[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) This section presents the company's condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and comprehensive notes [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q1 2022 show decreased net sales to **$98.8 million**, a **net loss of $1.6 million**, and negative operating cash flow of **$7.6 million** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2022, and December 31, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $6,239 | $10,372 | | Inventories - net | $67,799 | $62,871 | | Total current assets | $187,064 | $179,479 | | **Total Assets** | **$347,412** | **$342,595** | | **Current Liabilities** | | | | Accounts payable | $45,483 | $41,411 | | Deferred revenue | $19,310 | $13,411 | | Total current liabilities | $89,796 | $86,194 | | **Long-term debt** | $35,531 | $31,153 | | **Total Stockholders' Equity** | **$181,697** | **$183,610** | | **Total Liabilities and Stockholders' Equity** | **$347,412** | **$342,595** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, costs, and net loss for the three months ended March 31, 2022, and 2021 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total net sales | $98,794 | $116,080 | | Gross profit | $16,447 | $18,830 | | Operating loss | $(2,287) | $(661) | | Net loss attributable to L.B. Foster Company | $(1,566) | $(1,258) | | Basic loss per common share | $(0.15) | $(0.12) | | Diluted loss per common share | $(0.15) | $(0.12) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Outlines the total comprehensive loss, including net loss and other comprehensive income/loss items, for the reporting periods - Total comprehensive loss attributable to L.B. Foster Company was **$1.8 million** for the three months ended March 31, 2022, compared to a loss of **$0.5 million** in the prior-year period. The increase in loss was primarily driven by a net loss and a negative foreign currency translation adjustment[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2022, and 2021 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by continuing operating activities | $(7,636) | $7,614 | | Net cash used in continuing investing activities | $(539) | $(1,327) | | Net cash provided by (used in) continuing financing activities | $4,012 | $(8,446) | | **Net decrease in cash and cash equivalents** | **$(4,133)** | **$(2,549)** | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Tracks changes in the company's equity, including net loss and other comprehensive loss, from December 31, 2021, to March 31, 2022 - Total stockholders' equity decreased from **$183.6 million** at December 31, 2021, to **$181.7 million** at March 31, 2022. The decrease was primarily due to a net loss of **$1.6 million** and other comprehensive loss items, including a foreign currency translation adjustment[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, segment changes, backlog, debt, and significant commitments including a **$24 million** UPRR settlement and the Portland Harbor Superfund Site - Effective Q4 2021, the company reorganized into three new reporting segments: **Rail, Technologies, and Services; Precast Concrete Products; and Steel Products and Measurement**[22](index=22&type=chunk) - As of March 31, 2022, the company had approximately **$244.6 million** in backlog (remaining performance obligations), with about **10.8%** expected to extend beyond one year[34](index=34&type=chunk) - The company's revolving credit facility provides for aggregate borrowings up to **$130 million** and matures on August 13, 2026. As of March 31, 2022, net available borrowing capacity was **$93.9 million**[50](index=50&type=chunk)[56](index=56&type=chunk) - The company has a settlement agreement with Union Pacific Railroad (UPRR) with remaining payments totaling **$24 million**, to be paid in installments of **$8 million** per year through 2024[79](index=79&type=chunk)[80](index=80&type=chunk) - The company is identified as a potentially responsible party (PRP) for the Portland Harbor Superfund Site cleanup, with estimated total remedy costs of **$1.1 billion** (net present value). The ultimate financial impact on the company cannot be predicted at this time[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=22&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **14.9%** Q1 net sales decline to **$98.8 million** due to divestiture, improved gross margin, and increased backlog to **$244.6 million**, while maintaining strong liquidity [General Overview and Business Update](index=23&type=section&id=General%20Overview%20and%20Business%20Update) Provides an overview of Q1 performance, highlighting sales decline due to divestiture, gross margin improvement, and increased backlog - Q1 net sales were **$98.8 million**, a **14.9%** decrease from the prior year, but this decline was attributed to the divestiture of the Piling Products division, which accounted for a **$20.8 million** reduction in sales year-over-year[89](index=89&type=chunk) - Gross profit margin increased by **40 basis points** to **16.6%** despite inflationary pressures, which most significantly impacted the Precast Concrete Products and Steel Products and Measurement segments[90](index=90&type=chunk) - Net loss attributable to the company was **$1.6 million**, or **$0.15** per diluted share, an increased loss of **$0.3 million** compared to the prior year, driven by lower volume and inflation, partially offset by reduced expenses and insurance proceeds[93](index=93&type=chunk) - Consolidated backlog was **$244.6 million**, a **10.0%** decrease from the prior year due to the Piling Products divestiture, but showed a sequential increase of **16.4%** from December 31, 2021, indicating a seasonal ramp-up[94](index=94&type=chunk) [Results of the Quarter](index=25&type=section&id=Results%20of%20the%20Quarter) Summarizes the company's consolidated financial performance for Q1 2022 compared to Q1 2021, including sales, gross profit, and net loss Q1 2022 vs Q1 2021 Performance Summary (in thousands) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | **Total net sales** | **$98,794** | **$116,080** | **(14.9%)** | | Rail, Technologies, and Services | $63,710 | $66,232 | (3.8%) | | Precast Concrete Products | $15,010 | $12,678 | 18.4% | | Steel Products and Measurement | $20,074 | $37,170 | (46.0%) | | **Total gross profit** | **$16,447** | **$18,830** | **(12.7%)** | | Gross Profit % | 16.6% | 16.2% | +40 bps | | **Operating loss** | **$(2,287)** | **$(661)** | **246.0%** | | **Net loss attributable to L.B. Foster** | **$(1,566)** | **$(1,258)** | **24.5%** | [Segment Performance](index=26&type=section&id=Segment%20Performance) Details the individual financial performance of the Rail, Technologies, and Services; Precast Concrete Products; and Steel Products and Measurement segments Rail, Technologies, and Services Segment Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $63,710 | $66,232 | (3.8%) | | Gross profit | $12,528 | $12,805 | (2.2%) | | Gross profit percentage | 19.7% | 19.3% | +0.4% | Precast Concrete Products Segment Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $15,010 | $12,678 | 18.4% | | Gross profit | $2,445 | $2,489 | (1.8%) | | Gross profit percentage | 16.3% | 19.6% | (3.3%) | Steel Products and Measurement Segment Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $20,074 | $37,170 | (46.0%) | | Gross profit | $1,474 | $3,536 | (58.3%) | | Gross profit percentage | 7.3% | 9.5% | (2.2%) | [Segment Backlog](index=27&type=section&id=Segment%20Backlog) Presents the backlog for each operating segment as of March 31, 2022, and prior periods, indicating future revenue Segment Backlog (in thousands) | Segment | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :--- | :--- | :--- | :--- | | Rail, Technologies, and Services | $122,918 | $96,573 | $122,461 | | Precast Concrete Products | $72,369 | $68,636 | $65,774 | | Steel Products and Measurement | $49,331 | $44,980 | $83,709 | | **Total backlog** | **$244,618** | **$210,189** | **$271,944** | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's cash position, credit facility, and cash flow from operations, outlining its financial flexibility - The company's principal sources of liquidity are cash, cash from operations, and its **$130 million** revolving credit facility[113](index=113&type=chunk) Available Funding Capacity as of March 31, 2022 (in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $6,239 | | Net availability under the revolving credit facility | $93,868 | | **Total available funding capacity** | **$100,107** | - Cash used in operating activities was **$7.6 million** in Q1 2022, a significant reversal from **$7.6 million** in cash provided by operations in Q1 2021, primarily due to changes in working capital[115](index=115&type=chunk)[116](index=116&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable as the company is a smaller reporting company - This item is not applicable to a smaller reporting company[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2022, and concluded they were effective - Based on an evaluation as of March 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[126](index=126&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[127](index=127&type=chunk) [PART II. Other Information](index=32&type=section&id=PART%20II.%20Other%20Information) Covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 15 of the financial statements, including the UPRR settlement and the Portland Harbor Superfund Site matter - Details on legal proceedings are incorporated by reference from Note 15 of the Notes to Condensed Consolidated Financial Statements[130](index=130&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) This item is not applicable as the company is a smaller reporting company - This item is not applicable to a smaller reporting company[131](index=131&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the quarter, the company withheld a total of 26,346 shares at an average price of **$15.08** per share to pay taxes upon the vesting of restricted stock for employees Company Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2022 | — | $— | | February 2022 | 21,589 | $15.16 | | March 2022 | 4,757 | $14.72 | | **Total** | **26,346** | **$15.08** | - The shares purchased reflect shares withheld by the Company to pay taxes upon the vesting of restricted stock[132](index=132&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) The report lists several exhibits filed with the Form 10-Q, including the 2022 Executive Annual Incentive Plan, forms of stock award agreements, and certifications by the CEO and CFO - Filed exhibits include executive compensation plans, award agreements, and required CEO/CFO certifications[139](index=139&type=chunk)

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) L.B. Foster Company provides engineered products and services for infrastructure, operating across three realigned segments - The company realigned its operating segments in Q4 2021 into three new reporting structures: Rail, Technologies, and Services; Precast Concrete Products; and Steel Products and Measurement[15](index=15&type=chunk) - As of December 31, 2021, the company had **991 employees**, with 721 in the U.S., 72 in Canada, and 192 in Europe[51](index=51&type=chunk) - In 2022, the company created a new full-time role to focus on and enhance its sustainability and environmental, social, and governance (ESG) initiatives[44](index=44&type=chunk) Net Sales by Business Segment (as a percentage of total) | Segment | 2021 | 2020 | | :--- | :--- | :--- | | Rail, Technologies, and Services | 58% | 56% | | Precast Concrete Products | 14% | 13% | | Steel Products and Measurement | 28% | 31% | | **Total** | **100%** | **100%** | [Rail, Technologies, and Services](index=5&type=section&id=Rail%2C%20Technologies%2C%20and%20Services) - This segment provides products, solutions, and services for freight and passenger railroads globally through three business units[17](index=17&type=chunk) - The Global Friction Management unit manufactures products to reduce fuel consumption and extend asset life for rail customers[22](index=22&type=chunk) - The Technology Services and Solutions unit provides railroad condition monitoring systems to enable the 'digital railway'[23](index=23&type=chunk) [Precast Concrete Products](index=7&type=section&id=Precast%20Concrete%20Products) - This segment manufactures precast concrete products for the North American civil infrastructure market under its CXT® brand[24](index=24&type=chunk) [Steel Products and Measurement](index=7&type=section&id=Steel%20Products%20and%20Measurement) - This segment provides custom engineered solutions for civil and energy infrastructure, including bridge products and pipeline measurement systems[25](index=25&type=chunk) - On September 24, 2021, the Company completed the sale of its Piling Products division, which was part of this segment[30](index=30&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from the COVID-19 pandemic, operations, competition, finance, regulations, and international trade - **COVID-19 Risks:** The pandemic continues to adversely affect operations, supply chains, and demand, particularly in the midstream energy markets[69](index=69&type=chunk)[70](index=70&type=chunk) - **Business and Operational Risks:** Key risks include managing acquisitions and divestitures, negative economic conditions, rising inflation and labor costs, and cybersecurity threats[71](index=71&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - **Financial Risks:** The company's indebtedness could affect its business, and a decline in stock price could lead to write-downs of long-lived and intangible assets[90](index=90&type=chunk)[92](index=92&type=chunk) - **Legal, Tax, and Regulatory Risks:** The company is dependent on governmental funding for infrastructure projects and is subject to various environmental and anti-corruption regulations[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - **International Risks:** A portion of sales comes from international operations, exposing the company to currency fluctuations, political conditions, and trade restrictions[106](index=106&type=chunk)[108](index=108&type=chunk) [Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[110](index=110&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) The company owns or leases 39 facilities globally for sales, manufacturing, and warehousing operations Principal Owned and Leased Properties | Location | Function | Business Segment | Ownership | | :--- | :--- | :--- | :--- | | Bedford, PA | Bridge component fabricating plant | Steel Products and Measurement | Owned | | Birmingham, AL | Protective coatings facility | Steel Products and Measurement | Leased (exp. 2022) | | Columbia City, IN | Rail processing facility | Rail, Technologies, and Services | Owned | | Hillsboro, TX | Precast concrete facility | Precast Concrete Products | Owned | | Nampa, ID | Precast concrete facility | Precast Concrete Products | Leased (exp. 2029) | | Sheffield, United Kingdom | Track component facility | Rail, Technologies, and Services | Leased (exp. 2030) | | Spokane, WA | Concrete tie plant | Rail, Technologies, and Services | Leased (exp. 2025) | | Willis, TX | Protective coatings & measurement facilities | Steel Products and Measurement | Owned | [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceeding details are incorporated by reference from the Consolidated Financial Statements - Details on legal proceedings are incorporated by reference from Note 18 of the financial statements[114](index=114&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable to the Company[115](index=115&type=chunk) Part II [Market for Common Equity and Related Matters](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock (FSTR) trades on NASDAQ, with no dividends paid in 2021 and share repurchases in Q4 - The company's common stock is traded on the NASDAQ Global Select Market under the symbol FSTR with **287 common shareholders** of record as of February 23, 2022[117](index=117&type=chunk) - No quarterly dividends were declared during 2021 and 2020[118](index=118&type=chunk) - In 2021, the company withheld **45,288 shares**, valued at **$732 thousand**, to satisfy employee tax withholding obligations upon the vesting of restricted stock[121](index=121&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 2021 | 356 | $15.50 | | November 2021 | — | — | | December 2021 | 13,027 | $13.75 | | **Total** | **13,383** | **$13.80** | [Management's Discussion and Analysis (MD&A)](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, sales grew 3.3% but gross profit and net income declined due to margin pressure and a prior-year tax benefit [Executive Level Overview](index=26&type=section&id=Executive%20Level%20Overview) - Divested the Piling Products division, resulting in cash proceeds of **$22.7 million** and a pretax gain of **$2.7 million**[124](index=124&type=chunk) - Consolidated backlog as of December 31, 2021, was **$210.2 million**, a decrease of **15.3%** from the prior year, primarily due to the Piling Products divestiture[130](index=130&type=chunk) 2021 Financial Highlights vs. 2020 | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $513.6M | $497.4M | +3.3% | | Net Income (cont. ops) | $3.5M | $25.8M | -86.6% | | Diluted EPS (cont. ops) | $0.33 | $2.42 | -86.4% | | Adjusted EBITDA | $18.7M | $32.0M | -41.6% | | Total Debt | $31.3M | $45.0M | -30.5% | | Net Debt | $20.9M | $37.5M | -44.3% | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) - The effective income tax rate was **24.4%** in 2021, compared to **(84.7)%** in 2020, with the prior year impacted by a **$15.8 million** tax benefit[138](index=138&type=chunk) Net Sales by Segment (in thousands) | Segment | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Rail, Technologies, and Services | $299,749 | $276,447 | 8.4% | | Precast Concrete Products | $70,990 | $63,314 | 12.1% | | Steel Products and Measurement | $142,881 | $157,650 | (9.4)% | | **Total net sales** | **$513,620** | **$497,411** | **3.3%** | Gross Profit by Segment (in thousands) | Segment | 2021 | 2020 | % Change | 2021 Margin | 2020 Margin | | :--- | :--- | :--- | :--- | :--- | :--- | | Rail, Technologies, and Services | $57,249 | $55,263 | 3.6% | 19.1% | 20.0% | | Precast Concrete Products | $12,491 | $11,395 | 9.6% | 17.6% | 18.0% | | Steel Products and Measurement | $16,562 | $28,348 | (41.6)% | 11.6% | 18.0% | | **Total gross profit** | **$86,302** | **$95,006** | **(9.2)%** | **16.8%** | **19.1%** | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) - In August 2021, the company entered into a new five-year, **$130 million** revolving credit facility, extending the maturity to August 2026[163](index=163&type=chunk) Available Funding Capacity as of Dec 31, 2021 (in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $10,372 | | Net availability under revolving credit facility | $98,356 | | **Total available funding capacity** | **$108,728** | Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by continuing operating activities | $(810) | $20,549 | | Net cash provided by (used in) continuing investing activities | $17,822 | $(10,319) | | Net cash used in continuing financing activities | $(13,904) | $(15,277) | [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - **Income Taxes:** Management judgment is required to assess the future realization of deferred tax assets and determine if a valuation allowance is needed[171](index=171&type=chunk) - **Revenue Recognition:** For long-term contracts, revenue is recognized over time using input or output measures, which involves significant estimates[177](index=177&type=chunk)[179](index=179&type=chunk) - **Goodwill:** Goodwill is tested for impairment annually by comparing the fair value of a reporting unit to its carrying value[181](index=181&type=chunk)[182](index=182&type=chunk) [Financial Statements and Supplementary Data](index=40&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements and the independent auditor's report for 2021 and 2020 - The independent auditor's report from Ernst & Young LLP expressed an unqualified opinion on the financial statements and internal controls[190](index=190&type=chunk)[191](index=191&type=chunk)[194](index=194&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Current Assets | $179,479 | $195,319 | | Total Assets | $342,595 | $370,395 | | Total Current Liabilities | $86,194 | $95,302 | | Long-Term Debt | $31,153 | $44,905 | | Total Stockholders' Equity | $183,610 | $176,830 | | **Total Liabilities & Equity** | **$342,595** | **$370,395** | Consolidated Statement of Operations Highlights (in thousands) | Account | 2021 | 2020 | | :--- | :--- | :--- | | Total Net Sales | $513,620 | $497,411 | | Gross Profit | $86,302 | $95,006 | | Operating Profit | $4,471 | $15,633 | | Income from Continuing Operations | $3,471 | $25,823 | | Net Income Attributable to L.B. Foster | $3,626 | $7,582 | [Controls and Procedures](index=89&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal controls were effective as of year-end 2021 - Based on an evaluation as of December 31, 2021, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[385](index=385&type=chunk) - Management assessed the effectiveness of internal control over financial reporting using the COSO framework and concluded that it was effective as of December 31, 2021[387](index=387&type=chunk) Part III [Directors, Executive Officers, Compensation, and Corporate Governance](index=91&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information on directors, compensation, and governance is incorporated by reference from the 2022 Proxy Statement - Information required by Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's 2022 Proxy Statement[7](index=7&type=chunk)[400](index=400&type=chunk)[402](index=402&type=chunk)[404](index=404&type=chunk)[405](index=405&type=chunk) - Information regarding the executive officers of the Company is set forth in Part I of this Annual Report on Form 10-K[400](index=400&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=92&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K report - This section lists all financial statements, schedules (including Schedule II – Valuation and Qualifying Accounts), and exhibits filed with the report[407](index=407&type=chunk)[408](index=408&type=chunk) [Form 10-K Summary](index=92&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to include a voluntary summary of the Form 10-K report - The Company has elected not to include a summary under this item[412](index=412&type=chunk)

Financial Data and Key Metrics Changes - Fourth quarter sales were $113 million, down $2.6 million or 2.3% from Q4 of last year, but adjusted for the piling divestiture, sales were up 8.8% year-over-year [24] - Fourth quarter adjusted EBITDA declined $3.7 million to $3.2 million, with $1.3 million of the decline due to the piling divestiture [25] - The company finished 2021 with $6 million of operating cash flow, translating into a $5.2 million reduction in net debt, which stood at $21 million as of year-end [26] Business Line Data and Key Metrics Changes - Rail Technologies and Services segment revenue increased $3.5 million year-over-year, driven by increased volumes within global friction management and technology services [28] - Precast Concrete Products segment revenue was essentially unchanged year-over-year at $20 million, but gross margins were down 390 basis points due to higher input costs [30] - Steel Products and Measurement segment revenues and gross margins were up in Q4, primarily due to improved volumes in bridge products and fluid measurement systems [31] Market Data and Key Metrics Changes - Fourth quarter orders totaled approximately $95 million, softer than recent quarterly run rates, but the company finished the year with a healthy backlog of approximately $210 million [27] - The order book for Precast Concrete Products increased over 50% during 2021, driven by new operations and government funding programs [65] Company Strategy and Development Direction - The company is focusing on transforming into a technology-focused infrastructure solutions provider, with a refreshed corporate strategy emphasizing growth platforms in core markets [17][18] - The passage of the $1.2 trillion Infrastructure Jobs Act is expected to provide resources for U.S. transportation infrastructure projects, which should lead to improving shareholder value [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the company faced significant operational and inflationary challenges in 2021, particularly in labor and raw material costs [48] - Despite challenges, management is optimistic about improving demand due to significant government funding for infrastructure projects [46] Other Important Information - The company has reduced its net debt by $17 million during 2021 and has nearly $109 million in available funding to execute its strategic plan [40] - The company is leveraging a capital-light business model, with capital spending and working capital needs around 1% and 20% of sales respectively [41] Q&A Session Summary Question: Why were new orders in rail weak? - Management indicated that significant projects are coming through the pipeline, leading to some timing issues, but there is nothing to be alarmed about [57] Question: Is the large project bid opportunity growing in 2022? - Management confirmed that quoting activity has been robust, indicating a fair assumption that opportunities are growing [58] Question: Any guidance for first quarter or full year 2022? - Management does not provide guidance but noted strong order book momentum heading into 2022 [60] Question: What are the main growth drivers for the Precast Concrete business? - Growth is driven by new operations and government funding programs, particularly the Great American Outdoors Act [65] Question: Will rising oil prices lead to more orders in coatings and measurement? - Management has not seen a correlation between rising oil prices and increased orders in coatings and measurement [67]

Financial Performance - 2021 - The company's 2021 sales were $514 million [2] - 2021 adjusted EBITDA was $187 million [3] - The company's revenue for the year ended December 31, 2021, was $5136 million, a 33% year-over-year increase [3, 24] - The company's backlog as of December 31, 2021, was $2102 million [3] Q4 2021 Results - Q4 2021 sales were $113 million, a 23% year-over-year decrease [14] - Q4 2021 adjusted EBITDA was $32 million, a year-over-year decrease of $37 million [14] - The company's backlog was $2102 million, a year-over-year decrease of $38 million [3, 14] Segment Performance - Rail, Technologies, and Services segment sales were $2997 million with an EBITDA of $199 million [11] - Precast Concrete Products segment sales were $71 million with an EBITDA of $33 million [11] - Steel Products and Measurement segment sales were $1429 million with an EBITDA of $53 million [11] Strategic Actions and Outlook - The company completed the divestiture of the steel Piling business for $227 million in proceeds [6] - The company anticipates approximately $85 million in tax refunds [29] - The company's long-term vision for 2025 includes revenue of approximately $600 million and adjusted EBITDA of approximately $50 million [43]

[PART I. Financial Information](index=4&type=section&id=PART%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents L.B. Foster Company's unaudited condensed consolidated financial statements as of September 30, 2021, highlighting increased quarterly revenue, decreased net income due to a prior-year tax benefit, and minor shifts in assets and equity [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2021, shows total assets of $359.8 million, a slight decrease from $370.4 million at year-end 2020, primarily driven by a reduction in inventories, while total stockholders' equity increased to $182.4 million from $176.8 million over the same period Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $194,613 | $195,319 | | **Total Assets** | **$359,803** | **$370,395** | | **Total Current Liabilities** | $97,938 | $95,302 | | **Total Liabilities** | $177,429 | $193,565 | | **Total Stockholders' Equity** | **$182,374** | **$176,830** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the third quarter of 2021, total net sales increased to $130.1 million from $118.4 million in Q3 2020, but income from continuing operations fell sharply to $2.2 million from $16.6 million, largely due to a significant income tax benefit recorded in the prior-year quarter, resulting in diluted earnings per share from continuing operations of $0.21, compared to $1.56 in Q3 2020 Q3 and Nine Months Statement of Operations (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Net Sales** | $130,053 | $118,365 | $400,655 | $381,835 | | **Gross Profit** | $22,276 | $22,061 | $67,267 | $73,321 | | **Income from Continuing Operations** | $2,240 | $16,578 | $3,824 | $23,543 | | **Net Income Attributable to L.B. Foster** | $2,342 | $6,830 | $3,960 | $5,487 | | **Diluted EPS (Continuing Operations)** | $0.21 | $1.56 | $0.36 | $2.21 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2021, net cash used in continuing operating activities was $6.8 million, a significant shift from the $16.2 million provided by operations in the same period of 2020, while net cash provided by investing activities was $18.9 million, driven by proceeds from an asset divestiture, compared to a use of $8.7 million in the prior year, and financing activities used $13.0 million, primarily for debt repayment Nine Months Cash Flow Summary (in thousands) | Cash Flow Activity | 9 Months 2021 | 9 Months 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by continuing operating activities | $(6,810) | $16,201 | | Net cash provided by (used in) continuing investing activities | $18,910 | $(8,688) | | Net cash used in continuing financing activities | $(13,030) | $(11,147) | | **Net decrease in cash and cash equivalents** | **$(1,159)** | **$(4,867)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies and specific financial statement items, covering the company's two business segments (Rail Technologies and Services, Infrastructure Solutions), revenue recognition, discontinued operations from the 2020 sale of the Test and Inspection Services business, details on the new credit agreement, and commitments including a settlement with Union Pacific Railroad - The company now operates under two segments: **Rail Technologies and Services** and **Infrastructure Solutions**, following operational changes implemented at the end of 2020[25](index=25&type=chunk)[27](index=27&type=chunk) Segment Performance - Q3 2021 vs Q3 2020 (in thousands) | Segment | Net Sales (Q3 2021) | Segment Profit (Q3 2021) | Net Sales (Q3 2020) | Segment Profit (Q3 2020) | | :--- | :--- | :--- | :--- | :--- | | Rail Technologies and Services | $73,942 | $3,555 | $63,988 | $3,742 | | Infrastructure Solutions | $56,111 | $3,484 | $54,377 | $2,375 | - As of September 30, 2021, the company's backlog of remaining performance obligations was approximately **$231.7 million**[40](index=40&type=chunk) - In August 2021, the company entered into a new credit agreement, increasing its revolving credit facility to **$130 million** and extending the maturity to August 2026[60](index=60&type=chunk) - The company is making installment payments to Union Pacific Railroad (UPRR) under a settlement agreement, with **$28 million** remaining to be paid from Q4 2021 through 2024[94](index=94&type=chunk)[95](index=95&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q3 and nine-month 2021 financial performance, highlighting a 9.9% increase in Q3 net sales, a 150 basis point decline in gross profit margin, and the sale of the Piling Products division, while noting inflationary pressures and supply chain disruptions [Results of the Quarter](index=32&type=section&id=Results%20of%20the%20Quarter) Q3 2021 net sales increased 9.9% driven by the Rail segment, but gross profit margin contracted by 150 basis points, selling and administrative expenses rose, and a $2.7 million gain from the Piling Products division sale was recorded, leading to a significant net income drop due to tax rate changes - On September 24, 2021, the company sold its Piling Products division for expected proceeds of **$23.9 million**, resulting in a net gain of **$2.7 million**[105](index=105&type=chunk)[125](index=125&type=chunk) Q3 2021 vs Q3 2020 Performance Summary | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $130,053 | $118,365 | 9.9% | | **Gross Profit** | $22,276 | $22,061 | 1.0% | | **Gross Profit Margin** | 17.1% | 18.6% | -150 bps | | **S&A Expenses** | $20,056 | $17,066 | 17.5% | | **Income from Continuing Operations** | $2,240 | $16,578 | -86.5% | - The Rail Technologies and Services segment sales increased **15.6% YoY**, driven by higher rail distribution sales and increased service revenue in Europe as pandemic restrictions eased[121](index=121&type=chunk) - The Infrastructure Solutions segment sales increased **3.2% YoY**, though this was offset by a sales reduction in the Coatings and Measurement business unit due to unfavorable conditions in the midstream energy market[126](index=126&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash on hand, operating cash flow, and its $130 million revolving credit facility, with total debt decreasing to $32.5 million at September 30, 2021, from $45.0 million at year-end 2020, and net available borrowing capacity of $97.1 million, while cash used in operations for the first nine months of 2021 was $6.8 million, a reversal from cash provided in the prior year, mainly due to working capital fluctuations Available Funding Capacity as of Sep 30, 2021 (in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $6,405 | | Net availability under the revolving credit facility | $97,067 | | **Total available funding capacity** | **$103,472** | - Total debt decreased to **$32.5 million** at September 30, 2021, from **$45.0 million** at December 31, 2020, primarily due to debt repayments following the Piling Products division divestiture[148](index=148&type=chunk)[156](index=156&type=chunk) - Capital expenditures for the first nine months of 2021 were **$3.6 million**, a significant decrease from **$7.7 million** in the prior-year period[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company has omitted this section, stating that it is not applicable as L.B. Foster is a smaller reporting company - This item is not applicable to a smaller reporting company[163](index=163&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of September 30, 2021, the company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective, with no material changes to the company's internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[164](index=164&type=chunk) - No changes occurred during the nine months ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165](index=165&type=chunk) [PART II. Other Information](index=42&type=section&id=PART%20II.%20Other%20Information) [Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 16 of the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings - For details on legal proceedings, the report refers to Note 16 of the financial statements, which discusses the UPRR settlement and the Portland Harbor Superfund Site matter[168](index=168&type=chunk)[93](index=93&type=chunk)[97](index=97&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports minimal purchases of its own equity securities during the third quarter of 2021, with 20 shares purchased in September at an average price of $15.06 Equity Securities Purchases (Q3 2021) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2021 | 0 | N/A | | August 2021 | 0 | N/A | | September 2021 | 20 | $15.06 |

Financial Data and Key Metrics Changes - Third quarter sales were $130.1 million, up $11.7 million or 9.9% over Q3 of last year [27] - Net income from continuing operations was $2.2 million or $0.21 per diluted share, compared to $16.6 million or $1.56 per diluted share last year [29] - Adjusted EBITDA totaled $4.4 million in the third quarter, a decrease of $3 million compared to Q3 of last year [29] - Year-to-date revenues were $400.7 million, compared to $381.8 million last year, representing an $18.8 million increase or 4.9% [33] Business Line Data and Key Metrics Changes - Rail segment revenues increased by $10 million year-over-year, primarily due to new rail deliveries and improved European operations [30] - Infrastructure Solutions segment's revenues were up $1.7 million, driven by increases in fabricated steel and precast concrete business units [31] - Coatings and Measurement business continued to face challenges, with a decline in gross profit margins [32] Market Data and Key Metrics Changes - New orders increased by almost $20 million compared to Q3 of 2020, with rail segment showing strong performance [20] - Backlog stood at $232 million, an increase of over $20 million compared to September 30, 2020 [25] - The company is experiencing inflationary pressures impacting raw material costs and wages, leading to margin erosion [17] Company Strategy and Development Direction - The company completed a comprehensive strategy reassessment, focusing on divesting non-core businesses and reallocating resources to growth areas [13][14] - The divestiture of the Piling Products business generated approximately $24 million in proceeds, which will be redeployed into stronger competitive positions [15] - The company aims to transform into a more innovation-focused provider of products and services to build and support infrastructure [57] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term growth despite current challenges such as supply chain disruptions and inflation [59] - The Coatings and Measurement business is expected to remain weak, with no meaningful recovery projected in the near future [19] - The backlog continues to rise and stands well above pre-pandemic levels, indicating positive future demand [61] Other Important Information - The company revised its credit facility to provide more capacity and lower interest costs, positioning it for continued investment [16] - Cash flows used for operations totaled $6.8 million year-to-date, reflecting increased working capital needs [37] - The company anticipates further debt reduction during the fourth quarter due to seasonal reductions in working capital needs [46] Q&A Session Summary Question: Organic growth targets and cash flow targets - Management indicated that specific targets would be discussed in detail during the upcoming analyst meeting, but they have a good understanding of where value will come from [68] Question: Margin profile in new backlog work - Management confirmed that the divestiture of the piling business will improve margins moving forward, with significant backlog growth noted [70][72] Question: Decline in gross margin quantification - Management explained that the decline was primarily due to supply chain disruptions and inflation, with specific impacts from the Coatings and Measurement business [78][84] Question: Protecting against future supply chain disruptions - The company is actively assessing vulnerabilities in its supply chain and building up inventories to mitigate risks [86][88]

| --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|---------------------------------|-----------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lytham October 6, 2021 | L.B. Foster Presentation Partners Fall 2021 Investor Conference | | | | | | John Kasel – Bill Thalman – | President and Chief Executive Officer Senior Vice President and Chief Financial Officer | Safe Harbor Disclaimer Safe H ...

Transaction Overview - L B Foster sold its Steel Piling business to an unaffiliated buyer effective September 24, 2021[5] - The company expects to realize proceeds of approximately $24 million from the sale[5] - The sale proceeds of $24 million imply an Adjusted EBITDA multiple of approximately 8x[18] Financial Performance of Steel Piling - For the six months ended June 30, 2021, Steel Piling's sales were $42 9 million, compared to $31 1 million for the same period in 2020[15] - Gross profit margin for the six months ended June 30, 2021, was 7 5%, compared to 10 3% for the same period in 2020[15] - Adjusted EBITDA for the six months ended June 30, 2021, was $1 4 million, compared to $0 6 million for the same period in 2020[15] - Average trade working capital as a percentage of sales was 35 9% for the six months ended June 30, 2021, compared to 54 2% for the same period in 2020[15] Rationale for the Sale - Steel Piling is a commodity-driven business that does not align with the company's focus on providing unique, innovative solutions[5] - The business had a disproportionate level of working capital in relation to sales and profitability[13] - Slow inventory turns drove poor Return on Invested Capital (ROIC) well below corporate targets[13]

Financial Data and Key Metrics Changes - Second quarter sales were $154.5 million, up $38.4 million or 33% from Q1 and up $13 million or 9.2% year-over-year [21] - Q2 gross profit decreased by $2 million, with a gross profit margin of 16.9%, a 290 basis point decrease from the previous year [21] - Net income from continuing operations was $2.9 million or $0.27 per diluted share, compared to $7 million or $0.66 per diluted share last year [22] - Adjusted EBITDA totaled $8.3 million, a decrease of $4.6 million compared to last year [22] Business Line Data and Key Metrics Changes - Rail segment revenue increased by $13.8 million year-over-year, driven by new rail deliveries and improved European operations [23] - Infrastructure Solutions revenue decreased by $900,000, primarily due to the Coatings and Measurement business facing challenges in the midstream energy market [24] - Precast concrete and fabricated steel businesses saw significant revenue increases, with precast concrete business at near-record levels, up 33% year-over-year [13][24] Market Data and Key Metrics Changes - Total company backlog declined by $19 million during the quarter, finishing at $253 million, which is 12% above last year [13] - The backlog for precast concrete business is at near-record levels, while the Coatings and Measurement business backlog has more than doubled since December [14][34] - The consolidated backlog stood at $253.2 million at the end of Q2, an increase of $28 million or 12.4% compared to a year ago [34] Company Strategy and Development Direction - The company is focusing on directing capital towards top priorities in attractive markets, particularly in infrastructure solutions [11] - There is an ongoing assessment of opportunities for bolt-on acquisitions in Rail Technologies and precast concrete, with a focus on core business areas [31][59] - The company is also exploring diversification into water infrastructure, moving away from energy-focused markets [53] Management's Comments on Operating Environment and Future Outlook - The company anticipates continued recovery from the pandemic, with expectations for infrastructure investment trends to benefit precast concrete and fabricated steel businesses [36] - Management remains cautious about the Coatings and Measurement business due to ongoing challenges in the midstream energy market [36] - The outlook for cash flow remains strong, with expected tax refunds and disciplined working capital management [37] Other Important Information - The company has a strong balance sheet, with net debt at $33 million, down from $48.2 million a year ago [29] - Selling and administrative expenses increased year-over-year by $900,000, primarily due to higher professional fees related to a strategic review [22] - The company is facing inflationary pressures, particularly in materials for bridge products, and is taking pricing actions to mitigate these impacts [17] Q&A Session Summary Question: Plans to expand capacity in precast concrete business - The company is exploring efforts to set up satellite facilities and investing in the Texas facility to support volume [40][41] Question: Expectations for gross margins in the second half of the year - Management indicated that the weakness in the Coatings and Measurement business is the primary driver affecting overall gross margins, but improvements in other areas may offset some challenges [42][43] Question: Status of the Cross London project team members - The project team is currently at about 75% capacity and is expected to reach 100% by Q3 [44] Question: Impact of the delta variant on operations - There have been no operational impacts from the delta variant, and the company is managing the pandemic's effects effectively [46] Question: Future of the Coatings and Measurement business - The company sees potential in certain parts of the Coatings and Measurement business but is cautious about significant improvements in the near term [47][48] Question: Consideration of share buybacks or dividends - The company is actively discussing capital allocation and may consider share buybacks or dividends as part of its overall capital structure strategy [56][57] Question: Focus areas for potential M&A - The company is focusing on core areas such as rail technologies and precast concrete for potential acquisitions [58][59]

[PART I. Financial Information](index=4&type=section&id=PART%20I%2E%20Financial%20Information) This section provides the unaudited condensed consolidated financial statements of L.B. Foster Company for the period ending June 30, 2021, along with management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201%2E%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for L.B. Foster Company as of June 30, 2021, and for the three and six-month periods then ended, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation and significant accounting policies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets increased to $379.9 million from $370.4 million at year-end 2020, driven by higher accounts receivable and deferred revenue, while total liabilities also increased, primarily due to a rise in accounts payable and deferred revenue, and stockholders' equity saw a slight increase to $180.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $210,469 | $195,319 | | **Total assets** | $379,941 | $370,395 | | **Total current liabilities** | $111,962 | $95,302 | | **Long-term debt** | $37,121 | $44,905 | | **Total liabilities** | $199,049 | $193,565 | | **Total stockholders' equity** | $180,892 | $176,830 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the second quarter of 2021, total net sales increased to $154.5 million from $141.6 million year-over-year, but gross profit declined to $26.2 million from $28.1 million, with net income attributable to the company at $2.9 million, or $0.27 per diluted share, compared to $0.5 million, or $0.05 per diluted share, in Q2 2020, where the prior year's net income was significantly impacted by a large loss from discontinued operations Q2 and H1 2021 vs 2020 Performance (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total net sales** | $154,522 | $141,563 | $270,602 | $263,470 | | **Gross profit** | $26,161 | $28,138 | $44,991 | $51,260 | | **Income from continuing operations** | $2,854 | $6,970 | $1,584 | $6,965 | | **Net income (loss) attributable to L.B. Foster** | $2,876 | $523 | $1,618 | $(1,343) | | **Diluted EPS from continuing operations** | $0.27 | $0.66 | $0.15 | $0.66 | | **Diluted EPS (total)** | $0.27 | $0.05 | $0.15 | $(0.13) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash provided by continuing operating activities was $6.8 million, a decrease from $8.1 million in the prior-year period, while net cash used in investing activities decreased significantly to $2.2 million from $5.7 million, mainly due to lower capital expenditures, and net cash used in financing activities increased to $7.9 million, driven by debt repayments Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net cash provided by continuing operating activities** | $6,842 | $8,122 | | **Net cash used in continuing investing activities** | $(2,248) | $(5,700) | | **Net cash used in continuing financing activities** | $(7,918) | $(4,675) | | **Net decrease in cash and cash equivalents** | $(3,424) | $(6,791) | | **Cash and cash equivalents at end of period** | $4,140 | $7,387 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial results, covering topics such as the reclassification of business segments, the sale of the Test and Inspection Services business, revenue recognition, goodwill and intangible assets, debt structure, and contingent liabilities related to a UPRR settlement and environmental matters - The company now operates under two segments: **Rail Technologies and Services**, and **Infrastructure Solutions**, following operational changes implemented in Q4 2020[25](index=25&type=chunk) - On September 4, 2020, the company completed the sale of its upstream oil and gas test and inspection business, which is now reported as a **discontinued operation**[32](index=32&type=chunk) - As of June 30, 2021, the company had approximately **$253.2 million in backlog** (remaining performance obligations)[40](index=40&type=chunk) - The company is making installment payments totaling **$50 million through December 2024** to resolve litigation with Union Pacific Railroad (UPRR) regarding concrete ties[88](index=88&type=chunk)[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=26&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management discusses the financial results for the second quarter and first half of 2021, highlighting a 9.2% Q2 2021 revenue increase driven by the Rail segment, but a 7.0% decline in gross profit due to weakness in the Infrastructure Solutions segment, particularly the midstream energy-focused Coatings and Measurement business, while expressing optimism for second-half revenue growth despite commodity price inflation and a weak midstream market, with sufficient liquidity from $77.5 million available under the revolving credit facility [Results of the Quarter (Q2 2021 vs. Q2 2020)](index=30&type=section&id=Results%20of%20the%20Quarter%20%28Q2%202021%20vs%2E%20Q2%202020%29) In Q2 2021, net sales rose 9.2% to $154.5 million, driven by an 18.5% increase in the Rail Technologies and Services segment, but consolidated gross profit fell 7.0% to $26.2 million, with the gross margin contracting by 300 basis points to 16.9%, primarily due to a 27.6% drop in gross profit from the Infrastructure Solutions segment, impacted by weakness in the midstream energy market, leading to a decrease in net income from continuing operations to $2.9 million from $7.0 million in the prior-year quarter Q2 2021 vs Q2 2020 Performance Summary (in thousands) | Metric | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Net Sales** | $154,522 | $141,563 | 9.2% | | Rail Technologies and Services Sales | $88,782 | $74,939 | 18.5% | | Infrastructure Solutions Sales | $65,740 | $66,624 | (1.3)% | | **Total Gross Profit** | $26,161 | $28,138 | (7.0)% | | **Gross Profit Margin** | 16.9% | 19.9% | -300 bps | | **Income from Continuing Operations** | $2,854 | $6,970 | (59.1)% | - The increase in Rail segment sales was driven by a significant rise in **new rail sales** and increased service revenue in European operations as pandemic restrictions eased[116](index=116&type=chunk) - The decline in Infrastructure Solutions was wholly attributable to the **Coatings and Measurement business unit** due to unfavorable conditions in the midstream energy market[120](index=120&type=chunk) [Six Month Results (H1 2021 vs. H1 2020)](index=33&type=section&id=Six%20Month%20Results%20%28H1%202021%20vs%2E%20H1%202020%29) For the first six months of 2021, net sales increased 2.7% to $270.6 million, led by a 6.8% rise in the Rail segment, but gross profit declined 12.2% to $45.0 million, with the gross margin falling 290 basis points to 16.6%, again due to weakness in the Infrastructure Solutions segment, while selling and administrative expenses decreased by 3.6%, and net income from continuing operations was $1.6 million, a significant drop from $7.0 million in the first half of 2020 H1 2021 vs H1 2020 Performance Summary (in thousands) | Metric | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Net Sales** | $270,602 | $263,470 | 2.7% | | Rail Technologies and Services Sales | $155,014 | $145,143 | 6.8% | | Infrastructure Solutions Sales | $115,588 | $118,327 | (2.3)% | | **Total Gross Profit** | $44,991 | $51,260 | (12.2)% | | **Gross Profit Margin** | 16.6% | 19.5% | -290 bps | | **Income from Continuing Operations** | $1,584 | $6,965 | (77.3)% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash from operations and its revolving credit facility, with total debt at $37.2 million and $77.5 million of net available borrowing capacity as of June 30, 2021, and cash provided by continuing operations for the first six months at $6.8 million, indicating sufficient liquidity to operate the business and service its debt Available Funding Capacity as of June 30, 2021 (in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $4,140 | | Net availability under the revolving credit facility | $77,478 | | **Total available funding capacity** | **$81,618** | - Total debt decreased from **$45.0 million** at year-end 2020 to **$37.2 million** as of June 30, 2021[141](index=141&type=chunk) - Capital expenditures for the first six months of 2021 were **$2.2 million**, significantly lower than the **$5.7 million** spent in the same period of 2020[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=page&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable as L.B. Foster Company is classified as a smaller reporting company - The company states that this item is **not applicable** to a smaller reporting company[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=37&type=page&id=Item%204%2E%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of June 30, 2021, and concluded they were effective, with no material changes to the company's internal control over financial reporting during the period - Based on an evaluation as of June 30, 2021, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[154](index=154&type=chunk) - No changes occurred during the six months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the company's **internal control over financial reporting**[155](index=155&type=chunk) [PART II. Other Information](index=38&type=section&id=PART%20II%2E%20Other%20Information) This section provides additional information, including details on legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the Form 10-Q [Item 1. Legal Proceedings](index=38&type=page&id=Item%201%2E%20Legal%20Proceedings) This section refers to Note 16 of the financial statements for information on legal proceedings, which details the UPRR settlement, product liability claims, and an environmental matter concerning the Portland Harbor Superfund Site - For details on legal proceedings, the report refers to **Note 16** of the Notes to Condensed Consolidated Financial Statements[158](index=158&type=chunk) [Item 1A. Risk Factors](index=38&type=page&id=Item%201A%2E%20Risk%20Factors) This item is not applicable as L.B. Foster Company is classified as a smaller reporting company - The company states that this item is **not applicable** to a smaller reporting company[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=page&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no purchases of its equity securities during the three months ended June 30, 2021 - The company made **no purchases of its equity securities** for the three months ended June 30, 2021[160](index=160&type=chunk) [Item 6. Exhibits](index=39&type=page&id=Item%206%2E%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including a retirement agreement, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Exhibits filed include a retirement agreement for Robert P. Bauer, CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and **XBRL interactive data files**[164](index=164&type=chunk)