What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-06 · 180 added, 109 removed, 537 unchanged (35% 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) 16,020 19,010

Deferred tax assets (Note 9) 30,045 —

Other assets 3,809 2,965

15 unchanged sentences

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

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

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

shares outstanding at September 30, 2024 and December 31, 2023, 10,657,554 and 10,733,935 , respectively

Paid-in capital 43,385 43,111

Retained earnings 167,821 124,633

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

Treasury stock - at cost, 458,225 and 381,844 common stock shares at September 30, 2024 and December 31, 2023, respectively

( 8,994 ) ( 6,494 )

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Selling and administrative expenses 24,289 24,421 71,977 70,360

(Gain) on sale of former joint venture facility — — ( 3,477 ) —

Amortization expense 1,146 1,379 3,486 4,119

3 unchanged sentences

Income before income taxes 6,153 326 14,010 1,670

Income tax expense 346 563 635 22

Income tax benefit ( 29,745 ) ( 121 ) ( 29,110 ) ( 99 )

Net income 35,898 447 43,120 1,769

10 unchanged sentences

FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 35,898 $ 447 $ 43,120 $ 1,769

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment 1,376 ( 1,651 ) ( 590 ) 852

2 unchanged sentences

Reclassification of pension liability adjustments to earnings, net of tax expense of $ 5 , $ 1 , $ 12 , and $ 5 , respectively*

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

Total comprehensive income (loss) 36,600 ( 1,161 ) 41,827 2,823

Less comprehensive (loss) income attributable to noncontrolling interest:

2 unchanged sentences

Amounts attributable to noncontrolling interest 11 ( 89 ) ( 139 ) ( 113 )

Comprehensive income attributable to L.B.

Comprehensive income (loss) attributable to L.B.

Foster Company $ 36,589 $ ( 1,072 ) $ 41,966 $ 2,936

4 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

4 unchanged sentences

Amortization 3,486 4,119

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

Equity in loss of nonconsolidated investments 6 6

Gain on sales and disposals of property, plant, and equipment ( 4,437 ) ( 366 )

13 unchanged sentences

Other long-term liabilities ( 3,030 ) ( 253 )

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

Net cash (used in) provided by operating activities ( 1,653 ) 15,310

CASH FLOWS FROM INVESTING ACTIVITIES:

21 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Stock Paid-in

4 unchanged sentences

Interest Total Stockholders’

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

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

Net income (loss) — — 35,905 — — ( 7 ) 35,898

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Pension liability adjustment — — — — 24 — 24

6 unchanged sentences

Stock-based compensation — 788 — — — — 788

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

Balance, September 30, 2024 $ 111 $ 43,385 $ 167,821 $ ( 8,994 ) $ ( 20,472 ) $ 585 $ 182,436

Three Months Ended September 30, 2023

Stock Paid-in

4 unchanged sentences

Interest Total Stockholders’

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

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

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

8 unchanged sentences

Stock-based compensation — 928 — — — — 928

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

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

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

2 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Stock Paid-in

16 unchanged sentences

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

Balance, September 30, 2024 $ 111 $ 43,385 $ 167,821 $ ( 8,994 ) $ ( 20,472 ) $ 585 $ 182,436

Nine Months Ended September 30, 2023

Stock Paid-in

15 unchanged sentences

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

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

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

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 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.

Operating results for the three and nine months ended September 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.

Foster Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Foster Company’s Annual Report on Form 10-K/A for the year ended December 31, 2023.

In this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” and the “Company” refer collectively to L.B.

Foster Company and its consolidated subsidiaries.

Recently Issued Accounting Standards

In November 2023, the FASB issued Accounting Standards Update 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires enhanced disclosures regarding significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included in each reported measure of segment operating income or loss, including an amount for “other segment items” by reportable segment and a description of its composition.

ASU 2023-07 also requires entities to disclose the title and position of the CODM and an explanation of how the CODM uses reported measures of segment operating income or loss to assess performance and allocate resources.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted.

The Company expects ASU 2023-07 to only impact its disclosures with no impacts to its consolidated financial condition, results of operations, and cash flows.

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires entities to disclose additional information with respect to the effective tax rate reconciliation and disaggregation of income tax expense and income taxes paid by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of ASU 2023-09, but expects this ASU to only impact its disclosures with no impacts to its consolidated financial condition, results of operations, and cash flows.

Correction of Immaterial Errors in Previously Issued Condensed Consolidated Financial Statements

As previously announced in the Company’s Annual Report on Form 10-K/A filed with the SEC on November 1, 2024, the Company identified an immaterial error related to the classification of $ 1,068 of costs associated with exit of the bridge grid deck product line (the “Bridge Exit”) that were erroneously excluded from the Company’s “Operating income,” as reported in the Company’s Condensed Consolidated Statement of Operations.

The Company has corrected this immaterial error and other immaterial errors for the three and nine months ended September 30, 2023.

The impact of these adjustments are shown in the tables below.

Note only line items that were impacted by the immaterial error corrections detailed above are included below.

Three Months Ended September 30, 2023

As Previously Reported Adjustments As Revised

Cost of goods sold $ 103,061 $ 807 $ 103,868

Total cost of sales 117,121 807 117,928

Gross profit 28,224 ( 807 ) 27,417

Selling and administrative expenses 24,160 261 24,421

Operating income 2,685 ( 1,068 ) 1,617

Other expense (income) - net 917 ( 1,068 ) ( 151 )

Nine Months Ended September 30, 2023

As Previously Reported Adjustments As Revised

Cost of goods sold $ 282,195 $ 432 $ 282,627

Total cost of sales 325,100 432 325,532

Gross profit 83,767 ( 432 ) 83,335

Selling and administrative expenses 70,111 249 70,360

Operating income 9,537 ( 681 ) 8,856

Other expense - net

3,463 ( 681 ) 2,782

The correction of immaterial errors to the Unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2023 did not change “Income before income taxes,” “Income tax benefit,” or “Net income.” Where appropriate, the financial disclosures in the footnotes to the Unaudited Condensed Consolidated Financial Statements impacted by the correction of these immaterial errors have been updated.

Business Segments

3 unchanged sentences

Other income and expenses, interest, income taxes, and certain other items are managed on a consolidated basis.

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:

5 unchanged sentences

Three Months Ended

June 30, 2024 Three Months Ended

June 30, 2023

September 30, 2024 Three Months Ended

September 30, 2023

Net Sales Segment Operating Income Net Sales Segment Operating Income

2 unchanged sentences

Total $ 137,466 $ 10,043 $ 145,345 $ 4,665

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

Net Sales Segment Operating Income Net Sales Segment Operating Income

9 unchanged sentences

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.

During the nine months ended September 30, 2024, the Company sold 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 nine months ended September 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.

2 unchanged sentences

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.

During the nine months ended September 30, 2024, the Company sold a former joint venture facility located in Magnolia, Texas generating a $ 3,477 gain on sale recorded in “(Gain) on sale of former joint venture facility ” which is included as a component of corporate operating income.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Total segment operating income $ 10,043 $ 4,665 $ 24,557 $ 16,463

Gain on sale of former joint venture facility — — 3,477 —

Interest expense - net ( 1,358 ) ( 1,442 ) ( 3,976 ) ( 4,404 )

14 unchanged sentences

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

September 30,

2024 December 31,

3 unchanged sentences

Total $ 344,544 $ 312,401

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 six months ended June 30, 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 and six months ended June 30, 2023.

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 (income) expense - net” for the nine months ended September 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.

On August 30, 2023, the Company announced the 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 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 Bedford, PA based operations supporting the discontinued bridge grid deck product line expect to complete any remaining customer obligations during 2025.

The discontinued product line had sales of $ 921 and $ 283 for the three months ended September 30, 2024 and 2023, respectively, and $ 2,888 and $ 3,749 for the nine months ended September 30, 2024 and 2023, respectively.

During the three and nine months ended September 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.

Cumulatively, the Company has incurred a total of $ 1,476 in exit costs for the Bridge Exit, which included $ 474 in inventory write-downs and $ 740 in personnel expenses, both of which were recorded in “Cost of goods sold,” as well as $ 262 in other exit costs, which were recorded in “Selling and administrative expenses.” The majority of such expenses were incurred in the last six months of 2023 and paid in early 2024.

On November 17, 2023, the Company acquired the operating assets of Caldwell, Idaho based Cougar Mountain Precast, LLC (“Cougar”), a licensed manufacturer and seller of Redi-Rock® products for $ 1,644 , subject to hold back amount equal to $ 160 to be paid twelve months following the closing 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.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

11 unchanged sentences

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Rail, Technologies, and Services Infrastructure Solutions Total

2 unchanged sentences

Total net sales $ 79,498 $ 57,968 $ 137,466

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Rail, Technologies, and Services Infrastructure Solutions Total

2 unchanged sentences

Total net sales $ 86,866 $ 58,479 $ 145,345

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Rail, Technologies, and Services Infrastructure Solutions Total

2 unchanged sentences

Total net sales $ 247,715 $ 154,867 $ 402,582

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Rail, Technologies, and Services Infrastructure Solutions Total

4 unchanged sentences

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.

Revenue under these long-term agreements is 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.

3 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 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.

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

During the nine months ended September 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 ;

there were no such changes in actual or expected values during the three months ended September 30, 2024.

Such adjustments were $ 3,996 and $ 5,424 during the three and nine months ended September 30, 2023, respectively, including $ 1,977 related to the Bridge Exit in both the three and nine month periods last year.

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

Three Months Ended

June 30, Percentage of Total Net Sales

Three Months Ended June 30,

September 30, Percentage of Total Net Sales

Three Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Total over time sales $ 41,287 $ 34,565 30.0 % 23.8 %

Six Months Ended

June 30, Percentage of Total Net Sales

Six Months Ended June 30,

Nine Months Ended

September 30, Percentage of Total Net Sales

Nine Months Ended September 30,

2024 2023 2024 2023

8 unchanged sentences

Transfers from contract asset balance to accounts receivable ( 19,201 )

Balance as of June 30, 2024

Balance as of September 30, 2024

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

4 unchanged sentences

Other adjustments ( 317 )

Balance as of June 30, 2024

Balance as of September 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 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.

As of September 30, 2024, the Company had approximately $ 209,005 of remaining performance obligations, which are also referred to as backlog.

Approximately 12.5 % of the September 30, 2024 backlog was related to projects that are anticipated to extend beyond September 30, 2025.

Goodwill and Other Intangible Assets

4 unchanged sentences

Foreign currency translation impact 738 — 738

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

Balance as of September 30, 2024 $ 21,204 $ 11,676 $ 32,880

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.

3 unchanged sentences

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

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

No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of September 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:

June 30, 2024

September 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 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.

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 $ 0 and $ 732 for the three months ended September 30, 2024 and 2023, respectively, and an expense of $ 529 and $ 1,174 for the nine months ended September 30, 2024 and 2023, respectively.

The changes in reserves for uncollectible accounts are net of recoveries of previous write-offs of $ 263 for the three and nine months ended September 30, 2024.

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.

4 unchanged sentences

Balance as of December 31, 2023 $ 809

Current period provision 529

Additions to the current period provision 792

Write-off against allowance ( 36 )

Balance as of June 30, 2024 $ 1,302

Recoveries of previous write-offs ( 263 )

Balance as of September 30, 2024 $ 1,302

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

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

September 30,

2024 December 31,

5 unchanged sentences

Long-term debt consisted of the following:

September 30,

2024 December 31,

13 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 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 .

As of September 30, 2024, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $ 2,264 .

Earnings Per Common Share

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

10 unchanged sentences

Diluted earnings per common share $ 3.27 $ 0.05 $ 3.91 $ 0.17

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.

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.

For the three months ended September 30, 2024 and 2023, the Company recorded an income tax benefit of $ 29,745 and $ 121 , respectively, on pre-tax income of $ 6,153 and $ 326 , respectively, for an effective income tax rate of ( 483.4 %) and ( 37.1 %), respectively.

For the nine months ended September 30, 2024 and 2023, the Company recorded an income tax benefit of $ 29,110 and $ 99 , respectively, on pre-tax income of $ 14,010 and $ 1,670 , respectively, for an effective income tax rate of ( 207.8 %) and ( 5.9 %), respectively.

The Company’s effective income tax rate for the three and nine months ended September 30, 2024 differed from the federal statutory rate of 21% primarily due to the change in valuation allowance previously recorded against certain U.S.

federal and state deferred tax assets.

When a change in a valuation allowance is recognized in an interim period, the change in valuation allowance resulting from current year income is included in the annual effective tax rate, and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete tax benefit in the interim period.

Accordingly, during the quarter ended September 30, 2024, the Company recognized an income tax benefit of $ 30,045 comprised of both a discrete tax benefit and change in the Company’s estimated annual effective tax rate arising from the change in valuation allowance.

The Company continued to maintain a valuation allowance against deferred tax assets related to operating loss carryforwards in certain U.S.

state and foreign jurisdictions.

The Company regularly assesses the need for a valuation allowance against its deferred tax assets.

A valuation allowance is required to be established or maintained, when based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized.

The Company has considered all evidence, both positive and negative, in assessing the need for a valuation allowance in each jurisdiction.

The positive evidence considered in evaluating U.S.

federal and state deferred tax assets included the Company’s cumulative financial income position over the previous three years, as well as the composition and reversal patterns of existing taxable and deductible temporary differences between financial reporting and tax.

Based on its evaluation, the Company believed it was appropriate to rely on forecasted future taxable income to support its U.S.

federal and state deferred tax assets.

The amount of deferred tax assets considered realizable;

however, could be adjusted if negative evidence outweighs additional subjective evidence such as the Company’s projections for growth.

Stock-Based Compensation

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 recorded stock-based compensation expense of $ 788 and $ 928 for the three months ended September 30, 2024 and 2023, respectively, and $ 3,135 and $ 2,757 for the nine months ended September 30, 2024 and 2023, respectively, related to restricted stock awards and performance unit awards.

As of September 30, 2024, unrecognized compensation expense for awards that the Company expects to vest approximated $ 6,163 .

The Company will recognize this unrecognized compensation expense over the upcoming 2.3 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”).

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 June 30, 2024 and 2023.

As of September 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

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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.

Non-Employee directors may elect to receive quarterly cash compensation in the form of fully-vested stock.

During 2024, a Board member has elected to receive fully vested stock in lieu of cash compensation.

Restricted Stock and Performance-Based Stock and Share Units

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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

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.

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Cancelled and forfeited ( 2,250 ) — ( 437 ) 15.19

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

Outstanding as of September 30, 2024 204,719 12,404 592,730 $ 15.61

Fair Value Measurements

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

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.

As of September 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

September 30,

2024 Level 1 Level 2 Level 3 December 31,

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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 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.

For the three months ended September 30, 2024 and 2023, the Company recognized interest income of $ 340 and $ 329 , respectively, from interest rate swaps.

For the nine months ended September 30, 2024 and 2023, the Company recognized interest income of $ 1,017 and $ 869 , respectively, from interest rate swaps.

Retirement Plans

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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 transfer of plan assets and obligations to insurers and subsequent terminations are expected to be completed by December 31, 2024 for the US DB Plan and by June 30, 2025 for the UK DB Plan, subject to the finalization of agreements with insurance companies.

The Company’s US DB Plan is underfunded as of September 30, 2024, and will require cash payments of approximately $ 2,000 to $ 2,500 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.

The UK DB Plan is fully funded as of September 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.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Net periodic pension cost $ 13 $ 23 $ 39 $ 69

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.

The Company has made contributions to its United States defined benefit plan of $ 356 during the nine months ended September 30, 2024 and expects to make total contributions of approximately $ 370 during 2024.

United Kingdom Defined Benefit Plan

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

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

For the nine months ended September 30, 2024, the Company contributed approximately $ 240 to the plan.

The Company anticipates total contributions of approximately $ 334 to the United Kingdom pension plan during 2024.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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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.

As of September 30, 2024 and December 31, 2023, the Company maintained environmental reserves approximating $ 1,796 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 June 30, 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 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.

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

Restructuring Costs

In August 2024, the Company announced an enterprise restructuring program aligned with its long-term strategy to reduce costs and enable investment in its growth platforms.

The restructuring action is expected to be completed in 2024, and is expected to provide annual run-rate pre-tax savings of approximately $ 4,500 , $ 2,000 of which to be realized in 2024.

The following table sets forth restructuring costs by segment for the three and nine months ended September 30, 2024:

Rail, Technologies, and Services $ 651

Infrastructure Solutions 63

Corporate 195

There were no restructuring costs incurred prior to the three months ended September 30, 2024.

The Company's $ 909 restructuring expense relates to severance and an immaterial amount of legal costs.

Of the total restructuring costs incurred for the three and nine months ended September 30, 2024, $ 69 was reported in “Cost of goods sold” and $ 840 was reported in “Selling and administrative expense.” The Company expects approximately $ 471 in additional restructuring costs associated with this program in total.

The following table sets forth a reconciliation of the beginning and ending restructuring liability balance through September 30, 2024:

Balance as of June 30, 2024 $ —

Restructuring costs 909

Cash paid 767

Balance as of September 30, 2024 $ 142

The majority of the remaining liability of $ 142 is expected to be paid 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