# Foster L B Co: Form 10-Q for the period ended Mar 31, 2022

- Company: [Foster L B Co](/companies/fstr.md) (CIK 352825)
- Form: 10-Q
- Filed: 2022-05-10
- Accepted by EDGAR: May 10, 2022, 10:30 ET
- Period: 2022-03-31
- Accession: 0000352825-22-000014
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/352825/000035282522000014/fstr-20220331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/352825/000035282522000014/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $98.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2022-01-01 to 2022-03-31 | $82.3m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2022-01-01 to 2022-03-31 | $16.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2022-01-01 to 2022-03-31 | $17.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-01-01 to 2022-03-31 | −$2.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-01-01 to 2022-03-31 | $370.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | −$508.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | −$1.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-01-01 to 2022-03-31 | −$0.15 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-01-01 to 2022-03-31 | −$0.15 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-01-01 to 2022-03-31 | 10,685,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Capital expenditure | 3 months, 2022-01-01 to 2022-03-31 | $1.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2022-01-01 to 2022-03-31 | $397.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-03-31 | $6.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-03-31 | $187.1m | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $347.4m | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $89.8m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2022-03-31 | $181.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 34,237 characters.

### (Dollars in thousands, except share data)

### Forward-Looking Statements

*This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”). Forward-looking statements provide management’s current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are based on management’s current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company’s expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: the COVID-19 pandemic, and any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments; volatility in the prices of oil and natural gas and the related impact on the midstream energy markets, which could result in cost mitigation actions, including shutdowns or furlough periods; a continuation or worsening of the adverse economic conditions in the markets we serve, whether as a result of the current COVID-19 pandemic, including its impact on labor markets, supply chains, and other inflationary costs, travel and demand for oil and gas, the continued deterioration in the prices for oil and gas, governmental travel restrictions, project delays, and budget shortfalls, or otherwise; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a continuing decrease in freight or transit rail traffic, including as a result of the ongoing COVID-19 pandemic; environmental matters, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the recent dispositions of the Piling and IOS Test and Inspection Services businesses and acquisition of the LarKen Precast business and to realize anticipated benefits; costs of and impacts associated with shareholder activism; continued customer restrictions regarding the on-site presence of third party providers due to the COVID-19 pandemic; the timeliness and availability of materials from our major suppliers, including any continuation or worsening of the disruptions in the supply chain experienced as a result of the COVID-19 pandemic, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers’ concerns about conflict minerals; labor disputes; cyber-security risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation; the continuing effectiveness of our ongoing implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, and reforms regarding the use of LIBOR as a benchmark for establishing applicable interest rates; the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union; geopolitical conditions, including the conflict in Ukraine; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the loss of future revenues from current customers; and risks inherent in litigation and the outcome of litigation and product warranty claims. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2021, or as updated and/or amended by our other current or periodic filings with the Securities and Exchange Commission.*

*The forward-looking statements in this report are made as of the date of this report and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by the federal securities laws.*

### General Overview and Business Update

L.B. Foster Company is a global solutions provider of engineered, manufactured products and services that builds and supports infrastructure. The Company’s innovative engineering and product development solutions address the safety, reliability, and performance needs of its customers’ most challenging requirements. The Company maintains locations in North America, South America, Europe, and Asia.

While the Company experienced a year over year decline in overall net sales, results for the quarter ended March 31, 2022 reflect an increase in overall sales when adjusted for the divestiture of the Piling Products division in September 2021. The Company continued to experience inflationary pressures which impacted results. The first quarter has historically been its lowest quarter for sales due to the seasonality for the Company, however, orders and backlog levels for the quarter ended March 31, 2022, are indicative of seasonal increases looking to the second quarter, which has historically been stronger.

Net sales for the first quarter were $98,794, a $17,286, or 14.9%, decrease versus the prior year quarter. The now divested Piling Products division attributed $20,797 of the year over year sales decline. Net sales increased in the Precast Concrete Products segment by $2,332 and Steel Products and Measurement segment, as adjusted to exclude the Piling Products division, by $3,701, which was partially offset by a $2,522 decrease in Rail, Technologies, and Services segment sales.

Gross profit for the three months ended March 31, 2022 was $16,447, a $2,383 decrease, or 12.7%, from the prior year, attributable to all three of the Company’s segments. However, the 16.6% consolidated gross profit margin increased by 40 basis points when compared to the prior year quarter, and the Company is generally seeing signs of stability in its margins within the Rail, Technologies, and Services segment, despite continued inflationary pressures experienced. Gross profit decreased in the Rail, Technologies, and Services segment by $277, driven by the $2,522 decrease in sales. Rail, Technologies, and Services gross profit margins increased 40 basis points due to increased sales in its higher margin Global Friction Management and Technology Services and Solutions business units which were partially offset by the lower margin Rail Products business unit. The Precast Concrete Products segment gross profit decreased $44, or 1.8%, despite increased sales volumes. Precast Concrete Products segment gross profit margin was reduced by 330 basis points due to raw material and labor inflation and disruption, coupled with a shortage of engineering services to support production design certifications, and is the segment most significantly impacted by these market conditions. In the Steel Products and Measurement segment, gross profit declined from the prior year by $2,062. This decline was primarily attributable to the sale of the Piling Products division by $1,199 and also due to inflationary pressure, particularly in the Bridge Products division. Steel Products and Measurement gross profit margin was down 220 basis points compared to the prior year. The Company continues to be proactive in executing actions to mitigate inflationary pressures experienced, particularly in the Precast Concrete Products and Steel Products and Measurement segments where margins have been most adversely impacted.

Selling and administrative expenses for the three months ended March 31, 2022 decreased by $728, or 4.0%, from the prior year, primarily driven by decreases in expenses associated with the sale of the Piling Products division. Selling and administrative expenses as a percent of net sales were 17.5% versus 15.5% in the prior year quarter, a 200 basis points increase, due primarily to lower sales volume and increased travel expenses in the first quarter of 2022 versus the first quarter of 2021. Other income - net for the three months ended March 31, 2022 was $563 while Other expense - net was $59 in the prior year quarter, primarily due to $514 in insurance proceeds received in the current year quarter.

The Company’s effective income tax rate for the three months ended March 31, 2022 was 24.3%, compared to 20.2% in the prior year quarter. The Company’s effective income tax rate for the quarter ended March 31, 2022 differed from the federal statutory rate of 21% primarily due to state income taxes, nondeductible expenses, and research tax credits.

Net loss for the three months ended March 31, 2022 attributable to L.B. Foster Company was $1,566, or $0.15 per diluted share, an increased loss of $308, or $0.03 per diluted share, from the prior year. The loss was primarily driven by lower volume and inflationary pressure, which was partially offset by reductions in selling and administrative expense and insurance proceeds received in the current year quarter.

The Company’s consolidated backlog(a) was $244,618 as of December 31, 2021, a decrease of $27,326, or 10.0%, from the prior year, with the divested Piling Products division contributing $32,004 to the year over year decline. The Rail, Technologies, and Services and Precast Concrete Product segments reported a $457 and $6,595 backlog increase versus the prior year quarter, respectively, while the Steel Products and Measurement segment, adjusted for the Piling Products divestiture, reported a decrease of $2,374 versus the prior year quarter. Sequentially, consolidated backlog(a) increased $34,429, or 16.4% from December 31, 2021, with reported increases of $26,345, $3,733, and $4,351 in the Rail, Technologies, and Services, Precast Concrete Products, and Steel Products and Measurement segments, respectively. Order levels(a) for three months ended March 31, 2022, when adjusted for the Piling Products sale, increased by $20,364, or 17.7% from the prior year quarter. The Company anticipates that strong order and backlog levels are indicative of a seasonal activity ramp up when considering its outlook for the second quarter of 2022, historically its strongest quarter.

The current inflationary cost environment is expected to continue to put pressure on margins across our businesses throughout 2022, although the Company has seen signs of stabilization in certain areas of business during the first quarter of 2021. Actions to mitigate these impacts as much as possible are ongoing, and are anticipated to take hold and have a larger impact as 2022 progresses. In addition, the Company continues to take proactive steps to manage disruptions in raw materials, labor, supply chain, service partners, and other lingering COVID-19 related effects in an attempt to mitigate their adverse impact as much as possible. With the federal infrastructure support programs announced in 2020 and 2021, such as the U.S. Infrastructure Investment and Jobs Act passed in November 2021, the Company is maintaining its optimistic outlook regarding longer-term trends in the North American freight and transit markets given supply chain and transportation needs coupled with expected government-subsidized investment. The Company believes that many of its businesses will continue to directly benefit from infrastructure investment activity. Additionally, with the proceeds from the Piling division divestiture, coupled with the additional flexibility and capacity resulting from the amendment and extension of our credit agreement in August 2021, the Company believes that it has significant capacity to pursue organic and acquisitive growth opportunities in 2022 and beyond.

*(a) The Company defines new orders as a contractual agreement between the Company and a third-party in which the Company will, or has the ability to, satisfy the performance obligations of the promised products or services under the terms of the agreement. The Company defines backlog as contractual commitments to customers for which the Company’s performance obligations have not been met, including with respect to new orders and contracts for which the Company has not begun any performance. Management utilizes new orders and backlog to evaluate the health of the industries in which the Company operates, the Company’s current and future results of operations and financial prospects, and strategies for business development. The Company believes that new orders and backlog are useful to investors as supplemental metrics by which to measure the Company’s current performance and prospective results of operations and financial performance.*

### Results of the Quarter

| Net Sales: | Three Months Ended March 31, 2022 2021 | Percent Increase/ (Decrease) 2022 vs. 2021 | Percent of Total Net Sales Three Months Ended March 31, 2022 2021 |
| --- | ---: | ---: | ---: |
| Rail, Technologies, and Services | $63,710 $66,232 | (3.8%) | 64.5% 57.1% |
| Precast Concrete Products | 15,010 12,678 | 18.4 | 15.2 10.9 |
| Steel Products and Measurement | 20,074 37,170 | (46.0) | 20.3 32.0 |
| Total net sales | $98,794 $116,080 | (14.9%) | 100.0% 100.0% |
|  | Three Months Ended March 31, | Percent Increase/ (Decrease) | Gross Profit Percentage Three Months Ended March 31, |
|  | 2022 2021 | 2022 vs. 2021 | 2022 2021 |
| Gross Profit: |  |  |  |
| Rail, Technologies, and Services | $12,528 $12,805 | (2.2%) | 19.7% 19.3% |
| Precast Concrete Products | 2,445 2,489 | (1.8) | 16.3 19.6 |
| Steel Products and Measurement | 1,474 3,536 | (58.3) | 7.3 9.5 |
| Total gross profit | $16,447 $18,830 | (12.7%) | 16.6% 16.2% |
|  | Three Months Ended March 31, | Percent Increase/ (Decrease) | Percent of Total Net Sales Three Months Ended March 31, |
|  | 2022 2021 | 2022 vs. 2021 | 2022 2021 |
| Expenses: |  |  |  |
| Selling and administrative expenses | $17,298 $18,026 | (4.0%) | 17.5% 15.5% |
| Amortization expense | 1,436 1,465 | (2.0) | 1.5 1.3 |
| Operating loss | (2,287) (661) | 246.0 | (2.3) (0.6) |
| Interest expense - net | 370 871 | (57.5) | 0.4 0.8 |
| Other (income) expense - net | (563) 59 | \*\* | (0.6) 0.1 |
| Loss before income taxes | (2,094) (1,591) | 31.6 | (2.1) (1.4) |
| Income tax benefit | (508) (321) | 58.3 | (0.5) (0.3) |
| Net loss | $(1,586) $(1,270) | 24.9% | (1.6%) (1.1%) |
| Net loss attributable to noncontrolling interest | (20) (12) | \*\* | (0.0) (0.0) |
| Net loss attributable to L.B. Foster Company | $(1,566) $(1,258) | 24.5% | (1.6%) (1.1%) |

*\*\* Results of the calculation are not considered meaningful for presentation purposes.*

### Rail, Technologies, and Services

|  | Three Months Ended March 31, 2022 | 2021 | (Decrease)/Increase 2022 vs. 2021 | Percent (Decrease)/Increase 2022 vs. 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $63,710 | $66,232 | $(2,522) | (3.8%) |
| Gross profit | $12,528 | $12,805 | $(277) | (2.2%) |
| Gross profit percentage | 19.7% | 19.3% | 0.4% | 1.7% |
| Segment operating profit | $1,039 | $2,225 | $(1,186) | (53.3%) |
| Segment operating profit percentage | 1.6% | 3.4% | (1.8%) | (52.9%) |

#### First Quarter 2022 Compared to First Quarter 2021

The Rail, Technologies, and Services segment sales for the three months ended March 31, 2022 decreased by $2,522, or 3.8%, compared to the prior year quarter. The decrease in sales was driven by the Rail Products business unit, which declined by $3,938, or 9.0%, offsetting modest sales increases in both the Global Friction Management and Technology Services and Solutions business units. The decrease in the Rail Products business unit was driven by decreased volumes and the timing of shipments versus the prior year quarter. The sales increase in the Global Friction Management business unit is due to strength in domestic markets served as well as increased sales in the United Kingdom, while Technology Services sales drove the increase in the Technology Services and Solutions business unit.

The Rail, Technologies, and Services segment gross profit decreased by $277, or 2.2%, from the prior year quarter. The decrease was driven by overall lower sales volumes. However, segment gross profit margins increased by 40 basis points as a result of stronger sales in the higher margin Global Friction Management and Technology Services and Solutions business units, versus the lower-margin Rail Products businesses. Operating profit was $1,039, a $1,186 decrease over the prior year quarter, due in part to lower overall gross profit levels and increases in selling and administrative expenses.

During the current quarter, the Rail, Technologies, and Services segment had an increase in new orders of 33.1% compared to the prior year period, driven by improvements in all business units. Backlog as of March 31, 2022 was nearly flat versus March 31, 2021 at $122,918, an increase of $457, or 0.4%. Backlog remains strong, and was above pre-pandemic levels as of March 31, 2022.

### Precast Concrete Products

|  | Three Months Ended March 31, 2022 | 2021 | Increase/(Decrease) 2022 vs. 2021 | Percent Increase/(Decrease) 2022 vs. 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $15,010 | $12,678 | $2,332 | 18.4% |
| Gross profit | $2,445 | $2,489 | $(44) | (1.8%) |
| Gross profit percentage | 16.3% | 19.6% | (3.3%) | (17.0%) |
| Segment operating loss | $(791) | $(112) | $(679) | (606.3%) |
| Segment operating loss percentage | (5.3)% | (0.9%) | (4.4%) | (498.1%) |

#### First Quarter 2022 Compared to First Quarter 2021

The Precast Concrete Products segment sales for the three months ended March 31, 2022 increased by $2,332, or 18.4%, compared to the prior year quarter, which is a continued reflection of the strong demand environment in the southern United States market served.

Precast Concrete Products gross profit decreased by $44, or 1.8%, from the prior year quarter. The decline was attributable to continued inflationary pressures experienced in the business unit, and, to a lesser extent, manufacturing inefficiencies due to supply chain disruption. Segment gross profit margin declined by 330 bps for the first quarter of 2022 when compared to the prior year quarter is principally attributable to continued higher raw material and labor costs, coupled with production disruptions. Operating loss for the first quarter of 2022 increased by $679 when compared to the prior year quarter, due in part to margin degradation and increases in selling and administrative costs.

During the quarter, the Precast Concrete Products segment had a decrease in new orders of 37.8% compared to the prior year quarter; however, order levels remained consistent with those of recent quarters. Backlog as of March 31, 2022 was $72,369, an increase of $6,595, or 10.0%, from March 31, 2021, nearing double pre-pandemic levels.

### Steel Products and Measurement

|  | Three Months Ended March 31, 2022 | 2021 | Decrease 2022 vs. 2021 | Percent Decrease 2022 vs. 2021 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $20,074 | $37,170 | $(17,096) | (46.0)% |
| Gross profit | $1,474 | $3,536 | $(2,062) | (58.3)% |
| Gross profit percentage | 7.3% | 9.5% | (2.2)% | (22.8)% |
| Segment operating loss | $(2,148) | $(928) | $(1,220) | (131.5)% |
| Segment operating loss percentage | (10.7)% | (2.5)% | (8.2)% | (328.4)% |

#### First Quarter 2022 Compared to First Quarter 2021

The Steel Products and Measurement segment sales for the three months ended March 31, 2022 decreased by $17,096, or 46.0%, compared to the prior year quarter. The decrease in sales for the first quarter of 2022 was attributable to the $20,797 decline in year over year sales from the Piling Products division, which was divested September 2021. The decline was partially offset by increases in Fabricated Steel Products, excluding the divested Piling Products division, of $2,008 and Coatings and Measurement of $1,693.

Steel Products and Measurement gross profit decreased by $2,062, or 58.3%, from the prior year quarter. The gross profit margin declined 220 basis points to 7.3%, as a result of higher raw material costs for bridge products and unfavorable manufacturing efficiencies in Coatings and Measurement business unit. The segment loss was $2,148, an increased loss of $1,220 from the prior year quarter. Selling and administrative expenses incurred by the segment decreased by $895 compared to the prior year quarter, primarily attributable to the Piling Products divestiture.

During the quarter, the Steel Products and Measurement segment new orders decreased by $11,288, or 31.2% compared to the prior year quarter, driven by a $20,575 decline from the divested Piling Products division. This decrease was partially offset by improvements in both Fabricated Steel Products, excluding the divested Piling Products division, and Coatings and Measurement. Backlog as of March 31, 2022 was $49,331, a decrease of $34,378, or 41.1%, from March 31, 2021 driven primarily by Fabricated Steel Products, with the decrease in backlog primarily related to the divested Piling Products division representing $32,004 of the decrease. The decline was partially offset by an 57.6% increase in Coatings and Measurement backlog compared to March 31, 2021.

### Other

### Segment Backlog

Total Company backlog is summarized by business segment in the following table for the periods indicated:

|  | 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 |

The backlog for Steel Products and Measurement includes $32,004 related to the divested Piling Products division as of March 31, 2021 in the above table.

The Company’s backlog represents the sales price of received customer purchase orders and any contracts for which the performance obligations have not been met, and therefore are precluded from revenue recognition. Although the Company believes that the orders included in backlog are firm, customers may cancel or change their orders with limited advance notice; however, these instances have been rare. Backlog should not be considered a reliable indicator of the Company’s ability to achieve any particular level of revenue or financial performance. While a considerable portion of the Company’s business is backlog-driven, certain product lines within the Company are not driven by backlog as the orders are fulfilled shortly after they are received.

### Liquidity and Capital Resources

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility, which provides for a total commitment of up to $130,000. The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, and payments related to the Union Pacific Railroad Settlement. The Company’s total debt was $35,611 and $31,251 as of March 31, 2022 and December 31, 2021, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity, subject to covenant restrictions, as of March 31, 2022:

|  | March 31, 2022 |  |
| --- | ---: | ---: |
| Cash and cash equivalents |  | $6,239 |
| Credit agreement: |  |  |
| Total availability under the credit agreement | 130,000 |  |
| Outstanding borrowings on revolving credit facility | (35,496) |  |
| Letters of credit outstanding | (636) |  |
| Net availability under the revolving credit facility |  | 93,868 |
| Total available funding capacity |  | $100,107 |

The Company’s cash flows are impacted from period to period by fluctuations in working capital. While the Company places an emphasis on working capital management in its operations, factors such as its contract mix, commercial terms, customer payment patterns, and market conditions as well as seasonality may impact its working capital. The Company regularly assesses its receivables and contract assets for collectability, and provides allowances for credit losses where appropriate. The Company believes that its reserves for credit losses are appropriate as of March 31, 2022, but adverse changes in the economic environment and adverse financial conditions of its customers resulting from, among other things, the COVID-19 pandemic, may impact certain of its customers’ ability to access capital and pay the Company for its products and services, as well as impact demand for its products and services.

The changes in cash and cash equivalents for the three months ended March 31, 2022 and 2021 were as follows:

|  | Three Months Ended March 31, 2022 | 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) |
| Effect of exchange rate changes on cash and cash equivalents | 30 | (206) |
| Net cash used in discontinued operations | — | (184) |
| Net decrease in cash and cash equivalents | $(4,133) | $(2,549) |

### Cash Flow from Operating Activities

During the three months ended March 31, 2022, cash flows used in operating activities were $7,636, compared to cash flows provided by continuing operating activities of $7,614 during the prior year to date period. For the three months ended March 31, 2022, the net loss and adjustments to net loss from continuing operating activities provided $1,408, compared to $2,310 in the 2021 period. Working capital and other assets and liabilities used $9,044 in the current period, compared to providing $5,304 in the prior year period.

The Company’s calculation for days sales outstanding at March 31, 2022 and December 31, 2021 was 46 and 45 days, respectively, and the Company believes it has a high quality receivables portfolio.

### Cash Flow from Investing Activities

Capital expenditures for the three months ended March 31, 2022 and 2021 were $1,764 and $1,327, respectively. The current period expenditures primarily relate to the implementation of the enterprise resource planning system at additional Company divisions and general plant and operational improvements throughout the Company. Expenditures for the three months ended March 31, 2021 primarily relate to the expansion of the Precast Concrete Products business line in Texas.

### Cash Flow from Financing Activities

During the three months ended March 31, 2022 and 2021, the Company had an increase in outstanding debt of $4,409 and decrease of $8,295, respectively. The increase in debt for the three months ended March 31, 2022 was the result of funding working capital and other assets and liabilities, while the decrease in 2021 was primarily attributable to the utilization of excess cash generated through operating activities. Treasury stock acquisitions of $397 and $547 for the three months ended March 31, 2022 and 2021, respectively, represent stock repurchases from employees to satisfy their income tax withholdings in connection with the vesting of stock awards.

### Financial Condition

As of March 31, 2022, the Company had $6,239 in cash and cash equivalents. The Company’s cash management priority continues to be short-term maturities and the preservation of its principal balances. As of March 31, 2022, approximately $5,931 of the Company’s cash and cash equivalents were held in non-domestic bank accounts. The Company principally maintains its cash and cash equivalents in accounts held by major banks and financial institutions.

The Company’s principal uses of cash in recent years have been to fund its operations, including capital expenditures, and to service its indebtedness. The Company views its liquidity as being dependent on its results of operations, changes in working capital needs, and its borrowing capacity. As of March 31, 2022, its revolving credit facility had $93,868 of net availability, while the Company had $35,611 in total debt. The Company’s current ratio as of March 31, 2022 and December 31, 2021 was 2.08.

On August 13, 2021, the Company entered into the Credit Agreement, which increased the total commitments under the revolving credit facility to $130,000 from $115,000, extends the maturity from April 30, 2024 to August 13, 2026, and provides more favorable covenant terms. Borrowings under the Credit Agreement bear interest rates based upon either the base rate or LIBOR rate plus applicable margins. The Company believes that the combination of its cash and cash equivalents, cash generated from operations, and the capacity under its revolving credit facility should provide the Company with sufficient liquidity to provide the flexibility to operate the business in a prudent manner and enable the Company to continue to service its outstanding debt. For a discussion of the terms and availability of the credit facilities, please refer to Note 9 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company entered into forward starting LIBOR-based interest rate swaps with notional values totaling $50,000 and $20,000, effective February 1, 2017 and March 1, 2022, respectively, at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. During 2020, the Company dedesignated its cash flow hedges and accounted for the $50,000 tranche of interest rate swaps on a mark-to-market basis with changes in fair value recorded in current period earnings. During February 2022, the $50,000 tranche of interest rate swaps expired. As of March 31, 2022 the swap asset was $914 and as of December 31, 2021 the swap asset and liability were $175 and $159, respectively.

### Critical Accounting Policies

The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. When more than one accounting principle, or method of its application, is generally accepted, management selects the principle or method that, in its opinion, is appropriate in the Company’s specific circumstances. Application of these accounting principles requires management to reach opinions regarding estimates about the future resolution of existing uncertainties. As a result, actual results could differ from these estimates. In preparing these financial statements, management has reached its opinions regarding the best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality. A summary of the Company’s critical accounting policies and estimates is included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

## Controls and procedures

As filed, 2,219 characters.

### Evaluation of Disclosure Controls and Procedures

L.B. Foster Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2022. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of such date such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the chief executive officer, chief financial officer, or person performing such functions, as appropriate to allow timely decisions regarding disclosure.

### Changes in Internal Control Over Financial Reporting

There were no changes to our “internal control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2022, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

### PART II. OTHER INFORMATION

### (Dollars in thousands, except share data)

Filed May 10, 2022.
Source: SEC EDGAR, the filing index for accession 0000352825-22-000014. Last ingested by Listed: Nov 4, 2026, 19:02 ET. No prices; not investment advice.