was reported in the Fabricated Steel Products business unit within the Steel Products and Measurement segment.

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 decision to exit the bridge grid deck product line is a result of a weak bridge grid deck market condition and outlook due to customer adoption of newer technologies replacing the grid deck solution.

During the three months ended September 30, 2023, the Company incurred $1,069 of exit costs recorded in “Other expense (income) - net,” which included $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 bridge grid deck product line.

Acquisition and Divestiture Summary

On June 21, 2022, the Company acquired the stock of Skratch Enterprises Ltd.

(“Skratch”) for $7,402, which is inclusive of deferred payments withheld by the Company of $1,228, to be paid over the next four years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement.

Skratch is an industry leader in digital system integration with expertise in advanced digital display technologies and capabilities currently serving retail markets in the U.K.

(“Skratch”) for $7,402, which is inclusive of deferred payments withheld by the Company of $1,228, to be paid over the five years following the transaction or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement.

Skratch is an industry leader in digital system integration with expertise in advanced digital display technologies and capabilities currently serving retail markets in the United Kingdom.

Skratch is reported within the Technology Services and Solutions business unit in the Rail, Technologies, and Services segment.

2 unchanged sentences

On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast, LLC (“VanHooseCo”), a business specializing in precast concrete walls, water management products, and forms for the commercial and residential infrastructure markets for $52,146 net of cash acquired.

VanHooseCo has been included in the Company’s Precast Concrete Products segment.

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec Energy Services LLC (“Chemtec”) business for $5,344 in proceeds, subject to final working capital adjustments, generating a $2,065 loss on sale, 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 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”.

VanHooseCo is included in the Company’s Precast Concrete Products segment.

The Chemtec business was reported in the Coatings and Measurement 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” for the nine months ended September 30, 2023.

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

Results Summary

Net sales of $148,034 for the three months ended June 30, 2023 increased by $16,519, or 12.6%, over the prior year quarter.

The change in sales is due in part to the acquisitions of Skratch and VanHooseCo offset by the divestiture of the Track Components and Chemtec businesses.

Net sales of $145,345 for the three months ended September 30, 2023, increased by $15,330, or 11.8%, over the prior year quarter.

The change in sales is due in part to the acquisition of VanHooseCo, offset by the divestiture of the Ties, Chemtec, and Track Components businesses.

Net sales for the three months ended September 30, 2023 included a $1,977 reduction stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line within the Steel Products and Measurement segment.

Net sales for the three months ended September 30, 2022 included a $3,956 reduction from the settlement of certain long-term commercial contracts related to the multi-year Crossrail project in the Company’s Technology Services and Solutions business in the United Kingdom.

Organic growth and acquisitions drove a 14.5% and 2.2% increase in sales over the prior year quarter, respectively, with an offsetting 4.8% decline from divestitures.

Gross profit for the three months ended June 30, 2023, was $32,252, an increase of $8,959 over the prior year quarter, or 38.5%, and gross profit margins expanded by 410 basis points to 21.8%.

The improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation plan along with increased sales volumes, product mix, and pricing.

Selling and administrative expenses for the three months ended June 30, 2023 increased by $5,134, or 26.5%, from the prior year quarter, due primarily to increased personnel costs as well as the net impact from business portfolio actions.

Gross profit for the three months ended September 30, 2023 was $28,224, an increase of $5,127 over the prior year quarter, or 22.2%, and gross profit margins expanded by 160 basis points to 19.4%.

The improvement in gross profit was due to the portfolio changes that are a part of the Company’s strategic transformation, along with an uplift from increased sales volumes, product mix, and pricing.

Gross profit for the three months ended September 30, 2023 included a reduction in profitability of $3,051 related to changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line in the Steel Products and Measurement segment.

Gross profit for the three months ended September 30, 2022 included a non-routine adverse impact of $3,956 associated with the settlement of certain long-term commercial contracts related to the multi-year Crossrail project in the Company’s Technology Services and Solutions business in the United Kingdom, and expense of $851 associated with a purchase accounting adjustment related to acquired inventory from the acquisition of VanHooseCo within the Precast Concrete Products segment.

Selling and administrative expenses for the three months ended September 30, 2023 increased by $1,542, or 6.8%, from the prior year quarter, due primarily to increased personnel costs as well as a bad debt provision charge of $866 in the Rail, Technologies, and Services segment due to a customer in the United Kingdom that filed for administrative protection.

The Company will continue to evaluate the collectibility of this account and will adjust the provision as required.

Selling and administrative expenses as a percent of net sales were 16.6% versus 17.4% in the prior year quarter.

Other expense - net for the three months ended June 30, 2023 was $719 while other income - net was $701 in the prior year quarter.

Other expense - net for the three months ended June 30, 2023 was due to the $1,041 loss on the divestitures of Ties and Chemtec, and other income - net for the three months ended June 30, 2022 was due to a $489 divestiture gain and $318 in insurance proceeds.

The Company’s effective income tax rate for the three months ended June 30, 2023 was 13.9%, compared to 29.4% in the prior year quarter.

The Company’s effective income tax rate for the three months ended June 30, 2023 differed from the federal statutory 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.

Net income for the three months ended June 30, 2023 attributable to the Company was $3,531, or $0.32 per diluted share, favorable by $1,521, or $0.14 per diluted share, from the prior year quarter.

Net income for the three months ended June 30, 2023 was primarily driven by stronger comparable operating profit stemming from margin expansion despite the $1,041 loss on divestitures.

The Company continues to execute its strategic transformation into a technology-focused, high growth infrastructure solutions provider, as evidenced by the number of recent portfolio actions taken, including the sale of Ties, which further reduces the Company’s commoditized offering to allow for increased focus on its core growth platforms, Rail Technologies and Precast Concrete, as well as organic growth initiatives, debt reduction, and improving shareholder value.

Other expense - net for the three months ended September 30, 2023 and 2022 was $917 and $168, respectively.

Other expense - net for the three months ended September 30, 2023 was due to $1,069 in costs incurred from the exit of the bridge grid deck product line, which included $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.

Other expense - net for the three months ended September 30, 2022 was due to the $447 loss on the sale of Track Components, partially offset by foreign currency revaluation gains.

The Company’s effective income tax rate for the three months ended September 30, 2023 was (37.1)%, compared to 7.7% in the prior year quarter.

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

and United Kingdom deferred tax assets.

The Company maintains a valuation allowance against its U.S.

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

Net income for the three months ended September 30, 2023 attributable to the Company was $515, or $0.05 per diluted share, favorable by $2,592, or $0.25 per diluted share, from the prior year quarter.

Net income for the three months ended September 30, 2023 was primarily driven by increased sales volumes and gross profit expansion partially offset by an increase in selling and administrative expenses and $4,120 in exit costs impacting both gross profit and other expense - net incurred from the exit of the bridge grid deck product line.

The Company continues to execute its strategic transformation into a technology-focused, high growth infrastructure solutions provider, as evidenced by the number of recent portfolio actions taken which further reduces the Company’s commoditized offerings to allow for increased focus on its core growth platforms, rail technologies and precast concrete, as well as organic growth initiatives, debt reduction, and improving shareholder value.

Results of Operations - Segment Analysis

Second Quarter 2023 Compared to Second Quarter 2022

Third Quarter 2023 Compared to Third Quarter 2022

Rail, Technologies, and Services

Three Months Ended

June 30, Change Percent

September 30, Change Percent

2023 2022 2023 vs.

2 unchanged sentences

Gross profit $ 17,229 $ 13,376 $ 3,853 28.8 %

Gross profit percentage 21.7 % 19.1 % 2.6 % 13.1 %

Gross profit margin 19.8 % 17.3 % 2.5 % 14.7 %

Segment operating profit $ 3,865 $ 539 $ 3,326 **

Segment operating profit percentage 7.2 % 4.9 % 2.3 % 46.9 %

The Rail, Technologies, and Services segment sales for the three months ended June 30, 2023 increased by $9,819, or 12.0%, compared to the prior year quarter.

Net sales increased by 17.0% organically and by 0.8% from the acquisition of Skratch, offset by a 5.8% decrease from the divestiture of Track Components.

The Rail Products and Global Friction Management business units increase in sales was offset by sales decreases in the Technology Services and Solutions business unit.

Segment operating profit margin 4.4 % 0.7 % 3.7 % **

** Results of the calculation are not considered meaningful for presentation purposes.

The Rail, Technologies, and Services segment sales for the three months ended September 30, 2023 increased by $9,516, or 12.3%, compared to the prior year quarter.

Net sales increased by 14.9% organically, partially offset by a 2.6% decrease from the divestitures of Track Components and Ties.

Each of the three business units, Rail Products, Global Friction Management, and Technology Services and Solutions, had an increase in sales from the prior year quarter.

The Rail Products and Global Friction Management sales increase was driven by strength in domestic markets served.

The sales decrease in the Technology Services and Solutions business unit was driven by weak economic conditions in the Company’s U.K.

based businesses.

The sales increase for Technology Services and Solutions was driven by an unfavorable settlement adjustment of $3,956 included in the prior year quarter for certain long-term commercial contracts related to the multi-year Crossrail project, partially offset by a decline in volumes, specifically in our United Kingdom business, in the current quarter.

The Rail, Technologies, and Services segment gross profit increased by $3,853, or 28.8% over the prior year quarter, and gross profit margins expanded 250 basis points to 19.8%.

Gross profit increases in Rail Products and Global Friction Management were commensurate with higher sales levels, while weaker sales in Technology Services and Solutions partially offset the increased gross

The improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation along with increased sales in the higher margin Global Friction Management business along with improved pricing.

Operating profit was $6,627, a $2,629 increase over the prior year quarter, due primarily to higher gross profit levels.

During the current quarter, the Rail, Technologies, and Services segment had an increase in new orders of $23,048, or 24.8%, compared to the prior year period.

The increase is due to tailwinds from government infrastructure investment programs, despite a $3,114 decrease due to the divested Track Components business.

Backlog as of June 30, 2023 was $132,451, an increase of $434, or 0.3%, versus the prior year quarter, despite a $6,960 and $832 reduction due to the Ties and Track Components divestitures, respectively.

Gross profit improvement in Rail Products is due to the portfolio changes implemented as part of the Company’s strategic transformation, higher volumes, and improved pricing.

The gross profit improvement in Global Friction Management was commensurate with higher sales levels.

Gross profit improvement in Technology Services and Solutions is due to the adverse impact of $3,956 for certain long-term commercial contracts related to the multi-year Crossrail project incurred in the prior year quarter, offset by lower current quarter gross profit in the in the United Kingdom businesses, driven by unfavorable business mix and ongoing commercial weakness in the United Kingdom market.

Operating profit was $3,865, a $3,326 increase over the prior year quarter, due to the commercial contract settlement in the prior year quarter, partially offset by a bad debt provision charge of $866 resulting from a customer in the United Kingdom that filed for administrative protection in the third quarter of 2023.

During the current quarter, the Rail, Technologies, and Services segment had a decrease in new orders of $6,711, or 11.9%, compared to the prior year quarter.

The decrease is due to a $1,799 impact associated with the divestitures of Track Components and Ties as well as lower overall order rates in the Rail Products business, partially offset by order growth in the Technology Services and Solutions business.

Backlog as of September 30, 2023 was $93,632, a decrease of $15,232, or 14.0%, versus the prior year quarter, driven by a decline in the Rail Products business unit, including a reduction of $7,091 related to the divestiture of Ties, partially offset by a 42.7% and 8.7% increase in Technology Services and Solutions and Global Friction Management backlog, respectively.

Precast Concrete Products

Three Months Ended

June 30, Change Percent

September 30, Change Percent

2023 2022 2023 vs.

2 unchanged sentences

Gross profit $ 9,266 $ 5,647 $ 3,619 64.1 %

Gross profit percentage 22.7 % 14.2 % 8.5 % 59.9 %

Segment operating profit (loss) $ 1,296 $ (125) $ 1,421 **

Segment operating profit (loss) percentage 3.8 % (0.5 %) 4.3 % **

** Results of the calculation are not considered meaningful for presentation purposes.

The Precast Concrete Products segment sales for the three months ended June 30, 2023 increased by $10,254, or 43.4%, compared to the prior year quarter.

The VanHooseCo acquisition contributed $7,230, or 30.6%, of the increase in sales over the prior year quarter.

Gross profit margin 24.0 % 19.6 % 4.4 % 22.5 %

Segment operating profit $ 3,389 $ 1,245 $ 2,144 172.2 %

Segment operating profit margin 8.8 % 4.3 % 4.5 % 104.3 %

The Precast Concrete Products segment sales for the three months ended September 30, 2023 increased by $9,786, or 33.9%, compared to the prior year quarter.

The VanHooseCo acquisition contributed $2,800, or 9.7%, of the increase in sales over the prior

year quarter.

Organic sales increased by $6,986, or 24.2%, which is a continued reflection of the strong demand environment in the southern and northeastern United States markets.

The Precast Concrete Products segment's gross profit for the three months ended June 30, 2023 increased by $4,329, and gross profit margins expanded by 850 basis points to 22.7%.

The improvement in gross profit is due to the VanHooseCo acquisition as well as overall sales volumes and stronger margins from the legacy precast business, including the impact of improved pricing.

Operating profit for the second quarter of 2023 was $1,296, a $1,421 improvement over the prior year quarter, due to higher gross profit levels, which was partially offset by an increase in selling and administrative expenses from the VanHooseCo acquisition, as well as increased personnel expenses.

During the quarter, the Precast Concrete Products segment had an increase in new orders and backlog of 65.0% and 28.2%, respectively, compared to the prior year quarter.

The increase in new orders and backlog is due primarily to the VanHooseCo acquisition.

The Precast Concrete Products segment gross profit for the three months ended September 30, 2023 increased by $3,619, and gross profit margins expanded by 440 basis points to 24.0%.

The improvement in gross profit is due to the VanHooseCo acquisition as well as overall sales volumes and the impact of improved pricing in the legacy precast business.

The prior year quarter includes an expense of $851 associated with a purchase accounting adjustment related to the acquired VanHooseCo inventory.

Operating profit for the third quarter of 2023 was $3,389, a $2,144 improvement over the prior year quarter, due to higher gross profit levels, which was partially offset by an increase in selling and administrative expenses.

During the quarter, the Precast Concrete Products segment had a decrease in new orders and backlog of 10.8% and 7.2%, respectively, compared to the prior year quarter.

The decrease in new orders and backlog is due primarily to declines in the legacy businesses.

Steel Products and Measurement

Three Months Ended

June 30, Change Percent

September 30, Change Percent

2023 2022 2023 vs.

2 unchanged sentences

Gross profit $ 1,729 $ 4,074 $ (2,345) (57.6) %

Gross profit percentage 21.0 % 16.4 % 4.6 % 27.8 %

Segment operating profit $ 1,456 $ 762 $ 694 91.1 %

Segment operating profit percentage 6.5 % 2.9 % 3.6 % 124.1 %

The Steel Products and Measurement segment sales for the three months ended June 30, 2023 decreased by $3,554, or 13.6%, compared to the prior year quarter.

The decrease in sales for the second quarter of 2023 was attributable to the $4,176 decrease due to the divestiture of the Chemtec business during the first quarter of 2023 and a decline in the Fabricated Steel Products business, driven by soft demand for bridge grid decking.

This decline was offset by increased activity in both traditional and adjacent market applications in the Protective Coatings business unit within Coatings and Measurement.

Steel Products and Measurement gross profit for the three months ended June 30, 2023 increased by $444, and gross profit margins increased 460 basis points to 21.0%.

The increase in gross profit is primarily due to stronger margins in the Protective Coatings division attributable to higher volumes.

The segment operating profit increased by $694 from the prior year quarter, due to higher gross profit levels.

During the quarter, the Steel Products and Measurement segment had an increase in new orders and backlog of $4,360, or 17.0%, and $18,635, or 39.4%, respectively, compared to the prior year quarter.

The increase is a result of improved order levels in the Protective Coatings division due to strong demand in both traditional and adjacent market applications which was offset by a $6,023 decline from the Chemtec divestiture.

The backlog increase was partially offset by a $7,503 decrease due to the Chemtec divestiture.

Six Month Results

Six Months Ended

June 30, Percent

Change Percent of Total Net Sales

Six Months Ended

Gross profit margin 8.7 % 17.1 % (8.4) % (49.1) %

Segment operating (loss) profit $ (1,521) $ 303 $ (1,824) **

Segment operating (loss) profit margin (7.7) % 1.3 % (9.0) % **

** Results of the calculation are not considered meaningful for presentation purposes.

The Steel Products and Measurement segment sales for the three months ended September 30, 2023, decreased by $3,972, or 16.7%, compared to the prior year quarter.

The decrease in sales for the third quarter of 2023 was attributable to the divestiture of Chemtec, which reduced sales by $4,275, and $1,977 stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line, partially offset by organic growth of $2,280 during the quarter.

Steel Products and Measurement gross profit for the three months ended September 30, 2023 decreased by $2,345, and gross profit margins decreased 840 basis points to 8.7%.

This decline was driven by the reduction in profitability of $3,051 related to changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line.

The segment operating loss was $1,521, unfavorable by $1,824 from the prior year quarter, due to the decline in gross profit, partially offset by lower selling and administrative expenses.

During the quarter, the Steel Products and Measurement segment had a decrease in new orders and backlog of $26,999, or 53.9%, and $8,105, or 10.5%, respectively, compared to the prior year quarter.

The decrease in order levels was due to the divestiture of Chemtec, driving a decrease of $15,991, and the discontinued bridge grid deck product line, which had an order decline of $4,518, and a decline in the Company’s Protective Coatings business unit.

The backlog decrease was due to the divestiture of the Chemtec business driving a decrease of $20,251, and the discontinued bridge grid deck product line, which had a backlog decrease of $5,405, partially offset by growth in the Protective Coatings business unit.

Nine Month Results

Nine Months Ended

September 30, Change

2023 2022 2023 vs.

2022 2023 2022

Net sales $ 408,867 $ 360,324 $ 48,543

Gross profit 83,767 62,837 20,930

Gross profit margin 20.5 % 17.4 % 310 bps

Selling and administrative expenses $ 70,111 $ 59,310 $ 10,801

Selling and administrative expenses as a percent of sales 17.1 % 16.5 % 60 bps

Amortization expense 4,119 4,454 (335)

Operating profit 6,852 193 ** 2.6 0.1

Operating profit (loss) $ 9,537 $ (927) $ 10,464

Operating profit (loss) margin 2.3 % (0.3) % 260 bps

Interest expense - net $ 4,404 $ 1,747 $ 2,657

Other expense (income) - net 3,463 (1,096) 4,559

Income before income taxes $ 1,344 $ 703 91.2 % 0.5 % 0.3 %

Income tax expense 22 313 (93.0) — 0.1

Net income 1,322 390 239.0 0.5 0.2

Income (loss) before income taxes $ 1,670 $ (1,578) $ 3,248

Income tax (benefit) expense (99) 137 (236)

Net income (loss) $ 1,769 $ (1,715) $ 3,484

Net loss attributable to noncontrolling interest (125) (82) (43)

Net income attributable to L.B.

Net income (loss) attributable to L.B.

Foster Company $ 1,894 $ (1,633) $ 3,527

Diluted earnings per common share $ 0.12 $ 0.04

** Results of the calculation are not considered meaningful for presentation purposes.

Diluted earnings (loss) per common share $ 0.17 $ (0.16) $ 0.33

Results Summary

Net sales of $263,522 for the six months ended June 30, 2023 increased by $33,213, or 14.4%, over the prior year quarter.

The change in sales is due in part to the acquisitions of Skratch and VanHooseCo offset by the divestitures of the Track Components and Chemtec businesses.

Organic growth and acquisitions drove a 10.8% and 7.4% increase in sales over the prior year quarter, respectively, with an offsetting 3.7% decline from divestitures.

Gross profit for the six months ended June 30, 2023 was $55,543, an increase of $15,803 over the prior year quarter, or 39.8%, and gross profit margins expanded by 380 basis points to 21.1%.

The improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation plan along with higher sales volume, improved product mix, input costs, and pricing.

Selling and administrative expenses for the six months ended June 30, 2023 increased by $9,259, or 25.2%, from the prior year quarter, due in part to the acquisitions of VanHooseCo and Skratch, as well as higher personnel expenses.

Selling and administrative expenses as a percent of net sales were 17.4 % versus 15.9 % in the prior year quarter, a 150 basis point increase.

Other expense - net for the six months ended June 30, 2023 was $2,546 while other income - net was $1,264 in the prior year quarter.

Other expense - net for the six months ended June 30, 2023 was due primarily to the $3,074 loss on the divestitures of Ties and Chemtec, and other income - net for the six months ended June 30, 2022 was due to a $489 divestiture gain and $790 in insurance proceeds.

The Company’s effective income tax rate for the six months ended June 30, 2023 was 1.6%, compared to 44.5% in the prior year quarter.

The Company’s effective tax rate for the 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.

Net income for the six months ended June 30, 2023 attributable to the Company was $1,379, or $0.12 per diluted share, favorable by $935, or $0.08 per diluted share, from the prior year quarter.

Net income was primarily driven stronger operating profit stemming

from margin expansion during the six months ended June 30, 2023, which was offset by a $3,074 loss on the divestitures of the Chemtec and Ties.

Net sales of $408,867 for the nine months ended September 30, 2023, increased by $48,543, or 13.5%, over the prior year period.

Organic growth and acquisitions drove a 13.3% and 5.5% increase in sales over the prior year period, respectively, with an offsetting 5.3% decline from divestitures.

The organic growth rate includes the adverse impact stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line within the Steel Products and Measurement segment by $1,977 and the $3,956 non-routine adverse impact on sales in the prior year from the settlement of certain long-term commercial contracts related to the multi-year Crossrail project in the Company’s Technology Services and Solutions business in the United Kingdom.

Gross profit for the nine months ended September 30, 2023 was $83,767, an increase of $20,930 over the prior year period, or 33.3%, and gross profit margins expanded by 310 basis points to 20.5%.

The improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation plan along with higher sales volume and improved product mix, input costs, and pricing.

The current year gross profit includes the reduction in profitability of $3,051 related to changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line in the Steel Products and Measurement segment.

The prior year gross profit includes the adverse impact of $3,956 associated with the settlement of certain long-term commercial contracts related to the multi-year Crossrail project in the Company’s Technology Services and Solutions business in the United Kingdom and an expense of $851 associated with a purchase accounting adjustment related to acquired inventory stemming from the acquisition of VanHooseCo within the Precast Concrete Products segment.

Selling and administrative expenses for the nine months ended September 30, 2023 increased by $10,801, or 18.2%, from the prior year quarter, due in part to the acquisitions of VanHooseCo and Skratch, higher personnel expenses, and a bad debt provision charge of $866 due to a customer in the United Kingdom who filed for administrative protection in the Rail, Technologies, and Services segment.

The Company will continue to evaluate the collectibility of this account and will adjust the provision as required.

Selling and administrative expenses as a percent of net sales were 17.1% versus 16.5% in the prior year period, a 60 basis point increase.

Other expense - net for the nine months ended September 30, 2023 was $3,463 while other income - net was $1,096 in the prior year quarter.

Other expense - net for the nine months ended September 30, 2023 was due primarily to the $3,074 loss on the divestitures of Ties and Chemtec and $1,069 of exit costs incurred related to the exit of the bridge grid deck product line, and other income - net for the nine months ended September 30, 2022 was due to a $489 divestiture gain and $790 in insurance proceeds.

The Company’s effective income tax rate for the nine months ended September 30, 2023 was (5.9)%, compared to (8.7)% in the prior year period.

The Company’s effective tax rate for the 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.

The Company maintains a valuation allowance against its U.S.

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

Net income for the nine months ended September 30, 2023 attributable to the Company was $1,894, or $0.17 per diluted share, favorable by $3,527, or $0.33 per diluted share, from the prior year period.

Net income was primarily driven by stronger operating profit stemming from margin expansion during the nine months ended September 30, 2023, which was partially offset by a $3,074 loss on the divestitures of the Chemtec and Ties and $4,120 in exit costs impacting both gross profit and other expense (income) - net incurred from the exit of the bridge grid deck product line.

The Company continues to execute its strategic transformation into a technology-focused, high growth infrastructure solutions provider, as evidenced by the number of recent portfolio actions taken, including the divestiture of Chemtec and Ties and the exit of the bridge grid deck product line, which further reduces the Company’s commoditized offerings to allow for increased focus on its core growth platforms, rail technologies and precast concrete, as well as organic growth initiatives, debt reduction, and improving shareholder value.

Results of Operations - Segment Analysis

First Six Months 2023 Compared to First Six Months 2022

First Nine Months 2023 Compared to First Nine Months 2022

Rail, Technologies, and Services

Six Months Ended

June 30, Change Percent

Nine Months Ended

September 30, Change Percent

2023 2022 2023 vs.

2 unchanged sentences

Gross profit $ 51,360 $ 41,564 $ 9,796 23.6 %

Gross profit percentage 21.9 % 19.4 % 2.5 % 12.9 %

Gross profit margin 21.1 % 18.7 % 2.4 % 13.4 %

Segment operating profit $ 12,880 $ 5,576 $ 7,304 131.0 %

Segment operating profit percentage 5.8 % 3.5 % 2.3 % 66.9 %

The Rail, Technologies, and Services segment sales for the six months ended June 30, 2023 increased by $10,493, or 7.2%, compared to the prior year quarter.

Net sales increased by 12.1% organically and by 1.0% from the acquisition of Skratch, offset by a 5.9% decrease from the divestiture of Track Components.

The Rail Products and Global Friction Management business unit increase in sales were offset by sales decreases in the Technology Services and Solutions business unit.

The Rail Products and Global Friction Management sales increases were driven by strength in domestic markets served.

The sales decrease in the Technology Services and Solutions business unit was driven by the completion of the multi-year Crossrail project in late 2022 and weak economic conditions in the United Kingdom.

The Rail, Technologies, and Services segment gross profit increased by $5,943, or 21.1% over the prior year quarter, and gross profit margins expanded 250 basis points to 21.9%.

Segment operating profit margin 5.3 % 2.5 % 2.8 % 112.0 %

The Rail, Technologies, and Services segment sales for the nine months ended September 30, 2023 increased by $20,009, or 9.0%, compared to the prior year period.

Net sales increased by 13.1% organically and by 0.7% from the acquisition of Skratch, offset by a 4.8% decrease from the divestitures of Track Components and Ties.

The sales increase was driven by Rail Products and Global Friction Management due to strength in domestic markets served, partially offset by a sales decline in Technology Services and Solutions due to the completion of the multi-year Crossrail project in late 2022 and weak economic conditions in the United Kingdom in 2023.

Technology Services and Solutions sales in the nine months ended September 30, 2022 include a $3,956 reduction in sales from the settlement of certain long-term commercial contracts related to the multi-year Crossrail project.

The Rail, Technologies, and Services segment gross profit increased by $9,796, or 23.6%, over the prior year period, and gross profit margins expanded 240 basis points to 21.1%.

Gross profit increases in Rail Products and Global Friction Management were commensurate with higher sales levels.

Technology Services and Solutions gross profit declined year over year due to lower sales volumes, unfavorable business mix and ongoing commercial weakness in the United Kingdom market, partially offset by the $3,956 reduction in gross profit recorded in the prior year related to the settlement of certain long-term commercial contracts related to the multi-year Crossrail project.

The overall improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation, increased sales in the higher margin Global Friction Management business, and improved pricing.

Operating profit was $12,880, a $7,304 increase over the prior year quarter, due primarily to higher gross profit levels.

During the current quarter, the Rail, Technologies, and Services segment had an increase in new orders of $5,385, or 2.9%, compared to the prior year period.

The increase is due primarily to increases in the Global Friction Management business unit, which was offset by an unfavorable impact of $7,918 due to the Track Components divestiture.

Backlog as of June 30, 2023 was $132,451, an increase of $434, or 0.3%, versus the prior year quarter, despite a $6,960 and $832 reduction due to the Ties and Track Components sales, respectively.

During the nine months ended September 30, 2023, the Rail, Technologies, and Services segment had a slight decrease in new orders of $1,326, or 0.6%, compared to the prior year period.

New orders declined $8,224 and $1,493 related to the divestitures of Track Components and Ties, respectively, which was almost entirely offset by strong order levels in the Global Friction Management and Technology Services and Solutions businesses.

Backlog as of September 30, 2023 was $93,632, a decrease of $15,232, or 14.0%, versus the prior year period, driven by a decline in the Rail Products business, including a reduction of $7,091 related to the divestiture of Ties, partially offset by a 42.7% and 8.7% increase in Technology Services and Solutions and Global Friction Management backlog, respectively.

Precast Concrete Products

Six Months Ended

June 30, Change Percent

Nine Months Ended

September 30, Change Percent

2023 2022 2023 vs.

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Gross profit $ 22,463 $ 11,439 $ 11,024 96.4 %

Gross profit percentage 22.7 % 15.0 % 7.7 % 51.3 %

Segment operating profit (loss) $ 948 $ (916) $ 1,864 203.5 %

Segment operating profit (loss) percentage 1.6 % (2.4) % 4.0 % 168.7 %

The Precast Concrete Products segment sales for the six months ended June 30, 2023 increased by $19,532, or 50.6%, compared to the prior year quarter.

The VanHooseCo acquisition contributed $15,530, or 40.2% of the increase in sales over the prior year quarter.

Organic sales increased by $4,002, or 10.4%, which is a continued reflection of the strong demand environment in the southern and northeastern United States markets.

The Precast Concrete Products segment's gross profit for the six months ended June 30, 2023 increased by $7,405, and gross profit margins expanded by 770 basis points to 22.7%.

Gross profit margin 23.2 % 17.0 % 6.2 % 36.9 %

Segment operating profit $ 4,337 $ 329 $ 4,008 **

Segment operating profit margin 4.5 % 0.5 % 4.0 % **

** Results of the calculation are not considered meaningful for presentation purposes.

The Precast Concrete Products segment sales for the nine months ended September 30, 2023 increased by $29,318, or 43.4%, compared to the prior year period.

The VanHooseCo acquisition contributed 27.2% of the increase in sales over the prior year period.

Organic sales increased by 16.3%, which is a continued reflection of the strong demand environment in the southern and northeastern United States markets.

The Precast Concrete Products segment’s gross profit for the nine months ended September 30, 2023 increased by $11,024, and gross profit margins expanded by 620 basis points to 23.2%.

The improvement in gross profit is due to the VanHooseCo acquisition as well as overall sales volumes and stronger margins from the legacy precast business, including the impact of improved pricing.

Operating profit for the six months ended June 30, 2023 was $948, a $1,864 improvement over the prior year quarter, due to higher gross profit levels, which was partially offset by an increase in selling and administrative expenses from the VanHooseCo acquisition, as well as increased personnel expenses.

During the quarter, the Precast Concrete Products segment had an increase in new orders and backlog of 76.0% and 28.2%, respectively, compared to the prior year quarter.

The increase in new orders and backlog is due to the VanHooseCo acquisition and strong demand in the legacy business.

Operating profit for the nine months ended September 30, 2023 was $4,337, a $4,008 improvement over the prior year period, due to higher gross profit levels, which was partially offset by an increase in selling and administrative expenses from the VanHooseCo acquisition, as well as increased personnel expenses.

During the quarter, the Precast Concrete Products segment had an increase in new orders of 39.4% due to both the VanHooseCo acquisition and strong demand in the legacy business.

As of September 30, 2023, backlog decreased by 7.2%, driven by the legacy businesses, which was partially offset by uplift from the VanHooseCo acquisition.

Steel Products and Measurement

Six Months Ended

June 30, Change Percent

Nine Months Ended

September 30, Change Percent

2023 2022 2023 vs.

2 unchanged sentences

Gross profit $ 9,944 $ 9,834 $ 110 1.1 %

Gross profit percentage 16.6 % 12.5 % 4.1 % 33.4 %

Segment operating profit (loss) $ 1,448 $ (1,386) $ 2,834 204.5 %

Segment operating profit (loss) percentage 2.9 % (3.0) % 5.9 % 197.7 %

The Steel Products and Measurement segment sales for the six months ended June 30, 2023 increased by $3,188, or 6.9%, compared to the prior year quarter.

The increase in sales for the second quarter of 2023 was attributable to the increase in Coatings and Measurement sales over the prior year quarter, due to increased activity in both traditional and adjacent market applications.

This increase was partially offset by a decrease in Fabricated Steel Products business unit sales, driven by soft demand for bridge grid decking.

Steel Products and Measurement gross profit for the six months ended June 30, 2023 increased by $2,455, and gross profit margins increased 410 basis points to 16.6%.

The increase in gross profit is primarily due to stronger margins in the Protective Coatings division attributable to higher volumes.

The segment operating profit increased by $2,834 from the prior year quarter, due to higher gross profit levels.

During the quarter, the Steel Products and Measurement segment had an increase in new orders and backlog of $9,057, or 17.9%, and $18,635, or 39.4%, respectively, compared to the prior year quarter.

The increase is a result of improved order levels in the Fabricated Steel Products business unit and the Protective Coatings division due to strong demand in both traditional and adjacent market applications which was offset by a decrease of $6,982 due to the divestiture of Chemtec.

The backlog increase was partially offset by a $7,503 decrease due to the Chemtec divestiture.

Gross profit margin 14.4 % 14.1 % 0.3 % 2.3 %

Segment operating loss $ (73) $ (1,083) $ 1,010 93.3 %

Segment operating loss margin (0.1) % (1.5) % 1.4 % 93.2 %

The Steel Products and Measurement segment sales for the nine months ended September 30, 2023 decreased by $784, or 1.1%, compared to the prior year quarter.

The decrease in sales for the nine months ended September 30, 2023 was due to a reduction of $8,451 from the Chemtec divestiture and $1,977 stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line, which was almost entirely offset by an increase in Protective Coatings.

Steel Products and Measurement gross profit for the nine months ended September 30, 2023 increased by $110, and gross profit margins increased 30 basis points to 14.4%.

Gross profit for the nine months ended September 30, 2023 included growth in Protective Coatings due to stronger margins and higher sales volume, partially offset by an adverse impact of $3,051 related to changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line and a reduction of $560 due to the Chemtec divestiture.

The segment operating loss was favorable $1,010 from the prior year period, due to higher gross profit levels and a decrease in selling and administrative expenses.

During the quarter, the Steel Products and Measurement segment had a decrease in new orders and backlog of $17,942, or 17.8%, and $8,105, or 10.5%, respectively, compared to the prior year period.

The divestiture of Chemtec during the first quarter of 2023 resulted in a reduction in new orders and backlog of $22,014 and $20,251, respectively, from the prior year period.

Strong demand in the Protective Coatings division, in both traditional and expanded market applications, partially offset the decrease in new orders and backlog from the Chemtec divestiture.

Liquidity and Capital Resources

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility, which provides for a total commitment of up to $130,000, of which $39,547 was available for borrowing as of June 30, 2023, subject to covenant restrictions.

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility, which provides for a total commitment of up to $130,000, of which $55,980 was available for borrowing as of September 30, 2023, subject to covenant restrictions.

The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, payments related to the Union Pacific Railroad Settlement, and acquisitions.

The Company’s total debt, including finance leases, was $89,505 and $91,879 as of June 30, 2023 and December 31, 2022, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity, subject to covenant restrictions, as of June 30, 2023:

June 30, 2023

The Company’s total debt, including finance leases, was $71,689 and $91,879 as of September 30, 2023 and December 31, 2022, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity, subject to covenant restrictions, as of September 30, 2023:

September 30, 2023

Cash and cash equivalents $ 2,969

8 unchanged sentences

The Company regularly assesses its receivables and contract assets for collectability and realization, and provides allowances for credit losses where appropriate.

The Company believes that its reserves for credit losses are appropriate as of June 30, 2023, but adverse changes in the economic environment and adverse financial conditions of its customers may impact certain of its customers’ ability to access capital and pay the Company for its products and services, as well as impact demand for its products and services.

The changes in cash and cash equivalents for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

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

The Company believes that its reserves for credit losses are appropriate as of September 30, 2023, but adverse changes in the economic environment and adverse financial conditions of its customers may impact certain of its customers’ ability to access capital and pay the Company for its products and services, as well as impact demand for its products and services.

The changes in cash and cash equivalents for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

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

Net cash provided by (used in) investing activities 5,798 (54,061)

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Cash Flow from Operating Activities

During the six months ended June 30, 2023, net cash used by operating activities was $3,333, compared to cash used by operating activities of $13,382 during the prior year period.

For the six months ended June 30, 2023, net income and adjustments to reconcile net income from operating activities provided $11,862, compared to $7,277 in the prior year period.

During the nine months ended September 30, 2023, net cash provided by operating activities was $15,310, compared to cash used by operating activities of $18,836 during the prior year period.

For the nine months ended September 30, 2023, net income and adjustments to reconcile net income from operating activities provided $16,850, compared to $9,134 in the prior year period.

Working capital and other assets and liabilities used $1,540 in the current period, compared to using $27,970 in the prior year period.

The Company received $2,973 during the six months ended June 30, 2023 associated with its federal income tax refund claims, which have now been collected in full.

The Company received $2,973 during the nine months ended September 30, 2023 associated with its federal income tax refund claims, which have now been collected in full.

Cash Flow from Investing Activities

Capital expenditures for the six months ended June 30, 2023 and 2022 were $1,495 and $3,048, respectively.

The current period expenditures primarily relate to general plant and operational improvements throughout the Company, including corporate system and facility improvements and organic growth initiatives.

Expenditures for the six months ended June 30, 2022 primarily related to general plant and operational improvements throughout the Company, as well as organic growth initiatives.

During the six months ended June 30, 2023, the Company divested the assets of its Chemtec and Ties businesses, generating a cash inflow of $7,706.

During the six months ended June 30, 2023 the Company received proceeds of $966 from final working capital adjustments related to prior year acquisitions.

During the six months ended June 30, 2022 the Company had $5,712 in cash outflows for the acquisition of Skratch.

Capital expenditures for the nine months ended September 30, 2023 and 2022 were $2,784 and $4,559, respectively.

The current period expenditures primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives.

Expenditures for the nine months ended September 30, 2022 primarily related to general plant and operational improvements throughout the Company, including corporate system and facility improvements and organic growth initiatives.

During the nine months ended September 30, 2023, the Company divested the assets of its Chemtec and Ties businesses, generating a cash inflow of $7,706.

During the nine months ended September 30, 2023 the Company received proceeds of $337 from final working capital adjustments related to prior year acquisitions.

During the nine months ended September 30, 2022 the Company received cash proceeds from the Track Components divestiture and final proceeds from the 2021 Piling Products divestiture totaling $8,800.

During the nine months ended September 30, 2022, the Company had $58,561 in cash outflows for the acquisition of Skratch and VanHooseCo.

Cash Flow from Financing Activities

During the six months ended June 30, 2023 and 2022, the Company had a decrease in outstanding debt of $2,920 and an increase of $18,877, respectively.

The decrease in debt for the six months ended June 30, 2023 was primarily due to the proceeds received from the Ties and Chemtec divestiture during the period, which were used to pay down debt, partially offset by increased working capital needs.

The increase in debt for the 2022 period was the result of funding working capital and other assets and liabilities.

Treasury stock acquisitions of $977 and $401 for the six months ended June 30, 2023 and 2022, respectively, represent stock repurchases from employees to satisfy their income tax withholdings in connection with the vesting of stock awards.

During the nine months ended September 30, 2023 and 2022, the Company had a decrease in outstanding debt of $20,262 and an increase of $69,155, respectively.

The decrease in debt for the nine months ended September 30, 2023 was primarily due to cash provided by operations, as well as proceeds received from the Ties and Chemtec divestitures during the period, which were used to pay down debt.

The increase in debt for the 2022 period was due largely to the acquisition of VanHooseCo on August 12, 2022, as well as the acquisition of Skratch on June 21, 2022, and the funding of working capital and other assets and liabilities.

Treasury stock acquisitions of $1,193 and $405 for the nine months ended September 30, 2023 and 2022, respectively, represent stock repurchases from employees to satisfy their income tax withholdings in connection with the vesting of stock awards.

During the first quarter of 2023, the Company’s Board of Directors authorized the repurchase of up to $15,000 of the Company’s common stock in open market transactions through February 2026.

Repurchases are limited to up to $5,000 in any trailing 12-month period, with unused amounts carrying forward to future periods through the end of the authorization.

Any repurchases will be subject

to the Company’s liquidity, including availability of borrowings and covenant compliance under its revolving credit facility, and other capital needs of the business.

In connection with the stock repurchase program, 51,241 shares valued at $662 were repurchased during the six months ended June 30, 2023.

Any repurchases will be subject to the Company’s liquidity, including availability of borrowings and covenant compliance under its revolving credit facility, and other capital needs of the business.

In connection with the stock repurchase program, 63,343 shares valued at $878 were repurchased during the nine months ended September 30, 2023.

Repurchases of shares of the Company’s common stock may be made from time to time in the open market or in such other manner as determined by the Company.

2 unchanged sentences

Financial Condition

As of June 30, 2023, the Company had $3,880 in cash and cash equivalents.

As of September 30, 2023, the Company had $2,969 in cash and cash equivalents.

The Company’s cash management priority continues to be short-term maturities and the preservation of its principal balances.

As of June 30, 2023, approximately $2,418 of the Company’s cash and cash equivalents were held in non-domestic bank accounts.

As of September 30, 2023, approximately $2,243 of the Company’s cash and cash equivalents were held in non-domestic bank accounts.

The Company principally maintains its cash and cash equivalents in accounts held by major banks and financial institutions.

1 unchanged sentence

The Company views its liquidity as being dependent on its results of operations, changes in working capital needs, and its borrowing capacity.

As of June 30, 2023, the Company's revolving credit facility had $39,547 of net availability, while the Company had $89,505 in total debt.

As of September 30, 2023, the Company's revolving credit facility had $55,980 of net availability, while the Company had $71,689 in total debt.

On August 13, 2021, the Company entered into the Credit Agreement, which increased the total commitments under the revolving credit facility to $130,000, extended the maturity date from April 30, 2024 to August 13, 2026, and provided more favorable covenant terms.

2 unchanged sentences

On August 12, 2022, the Company amended its Credit Agreement to obtain approval for the VanHooseCo acquisition 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.

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.

The Second Amendment also added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings.

3 unchanged sentences

Total Company backlog is summarized by business segment in the following table for the periods indicated:

September 30,

2023 December 31,

2022 June 30,

2022 September 30,

Rail, Technologies, and Services $ 93,632 $ 105,241 $ 108,864

19 unchanged sentences

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 2. Management’s Discussion and Analysis