L.B. Foster pany(FSTR) - 2024 Q1 - Quarterly Report

PART I. Financial Information Item 1. Financial Statements The company's Q1 2024 financial statements show a shift from net loss to net income, driven by sales growth and an asset sale gain, with increased assets and equity but negative operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2024, total assets increased to $326.4 million from $313.2 million at year-end 2023, driven by higher inventories and accounts receivable, while total liabilities rose to $181.1 million and stockholders' equity grew to $145.3 million | Balance Sheet Items (In thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $182,984 | $167,990 | | Total Assets | $326,401 | $313,206 | | Total Current Liabilities | $84,181 | $95,306 | | Long-Term Debt | $77,926 | $55,171 | | Total Liabilities | $181,124 | $170,371 | | Total Stockholders' Equity | $145,277 | $142,835 | Condensed Consolidated Statements of Operations For Q1 2024, the company reported a net income of $4.4 million ($0.40 per diluted share), a significant improvement from a $2.2 million net loss in Q1 2023, driven by a 7.6% increase in net sales and a $3.5 million gain from other income | Income Statement Items (In thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Net Sales | $124,320 | $115,488 | | Gross Profit | $26,249 | $23,291 | | Operating Profit | $2,283 | $503 | | Income (loss) before income taxes | $4,694 | $(2,712) | | Net Income (loss) attributable to L.B. Foster | $4,436 | $(2,152) | | Diluted EPS | $0.40 | $(0.20) | Condensed Consolidated Statements of Cash Flows In Q1 2024, net cash used in operating activities was $21.9 million, a sharp contrast to the $6.9 million provided in Q1 2023, primarily due to working capital changes, while investing activities provided $1.2 million and financing activities provided $21.3 million | Cash Flow Items (In thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(21,864) | $6,932 | | Net cash provided by investing activities | $1,209 | $4,661 | | Net cash provided by (used in) financing activities | $21,298 | $(12,022) | | Net increase (decrease) in cash | $588 | $(243) | | Cash and cash equivalents at end of period | $3,148 | $2,639 | Notes to Condensed Consolidated Financial Statements The notes detail key accounting policies, including a segment reorganization, revenue breakdowns, goodwill, debt covenants, and contingent liabilities such as the UPRR settlement and environmental proceedings - Effective Q4 2023, the company reorganized from three reporting segments to two: Rail, Technologies, and Services ("Rail") and Infrastructure Solutions ("Infrastructure"), with historical data restated to conform to this new structure[20] - As of March 31, 2024, the company had approximately $222.3 million in remaining performance obligations (backlog), with about 10.5% expected to extend beyond one year[33] - The company has an outstanding settlement obligation with Union Pacific Railroad (UPRR), with a final payment of $8.0 million expected in 2024[66] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 7.6% increase in Q1 2024 net sales to strong organic growth, partially offset by divestitures, leading to improved gross profit margin and a significant swing to net income, with solid liquidity | Key Performance Indicators | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $124.3M | $115.5M | +7.6% | | Gross Profit Margin | 21.1% | 20.2% | +90 bps | | Operating Profit | $2.3M | $0.5M | +$1.8M | | Net Income (Loss) | $4.4M | $(2.2)M | +$6.6M | | Diluted EPS | $0.40 | $(0.20) | +$0.60 | - The increase in net sales was driven by organic sales growth of $19.5 million (16.9%), partially offset by a $10.6 million (9.2%) reduction from the divestiture of the Ties and Chemtec businesses and the exit of the Bridge product line[81] - Other income of $3.5 million in Q1 2024 was primarily due to a gain on the sale of the company's former joint venture facility in Magnolia, Texas[85] Results of Operations - Segment Analysis The Rail segment saw a significant 28.3% increase in sales to $82.6 million, driving its operating profit up by 183.8% to $6.8 million, while the Infrastructure Solutions segment's sales decreased by 18.4% to $41.7 million, resulting in an increased operating loss of $1.4 million | Segment Performance (Q1 2024 vs Q1 2023) | Net Sales | % Change | Segment Operating Profit (Loss) | % Change | | :--- | :--- | :--- | :--- | :--- | | Rail, Technologies, and Services | $82.6M | +28.3% | $6.8M | +183.8% | | Infrastructure Solutions | $41.7M | -18.4% | $(1.4)M | -291.3% | - The Rail segment's sales growth was driven by higher organic sales of $18.9 million (29.4%), particularly in Rail Products and Technology Services and Solutions[89] - The Infrastructure segment's sales decline was primarily attributable to the divestiture of Chemtec and the Bridge product line exit, which together decreased sales by $9.9 million[93] Liquidity and Capital Resources As of March 31, 2024, the company had total available funding capacity of $53.2 million, consisting of $3.1 million in cash and $50.1 million available under its revolving credit facility, with net cash used in operating activities shifting to $21.9 million due to working capital needs | Available Funding Capacity (March 31, 2024) | Amount (In thousands) | | :--- | :--- | | Cash and cash equivalents | $3,148 | | Net availability under revolving credit facility | $50,071 | | Total available funding capacity | $53,219 | - The change in operating cash flow was largely driven by accounts receivable, which was a use of cash of $4.0 million in Q1 2024 compared to a source of cash of $26.2 million in Q1 2023[102] Backlog Total company backlog was $222.3 million as of March 31, 2024, a decrease from $259.9 million a year prior, attributed to $12.1 million from divested businesses and a discontinued product line, with the remainder related to the timing of large orders | Backlog by Segment (In thousands) | Mar 31, 2024 | Mar 31, 2023 | | :--- | :--- | :--- | | Rail, Technologies, and Services | $86,038 | $113,593 | | Infrastructure Solutions | $136,223 | $146,288 | | Total backlog | $222,261 | $259,881 | Quantitative and Qualitative Disclosures about Market Risk This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable to a smaller reporting company[119] Controls and Procedures As of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during Q1 2024 - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[120] - No changes occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[121] PART II. Other Information Legal Proceedings The company is subject to various legal proceedings, notably its potential responsibility in the Portland Harbor Superfund Site cleanup, though management does not currently believe these matters will have a material adverse effect on financial condition - 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 to $1.7 billion, though the company's ultimate liability cannot be predicted at this time[68] - Management believes that the ultimate resolution of pending legal actions will not have a material adverse effect on the company's financial position or liquidity as of March 31, 2024[69] Risk Factors This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable to a smaller reporting company[124] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2024, the company repurchased 51,217 shares at an average price of $23.80 per share, with 16,555 shares purchased under the publicly announced program, leaving approximately $12.3 million available for future repurchases | Share Repurchases (Q1 2024) | Value | | :--- | :--- | | Total shares purchased | 51,217 | | Average price paid per share | $23.80 | | Shares purchased under public plan | 16,555 | | Approx. value remaining under plan | $12,303 thousand | - On March 3, 2023, the Board of Directors authorized a share repurchase program of up to $15.0 million of the Company's common shares, effective until February 2026[128] Other Information During the fiscal quarter ended March 31, 2024, none of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the first quarter of 2024[128] Exhibits This section provides an index of the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files