What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-06 · 199 added, 100 removed, 134 unchanged (69% of the section changed)

15 unchanged sentences

environmental matters and the impact of environmental regulations, including any costs associated with any remediation and monitoring of such matters;

the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, global shipping disruptions, the imposition of increased or new tariffs, and trade restrictions or embargoes;

our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the acquisition of VanHooseCo Precast LLC, and to realize anticipated benefits;

our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, and to realize anticipated synergies and benefits;

costs of and impacts associated with shareholder activism;

1 unchanged sentence

labor disputes;

emerging technologies, including those related to or arising from artificial intelligence, and resultant risks to our business and operations;

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

4 unchanged sentences

domestic and foreign government regulations, including tariffs;

our ability to maintain effective internal controls over financial reporting (“ICFR”) and disclosure controls and procedures, as well as our ability to reestablish effective disclosure controls and procedures;

our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures, as well as our ability to reestablish effective disclosure controls and procedures;

any change in policy or other change due to the results of the UK’s 2024 parliamentary election and the U.S.

2 unchanged sentences

other geopolitical conditions, including the ongoing conflicts between Russia and Ukraine, conflicts in the Middle East, and increasing tensions between China and Taiwan;

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

a lack of or delay in state or federal funding for infrastructure projects;

an increase in manufacturing or material costs, including volatility in steel prices;

10 unchanged sentences

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

Product Line Exit

Product Line Exits

During the second quarter of 2025, the Company announced the discontinuation of its Automation and Materials Handling product line (“AMH Exit”) which was reported in the Technology Services and Solutions business unit within the Rail segment.

AMH had net sales of $813 and $1,100 for the three months ended June 30, 2025 and 2024, respectively, and $1,220 and $3,324 for the six months ended June 30, 2025 and 2024, respectively.

The Company expects to complete any remaining customer obligations by the end of 2025.

The Company has incurred a total of $1,351 in exit costs associated with the AMH Exit, which included $655 in inventory and fixed asset write-downs, $507 in personnel expenses, and $189 in other exit costs.

Exit costs of $1,085 were recorded in “Cost of goods sold” and $266 were recorded in “Selling and administrative expenses” within our 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 Infrastructure.

The Bedford, PA based operations supporting the product line expects to complete any remaining customer obligations in 2025.

For the three months ended March 31, 2025 and 2024, the product line had $501 and $810 in sales, respectively.

The product line had net sales of $498 and $1,157 for the three months ended June 30, 2025 and 2024, respectively, and $999 and $1,967 for the six months ended June 30, 2025 and 2024, respectively.

Results of Operations

First Quarter 2025 Compared to First Quarter 2024

Second Quarter 2025 Compared to Second Quarter 2024

Three Months Ended

March 31, Change

June 30, Change

2025 2024 2025 vs.

5 unchanged sentences

15.6 % 17.6 % (200) bps

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

Amortization expense $ 840 $ 1,123 $ (283)

Operating (loss) income $ (1,923) $ 5,566 $ (7,489)

Operating (loss) income margin (2.0) % 4.5 % (650) bps

Operating income $ 7,678 $ 4,572 $ 3,106

Operating income margin 5.3 % 3.2 % 210 bps

Interest expense - net $ 1,490 $ 1,493 $ (3)

Other income - net (95) (84) (11)

(Loss) income before income taxes $ (2,748) $ 4,694 $ (7,442)

Income tax (benefit) expense (631) 289 (920)

Net (loss) income $ (2,117) $ 4,405 $ (6,522)

Income before income taxes $ 6,283 $ 3,163 $ 3,120

Income tax expense 3,444 346 3,098

Net income $ 2,839 $ 2,817 $ 22

Net loss attributable to noncontrolling interest (46) (30) (16)

Net (loss) income attributable to L.B.

Net income attributable to L.B.

Foster Company $ 2,885 $ 2,847 $ 38

Diluted (loss) earnings per common share $ (0.20) $ 0.40 $ (0.60)

Diluted earnings per common share $ 0.27 $ 0.26 $ 0.01

Results Summary

Net sales for the three months ended March 31, 2025 decreased $26,528, or 21.3%, from the prior year quarter.

The decrease in sales was driven by $28,608, or 34.6%, in the Rail segment, partially offset by a $2,080, or 5.0% increase in the Infrastructure segment.

Gross profit for the three months ended March 31, 2025 decreased $6,025, or 23.0%, from the prior year quarter and gross profit margins decreased 50 basis points to 20.6%.

The decline in gross profit and gross profit margin is due to lower sales volumes associated with the Rail segment, which has historically been the more profitable segment .

Selling and administrative expenses for the three months ended March 31, 2025 decreased by $1,918, or 8.4%, from the prior year quarter, due primarily to decreased personnel costs and professional services expenditures.

Selling and administrative expenses as a percent of net sales increased to 21.4% from 18.4% in the prior year quarter due to lower sales volumes.

Net interest expense increased $18 for the three months ended March 31, 2025 compared to the prior year quarter.

The Company's outstanding debt balance was $82,498 as of March 31, 2025, compared to $78,085 as of March 31, 2024.

The Company’s effective income tax rate for the three months ended March 31, 2025 was 23.0%, compared to 6.2% in the prior year quarter.

The Company's effective income tax rate for the three months ended March 31, 2025 differed from the statutory rate of 21% primarily due to state income taxes, nondeductible expenses and the discrete impact of excess tax benefits related to share-based compensation, offset by the impact of pre-tax losses in foreign jurisdictions with full valuation allowances for which no income tax benefit was recognized.

Net loss attributable to the Company for the three months ended March 31, 2025 was $2,110, or $0.20 per diluted share, compared to net income in the prior year quarter of $4,436, or $0.40 per diluted share.

Net loss for the three months ended March 31, 2025 was primarily driven by decreased sales volumes and lower gross profit, offset in part by a decrease in selling and administrative expenses.

Net income for the three months ended March 31, 2024 included the $3,477 gain on the sale of the former joint venture facility in Magnolia, Texas.

Net sales for the three months ended June 30, 2025 increased $2,762, or 2.0%, over the prior year quarter.

The increase was driven by strong sales growth in the Infrastructure segment, which improved $12,383, or 22.4%, over the prior year quarter.

Partially offsetting these improvements were sales volumes declines in the Rail segment which declined $9,621, or 11.2%, from the prior year quarter.

Gross profit for the three months ended June 30, 2025 increased $387, or 1.3%, from the prior year quarter.

The improvement in gross profit was due to higher sales volume partially offset by $1,085 of costs related to the AMH Exit.

Gross profit margins declined 20

basis points to 21.5% due to the absence of the $815 gain realized on the sale of an ancillary property in the prior year quarter coupled with the AMH Exit costs incurred in the current year.

Selling and administrative expenses for the three months ended June 30, 2025 decreased $2,436, or 9.8%, from the prior year quarter, due primarily to lower personnel costs and professional services expenditures which decreased $941 and $473, respectively.

Selling and administrative expenses for the 2025 second quarter includes $266 in AMH Exit costs and the prior year quarter includes $751 in legal costs associated with a resolved legal matter.

Selling and administrative expenses as a percentage of net sales decreased to 15.6% in the current quarter compared to the prior year quarter.

Net interest expense was flat to the prior year quarter.

The Company's outstanding debt balance was $81,628 as of June 30, 2025, compared to $87,173 as of June 30, 2024.

The Company’s effective income tax rate for the three months ended June 30, 2025 was 54.8%, compared to 10.9% in the prior year quarter.

The Company's effective income tax rate for the three months ended June 30, 2025 differed from the statutory rate of 21% primarily due to the impact of pre-tax losses in the United Kingdom, for which no income tax benefit was recognized due to a valuation allowance.

Net income attributable to the Company for the three months ended June 30, 2025 was $2,885, or $0.27 per diluted share, compared to net income in the prior year quarter of $2,847, or $0.26 per diluted share.

Net income for the three months ended June 30, 2025 was driven by lower selling and administrative expenses offset by higher income tax expense.

Results of Operations - Segment Analysis

1 unchanged sentence

Three Months Ended

March 31, Change Percent

June 30, Change Percent

2025 2024 2025 vs.

5 unchanged sentences

Segment operating income margin 4.9 % 6.4 % (150) bps (23.3)

Rail segment net sales for the three months ended March 31, 2025 decreased $28,608, or 34.6%, from the prior year quarter.

The decrease was primarily due to the decline in the Rail Products business unit which declined by $23,719, or 44.7%, due to the timing of large orders in the Rail Distribution product line and an exceptionally strong prior year.

Technology Services and Solutions sales decreased by $6,430 due to the Company scaling back initiatives in the United Kingdom and softness in the domestic markets served.

The Global Friction Management business unit sales improved $1,541, or 11.0%, due to improved demand in domestic markets served.

The Rail segment's gross profit decreased by $6,542, or 35.2%, from the prior year quarter, and gross profit margins declined 20 basis points to 22.3%.

The Rail Products and Technology Services and Solutions business units gross profit declined by $4,231 and $3,241, respectively, due to lower volumes and slightly unfavorable business mix.

Partially offsetting these declines was an improvement in the Global Friction Management gross profit of $930, due to higher volumes.

Segment operating income decreased by $6,634 from the prior year quarter.

The decrease was driven by a decline in gross profit associated with lower sales volumes.

New orders of $83,252 for the three months ended March 31, 2025 decreased 0.6% from the prior year quarter due to order level declines in the Rail Products and Technology Services and Solutions business units, declining by 5.2% and 30.6%, respectively.

Partially offsetting these declines was a 28.3% increase in new orders in our Global Friction Management business unit.

Segment backlog of $91,724 as of March 31, 2025 increased 6.6% over the prior year quarter.

The increase is attributed to a 22.1% increase in the Rail Products business and a 71.4% increase in the Global Friction Management business, partially offset by a decline of 47.5% in our Technology Services and Solutions business as we scale back initiatives in the United Kingdom.

Rail segment net sales for the three months ended June 30, 2025 decreased $9,621, or 11.2%, from the prior year quarter.

The decline was primarily driven by $8,753, or 15.5%, in lower volumes in the Rail Products business, coupled with lower volumes in our Technology Services and Solutions business which declined $3,861, or 32.6%, due to scaling back initiatives in our UK business and softness in the UK market.

Partially offsetting these declines was an increase of $2,993, or 17.2%, in Global Friction Management sales.

Rail segment gross profit for the three months ended June 30, 2025 decreased $2,743, or 15.3%, from the prior year quarter, and gross profit margins declined by 100 basis points to 19.9%.

The decline in gross profit was due to lower sales volumes and $1,085 of costs associated with the AMH Exit.

Rail segment operating income for the three months ended June 30, 2025 decreased $1,754 from the prior year quarter due primarily to lower gross profit partially offset by a decline in selling and administrative expenses.

During the three months ended June 30, 2025, AMH Exit costs reduced operating income by $1,351.

For the three months ended June 30, 2025, the Rail segment had new orders of $114,345, a decrease of $2,651, driven primarily by Technology Services and Solutions as the Company scales back initiatives in our UK business and due to the timing of Global Friction Management orders.

Partially offsetting these declines was a 3.1% increase in Rail Products orders.

Backlog as of June 30, 2025, was $130,709, a $15,915, or 13.9%, increase over the prior year.

The increase in backlog was due to Rail Products and Global Friction Management, partially offset by a decrease in Technology Services and Solutions.

Infrastructure Solutions

Three Months Ended

March 31, Change Percent

June 30, Change Percent

2025 2024 2025 vs.

3 unchanged sentences

Gross profit margin 23.3 % 22.9 % 40 bps 1.9

Segment operating loss $ (444) $ (1,388) $ 944 (68.0)

Segment operating loss margin (1.0) % (3.3) % 230 bps (69.1)

The Infrastructure segment net sales for the three months ended March 31, 2025 increased by $2,080, or 5.0%, over the prior year quarter.

The increase in net sales was attributable to the Precast Concrete Products business unit which increased $7,113, or 33.7%,

which was partially offset by a $5,033, or 24.4%, decline in the Steel Products business unit due to timing of orders in the Protective Coatings businesses.

The Infrastructure segment's gross profit for the three months ended March 31, 2025 increased by $517, or 6.8%, due primarily to strength in the Precast Concrete Products business.

Gross profit margins of 18.6% increased 40 basis points over the prior year quarter due to improved volumes in Precast Concrete and favorable business mix in the Steel Products business unit.

Segment operating loss for the three months ended March 31, 2025 was favorable by $944 compared to the prior year quarter due to improvements in gross profit and a decrease in selling and administrative expenses.

For the three months ended March 31, 2025, the Infrastructure segment had new orders of $65,812, an increase of 35.3%, over the prior year quarter.

The increase is due to our Precast Concrete Products business unit which increased by 20.0% over the prior year quarter, and our Steel Products business unit which increased by 71.8% over the prior year quarter due to new order strength in our Protective Coatings business.

Backlog as of March 31, 2025, was $145,491, a 6.8% increase over the prior year quarter, driven by both business units.

Three Months Ended March 31, Change Percent

Segment operating income $ 6,766 $ 3,623 $ 3,143 86.8

Segment operating income margin 10.0 % 6.6 % 340 bps 51.8

Infrastructure segment net sales for the three months ended June 30, 2025, increased $12,383 or 22.4%, over the prior year quarter.

Sales increased due to strong growth in Precast Concrete Products, which increased $12,224, or 36.0%, over the prior year quarter.

The Steel Products business unit net sales increased $159, or 0.7%, due to sales volume growth in the Protective Coatings business which was partially offset by declines in the bridge forms product line and the exit of the bridge grid deck product line.

Infrastructure segment gross profit for the three months ended June 30, 2025 increased $3,130, or 24.8%, and gross profit margins expanded 40 basis points to 23.3%, compared to 22.9% over the prior year quarter, primarily driven by higher sales volumes in Precast Concrete Products and Protective Coatings businesses over the prior year quarter.

Gross profit for the second quarter of 2024 includes a $815 gain realized on the sale of an ancillary property, which was not included in the second quarter of 2025.

Infrastructure segment operating income for the three months ended June 30, 2025 was favorable by $3,143 compared to the prior year quarter due to improvements in gross profit.

For the three months ended June 30, 2025, Infrastructure had new orders of $61,411, an increase of $7,414, over the prior year quarter.

The increase in new orders is due to our Precast Concrete Products business unit which increased 26.7% over the prior year quarter, which was partially offset by the Steel Products business unit which decreased 16.7% from the prior year quarter.

Backlog as of June 30, 2025, was $139,220, an increase of $4,209, or 3.1% over the prior year quarter, driven by both business units.

Three Months Ended

June 30, Change Percent

2025 2024 2025 vs.

2024 2025 vs.

Public company costs $ 1,317 $ 1,621 $ (304) (18.8) %

Corporate executive management costs 728 1,885 (1,157) (61.4)

Corporate management stock-based compensation 761 880 (119) (13.5)

Other 29 166 (137) (82.5)

Unallocated corporate expense - net $ 2,835 $ 4,552 $ (1,717) (37.7) %

Unallocated corporate expense - net for the three months ended June 30, 2025 was $2,835 compared to $4,552 for the three months ended June 30, 2024.

Corporate executive management costs decreased from the prior year quarter primarily due to a decrease of $751 in corporate legal costs associated with a resolved legal matter and a decrease in professional service expenditures of $473.

Results of Operations

First Six Months 2025 Compared to First Six Months 2024

Six Months Ended

June 30, Change

2025 2024 2025 vs.

Net sales $ 241,350 $ 265,116 $ (23,766)

Gross profit 51,051 56,689 (5,638)

Gross profit margin 21.2 % 21.4 % (20) bps

Selling and administrative expenses $ 43,334 $ 47,688 $ (4,354)

Selling and administrative expenses as a percent of sales 18.0 % 18.0 % 0 bps

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

Amortization expense 1,962 2,340 (378)

Operating income $ 5,755 $ 10,138 $ (4,383)

Operating income margin 2.4 % 3.8 % (140) bps

Interest expense - net $ 2,633 $ 2,618 $ 15

Other income - net (413) (337) (76)

Income before income taxes $ 3,535 $ 7,857 $ (4,322)

Income tax expense 2,813 635 2,178

Net income $ 722 $ 7,222 $ (6,500)

Net loss attributable to noncontrolling interest (53) (61) 8

Net income attributable to L.B.

Foster Company $ 775 $ 7,283 $ (6,508)

Diluted earnings per common share $ 0.07 $ 0.66 $ (0.59)

Results Summary

Net sales for the six months ended June 30, 2025 decreased $23,766, or 9.0%, from the prior year period.

The decrease in net sales was driven by a decrease of $38,229, or 22.7%, in the Rail segment, partially offset by a $14,463, or 14.9%, increase in the Infrastructure segment.

Gross profit for the six months ended June 30, 2025 decreased $5,638, or 9.9%, from the prior year period and gross profit margins declined 20 basis points to 21.2%.

The decline in gross profit and gross profit margin is due to lower sales volumes associated with the Rail segment, AMH Exit restructuring costs of $1,085 and the $815 gain on the sale of ancillary property realized in the prior year period.

Selling and administrative expenses for the six months ended June 30, 2025 decreased $4,354, or 9.1%, from the prior year period, due primarily to a decrease of $1,777 in personnel costs, $751 in legal fees, $783 in professional services expenditures, and reduced travel and insurance costs.

Partially offsetting this decline were $266 of costs associated with the AMH Exit.

Selling and administrative expenses as a percentage of net sales was unchanged compared to the prior year period at 18.0%.

Net interest expense increased $15 for the six months ended June 30, 2025 compared to the prior year period.

The Company's outstanding debt balance was $81,628 as of June 30, 2025, compared to $87,173 as of June 30, 2024.

The Company’s effective income tax rate for the six months ended June 30, 2025 was 79.6%, compared to 8.1% in the prior year period.

The Company's effective income tax rate for the six months ended June 30, 2025 differed from the statutory rate of 21% primarily due to the impact of pre-tax losses in the United Kingdom for which no income tax benefit was recognized due to a valuation allowance.

Net income attributable to the Company for the six months ended June 30, 2025 was $775, or $0.07 per diluted share, compared to net income in the prior year period of $7,283, or $0.66 per diluted share.

The lower net income for the six months ended June 30, 2025 was primarily driven by a decrease in gross profit and an increase in income tax expense offset in part by a decrease in selling and administrative expenses.

Also, net income for the six months ended June 30, 2024 included the $3,477 gain on the sale of the former joint venture facility in Magnolia, Texas.

Results of Operations - Segment Analysis

Rail, Technologies, and Services

Six Months Ended

June 30, Change Percent

2025 2024 2025 vs.

2024 2025 vs.

Net sales $ 129,988 $ 168,217 $ (38,229) (22.7 %)

Gross profit $ 27,161 $ 36,446 $ (9,285) (25.5)

Gross profit margin 20.9 % 21.7 % (80) bps (3.6)

Segment operating income $ 3,891 $ 12,279 $ (8,388) (68.3)

Segment operating profit margin 3.0 % 7.3 % (430) bps (59.0)

Rail segment net sales for the six months ended June 30, 2025 decreased $38,229, or 22.7 %, from the prior year period.

The decrease was primarily due to the decline in the Rail Products business unit which declined $32,472, or 29.7%, due to the timing of large orders in the Rail Distribution product line and an exceptionally strong prior year period.

Technology Services and Solutions' net sales decreased $10,292, or 37.6%, due to the Company scaling back initiatives in the United Kingdom and softness in the domestic markets served.

The Global Friction Management business unit's net sales improved $4,535, or 14.4%, due to improved demand in domestic markets served.

Rail segment gross profit for the six months ended June 30, 2025 decreased $9,285, or 25.5%, from the prior year period, and gross profit margins declined 80 basis points to 20.9%.

The Rail Products and Technology Services and Solutions business units' gross profit declined $6,029 and $6,041, respectively, due to lower volumes.

The Technology Services and Solutions business unit gross profit decline was due in part to $1,085 of restructuring costs associated with the AMH Exit.

Partially offsetting these declines was an improvement in the Global Friction Management gross profit of $2,785, due to higher volumes.

Rail segment operating income for the six months ended June 30, 2025 decreased $8,388 from the prior year period.

The decrease was driven by a decline in gross profit associated with lower sales volumes and $266 of costs associated with AMH Exit, partially offset by lower selling and administrative expenses.

For the six months ended June 30, 2025, new orders were $197,597, a decrease of $3,140 from the prior year period.

The decrease was due to declines in the Technology Services and Solutions business unit of 27.6% as the Company scales back initiatives in the United Kingdom.

Partially offsetting these declines was a 7.3% increase in new orders in our Global Friction Management business unit while Rail Product orders were flat compared to the prior year.

Infrastructure Solutions

Six Months Ended

June 30, Change Percent

2025 2024 2025 vs.

2024 2025 vs.

Net sales $ 111,362 $ 96,899 $ 14,463 14.9 %

Gross profit $ 23,890 $ 20,243 $ 3,647 18.0

Gross profit margin 21.5 % 20.9 % 60 bps 2.7

Segment operating income $ 6,322 $ 2,235 $ 4,087 182.9

Segment operating income margin 5.7 % 2.3 % 340 bps 146.1

Infrastructure segment net sales for the six months ended June 30, 2025 increased $14,463, or 14.9%, over the prior year period.

The increase in net sales was attributable to the Precast Concrete Products business unit which increased $19,337, or 35.1%, over the prior year period which was partially offset by the Steel Products business unit which decrease $4,874, or 11.6%, from the prior year period due to declines in the bridge forms product line and the exit of the bridge grid deck product line.

Infrastructure segment gross profit for the six months ended June 30, 2025 increased $3,647, or 18.0%, due primarily to strength in the Precast Concrete Products business.

Gross profit margins of 21.5% increased 60 basis points over the prior year period due primarily to favorable business mix in the Steel Products business unit.

Gross profit for the six months ended June 30, 2024 includes the $815 gain on sale of ancillary property.

Infrastructure segment operating income for the six months ended June 30, 2025 was favorable $4,087 compared to the prior year period due to improvements in gross profit and a decrease in selling and administrative expenses.

For the six months ended June 30, 2025, the Infrastructure segment had new orders of $127,223, an increase of $24,582, over the prior year period.

The increase is due to our Precast Concrete Products business unit which increased by 23.5% over the prior year period, and our Steel Products business unit which increased 25.0% over the prior year period due to new order strength in our Protective Coatings business.

Six Months Ended

June 30, Change Percent

2025 2024 2025 vs.

2024 2025 vs.

(Gain) on sale of former joint venture facility $ — $ (3,477) $ 3,477 (100.0) %

Public company costs 2,471 2,840 (369) (13.0)

2 unchanged sentences

Other — 242 (242) (100.0)

Unallocated corporate expense (income) - net $ 1,623 $ (176) $ 1,799 **

** Results are not considered meaningful

Unallocated corporate expense - net for the three months ended March 31, 2025 was $1,623 compared to unallocated corporate income - net for the three months ended March 31, 2024 which was $176.

The unallocated corporate income - net for the three months ended March 31, 2024 included the $3,477 gain on the sale of the former joint venture facility in Magnolia, Texas.

Corporate executive management costs decreased from the prior year quarter due to a decrease in professional service expenditures.

Unallocated corporate expense - net $ 4,458 $ 4,376 $ 82 1.9 %

Unallocated corporate expense - net for the six months ended June 30, 2025 was $4,458 compared to the six months ended June 30, 2024 which was $4,376.

The increase was due to the $3,477 gain on the sale of the former joint venture facility in Magnolia, Texas recorded in the six months ended June 30, 2024.

This was partially offset by a decrease in corporate executive management costs of $2,344 due to a decrease in professional service expenditures and lower travel and insurance costs.

Liquidity and Capital Resources

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility, which provides for a total commitment of up to $130,000, of which $47,178 was available for borrowing as of March 31, 2025, subject to covenant restrictions.

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility.

The revolving credit facility provides for a total commitment of up to $150,000, of which $68,138 was available for borrowing as of June 30, 2025, subject to covenant restrictions.

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 the share repurchase program.

The Company’s total debt, including finance leases, was $82,498 and $46,940 as of March 31, 2025 and December 31, 2024, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity as of March 31, 2025:

March 31, 2025

The Company’s total debt, including finance leases, was $81,628 and $46,940 as of June 30, 2025 and December 31, 2024, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity as of June 30, 2025:

June 30, 2025

Cash and cash equivalents $ 4,186

5 unchanged sentences

Total available funding capacity $ 72,324

As of March 31, 2025, we were in compliance with all covenants of the Credit Agreement and have $49,790 available funding capacity.

As of June 30, 2025, we were in compliance with all covenants of the Credit Agreement and have $72,324 available funding capacity, subject to covenant restrictions.

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

1 unchanged sentence

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 March 31, 2025, 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.

The changes in cash and cash equivalents for the three months ended March 31, 2025 and 2024 were as follows:

Three Months Ended March 31,

The Company believes that its reserves for credit losses are appropriate as of June 30, 2025, 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.

The changes in cash and cash equivalents for the six months ended June 30, 2025 and 2024 were as follows:

Six Months Ended June 30,

Net cash used in operating activities $ (15,734) $ (26,398)

Net cash (used in) provided by investing activities (2,575) 789

Net cash used in investing activities (5,199) (885)

Net cash provided by financing activities 22,468 28,815

2 unchanged sentences

Cash Flow from Operating Activities

During the three months ended March 31, 2025, net cash used in operating activities was $26,136, compared to cash used in operating activities of $21,444 during the prior year quarter.

For the three months ended March 31, 2025, net income and adjustments to reconcile net income from operating activities provided $1,324, compared to $5,414 in the prior year quarter.

During the six months ended June 30, 2025, net cash used in operating activities was $15,734, compared to cash used in operating activities of $26,398 during the prior year period.

For the six months ended June 30, 2025, net income and adjustments to reconcile net income from operating activities provided $12,553, compared to $12,178 in the prior year period.

Working capital and other assets and liabilities were a use of $28,287 in the current period, compared to a use of $38,576 in the prior year quarter.

The change in operating cash flow for the three months ended March 31, 2025 versus the three months ended March 31, 2024 was largely driven by accounts payable, which used $12,649 during the current quarter compared to the $3,200 provided in the prior year quarter.

Changes in payment timing can impact accounts payable in any given quarter;

however, overall working capital needs are typically higher in the first quarter of the year due to seasonality.

The increase in operating cash flow for the six months ended June 30, 2025 versus the six months ended June 30, 2024 was largely driven by lower working capital needs this year related to lower Rail volumes.

Changes in payment timing can impact accounts receivable in any given quarter due to the seasonality of our businesses.

Cash Flow from Investing Activities

Capital expenditures for the three months ended March 31, 2025 and 2024 were $2,575 and $2,712, respectively.

Capital expenditures in both periods primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives including investments that are being made in our new facility in Lake County, Florida.

During the three months ended March 31, 2024, the Company's divestiture of the facility and land of its former joint venture in Magnolia, Texas (the “Magnolia Sale”) generated a cash inflow of $3,501.

Capital expenditures for the six months ended June 30, 2025 and 2024 were $5,248 and $4,766, respectively.

Capital expenditures in both periods primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives including investments in our new Precast Concrete facility in Lake County, Florida.

During the six months ended June 30, 2024, the Company divested the facility and land of its former joint venture in Magnolia, Texas and the fixed assets associated with the Bridge Exit generating a cash inflow of $3,881.

Cash Flow from Financing Activities

During the three months ended March 31, 2025 the Company had an increase in outstanding debt of $34,891 compared to $22,911 increase during the three months ended March 31, 2024.

The higher increase in debt for the three months ended March 31, 2025 versus three months ended March 31, 2024 was driven by an increase in cash used in operating activities, primarily due to higher seasonal working capital needs as well as organic growth initiatives and the absence of the cash inflow from the Magnolia Sale.

During the six months ended June 30, 2025 the Company had an increase in outstanding debt of $32,340 compared to a $31,955 increase during the six months ended June 30, 2024.

Additionally, debt issuance costs of $706 were incurred during the six months ended June 30, 2025 related to the June 27, 2025 Fifth Amended and Restated Credit Agreement.

During the six months ended June 30, 2025, the Company also made a $782 deferred payment related to the June 2022 acquisition of Skratch Enterprises Ltd.

This payment was deferred at the date of the acquisition in accordance with the purchase agreement and was made during the second quarter of 2025.

The increase in debt for the six months ended June 30, 2025 was driven by an increase in cash needed for treasury stock acquisitions, debt issuance costs, and the Skratch deferred acquisition payment and the absence of the cash inflow from the sale of the former joint venture in Magnolia, Texas from the prior year period.

The Board of Directors previously authorized the repurchase of up to $15,000 of the Company’s common shares until February 2025, pursuant to the terms of the previously disclosed stock repurchase program adopted March 3, 2023, as amended August 5, 2024.

During the three months ended March 31, 2025, the Company repurchased 113,169 shares for $3,123 under this program through February 2025.

The Company repurchased a total of 547,679 shares of its stock for $12,241 since the program's inception through February 2025.

The Company repurchased 113,169 shares for $3,123 under this program through February 2025.

Since the program's inception and continuing through February 2025, the Company repurchased a total of 547,679 shares of its stock for $12,241 under the program.

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

As of March 31, 2025, the Company repurchased 55,742 shares for $1,154 under this program.

Under both programs, the Company repurchased a total of 168,911 shares for $4,277 during the three months ended March 31, 2025.

From February 2023 through March 31, 2025, the Company repurchased a total of 603,421 shares of its stock for $13,395 under both programs.

As of June 30, 2025, the Company repurchased 163,762 shares of its stock for $3,316 under this program.

Under both programs, the Company repurchased a total of 276,931 shares for $6,439 during the six months ended June 30, 2025.

From February 2023 through June 30, 2025, the Company repurchased a total of 711,441 shares of its stock for $15,557 under both programs.

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

The timing of the repurchases and the actual amount repurchased will depend on a variety of factors, including the market price of the Company’s shares, general market and economic conditions, and other factors.

The stock repurchase

program does not obligate the Company to acquire any particular amount of common stock and may be suspended or discontinued at any time.

The stock repurchase program does not obligate the Company to acquire any particular amount of common stock and may be suspended or discontinued at any time.

Financial Condition

As of March 31, 2025, the Company had $2,612 in cash and cash equivalents and $47,178 of availability under its revolving credit facility, subject to covenant restrictions.

As of March 31, 2025, approximately $1,361 of the Company’s cash and cash equivalents were held in non-domestic bank accounts.

As of June 30, 2025, the Company had $4,186 in cash and cash equivalents and $68,138 of availability under its revolving credit facility, subject to covenant restrictions.

As of June 30, 2025, approximately $2,890 of the Company’s cash and cash equivalents were held in non-domestic bank accounts.

The Company’s principal uses of cash in recent years have been to fund its operations, including capital expenditures, repurchase of shares, acquisitions, funding the now complete UPRR Settlement Agreement, and service indebtedness.

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

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 U.S.

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”) which added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings.

On June 27, 2025, the Company, its domestic subsidiaries, and certain of its Canadian and United Kingdom subsidiaries (collectively, the “Borrowers”), entered into the Fifth Amended and Restated Credit Agreement (the “Credit Agreement”) with PNC Bank, N.A., Bank of America, N.A., Citizens Bank, N.A., and Wells Fargo Bank N.A.

as Co-Syndication Agents, and Dollar Bank, Federal Savings Bank as a participant.

The Credit Agreement, as amended, modifies the prior amended revolving credit facility, which had a maximum credit line of $130,000 and extends the maturity date from August 13, 2026 to June 27, 2030.

The Credit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of the Borrowers up to $150,000 with sublimits for (a) the issuance of Letters of Credit in Dollars and in Alternative Currencies in an amount not to exceed the Dollar Equivalent of $30,000, and (b) borrowings of Swing Loans in Dollars in an amount not to exceed $20,000;

and with an incremental loan feature not to exceed $60,000.

For a discussion of the terms and availability of the credit facilities, please refer to Note 7 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

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 the agreements effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company 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 the agreements effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.

The August 12, 2022 interest rate swap expired on March 1, 2025.

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2025 December 31,

2024 March 31,

2024 June 30,

Rail, Technologies, and Services $ 130,709 $ 91,724 $ 114,794

1 unchanged sentence

Total backlog $ 269,929 $ 237,215 $ 249,805

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 increased by $20,124 over the prior year quarter due to increases throughout our portfolio.

7 unchanged sentences

The Company believes that these measures provide useful perspective on underlying business trends and results and a supplemental measure of year-over-year results.

The non-GAAP financial measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes and may, therefore, also be useful to investors as they are a view of our business results through the eyes of

These non-GAAP financial measures are not intended to be considered by the user in place of the related GAAP financial measure, but rather as supplemental information to our business results.

1 unchanged sentence

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.

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.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis