What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 227 added, 96 removed, 419 unchanged (44% of the section changed)

33 unchanged sentences

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

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

shares issued at June 30, 2024 and December 31, 2023, 11,115,779 ;

shares outstanding at June 30, 2024 and December 31, 2023, 10,783,036 and 10,733,935 , respectively

Paid-in capital 42,612 43,111

Retained earnings 131,916 124,633

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

Treasury stock - at cost, 332,743 and 381,844 common stock shares at June 30, 2024 and December 31, 2023, respectively

( 6,405 ) ( 6,494 )

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Sales of goods $ 122,417 $ 132,167 $ 226,880 $ 230,705

7 unchanged sentences

Amortization expense 1,123 1,375 2,340 2,740

Operating profit 2,283 503

Operating income 4,504 6,349 6,787 6,852

Interest expense - net 1,493 1,574 2,618 2,962

Other (income) expense - net ( 152 ) 719 ( 3,688 ) 2,546

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

Income tax expense (benefit) 289 ( 541 )

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

Income before income taxes 3,163 4,056 7,857 1,344

Income tax expense 346 563 635 22

Net income 2,817 3,493 7,222 1,322

Net loss attributable to noncontrolling interest ( 30 ) ( 38 ) ( 61 ) ( 57 )

Net income (loss) attributable to L.B.

Net income attributable to L.B.

Foster Company $ 2,847 $ 3,531 $ 7,283 $ 1,379

1 unchanged sentence

Foster shareholders:

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

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

Basic earnings per common share $ 0.26 $ 0.32 $ 0.68 $ 0.12

Diluted earnings per common share $ 0.26 $ 0.32 $ 0.66 $ 0.12

Basic weighted average shares outstanding 10,793 10,807 10,777 10,800

2 unchanged sentences

FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

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

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 2,817 $ 3,493 $ 7,222 $ 1,322

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 452 ) 1,252 ( 1,966 ) 2,503

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

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

( 186 ) 496 ( 80 ) 78

Reclassification of pension liability adjustments to earnings, net of tax expense of $ 7 , $ 2 , $ 11 , and $ 4 , respectively*

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

Total comprehensive income 2,205 5,282 5,227 3,984

Less comprehensive (loss) income attributable to noncontrolling interest:

2 unchanged sentences

Amounts attributable to noncontrolling interest ( 102 ) ( 9 ) ( 150 ) ( 24 )

Comprehensive income (loss) attributable to L.B.

Comprehensive income attributable to L.B.

Foster Company $ 2,307 $ 5,291 $ 5,377 $ 4,008

4 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

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

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

Net income $ 7,222 $ 1,322

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

Deferred income taxes ( 61 ) ( 1,710 )

1 unchanged sentence

Amortization 2,340 2,740

Equity in income of nonconsolidated investments — ( 17 )

Equity in loss (income) of nonconsolidated investments 6 ( 16 )

Gain on sales and disposals of property, plant, and equipment ( 4,412 ) ( 366 )

10 unchanged sentences

Accrued payroll and employee benefits ( 9,009 ) ( 1,885 )

Accrued settlement ( 2,000 ) ( 2,000 )

Other current liabilities ( 4,210 ) ( 941 )

Other long-term liabilities ( 2,181 ) 172

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

Net cash used in operating activities ( 26,818 ) ( 3,333 )

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

Proceeds from business dispositions — 7,706

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

Acquisitions, net of cash acquired — 966

Net cash (used in) provided by investing activities ( 465 ) 7,716

CASH FLOWS FROM FINANCING ACTIVITIES:

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 71 ) 178

Net increase (decrease) in cash and cash equivalents 588 ( 243 )

Net increase in cash and cash equivalents 1,461 998

Cash and cash equivalents at beginning of period 2,560 2,882

7 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Stock Paid-in

4 unchanged sentences

Interest Total Stockholders’

Balance, December 31, 2023 $ 111 $ 43,111 $ 124,633 $ ( 6,494 ) $ ( 19,250 ) $ 724 $ 142,835

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

Net income (loss) — — 2,847 — — ( 30 ) 2,817

Other comprehensive income, net of tax:

Other comprehensive loss, net of tax:

Pension liability adjustment — — — — 26 — 26

Foreign currency translation adjustment — — — — ( 380 ) ( 72 ) ( 452 )

Unrealized derivative gain on cash flow hedges — — — — 106 — 106

Unrealized derivative loss on cash flow hedges — — — — ( 186 ) — ( 186 )

Purchase of 53,525 common shares for treasury

3 unchanged sentences

Stock-based compensation — 1,314 — — — — 1,314

Investment of noncontrolling interest — 374 — — — — 374

Balance, June 30, 2024 $ 111 $ 42,612 $ 131,916 $ ( 6,405 ) $ ( 21,156 ) $ 574 $ 147,652

Three Months Ended June 30, 2023

Stock Paid-in

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive Loss Noncontrolling

Interest Total Stockholders’

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

Three Months Ended March 31, 2023

Net income (loss) — — 3,531 — — ( 38 ) 3,493

Other comprehensive income, net of tax:

Pension liability adjustment — — — — 41 — 41

Foreign currency translation adjustment — — — — 1,223 29 1,252

Unrealized derivative loss on cash flow hedges — — — — 496 — 496

Purchase of 51,241 common shares for treasury

— — — ( 662 ) — — ( 662 )

Issuance of 58,432 common shares, net of shares withheld for taxes

— ( 977 ) — 990 — — 13

Stock-based compensation — 945 — — — — 945

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

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)

Six Months Ended June 30, 2024

Stock Paid-in

5 unchanged sentences

Balance, December 31, 2023 $ 111 $ 43,111 $ 124,633 $ ( 6,494 ) $ ( 19,250 ) $ 724 $ 142,835

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

Net income (loss) — — 7,283 — — ( 61 ) 7,222

Other comprehensive loss, net of tax:

2 unchanged sentences

Unrealized derivative loss on cash flow hedges — — — — ( 80 ) — ( 80 )

Purchase of 70,080 common shares for treasury

— — — ( 1,707 ) — — ( 1,707 )

Issuance of 119,181 common shares, net of shares withheld for taxes

1 unchanged sentence

Stock-based compensation — 2,347 — — — — 2,347

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

Investment of noncontrolling interest — 374 — — — — 374

Balance, June 30, 2024 $ 111 $ 42,612 $ 131,916 $ ( 6,405 ) $ ( 21,156 ) $ 574 $ 147,652

Six Months Ended June 30, 2023

Stock Paid-in

Capital Retained

Earnings Treasury

Stock Accumulated Other

Comprehensive Loss Noncontrolling

Interest Total Stockholders’

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

Net income (loss) — — 1,379 — — ( 57 ) 1,322

Other comprehensive income, net of tax:

Pension liability adjustment — — — — 81 — 81

Foreign currency translation adjustment — — — — 2,470 33 2,503

Unrealized derivative gain on cash flow hedges — — — — 78 — 78

Purchase of 51,241 common shares for treasury

— — — ( 662 ) — — ( 662 )

Issuance of 91,316 common shares, net of shares withheld for taxes

— ( 2,213 ) — 2,056 — — ( 157 )

Stock-based compensation — 1,829 — — — — 1,829

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

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

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

Operating results for the three and six months ended June 30, 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 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.

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 (“CODM”), who uses such information to make decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available.

Operating segments are evaluated on their segment profit contribution to the Company’s consolidated results.

5 unchanged sentences

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 Infrastructure 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

March 31, 2024 Three Months Ended

March 31, 2023

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

June 30, 2024 Three Months Ended

June 30, 2023

Net Sales Segment Operating Income Net Sales Segment Operating Income

Rail, Technologies, and Services $ 85,594 $ 5,431 $ 91,616 $ 6,627

1 unchanged sentence

Total $ 140,796 $ 9,049 $ 148,034 $ 9,379

Segment profit (loss) from operations, as shown above, includes allocated corporate operating expenses.

Operating expenses related to corporate headquarter functions that directly support the segment activity are allocated based on segment headcount, revenue contribution, or activity of the business units within the segments, based on the corporate activity type provided to the segment.

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

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Net Sales Segment Operating Income Net Sales Segment Operating Income

Rail, Technologies, and Services $ 168,217 $ 12,209 $ 156,000 $ 9,015

Infrastructure Solutions 96,899 2,225 107,522 2,396

Total $ 265,116 $ 14,434 $ 263,522 $ 11,411

Segment income from operations, as shown above, includes allocated corporate operating expenses.

Allocated corporate operating expenses include costs associated with central services such as quality, logistics, environmental health and safety, information technology, insurance, and human resources.

Other corporate functional costs that are associated with the operating segments are also allocated to the segments such as finance, marketing, credit and collections, and treasury functions.

Operating expenses related to corporate headquarter functions were allocated to each segment based on segment headcount, revenue contribution, or activity of the

business units within the segments, based on the corporate activity type provided to the segment.

Management believes the allocation of corporate operating expenses provides an accurate presentation of how the segments utilize corporate support activities.

This provides the CODM meaningful segment profitability information to support operating decisions and the allocation of resources.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies found in Note 1 Significant Accounting Policies 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.

During the quarter, the Company divested an ancillary property within the Steel Products business unit for total proceeds of $ 1,300 generating an $ 815 gain on sale recorded in “Cost of goods sold” for the three months ended June 30, 2024 which has been included in the Infrastructure segment's operating income.

Certain corporate costs are separately managed on a consolidated basis and are not allocated to the operating segments.

These corporate costs include public company costs such as listing fees, audit fees, compliance costs, and Board of Directors fees.

Additionally, certain corporate executive management costs, including costs of the corporate executive leadership team, and corporate management stock-based compensation expenses are not allocated to the operating segments.

Finally, interest expense, income taxes, and certain other items included in other income and expense which are managed on a consolidated basis are not allocated to the operating segments.

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

Three Months Ended

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

June 30, Six Months Ended

2024 2023 2024 2023

Income from operations:

Total segment operating income $ 9,049 $ 9,379 $ 14,434 $ 11,411

Interest expense - net ( 1,493 ) ( 1,574 ) ( 2,618 ) ( 2,962 )

Other income (expense) - net 152 ( 719 ) 3,688 ( 2,546 )

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

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

Public company costs ( 1,621 ) ( 1,217 ) ( 2,840 ) ( 1,873 )

Corporate executive management costs ( 1,885 ) ( 1,155 ) ( 3,292 ) ( 1,521 )

Corporate management stock-based compensation ( 880 ) ( 604 ) ( 1,479 ) ( 1,148 )

Other ( 159 ) ( 54 ) ( 36 ) ( 17 )

Income before income taxes $ 3,163 $ 4,056 $ 7,857 $ 1,344

Depreciation/Amortization:

Total segment depreciation/amortization $ 3,018 $ 3,412 $ 6,151 $ 6,841

Corporate depreciation/amortization 467 447 925 888

Depreciation/amortization $ 3,485 $ 3,859 $ 7,076 $ 7,729

Expenditures for Long-Lived Assets:

Total segment expenditures for long-lived assets $ 1,480 $ 708 $ 3,629 $ 1,066

Corporate expenditures for long-lived assets 574 88 717 429

Expenditures for long-lived assets $ 2,054 $ 796 $ 4,346 $ 1,495

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

4 unchanged sentences

Total $ 333,261 $ 313,206

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.

1 unchanged sentence

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.

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.

The Company continues to operate its bridge forms product line which is a newer technology and not subject to the same challenging market conditions.

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

For the three months ended June 30, 2024 and 2023, the discontinued product line had $ 1,157 and $ 1,975 in sales, respectively, and for the six months ended June 30, 2024 and 2023, the discontinued product line had $ 1,967 and $ 3,466 in sales, respectively.

During the three and six months ended June 30, 2024, the Company incurred an immaterial amount of exit costs, all of which were personnel expenses.

The Company does not expect to incur additional material exit costs in the remainder of 2024.

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, which were recorded in “Other (income) expense - net,” the majority of which were incurred in the last six months of 2023.

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.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Rail Products $ 56,323 $ 64,246 $ 109,361 $ 104,475

10 unchanged sentences

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

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Rail, Technologies, and Services Infrastructure Solutions Total

2 unchanged sentences

Total net sales $ 85,594 $ 55,202 $ 140,796

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Rail, Technologies, and Services Infrastructure Solutions Total

2 unchanged sentences

Total net sales $ 91,616 $ 56,418 $ 148,034

Six Months Ended June 30, 2024

Rail, Technologies, and Services Infrastructure Solutions Total

Point in time $ 135,462 $ 64,784 $ 200,246

Over time 32,755 32,115 64,870

Total net sales $ 168,217 $ 96,899 $ 265,116

Six Months Ended June 30, 2023

Rail, Technologies, and Services Infrastructure Solutions Total

Point in time $ 129,757 $ 64,075 $ 193,832

Over time 26,243 43,447 69,690

Total net sales $ 156,000 $ 107,522 $ 263,522

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

6 unchanged sentences

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.

During the three and six months ended June 30, 2024, reductions to net sales stemming from changes in actual and expected values of certain commercial contracts and settlements of such contracts were $ 1,477 .

Such adjustments were $ 1,035 and $ 1,428 during the three and six months ended June 30, 2023, respectively.

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:

R evenue recognized over time was as follows for the periods presented:

Three Months Ended

March 31, Percentage of Total Net Sales

Three Months Ended March 31,

June 30, Percentage of Total Net Sales

Three Months Ended June 30,

2024 2023 2024 2023

2 unchanged sentences

Total over time sales $ 35,746 $ 37,164 25.4 % 25.1 %

Six Months Ended

June 30, Percentage of Total Net Sales

Six Months Ended June 30,

2024 2023 2024 2023

Over time input method $ 29,007 $ 31,935 10.9 % 12.1 %

Over time output method 35,863 37,755 13.5 14.3

Total over time sales $ 64,870 $ 69,690 24.5 % 26.4 %

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

4 unchanged sentences

Transfers from contract asset balance to accounts receivable ( 15,150 )

Balance as of March 31, 2024

Balance as of June 30, 2024

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

4 unchanged sentences

Other adjustments ( 55 )

Balance as of March 31, 2024

Balance as of June 30, 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.

1 unchanged sentence

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.

As of June 30, 2024, the Company had approximately $ 249,805 of remaining performance obligations, which are also referred to as backlog.

Approximately 10.2 % of the June 30, 2024 backlog was related to projects that are anticipated to extend beyond June 30, 2025.

Goodwill and Other Intangible Assets

4 unchanged sentences

Foreign currency translation impact ( 123 ) — ( 123 )

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.

Balance as of June 30, 2024 $ 20,343 $ 11,676 $ 32,019

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

Purchase accounting finalization during the first quarter of 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.

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 March 31, 2024.

No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of June 30, 2024.

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

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

March 31, 2024

June 30, 2024

Weighted Average

20 unchanged sentences

Accounts Receivable

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.

Changes in reserves for uncollectible accounts are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, and were an expense of $ 134 and $ 256 for the three months ended June 30, 2024 and 2023, respectively, and an expense of $ 529 and $ 411 for the six months ended June 30, 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.

6 unchanged sentences

Write-off against allowance ( 36 )

Balance as of March 31, 2024 $ 1,170

Balance as of June 30, 2024 $ 1,302

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

22 unchanged sentences

(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.

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 .

As of June 30, 2024, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $ 2,084 .

Earnings Per Common Share

(Share amounts in thousands)

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

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

Three Months Ended

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

Net income (loss) attributable to L.B.

June 30, Six Months Ended

2024 2023 2024 2023

Numerator for basic and diluted earnings per common share:

Net income attributable to L.B.

Foster Company $ 2,847 $ 3,531 $ 7,283 $ 1,379

Weighted average shares outstanding 10,793 10,807 10,777 10,800

Denominator for basic earnings (loss) per common share 10,762 10,792

Denominator for basic earnings per common share 10,793 10,807 10,777 10,800

Effect of dilutive securities:

1 unchanged sentence

Dilutive potential common shares 267 71 285 66

Denominator for diluted earnings (loss) per common share - adjusted weighted average shares outstanding 10,985 10,792

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

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

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.

Denominator for diluted earnings per common share - adjusted weighted average shares outstanding 11,060 10,878 11,062 10,866

Basic earnings per common share $ 0.26 $ 0.32 $ 0.68 $ 0.12

Diluted earnings per common share $ 0.26 $ 0.32 $ 0.66 $ 0.12

For the three months ended June 30, 2024 and 2023, the Company recorded an income tax expense of $ 346 and $ 563 , respectively, on pre-tax income of $ 3,163 and $ 4,056 , respectively, for an effective income tax rate of 10.9 % and 13.9 %, respectively.

For the six months ended June 30, 2024 and 2023, the Company recorded an income tax expense of $ 635 and $ 22 , respectively, on pre-tax income of $ 7,857 and $ 1,344 , respectively, for an effective income tax rate of 8.1 % and 1.6 %, respectively.

The Company's effective income tax rate for the three and six months ended June 30, 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.

3 unchanged sentences

Stock-Based Compensation

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.

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.

The Company recorded stock-based compensation expense of $ 1,314 and $ 945 for the three months ended June 30, 2024 and 2023, respectively, and $ 2,347 and $ 1,829 for the six months ended June 30, 2024 and 2023, respectively, related to restricted stock awards and performance unit awards.

As of June 30, 2024, unrecognized compensation expense for awards that the Company expects to vest approximated $ 7,478 .

The Company will recognize this unrecognized compensation expense over the upcoming 2.6 years through February 13, 2027.

As of June 30, 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”).

Non-Employee Director Fully-Vested and Restricted Stock Awards

4 unchanged sentences

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.

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

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.

9 unchanged sentences

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

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

Outstanding as of June 30, 2024 205,969 12,404 617,005 $ 16.77

Fair Value Measurements

11 unchanged sentences

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

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.

As of June 30, 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

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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.

For the three months ended June 30, 2024 and 2023, the Company recognized interest income of $ 340 and $ 295 , respectively, from interest rate swaps.

For the six months ended June 30, 2024 and 2023, the Company recognized interest income of $ 677 and $ 540 respectively, from interest rate swaps.

Retirement Plans

2 unchanged sentences

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.

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

1 unchanged sentence

In the United Kingdom, the Company maintains two defined contribution plans and a defined benefit plan, which is frozen.

On May 23, 2024, the Company’s Board of Directors approved the termination of our frozen L.B.

Foster Company Merged Retirement Plan (the “US DB Plan”) and the Portec Rail Products (UK) Limited Pension Scheme (the “UK DB Plan”).

The transfer of plan assets and obligations to insurers, and subsequent termination is expected to be completed by June 30, 2025.

The Company’s US DB Plan is underfunded as of June 30, 2024, and will require cash payments of approximately $ 2,000 to $ 3,000 to effectuate the termination.

The estimated cash payments are subject to change due to changes in market conditions that can impact the return on plan assets that are held by the US DB Plan and the UK DB Plan.

The UK DB Plan is fully funded as of June 30, 2024, and we do not expect any additional contributions to be required during the termination process.

These plans are discussed in further detail below.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Interest cost $ 66 $ 71 $ 132 $ 143

2 unchanged sentences

Net periodic pension cost $ 13 $ 23 $ 26 $ 46

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.

The Company has made contributions to its United States defined benefit plan of $ 200 during the six months ended June 30, 2024 and expects to make total contributions of approximately $ 370 during 2024.

United Kingdom Defined Benefit Plan

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Interest cost $ 56 $ 56 $ 112 $ 112

4 unchanged sentences

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

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

For the six months ended June 30, 2024, the Company contributed approximately $ 156 to the plan.

The Company anticipates total contributions of approximately $ 316 to the United Kingdom pension plan during 2024.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

United States $ 720 $ 793 $ 1,271 $ 1,407

Canada 34 32 110 94

United Kingdom 287 315 565 576

$ 1,041 $ 1,140 $ 1,946 $ 2,077

Commitments and Contingent Liabilities

27 unchanged sentences

Based upon information currently available, management does not believe that the Company’s alleged PRP status regarding the Portland Harbor Superfund Site or other compliance with the present environmental protection laws will have a material adverse effect on the financial condition , results of operations, cash flows, competitive position, or capital expenditures of the Company.

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 March 31, 2024 and December 31, 2023, the Company maintained environmental reserves approximating $ 2,398 and $ 2,417 , respectively.

As more information develops and the

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

As of June 30, 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 March 31, 2024.

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 March 31, 2024, no such disclosures were considered necessary.

Based on the Company’s assessment as of June 30, 2024, no such disclosures were considered necessary.

Subsequent Events

On August 5, 2024, the Board of Directors approved the modification of the Company’s stock repurchase program.

The modifications include revising the repurchase program expiration date from February 2026 to February 2025.

Additionally, the Board of Directors removed the restriction which previously limited repurchases to $ 5,000 in any trailing 12-month period.

The authorized repurchase amount was unchanged at $ 15,000 .

As of June 30, 2024, the Company has repurchased stock of $ 4,021 , with $ 10,979 of the original $ 15,000 authorized remaining.

Any repurchases will continue to 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 August 2024, the Company announced an enterprise restructuring program aligned with its strategy to reduce costs and enable investment in growth platforms.

Total restructuring program includes both headcount reductions and attrition and is expected to result in severance and outplacement services charges totaling approximately $ 1,500 .

The majority of the restructuring costs will be recorded in the third quarter of 2024 with any remaining costs being recorded in the fourth quarter of 2024.

Annual run rate savings are expected to be approximately $ 4,500 with approximately $ 2,000 in savings being realized in 2024.

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