L.B. Foster pany(FSTR) - 2022 Q1 - Quarterly Report

PART I. Financial Information 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 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 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 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 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] Condensed Consolidated Statements of Cash Flows 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 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] Notes to Condensed Consolidated Financial Statements 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] - 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] - 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][56] - 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][80] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 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 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] - 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] - 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] - 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] Results of the Quarter 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 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 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 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] 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][116] Item 3. Quantitative and Qualitative Disclosures about Market Risk This item is not applicable as the company is a smaller reporting company - This item is not applicable to a smaller reporting company[125] Item 4. Controls and Procedures 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] - 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] PART II. Other Information Covers legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report Item 1. Legal Proceedings 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] Item 1A. Risk Factors This item is not applicable as the company is a smaller reporting company - This item is not applicable to a smaller reporting company[131] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 6. Exhibits 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]