What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-03-07 · 129 added, 248 removed, 137 unchanged (73% of the section changed)

1 unchanged sentence

(Dollars in thousands, except share data unless otherwise noted)

Foster Company is innovating to solve global infrastructure challenges.

Our technology innovations enable safety, improve information flow, keep things moving, monitor conditions, and enhance environments, improving the lives of people who rely on us to keep our world moving.

We enjoy a market-leading reputation for high-quality, high-performance engineering solutions in rail and infrastructure.

Foster Company is a global technology solutions provider of products and services for the rail and infrastructure markets.

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

The Company is organized and operates in two reporting segments:

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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 (decline), earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, net debt, funding capacity, new orders, and backlog.

We also refer to a number of financial measures that are not defined under US GAAP, including Consolidated EBITDA (as defined in the Credit Agreement), funding capacity, new orders, net, and backlog.

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

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 $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;

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

• 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;

• 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, as reported $ 42,843 $ 1,299

Interest expense - net 4,992 5,528

Income tax benefit (28,398) (355)

Depreciation expense 9,452 9,949

Amortization expense 4,628 5,314

Total EBITDA $ 33,517 $ 21,735

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

Bad debt provision — 1,862

Adjusted EBITDA $ 33,576 $ 31,775

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Net Debt Reconciliation

Total debt $ 46,940 $ 55,273

cash and cash equivalents (2,454) (2,560)

Net debt $ 44,486 $ 52,713

Change in Consolidated Sales Year Ended

December 31, Percent

2023 net sales, as reported $ 543,744

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) %

Change in Rail Sales Year Ended

December 31, Percent

2023 net sales, as reported $ 312,160

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

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 %

Change in Infrastructure Solutions Sales Year Ended

December 31, Percent

2023 net sales, as reported $ 231,584

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) %

Note percentages may not foot due to rounding.

Acquisitions, Divestitures and Product Line Exit

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 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.

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

A reconciliation of funding capacity to its most directly comparable respective US GAAP financial measure is presented in the “Liquidity and Capital Resources” section below.

Product Line Exits

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

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

The Bedford, PA based operations supporting the product line completed all customer obligations as of December 31, 2025.

For the years ended December 31, 2025 and 2024, the product line had $1,637 and $3,700 in sales, respectively.

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 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.

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

During the year ended December 31, 2025, the Company announced the discontinuation of its Automation and Materials Handling product line (the “AMH Exit”) which was reported in the Technology Services and Solutions business unit within the Rail segment.

The decision to exit this product line was due to the Company's initiatives to scale back businesses in the United Kingdom.

The Company completed all remaining customer obligations in 2025.

This product line had net sales of $1,843 and $5,230 for the years ended December 31, 2025 and 2024, respectively.

The Company has incurred a total of $1,351 in exit costs associated with the AMH Exit, which included $615 in inventory write-offs, $40 in fixed asset write-offs, $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.

The Company does not expect to incur additional material exit costs associated with the AMH Exit.

Full Year Results Comparison

Results of Operations

Year Ended December 31, Change

2024 2023 2024 vs.

Net sales $ 530,765 $ 543,744 $ (12,979)

Gross profit 118,062 112,044 6,018

Gross profit margin 22.2 % 20.6 % 160 bps

Year Ended December 31,

Gross profit margin

Selling and administrative expenses

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

Selling and administrative expenses as a percent of sales

(Gain) on sale of former joint venture facility

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Operating income

Operating income margin 3.9 % 1.7 % 220 bps

Operating income margin

Interest expense - net

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

Other (income) expense - net

Income before income taxes

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

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

Income tax expense (benefit)

Net loss attributable to noncontrolling interest

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Fiscal 2025 Compared to Fiscal 2024 — Company Analysis

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.

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 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.

Net sales for the year ended December 31, 2025 increased $9,244, or 1.7%, over the prior year.

Infrastructure net sales improved $30,387, or 14.9%, over the prior year due to volume increases in both business units.

Rail net sales declined $21,143, or 6.5% from the prior year due to softer demand for Rail Products in early 2025, as well as right-sizing activities and overall commercial weakness in the UK Rail business.

Gross profit for the year ended December 31, 2025 declined $4,310, or 3.7%, from the prior year, and gross profit margins declined 110 basis points to 21.1%.

The decline in gross profit was driven by Rail which declined $10,139 primarily due to lower sales volumes and weakness in the UK Rail business coupled with lower volumes for Rail Products.

Rail gross profit was also impacted in 2025 by $1,085 of AMH Exit costs and $953 of costs associated with restructuring actions taken in the fourth quarter related to the UK businesses.

Infrastructure gross profit improved $5,829 due to improved volumes in both business units and favorable business mix in Steel Products, partially offset by increased manufacturing costs in the Precast Concrete business including $2,246 in start up costs associated with our new precast facility in Florida.

The prior year gross profit included a $815 gain realized on a facility sale.

Selling and administrative expenses for the year ended December 31, 2025 decreased $7,842, or 8.1%, from the prior year.

The decrease was primarily attributed to declines of $3,037 in personnel costs, $988 in travel and entertainment costs, $1,053 in insurance costs, $1,834 in professional services costs, and $1,173 in legal costs.

These declines were offset in part by an increase of $243 in restructuring charges.

Selling and administrative expenses as a percentage of net sales declined 180 basis points to 16.4% in 2025.

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.

Amortization expense for the year ended December 31, 2025 decreased $1,317, or 28.5%, from the prior year due to acquired intangible assets becoming fully amortized during the year.

Other (income) expense - net was favorable by $1,496 compared to the prior year.

Other expense - net 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 in the US.

The Company’s effective income tax rate for 2025 was 57.4%, compared to (196.6)% in the prior year period.

The Company's 2025 effective income tax rate differed from the federal 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.

The Company's 2024 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.

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

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.

Net income attributable to the Company for the year ended December 31, 2025 was unfavorable by $35,401 from the prior year period.

The change in net income attributable to the Company was due primarily to a $31,937 favorable tax valuation allowance adjustment in 2024 and a higher effective tax rate in 2025 largely driven by the impact of pre-tax losses in the United Kingdom, for which no income tax benefit was recognized due to a valuation allowance, partially offset by improved operating income for the year ended December 31, 2025.

Results of Operations — Segment Analysis

Rail, Technologies, and Services

December 31, Change Percent

2024 2023 2024 vs.

2023 2024 vs.

Net sales $ 326,869 $ 312,160 $ 14,709 4.7 %

Gross profit $ 72,469 $ 65,033 $ 7,436 11.4

Gross profit margin 22.2 % 20.8 % 140 bps 6.4

Gross profit margin

Segment operating income

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.

Segment operating income margin

Rail net sales for the year ended December 31, 2025 decreased $21,143, or 6.5%, from the prior year.

The decrease was primarily due to softer demand in the first half of the year for the Rail Products business unit which decreased $19,441, or 9.4%, from the prior year.

Technology Services and Solutions net sales decreased $14,231, or 26.8%, due to right-sizing activities and overall commercial weakness in the UK Rail business.

Global Friction Management net sales improved $12,529, or 19.0%, over the prior year due to improved demand in markets served.

Rail gross profit for the year ended December 31, 2025 decreased $10,139, or 14.0%, from the prior year and gross margins declined 180 basis points to 20.4%.

The Rail Products business unit gross profit declined $2,561 due to lower volumes.

The Technology Services and Solutions business unit gross profit declined $13,497 due to lower sales volumes, higher costs, unfavorable mix, and $1,085 of costs associated with the AMH Exit and $953 of costs associated with fourth quarter restructuring actions taken in the UK businesses.

Partially offsetting these declines was an improvement in Global Friction Management gross profit of $5,919 over the prior year due to higher volumes and favorable mix.

Rail operating income for the year ended December 31, 2025 decreased $6,320, or 28.8%, from the prior year.

The decrease was driven by the decline in gross profit, partially offset by decreases in selling and administrative expenses of $2,600 due to lower personnel costs and amortization expense of $1,219.

For the year ended December 31, 2025, Rail had new orders, net of $338,039, an increase of $29,645 over the prior year.

The increase was due to a 45.5% improvement in the Technology Services and Solutions business unit due to a large, multi-year order received in the UK business, a 16.8% improvement in the Global Friction Management business unit, and a 0.7% improvement in the Rail Product business unit.

Backlog as of December 31, 2025 was $96,980, an increase of $34,531, or 55.3%, over the prior year.

The increase was due to a 114.0% improvement in the Technology Services and Solutions business unit, a 68.8% improvement in the Global Friction Management business unit, and a 29.5% improvement in the Rail Products business unit.

Infrastructure Solutions

December 31, Change Percent

2024 2023 2024 vs.

2023 2024 vs.

Net sales $ 203,896 $ 231,584 $ (27,688) (12.0) %

Gross profit $ 45,593 $ 47,011 $ (1,418) (3.0)

Gross profit margin 22.4 % 20.3 % 210 bps 10.2

Gross profit margin

Segment operating income

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

2024 2023 2024 vs.

2023 2024 vs.

Segment operating income margin

Infrastructure net sales for the year ended December 31, 2025 increased $30,387, or 14.9%, over the prior year.

The increase in net sales was attributable to the Precast Concrete Products business unit which increased $27,080, or 19.9%, over the prior year.

The Steel Products business unit net sales also increased $3,307, or 4.9%, over the prior year due to improved demand in markets served.

Infrastructure gross profit for the year ended December 31, 2025 increased $5,829, or 12.8%, over the prior year.

Gross profit increased $2,025 in the Precast Concrete business unit due to higher volumes offset in part by higher manufacturing costs, including $2,246 of costs associated with the start up of our Florida precast facility in line with the Company's strategic growth plan.

Steel Products gross profit improved $3,804 over the prior year due to higher volumes and favorable business mix.

Gross margins of 21.9% decreased 50 basis points from the prior year due to unfavorable sales mix and higher manufacturing costs in the Precast Concrete business unit.

Gross profit for the year ended December 31, 2024 includes the $815 gain realized on a facility sale.

Infrastructure operating income for the year ended December 31, 2025 increased $6,412, or 68.4%, over the prior year which was primarily due to improvements in gross profit.

For the year ended December 31, 2025, Infrastructure had new orders, net of $202,880, an increase of $4,736 from the prior year.

The increase was due to the Precast Concrete Products business unit which increased 12.9% over the prior year.

Partially offsetting this increase was a decrease in the Steel Products business unit of 22.8% from the prior year period due to order cancellations.

Backlog as of December 31, 2025 was $92,358, a decrease of $31,102, or 25.2%, from the prior year due to order cancellations in the Steel Products business unit coupled with a decrease in the Precast Concrete Products business unit of 6.7%.

(Gain) on sale of former joint venture facility

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Corporate management stock-based compensation

Other 705 384 321 83.6

Unallocated corporate expense - net

**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.

Unallocated corporate expenses - net for the year ended December 31, 2025 was $9,494 compared to the year ended December 31, 2024 which was $10,774.

The decrease was primarily due to a decline in corporate executive management costs of $3,596 due to a decrease in legal fees, professional service expenditures, travel and insurance costs.

The decline was offset in part by the $3,477 gain on the sale of the former joint venture facility in Magnolia, Texas in the year ended December 31, 2024.

Restructuring

During the year ended December 31, 2025, the Company announced a restructuring program aligned with its strategy to reduce costs within the UK-based Technology Services and Solutions businesses within the Rail segment.

The restructuring action has been completed as of December 31, 2025.

The Company has incurred a total of $2,184 in restructuring and other costs associated with this program, which includes $695 in inventory write-offs, $95 in fixed asset write-offs, $524 in personnel expenses, $717 in lease termination costs, and $153 in other costs.

Costs of $780 were recorded in “Cost of services sold,” $173 were recorded in “Cost of

goods sold,” and $1,231 were recorded in “Selling and administrative expenses” within our Rail segment.

The Company does not expect to incur additional material costs associated with this program.

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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The restructuring action has been completed as of December 31, 2024.

For the year ended December 31, 2024, the Company incurred $1,456 of restructuring expense, related primarily to severance costs.

Of the total restructuring costs, $245 was recorded in “Cost of goods sold” and $1,211 was reported in “Selling and administrative expense.” By business segment, the Company incurred $1,134 of restructuring costs in Rail, $113 in Infrastructure, and $209 in Corporate.

Liquidity and Capital Resources

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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 $42,756 and $46,940 as of December 31, 2025 and December 31, 2024, respectively, and was primarily comprised of borrowings under its revolving credit facility.

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The Company believes that its reserves for credit losses are appropriate as of December 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.

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:

The change in cash and cash equivalents for the years ended December 31, 2025 and 2024 was as follows:

Year Ended December 31,

Net cash provided by operating activities

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

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents $ (106) $ (322)

Net increase (decrease) in cash and cash equivalents

Cash Flows from Operating Activities

During the year ended December 31, 2025, net cash provided by operating activities was $35,619, compared to $22,632 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.

During 2025, cash flow provided by operating activities consisted of net income and non-cash items amounting to $34,678 and changes in certain assets and liabilities netting to a cash inflow of $941.

In 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.

Cash Flows from Investing Activities

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.

During the year ended December 31, 2025, the Company had capital expenditures of $10,424, a $633 increase over 2024.

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.

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 $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.”

During the year ended December 31, 2025, the Company had a decrease in outstanding debt of $5,540 compared to a $7,994 decrease during the year ended December 31, 2024.

Additionally, debt issuance costs of $706 were incurred during the year ended December 31, 2025 related to the June 27, 2025 Fifth Amended and Restated Credit Agreement.

During the year ended December 31, 2025, the Company also made a $782 deferred payment related to the June 2022 acquisition of Skratch Enterprise 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 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 first quarter of 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 December 31, 2025, the Company repurchased 469,220 shares of its stock for $11,313 under this program.

Under both programs, the Company repurchased a total of 582,389 shares for $14,436 during the year ended December 31, 2025.

From February 2023 through December 31, 2025, the Company repurchased a total of 1,016,899 shares of its stock for $23,554 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.

Financial Condition

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, 2025, the Company had $4,348 in cash and cash equivalents and $106,930 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, 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.

Non-domestic cash balances of $1,882 are held in various locations throughout the world.

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, 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”) 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.

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.

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As of December 31, 2025, approximately $4,029 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 as discussed further under Part II, Item 8, Financial Statements and Supplementary Data, Note 16 to the Condensed Consolidated Financial Statements.

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 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, refer to Part II, Item 8, Financial Statements and

Supplementary Data, Note 9 to the Consolidated Financial Statements contained in this Annual Report on Form 10-K, which is incorporated by reference into this Item 7.

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.

The August 31, 2022 interest rate swap expires on August 13, 2026.

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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Infrastructure Solutions

Total backlog $ 185,909 $ 213,780

Consolidated Total

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 $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.

Backlog increased $3,429 due to increases in the Rail segment.

Critical Accounting Estimates

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The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses, and the related disclosure of contingent assets and liabilities.

The following critical accounting estimates, which are reviewed by the Company’s Audit Committee of the Board of Directors, are those management believes are the most critical to understand and evaluate our financial condition and results and require subjective or complex judgements.

Actual results could differ from those estimates.

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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

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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 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.

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If the carrying amount of the reporting unit exceeds its fair value, an impairment loss equal to the excess amount up to the goodwill balance is recorded as an impairment to goodwill of the reporting unit.

The Company uses a combination of a discounted cash flow method and a market approach to determine the fair values of the reporting units.

A number of significant assumptions and estimates are involved in the estimation of the fair value of reporting units, including the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, which may drive changes to revenue growth, EBITDA contribution, and market participant assumptions.

The Company uses a discounted cash flow method to determine the fair values of the reporting units.

A number of significant assumptions and estimates are involved in the estimation of the fair value of reporting units, including the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, which may drive changes to future operating cash flows and market participant assumptions.

The estimated fair value of a reporting unit is sensitive to changes in assumptions, including forecasted future operating cash flows, weighted-average cost of capital, terminal growth rates, and industry multiples.

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The accounting estimate related to asset impairments is highly susceptible to change from period to period because it requires management to make assumptions about the existence of impairment indicators and cash flows over future years.

These assumptions impact the amount of an impairment, which could materially adversely impact the Consolidated Statements of Operations.

assumptions impact the amount of an impairment, which could materially adversely impact the Consolidated Statements of Operations.

Additional information concerning the impairments is set forth in Part II, Item 8, Financial Statements and Supplementary Data, Note 4 to the Consolidated Financial Statements included herein, which is incorporated by reference into this Item 7.

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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 (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 (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.

EBITDA is a financial metric utilized by management to evaluate the Company’s performance on a comparable basis.

The Company believes that EBITDA is useful to investors as a supplemental way to evaluate the ongoing operations of the Company’s business as many investors utilize EBITDA to enhance their ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization.

In addition, EBITDA is a financial measurement that management and the Company’s Board of Directors use in their financial and operational decision-making and in the determination of certain compensation programs.

Adjusted EBITDA includes certain adjustments to EBITDA.

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 new orders, net 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 net of order cancellations incurred during the period.

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.

Backlog may not be indicative of future operating results as orders may be cancelled or modified by the customer.

Management utilizes new orders, net 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, net 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, funding capacity, and net debt to the non-GAAP financial measures are presented in this Item 7.

Quantitative reconciliations of funding capacity 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