What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-07 · 140 added, 249 removed, 375 unchanged (51% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2024 December 31,

11 unchanged sentences

Other intangibles - net (Note 4) 18,198 19,010

Deferred tax assets (Note 9) — 24

Other assets 2,993 2,715

3 unchanged sentences

Accounts payable $ 43,368 $ 40,305

Deferred revenue 16,003 19,452

Deferred revenue (Note 3) 11,458 12,479

Accrued payroll and employee benefits 5,340 16,978

5 unchanged sentences

Deferred tax liabilities (Note 9) 1,191 1,232

Long-term portion of accrued settlement (Note 13) 4,000 8,000

Long-term operating lease liabilities 11,178 11,865

2 unchanged sentences

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

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

shares issued at March 31, 2024 and December 31, 2023, 11,115,779 ;

shares outstanding at March 31, 2024 and December 31, 2023, 10,789,231 and 10,733,935 , respectively

Paid-in capital 41,866 43,111

Retained earnings 129,069 124,633

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

Treasury stock - at cost, 326,548 and 381,844 common stock shares at March 31, 2024 and December 31, 2023, respectively

( 5,829 ) ( 6,494 )

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Sales of goods $ 104,463 $ 98,538

7 unchanged sentences

Amortization expense 1,217 1,365

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

Operating profit 2,283 503

Interest expense - net 1,125 1,388

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

Other (income) expense - net ( 3,536 ) 1,827

Income (loss) before income taxes 4,694 ( 2,712 )

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

Income tax expense (benefit) 289 ( 541 )

Net income (loss) 4,405 ( 2,171 )

2 unchanged sentences

Foster Company $ 4,436 $ ( 2,152 )

Per share data attributable to L.B.

Foster shareholders:

Basic earnings (loss) per common share $ 0.41 $ ( 0.20 )

Diluted earnings (loss) per common share $ 0.40 $ ( 0.20 )

Basic weighted average shares outstanding 10,762 10,792

Diluted weighted average shares outstanding 10,985 10,792

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

FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net income (loss) $ 4,405 $ ( 2,171 )

1 unchanged sentence

Foreign currency translation adjustment ( 1,497 ) 1,247

Unrealized gain on cash flow hedges, net of tax expense of $ 0 , $ 217 , $ 0 , and $ 455 , respectively

1 632 79 1,330

Cash flow hedges reclassified to earnings, net of tax expense of $ 0 , $ 0 , $ 0 , and $ 66 , respectively

Unrealized gain (loss) on cash flow hedges, net of tax expense of $ 0

Reclassification of pension liability adjustments to earnings, net of tax expense of $ 4 and $ 2 , respectively*

42 50 123 149

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

Total comprehensive income (loss) 3,039 ( 1,302 )

Less comprehensive (loss) income attributable to noncontrolling interest:

2 unchanged sentences

Amounts attributable to noncontrolling interest ( 48 ) ( 15 )

Comprehensive (loss) income attributable to L.B.

Comprehensive income (loss) attributable to L.B.

Foster Company $ 3,087 $ ( 1,287 )

4 unchanged sentences

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Amortization 1,217 1,365

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

Equity in income of nonconsolidated investments — ( 17 )

Gain on sales and disposals of property, plant, and equipment ( 3,574 ) ( 14 )

Stock-based compensation 1,033 884

Loss (gain) on asset divestitures 3,074 ( 44 )

Loss on asset divestitures — 2,033

Change in operating assets and liabilities:

7 unchanged sentences

Accrued payroll and employee benefits ( 11,599 ) ( 6,386 )

Accrued settlement ( 4,000 ) ( 4,000 )

Other current liabilities ( 1,807 ) ( 2,981 )

Other long-term liabilities ( 1,395 ) 1,148

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

Net cash (used in) provided by operating activities ( 21,864 ) 6,932

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

Proceeds from business dispositions — 5,344

Acquisitions, net of cash acquired 337 ( 58,561 )

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

Net cash provided by investing activities 1,209 4,661

CASH FLOWS FROM FINANCING ACTIVITIES:

1 unchanged sentence

Proceeds from debt 78,746 43,086

Debt issuance costs — ( 182 )

Treasury stock acquisitions ( 1,613 ) ( 309 )

Investment of noncontrolling interest — 334

Net cash (used in) provided by financing activities ( 21,121 ) 68,568

Net cash provided by (used in) financing activities 21,298 ( 12,022 )

Effect of exchange rate changes on cash and cash equivalents ( 55 ) 186

4 unchanged sentences

Interest paid $ 992 $ 1,425

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

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

FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands)

Three Months Ended September 30, 2023

Stock Paid-in

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive Loss Noncontrolling

Interest Total Stockholders’

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

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

Other comprehensive income, net of tax:

Pension liability adjustment — — — — 42 — 42

Foreign currency translation adjustment — — — — ( 1,630 ) ( 21 ) ( 1,651 )

Unrealized derivative gain on cash flow hedges — — — — 1 — 1

Purchase of 12,102 common shares for treasury

— — — ( 216 ) — — ( 216 )

Issuance of 0 common shares, net of shares withheld for taxes

— ( 15 ) — — — — ( 15 )

Stock-based compensation — 928 — — — — 928

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

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive Loss Noncontrolling

Interest Total Stockholders’

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

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

Other comprehensive loss, net of tax:

Pension liability adjustment — — — — 50 — 50

Foreign currency translation adjustment — — — — ( 4,341 ) ( 21 ) ( 4,362 )

Unrealized derivative gain on cash flow hedges — — — — 632 — 632

Issuance of 605 common shares, net of shares withheld for taxes

— 20 — 40 — — 60

Stock-based compensation — 387 — — — — 387

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

Income taxes paid (received) $ 303 $ ( 1,564 )

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

2 unchanged sentences

(Dollars in thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Stock Paid-in

15 unchanged sentences

Stock-based compensation — 1,033 — — — — 1,033

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

Nine Months Ended September 30, 2022

Balance, March 31, 2024 $ 111 $ 41,866 $ 129,069 $ ( 5,829 ) $ ( 20,616 ) $ 676 $ 145,277

Three Months Ended March 31, 2023

Stock Paid-in

5 unchanged sentences

Balance, December 31, 2022 $ 111 $ 41,303 $ 123,169 $ ( 6,240 ) $ ( 21,165 ) $ 420 $ 137,598

Net income (loss) — — ( 1,633 ) — — ( 82 ) ( 1,715 )

Other comprehensive (loss) income, net of tax:

Net loss — — ( 2,152 ) — — ( 19 ) ( 2,171 )

Other comprehensive loss, net of tax:

Pension liability adjustment — — — — 40 — 40

Foreign currency translation adjustment — — — — 1,247 4 1,251

Unrealized derivative gain on cash flow hedges — — — — 1,330 — 1,330

Cash flow hedges reclassified to earnings — — — — 93 — 93

Unrealized derivative loss on cash flow hedges — — — — ( 418 ) — ( 418 )

Issuance of 32,884 common shares, net of shares withheld for taxes

1 unchanged sentence

Stock-based compensation — 884 — — — — 884

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

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

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

2 unchanged sentences

(Dollars in thousands, except share data)

Financial Statements

Basis of Presentation

3 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 nine months ended September 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 months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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

4 unchanged sentences

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

The Company’s innovative engineering and product development solutions address the safety, reliability, and performance needs of its customers’ most challenging requirements.

The Company maintains locations in North America, South America, Europe, and Asia.

The Company’s segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred, (b) whose operating results are regularly reviewed by the Chief Operating Decision Maker, who uses such information to make decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available.

2 unchanged sentences

The Company’s segment accounting policies are described in Note 2 Business Segments of the Notes to the Company’s Consolidated Financial Statements contained in its Annual Report on Form 10-K for the year ended December 31, 2023.

The Company is organized and operates in two reporting segments:

Rail, Technologies, and Services (“Rail”), and Infrastructure Solutions (“Infrastructure”).

Effective for the quarter and year ended December 31, 2023, the Company made certain organizational changes that led to the conclusion that it will operate under two reporting segments as opposed to the three reporting segments it has operated under historically.

As such, the Company has restated segment information for the historical periods presented herein to conform to the current presentation.

The Infrastructure Solutions business comprises both the historic Precast Concrete Products and Steel Products and Measurement (since renamed “Steel Products”) reporting segments.

The operating results of the Company’s reportable segments were as follows for the periods presented:

Three Months Ended

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

Precast Concrete Products 38,642 3,389 28,856 1,245

Steel Products and Measurement 19,837 ( 1,521 ) 23,809 303

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

Nine Months Ended

September 30, 2023 Nine Months Ended

September 30, 2022

March 31, 2024 Three Months Ended

March 31, 2023

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

Rail, Technologies, and Services $ 82,623 $ 6,778 $ 64,384 $ 2,388

Precast Concrete Products 96,795 4,337 67,477 329

Steel Products and Measurement 69,206 ( 73 ) 69,990 ( 1,083 )

Infrastructure Solutions 41,697 ( 1,393 ) 51,104 ( 356 )

Total $ 124,320 $ 5,385 $ 115,488 $ 2,032

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating profit for reportable segments $ 5,385 $ 2,032

Interest expense - net ( 1,125 ) ( 1,388 )

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

Other income (expense) - net 3,536 ( 1,827 )

Unallocated corporate expenses and other unallocated charges ( 3,102 ) ( 1,529 )

1 unchanged sentence

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

September 30,

2024 December 31,

Rail, Technologies, and Services $ 167,565 $ 157,023

Precast Concrete Products 106,243 108,598

Steel Products and Measurement 36,481 54,516

Infrastructure Solutions 129,852 130,667

Unallocated corporate assets 28,984 25,516

Total $ 326,401 $ 313,206

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.

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 generating a $ 2,065 loss on sale, recorded in “Other (income) expense - net” for the three months ended March 31, 2023.

The Chemtec business was reported in the Steel Products business unit in the Infrastructure 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, generating a $ 1,009 loss on the sale, which was recorded in “Other expense (income) - net” for the three months ended June 30, 2023.

The Ties business was reported in the Rail Products business unit within the Rail segment.

On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line (“Bridge Exit”) which was reported in the Steel Products business unit within the Infrastructure segment.

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

The Bedford, PA based operations supporting the product line expects to complete any remaining customer obligations during 2024.

For the three months ended March 31, 2024 and 2023, the product line had $ 810 and $ 1,491 in sales, respectively.

During the three months ended March 31, 2024, the Company incurred $ 73 of exit costs recorded in “Other (income) expense - net,” all of which were personnel expenses.

The Company expects to incur an additional $ 111 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:

Cumulatively, the Company has incurred a total of $ 1,476 in exit costs for the Bridge Exit, which included $ 474 in inventory write-downs, $ 740 in personnel expenses, and $ 262 in other exit costs.

On November 17, 2023, the Company acquired the operating assets of Cougar Mountain Precast, LLC (“Cougar”), located in Caldwell, Idaho, which is a licensed manufacturer of Redi-Rock and natural concrete products for $ 1,644 , subject to hold back payments, to be paid over the next twelve months or utilized to satisfy post-close working capital adjustments or indemnity claims.

Cougar has been included in the Precast Concrete Products business unit within the Infrastructure segment.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Rail Products and Global Friction Management $ 76,262 $ 69,573 $ 214,236 $ 192,527

Rail Products $ 53,038 $ 40,228

Global Friction Management 14,022 15,820

Technology Services and Solutions 15,563 8,336

Rail, Technologies, and Services 82,623 64,384

Precast Concrete Buildings 20,127 15,525 50,338 41,306

Precast Infrastructure Products 18,515 13,331 46,457 26,171

Precast Concrete Products 21,091 24,288

Fabricated Steel Products 14,218 15,300 39,589 45,871

Coatings and Measurement 5,619 8,509 29,617 24,119

Steel Products and Measurement 19,837 23,809 69,206 69,990

Steel Products 20,606 26,816

Infrastructure Solutions 41,697 51,104

Total net sales $ 124,320 $ 115,488

3 unchanged sentences

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

Three Months Ended September 30, 2023

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

Point in time $ 72,246 $ 18,516 $ 20,018 $ 110,780

Over time 14,620 20,126 ( 181 ) 34,565

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

Three Months Ended September 30, 2022

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

Point in time $ 64,913 $ 13,331 $ 20,871 $ 99,115

Over time 12,437 15,525 2,938 30,900

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

Nine Months Ended September 30, 2023

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

Three Months Ended March 31, 2024

Rail, Technologies, and Services Infrastructure Solutions Total

Point in time $ 65,539 $ 29,657 $ 95,196

1 unchanged sentence

Total net sales $ 82,623 $ 41,697 $ 124,320

Nine Months Ended September 30, 2022

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

Three Months Ended March 31, 2023

Rail, Technologies, and Services Infrastructure Solutions Total

Point in time $ 53,834 $ 29,128 $ 82,962

1 unchanged sentence

Total net sales $ 64,384 $ 51,104 $ 115,488

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.

Revenue under long-term agreements is at times recognized using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts its performance to date under the terms of the contract.

The Company’s revenue recognized over time under long-term agreements is also at times recognized using an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements.

Over time revenue is primarily comprised of transit infrastructure and technology services and solutions projects within the Rail segment, precast concrete buildings within the Precast Concrete Products division in the Infrastructure segment, and long-term bridge projects and custom precision metering systems within the Steel Products division in the Infrastructure segment.

Revenue under these long-term agreements is generally recognized over time, either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts the Company’s performance to date under the terms of the contract, or an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements.

The use of an input or an output measure to recognize revenue is determined based on what is most appropriate given the nature of the work performed and terms of the associated agreement.

Accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs.

The Company estimates profit on these long-term agreements as the difference between total estimated revenues and expected costs to complete a contract and recognizes that profit over the life of the contract.

As a result of management's reviews of contract-related estimates the Company makes adjustments to contract estimates that impact our revenue and profit totals.

Changes in estimates are primarily attributed to updated considerations, including economic conditions and historic contract patterns, resulting in changes to anticipated revenue from existing contracts.

During the three months ended March 31, 2024, reductions to net sales stemming from changes in actual and expected values of certain commercial contracts and settlements of such contracts were immaterial .

Such adjustments were $ 393 during the three months ended March 31, 2023.

The Company’s estimates related to these long-term agreements are further described in Note 4 Revenue of the Notes to the Company’s Consolidated Financial Statements contained in its Annual Report on Form 10-K for the year ended December 31, 2023.

Revenue recognized over time was as follows for the periods presented:

Three Months Ended

September 30, Percentage of Total Net Sales

Three Months Ended September 30,

2023 2022 2023 2022

Over time input method $ 12,642 $ 14,380 8.7 % 11.1 %

Over time output method 21,923 16,520 15.1 12.7

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

Nine Months Ended

September 30, Percentage of Total Net Sales

Nine Months Ended September 30,

March 31, Percentage of Total Net Sales

Three Months Ended March 31,

2024 2023 2024 2023

8 unchanged sentences

Transfers from contract asset balance to accounts receivable ( 9,560 )

Balance as of September 30, 2023

Balance as of March 31, 2024

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

3 unchanged sentences

Increase in billings in excess of cost, excluding revenue recognized 1,850

Other adjustments, including business divestiture ( 1,904 )

Balance as of September 30, 2023

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

Provisions are recorded based upon a specific review of individual contracts as necessary, and a standard provision over any remaining contract assets pooled together based on similar risk of credit loss.

The development of these provisions is based on historical collection trends, accuracy of estimates within contract margin reporting, as well as the expectation that collection patterns and margin reporting will continue to adhere to patterns observed in recent years.

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

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.

Other adjustments 317

Balance as of March 31, 2024

The Company has established policies regarding allowance for credit losses associated with contract assets, which includes standalone reserve assessments for its long term, complex contracts as needed as well as detailed regular review and updates to contract margins, progress, and value.

A standard reserve threshold is applied to contract assets related to short term, less complex contracts.

Management also regularly reviews collection patterns and future expected collections and makes necessary revisions to allowance for credit losses related to contract assets.

As of March 31, 2024, the Company had approximately $ 222,261 of remaining performance obligations, which is also referred to as backlog.

Approximately 10.5 % of the March 31, 2024 backlog was related to projects that are anticipated to extend beyond March 31, 2025.

Goodwill and Other Intangible Assets

The following table presents the changes in goodwill balance by reportable segment for the period presented:

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

Rail, Technologies, and Services Infrastructure Solutions Total

Balance as of December 31, 2023 $ 20,466 $ 12,121 $ 32,587

VanHooseCo acquisition — 242 — 242

Cougar purchase accounting adjustment — ( 445 ) ( 445 )

Foreign currency translation impact ( 147 ) — ( 147 )

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

Balance as of March 31, 2024 $ 20,319 $ 11,676 $ 31,995

On November 17, 2023, the Company acquired Cougar Mountain Precast, LLC., for which all purchase accounting adjustments were finalized as of March 31, 2024.

Purchase accounting finalization during the three months ended March 31, 2024 included adjustments to record $ 429 of gross intangible assets for customer relationships with a weighted average amortization period of 5 years.

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.

Qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount, which included the impacts of current economic conditions, including but not limited to labor markets, supply chains, and other inflationary costs.

other inflationary costs.

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 September 30, 2023.

No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of March 31, 2024.

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

The following table sets forth the components of the Company’s intangible assets for the periods presented:

March 31, 2024

Weighted Average

8 unchanged sentences

$ 69,314 $ ( 51,116 ) $ 18,198

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, 2023

3 unchanged sentences

Amortization Net

Non-compete agreements 1 $ 27 $ ( 16 ) $ 11

Patents 10 $ 335 $ ( 199 ) $ 136

4 unchanged sentences

$ 69,021 $ ( 50,011 ) $ 19,010

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

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

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 $ 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.

Trade receivables are pooled based on age, which groups receivables of similar credit risk together.

Management maintains stringent credit review practices and works to maintain positive customer relationships to further mitigate credit risk.

Changes in reserves for uncollectible accounts are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, and an expense of $ 396 and $ 155 for the three months ended March 31, 2024 and 2023, respectively.

The Company established the allowance for credit losses by calculating the amount to reserve based on the age of a given trade receivable and considering historical collection patterns, bad debt expense experience, expected future trends of collections, current and expected market conditions, and any other relevant subjective adjustments as needed.

Management maintains high-quality credit review practices and positive customer relationships that mitigate credit risks.

The Company’s reserves are regularly reviewed and revised as necessary.

The following table sets forth the Company’s allowance for credit losses:

3 unchanged sentences

Write-off against allowance ( 35 )

Balance as of September 30, 2023 $ 1,743

Balance as of March 31, 2024 $ 1,170

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

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

September 30,

The Company’s components of inventory are summarized in the following table for the periods presented:

2024 December 31,

5 unchanged sentences

Long-term debt consisted of the following:

September 30,

2024 December 31,

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On August 13, 2021, the Company, its domestic subsidiaries, and certain of its Canadian and United Kingdom subsidiaries (collectively, the “Borrowers”), entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) with PNC Bank, N.A., Citizens Bank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A., and BMO Harris Bank, National Association.

The Credit Agreement, as amended, modifies the prior revolving credit facility, as amended, on terms more favorable to the Company and extends the maturity from April 30, 2024 to August 13, 2026.

The Credit Agreement, as amended, modifies the prior amended revolving credit facility, on terms more favorable to the Company and extends the maturity from April 30, 2024 to August 13, 2026.

The Credit Agreement provides for a five-year , revolving credit facility that permits aggregate borrowings of the Borrowers up to $ 130,000 with a sublimit of the equivalent of $ 25,000 U.S.

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The Credit Agreement’s incremental loan feature permits the Company to increase the available commitments under the facility by up to an additional $ 50,000 subject to the Company’s receipt of increased commitments from existing or new lenders and the satisfaction of certain conditions.

On August 12, 2022, the Company entered into a second amendment to its Credit Agreement (the “Second Amendment”) which added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings.

Borrowings under the Credit Agreement, as amended, will bear interest at rates based upon either the base rate or SOFR rate plus applicable margins.

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(a) Maximum Gross Leverage Ratio, defined as the Company’s consolidated Indebtedness (as defined in the Credit Agreement) divided by the Company’s consolidated EBITDA, which must not exceed (i) 3.25 to 1.00 for all testing periods other than during an Acquisition Period (as defined in the Credit Agreement), and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period, and (b) Minimum Consolidated Fixed Charge Coverage Ratio, defined as the Company’s consolidated EBITDA divided by the Company’s Fixed Charges (as defined in the Credit Agreement), which must be more than 1.05 to 1.00.

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 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 .

As of March 31, 2024, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $ 2,432 .

Earnings Per Common Share

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Numerator for basic and diluted earnings per common share:

Numerator for basic and diluted earnings (loss) per common share:

Net income (loss) attributable to L.B.

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Diluted earnings (loss) per common share $ 0.40 $ ( 0.20 )

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.

There were 0 and 101 anti-dilutive shares for the three months ended March 31, 2024 and March 31, 2023, respectively.

For the three months ended March 31, 2024 and 2023, the Company recorded an income tax expense of $ 289 on pre-tax income of $ 4,694 and an income tax benefit of $ 541 on pre-tax losses of $ 2,712 , respectively, for an effective income tax rate of 6.2 % and 19.9 %, respectively.

The Company's effective income tax rate for the three months ended March 31, 2024 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.

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 $ 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 recorded stock-based compensation expense of $ 1,033 and $ 884 for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, unrecognized compensation expense for awards that the Company expects to vest approximated $ 4,711 .

The Company will recognize this unrecognized compensation expense over the upcoming 1.9 years through March 1, 2026.

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

As of March 31, 2024, the Company had stock awards issued pursuant to the 2022 Equity and Incentive Compensation Plan (the "Equity and Incentive Plan") and its predecessor, the 2006 Omnibus Incentive Compensation Plan (the "Omnibus Plan").

No stock options are outstanding under either the Omnibus Plan or Equity and Incentive Plan and, as such, there was no stock-based compensation expense related to stock options recorded for the March 31, 2024 and 2023.

Non-Employee Director Fully-Vested and Restricted Stock Awards

Since May 2018, non-employee directors have been awarded shares of the Company’s common stock on each date the non-employee directors were elected at the annual shareholders’ meeting to serve as directors, subject to a one-year vesting requirement.

The Deferred Compensation Plan for Non-Employee Directors under the Omnibus Plan and, by amendment, under the Equity and Incentive Compensation Plan, which permits non-employee directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board into deferred stock units.

Restricted Stock and Performance-Based Stock and Share Units

Under the Equity and Incentive Compensation Plan and Omnibus Plan, the Company grants certain employees restricted stock and performance-based stock and 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.

Awards of restricted stock are subject to a minimum one-year vesting period, including those granted to non-employee directors.

Performance share units are offered annually under separate three-year long-term incentive programs.

Performance share units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples, as defined in the underlying program.

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.

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.

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 nine months ended September 30, 2023:

Performance unit awards are offered annually under separate three-year long-term incentive programs, unless indicated otherwise by the underlying performance unit award agreement.

Performance units are subject to forfeiture and will be converted into common stock based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program.

The following table summarizes the restricted stock, deferred stock units, and performance-based stock and share unit activity for the periods presented:

Stock Deferred

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Cancelled and forfeited ( 1,000 ) — ( 437 ) 11.62

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

Outstanding as of March 31, 2024 173,748 12,404 540,229 $ 13.81

Fair Value Measurements

The Company determines the fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.

The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations.

The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions of what market participants would use.

The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below.

Observable inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities.

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Cash equivalents - Included in “Cash and cash equivalents” within the Condensed Consolidated Balance Sheets are investments in non-domestic term deposits.

The carrying amounts approximate fair value because of the short maturity of the instruments.

SOFR-based interest rate swaps - To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into forward-starting SOFR-based interest rate swaps with notional values totaling $ 20,000 and $ 20,000 effective August 12, 2022 and August 31, 2022, respectively.

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

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.

As of March 31, 2024 and December 31, 2023, 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,

2024 Level 1 Level 2 Level 3 December 31,

2023 Level 1 Level 2 Level 3

Term deposits $ — $ — $ — $ — $ 17 $ 17 $ — $ —

Interest rate swaps $ 1,331 $ — $ 1,331 $ — $ 1,225 $ — $ 1,225 $ —

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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 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

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 March 31, 2024 and 2023, the Company recognized interest income of $ 337 and $ 245 , respectively, from interest rate swaps.

Retirement Plans

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Employees are eligible to participate in the appropriate plan based on employment classification.

The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Company’s policy and investment guidelines applicable to each respective plan.

applicable to each respective plan.

The Company’s policy is to contribute at least the minimum in accordance with the funding standards of ERISA.

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United States Defined Benefit Plan

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:

Net periodic pension costs were as follows for the periods presented:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Interest cost $ 66 $ 71

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Net periodic pension cost $ 13 $ 23

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.

The Company has made contributions to its United States defined benefit plan of $ 100 during the three months ended March 31, 2024 and expects to make total contributions of approximately $ 370 during 2024.

United Kingdom Defined Benefit Plan

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:

Net periodic pension costs were as follows for the periods presented:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Interest cost $ 56 $ 55

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Recognized net actuarial loss 8 3

Net periodic pension (income) cost $ ( 19 ) $ 12 $ ( 57 ) $ 36

Net periodic pension income $ ( 24 ) $ ( 19 )

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

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

For the three months ended March 31, 2024, the Company contributed approximately $ 79 to the plan.

The Company anticipates total contributions of approximately $ 315 to the United Kingdom pension plan during 2024.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

United States $ 551 $ 614

Canada 36 83 131 143

United Kingdom 281 261

$ 1,058 $ 1,112 $ 3,147 $ 1,867

Commitments and Contingent Liabilities

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The Settlement Agreement also includes a mutual release of all claims and liability regarding or relating to all CXT pre-stressed concrete railroad ties with no admission of liability and dismissal of the litigation with prejudice.

The expected payments under the UPRR Settlement Agreement for the remainder of the year ending December 31, 2023 and thereafter are as follows:

Year Ending December 31,

Remainder of 2023 $ 4,000

Total $ 12,000

The expected payment under the UPRR Settlement Agreement for the remainder of the year ending December 31, 2024 is $ 8,000 , upon which the obligation for the Settlement Agreement will be satisfied.

Environmental and Legal Proceedings

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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.

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

As of March 31, 2024 and December 31, 2023, the Company maintained environmental reserves approximating $ 2,398 and $ 2,417 , 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 September 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 September 30, 2023, no such disclosures were considered necessary.

Based on the Company’s assessment as of March 31, 2024, 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