L.B. Foster pany(FSTR) - 2023 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2023, were $145,345, an increase of $15,330 or 11.8% compared to the prior year quarter[80] - Gross profit for the same period was $28,224, up $5,127 or 22.2%, with a gross profit margin of 19.4%, an increase of 160 basis points[88] - Operating profit for the quarter was $2,685, compared to an operating loss of $1,120 in the prior year, reflecting a margin improvement of 270 basis points[80] - Net income attributable to the Company was $515, or $0.05 per diluted share, a favorable change of $2,592 or $0.25 per diluted share from the prior year[92] - For the nine months ended September 30, 2023, net sales increased by $48,543, or 13.5%, to $408,867 compared to the prior year period[106] - Gross profit for the nine months ended September 30, 2023 was $83,767, an increase of $20,930, or 33.3%, with gross profit margin expanding by 310 basis points to 20.5%[108] - Net income attributable to the Company for the nine months ended September 30, 2023 was $1,894, or $0.17 per diluted share, an increase of $3,527 from the prior year[112] Segment Performance - The Rail, Technologies, and Services segment net sales increased by $9,516, or 12.3%, to $86,866 for Q3 2023 compared to Q3 2022[94] - Gross profit for the Rail, Technologies, and Services segment rose by $3,853, or 28.8%, with gross profit margin expanding by 250 basis points to 19.8%[96] - The Precast Concrete Products segment net sales increased by $9,786, or 33.9%, to $38,642 for Q3 2023, driven by organic growth and the VanHooseCo acquisition[98] - Gross profit for the Precast Concrete Products segment increased by $3,619, or 64.1%, with gross profit margin expanding by 440 basis points to 24.0%[100] - The Steel Products and Measurement segment net sales decreased by $3,972, or 16.7%, to $19,837 for Q3 2023, primarily due to the divestiture of Chemtec[102] - The Steel Products and Measurement segment gross profit decreased by $2,345, or 57.6%, with gross profit margin declining by 840 basis points to 8.7%[104] - Rail, Technologies, and Services segment net sales increased by $20,009, or 9.0%, to $242,866 for the nine months ended September 30, 2023, compared to $222,857 in the prior year[114] - Gross profit for the Rail, Technologies, and Services segment rose by $9,796, or 23.6%, with gross profit margin expanding to 21.1% from 18.7%[115] - Precast Concrete Products segment net sales increased by $29,318, or 43.4%, to $96,795, driven by a 27.2% contribution from the VanHooseCo acquisition[118] - Precast Concrete Products segment gross profit increased by $11,024, with gross profit margin expanding by 620 basis points to 23.2%[119] - Steel Products and Measurement segment net sales decreased by $784, or 1.1%, to $69,206, primarily due to a reduction from the Chemtec divestiture[121] Expenses and Costs - Selling and administrative expenses increased by $1,542 or 6.8%, primarily due to higher personnel costs and a bad debt provision charge[89] - The Company incurred $1,069 in exit costs related to the discontinuation of the Bridge Products grid deck product line, with additional expected costs of $520 through 2024[81] Strategic Focus and Transformation - The Company continues to focus on strategic transformation towards technology-driven infrastructure solutions, reducing commoditized offerings[93] - The Company continues to focus on strategic transformation, including divestitures and exits from commoditized offerings to enhance core growth platforms[113] - Recent acquisitions include Skratch Enterprises Ltd. for $7,402 and VanHooseCo Precast, LLC for $52,146, enhancing the Company's technology and precast concrete capabilities[82][84] Tax and Accounting - The effective income tax rate for the quarter was (37.1)%, significantly differing from the federal statutory rate of 21% due to changes in valuation allowances[91] - The Company’s critical accounting estimates are based on management's judgments regarding future uncertainties, which may lead to actual results differing from estimates[138] Debt and Liquidity - As of September 30, 2023, total debt decreased to $71,689 from $91,879 as of December 31, 2022[124] - Net cash provided by operating activities was $15,310 for the nine months ended September 30, 2023, compared to cash used of $18,836 in the prior year[127] - The Company had $2,969 in cash and cash equivalents as of September 30, 2023, with approximately $2,243 held in non-domestic bank accounts[132] - The Company authorized a stock repurchase program of up to $15,000, with $878 spent on repurchasing 63,343 shares during the nine months ended September 30, 2023[130] - The Company believes its liquidity is sufficient to operate prudently and service its outstanding debt, supported by cash and cash equivalents, cash generated from operations, and credit facility capacity[134] Backlog Information - Backlog for the Rail, Technologies, and Services segment as of September 30, 2023 was $93,632, a decrease of $15,232, or 14.0%, compared to the prior year[116] - The total backlog as of September 30, 2023, was $243,219, a decrease from $272,251 as of December 31, 2022, representing a decline of approximately 10.7%[136] - The backlog for Rail, Technologies, and Services was $93,632 as of September 30, 2023, down from $105,241 as of December 31, 2022, indicating a decrease of about 11.5%[136] - The backlog for Precast Concrete Products was $80,391 as of September 30, 2023, slightly down from $80,501 as of December 31, 2022[136] - The backlog for Steel Products and Measurement decreased to $69,196 as of September 30, 2023, from $86,509 as of December 31, 2022, a decline of approximately 20%[136] - The Company’s backlog should not be considered a reliable indicator of future revenue or financial performance due to the potential for order cancellations[136] Credit and Interest Rate Management - The Company amended its Credit Agreement on August 12, 2022, to facilitate the acquisition of VanHooseCo and modified certain financial covenants[134] - The Company entered into SOFR-based interest rate swaps with notional values totaling $20,000 to mitigate the impact of interest rate changes on variable-rate debt[135]