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]

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)

Company Overview - L.B. Foster's 2020 net sales were $497 million, with $398.3 million from the United States, $44.6 million from the United Kingdom, $34.5 million from Canada, and $20.0 million from other regions[6,8] - The company's Q1 2021 revenue was $116.1 million, with an adjusted EBITDA of $2.7 million and a backlog of $271.9 million[8] - New orders in Q1 2021 reached $135.6 million[8] - Adjusted earnings per diluted share for 2020 were $0.981[7] Segment Performance - Rail Technologies and Services accounted for 56% ($276 million) of the company's revenue as of December 31, 2020, while Infrastructure Solutions contributed 44% ($221 million)[14] - Rail Technologies and Services Q1 2021 revenue was $66 million, and Infrastructure Solutions revenue was $50 million[20] - Rail Technologies and Services new orders for Q1 2021 were $62.9 million, a 16.5% decrease year-over-year, while Infrastructure Solutions new orders were $66.9 million, a 20.7% increase[73] Financial Highlights - The company's adjusted net leverage ratio as of Q1 2021 was 1.1x[12] - Free cash flow for the trailing twelve months (TTM) ending March 31, 2021, was $25.4 million, resulting in a 13.4% free cash flow yield[42] - Net debt decreased by $5.6 million in Q1 2021 to $31.8 million[47] - Sales decreased by 4.8% from $121.9 million to $116.1 million in Q1 2021 compared to Q1 2020[36]

Financial Performance - Q1 2021 revenue was $116.1 million, a decrease of $5.8 million or 4.8% compared to Q1 2020[8, 16] - Adjusted EBITDA for Q1 2021 was $2.7 million, a decrease of $2.1 million compared to the prior year quarter[8, 9, 16] - Net debt as of March 31, 2021, was approximately $31.8 million, a $26.0 million decrease from the prior year quarter[11] - Total available funding capacity as of March 31, 2021, was approximately $82.6 million, an increase of approximately $5.7 million over December 31, 2020[10] - The company's adjusted net leverage ratio was 1.1x for the twelve months ended March 31, 2021[11] - The company generated exceptional free cash flow, resulting in a 13.4% TTM free cash flow yield[30] Orders and Backlog - Backlog levels remain strong at $271.9 million, an increase of $34.7 million or 15% over the prior year quarter[8, 10, 16] - New orders for Q1 2021 were $135.6 million, an increase of $4.8 million or 3.7% compared to Q1 2020[8, 16] - The company's TTM Q1 2021 consolidated book-to-bill ratio was 1.09[10] Segment Performance - Rail Technologies and Services segment sales decreased by $4.0 million or 5.7% to $66.2 million[21] - Infrastructure Solutions segment sales decreased by $1.9 million or 3.6% to $49.8 million[21] - Infrastructure Solutions backlog increased 17% year-over-year, despite the reduction experienced in the Coatings and Measurement business unit[45]

Financial Data and Key Metrics Changes - The first quarter revenue was $116.1 million, a decrease of $5.8 million or 4.8% compared to $121.9 million in the same quarter last year [22][8] - Consolidated gross profit decreased by $4.3 million, resulting in a gross profit margin of 16.2%, down 280 basis points year-over-year [22][12] - The net loss from continuing operations was $1.3 million, or $0.12 per diluted share, compared to a negligible loss in the prior year [24] - Adjusted EBITDA totaled $2.7 million, a decrease of $2.1 million year-over-year [25] Business Line Data and Key Metrics Changes - Rail segment revenue decreased by $4 million year-over-year, primarily due to timing of deliveries and customer delays [26] - Infrastructure Solutions revenue was down $1.9 million, driven by the coatings and measurement business unit, while fabricated steel and precast concrete revenues increased significantly [28] - Despite revenue decline, rail segment gross profit increased by $300,000, resulting in a 150 basis point improvement in gross profit margin [27] Market Data and Key Metrics Changes - Consolidated orders in Q1 were $135.6 million, an increase from $130.8 million last year, driven by the infrastructure solutions segment [31] - The backlog stood at $271.9 million at the end of Q1, an increase of $34.7 million or 14.6% compared to the previous year [42] Company Strategy and Development Direction - The company is focusing on capitalizing on post-pandemic trends and the need for infrastructure investment [45] - There is an emphasis on expanding into markets beyond energy, including water infrastructure and petrochemical applications [96][97] - The company anticipates further debt reduction in 2021, supported by tax refunds and strong cash flow generation [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second quarter, expecting a significant increase in volume due to a strong backlog and improving market conditions [18][57] - The rail industry is showing signs of recovery, with increasing passenger and freight traffic [15][48] - The coatings and measurement business is expected to remain weak, but there are signs of potential recovery in the energy pipeline sector [54][55] Other Important Information - The company generated strong operating cash flow of $7.6 million, a $12.5 million increase year-over-year [33] - Total available funding capacity was $82.6 million at quarter-end, with net debt reduced to $31.8 million [37] Q&A Session Summary Question: What variables will impact SG&A as revenues rebound? - Management indicated that SG&A will likely increase with a return to normalcy and business travel, but they have control over expenses [62][63] Question: Will improved confidence in backlog carry over into order activity? - Management confirmed that strong backlog and increased spending from freight rail companies suggest positive order activity in the upcoming quarters [65][66] Question: What is the sequence of the tax refund process? - The tax refund is expected to be received in portions, with half anticipated in Q2 and the remainder by early Q4, depending on IRS processing [75][76] Question: How are rising raw material costs affecting the company? - Management noted that while steel prices are rising, they do not expect significant margin compression due to effective management of input costs [81][82]

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, 2021 Or ☐ 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 415 Holiday Drive, Suite ...