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Item 7. Management’s Discussion and Analysis

2025-03-07 compared with 2024-03-06 · 192 added, 165 removed, 193 unchanged (65% of the section changed)

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Throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”), we refer to measures used by management to evaluate performance.

We also refer to a number of financial measures that are not defined under US GAAP, including organic sales growth, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, and net debt.

We also refer to a number of financial measures that are not defined under US GAAP, including organic sales growth (decline), earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, net debt, funding capacity, new orders, and backlog.

The explanation at the end of the MD&A provides the definition of these non-GAAP financial measures.

A reconciliation of each non-GAAP financial measure to its most directly comparable respective US GAAP financial measure is presented below.

A reconciliation of EBITDA, adjusted EBITDA, organic sales growth (decline), net debt, and funding capacity to its most directly comparable respective US GAAP financial measure is presented below.

2024 Developments

During 2024, the Company:

• Produced net sales of $543,744, an increase of $46,247, or 9.3%, over 2022, reflective of organic sales growth of 11.7% and growth due to acquisitions of 4.0%, which was partially offset by a 6.4% reduction due to divestitures;

• Produced net sales of $530,765, a decrease of $12,979, or 2.4%, from 2023, due to a 2.5% reduction from divestitures and product line exit activity;

• Reported gross profit margin of 22.2% for the year, a 160-basis point improvement over prior year;

• Continued its strategic transformation with the divestitures of the Chemtec and Ties businesses;

• Generated net cash flow from operations in 2024 of $22,632;

• Reduced net debt during 2023 by $36,284 to $52,713;

• Reduced debt during 2024 by $8,333 to $46,940;

• Reported net income of $42,843, an increase of $41,544 compared to the prior year due to a $28,398 tax benefit which was primarily related to a favorable tax valuation allowance adjustment in 2024 as well as improved operating income;

• Reported adjusted EBITDA of $33,576;

an increase of 5.7% compared to the prior year;

• Announced that its Board of Directors has authorized the repurchase of up to $15,000 of its common stock through February 2026 and repurchased 134,208 shares of the Company’s stock, or 1.2% of its outstanding shares, at a cost of $2,310.

• Restructuring actions taken to reduce our cost structure by $4,500 on a run-rate basis;

• Repurchased 300,302 shares of the Company’s stock, or 2.7% of its outstanding shares, at a cost of $6,808.

Year Ended December 31,

Adjusted EBITDA Reconciliation

Net income (loss), as reported $ 1,299 $ (45,677)

Net income, as reported $ 42,843 $ 1,299

Interest expense - net 4,992 5,528

Income tax (benefit) expense (355) 36,681

Income tax benefit (28,398) (355)

Depreciation expense 9,452 9,949

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Total EBITDA $ 33,517 $ 21,735

Loss (gain) on divestitures 3,074 (22)

Acquisition and divestiture costs — 2,235

Commercial contract settlement — 3,956

Insurance proceeds — (790)

VanHooseCo inventory adjustment to fair value amortization — 1,135

Gain on asset sale (4,292) —

Restructuring costs 1,456 676

Pension termination costs 1,722 —

Legal expense 1,173 —

Loss on divestitures — 3,074

VanHooseCo contingent consideration — (26)

Bridge grid deck exit impact — 4,454

Impairment expense — 8,016

Bad debt provision — 1,862

Restructuring costs 676 —

Adjusted EBITDA $ 33,576 $ 31,775

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Net Debt Reconciliation

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2023 net sales, as reported $ 543,744

Decrease due to divestitures (31,995) (6.4) %

Increase due to acquisitions 19,834 4.0 %

Change due to organic sales 58,408 11.7 %

Decrease from divestitures and exit (13,819) (2.5) %

Change due to organic sales growth 840 0.2 %

2024 net sales, as reported $ 530,765

Total sales change, 2023 vs 2024 $ (12,979) (2.4) %

$ 46,247 9.3 %

Change in Rail Sales Year Ended

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Decrease due to divestitures (2,114) (0.7) %

Increase due to acquisitions 1,504 0.5 %

Change due to organic sales 26,040 8.7 %

Change due to organic sales growth 16,823 5.4 %

2024 net sales, as reported $ 326,869

Total sales change, 2023 vs 2024 $ 14,709 4.7 %

$ 11,568 3.8 %

Change in Infrastructure Sales

Change in Infrastructure Solutions Sales Year Ended

December 31, Percent

2023 net sales, as reported $ 231,584

Decrease due to divestitures (16,019) (8.1) %

Increase due to acquisitions 18,330 9.3 %

Change due to organic sales 32,368 16.4 %

Decrease due to divestitures and exit (11,705) (5.1) %

Change due to organic sales decline (15,983) (6.9) %

2024 net sales, as reported $ 203,896

Total sales change, 2023 vs 2024 $ (27,688) (12.0) %

$ 34,679 17.6 %

Note percentages may not foot due to rounding.

Acquisitions, Divestitures and Product Line Exit

On June 21, 2022 and August 12, 2022, the Company acquired the stock of Skratch for $7,402, and acquired the operating assets of VanHooseCo for $52,146, net of cash acquired at closing, respectively.

Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail segment and VanHooseCo has been included within the Precast Concrete Products business unit within the Infrastructure segment.

Skratch and VanHooseCo’s net sales were $4,624 and $33,742, respectively, for the year ended December 31, 2023, and $2,975 and $17,788, respectively, for the year ended December 31, 2022.

On August 1, 2022, the Company divested the assets of its Track Components division for $7,795, subject to indemnification obligations and working capital adjustments, generating a $467 loss on sale, recorded in “Other expense (income) - net” for the year ended December 31, 2022.

The Track Components division was included in the Rail Products business unit within the Rail segment.

The Track Components division’s net sales were $9,244 for the year ended December 31, 2022.

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec business for $5,344 in proceeds, subject to final working capital adjustments, generating a $2,065 loss on sale, recorded in “Other expense (income) - net” for the year ended December 31, 2023.

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec business for $5,344 in proceeds, generating a $2,065 loss on sale, recorded in “Other expense - net” for the year ended December 31, 2023.

The Chemtec business was reported in the Steel Products business unit within the Infrastructure segment.

Chemtec’s net sales for the year ended December 31, 2023 and December 31, 2022 were $9,259 and $21,119, respectively.

On June 30, 2023, the Company sold substantially all the operating assets of the Ties business, located in Spokane, WA, for $2,362 in proceeds, subject to final working capital adjustments, generating a $1,009 loss on the sale, which was recorded in “Other expense (income) - net” for the year ended December 31, 2023.

Chemtec’s net sales for the year ended December 31, 2023 were $9,259.

On June 30, 2023, the Company sold substantially all the operating assets of the Ties business, located in Spokane, WA, for $2,362 in proceeds, generating a $1,009 loss on the sale, which was recorded in “Other expense - net” for the year ended December 31, 2023.

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

Net sales for Ties for the year ended December 31, 2023 and December 31, 2022 were $2,130 and $11,622, respectively.

Ties' net sales for the year ended December 31, 2023 were $2,130.

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.

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

During 2023, the Company incurred $1,403 of exit costs recorded in “Other expense (income) - net,” which included $474 in inventory write-downs, $667 in personnel related expenses, and $262 in other exit costs.

The Company expects to incur an additional $184 of personnel expenses associated with the exit through 2024.

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

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.

During the year ended 2023, the Company incurred $1,403 of Bridge Exit costs, of which $1,141 was recorded in “Cost

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of goods sold” and $262 was recorded in “Selling and administrative expenses.” These expenses included $474 in inventory write-downs, $667 in personnel related expenses, and $262 in other exit costs;

the majority of cash payments were made in early 2024.

During the year ended December 31, 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 2025.

During 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 Bridge Exit.

On November 17, 2023, the Company acquired the operating assets of Cougar Mountain Precast, LLC (“Cougar”) which is a licensed manufacturer of Redi-Rock and natural concrete products for $1,644.

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

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Selling and administrative expenses as a percent of sales 18.2 % 18.0 % 20 bps

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

Amortization expense 4,628 5,314 (686)

Goodwill and long-lived assets impairment charges (Note 5) — 8,016 (8,016)

Operating profit (loss) 10,138 (7,206) 17,344

Operating profit (loss) margin 1.9 % (1.4) % 330 bps

Operating income 20,513 9,107 11,406

Operating income margin 3.9 % 1.7 % 220 bps

Interest expense - net 4,992 5,528 (536)

Other expense (income) - net 3,666 (1,550) 5,216

Income (loss) before income taxes 944 (8,996) 9,940

Income tax (benefit) expense (355) 36,681 (37,036)

Net income (loss) $ 1,299 $ (45,677) $ 46,976

Diluted earnings (loss) per common share

$ 0.13 $ (4.25) $ 4.38

Other expense - net 1,076 2,635 (1,559)

Income before income taxes 14,445 944 13,501

Income tax benefit (28,398) (355) (28,043)

Net income $ 42,843 $ 1,299 $ 41,544

Net loss attributable to noncontrolling interest (103) (165) 62

Net income attributable to L.B.

Foster Company $ 42,946 $ 1,464 $ 41,482

Diluted earnings per common share $ 3.89 $ 0.13 $ 3.76

Fiscal 2024 Compared to Fiscal 2023 — Company Analysis

Net sales of $543,744 for the year ended December 31, 2023 increased by $46,247, or 9.3%, over the prior year.

The increase in sales is due to organic sales growth of 11.7% and a 4.0%, or $19,834, increase from the acquisitions of Skratch and VanHooseCo, partially offset by a 6.4%, or $31,995, decline in sales due to the divestitures of Track Components, Chemtec, and Ties.

Net sales for the year ended December 31, 2024 decreased by $12,979, or 2.4%, from the prior year.

The decrease in sales is due to divestitures and product line exits which declined $13,819, offset partially by an organic sales increase of $840.

Net sales for the year ended December 31, 2023 included a $1,977 reduction stemming from changes in expected value of certain commercial projects associated with the Bridge Exit within the Infrastructure segment.

Net sales for the year ended December 31, 2022 included a $3,956 reduction from the settlement of certain long-term commercial contracts related to the multi-year Crossrail project (“Crossrail Settlement”) in the Company’s Technology Services and Solutions business in the United Kingdom.

This settlement reduced both sales and gross profit in 2022.

Gross profit increased by $6,018, or 5.4%, and gross profit margin expanded by 160 basis points to 22.2%.

The improvement in gross profit is due primarily to the portfolio changes that are a part of the Company’s strategic transformation, as well as uplift from increased sales volumes, product mix, and pricing.

In 2023, gross profit was also impacted by a reduction in profitability of $3,051

due to the Bridge Exit.

In 2022, gross profit was negatively impacted by a $1,135 purchase accounting adjustment related to the VanHooseCo acquired inventory along with the $3,956 reduction from the Crossrail Settlement.

Selling and administrative expenses increased by $14,701, or 17.8%, over the prior year.

The increase was primarily attributable $1,608 of increased costs associated with portfolio changes, higher personnel expenses including variable incentive costs that will rest in 2024, UK restructuring costs of $676 and a bad debt provision charge of $1,862 due to a customer in the United Kingdom who filed for administrative protection.

Selling and administrative expenses as a percentage of net sales increased to 17.9% from 16.6% due to the increased spending.

Interest expense increased by $2,188, or 65.5%, due to higher outstanding debt, on average, throughout the year as well as the higher interest rate environment in 2023.

Despite higher average debt levels throughout 2023, the Company’s outstanding debt balance decreased to $55,273 as of December 31, 2023, compared to $91,879 as of December 31, 2022.

The proceeds of $5,344 and $2,362 from the divestiture of Chemtec and Ties, respectively, as well as stronger operating cash flows in 2023, were used to drive the decrease in debt.

Other expense for the year ended December 31, 2023 was $3,666 and was primarily attributable to a $3,074 loss on the divestitures of Ties and Chemtec and $1,403 of exit costs incurred related to the Bridge Exit.

Other income for the year ended December 31, 2022 included pre-tax income of $489 from the 2021 sale of the Piling Products division, $790 in insurance proceeds, and $325 received to recover costs associated with environmental cleanup activities partially offset by a $467 loss related to the sale of the Track Components business.

The improvement in gross profit is due primarily to the portfolio changes that are a part of the Company’s strategic transformation, as well as uplift from favorable business mix and recovery in our UK Technology Services and Solutions businesses.

In 2024, gross profit also included an $815 gain on the sale of an ancillary property within the Steel Products business unit In 2023, gross profit was impacted by a reduction in profitability of $4,192 due to the Bridge Exit.

Selling and administrative expenses decreased by $1,225, or 1.3%, from the prior year.

The decrease was primarily attributable to $2,919 of lower employment costs in the year ended December 31, 2024 and $1,862 of bad debt expense incurred in the year ended December 31, 2023 due to a customer filing for administrative protection.

Partially offsetting these decreases were $1,173 of corporate legal costs associated with a resolved legal matter, $783 in professional services expenditures associated with the announced enterprise restructuring, and $608 in higher employee-related restructuring expense in 2024.

Selling and administrative expenses as a percentage of net sales increased to 18.2% from 18.0% due to lower sales volumes.

The $3,477 gain on sale of the former joint venture facility for the year ended December 31, 2024 was attributed to the Company's facility and land in Magnolia, Texas.

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Net interest expense for the year ended December 31, 2024 decreased by $536, or 9.7%, due to declining interest rates and lower debt levels during the year.

Other expense - net decreased by $1,559 from the prior year.

Other expense - net in for the year ended December 31, 2024 was primarily attributable to $1,722 of pension termination costs associated with the termination of the frozen L.B.

Foster Company Merged Retirement Plan (the “US DB Plan”).

Other expense - net for the year ended December 31, 2023 was attributable to a $3,074 loss on the divestitures of Ties and Chemtec.

The Company’s effective income tax rate for 2024 was (196.6)%, compared to (37.6)% in the prior year period.

The Company's effective income tax rate differed from the federal statutory rate of 21% primarily due to the realization of domestic tax benefits previously offset by a valuation allowance.

Such tax benefits were offset by an increase in the Company’s valuation allowance against its deferred tax assets in the UK and other foreign jurisdictions.

The Company's effective income tax rate 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.

For further discussion on the valuation allowance, refer to Note 13 of the Notes to the Consolidated Financial Statements.

Net income for the year ended December 31, 2023 was $1,299, or $0.13 per diluted share, compared to net loss for the 2022 year of $45,677, or $4.25 per diluted share.

Net loss in 2022 was impacted by a $37,895 expense related to the increase in the Company’s valuation allowance against deferred tax assets, as well as non-cash impairment charges of $8,016.

Net income attributable to the Company for the year ended December 31, 2024 was favorable by $41,482, or $3.76 per diluted share over the prior year.

The increase was due to an income tax benefit of $28,398 that is primarily associated with a favorable tax valuation allowance adjustment, the gain on sale attributed to the Company's facility and land in Magnolia, Texas, and an increase in gross profit, due in part to the unfavorable impact of $4,192 on gross profit from the Bridge Exit in the prior year.

Results of Operations — Segment Analysis

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Gross profit margin 22.2 % 20.8 % 140 bps 6.4

Segment operating profit $ 11,940 $ 11,454 $ 486 4.2 %

Segment operating profit margin 3.8 % 3.8 % 0 bps 0.4 %

Rail segment sales increased by $11,568, or 3.8%, over the prior year.

The increase was due to higher organic sales of $26,040 or 8.7%, which includes the impact of the 2022 Crossrail Settlement.

The acquisition of Skratch resulted in higher sales of $1,504, or 0.5% and the divestiture of the Track Components and Ties businesses reduced sales by $15,976, or 5.3%.

Rail Products sales increased $3,238 driven by increased volumes partially offset by the Track Components and Ties divestitures.

Global Friction Management volumes resulted in a sales increase of $9,135.

Technology Services and Solutions sales decreased $805 due to continued weak commercial conditions in the UK, partially offset by $1,504 in higher sales from the Skratch acquisition and the Crossrail Settlement in impact 2022.

Segment gross profit increased by $5,190, or 8.7%, compared to the prior year.

Higher volumes in Rail Products and the Crossrail Settlement impact recorded in 2022 resulted in gross profit increasing $6,530.

Improved Global Friction Management volumes resulted in increased gross profit of $3,393.

Technology Services and Solutions gross profit declined by $4,733 due to weaker commercial conditions in the UK.

The net impact of acquisitions and divestitures reduced gross profit in 2023 by $1,752.

The Rail segment gross profit margin increased by 90 basis points from the prior year due to improved volumes and pricing in Rail Products and Global Friction Management and the portfolio changes made;

the acquired Skratch business reported higher margins than the divested Track Components and Ties businesses and higher margins realized in Rail Products.

Such improvements were partially offset by declines in margins in the Technology Services and Solutions business unit driven by weak commercial conditions in the UK.

Segment operating profit increased by $486, or 4.2%, compared to the prior year.

The increase was driven by the improvement in gross profit, which was partially offset by increased personnel costs as well as a 2023 bad debt provision charge of $1,862 due to a customer in the UK who filed for administrative protection and $676 in restructuring expense associated with the UK operations.

During 2023, new orders within the Rail segment decreased by 4.7% compared to the prior year.

The decrease in new orders was attributable to the divestitures of the Ties and Track Components businesses declining new orders by $2,089 and $8,224, respectively, and the Rail Distribution business declining in new orders by $26,597 compared to the prior year.

The decline was partially offset by increases in the Global Friction Management and Technology Services and Solutions business units which included the Skratch acquisition increase of $2,735.

Segment backlog decreased by 19.8% compared to the prior year, ending 2023 at $84,418.

The decrease is attributed to Rail Distribution business reducing backlog by $29,717 from the prior year which was impacted by the timing of larger orders.

Segment operating income $ 21,912 $ 12,306 $ 9,606 78.1

Segment operating income margin 6.7 % 3.9 % 280 bps 70.0

The Rail segment sales increased by $14,709, or 4.7%, over the prior year.

The increase was due to higher organic sales of $16,823, or 5.4%, partially offset by a $2,114, or 0.7%, decrease from the divestiture of Ties.

Rail Products sales increased $1,899 driven by increased volumes partially offset by lower market prices as well as the Ties divestiture.

Global Friction Management sales increased by $2,038 due to domestic markets served.

Technology Services and Solutions sales increased by $10,772 due to strength in the domestic rail safety markets served, as well as recovery in the UK markets.

The Rail segment gross profit increased by $7,436, or 11.4%, over the prior year and gross margins improved 140 basis points.

Higher volumes and improved mix attributed to the $2,653 improved gross profit in Global Friction Management over the prior year.

The Technology Services and Solutions business unit gross profit improved by $8,079 over the prior year due to higher volumes and improved mix, including recovery in our UK business.

Rail Products gross profit decreased by $3,296, due to market pricing pressure.

The Rail segment operating income increased by $9,606, or 78.1%, over the prior year.

The increase was driven by the improvement in gross profit, as well as a decrease in selling and administrative expenses due primarily to the $1,862 of bad debt expense incurred in the year ended December 31, 2023 due to a UK customer filing for administrative protection.

During the year ended December 31, 2024, new orders within the Rail segment increased by 2.9% over the prior year.

Rail Products had an increase in new orders of $17,172, despite a $6,105 decline from the Ties divestiture.

Global Friction Management new orders increased by $6,618, while Technology Services and Solutions declined by $15,914 as the Company scales back initiatives in the UK market in line with our strategy.

For the year ended December 31, 2024, the Rail segment backlog decreased by 26.0% from the prior year.

The decrease is attributed to the Technology Services and Solutions businesses decreasing by $15,320, due to our UK businesses and the Rail Products business which declined $10,257 due to timing of orders.

This decrease was partially offset by an increase of $3,848 in Global Friction Management.

Infrastructure Solutions

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Gross profit margin 22.4 % 20.3 % 210 bps 10.2

Segment operating profit (loss) $ 9,988 $ (9,132) $ 19,120 209.4 %

Segment operating profit (loss) margin 4.3 % (4.6) % 895 bps 193.0 %

The Infrastructure segment sales increased by $34,679, or 17.6%, compared to the prior year.

The increase was due to organic sales of $32,368 or 16.4% and includes a $1,977 reduction in 2023 sales stemming from changes in expected value of certain commercial projects associated with the Bridge Exit.

The acquisition of VanHooseCo contributed $18,330, or 9.3%, of the increase in sales year over year offset by the divestiture of Chemtec, which drove a sales decline of $16,019, or 8.1%.

Strong organic sales were driven by the Precast Concrete Products business unit as well as the Protective Pipe Coatings line of business.

The Infrastructure segment gross profit increased by $18,009, or 59.8%, compared to the prior year.

The improvement in gross profit dollars is due to higher volumes and improved pricing in the legacy business and the net impact of acquisitions and divestitures which increased gross profit dollars in 2023 by $3,627.

Gross profit in 2023 was negatively impacted by an adjustment of $3,051 due to changes in expected value of certain commercial projects associated with the Bridge Exit.

In 2022, gross profit included an unfavorable adjustment of $1,135 related to the purchase accounting of acquired inventory related to VanHooseCo.

Gross profit margins of 20.8% increased 550 basis points over last year, driven by more favorable margins associated with portfolio changes, as well as higher overall sales volumes and gains from pricing initiatives.

The segment profit of $9,988 increased by $19,120 over the prior year.

Segment profit in 2022 was negatively impacted by a goodwill impairment charge of $3,011 in the Fabricated Bridge business and a $5,005 impairment charge for intangible assets related to the Chemtec business.

The other drivers of the increase in segment profit are the increase in gross profit, which was partially offset by higher selling and administrative expenses including the net impact of acquisitions and divestitures which increased selling and administrative costs by $1,628.

During 2023, the Infrastructure segment had a decrease in new orders and backlog of $8,117, or 3.4%, and $37,648, or 22.5%, respectively, compared to the prior year period.

The divestiture of Chemtec during the first quarter of 2023 resulted in a reduction of new orders and backlog of $33,234 and $20,928, respectively, from the prior year period.

Orders in the Precast business, including the acquisition of VanHooseCo, partially offset the decline in new orders from the Chemtec divestiture.

Backlog was also impacted by $8,094 due to the Bridge Exit.

Segment operating income $ 9,375 $ 8,622 $ 753 8.7

Segment operating income margin 4.6 % 3.7 % 90 bps 23.5

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The Infrastructure segment sales decreased by $27,688, or 12.0%, from the prior year.

The decrease in net sales was attributable to an organic sales decline of 15,983, or 6.9%, driven by the Steel Products business and due to the divestiture of Chemtec and the Bridge Exit, which decreased sales by $9,259 and $2,446, respectively.

Precast Concrete Products net sales were primarily flat from the prior year.

The Infrastructure segment gross profit decreased by $1,418, or 3.0%, from the prior year.

The decrease in gross profit was primarily attributable to lower volumes and unfavorable business mix of $4,751.

Gross profit for the year ended December 31, 2023 was negatively impacted by $4,192 related to the Bridge Exit, including a $3,051 reduction in profitability related to changes in the expected value of certain commercial projects.

The divestiture of Chemtec also decreased gross profit by $859 from the prior year.

Gross margins improved 210 basis points over last year, driven by more favorable margins associated with portfolio changes and due to an $815 gain on ancillary property incurred in the year ended December 31, 2024.

The Infrastructure segment operating income increased by $753, or 8.7%, over the prior year.

The increase in operating income was due to a $1,407 decrease in selling and administrative costs and a $763 decrease in amortization expense offset by lower gross profit.

For the year ended December 31, 2024, new orders within the Infrastructure segment had a decrease of 13.6%, from the prior year.

The decrease was driven by the Steel Products business unit due to market challenges as well as a $4,489 impact associated with the divestiture of Chemtec.

For the year ended December 31, 2024, the Infrastructure segment backlog decreased by 4.6%, from the prior year driven primarily by Steel Products which decreased $9,465 and includes a reduction of $2,685 related to the Bridge Exit, offsetting an increase of $3,563 in Precast Concrete Products.

December 31, Change Percent

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2023 2024 vs.

Corporate expense and other unallocated charges $ 11,790 $ 9,528 $ 2,262 23.7 %

Unallocated corporate expenses increased in 2023 compared with 2022 primarily due to higher compensation including variable compensation costs that will reset in 2024 and higher interest expense.

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

Public company costs 5,755 4,814 941 19.5 %

Corporate executive management costs 5,726 3,807 1,919 50.4

Corporate management stock-based compensation 2,065 2,816 (751) (26.7)

Other 705 384 321 83.6

Unallocated corporate expense - net $ 10,774 $ 11,821 $ (1,047) (8.9) %

**Results of this calculation not meaningful.

Unallocated corporate expenses - net declined by $1,047 due to the gain of $3,477 on the sale of former joint venture facility.

Public company costs include listing fees, audit fees, compliance costs, insurance costs, professional services, and Board of Director fees.

The increase in public company costs was primarily due to an increase in insurance costs and professional services expenditures.

Corporate executive management costs also increased due to legal fees associated with a resolved legal matter and professional services associated with the announced enterprise restructuring program.

Corporate management stock-based compensation costs declined due to the net impact of adjustments to expected attainment levels across the Company's equity incentive plans.

Restructuring

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

The restructuring action has been completed as of December 31, 2024, and is expected to provide run-rate pre-tax savings of approximately $4,500, of which approximately $2,000 was recognized in 2024.

The following table sets forth restructuring costs by segment for the year ended December 31, 2024:

Year Ended December 31,

Rail, Technologies, and Services $ 1,134

Infrastructure Solutions 113

Corporate 209

Total $ 1,456

The Company's $1,456 restructuring expense relates primarily to severance.

Of the total restructuring costs incurred for the year ended December 31, 2024, $245 was recorded in “Cost of goods sold” and $1,211 was reported in “Selling and administrative expense.” The Company does not anticipate any additional restructuring expense to be incurred associated with this program.

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Liquidity and Capital Resources

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under its revolving credit facility, which provides for a total commitment of up to $130,000, of which $82,124 was available for borrowing as of December 31, 2024, subject to covenant restrictions.

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

The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, tax obligations, outstanding purchase obligations, acquisitions, restructuring payments, and to support share repurchase programs.

During 2024 and 2023, the Company paid $8,000 annually as a result of the Settlement Agreement (the “Settlement Agreement”) with Union Pacific Railroad Company (“UPRR”).

As of December 31, 2024 the UPRR Settlement Agreement has been fully paid.

The Company’s total debt, including finance leases, was $46,940 and $55,273 as of December 31, 2024 and December 31, 2023, respectively, and was primarily comprised of borrowings under its revolving credit facility.

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Total available funding capacity $ 84,578

As of December 31, 2023 and December 31, 2022 we were in compliance with all covenants of the Credit Agreement and have $74,693 available funding capacity as of December 31, 2023.

The Company’s cash flows are impacted from period to period by fluctuations in working capital, as well as its overall profitability.

While the Company places an emphasis on working capital management in its operations, factors such as its contract mix, commercial terms, days sales outstanding (“DSO”), and market conditions as well as seasonality may impact its working capital.

As of December 31, 2024, the Company was in compliance with all covenants of the Credit Agreement and has $84,578 available funding capacity, subject to covenant restrictions.

The Company’s operating cash flows are impacted from period to period by fluctuations in working capital, as well as its overall profitability.

While the Company places an emphasis on working capital management in its operations, factors such as business mix, commercial terms, and market conditions as well as seasonality may impact working capital.

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

The Company believes that its reserves for credit losses are appropriate as of December 31, 2024, but adverse changes in the economic environment and adverse financial conditions of its customers may impact certain of its customers’ ability to access capital and compensate the Company for its products and services, as well as impact demand for its products and services.

On May 23, 2024, the Company's Board of Directors approved the termination of the 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”).

At such time, the Company notified all plan participants of the Company's intentions to terminate and fully settle the obligations.

During the fourth quarter of 2024, the Company completed the termination of the US DB Plan by distributing all the assets of its US DB Plan and by making additional cash contributions of $1,806 to effectuate the termination of this plan.

The settlement of these obligations resulted in the recognition of a charge of $1,722 which has been presented as a component of “Other expense - net” for the year ended December 31, 2024.

The Company's UK DB Plan is fully funded as of December 31, 2024.

In January 2025, the Company entered into an insurance buy-in contract with a third party insurer which resulted in an exchange of plan assets for an annuity that covers our future projected benefit obligations.

The Company expects the buy out of the plan and transfer of future benefit obligations of plan participants to be completed in early 2026.

The Company does not expect to make any further contributions to the UK DB Plan.

The change in cash and cash equivalents for the years ended December 31, 2024 and 2023 were as follows:

Year Ended December 31,

Net cash provided by (used in) operating activities $ 37,376 $ (10,576)

Net cash provided by (used in) investing activities 2,066 (56,418)

Net cash (used in) provided by financing activities (39,296) 60,240

Net cash provided by operating activities $ 22,632 $ 36,956

Net cash (used in) provided by investing activities (6,312) 2,486

Net cash used in financing activities (16,231) (39,296)

Effect of exchange rate changes on cash and cash equivalents (195) (468)

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Cash Flows from Operating Activities

During the year ended December 31, 2023, net cash provided by operating activities was $37,376, compared to a use of $10,576 during the prior year.

During 2023, cash flow provided by operating activities consisted of net income and non-cash items amounting to $21,453 and changes in certain assets and liabilities netting to a cash inflow of $15,923.

In 2022, working capital and other assets and liabilities were a use of $25,822.

Both periods include payments of $8,000 for the Union Pacific Railroad Concrete Tie Settlement.

The Company’s calculation of DSO was 43 days as of December 31, 2023 compared to 48 days as of December 31, 2022.

During the year ended December 31, 2024, net cash provided by operating activities was $22,632, compared to $36,956 during the prior year.

During 2024, cash flow provided by operating activities consisted of net income and non-cash items amounting to $27,195 and changes in certain assets and liabilities netting to a cash outflow of $4,563.

In 2023, cash flow provided by operating activities consisted of net income and non-cash items amounting to $21,453 and changes in certain assets and liabilities netting to a

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cash inflow of $15,503.

Both periods include payments of $8,000 for the UPRR Settlement, which was fully paid as of December 31, 2024.

Cash Flows from Investing Activities

For the year ended December 31, 2023, the Company had capital expenditures of $4,933, a $2,700 decrease from 2022.

The expenditures for the year ended December 31, 2023 were primarily related to general plant and operational improvements throughout the Company, as well as organic growth initiatives.

Expenditures for the year ended December 31, 2022 related to plant expansions within our Infrastructure segment, including those related to the second VanHooseCo operating location, implementations of the Company’s ERP system, and general plant and operational improvements throughout the Company.

In 2023, the Company received cash proceeds of $7,706 from the sale of its Ties and Chemtec businesses.

In 2022 the Company received cash proceeds of $8,800 primarily from the sale of its Track Components business.

Cash used for investing activities for the year ended December 31, 2022 included cash paid of $57,852 for the acquisitions of VanHooseCo and Skratch.

For the year ended December 31, 2024, the Company had capital expenditures of $9,791, a $5,278 increase from 2023.

Capital expenditures in both periods primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives.

In 2024, the Company sold the facility and land of its former joint venture in Magnolia, Texas and fixed assets associated with the Bridge Exit generating cash inflow of $3,895.

In 2023, the Company received cash proceeds of $7,706 primarily from the sale of its Ties and Chemtec businesses.

Cash Flows from Financing Activities

The Company decreased its outstanding debt by $37,260 during the year ended December 31, 2023, primarily due to the proceeds from divestitures and improved operating cash flows.

During the year ended December 31, 2022, the Company increased outstanding debt by $60,832, primarily from the borrowings used to fund the acquisitions of Skratch and VanHooseCo.

During the year ended December 31, 2022, the Company paid financing fees of $182 related to its Credit Agreement (as defined below).

For the year ended December 31, 2023 the Company repurchased 134,208 shares of its stock for $2,310 associated with the Company’s Board of Directors authorizing the purchase of up to $15,000 of the Company’s common stock through February of 2026.

For the years ended December 31, 2023 and 2022, the Company also repurchased 24,886 and 27,636 shares of its stock, respectively, for $315 and $410 from employees to pay their withholding taxes in connection with the vesting of stock awards.

The Company decreased its outstanding debt by $7,994 during the year ended December 31, 2024, primarily due to the proceeds from asset sales and operating cash flows.

During the year ended December 31, 2023, the Company decreased outstanding debt by $37,260, primarily due to the proceeds from divestitures and improved operating cash flows.

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

For the year ended December 31, 2024 and 2023, the Company repurchased 300,302 shares of its stock for $6,808 and 134,208 shares for $2,310, respectively, under this program.

For the year ended December 31, 2024 and 2023, the Company also purchased 59,577 and 24,886 of its stock, respectively, for $1,429 and $315 from employees to pay for withholding taxes in connection with the vesting of stock awards.

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 December 31, 2024, the Company has repurchased stock of $9,118, with $5,882 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.

On March 3, 2025, the Company's Board of Directors authorized the repurchase of up to $40,000 of the Company's common stock in open market transactions and/or 10b5-1 trading plans through February 29, 2028.

Refer to “Part II, Item 8, Financial Statements and Supplementary Data, Note 20 to the Consolidated Financial Statements.”

Financial Condition

The Company generated $37,376 from cash flows from operations during 2023, which was utilized to pay down debt, fund capital expenditures and repurchase shares.

The Company generated $22,632 in cash flows from operations during 2024, which was utilized to pay down debt, fund capital expenditures, and repurchase shares.

As of December 31, 2024, the Company had $2,454 in cash and cash equivalents and $82,124 of availability under its revolving credit facility, subject to covenant restrictions.

Principal uses of cash in recent years have been to fund operations, including capital expenditures, repurchase shares and service indebtedness.

Principal uses of cash in recent years have been to fund operations, including capital expenditures, acquisitions, repurchase shares, and service indebtedness.

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

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Should management determine that the cash balances of its foreign subsidiaries exceed its projected working capital needs, excess funds may be repatriated and subject to additional income taxes.

On August 13, 2021, the Company entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).

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

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 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 US dollars that is available to the Canadian and United Kingdom borrowers in the aggregate.

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”) to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction.

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

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

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.

For a discussion of the terms and availability of the credit agreement, please refer to Note 9 of the Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K.

As of December 31, 2023, the Company was in compliance with the covenants in the Credit Agreement.

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into SOFR-based interest rate swaps with notional values totaling $20,000 and $20,000 effective August 12, 2022 and August 31, 2022, respectively, at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.

Prior to the 2022 forward interest rate swaps, the Company had $50,000 of interest rate swaps that were accounted for on a mark-to-market basis.

During February 2022, the $50,000 tranche of interest rate swaps expired.

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into SOFR-based interest rate swaps with notional values totaling $20,000 and $20,000 effective August 12, 2022 and August 31, 2022 and expiring March 1, 2025 and August 13, 2026, respectively, at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.

As of December 31, 2024 and December 31, 2023 the swap asset was $430 and $1,225, respectively.

On June 30, 2023, the Company sold substantially all the operating assets of the Ties business, located in Spokane, WA, for $2,362 in proceeds, subject to final working capital adjustments.

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

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec business, for $5,344 in proceeds, subject to final working capital adjustments.

The Chemtec business was reported in the Steel Products business unit within the Infrastructure segment.

On August 1, 2022, the Company divested the assets of its rail spikes and anchors Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada.

Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments, resulting in a pre-tax loss of $3,074.

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

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The Company believes that the combination of its cash and cash equivalents, cash generated from operations, and the capacity under its revolving credit facility will provide sufficient liquidity to provide the flexibility to operate the business in a prudent manner, continue to service outstanding debt, repurchase shares and to selectively pursue accretive acquisitions to further the Company’s strategic initiatives.

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While a considerable portion of the Company’s business is backlog driven, certain businesses, including the Global Friction Management business unit, are not driven by backlog and therefore have insignificant levels of backlog throughout the year.

Backlog decreased $58,471 compared to the prior year due to $31,270 from businesses that were divested and a discontinued product line.

The remaining decline is associated with the timing of large orders for the Rail Distribution business.

Backlog decreased $27,871 from the prior year stemming from the Rail Products business due to lower volumes, the UK Technology Services and Solutions businesses as the Company scales back initiatives in the UK market in line with our strategy, and the Steel Products business, including a $2,685 decline from a discontinued product line.

Critical Accounting Estimates

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The Company’s income tax rate is significantly affected by the tax rate on global operations.

In addition to local country tax laws and regulations, this rate depends on the extent earnings are indefinitely reinvested outside of the US Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company.

In addition to local country tax laws and regulations, this rate depends on the extent earnings are indefinitely reinvested outside of the US.

Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company.

There have been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period.

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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.

The Company estimates profit on these long-term agreements as the difference between total estimated revenues and expected costs to complete a

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contract and recognizes that profit over the life of the contract.

Contract estimates are based on various assumptions to project the outcome of future events that may span several years.

These assumptions include, among other things, labor productivity, cost and availability of materials, and timing of project execution.

The nature of these long-term agreements may give rise to several types of variable considerations, such as discounts and claims.

The nature of these long-term agreements may give rise to several types of variable consideration, such as discounts and claims.

Contract estimates may include additional revenue for submitted contract modifications, including at times unapproved change orders, if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable.

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These non-GAAP financial measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.

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References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “organic sales” refer to sales calculated in accordance with GAAP, adjusted to exclude divestiture or acquisition-related sales.

Management evaluates the Company’s sales performance based on organic sales growth.

Organic sales growth is a non-GAAP financial measure of sales growth (which is the most directly comparable GAAP measure), adjusted to exclude the effects of acquisitions and divestitures from year-over-year comparisons.

Management evaluates the Company’s sales performance based on organic sales growth (decline).

Organic sales growth (decline) is a non-GAAP financial measure of sales (which is the most directly comparable GAAP measure), adjusted to exclude the effects of acquisitions and divestitures from year-over-year comparisons.

The Company believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis.

The Company reports organic sales growth at the consolidated and segment levels.

The Company reports organic sales growth (decline) at the consolidated and segment levels.

EBITDA is a non-GAAP financial measure that has been used in discussing the financial performance of the business for the years ended December 31, 2024 and 2023.

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Adjusted EBITDA includes certain adjustments to EBITDA.

In 2023, the Company made adjustments to exclude the loss on divestitures, VanHooseCo contingent consideration adjustments, the impact of the discontinuation of the bridge grid deck product line, and bad debt provision for a customer that filed for administrative protection in the UK.

In 2022, the Company made adjustments to exclude acquisition and divestiture related costs, VanHooseCo acquisition-related inventory step-up amortization and contingent consideration expense, the gain from insurance proceeds, the Crossrail project settlement amount, impairment charges, and the loss (gain) on the sale of the Track Components and Piling Products businesses, respectively.

In 2024, the Company made adjustments to exclude gains on asset sales, pension termination costs, restructuring costs, and costs associated with a resolved legal matter.

In 2023, the Company made adjustments to exclude the loss on divestitures, expenses from the exit of the bridge grid deck product line, bad debt provision for customer bankruptcy, restructuring costs, and contingent consideration adjustments associated with the VanHooseCo acquisition.

The Company views net debt, which is total debt less cash and cash equivalents, as an important metric of the operational and financial health of the organization and useful to investors as an indicator of our ability to incur additional debt and to service our existing debt.

The Company views funding capacity, which is the net availability under the revolving credit agreement plus cash and cash equivalents, as an important metric as it demonstrates the borrowing capacity of the Company.

The Company defines new orders as a contractual agreement between the Company and a third-party in which the Company will, or has the ability to, satisfy the performance obligations of the promised products or services under the terms of the agreement.

The Company defines backlog as contractual commitments to customers for which the Company’s performance obligations have not been met, including with respect to new orders and contracts for which the Company has not begun any performance.

Management utilizes new orders and backlog to evaluate the health of the industries in which the Company operates, the Company’s current and future results of operations and financial prospects, and strategies for business development.

The Company believes that new orders and backlog are useful to investors as supplemental metrics by which to measure the Company’s current performance and prospective results of operations and financial performance.

Non-GAAP financial measures are not a substitute for GAAP financial results and should only be considered in conjunction with the Company’s financial information that is presented in accordance with GAAP.

Quantitative reconciliations of EBITDA, adjusted EBITDA, organic sales growth, and net debt to the non-GAAP financial measures are presented in this Item 7.

Quantitative reconciliations of EBITDA, adjusted EBITDA, organic sales growth, funding capacity, and net debt to the non-GAAP financial measures are presented in this Item 7.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to a smaller reporting company.

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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-K

Item 7. Management’s Discussion and Analysis