fstr-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission File Number: 000-10436

L.B. Foster Company

(Exact name of registrant as specified in its charter)


Pennsylvania						25-1324733
(State of Incorporation)						(I. R. S. Employer Identification No.)


415 Holiday Drive, Suite 100, Pittsburgh, Pennsylvania						15220
(Address of principal executive offices)						(Zip Code)

(412) 928-3400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01

FSTR

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2024, there were 10,963,711 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

L.B. FOSTER COMPANY AND SUBSIDIARIES

INDEX


			Page
PART I. Financial Information

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets			3

Condensed Consolidated Statements of Operations			4

Condensed Consolidated Statements of Comprehensive Income (Loss)			5

Condensed Consolidated Statements of Cash Flows			6

Condensed Consolidated Statements of Stockholders’ Equity			7

Notes to Condensed Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

Item 3. Quantitative and Qualitative Disclosures about Market Risk			25

Item 4. Controls and Procedures			25

PART II. Other Information			26

Item 1. Legal Proceedings			26

Item 1A. Risk Factors			26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 3. Defaults Upon Senior Securities			26

Item 4. Mine Safety Disclosures			26

Item 5. Other Information			26

Item 6. Exhibits			27

Signature			28

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Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	March 31, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,148	$	2,560
Accounts receivable - net (Note 5)	57,871		53,484
Contract assets - net (Note 3)	24,141		29,489
Inventories - net (Note 6)	85,761		73,496


Other current assets	12,063		8,961

Total current assets	182,984		167,990
Property, plant, and equipment - net	76,133		75,999
Operating lease right-of-use assets - net	14,098		14,905
Other assets:
Goodwill (Note 4)	31,995		32,587
Other intangibles - net (Note 4)	18,198		19,010


Other assets	2,993		2,715

TOTAL ASSETS	$	326,401	$	313,206
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	43,368	$	40,305
Deferred revenue (Note 3)	11,458		12,479
Accrued payroll and employee benefits	5,340		16,978

Current portion of accrued settlement (Note 13)	8,000		8,000
Current maturities of long-term debt (Note 7)	159		102
Other accrued liabilities	15,856		17,442

Total current liabilities	84,181		95,306
Long-term debt (Note 7)	77,926		55,171
Deferred tax liabilities (Note 9)	1,191		1,232

Long-term operating lease liabilities	11,178		11,865
Other long-term liabilities	6,648		6,797

Stockholders’ equity:
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at March 31, 2024 and December 31, 2023, 11,115,779; shares outstanding at March 31, 2024 and December 31, 2023, 10,789,231 and 10,733,935, respectively	111		111
Paid-in capital	41,866		43,111
Retained earnings	129,069		124,633
Treasury stock - at cost, 326,548 and 381,844 common stock shares at March 31, 2024 and December 31, 2023, respectively	(5,829)		(6,494)
Accumulated other comprehensive loss	(20,616)		(19,250)
Total L.B. Foster Company stockholders’ equity	144,601		142,111
Noncontrolling interest	676		724
Total stockholders’ equity	145,277		142,835
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	326,401	$	313,206

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


	Three Months Ended March 31,
	2024		2023


Sales of goods	$	104,463	$	98,538
Sales of services	19,857		16,950
Total net sales	124,320		115,488
Cost of goods sold	81,469		78,065
Cost of services sold	16,602		14,132
Total cost of sales	98,071		92,197
Gross profit	26,249		23,291
Selling and administrative expenses	22,749		21,423
Amortization expense	1,217		1,365
Operating profit	2,283		503

Interest expense - net	1,125		1,388


Other (income) expense - net	(3,536)		1,827

Income (loss) before income taxes	4,694		(2,712)
Income tax expense (benefit)	289		(541)
Net income (loss)	4,405		(2,171)
Net loss attributable to noncontrolling interest	(31)		(19)





Net income (loss) attributable to L.B. Foster Company	$	4,436	$	(2,152)




Per share data attributable to L.B. Foster shareholders:
Basic earnings (loss) per common share	$	0.41	$	(0.20)



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

Basic weighted average shares outstanding	10,762		10,792
Diluted weighted average shares outstanding	10,985		10,792

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2024		2023


Net income (loss)	$	4,405	$	(2,171)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(1,497)		1,247
Unrealized gain (loss) on cash flow hedges, net of tax expense of $0	106		(418)

Reclassification of pension liability adjustments to earnings, net of tax expense of $4 and $2, respectively*	25		40
Total comprehensive income (loss)	3,039		(1,302)
Less comprehensive (loss) income attributable to noncontrolling interest:
Net loss attributable to noncontrolling interest	(31)		(19)
Foreign currency translation adjustment	(17)		4
Amounts attributable to noncontrolling interest	(48)		(15)
Comprehensive income (loss) attributable to L.B. Foster Company	$	3,087	$	(1,287)


*			Reclassifications out of “Accumulated other comprehensive loss” for pension obligations are charged to “Selling and administrative expenses” within the Condensed Consolidated Statements of Operations.

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2024		2023

	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	4,405	$	(2,171)
Adjustments to reconcile net income (loss) to cash used in operating activities:
Deferred income taxes	(41)		(1,233)
Depreciation	2,374		2,505
Amortization	1,217		1,365

Equity in income of nonconsolidated investments	—		(17)
Gain on sales and disposals of property, plant, and equipment	(3,574)		(14)
Stock-based compensation	1,033		884
Loss on asset divestitures	—		2,033

Change in operating assets and liabilities:
Accounts receivable	(4,042)		26,239
Contract assets	5,136		(860)
Inventories	(12,371)		(15,564)
Other current assets	(3,012)		(791)

Other noncurrent assets	425		(1,439)

Accounts payable	2,395		4,921
Deferred revenue	(1,008)		(707)
Accrued payroll and employee benefits	(11,599)		(6,386)

Other current liabilities	(1,807)		(2,981)
Other long-term liabilities	(1,395)		1,148
Net cash (used in) provided by operating activities	(21,864)		6,932

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property, plant, and equipment	3,501		16
Capital expenditures on property, plant, and equipment	(2,292)		(699)
Proceeds from business dispositions	—		5,344

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

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt	(55,835)		(55,133)
Proceeds from debt	78,746		43,086



Treasury stock acquisitions	(1,613)		(309)

Investment of noncontrolling interest	—		334
Net cash provided by (used in) financing activities	21,298		(12,022)

Effect of exchange rate changes on cash and cash equivalents	(55)		186
Net increase (decrease) in cash and cash equivalents	588		(243)
Cash and cash equivalents at beginning of period	2,560		2,882
Cash and cash equivalents at end of period	$	3,148	$	2,639
Supplemental disclosure of cash flow information:
Interest paid	$	992	$	1,425
Income taxes paid (received)	$	303	$	(1,564)

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)


	Three Months Ended March 31, 2024
	Common Stock		Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders’ Equity
Balance, December 31, 2023	$	111	$	43,111	$	124,633	$	(6,494)	$	(19,250)	$	724	$	142,835

Net income (loss)	—		—		4,436		—		—		(31)		4,405
Other comprehensive income, net of tax:
Pension liability adjustment	—		—		—		—		25		—		25
Foreign currency translation adjustment	—		—		—		—		(1,497)		(17)		(1,514)
Unrealized derivative gain on cash flow hedges	—		—		—		—		106		—		106

Purchase of 16,555 common shares for treasury	—		—		—		(385)		—		—		(385)
Issuance of 71,851 common shares, net of shares withheld for taxes	—		(2,278)		—		1,050		—		—		(1,228)
Stock-based compensation	—		1,033		—		—		—		—		1,033


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


	Three Months Ended March 31, 2023
	Common Stock		Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders’ Equity
Balance, December 31, 2022	$	111	$	41,303	$	123,169	$	(6,240)	$	(21,165)	$	420	$	137,598

Net loss	—		—		(2,152)		—		—		(19)		(2,171)
Other comprehensive loss, net of tax:
Pension liability adjustment	—		—		—		—		40		—		40
Foreign currency translation adjustment	—		—		—		—		1,247		4		1,251
Unrealized derivative loss on cash flow hedges	—		—		—		—		(418)		—		(418)


Issuance of 32,884 common shares, net of shares withheld for taxes	—		(1,236)		—		1,066		—		—		(170)
Stock-based compensation	—		884		—		—		—		—		884


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

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except share data)

Note 1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all estimates and adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in L.B. Foster Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” and the “Company” refer collectively to L.B. Foster Company and its consolidated subsidiaries.

Note 2. Business Segments

The Company is a global technology solutions provider of engineered, manufactured products and services that builds and supports infrastructure. The Company’s segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred, (b) whose operating results are regularly reviewed by the Chief Operating Decision Maker, who uses such information to make decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available. Operating segments are evaluated on their segment profit contribution to the Company’s consolidated results. Other income and expenses, interest, income taxes, and certain other items are managed on a consolidated basis. The Company’s segment accounting policies are described in Note 2 Business Segments of the Notes to the Company’s Consolidated Financial Statements contained in its Annual Report on Form 10-K for the year ended December 31, 2023.

The Company is organized and operates in two reporting segments: Rail, Technologies, and Services (“Rail”), and Infrastructure Solutions (“Infrastructure”). Effective for the quarter and year ended December 31, 2023, the Company made certain organizational changes that led to the conclusion that it will operate under two reporting segments as opposed to the three reporting segments it has operated under historically. As such, the Company has restated segment information for the historical periods presented herein to conform to the current presentation. The Infrastructure Solutions business comprises both the historic Precast Concrete Products and Steel Products and Measurement (since renamed “Steel Products”) reporting segments.

The operating results of the Company’s reportable segments were as follows for the periods presented:


	Three Months Ended March 31, 2024				Three Months Ended March 31, 2023
	Net Sales		Segment Operating Profit (Loss)		Net Sales		Segment Operating Profit (Loss)
Rail, Technologies, and Services	$	82,623	$	6,778	$	64,384	$	2,388
Infrastructure Solutions	41,697		(1,393)		51,104		(356)

Total	$	124,320	$	5,385	$	115,488	$	2,032

Segment profit (loss) from operations, as shown above, includes allocated corporate operating expenses. Operating expenses related to corporate headquarter functions that directly support the segment activity are allocated based on segment headcount, revenue contribution, or activity of the business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from the segments.

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

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	Three Months Ended March 31,
	2024		2023
Operating profit for reportable segments	$	5,385	$	2,032
Interest expense - net	(1,125)		(1,388)

Other income (expense) - net	3,536		(1,827)


Unallocated corporate expenses and other unallocated charges	(3,102)		(1,529)
Income (loss) before income taxes	$	4,694	$	(2,712)

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


	March 31, 2024		December 31, 2023
Rail, Technologies, and Services	$	167,565	$	157,023
Infrastructure Solutions	129,852		130,667

Unallocated corporate assets	28,984		25,516
Total	$	326,401	$	313,206

On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec Energy Services LLC (“Chemtec”) business for $5,344 in proceeds generating a $2,065 loss on sale, recorded in “Other (income) expense - net” for the three months ended March 31, 2023. The Chemtec business was reported in the Steel Products business unit in the Infrastructure segment.

On June 30, 2023, the Company sold substantially all the operating assets of the prestressed concrete railroad tie business operated by its wholly-owned subsidiary, CXT Incorporated (“Ties”), located in Spokane, WA, for $2,362 in proceeds, generating a $1,009 loss on the sale, which was recorded in “Other expense (income) - net” for the three months ended June 30, 2023. The Ties business was reported in the Rail Products business unit within the Rail segment.

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 decision to exit the bridge grid deck product line was a result of a weak bridge grid deck market condition and outlook due to customer adoption of newer technologies replacing the grid deck solution. The Bedford, PA based operations supporting the product line expects to complete any remaining customer obligations during 2024. For the three months ended March 31, 2024 and 2023, the product line had $810 and $1,491 in sales, respectively. During the three months ended March 31, 2024, the Company incurred $73 of exit costs recorded in “Other (income) expense - net,” all of which were personnel expenses. The Company expects to incur an additional $111 of personnel expenses associated with the exit through 2024. Cumulatively, the Company has incurred a total of $1,476 in exit costs for the Bridge Exit, which included $474 in inventory write-downs, $740 in personnel expenses, and $262 in other exit costs.

On November 17, 2023, the Company acquired the operating assets of Cougar Mountain Precast, LLC (“Cougar”), located in Caldwell, Idaho, which is a licensed manufacturer of Redi-Rock and natural concrete products for $1,644, subject to hold back payments, to be paid over the next twelve months or utilized to satisfy post-close working capital adjustments or indemnity claims. Cougar has been included in the Precast Concrete Products business unit within the Infrastructure segment.

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Note 3. Revenue

The following table summarizes the Company’s sales by major product and service line for the periods presented:


	Three Months Ended March 31,
	2024		2023
Rail Products	$	53,038	$	40,228
Global Friction Management	14,022		15,820
Technology Services and Solutions	15,563		8,336
Rail, Technologies, and Services	82,623		64,384
Precast Concrete Products	21,091

SEC Form 10-Q filed by L.B. Foster Company