Table of Contents

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 September 30, 20172022
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)
fstr-20220930_g1.gif
L.B. Foster Company
(Exact name of registrant as specified in its charter)
Pennsylvania25-1324733
(State of Incorporation)
(I. R. S. Employer
Identification No.)
415 Holiday Drive, Suite 100, Pittsburgh, Pennsylvania15220
(Address of principal executive offices)(Zip Code)
(412) 928-3400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01FSTRNASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer ☐☐  (Do not check if a smaller reporting company)Smaller reporting company☐ ☒
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by checkmarkcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No ☒
Indicate the number
As of November 1, 2022, there were 10,929,296 shares outstanding of each of the issuer’s classes ofregistrant’s common stock, as of the latest practicable date.par value $0.01 per share, outstanding.


ClassOutstanding as of October 31, 2017
Common Stock, Par Value $0.0110,340,576 Shares


L.B. FOSTER COMPANY AND SUBSIDIARIES
INDEX
Page
Page
PART I. Financial Information
Item 1. Financial Statements (unaudited):Statements:
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Operations
4
Condensed Consolidated Statements of Comprehensive (Loss) Income (Loss)
5
Condensed Consolidated Statements of Cash Flows
6
Condensed Consolidated Statements of Stockholders’ Equity
7
Notes to Condensed Consolidated Financial Statements
810
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2326
Item 3. Quantitative and Qualitative Disclosures about Market Risk
3736
Item 4. Controls and Procedures
37
37
Item 1. Legal Proceedings
38
Item 1A. Risk Factors
38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
38
Item 3. Defaults Upon Senior Securities
38
Item 4. Mine Safety Disclosures
38
Item 5. Other Information
38
Item 6. Exhibits
39
Signature
40



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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
  September 30,
2017		 December 31,
2016
  (Unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents $35,008
 $30,363
Accounts receivable - net 79,324
 66,632
Inventories - net 104,035
 83,243
Prepaid income tax 1,048
 14,166
Other current assets 9,986
 5,200
Total current assets 229,401
 199,604
Property, plant, and equipment - net 98,536
 103,973
Other assets:    
Goodwill 19,699
 18,932
Other intangibles - net 59,135
 63,519
Investments 151
 4,031
Other assets 2,242
 2,964
Total assets $409,164
 $393,023
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable $59,825
 $37,744
Deferred revenue 11,038
 7,597
Accrued payroll and employee benefits 10,353
 7,497
Accrued warranty 9,614
 10,154
Current maturities of long-term debt 9,887
 10,386
Other accrued liabilities 8,452
 8,953
Total current liabilities 109,169
 82,331
Long-term debt 128,398
 149,179
Deferred tax liabilities 11,044
 11,371
Other long-term liabilities 16,734
 16,891
Stockholders' equity:    
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at September 30, 2017 and December 31, 2016, 11,115,779; shares outstanding at September 30, 2017 and December 31, 2016, 10,340,576 and 10,312,625, respectively 111
 111
Paid-in capital 44,423
 44,098
Retained earnings 137,492
 133,667
Treasury stock - at cost, common stock, shares at September 30, 2017 and December 31, 2016, 775,203 and 803,154, respectively (18,662) (19,336)
Accumulated other comprehensive loss (19,545) (25,289)
Total stockholders' equity 143,819
 133,251
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $409,164
 $393,023

September 30,
2022		December 31,
2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$4,943 $10,372 
Accounts receivable - net (Note 6)80,672 55,911 
Contract assets - net (Note 4)31,963 36,179 
Inventories - net (Note 7)85,146 62,871 
Other current assets13,664 14,146 
Total current assets216,388 179,479 
Property, plant, and equipment - net (Note 8)83,957 58,222 
Operating lease right-of-use assets - net (Note 9)12,701 15,131 
Other assets:
Goodwill (Note 5)33,430 20,152 
Other intangibles - net (Note 5)29,195 31,023 
Deferred tax assets (Note 12)36,272 37,242 
Other assets1,249 1,346 
TOTAL ASSETS$413,192 $342,595 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$51,231 $41,411 
Deferred revenue22,157 13,411 
Accrued payroll and employee benefits8,820 9,517 
Current portion of accrued settlement (Note 16)8,000 8,000 
Current maturities of long-term debt (Note 10)82 98 
Other accrued liabilities14,811 13,757 
Total current liabilities105,101 86,194 
Long-term debt (Note 10)98,837 31,153 
Deferred tax liabilities (Note 12)2,817 3,753 
Long-term portion of accrued settlement (Note 16)12,000 16,000 
Long-term operating lease liabilities (Note 9)10,001 12,279 
Other long-term liabilities8,735 9,606 
Stockholders’ equity:
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at September 30, 2022 and December 31, 2021, 11,115,779; shares outstanding at September 30, 2022 and December 31, 2021, 10,731,555 and 10,670,343, respectively111 111 
Paid-in capital42,608 43,272 
Retained earnings167,100 168,733 
Treasury stock - at cost, 384,224 and 445,436 common stock shares at September 30, 2022 and December 31, 2021, respectively(8,351)(10,179)
Accumulated other comprehensive loss(26,206)(18,845)
Total L.B. Foster Company stockholders’ equity175,262 183,092 
Noncontrolling interest439 518 
Total stockholders’ equity175,701 183,610 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$413,192 $342,595 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Sales of goods$117,302 $112,813 $318,307 $351,668 
Sales of services12,713 17,240 42,017 48,987 
Total net sales130,015 130,053 360,324 400,655 
Cost of goods sold93,737 93,521 258,913 292,733 
Cost of services sold13,181 14,256 38,574 40,655 
Total cost of sales106,918 107,777 297,487 333,388 
Gross profit23,097 22,276 62,837 67,267 
Selling and administrative expenses22,618 20,056 59,310 57,849 
Amortization expense1,599 1,462 4,454 4,397 
Operating (loss) profit(1,120)758 (927)5,021 
Interest expense - net993 722 1,747 2,454 
Other expense (income) - net168 (2,880)(1,096)(2,751)
(Loss) income from continuing operations before income taxes(2,281)2,916 (1,578)5,318 
Income tax (benefit) expense from continuing operations(176)676 137 1,494 
Net (loss) income from continuing operations(2,105)2,240 (1,715)3,824 
Net loss attributable to noncontrolling interest(28)(30)(82)(64)
(Loss) income from continuing operations attributable to L.B. Foster Company(2,077)2,270 (1,633)3,888 
Discontinued operations:
Income from discontinued operations before income taxes— 72 — 72 
Income tax benefit from discontinued operations— — — — 
Income from discontinued operations— 72 — 72 
Net (loss) income attributable to L.B. Foster Company$(2,077)$2,342 $(1,633)$3,960 
Basic (loss) earnings per common share:
From continuing operations$(0.20)$0.21 $(0.16)$0.36 
From discontinued operations— 0.01 — 0.01 
Basic (loss) earnings per common share$(0.20)$0.22 $(0.16)$0.37 
Diluted (loss) earnings per common share:
From continuing operations$(0.20)$0.21 $(0.16)$0.36 
From discontinued operations— 0.01 — 0.01 
Diluted (loss) earnings per common share$(0.20)$0.22 $(0.16)$0.37 

  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
  (Unaudited) (Unaudited)
Sales of goods $103,058
 $100,293
 $318,414
 $326,278
Sales of services 28,434
 14,351
 76,640
 50,670
Total net sales 131,492
 114,644
 395,054
 376,948
Cost of goods sold 82,460
 81,674
 256,152
 260,705
Cost of services sold 22,667
 13,167
 63,549
 44,667
Total cost of sales 105,127
 94,841
 319,701
 305,372
Gross profit 26,365
 19,803
 75,353
 71,576
Selling and administrative expenses 20,218
 19,807
 60,023
 65,941
Amortization expense 1,764
 1,763
 5,218
 7,818
Asset impairments —
 6,946
 —
 135,884
Interest expense 2,026
 1,520
 6,315
 4,342
Interest income (56) (50) (166) (157)
Equity in (income) loss of nonconsolidated investments (50) 263
 5
 946
Other income (551) (1,085) (564) (263)
  23,351
 29,164
 70,831
 214,511
Income (loss) before income taxes 3,014
 (9,361) 4,522
 (142,935)
Income tax (benefit) expense (208) (3,379) 698
 (42,125)
Net income (loss) $3,222
 $(5,982) $3,824
 $(100,810)
Basic earnings (loss) per common share $0.31
 $(0.58) $0.37
 $(9.82)
Diluted earnings (loss) per common share $0.31
 $(0.58) $0.37
 $(9.82)
Dividends paid per common share $—
 $0.04
 $—
 $0.12

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (LOSS)
(Unaudited)
(In thousands)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Net (loss) income$(2,105)$2,312 $(1,715)$3,896 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment(4,341)(1,610)(8,933)(649)
Unrealized gain (loss) on cash flow hedges, net of tax (expense) benefit of $(217), $11, $(455),and $11, respectively632 (33)1,330 (33)
Cash flow hedges reclassified to earnings, net of tax expense of $0, $99, $66, and $295, respectively— 136 93 409 
Reclassification of pension liability adjustments to earnings, net of tax expense of $8, $23, $40, and $71, respectively*50 92 149 274 
Total comprehensive (loss) income(5,764)897 (9,076)3,897 
Less comprehensive (loss) income attributable to noncontrolling interest:
Net loss attributable to noncontrolling interest(28)(30)(82)(64)
Foreign currency translation adjustment(21)(31)3 (10)
Amounts attributable to noncontrolling interest(49)(61)(79)(74)
Comprehensive (loss) income attributable to L.B. Foster Company$(5,715)$958 $(8,997)$3,971 

  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
  (Unaudited) (Unaudited)
Net income (loss) $3,222
 $(5,982) $3,824
 $(100,810)
Other comprehensive income (loss), net of tax:        
Foreign currency translation adjustment 2,412
 (1,431) 5,528
 (3,438)
Unrealized gain (loss) on cash flow hedges, net of tax expense (benefit) of $0, $88 and $0, ($815) 82
 137
 (119) (1,286)
Reclassification of pension liability adjustments to earnings, net of tax expense of $0, $38 and $0, $115* 114
 73
 335
 223
Other comprehensive income (loss) 2,608
 (1,221) 5,744
 (4,501)
Comprehensive income (loss) $5,830
 $(7,203) $9,568
 $(105,311)
*Reclassifications out of accumulated“Accumulated other comprehensive lossloss” for pension obligations are charged to selling“Selling and administrative expense.expenses” within the Condensed Consolidated Statements of Operations.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income$(1,715)$3,824 
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
Deferred income taxes(962)526 
Depreciation6,083 6,049 
Amortization4,454 4,397 
Equity in income of nonconsolidated investments(38)(5)
(Gain) loss on sales and disposals of property, plant, and equipment(214)30 
Stock-based compensation1,570 1,800 
Gain on asset divestitures(44)(2,741)
Change in operating assets and liabilities:
Accounts receivable(23,760)(6,384)
Contract assets(1,037)(3,321)
Inventories(21,571)(9,344)
Other current assets2,309 (469)
Other noncurrent assets2,468 2,063 
Accounts payable12,307 (892)
Deferred revenue7,493 6,046 
Accrued payroll and employee benefits(417)852 
Accrued settlement(4,000)(4,000)
Other current liabilities54 (3,461)
Other long-term liabilities(1,816)(1,780)
Net cash used in continuing operating activities(18,836)(6,810)
Net cash used in discontinued operating activities— (253)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property, plant, and equipment259 — 
Capital expenditures on property, plant, and equipment(4,559)(3,568)
Proceeds from asset divestitures8,800 22,707 
Acquisitions, net of cash acquired(58,561)(229)
Net cash (used in) provided by continuing investing activities(54,061)18,910 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt(128,771)(147,224)
Proceeds from debt197,926 134,705 
Debt issuance costs(182)(358)
Treasury stock acquisitions(405)(549)
Investment of noncontrolling interest— 396 
Net cash provided by (used in) continuing financing activities68,568 (13,030)
Effect of exchange rate changes on cash and cash equivalents(1,100)24 
Net decrease in cash and cash equivalents(5,429)(1,159)
Cash and cash equivalents at beginning of period10,372 7,564 
Cash and cash equivalents at end of period$4,943 $6,405 
Supplemental disclosure of cash flow information:
Interest paid$1,337 $2,205 
Income taxes (received) paid$(5,151)$1,215 


  Nine Months Ended
September 30,
  2017 2016
  (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) $3,824
 $(100,810)
Adjustments to reconcile net loss to cash provided (used) by operating activities:    
Deferred income taxes (648) (39,690)
Depreciation 9,705
 10,620
Amortization 5,218
 7,818
Asset impairments —
 135,884
Equity loss of nonconsolidated investments 5
 946
(Gain) loss on sales and disposals of property, plant, and equipment (347) 209
Share-based compensation 1,228
 875
Income tax deficiency from share-based compensation —
 124
Change in operating assets and liabilities    
Accounts receivable (11,899) 13,491
Inventories (19,336) 3,188
Other current assets (786) (379)
Prepaid income tax 12,569
 (6,436)
Other noncurrent assets 719
 117
Accounts payable 22,017
 (13,256)
Deferred revenue 3,339
 866
Accrued payroll and employee benefits 2,734
 (2,294)
Other current liabilities (763) 956
Other liabilities (63) (353)
Net cash provided by operating activities 27,516
 11,876
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from the sale of property, plant, and equipment 1,388
 923
Capital expenditures on property, plant, and equipment (5,335) (6,507)
Loans and capital contributions to equity method investment —
 (635)
Net cash used by investing activities (3,947) (6,219)

L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)

  Nine Months Ended
September 30,
  2017 2016
  (Unaudited)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayments of debt (113,119) (134,200)
Proceeds from debt 91,838
 101,075
Financing fees —
 (712)
Treasury stock acquisitions (103) (265)
Cash dividends on common stock paid to shareholders —
 (1,244)
Income tax deficiency from share-based compensation —
 (124)
Net cash used by financing activities (21,384) (35,470)
Effect of exchange rate changes on cash and cash equivalents 2,460
 152
Net increase (decrease) in cash and cash equivalents 4,645
 (29,661)
Cash and cash equivalents at beginning of period 30,363
 33,312
Cash and cash equivalents at end of period $35,008
 $3,651
Supplemental disclosure of cash flow information:    
Interest paid $5,599
 $3,485
Income taxes (received) paid $(11,233) $3,991

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands)
Three Months Ended September 30, 2022
Common
Stock		Paid-in
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other
Comprehensive Loss		Noncontrolling
Interest		Total Stockholders’
Equity
Balance, June 30, 2022$111 $42,201 $169,177 $(8,391)$(22,547)$488 $181,039 
Net loss— — (2,077)— — (28)(2,105)
Other comprehensive loss, net of tax:
Pension liability adjustment— — — — 50 — 50 
Foreign currency translation adjustment— — — — (4,341)(21)(4,362)
Unrealized derivative gain on cash flow hedges— — — — 632 — 632 
Issuance of 605 common shares, net of shares withheld for taxes— 20 — 40 — — 60 
Stock-based compensation— 387 — — — — 387 
Balance, September 30, 2022$111 $42,608 $167,100 $(8,351)$(26,206)$439 $175,701 

Three Months Ended September 30, 2021
Common
Stock		Paid-in
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other
Comprehensive Loss		Noncontrolling
Interest		Total Stockholders’
Equity
Balance, June 30, 2021$111 $43,650 $166,725 $(11,104)$(18,873)$383 $180,892 
Net income (loss)— — 2,342 — — (30)2,312 
Other comprehensive loss, net of tax:
Pension liability adjustment— — — — 92 — 92 
Foreign currency translation adjustment— — — — (1,579)(31)(1,610)
Unrealized derivative loss on cash flow hedges— — — — (33)— (33)
Cash flow hedges reclassified to earnings— — — — 136 — 136 
Issuance of 8,113 common shares, net of shares withheld for taxes— (189)— 187 — — (2)
Stock-based compensation— 587 — — — — 587 
Balance, September 30, 2021$111 $44,048 $169,067 $(10,917)$(20,257)$322 $182,374 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(Unaudited)
(Dollars in thousands)
Nine Months Ended September 30, 2022
Common
Stock		Paid-in
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other
Comprehensive Loss		Noncontrolling
Interest		Total Stockholders’
Equity
Balance, December 31, 2021$111 $43,272 $168,733 $(10,179)$(18,845)$518 $183,610 
Net loss— — (1,633)— — (82)(1,715)
Other comprehensive loss income, net of tax:
Pension liability adjustment— — — — 149 — 149 
Foreign currency translation adjustment— — — — (8,933)3 (8,930)
Unrealized derivative gain on cash flow hedges— — — — 1,330 — 1,330 
Cash flow hedges reclassified to earnings— — — — 93 — 93 
Issuance of 61,212 common shares, net of shares withheld for taxes— (2,234)— 1,828 — — (406)
Stock-based compensation— 1,570 — — — — 1,570 
Balance, September 30, 2022$111 $42,608 $167,100 $(8,351)$(26,206)$439 $175,701 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


























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L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)
(Unaudited)
(Dollars in thousands)
Nine Months Ended September 30, 2021
Common
Stock		Paid-in
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other
Comprehensive Loss		Noncontrolling
Interest		Total Stockholders’
Equity
Balance, December 31, 2020$111 $44,583 $165,107 $(12,703)$(20,268)$— $176,830 
Net income (loss)— — 3,960 — — (64)3,896 
Other comprehensive income, net of tax:
Pension liability adjustment— — — — 274 — 274 
Foreign currency translation adjustment— — — — (639)(10)(649)
Unrealized derivative loss on cash flow hedges— — — — (33)— (33)
Cash flow hedges reclassified to earnings— — — — 409 — 409 
Issuance of 114,288 common shares, net of shares withheld for taxes— (2,335)— 1,786 — — (549)
Stock-based compensation— 1,800 — — — — 1,800 
Investment of noncontrolling interest— — — — — 396 396 
Balance, September 30, 2021$111 $44,048 $169,067 $(10,917)$(20,257)$322 $182,374 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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L.B. FOSTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except share data)
Note 1. FINANCIAL STATEMENTSFinancial Statements
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 108 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principlesGAAP for complete financial statements. In the opinion of management, all estimates and adjustments (consisting of normal recurring accruals)accruals, unless otherwise stated herein) considered necessary for a fair presentation of the financial position and Condensed Consolidated Statements of Cash Flows of L.B. Foster Company and subsidiaries as of September 30, 2022 and December 31, 2021 and its Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive (Loss) Income, and Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021 have been included. However, actual results could differ from those estimates.estimates and changes in those estimates are recorded when known. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2022. The year-end Condensed Consolidated Balance Sheet as of December 31, 20162021 was derived from audited financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in theL.B. Foster Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2021. In this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” and the “Company” refer collectively to L.B. Foster Company and its consolidated subsidiaries.


Assets HeldReclassifications
Certain accounts in the prior year consolidated financial statements have been reclassified for Sale
comparative purposes principally to conform to the presentation of reporting segments in the current year period. Effective for the quarter and year ended December 31, 2021, the Company implemented operational changes in how its Chief Operating Decision Maker (“CODM”) manages its businesses, including resource allocation and operating decisions. As a result of these changes, the Company has three reporting segments, representing the individual businesses that are run separately under the new structure: Rail, Technologies, and Services; Precast Concrete Products; and Steel Products and Measurement. The Company classifies assets as heldhas revised the information for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year.  The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell.  See Note 7 Investments of the Notes to Condensed Consolidated Financial Statements containedall periods presented in this Quarterly Report on Form 10-Q for additional information.to reflect these reclassifications.


Recently Issued Accounting Standards
In May 2014,March 2020 and as clarified in January 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2014-09, “Revenue from Contracts with Customers2020-04, “Reference Rate Reform (Topic 606)”848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2014-09”2020-04”), which supersedesprovides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition”discontinuation of the London Interbank Offered Rate (“ASC 605”LIBOR”). ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expectsby another reference rate expected to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue, cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period.discontinued. The Company continues its project adoption plan by performing a detailed evaluation of contracts and sales orders with customers and assessing the impact that this standard will have on the Company’s results of operations, cash flows, financial position, and backlog. We have also been assessing the impact to internal controls over financial reporting and disclosure requirements. We regularly brief our Audit Committee on our overall project plan as well as our progress towards adoption. The Company will adopt this standard as of January 1, 2018 and anticipates using the modified retrospective approach at adoption as it relates to ASU 2014-09.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new accounting requirements include the accounting for, presentation of, and classification of leases. The guidance will result in most leases being capitalized as a right of use asset with a related liability on our balance sheets. The requirements of the new standardamendments are effective for annual reporting periods beginning afterall entities as of March 12, 2020 through December 15, 2018, and interim periods within those annual periods. The Company is in the process of analyzing the impact of ASU 2016-02 on our financial position. The Company has a significant number of operating leases, and, as a result, expects this guidance to have a material impact on its Condensed Consolidated Balance Sheet.31, 2022. The Company does not anticipate early adoption as it relates to ASU 2016-02.

In October 2016,expect the FASB issued ASU 2016-16, “Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory (Topic 740),” (“ASU 2016-16”) which will require an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU is effective on January 1, 2018 with early adoption permitted. The Company continues to evaluate the impact this standard will have on the Company’s financial statements but believes there will not be a material change once adopted. The Company will not elect early adoptionprovisions of ASU 2016-16.2020-04 to have a significant impact on its financial condition, results of operations, or cash flows.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715),” (“ASU 2017-07”) which improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. The guidance requires that the entity report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, and report the other components of net periodic pension cost and net

periodic postretirement benefit cost in the income statement separately from the service cost component and outside a subtotal of income from operations. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. The new standard will be effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. The Company is evaluating its implementation approach and assessing the impact of ASU 2017-07 on the presentation of operations.
Note 2. BUSINESS SEGMENTSBusiness Segments
The Company is a leading manufacturer and distributorglobal solutions provider of engineered, manufactured products and services for transportationthat builds and energy infrastructure withsupports 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 Europe.Asia. The Company is organized and evaluated by product group, which is the basis for identifying reportable segments. Each segment represents a revenue-producing componentCompany’s segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred, (b) whose operating results are regularly reviewed by the CODM, who uses such information to make decisions about resources to be allocated to the segments, and (c) for which separatediscrete financial information is produced internally that is subject to evaluation by the Company’s chief operating decision maker in deciding how to allocate resources. Each segment isavailable. Operating segments are evaluated based upon itson their segment profit contribution to the Company’s consolidated results. Other income and expenses, interest, income taxes, and certain other items are managed on a consolidated basis. The Company’s segment accounting policies are described in Note 2 Business Segments of the Notes to the Company’s Consolidated Financial Statements contained in its Annual Report on Form 10-K for the year-ended December 31, 2021.








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The following table illustrates the Company’s revenues and profits (losses)profit (loss) from operations of the Company by segment for the periods indicated:
Three Months Ended
September 30, 2022		Three Months Ended
September 30, 2021
Net SalesSegment Operating ProfitNet SalesSegment Operating Profit (Loss)
Rail, Technologies, and Services$77,350 $539 $73,942 $3,091 
Precast Concrete Products28,856 1,245 17,972 144 
Steel Products and Measurement23,809 303 38,139 (27)
Total$130,015 $2,087 $130,053 $3,208 
  Three Months Ended
September 30, 2017		 Nine Months Ended
September 30, 2017
  Net Sales Segment Profit Net Sales Segment Profit
Rail Products and Services $62,095
 $3,472
 $187,922
 $8,938
Construction Products 39,118
 3,387
 121,905
 9,156
Tubular and Energy Services 30,279
 2,298
 85,227
 1,774
Total $131,492
 $9,157
 $395,054
 $19,868

Nine Months Ended
September 30, 2022		Nine Months Ended
September 30, 2021
Net SalesSegment Operating Profit (Loss)Net SalesSegment Operating Profit (Loss)
Rail, Technologies, and Services$222,857 $5,576 $228,956 $10,970 
Precast Concrete Products67,477 329 50,723 1,175 
Steel Products and Measurement69,990 (1,083)120,976 (140)
Total$360,324 $4,822 $400,655 $12,005 
  Three Months Ended
September 30, 2016		 Nine Months Ended
September 30, 2016
  Net Sales Segment Profit (Loss) Net Sales Segment Profit (Loss)
Rail Products and Services $56,891
 $(2,047) $188,686
 $(26,474)
Construction Products 34,870
 1,356
 107,098
 5,748
Tubular and Energy Services 22,883
 (6,966) 81,164
 (111,876)
Total $114,644
 $(7,657) $376,948
 $(132,602)


Segment profit (loss) from operations, as shown above, include internal cost of capital charges for assets used inincludes allocated corporate operating expenses. Operating expenses related to corporate headquarter functions that directly support the segment at a rateactivity are allocated based on segment headcount, revenue contribution, or activity of generally 1% per month. There has been no change in the measurement of segment profit (loss)business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from operations since December 31, 2016. The internal cost of capital charges are eliminated during the consolidation process.segments.


The following table provides a reconciliation of reportable segment net profit (loss) from operations to the Company’s consolidated total:
total for the periods presented:
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Profit (loss) for reportable segments $9,157
 $(7,657) $19,868
 $(132,602)
Interest expense (2,026) (1,520) (6,315) (4,342)
Interest income 56
 50
 166
 157
Other income 551
 1,085
 564
 263
LIFO (expense) income (1,552) 917
 (1,733) 1,442
Equity in income (loss) of nonconsolidated investments 50
 (263) (5) (946)
Corporate expense, cost of capital elimination, and other unallocated charges (3,222) (1,973) (8,023) (6,907)
Income (loss) before income taxes $3,014
 $(9,361) $4,522
 $(142,935)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Operating profit for reportable segments$2,087 $3,208 $4,822 $12,005 
Interest expense - net(993)(722)(1,747)(2,454)
Other (expense) income - net(168)2,880 1,096 2,751 
Unallocated corporate expenses and other unallocated charges(3,207)(2,450)(5,749)(6,984)
(Loss) income from continuing operations before income taxes$(2,281)$2,916 $(1,578)$5,318 


The following table illustrates assets of the Company by segment:segment for the periods presented:
September 30,
2022		December 31,
2021
Rail, Technologies, and Services$165,651 $171,608 
Precast Concrete Products116,519 48,740 
Steel Products and Measurement64,830 58,377 
Unallocated corporate assets66,192 63,870 
Total$413,192 $342,595 
Note 3. Acquisitions and Divestitures
Skratch Enterprises Ltd.
On June 21, 2022, the Company acquired the stock of Skratch Enterprises Ltd. (“Skratch”) for $7,402, which is inclusive of deferred payments withheld by the Company of $1,228, to be paid over the next five years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement. Located in Telford, United Kingdom, Skratch offers a single-point supply solution model for clients, and enabling large scale deployments. Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring. Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail, Technologies, and Services segment.

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  September 30,
2017		 December 31,
2016
Rail Products and Services $198,761
 $174,049
Construction Products 88,542
 81,074
Tubular and Energy Services 100,046
 100,006
Unallocated corporate assets 21,815
 37,894
Total $409,164
 $393,023
VanHooseCo Precast LLC
On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast LLC (“VanHooseCo”), a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and traditional precast products for the industrial, commercial, and residential infrastructure markets. The Company acquired VanHooseCo for $52,203, net of cash acquired at closing, subject to the finalization of net working capital adjustments. An amount equal to $2,500 of the purchase price was deposited in an escrow account in order to cover breaches of representations and warranties. The acquisition agreement includes two employment agreements whereby principals have the ability to earn up to an additional $1,000 dependent upon the successful completion of the principals’ employment agreements. VanHooseCo has been included in the Company’s Precast Concrete Products segment.
3. GOODWILL AND OTHER INTANGIBLE ASSETSAcquisition Summary
Each transaction was accounted for under the acquisition method of accounting under U.S. GAAP which requires an acquiring entity to recognize, with limited exceptions, all of the assets acquired and liabilities assumed in a transaction at fair value as of the acquisition date. Goodwill primarily represents the value paid for each acquisition’s enhancement to the Company’s product and service offerings and capabilities, as well as a premium payment related to the ability to control the acquired assets, as well as the assembled workforce provided.

VanHooseCo contributed net sales of $6,353 and operating profit of $397 to the Company’s consolidated results for the period from August 12, 2022 through September 30, 2022.

The table below summarizes the Company’s results as though the VanHooseCo acquisition had been completed on January 1, 2022. Certain of VanHooseCo’s historical amounts were reclassified to conform to the Company’s financial presentation of operations, which included recording inventory and property, plant, and equipment at fair market value, to establish intangible assets, to remove deferred compensation expense, and to include interest expense for the additional borrowings. The following unaudited pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the VanHooseCo acquisition occurred on January 1, 2022 nor are they necessarily indicative of future consolidated results of operations. The Company has omitted the prior year interim period from the table below due to the acquired company being a privately-held entity with limited interim financial information.
Nine Months Ended
September 30,
2022
Net sales$385,824 
Net loss attributable to L.B. Foster Company(633)
Diluted loss per share
As reported$(0.16)
Pro forma$(0.06)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the VanHooseCo and Skratch acquisitions. Due to the timing of the acquisitions, the Company is in the process of measuring the fair value of assets acquired and liabilities assumed, including intangible assets, and values for the allocations shown in the tables below are preliminary.
Allocation of purchase priceVanHooseCoSkratch
Current assets, net of cash acquired on the acquisition date$10,825 $1,129 
Property, plant, and equipment30,001 174 
Goodwill9,674 5,549 
Other intangibles4,561 1,750 
Liabilities assumed(2,521)(1,200)
Total$52,540 $7,402 








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The following table summarizes the estimates of the fair values of the VanHooseCo and Skratch identifiable intangible assets acquired:
Identifiable intangible assetsVanHooseCoSkratch
Non-compete agreements$— 27 
Customer relationships1,537 1,349 
Trademarks and trade names2,697 374 
Favorable lease327 — 
Total$4,561 $1,750 

The Company made a preliminary allocation of the purchase price for the VanHooseCo and Skratch acquisitions as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. See Note 14 for a description of the fair value hierarchy.

Due to the timing of the acquisitions, values shown in the table above are preliminary. If new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement recognized for assets or liabilities assumed, the Company will retrospectively adjust the amounts recognized as of the acquisition date.
Divestiture Summary
On August 1, 2022, the Company divested the assets of its rail spikes and anchors track components business (“Track Components”) located in St-Jean-sur-Richelieu, Quebec, Canada. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments. The Track Components business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment. On September 24, 2021, the Company executed the sale of its Piling Products division for $23,902 in total proceeds. The sale included substantially all inventory held by the Company associated with the division. The Piling Products division was included in the Fabricated Steel business unit within the Steel Products and Measurement segment.
Note 4. Revenue
Revenue from products or services provided to customers over time accounted for 23.8% and 35.8% of revenue for the three months ended September 30, 2022 and 2021, respectively, and 27.0% and 29.7% of revenue for the nine months ended September 30, 2022 and 2021, respectively. The majority of revenue under these long-term agreements is recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts its performance to date under the terms of the contract. Revenue recognized over time using an input measure was $14,380 and $30,314 for the three months ended September 30, 2022 and 2021, respectively, and $53,791 and $79,109 for the nine months ended September 30, 2022 and 2021, respectively. A certain portion of the Company’s revenue recognized over time under these long-term agreements is recognized using an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements. Revenue recognized over time using an output measure was $16,520 and $16,262 for the three months ended September 30, 2022 and 2021, respectively, and $43,514 and $40,013 for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and December 31, 2021, the Company had contract assets of $31,963 and $36,179, respectively, that were recorded within the Condensed Consolidated Balance Sheets. As of September 30, 2022 and December 31, 2021, the Company had contract liabilities of $4,606 and $3,235, respectively, that were recorded in “Deferred revenue” within the Condensed Consolidated Balance Sheets.

The majority of the Company’s revenue is from products transferred and services rendered to customers at a point in time. Point in time revenue accounted for 76.2% and 64.2% of revenue for the three months ended September 30, 2022 and 2021, respectively, and 73.0% and 70.3% for nine months ended September 30, 2022 and 2021. The Company recognizes revenue at the point in time at which the customer obtains control of the product or service is performed, which is generally when the product title passes to the customer upon shipment or the service has been rendered to the customer. In limited cases, title does not transfer and revenue is not recognized until the customer has received the products at a physical location.










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The following table summarizes the Company’s net sales by major product and service category for the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Rail Products and Global Friction Management$69,161 $60,593 $191,228 $192,661 
Technology Services and Solutions8,189 13,349 31,629 36,295 
Rail, Technologies, and Services77,350 73,942 222,857 228,956 
Precast Concrete Buildings15,525 13,884 41,306 40,516 
Other Precast Concrete Products13,331 4,088 26,171 10,207 
Precast Concrete Products28,856 17,972 67,477 50,723 
Fabricated Steel Products15,250 30,512 45,821 100,233 
Coatings and Measurement8,559 7,627 24,169 20,743 
Steel Products and Measurement23,809 38,139 69,990 120,976 
Total net sales$130,015 $130,053 $360,324 $400,655 

Net sales by the timing of the transfer of products and performance of services was as follows for the periods presented:
Three Months Ended September 30, 2022
Rail, Technologies, and ServicesPrecast Concrete ProductsSteel Products and MeasurementTotal
Point in time$64,913 $13,331 $20,871 $99,115 
Over time12,437 15,525 2,938 30,900 
Total net sales$77,350 $28,856 $23,809 $130,015 
Three Months Ended September 30, 2021
Rail, Technologies, and ServicesPrecast Concrete ProductsSteel Products and MeasurementTotal
Point in time$54,470 $4,088 $24,919 $83,477 
Over time19,472 13,884 13,220 46,576 
Total net sales$73,942 $17,972 $38,139 $130,053 

Nine Months Ended September 30, 2022
Rail, Technologies, and ServicesPrecast Concrete ProductsSteel Products and MeasurementTotal
Point in time$179,951 $26,171 $56,897 $263,019 
Over time42,906 41,306 13,093 97,305 
Total net sales$222,857 $67,477 $69,990 $360,324 
Nine Months Ended September 30, 2021
Rail, Technologies, and ServicesPrecast Concrete ProductsSteel Products and MeasurementTotal
Point in time$178,225 $10,209 $93,099 $281,533 
Over time50,731 40,514 27,877 119,122 
Total net sales$228,956 $50,723 $120,976 $400,655 

The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (included in “Contract assets”), and billings in excess of costs (contract liabilities, included in “Deferred revenue”) within the Condensed Consolidated Balance Sheets.

Significant changes in contract assets during the nine months ended September 30, 2022 included transfers of $14,293 from the contract assets balance as of December 31, 2021 to accounts receivable. Significant changes in contract liabilities during the nine months ended September 30, 2022 resulted from increases of $3,087 due to billings in excess of costs, excluding amounts recognized as revenue during the period. Contract liabilities were reduced due to revenue recognized during the three months ended September
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30, 2022 and 2021 of $14 and $81, respectively, and revenue recognized during the nine months ended September 30, 2022 and 2021 of $2,656 and $985, respectively, which were included in contract liabilities at the beginning of each period.

The Company records provisions related to the allowance for credit losses associated with contract assets. Provisions are recorded based upon a specific review of individual contracts as necessary, and a standard provision over any remaining contract assets pooled together based on similar risk of credit loss. The development of these provisions are based on historic collection trends, accuracy of estimates within contract margin reporting, as well as the expectation that collection patterns, margin reporting, and bad debt expense will continue to adhere to patterns observed in recent years. These expectations are formed based on trends observed, as well as current and expected future conditions.

As of September 30, 2022, the Company had approximately $272,777 of obligations under new contracts and remaining performance obligations, which is also referred to as backlog. Approximately 10.1% of the September 30, 2022 backlog was related to projects that are anticipated to extend beyond September 30, 2023.
Note 5. Goodwill and Other Intangible Assets
The following table presents the changes in goodwill balance by reportable segment:segment for the period presented:
  Rail Products and
Services		 Construction
Products		 Tubular and Energy
Services		 Total
Balance at December 31, 2016 $13,785
 $5,147
 $—
 $18,932
Foreign currency translation impact 767
 —
 —
 767
Balance at September 30, 2017 $14,552
 $5,147
 $—
 $19,699

Rail, Technologies, and ServicesPrecast Concrete ProductsSteel Products and MeasurementTotal
Balance as of December 31, 2021$14,577 $2,564 $3,011 $20,152 
Skratch acquisition5,549 — — 5,549 
VanHooseCo acquisition— 9,674 — 9,674 
Foreign currency translation impact(1,945)— — (1,945)
Balance as of September 30, 2022$18,181 $12,238 $3,011 $33,430 
The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. Qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount.amount, which included the impacts of COVID-19 and current economic conditions, including but not limited to labor markets, supply chains, and other inflationary costs. However, the future impacts of COVID-19 and market conditions are unpredictable and are subject to change. No interim goodwill impairment test was required in connection with these evaluations foras a result of the nine months endedevaluation of qualitative factors as of September 30, 2017. The Company continues to monitor the recoverability of the long-lived assets associated with certain reporting units of the Company and the long-term financial projections of the businesses. Sustained declines in the markets we serve may result in future long-lived asset impairment.2022.

The following table represents the gross other intangible assets balance by reportable segment:
  September 30,
2017		 December 31,
2016
Rail Products and Services $57,538
 $56,476
Construction Products 1,348
 1,348
Tubular and Energy Services 29,179
 29,179
  $88,065
 $87,003


The components of the Company’s intangible assets arewere as follows:follows for the periods presented:
September 30, 2022
Weighted Average
Amortization
Period In Years		Gross
Carrying
Value		Accumulated
Amortization		Net
Carrying
Amount
Non-compete agreements1$24 $(8)$16 
Patents10326 (182)144 
Customer relationships1632,941 (16,363)16,578 
Trademarks and trade names159,542 (5,056)4,486 
Technology1434,855 (27,202)7,653 
Favorable lease6327 (9)318 
$78,015 $(48,820)$29,195 
December 31, 2021
Weighted Average
Amortization
Period In Years		Gross
Carrying
Value		Accumulated
Amortization		Net
Carrying
Amount
Patents10$385 $(218)$167 
Customer relationships1836,163 (18,222)17,941 
Trademarks and trade names167,801 (4,702)3,099 
Technology1335,772 (25,956)9,816 
$80,121 $(49,098)$31,023 
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  September 30, 2017
  Weighted Average
Amortization
Period In Years		 Gross
Carrying
Value		 Accumulated
Amortization		 Net
Carrying
Amount
Non-compete agreements 5 $4,233
 $(2,872) $1,361
Patents 10 392
 (160) 232
Customer relationships 17 37,597
 (8,542) 29,055
Trademarks and trade names 14 10,078
 (3,879) 6,199
Technology 14 35,765
 (13,477) 22,288
    $88,065
 $(28,930) $59,135
         
  December 31, 2016
  Weighted Average
Amortization
Period In Years		 Gross
Carrying
Value		 Accumulated
Amortization		 Net
Carrying
Amount
Non-compete agreements 5 $4,219
 $(2,217) $2,002
Patents 10 373
 (143) 230
Customer relationships 18 36,843
 (6,582) 30,261
Trademarks and trade names 14 10,018
 (3,238) 6,780
Technology 14 35,550
 (11,304) 24,246
    $87,003
 $(23,484) $63,519

IntangibleThe Company amortizes intangible assets are amortized over their useful lives, which range from 41 to 25 years, with a total weighted average amortization period of approximately 15 years atas of September 30, 2017.2022. Amortization expense was $1,599 and $1,462 for the three months ended September 30, 20172022 and 20162021, respectively, and was $1,764$4,454 and $1,763, respectively. Amortization expense$4,397 for the nine months ended September 30, 20172022 and 2016 was $5,2182021, respectively. As of September 30, 2022, the Company’s gross carrying value of customer relationships and $7,818, respectively.technology intangible assets were reduced by $5,448 and $471, respectively, and the net carrying amount of customer relationships and technology intangible assets were reduced by $2,869 and $7, respectively, as a result of the August 1, 2022 disposition of the Track Components business.


EstimatedAs of September 30, 2022, estimated amortization expense for the remainder of 20172022 and thereafter iswas as follows:
Amortization Expense
Remainder of 2022$1,603 
20236,036 
20245,042 
20253,219 
20262,630 
2027 and thereafter10,665 
$29,195 
Note 6. Accounts Receivable
 Amortization Expense
2017$1,782
20187,024
20196,302
20205,980
20215,960
2022 and thereafter32,087
 $59,135
4. ACCOUNTS RECEIVABLE
Credit is extendedThe Company extends credit based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment. Credit terms are consistent with industry standards and practices. The amounts of trade accounts receivable atas of September 30, 20172022 and December 31, 20162021 have been reduced by an allowance for doubtfulcredit losses of $515 and $547, respectively. Changes in reserves for uncollectible accounts, which are recorded as part of $2,138“Selling and $1,417,administrative expenses” within the Condensed Consolidated Statements of Operations, resulted in income of $40 and $145 for the three months ended September 30, 2022 and 2021, respectively, and expense of $171 and income of $127 for the nine months ended September 30, 2022 and 2021, respectively.


5. INVENTORIESThe Company established the allowance for credit losses by calculating the amount to reserve based on the age of a given trade receivable and considering historical collection patterns and bad debt expense experience, in addition to any other relevant subjective adjustments to individual receivables made by management. The Company also considers current and expected future market and other conditions. Trade receivables are pooled within the calculation based on a range of ages, which we believe appropriately groups receivables of similar credit risk together.

The established reserve thresholds to calculate the allowance for credit loss are based on and supported by historic collection patterns and bad debt expense incurred by the Company, as well as the expectation that collection patterns and bad debt expense will continue to adhere to patterns observed in recent years, which was formed based on trends observed as well as current and expected future conditions, including the impacts of the COVID-19 pandemic. Management maintains stringent credit review practices and works to maintain positive customer relationships to further mitigate credit risk.

The following table sets forth the Company’s allowance for credit losses:
Allowance for Credit Losses
Balance as of December 31, 2021$547 
Current period provision171 
Write-off against allowance(203)
Balance as of September 30, 2022$515 
Note 7. Inventory
Inventories atas of September 30, 20172022 and December 31, 20162021 are summarized in the following table:
September 30,
2022		December 31,
2021
Finished goods$43,745 $23,822 
Work-in-process11,862 10,738 
Raw materials29,539 28,311 
Inventories - net$85,146 $62,871 
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  September 30,
2017		 December 31,
2016
Finished goods $58,588
 $46,673
Work-in-process 30,507
 21,716
Raw materials 19,851
 18,032
Total inventories at current costs 108,946
 86,421
Less: LIFO reserve (4,911) (3,178)
  $104,035
 $83,243


Inventory is generally valued at the lower of last-in, first-out (“LIFO”) cost or market. Other inventoriesInventories of the Company are valued at average cost or net realizable value, whichever is lower. An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels
Note 8. Property, Plant, and costs at that time. Interim LIFO calculations are based on management’s estimates of expected year-end levels and costs.
6. PROPERTY, PLANT, AND EQUIPMENTEquipment
Property, plant, and equipment atas of September 30, 20172022 and December 31, 2016 consist2021 consisted of the following:
September 30,
2022		December 31,
2021
Land$5,256 $6,224 
Improvements to land and leaseholds20,762 15,416 
Buildings34,468 27,206 
Machinery and equipment, including equipment under finance leases122,935 112,021 
Construction in progress3,102 1,194 
Gross property, plant, and equipment186,523 162,061 
Less accumulated depreciation and amortization, including accumulated amortization of finance leases(102,566)(103,839)
Property, plant, and equipment - net$83,957 $58,222 
  September 30,
2017		 December 31,
2016
Land $14,866
 $14,826
Improvements to land and leaseholds 17,404
 17,408
Buildings 34,503
 33,910
Machinery and equipment, including equipment under capitalized leases 120,414
 118,060
Construction in progress 1,431
 1,291
  188,618
 185,495
Less accumulated depreciation and amortization, including accumulated amortization of capitalized leases 90,082
 81,522
  $98,536
 $103,973


We review ourDepreciation expense was $2,269 and $2,041 for the three months ended September 30, 2022 and 2021, respectively, and $6,083 and $6,049 for the nine months ended September 30, 2022 and 2021, respectively. The Company reviews its property, plant, and equipment for recoverability whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. We recognizeThe Company recognizes an impairment loss if it believes that the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. There were no asset impairments of property, plant, and equipment during the nine months ended September 30, 2017.2022 and 2021.

Depreciation expense for the three-month periods ended September 30, 2017 and 2016 was $3,178 and $3,295, respectively. For the nine-month periods ended September 30, 2017 and 2016, depreciation expense was $9,705 and $10,620, respectively.
7. INVESTMENTSNote 9. Leases
The Company determines if an arrangement is a memberlease at its inception. Operating leases are included in “Operating lease right-of-use assets - net,” “Other accrued liabilities,” and “Long-term operating lease liabilities” within the Condensed Consolidated Balance Sheets. Finance leases are included within “Property, plant, and equipment - net,” “Current maturities of a joint venture, L B Pipe & Coupling Products, LLC (“L B Pipe JV”), inlong-term debt,” and “Long-term debt” within the Condensed Consolidated Balance Sheets.

The Company has operating and finance leases for manufacturing facilities, corporate offices, sales offices, vehicles, and certain equipment. As of September 30, 2022, the Company’s leases had remaining lease terms of 2 to 12 years, some of which it maintains a 45% ownership interest. L B Pipe JV manufactures, markets,include options to extend the leases for up to 12 years, and sells various machined components and precision coupling products for the energy, water well, and construction markets and is scheduledsome of which include options to terminate on June 30, 2019.the leases within 1 year.


Under applicable guidance for variable interest entities in ASC 810, “Consolidation,” the Company previously determined that L B Pipe JV was a variable interest entity. The Company concluded that it was not the primary beneficiarybalance sheet components of the variable interest entity,Company’s leases were as the Company did not have a controlling financial interest and did not have the power to direct the activities that most significantly impact the economic performancefollows as of L B Pipe JV.

During the quarter ended September 30, 2017, pursuant to2022 and December 31, 2021:
September 30,
2022		December 31,
2021
Operating leases
Operating lease right-of-use assets$12,701 $15,131 
Other accrued liabilities$2,700 $2,852 
Long-term operating lease liabilities10,001 12,279 
Total operating lease liabilities$12,701 $15,131 
Finance leases
Property, plant, and equipment$1,250 $1,162 
Accumulated amortization(1,094)(1,011)
Property, plant, and equipment - net$156 $151 
Current maturities of long-term debt$82 $98 
Long-term debt74 53 
Total finance lease liabilities$156 $151 






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The components of lease expense within the limited liability company agreement, the Company determined to sell its 45% ownership interest to the other 45% equity holder. The Company concluded that it has met the criteria under applicable guidance for a long-lived asset to be held for sale, and has, accordingly, reclassified L B Pipe JV investmentCompany’s Condensed Consolidated Statements of $4,288Operations were as a current asset held for sale within other current assets. The asset was subsequently remeasured to its fair market value of $3,875. The difference between the fair market value and the Company's carrying amount of $413 was recorded as an other-than-temporary impairmentfollows for the three and nine months ended September 30, 2017.2022 and 2021:

Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Finance lease cost:
Amortization of finance leases$44 $50 $119 $152 
Interest on lease liabilities7 19 20 61 
Operating lease cost706 706 2,188 2,042 
Sublease income(50)(50)(150)(150)
Total lease cost$707 $725 $2,177 $2,105 

At September 30, 2017 and December 31, 2016, the Company had a nonconsolidated equity method investment of $0 and $3,902, respectively, in L B Pipe JV and other equity investments totaling $151 and $129, respectively.


The Company recorded equity incash flow components of the income of L B Pipe JV of $434 and loss of $276Company’s leases were as follows for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 20172022 and 2016, the Company recorded equity in the income of L B Pipe JV of $386 and loss of $1,001, respectively.2021:

Nine Months Ended
September 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases$(2,568)$(2,462)
Financing cash flows related to finance leases(110)(166)
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases$— $377 
During 2016, the Company and the other 45% member each executed a revolving line of credit with L B Pipe JV with an available limit of $1,350. The Company and the other 45% member each loaned $1,235 to L B Pipe JV in an effort to maintain compliance with L B Pipe JV’s debt covenants with an unaffiliated bank. The Company is to receive its outstanding loan balance at the 45% equity interest sale date.


The Company’s exposureweighted-average remaining lease term (in years) and discount rate related to loss results from its capital contributions and loans, netthe operating leases were as follows as of the Company’s sharedates presented:
September 30,
20222021
Operating lease weighted-average remaining lease term57
Operating lease weighted-average discount rate5.2 %5.2 %
Finance lease weighted-average remaining lease term11
Finance lease weighted-average discount rate4 %4.2 %

As of L B Pipe JV’s income or loss, and its net investment in the direct financing lease covering the facility used by L B Pipe JV for its operations, which is described below. The carrying amounts with the Company’s maximum exposure to loss at September 30, 2017 and2022, estimated annual maturities of lease liabilities remaining for the year ending December 31, 2016, respectively, are2022 and thereafter were as follows:
Operating LeasesFinance Leases
Remainder of 2022$845 $32 
20233,234 77 
20242,900 41 
20252,351 20 
20262,147 9 
2027 and thereafter3,092 — 
Total undiscounted lease payments14,569 179 
Interest(1,868)(23)
Total$12,701 $156 
  September 30,
2017		 December 31,
2016
L B Pipe JV equity method investment $3,875
 $3,902
Revolving line of credit 1,235
 1,235
Net investment in direct financing lease 770
 871
  $5,880
 $6,008

The Company is leasing five acres of landNote 10. Long-Term Debt and two facilities to L B Pipe JV through June 30, 2019, with a 5.5 year renewal period. The current monthly lease payments approximate $17, with a balloon payment of approximately $488, which is required to be paid either at the termination of the lease, allocated over the renewal period, or during the initial term of the lease. This lease qualifies as a direct financing lease under the applicable guidance in ASC 840-30, “Leases.”

The following is a schedule of the direct financing minimum lease payments for the remainder of 2017 and the years 2018 and thereafter:
 Minimum Lease Payments
2017$35
2018150
2019585
 $770
8. LONG-TERM DEBT
United StatesRelated Matters
Long-term debt consistsconsisted of the following:
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 September 30,
2017		 December 31,
2016		September 30,
2022		December 31,
2021
Revolving credit facility $123,494
 $127,073
Revolving credit facility$98,763 $31,100 
Term loan 13,131
 30,000
Capital leases and financing agreements 1,660
 2,492
Finance leases and financing agreementsFinance leases and financing agreements156 151 
Total 138,285
 159,565
Total98,919 31,251 
Less current maturities 9,887
 10,386
Less current maturities(82)(98)
Long-term portion $128,398
 $149,179
Long-term portion$98,837 $31,153 


On November 7, 2016,August 13, 2021, the Company, its domestic subsidiaries, and certain of its Canadian and United Kingdom subsidiaries (collectively, the “Borrowers”), entered into the Second Amendment (the “Second Amendment”) to the SecondFourth Amended and Restated Credit Agreement dated March 13, 2015 and as amended by the First Amendment dated June 29, 2016 (the “Amended and Restated Credit“Credit Agreement”), with PNC Bank, N.A., Citizens Bank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A., Wells Fargoand BMO Harris Bank, N.A., Citizens Bank of Pennsylvania, and Branch Banking and Trust Company. This Second Amendment modified the Amended and RestatedNational Association. The Credit Agreement which had a maximummodifies the prior revolving credit line of $275,000.facility, as amended, on more favorable terms and extends the maturity date from April 30, 2024 to August 13, 2026. The Second Amendment reduced the permittedCredit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of the Borrowers up to $195,000$130,000 (a $15,000 increase over the previous commitment) with a sublimit of the equivalent of $25,000 U.S. dollars that is available to the Canadian and provided

forUnited Kingdom borrowers in the aggregate. The Credit Agreement’s incremental loan feature permits the Company to increase the available commitments under the facility by up to an additional term loan borrowing of $30,000 (the “Term Loan”). The Term Loan is$50,000 subject to quarterly straight line amortization until fully paid off upon the final payment on January 1, 2020. Furthermore,Company’s receipt of increased commitments from existing or new lenders and the satisfaction of certain matters, including excess cash flow, asset sales,conditions.

The obligation of the Company and its domestic, Canadian, and United Kingdom subsidiaries (the “Guarantors”) under the Credit Agreement will be secured by the grant of a security interest by the Borrowers and Guarantors in substantially all of the assets owned by such entities. Additionally, the equity issuances, trigger mandatory prepaymentsinterests in each of the loan parties, other than the Company, and the equity interests held by each loan party in their subsidiaries, will be pledged to the Term Loan. Term Loan borrowings are not available to draw upon once they have been repaid. Capitalized terms used but not defined herein shall havelenders as collateral for the meanings ascribed to them inlending obligations.

Borrowings under the Second Amendment or Amended and Restated Credit Agreement as applicable.

The Second Amendment further provided for modificationswill bear interest at rates based upon either the base rate or LIBOR rate plus applicable margins. Applicable margins are dictated by the ratio of the Company’s total net indebtedness to the financial covenantsCompany’s consolidated EBITDA for four trailing quarters, as defined in the Amended and Restated Credit Agreement. The base rate is the highest of (a) the Overnight Bank Funding Rate plus 50 basis points, (b) the Prime Rate, or (c) the Daily LIBOR rate plus 100 basis points so long as the Daily LIBOR Rate is offered, ascertainable, and not unlawful (each as defined in the Credit Agreement). The base rate and LIBOR rate spreads range from 25 to 125 basis points and 125 to 225 basis points, respectively.

The Credit Agreement includes two financial covenants: (a) Maximum Gross Leverage Ratio, defined as the Company’s consolidated Indebtedness (as defined in the Credit Agreement) divided by the Company’s consolidated EBITDA, which must not exceed (i) 3.25 to 1.00 for all testing periods other than during an Acquisition Period, and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period (as defined in the Credit Agreement), and (b) Minimum Consolidated Fixed Charge Coverage Ratio, defined as the Company’s consolidated EBITDA divided by the Company’s Fixed Charges (as defined in the Credit Agreement), which must be more than 1.05 to 1.00.

The Credit Agreement permits the Company to pay dividends and make distributions and redemptions with respect to its stock provided no event of default or potential default (as defined in the Credit Agreement) has occurred prior to or after giving effect to the dividend, distribution, or redemption. Additionally, the Credit Agreement permits the Company to complete acquisitions so long as (a) no event of default or potential default has occurred prior to or as a result of such acquisition; (b) the liquidity of the Borrowers is not less than $15,000 prior to and after giving effect to such acquisition; and (c) the aggregate consideration for the acquisition does not exceed: (i) $50,000 per acquisition, so long as the Gross Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 2.75 after giving effect to such acquisition; or (ii) $75,000 per acquisition, so long as the Gross Leverage Ratio is less than or equal to 1.75 after giving effect to such acquisition.

Other restrictions exist at all times including, but not limited to, limitations on the Company’s sale of assets and the incurrence by either the Borrowers or the non-borrower subsidiaries of the Company of other indebtedness, guarantees, and liens.

On August 12, 2022, the Company amended its Credit Agreement to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction. The Second Amendment calls forpermitted the eliminationCompany to acquire the operating assets of the Maximum Leverage Ratio covenant through the quarter ending June 30, 2018. After that period,VanHooseCo and modified the Maximum Gross Leverage Ratio covenant will be reinstatedthrough June 30, 2023 to require a maximum ratio of 4.25 Consolidated Indebtedness to 1.00 Gross Leverage foraccommodate the quarter ending September 30, 2018, and 3.75 to 1.00 for all periods thereafter until the maturity date of the credit facility.transaction. The Second Amendment also includes a Minimum Last Twelve Months EBITDA covenant (“Minimum EBITDA”). Foradded an additional tier to the quarter ended December 31, 2016 through the quarter ended June 30, 2017, the Minimum EBITDA had to be at least $18,500. For each quarter thereafter, through the quarter ending June 30, 2018, the Minimum EBITDA requirement will increase by various increments. The incremental Minimum EBITDA requirementpricing grid and provided for the period endedconversion from LIBOR-based to SOFR-based borrowings.

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As of September 30, 2017 was at least $23,000. At June 30, 2018,2022, the Minimum EBITDA requirement will be $31,000. After the quarter ending June 30, 2018, the Minimum EBITDA covenant will be eliminated through the maturity of the Amended and Restated Credit Agreement. The Second Amendment also includes a Minimum Fixed Charge Coverage Ratio covenant. The covenant represents the ratio of the Company’s fixed charges to the last twelve months of EBITDA, and is required to be a minimum of 1.00 to 1.00 through the quarter ended December 31, 2017 and 1.25 to 1.00 for each quarter thereafter through the maturity of the credit facility. The final financial covenant included in the Second Amendment is a Minimum Liquidity covenant which calls for a minimum of $25,000 in undrawn availability on the revolving credit loan at all times through the quarter ending June 30, 2018. The Second Amendment includes several changes to certain non-financial covenants as defined in the Amended and Restated Credit Agreement. Through the maturity date of the loan, the Company is now prohibited from making any future acquisitions. The limitation on permitted annual distributions of dividends or redemptions of the Company’s stock was decreased from $4,000 to $1,700. The aggregate limitation on loans to and investments in non-loan parties was decreased from $10,000 to $5,000. Furthermore, the limitation on asset sales has been decreased from $25,000 annually with a carryover of up to $15,000 from the prior year to $25,000 in the aggregate through the maturity date of the credit facility.

At September 30, 2017, L.B. Foster was in compliance with the Second Amendment’s covenants.

The Second Amendment provided for the elimination of the three lowest tiers of the pricing grid that had previously been definedcovenants in the First Amendment. Upon executionCredit Agreement, as amended. As of the Second Amendment through the quarter ending March 31, 2018, the Company will be locked into the highest tier of the pricing grid, which provides for pricing of the prime rate plus 225 basis points on base rate loans and the applicable LIBOR rate plus 325 basis points on euro rate loans. For each quarter after March 31, 2018 and through the maturity date of the credit facility, the Company’s position on the pricing grid will be governed by a Minimum Net Leverage ratio, which is the ratio of Consolidated Indebtedness less cash on hand in excess of $15,000 to EBITDA. If, after March 31, 2018, the Minimum Net Leverage ratio positions the Company on the lowest tier of the pricing grid, pricing will be the prime rate plus 150 basis points on base rate loans or the applicable LIBOR rate plus 250 basis points on euro rate loans.

At September 30, 2017, L.B. Foster2022, the Company had outstanding letters of credit of approximately $425$564 and had net available borrowing capacity of $46,081.$30,673, subject to covenant restrictions. The maturity date of the facility is MarchAugust 13, 2020.2026.

United KingdomNote 11. Earnings Per Common Share
A subsidiary(Share amounts in thousands)

The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Numerator for basic and diluted (loss) earnings per common share:
Net (loss) income from continuing operations$(2,105)$2,240 $(1,715)$3,824 
Income from discontinued operations— 72 — 72 
Net (loss) income$(2,105)$2,312 $(1,715)$3,896 
Denominator:
Weighted average shares outstanding10,731 10,642 10,710 10,615 
Denominator for basic loss per common share10,731 10,642 10,710 10,615 
Effect of dilutive securities:
Stock compensation plans— 122 — 129 
Dilutive potential common shares— 122 — 129 
Denominator for diluted (loss) income per common share - adjusted weighted average shares outstanding10,731 10,764 10,710 10,744 
Continuing operations$(0.20)$0.21 $(0.16)$0.36 
Discontinued operations— 0.01 — 0.01 
Basic (loss) earnings per common share$(0.20)$0.22 $(0.16)$0.37 
Continuing operations$(0.20)$0.21 $(0.16)$0.36 
Discontinued operations— 0.01 — 0.01 
Diluted (loss) earnings per common share$(0.20)$0.22 $(0.16)$0.37 

There were 109 and 108 anti-dilutive shares for the three and nine months ended September 30, 2022, respectively, excluded from the calculation.
Note 12. Income Taxes
For the three months ended September 30, 2022 and 2021, the Company has a credit facility with NatWest Bankrecorded an income tax benefit of $176 and expense of $676, respectively, on pre-tax losses of $2,281 and pre-tax income of $2,916, respectively, for its United Kingdom operations, which includes an overdraft availabilityeffective income tax rate of £1,500 pounds sterling (approximately $2,010 at7.7% and 23.2%, respectively. For the nine months ended September 30, 2017). This credit facility supports the subsidiary’s working capital requirements2022 and is collateralized by substantially all of the assets of its United Kingdom operations. The interest rate on this facility is the financial institution’s base rate plus 2.50%. Outstanding performance bonds reduce availability under this credit facility. The subsidiary of2021, the Company had no outstanding borrowings under this credit facility atrecorded an income tax expense of $137 and $1,494, respectively, on pre-tax losses of $1,578 and pre-tax income of $5,318, respectively, for an effective income tax rate of 8.7% and 28.1%, respectively. The Company's provision for income taxes for the three- and nine-month periods ended September 30, 2017. There was approximately $9992022 included a discrete income tax expense of $330 for a change in outstanding guarantees (as definedour permanent reinvestment assertion with respect to the undistributed earnings in the underlying agreement) at September 30, 2017. This credit facility was renewed and amended during the fourth quarter of 2016 with all underlying terms and conditions remaining unchangedCanada, as a result of the renewal. It isdivestiture of our Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada. In addition to the impact of the discrete items, the Company’s intentioneffective tax rate for the three and nine months ended September 30, 2022 and 2021 differs from the federal statutory rate of 21% primarily due to renew this credit facilitystate income taxes, nondeductible expenses, research tax credits and withholding taxes on excess cash available for repatriation from foreign affiliates. Changes in pre-tax income projections, combined with NatWest Bank during the annual review withinseasonal nature of our businesses, could also impact the forth quarter of 2017.effective income tax rate.

Note 13. Stock-Based Compensation
The United Kingdom credit facility contains certain financial covenants that requireCompany applies the subsidiaryprovisions of the FASB’s Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation,” to maintain senior interestaccount for the Company’s stock-based compensation. Stock-based compensation cost is measured at the grant date based on the calculated fair value of the award and cash flow coverage ratios.is recognized over the employees’ requisite service periods. The subsidiary was in compliance with these financial covenants atCompany recorded stock-based compensation expense related to restricted stock awards and performance share units of $387 and $587 for the three months ended September 30, 2017. The subsidiary had available borrowing capacity of $1,011 at2022 and 2021, respectively, and $1,570 and $1,800 for the nine months ended September 30, 2017.2022 and 2021, respectively. As of September 30, 2022, unrecognized compensation expense for unvested awards approximated $3,254. The Company expects to recognize this expense over the upcoming 3.4 years through March 2026.

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9. FAIR VALUE MEASUREMENTS
Shares issued as a result of vested stock-based compensation awards generally will be from previously issued shares that have been reacquired by the Company and held as treasury stock or authorized and previously unissued common stock.

Restricted Stock Awards, Performance Share Units, and Performance-Based Stock Awards
Under the 2022 Equity and Incentive Compensation Plan, predecessor to the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance share units. The forfeitable restricted stock awards granted generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock award agreement. Since May 2018, awards of restricted stock have been subject to a minimum one-year vesting period, including those granted to non-employee directors. Performance share units are offered annually under separate three-year long-term incentive programs. Performance share units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples, as defined in the underlying program. If the Company’s estimate of the number of performance share units expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

Since May 1, 2017, non-employee directors have been permitted to defer receipt of annual stock awards and equity elected to be received in lieu of quarterly cash compensation. If so elected, these deferred stock units will be issued as common stock six months after separation from their service on the Board of Directors. Since May 2018, no non-employee directors have elected the option to receive deferred stock units of the Company’s common stock in lieu of director cash compensation.

In February 2022, the Compensation Committee approved the 2022 Performance Share Unit Program and the 2022 Executive Incentive Compensation Plan (consisting of cash and equity components).

On June 2, 2022, the shareholders approved the new 2022 Equity and Incentive Compensation plan as the successor to the 2006 Omnibus Plan and contingent Strategic Transformation Plan.

The following table summarizes the restricted stock awards, deferred stock units, and performance share units activity for the nine months ended September 30, 2022:
Restricted
Stock		Deferred
Stock Units		Performance
Share Units		Weighted Average
Grant Date Fair Value
Outstanding as of December 31, 2021135,704 74,950 116,571 $19.75 
Granted125,582 5,730 110,600 14.88 
Vested(75,153)— (13,095)17.98 
Adjustment for incentive awards expected to vest— — (105,598)16.67 
Cancelled and forfeited(500)— — 18.57 
Outstanding as of September 30, 2022185,633 80,680 108,478 $17.70 
Note 14. Fair Value Measurements
The Company determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions of what market participants would use. The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:


Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.


The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.


Cash equivalents - Included withinin “Cash and cash equivalents” within the Condensed Consolidated Balance Sheets are investments in non-domestic term deposits. The carrying amounts approximate fair value because of the short maturity of the instruments.

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LIBOR-based
SOFR-based interest rate swaps - To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into forward starting LIBOR-basedforward-starting SOFR-based interest rate swaps with notional values totaling $50,000.$20,000 and $20,000 effective August 12, 2022 and August 31, 2022, respectively. The fair value of the interest rate swaps isare based on market-observable forward interest rates and represents the estimated amount that the Company would pay to terminate the agreements. As such, the swap agreements are classified as Level 2 within the fair value hierarchy. AtAs of September 30, 2017,2022 and December 31, 2021, the interest rate swaps were recorded in “Other current assets” when the interest rate swaps’ fair market value are in an asset position, and "Other accrued liabilities" when in a liability position within other accrued liabilities.our Condensed Consolidated Balance Sheets.
Fair Value Measurements at Reporting DateFair Value Measurements at Reporting Date
September 30,
2022		Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		December 31,
2021		Quoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
Term deposits$17 $17 $— $— $18 $18 $— $— 
Interest rate swaps1,960 — 1,960 — 175 — 175 — 
Total assets$1,977 $17 $1,960 $— $193 $18 $175 $— 
Interest rate swaps$— $— $— $— $159 $— $159 $— 
Total liabilities$— $— $— $— $159 $— $159 $— 
  Fair Value Measurements at Reporting Date and Using Fair Value Measurements at Reporting Date and Using
  September 30,
2017		 Quoted Prices in Active Markets for Identical Assets
(Level  1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		 December 31,
2016		 Quoted Prices in Active Markets for Identical Assets
(Level  1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)
Term deposits $17
 $17
 $—
 $—
 $16
 $16
 $—
 $—
Total assets $17
 $17
 $—
 $—
 $16
 $16
 $—
 $—
Interest rate swaps $323
 $—
 $323
 $—
 $334
 $—
 $334
 $—
Total liabilities $323
 $—
 $323
 $—
 $334
 $—
 $334
 $—


The $20,000 interest rate swapsswap agreements that became effective August 2022 are accounted for as fair valuecash flow hedges and substantiallythe objective of the hedges is to offset the changes in fair value ofexpected interest variability on payments associated with the hedged portion of the underlying debt that are attributable to the changes in market risk. Therefore, theinterest rate on our debt. The gains and losses related to changes in the fair value of the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated Balance Sheets and included in interest income or“Interest expense - net” in our Condensed Consolidated Statements of Operations. Operations as the interest expense from our debt is recognized.

The Company accounted for the $50,000 of interest rate swaps that became effective February 2017 as cash flow hedges. In the third quarter of 2020, the Company dedesignated the cash flow hedges and accounted for the $50,000 interest rate swaps on a mark-to-market basis with changes in fair value recorded in current period earnings. In connection with this dedesignation, the Company froze the balances recorded in “Accumulated other comprehensive loss” at June 30, 2020 and reclassifies balances to earnings as the underlying physical transactions occur, unless it is no longer probable that the physical transaction will occur at which time the related gains deferred in Other Comprehensive Income will be immediately recorded in earnings. The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets and included in “Interest expense - net” in the Condensed Consolidated Statements of Operations as the interest expense from the Company’s debt is recognized. These interest rate swaps expired February 2022.

For the three months ended September 30, 2017,2021, the Company recognized interest expense of $244 from interest rate swaps was $98.swaps. For the nine months ended September 30, 2017,2022 and 2021, the Company recognized interest expense of $78 and $724, respectively, from interest rate swaps was $302.swaps.


In accordance with the provisions of ASC Topic 820, "Fair“Fair Value Measurement,"” the Company measures certain nonfinancial assets and liabilities at fair value, which are recognized orand disclosed on a nonrecurring basis. During the quarter ended September 30, 2017, a $413 other-than-temporary impairment charge was recorded against L B Pipe JV assets held for sale utilizing a Level 2 fair value measurement. The impairment was a result of the Company's carrying value being greater than the agreed-upon sales price, or fair market value. See
Note 7 Investments of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.

10. EARNINGS PER COMMON SHARE
(Share amounts in thousands)

The following table sets forth the computation of basic and diluted earnings (loss) per common share for the periods indicated:
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Numerator for basic and diluted earnings (loss) per common share:        
Net income (loss) $3,222
 $(5,982) $3,824
 $(100,810)
Denominator:        
Weighted average shares outstanding 10,341
 10,296
 10,332
 10,264
Denominator for basic earnings per common share 10,341
 10,296
 10,332
 10,264
Effect of dilutive securities:        
Stock compensation plans 138
 —
 103
 —
Dilutive potential common shares 138
 —
 103
 —
Denominator for diluted earnings per common share - adjusted weighted average shares outstanding and assumed conversions 10,479
 10,296
 10,435
 10,264
Basic earnings (loss) per common share $0.31
 $(0.58) $0.37
 $(9.82)
Diluted earnings (loss) per common share $0.31
 $(0.58) $0.37
 $(9.82)
Dividends paid per common share $—
 $0.04
 $—
 $0.12

There were approximately 34 and 80 anti-dilutive shares during the three- and nine-month periods ended September 30, 2016, respectively, excluded from the above calculation.
11. STOCK-BASED COMPENSATION
The Company applies the provisions of FASB ASC 718, “Compensation – Stock Compensation,” to account for the Company’s stock-based compensation. Stock-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees’ requisite service period. The Company recorded stock compensation expense of $503 and $320 for the three-month periods ended September 30, 2017 and 2016, respectively, related to fully-vested stock awards, restricted stock awards, and performance unit awards. Stock compensation expense of $1,228 and $875 was recorded for the nine-month periods ended September 30, 2017 and 2016, respectively. At September 30, 2017, unrecognized compensation expense for awards that the Company expects to vest approximated $4,140. The Company will recognize this expense over the upcoming 3.5 years through March 2021.

Shares issued as a result of vested stock-based compensation generally will be from previously issued shares that have been reacquired by the Company and held as treasury stock or authorized and previously unissued common stock.

During the nine months ended September 30, 2017, the Company recognized a tax deficiency of $127 related to stock-based compensation, which was fully offset by a valuation allowance, and $124 for the nine months ended September 30, 2016. Applying the prospective approach in accordance with ASU 2016-09, the change in excess income tax deficiency has been included in cash flows from operating activities for the nine months ended September 30, 2017 in the Condensed Consolidated Statements of Cash Flows.

Restricted Stock Awards and Performance Unit Awards
Under the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance unit awards. The forfeitable restricted stock awards granted prior to March 2015 generally time-vest after a four-year period, and those granted subsequent to March 2015 generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock agreement. Performance unit awards are offered annually under separate three-year long-term incentive programs. Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples, as defined in the underlying program. If the Company’s estimate of the number of performance stock awards expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

During the quarter ended June 30, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the 2006 Omnibus Incentive Plan, which permits Non-Employee Directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board. During the quarter ended March 31, 2017, the Compensation Committee approved the 2017 Performance Share Unit Program and the Executive Annual Incentive Compensation Plan (consisting of cash and equity components). The Compensation Committee also certified the actual performance achievement of participants in the 2014 Performance Share Unit Program. Actual performance resulted in no payout relative to the 2014 Performance Share Unit Program target performance metrics.

The following table summarizes the restricted stock award, deferred stock award, and performance unit award activity for the period ended September 30, 2017:
  Restricted
Stock		 Deferred
Stock		 Performance
Stock Units		 Weighted Average
Grant Date Fair Value
Outstanding at December 31, 2016 79,272
 —
 63,690
 $21.66
Granted 170,196
 24,927
 120,583
 14.24
Vested (22,808) —
 —
 28.88
Adjustment for incentive awards expected to vest —
 —
 53,385
 18.33
Cancelled (44,854) —
 (49,062) 15.40
Outstanding at September 30, 2017 181,806
 24,927
 188,596
 $16.48
12. RETIREMENT PLANS15. Retirement Plans
Retirement Plans
The Company has seventhree retirement plans that cover its hourly and salaried employees in the United States: threeone defined benefit plans, all ofplan, which areis frozen, and fourtwo defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Company’s policy and investment guidelines applicable to each respective plan. The Company’s policy is to contribute at least the minimum in accordance with the funding standards of ERISA.


The Company’s subsidiary, L.B. Foster Rail Technologies, Inc. (“Rail Technologies”),Company maintains twoone defined contribution plansplan for its employees in Canada, as well as a post-retirement benefit plan. In the United Kingdom, Rail TechnologiesCanada. The Company also maintains two defined contribution plans and aone defined benefit plan.plan for its employees in the United Kingdom.



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United States Defined Benefit PlansPlan
Net periodic pension costs for the United States defined benefit pension plansplan for the three-three and nine-month periodsnine months ended September 30, 20172022 and 2016 are2021 were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Interest cost$49 $43 $146 $129 
Expected return on plan assets(66)(62)(198)(185)
Recognized net actuarial loss18 25 53 74 
Net periodic pension cost$1 $6 $1 $18 
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Service cost $—
 $9
 $—
 $27
Interest cost 171
 186
 513
 559
Expected return on plan assets (178) (179) (533) (538)
Recognized net actuarial loss 33
 69
 98
 207
Net periodic pension cost $26
 $85
 $78
 $255


The Company does not expect to contributehas made contributions to its United States defined benefit plans in 2017.pension plan of $345 during the nine months ended September 30, 2022 and expects to make total contributions of $460 during 2022.


United Kingdom Defined Benefit PlansPlan
Net periodic pension costs for the United Kingdom defined benefit pension plan for the three-three and nine-month periodsnine months ended September 30, 20172022 and 2016 are2021 were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Interest cost$42 $28 $126 $84 
Expected return on plan assets(74)(65)(222)(195)
Amortization of prior service costs and transition amount6 7 18 21 
Recognized net actuarial loss38 83 114 249 
Net periodic pension cost$12 $53 $36 $159 
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
Interest cost $56
 $73
 $168
 $223
Expected return on plan assets (67) (82) (201) (250)
Amortization of prior service costs and transition amount 4
 5
 12
 15
Recognized net actuarial loss 72
 38
 216
 116
Net periodic pension cost $65
 $34
 $195
 $104


United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans. Employer contributions of approximately $251 are anticipated to the United Kingdom Rail Technologies pension plan during 2017. For the nine months ended September 30, 2017,2022, the Company contributed approximately $188$226 to the plan. The Company anticipates total contributions of approximately $302 to the United Kingdom pension plan during 2022.


Defined Contribution Plans
The Company sponsors eightfive defined contribution plans for hourly and salaried employees across ourits domestic and international facilities. The following table summarizes the expense associated with the contributions made to these plans.plans for the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
United States$441 $400 $1,136 $1,172 
Canada83 33 143 119 
United Kingdom588 131 588 386 
$1,112 $564 $1,867 $1,677 
  Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2017 2016 2017 2016
United States $415
 $152
 $1,276
 $1,289
Canada 53
 46
 167
 164
United Kingdom 93
 64
 306
 281
  $561
 $262
 $1,749
 $1,734
13. COMMITMENTS AND CONTINGENT LIABILITIESNote 16. Commitments and Contingent Liabilities
Product Liability Claims
The Company is subject to product warranty claims that arise in the ordinary course of its business. For certain manufactured products, the Company maintains a product warranty accrual, which is adjusted on a monthly basis as a percentage of cost of sales. TheIn addition, the product warranty accrual is adjusted periodically adjusted based on the identification or resolution of known individual product warranty claims.



23
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The following table sets forth the Company’s product warranty accrual:
Warranty Liability
Balance as of December 31, 2021$1,042 
Additions to warranty liability80 
Warranty liability utilized(366)
Balance as of September 30, 2022$756 
 Warranty Liability
Balance at December 31, 2016$10,154
Additions to warranty liability3,203
Warranty liability utilized(3,743)
Balance at September 30, 2017$9,614

Included within the above table are concrete tie warranty reserves of approximately $7,607 and $7,574 at September 30, 2017 and December 31, 2016, respectively.


Union Pacific Railroad (UPRR)(“UPRR”) Concrete Tie Matter
On July 12, 2011, UPRR notified (the “UPRR Notice”)March 13, 2019, the Company and its subsidiary, CXT Incorporated (“CXT”), ofentered into a warranty claim under CXT’s 2005 supply contract relating to the sale of pre-stressed concrete railroad ties to UPRR. UPRR asserted that a significant percentage of concrete ties manufactured in 2006 through 2011 at CXT’s Grand Island, NE facility failed to meet contract specifications, had workmanship defects and were cracking and failing prematurely. Of the 3 million ties manufactured between 1998 and 2011 from the Grand Island, NE facility, approximately 1.6 million ties were sold during the period UPRR had claimed nonconformance.The 2005 contract called for each concrete tie which failed to conform to the specifications or had a material defect in workmanship to be replaced with 1.5 new concrete ties, provided, that, within five years of the sale of a concrete tie, UPRR notified CXT of such failure to conform or such defect in workmanship.
The UPRR Notice did not specify how many ties manufactured during this period were defective nor the exact nature of the alleged workmanship defect.

Following the UPRR Notice, the Company worked with material scientists and pre-stressed concrete experts to test a representative sample of Grand Island, NE concrete ties and assess warranty claims for certain concrete ties made in its Grand Island, NE facility between 1998 and 2011. The Company discontinued manufacturing operations in Grand Island, NE in early 2011.

2012
During 2012, the Company completed sufficient testing and analysis to further understand this matter. Based upon testing results and expert analysis, the Company believed it discovered conditions, which largely related to the 2006 to 2007 manufacturing period, that can shorten the life of the concrete ties produced during this period. During the fourth quarter of 2012 and first quarter of 2013, the Company reached agreement with UPRR on several matters including a tie rating process for the Company and UPRR to work together to identify, prioritize, and replace defective ties that meet the criteria for replacement. This process applies to the ties the Company shipped to UPRR from its Grand Island, NE facility from 1998 to 2011. During most of this period, the Company’s warranty policy for UPRR carried a 5-year warranty with a 1.5:1 replacement ratio for any defective ties. In order to accommodate UPRR and other customer concerns, the Company also reverted to a previously used warranty policy providing a 15-year warranty with a 1:1 replacement ratio. This change provided an additional 10 years of warranty protection. In the amended 2005 supply agreement, the Company and UPRR also extended the supply of Tucson ties by five years and agreed on a cash payment of $12,000 to UPRR as compensation for concrete ties already replaced by UPRR during the investigation period.

During 2012, as a result of the testing that the Company conducted on concrete ties manufactured at its former Grand Island, NE facility and the developments related to UPRR and other customer matters, the Company recorded pre-tax warranty charges of $22,000 in “Cost of Goods Sold” within its Rail Products and Services segment based on the Company’s estimate of the number of defective concrete ties that will ultimately require replacement during the applicable warranty periods.

2013
Throughout 2013, at UPRR’s request and under the terms of the amended 2005 supply agreement, the Company provided warranty replacement concrete ties for use across certain UPRR subdivisions. The Company attempted to reconcile the quantity of warranty claims for ties replaced and obtain supporting detail for the ties removed. The Company believes that UPRR did not replace concrete ties in accordance with the amended agreement and has not furnished adequate documentation throughout the replacement process in these subdivisions to support its full warranty claim. Based on the information received by the Company to date, the Company believes that a significant number of ties which UPRR replaced in these subdivisions did not meet the criteria to be covered as warranty replacement ties under the amended 2005 supply agreement. The disagreement related to the 2013 warranty replacement activity includes approximately 170,000 ties where the Company provided detailed documentation supporting our position with reason codes that detail why these ties are not eligible for a warranty claim.

In late November 2013, the Company received notice from UPRR asserting a material breach of the amended 2005 supply agreement. UPRR’s notice asserted that the failure to honor its claims for warranty ties in these subdivisions was a material breach. Following receipt of this notice, the Company provided information to UPRR to refute UPRR’s claim of breach and included the reconciliation of warranty claims supported by substantial findings from the Company’s track observation team, all within the 90-day cure period. The Company also proposed further discussions to reach agreement on reconciliation for 2013 replacement activities and future replacement activities and a recommended process that will ensure future replacement activities are done with appropriate documentation and per the terms of the amended 2005 supply agreement.

2014
During the first quarter of 2014, the Company further responded within the 90-day cure period to UPRR’s claim and presented a reconciliation for the subdivisions at issue. This proposed reconciliation was based on empirical data and visual observation from Company employees that were present during the replacement process for a substantial majority of the concrete ties replaced. The Company spent considerable time documenting facts related to concrete tie condition and track condition to assess whether the ties replaced met the criteria to be eligible for replacement under the terms of the amended 2005 supply agreement.

During 2014, the Company increased its accrual by an additional $8,766 based on revised estimates of ties to be replaced based upon scientific testing and other analysis, adjusted for ties already provided to UPRR. The Company continued to workSettlement Agreement (the “Settlement Agreement”) with UPRR to identify, replace, and reconcile defective ties related toresolve the warranty claimpending litigation in accordance with the amended 2005 supply agreement. Thematter of Union Pacific Railroad Company v. L.B. Foster Company and UPRR met during the third quarter of 2014 to evaluate each other’s position in an effort to work towards agreement on the unreconciled 2013 and 2014 replacement activity as well as the standards and practices to be implemented for future replacement activity and warranty tie replacement.

In November and December of 2014, the Company received additional notices from UPRR asserting that ties manufactured in 2000 were defective and again asserting material breaches of the amended 2005 supply agreement relating to warranty tie replacements as well as certain new ties provided to UPRR being out of specification.

At December 31, 2014, the Company and UPRR had not been able to reconcile the disagreement related to the 2013 and 2014 warranty replacement activity. The disagreement relating to the 2014 warranty replacement activity includes approximately 90,100 ties that the Company believes are not warranty-eligible.

2015
On January 23, 2015, UPRR filed a Complaint and Demand for Jury TrialCXT Incorporated, Case No. CI 15-564, in the District Court for Douglas County, NE (“Complaint”) againstNebraska.

Under the Settlement Agreement, the Company and CXT will pay UPRR the aggregate amount of $50,000 without pre-judgment interest, which began with a $2,000 immediate payment, and with the remaining $48,000 paid in installments over a six-year period commencing on the effective date of the Settlement Agreement through December 2024 pursuant to a Promissory Note. Additionally, commencing in January 2019 and through December 2024, UPRR agreed to purchase and has been purchasing from the Company and its subsidiary, CXT, asserting, among other matters, that the Company breached its express warranty, breached an implied covenantsubsidiaries and affiliates, a cumulative total amount of good faith$48,000 of products and fair dealing, and anticipatorily repudiated its warranty obligations, and that UPRR’s exclusive and limited remedy provisions in the supply agreement have failedservices, targeting $8,000 of their essential purpose which entitles UPRR to recover all incidental and consequential damages. The Complaint seeks to cancel all dutiesannual purchases per year beginning March 13, 2019 per letters of UPRRintent under the contract, to adjudgeSettlement Agreement. During the Company as having no remaining rights under the contracts, and to recover damagesthird quarter of 2021, in an amount to be determined at trial for the value of unfulfilled warranty replacement ties and ties likely to become warranty eligible, for costs of cover for replacement ties, and for various incidental and consequential damages. The amended 2005 supply agreement provides that UPRR’s exclusive remedy is to receive a replacement tie that meets the contract specifications for each tie that failed to meet the contract specifications or otherwise contained a material defect provided that the Company receives written notice of such failure or defect within 15 years after that tie was produced. The amended 2005 supply agreement provides thatconnection with the Company’s warranty does not apply to ties that (a)divestiture of its Piling Products division, the targeted annual purchases per year have been repaired or altered without the Company’s written consent in suchreduced to $6,000 for 2021 through 2024. The Settlement Agreement also includes a way as to affect the stability or reliability thereof, (b) have been subject to misuse, negligence, or accident, or (c) have been improperly maintained or used contrary to the specifications for which such ties were produced. The amended 2005 supply agreement also continues to provide that the Company’s warranty is in lieumutual release of all other expressclaims and liability regarding or implied warranties and that neither party shall be subject to or liable for any incidental or consequential damages to the other party. The dispute is largely based on (1) claims submitted that the Company believes are for ties claimed for warranty replacement that are inaccurately rated under concrete tie rating guidelines and procedures agreed to in 2012 and incorporated by amendment to the 2005 supply agreement rated and are not the responsibility of the Company and claims that do not meet the criteria of a warranty replacement and (2) UPRR’s assertion, which the Company vigorously disputes, that UPRR in future years will be entitled to warranty replacement ties for virtually all of the Grand Island ties. Many thousands of Grand Island ties have been performing in track for over ten years. In addition, a significant amount of Grand Island ties were rated by both parties in the excellent category of the rating system.

In June 2015, UPRR delivered an additional notice alleging deficiencies in certain ties produced in the Company’s Tucson and Spokane locations and other claimed material breaches which the Company contends are unfounded. The Company again responded to UPRR that it was not in material breach of the amended 2005 supply agreement relating to warranty tie replacementsall CXT pre-stressed concrete railroad ties with no admission of liability and that the ties in question complied with the specifications provided by UPRR.

On June 16 and 17, 2015, UPRR issued a formal notice of the termination of the concrete tie supply agreement as well as the termination of the lease agreement at the Tucson, AZ production facility and rejection and revocation of its prior acceptance of certain ties manufactured at the Company’s Spokane, WA production facility. Since that time, UPRR has discontinued submitting purchase orders to the Company for shipment of warranty replacement ties.

On May 29, 2015, the Company and CXT filed an Answer, Affirmative Defenses and Counterclaims in response to the Complaint, denying liability to UPRR. As a result of UPRR’s subsequent June 16-17, 2015 actions and certain related conduct, the Company on October 5, 2015 amended the pending Answer, Affirmative Defenses and Counterclaims to add, among other things, assertions that UPRR’s conduct in question was wrongful and unjustified and constituted additional grounds for the affirmative defenses to UPRR’s claims and also for the Company’s counterclaims.

2016
By Scheduling Order dated June 29, 2016, an August 31, 2017 deadline for the completion of fact discovery was established with trial to proceed at some future date after October 30, 2017, and UPRR filed an amended notice of trial to commence on October 30, 2017.

2017
By Third Amended Scheduling Order dated September 26, 2017, a June 29, 2018 deadline for completion of discovery has been established with trial to proceed at some future date on or after October 1, 2018. During the first nine months ended September 30, 2017, the parties continued to conduct discovery, with various disputes that required and will likely require court resolution. The Company intends to continue to engage in discussions in an effort to resolve the UPRR matter. However, we cannot predict that such discussions will be successful, or that the resultsdismissal of the litigation with prejudice.

The expected payments under the UPRR or any settlement or judgment amounts, will reasonably approximate our estimated accrualsSettlement Agreement for loss contingencies. Future potential costs pertaining to UPRR’s claims and the outcomeremainder of the UPRR litigation could result in a material adverse effect on our results of operations, financial condition,year ending December 31, 2022 and cash flows.thereafter are as follows:

Year Ending December 31,
Remainder of 2022$4,000 
20238,000 
20248,000 
Total$20,000 
As a result of the preliminary status of the litigation and the uncertainty of any potential judgment, an estimate of any additional loss, or a range of additional loss, associated with this litigation cannot be made based upon currently available information.


Environmental and Legal Proceedings
The Company is subject to national, state, foreign, provincial, and/or local laws and regulations relating to the protection of the environment. The Company’s efforts to comply with environmental regulations may have an adverse effect on its future earnings.

On June 5, 2017, a General Notice Letter was received from the United States Environmental Protection Agency ("EPA"(“EPA”) indicating that the Company may be a potentially responsible party (“PRP”) regarding the Portland Harbor Superfund Site cleanup along with numerous other companies. More than 140 other companies received such a notice. The Company and a predecessor owned and operated a facility near the harbor site for a period prior to 1982. The net present value and undiscounted costs of the selected remedy throughout the harbor site are estimated by the EPA to be approximately $1.1 billion and $1.7 billion, respectively, and the remedial work is expected to take as long as 13 years to complete. These costs may increase given that the remedy will not be initiated or completed for several years. The Company is reviewing the basis for its identification by the EPA and the nature of the historic operations of an L.B. Fostera Company predecessor onnear the site. ManagementAdditionally, the Company executed a PRP agreement which provides for a private allocation process among almost 100 PRPs in a working group whose work is ongoing. On March 26, 2020, the EPA issued a Unilateral Administrative Order to two parties requiring them to perform remedial design work for that portion of the Harbor Superfund Site that includes the area closest to the facility; the Company was not a recipient of this Unilateral Administrative Order. The Company cannot predict the ultimate impact of these proceedings because of the large number of PRPs involved throughout the harbor site, the size and extent of the site, the degree of contamination of various wastes, varying environmental impacts throughout the harbor site, the scarcity of data related to the facility once operated by the Company and a predecessor, potential comparative liability between the allocation parties and regarding non-participants, and the speculative nature of the remediation costs. Based upon information currently available, management does not believe that the Company’s alleged PRP status regarding the Portland Harbor Superfund Site or other compliance with the present environmental protection laws will have a material adverse effect on the financial condition, results of operations, cash flows, competitive position, or capital expenditures of the Company. As more information develops and the allocation process is completed, and given the resolution of factors like those described above, an unfavorable resolution could have a material adverse effect.


At
24
Table of Contents
As of September 30, 20172022 and December 31, 2016,2021, the Company maintained environmental reserves approximating $6,255$2,470 and $6,270,$2,519, respectively. The following table sets forth the Company’s environmental obligation:
Environmental liability
Balance as of December 31, 2021$2,519 
Environmental obligations utilized(49)
Balance as of September 30, 2022$2,470 
 Environmental liability
Balance at December 31, 2016$6,270
Additions to environmental obligations7
Environmental obligations utilized(22)
Balance at September 30, 2017$6,255


The Company is also subject to other legal proceedings and claims that arise in the ordinary course of its business. Legal actions are subject to inherent uncertainties, and future events could change management'smanagement’s assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses having a material adverse effect on the Company'sCompany’s financial position or liquidity atas of September 30, 2017.2022.


If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions, the Company discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Company'sCompany’s assessment atas of September 30, 2017,2022, no such disclosures were considered necessary.



25
14. INCOME TAXES
For the three months ended September 30, 2017 and 2016, the Company recorded an income tax benefit
Table of $208 on pretax income of $3,014 and $3,379 on pretax losses of $9,361, respectively, for an effective income tax rate of (6.9)% and 36.1%, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded an income tax provision of $698 on pretax income of $4,522 and an income tax benefit of $42,125 on pretax losses of $142,935, respectively, for an effective income tax rate of 15.4% and 29.5%, respectively. The Company’s tax provision for the nine months ended September 30, 2017 is primarily comprised of taxes on our Canadian and United Kingdom operations. However, as a result of the U.S. consolidated group's current year income, the Company's estimated annual effective tax rate was adjusted during the third quarter to include the realization of a portion of its U.S. deferred tax assets previously offset by a valuation allowance. The Company continued to maintain a full valuation allowance against its U.S. deferred tax assets, which is likely to result in significant variability of the effective tax rate in the current year. Changes in pretax income projections and the mix of income across jurisdictions could also impact the effective tax rate.Contents
15. SUBSEQUENT EVENTS
Management evaluated all of the activity of the Company and concluded that no subsequent events have occurred that would require recognition in the Condensed Consolidated Financial Statements or disclosure in the Notes to Condensed Consolidated Financial Statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(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.”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, L.B. Fosterthe Company’s (the “Company”) expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations; the outcome of litigationoperations and product warranty claims; decisions regarding our strategic growth initiatives, market position, and product development; all of which are based on current estimates that involve inherent risks and uncertainties. The Company has based these forward-looking statements on current expectations and assumptions about future events.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, including recession, whether as a result of the current COVID-19 pandemic or otherwise, including its impact on labor markets, supply chains, and other inflationary costs, travel and demand for oil and gas, the continued volatility 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, strikes, or labor stoppages; environmental matters, including any costs associated with any remediation and monitoring; a resumptionmonitoring of the economic slowdown we have experienced in the previous two years in the markets we serve;such matters; the risk of doing business in international markets;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 disposition of the Piling business and Track Components business, and acquisitions of the Skratch Enterprises Ltd., Intelligent Video Ltd., and VanHooseCo Precast LLC businesses and to realize anticipated benefits; costs of and impacts associated with shareholder activism; a decrease in freight or passenger rail traffic;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'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 effectiveeffectiveness 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;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 these amounts; foreign currency fluctuations; inflation;taxes; domestic and foreign government regulations;regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom’s pending exit from the European Union; sustained declinesgeopolitical conditions, including the conflict in energy prices;Ukraine; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the ultimate number of concrete ties that will have to be replaced pursuant to the previously disclosed product warranty claim of the Union Pacific Railroad (“UPRR”) and an overall resolution of the related contract claims as well as the possible costs associated with the outcome of the lawsuit filed by the UPRR; the loss of future revenues from current customers; and risks inherent in litigation.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 andfor 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.

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General Overview and Business Update
L.B. Foster Company (the “Company”) is a leading manufacturer and distributorglobal solutions provider of engineered, manufactured products and services forthat builds and supports infrastructure. The Company’s innovative engineering and product development solutions address the transportationsafety, reliability, and energy infrastructure withperformance needs of its customers’ most challenging requirements. The Company maintains locations in North America, South America, Europe, and Europe.Asia.

On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast LLC (“VanHooseCo”), a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and traditional precast products for the industrial, commercial and residential infrastructure markets for $52,203 net of cash acquired, at closing, subject to the finalization of net working capital adjustments. VanHooseCo has been included in the Company’s Precast Concrete Products segment.

On June 21, 2022, the Company acquired the stock of Skratch Enterprises Ltd. (“Skratch”) for $7,402, which is inclusive of deferred payments withheld by the Company of $1,228, to be paid over the next five years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement. Skratch is an industry leader in digital system integration with expertise in advanced digital display technologies and capabilities currently serving retail markets in the U.K. Skratch is reported within the Technology Services and Solutions business unit in the Rail, Technologies, and Services segment.

On August 1, 2022, the Company divested the assets of its rail spikes and anchors track components business (“Track Components”) located in St-Jean-sur-Richelieu, Quebec, Canada. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments and a loss on sale of $447 was recorded in “Other expense (income) - net.” The Company is comprised of threeTrack Components business segments:was reported in the Rail Products business unit within the Rail, Technologies, and Services Constructionsegment. On September 24, 2021, the Company executed the sale of its Piling Products (“Piling”) division for $23,902 in total proceeds. The sale included substantially all inventory held by the Company associated with the division. The Piling Products division is included in the Fabricated Steel business unit within the legacy Infrastructure Solutions segment.

Net sales for the third quarter of 2022 were $130,015, essentially unchanged versus the prior year quarter. However, net sales increased 8.7% organically and 5.5% from acquisitions, which was offset by a 14.3% decrease from divestitures. Sales activity includes a 4.6% increase in the Rail, Technologies, and Services segment, a 60.6% increase in the Precast Concrete Product segment, and a 37.6% decrease in the Steel Products and Tubular and Energy Services.Measurement segment.


Quarter-to-Date Results
Gross profit for the three months ended September 30, 2022 was $23,096, an $821 increase, or 3.7%, from the prior year quarter. The segmentincrease in reported gross profit measures presented within Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") tables constitute non-GAAP financial measures disclosedwas driven primarily by management to provide investors and other users information to evaluate the performance of the Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocationsPrecast Concrete Product segment, which increased by $2,929, or 107.8%, due in part to the reportable segments:

Allows users to understand the operational performance of our reportable segments;
Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and
Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantitiesVanHooseCo acquisition as well as productionimproved margins in the legacy Precast Concrete Products business. Partially offsetting the increase was a decline in gross profit in the Steel Products and service costs to better evaluate key profitability drivers and trends that may developMeasurement segment of $1,556 due to industrythe Piling divestiture, as well as a more modest decline of $552 in Rail, Technologies, and competitive conditions.
Three months ended September 30, 2017 Rail Products and
Services		 Construction
Products		 Tubular and Energy
Services		 Total
Reportable Segment Profit $3,472
 $3,387
 $2,298
 $9,157
Segment and Allocated Selling & Administrative 9,405
 4,620
 3,337
 17,362
Amortization Expense 940
 38
 786
 1,764
Asset Impairments —
 —
 —
 —
Non-GAAP Segment Gross Profit $13,817
 $8,045
 $6,421
 $28,283
         
Three months ended September 30, 2016 Rail Products and
Services		 Construction
Products		 Tubular and Energy
Services		 Total
Reportable Segment (Loss) Profit $(2,047) $1,356
 $(6,966) $(7,657)
Segment and Allocated Selling & Administrative 8,926
 4,783
 4,290
 17,999
Amortization Expense 958
 38
 767
 1,763
Asset Impairments 4,383
 —
 2,563
 6,946
Non-GAAP Segment Gross Profit $12,220
 $6,177
 $654
 $19,051

      Percent of Total Net Sales  
  Three Months Ended Three Months Ended Percent
Increase/
(Decrease)
  September 30, September 30, 
  
 2017 2016 2017 2016 2017 vs. 2016
Net Sales:          
Rail Products and Services $62,095
 $56,891
 47.2 % 49.6 % 9.1 %
Construction Products 39,118
 34,870
 29.7
 30.4
 12.2
Tubular and Energy Services 30,279
 22,883
 23.1
 20.0
 32.3
Total net sales $131,492
 $114,644
 100.0 % 100.0 % 14.7 %
           
      Non-GAAP / Reported
Gross Profit Percentage		 Percent
Increase/
(Decrease)
  Three Months Ended Three Months Ended 
  September 30, September 30, 
  
 2017 2016 2017 2016 2017 vs. 2016
Gross Profit:          
Non-GAAP Rail Products and Services $13,817
 $12,220
 22.3 % 21.5 % 13.1 %
Non-GAAP Construction Products 8,045
 6,177
 20.6
 17.7
 30.2
Non-GAAP Tubular and Energy Services 6,421
 654
 21.2
 2.9
 **
Non-GAAP Segment gross profit 28,283
 19,051
      
LIFO (expense) income (1,552) 917
 (1.2) 0.8
 **
Other (366) (165) (0.3) (0.1) 121.8
Total gross profit $26,365
 $19,803
 20.1 % 17.3 % 33.1 %
        Percent
Increase/
(Decrease)
      Percent of Total Net Sales 
  Three Months Ended Three Months Ended 
  September 30, September 30, 
  2017 2016 2017 2016 2017 vs. 2016
Expenses:          
Selling and administrative expenses $20,218
 $19,807
 15.4 % 17.3 % 2.1 %
Amortization expense 1,764
 1,763
 1.3
 1.5
 0.1
Asset impairments —
 6,946
 —
 6.1
 (100.0)
Interest expense 2,026
 1,520
 1.5
 1.3
 33.3
Interest income (56) (50) —
 —
 12.0
Equity in (income) loss of nonconsolidated investments (50) 263
 —
 0.2
 (119.0)
Other income (551) (1,085) (0.4) (0.9) 49.2
Total expenses $23,351
 $29,164
 17.8 % 25.4 % (19.9)%
Income (loss) before income taxes $3,014
 $(9,361) 2.3 % (8.2)% 132.2 %
Income tax benefit (208) (3,379) (0.2) (2.9) 93.8
Net income (loss) $3,222
 $(5,982) 2.5 % (5.2)% 153.9 %
**Results of calculation are not considered meaningful for presentation purposes.

Third Quarter 2017 ComparedServices. Gross profit in the quarter included a $3,956 million adverse impact associated with the settlement of certain long-term commercial contracts related to Third Quarter 2016 – Company Analysis
Netthe multi-year Crossrail project in the Company’s Technology Services and Solutions business in the United Kingdom. This settlement also reduced net sales of $131,492 for the period ended September 30, 2017Rail, Technologies, and Services segment by $3,956. Consolidated gross profit margin increased by $16,848, or 14.7%,70 basis points to 17.8% when compared to the prior year quarter. The change wasquarter, with the increase attributable to increases of 32.3%, 12.2%, and 9.1%, in Tubular and Energy Services, Construction Products, and Rail Products and Services, respectively.

Gross profit margin for the quarter ended September 30, 2017Precast Concrete Product segment, which was 20.1% or 280 basis points (“bps”) higher thanup 450 bps compared to the prior year quarter. Eachperiod due to the VanHooseCo acquisition as well as improved margins in the legacy Precast Concrete Products business, and the Steel Products and Measurement segment which had a margin increase of 230 bps over the prior year quarter due to the sale of the three segments contributedlower margin Piling business. The Rail, Technologies, and Services segment margin decreased by 150 bps during the current quarter due to the increase with gainsimpact of 1,830 bps, 290 bps, and 80 bps,the Crossrail settlement as well as higher sales in Tubular and Energy Services, Construction Products, andthe lower margin Rail Products and Services, respectively.line of business.


Selling and administrative expenses for the three months ended September 30, 2022 increased by $411$2,562, or 2.1%12.8%, from the prior year. The increase wasyear, primarily driven by personnel related spendinga $1,443 increase in expenses associated with the Company's ongoing strategic transformation activities, including costs associated with the Company’s acquisition and divestiture activity, and an increase in salary and incentive costs. Selling and administrative expenses as a percent of $821, which was partially offset by reduced litigation costs related tonet sales were 17.4% versus 15.4% in the Union Pacific Railroad ("UPRR") matter of $468.prior year quarter, a 200 basis point increase.


DuringOther expense - net for the quarterthree months ended September 30, 2016,2022 was $168 while other income - net was $2,880 in the Company recorded total non-cash asset impairmentsprior year quarter, the change was due almost entirely to the loss of $6,946 from goodwill and definite-lived intangible assets.

Interest expense, net$447 on the sale of interest income, increased by $500, or 34.0%, as a result ofTrack Components in the increase in interest rates on outstanding debt. Other income decreased $534, or 49.2%, which primarily relates to losses on foreign exchange as the Canadian Dollar has strengthenedcurrent year quarter compared to the United States Dollar versusgain on the sale of the Piling business of $2,741 in the prior year period.quarter.


The Company’s effective income tax rate for the three-month periodthree months ended September 30, 20172022 was (6.9)%7.7%, compared to 36.1%23.2% in the prior year quarter. ForThe Company’s provision for income taxes for the three monthsquarter ended September 30, 2017,2022 included a discrete income tax expense of $330 for a change in our permanent reinvestment assertion with respect to the Company recordedundistributed earnings in Canada, as a result
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of the divestiture of our Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada. The Company’s effective income tax benefit of $208, compared to $3,379 inrate for the three monthsquarter ended September 30, 2016. The Company's2022 differed from the federal statutory rate of 21% primarily due to state income taxes, nondeductible expenses, research tax benefitcredits and withholding taxes on excess cash available for repatriation from foreign affiliates.

Net loss for the three months ended September 30, 20172022 attributable to L.B. Foster Company was primarily related to changes in our estimated annual effective tax rate. The Company continued to maintain a full valuation allowance against its U.S. deferred tax assets.

Net income for the third quarter of 2017 was $3,222,$2,077, or $0.31$0.20 per diluted share, compared to a net lossdecrease of $5,982,$4,419, or $0.58$0.42 per diluted share, infrom the prior year quarter. The following table providesdecrease was primarily driven a reconciliation$3,956 expense associated with the settlement of certain long-term commercial contracts related to the Crossrail project and by non-routine costs of $1,443 associated with the Company's acquisition and divestiture activity, as part of its overall portfolio transformation strategy. The prior year net income also benefited from the gain on the sale of the GAAP earnings per share value toPiling business, which was $2,741.

The Company’s consolidated backlog(a) was $272,777 as of September 30, 2022, an increase of $41,051, or 17.7%, from the non-GAAP adjusted earnings1 per share valueprior year. The Precast Concrete Product and Steel Products and Measurement segments reported a $17,048 and $24,954 backlog increase versus the prior year quarter, respectively, while the Rail, Technologies, and Services segment reported a decrease of $951 versus the prior year quarter. New order levels(a) for the three-month periodsthree months ended September 30, 20172022 decreased by $1,592, or 1.1%, from the prior year quarter. New orders increased 5.0% organically and 2016:5.6% from acquisitions, offset by a 11.7% decrease from divestitures.

  Three Months Ended
September 30,
  2017 2016
  (Unaudited)
Adjusted Diluted Earnings (Loss) Per Share Reconciliation    
Net income (loss), as reported $3,222
 $(5,982)
Asset impairments, net of tax benefits of $1,000 —
 5,946
Adjusted net income (loss) $3,222
 $(36)
Average number of common shares outstanding - Diluted 10,479
 10,296
Diluted earnings (loss) per common share, as reported $0.31
 $(0.58)
Diluted earnings (loss) per common share, as adjusted $0.31
 $(0.00)
While the present inflationary environment in labor and raw materials continues to pressure margins across the business, the Company has realized some benefit from cost and pricing mitigation actions taken, as evidenced in the Company's third quarter results. These mitigation efforts, along with the Company's portfolio transformation activities, drove the 70 basis point increase in margins from the prior year period, despite the $3,956 million unfavorable impact on gross profit levels due to the Crossrail adjustment. The Company continues to prioritize growth and margin improvement as well as its strategic transformation into a technology-focused, high growth infrastructure solutions provider, as evidenced from the acquisition of VanHooseCo and the divestiture of the Company’s Track Components business that were completed during the quarter. The additional flexibility and capacity resulting from the amendments to the Company’s credit agreement completed in 2021 and 2022 also provides the resources needed to fund operations and execute on any additional organic or acquisitive growth opportunities through the balance of 2022 and beyond.


1 AllAs recessionary market conditions persist and are in some ways expanding, these conditions may impact demand for the Company’s offerings. However, the Company expects that many of its businesses will continue to directly benefit from infrastructure investment activity, including funding benefits from 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.
(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 in this Quarterly Report that exclude asset impairment charges are non-GAAP measures usedof operations and financial prospects, and strategies for management reporting purposes. Managementbusiness development. The Company believes that these measures providenew orders and backlog are useful information to investors because they will assist investors in evaluating earningsas supplemental metrics by which to measure the Company’s current performance on a comparable year-over-year basis.and prospective results of operations and financial performance.


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Results of the Quarter
Three Months Ended
September 30,		Percent
Increase/
(Decrease)		Percent of Total Net Sales
Three Months Ended
September 30,
202220212022 vs. 202120222021
Net Sales:
Rail, Technologies, and Services$77,350 $73,942 4.6 %59.5 %56.9 %
Precast Concrete Products28,856 17,972 60.6 22.2 13.8 
Steel Products and Measurement23,809 38,139 (37.6)18.3 29.3 
Total net sales$130,015 $130,053 0.0 %100.0 %100.0 %
Three Months Ended
September 30,		Percent
Increase/
(Decrease)		Gross Profit Percentage
Three Months Ended
September 30,
202220212022 vs. 202120222021
Gross Profit:
Rail, Technologies, and Services$13,376 $13,928 (4.0 %)17.3 %18.8 %
Precast Concrete Products5,647 2,718 107.8 19.6 15.1 
Steel Products and Measurement4,074 5,630 (27.6)17.1 14.8 
Total gross profit$23,097 $22,276 3.7 %17.8 %17.1 %
Three Months Ended
September 30,		Percent
Increase/
(Decrease)		Percent of Total Net Sales
Three Months Ended
September 30,
202220212022 vs. 202120222021
Expenses:
Selling and administrative expenses$22,618 $20,056 12.8 %17.4 %15.4 %
Amortization expense1,599 1,462 9.4 1.2 1.1 
Operating (loss) profit(1,120)758 (247.8)(0.9)0.6 
Interest expense - net993 722 37.5 0.8 0.6 
Other expense (income) - net168 (2,880)105.8 0.1 (2.2)
(Loss) income before income taxes(2,281)2,916 (178.2)(1.8)2.2 
Income tax (benefit) expense(176)676 (126.0)(0.1)0.5 
Net (loss) income$(2,105)$2,240 (194.0 %)(1.6 %)1.7 %
Net loss attributable to noncontrolling interest(28)(30)6.7 (0.0)(0.0)
Net (loss) income attributable to L.B. Foster Company$(2,077)$2,270 (191.5 %)(1.6 %)1.7 %

Results of Operations –- Segment Analysis

Rail, ProductsTechnologies, and Services
Three Months Ended
September 30,		Increase/(Decrease)Percent
Increase/(Decrease)
202220212022 vs. 20212022 vs. 2021
Net sales$77,350 $73,942 $3,408 4.6 %
Gross profit$13,376 $13,928 $(552)(4.0 %)
Gross profit percentage17.3 %18.8 %(1.5 %)(8.2 %)
Segment operating profit$539 $3,091 $(2,552)(82.6 %)
Segment operating profit percentage0.7 %4.2 %(3.5 %)(83.3 %)
  Three Months Ended
September 30,		 Increase Percent
Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $62,095
 $56,891
 $5,204
 9.1%
Segment Profit (Loss) $3,472
 $(2,047) $5,519
 269.6%
Segment Profit (Loss) Percentage 5.6% (3.6)% 9.2% 255.6%


Third Quarter 20172022 Compared to Third Quarter 20162021
On August 1, 2022, the Company divested the assets of its Track Components business. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments.

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The Rail, ProductsTechnologies, and Services segment sales for the three months ended September 30, 2022 increased by $5,204,$3,408, or 9.1%4.6%, compared to the prior year quarter. The Rail Products business unit increased by $7,140, or 14.8%, and the Global Friction Management business unit increased by $1,428, or 11.7%, offsetting a sales decrease in the Technology Services and Solutions business unit of $5,160, or 38.7%, compared to the prior year quarter. The increase in the Rail Products business unit was driven by timing of customer order fulfillment versus the prior year quarter, which was partially offset by the impact of the Track Components divestiture. The sales decrease in the Technology Services and Solutions business unit was driven by an unfavorable settlement adjustment of $3,956 for certain long-term commercial contracts related to the multi-year Crossrail project along with foreign currency-related headwinds.

The Rail, Technologies, and Services segment gross profit decreased by $552, or 4.0%, from the prior year quarter. The decrease was driven by the $3,956 Crossrail settlement impact on Technology Services and Solutions gross profit, which was offset by increases in Rail Products and Global Friction Management commensurate with higher sales levels. Segment gross profit margins decreased by 150 basis points as a result of stronger sales in the lower margin Rail Products business unit, as well as the Crossrail settlement impact. Operating profit was $539, a $2,552 decrease over the prior year quarter, due primarily to lower overall gross profit levels and higher selling and administrative expenses stemming from increased salary, incentive, travel, and advertising costs.

During the current quarter, the Rail, Technologies, and Services segment had a decrease in new orders of $27,447, or 32.7%, compared to the prior year period. The decrease is due primarily to differences in customer order timing in the Rail Distribution business, as well as an impact of $3,079 due to the Track Components divestiture. Backlog as of September 30, 2022 was $108,864, a decrease of $951, or 0.9%, versus the prior quarter, $1,792 of which is related to the divested Track Components division.

Precast Concrete Products
Three Months Ended
September 30,		IncreasePercent
Increase
202220212022 vs. 20212022 vs. 2021
Net sales$28,856 $17,972 $10,884 60.6 %
Gross profit$5,647 $2,718 $2,929 107.8 %
Gross profit percentage19.6 %15.1 %4.5 %29.4 %
Segment operating profit$1,245 $144 $1,101 **
Segment operating profit percentage4.3 %0.8 %3.5 %**
** Results of the calculation are not considered meaningful for presentation purposes.

Third Quarter 2022 Compared to Third Quarter 2021
On August 12, 2022, the Company acquired the operating assets of VanHooseCo for $52,540. VanHooseCo reported sales increase was primarily driven domesticallyof $6,353, gross profit of $1,309 and operating profit of $397, which are included in the Precast Concrete Products results for the three months ended September 30, 2022.

The Precast Concrete Products segment sales for the three months ended September 30, 2022 increased by a $3,037 increase in our distribution business, which experienced increased demand as overall tonnage sold increased$10,884, or 60.6%, compared to the prior period,year quarter, which is the result of the VanHooseCo acquisition and Allegheny Raila continued reflection of the strong demand environment in the southern United States markets served.

Precast Concrete Products which increased by $2,017, following a 76% demand increase from Class 1 railroads.

The Rail Products and Services segmentgross profit increased by $5,519 to 5.6% of net sales.$2,929, or 107.8%, from the prior year quarter. The increase was primarilyis partially attributable to 2016 impairment chargesthe VanHooseCo acquisition as well as higher overall sales volumes and stronger margins from the legacy precast business. During the quarter, VanHooseCo gross profit was subject to an expense of $4,383$851 from a purchase accounting adjustment related to Rail Technologies goodwill. Non-GAAPthe acquired inventory, partially diluting the uplift on gross profit from the acquisition. Segment gross profit margin increased $1,597,by 450 bps for the third quarter of 2022. Operating profit for the third quarter of 2022 increased by $1,101 when compared to the operating profit in the prior year quarter, due to higher gross profit levels, which were partially offset by selling and administrative costs associated with the VanHooseCo transaction.

During the quarter, the Precast Concrete Products segment had an increase in new orders of 31.3% compared to the prior year quarter due to the VanHooseCo acquisition. Backlog as of September 30, 2022 was $86,612, an increase of $17,048, or 13.1%24.5%, from September 30, 2021, remaining at historically high levels, due in part to a $14,366 increase from VanHooseCo.







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Steel Products and Measurement
Three Months Ended
September 30,		(Decrease)/IncreasePercent
(Decrease)/Increase
202220212022 vs. 20212022 vs. 2021
Net sales$23,809 $38,139 $(14,330)(37.6)%
Gross profit$4,074 $5,630 $(1,556)(27.6)%
Gross profit percentage17.1 %14.8 %2.3 %15.9 %
Segment operating profit (loss)$303 $(27)$330 **
Segment operating profit (loss) percentage1.3 %(0.1)%1.4 %**
** Results of the calculation are not considered meaningful for presentation purposes.

Third Quarter 2022 Compared to Third Quarter 2021
The Steel Products and Measurement segment sales for the three months ended September 30, 2022 decreased by $14,330, or 37.6%, compared to the prior year quarter. The decrease in sales for the third quarter of 2022 was attributable to the $16,313 decline in year over year sales from the Piling Products division, which was divested in September of 2021. The decline was partially offset by an increase in Fabricated Steel Products, excluding the divested Piling Products division, of $1,102 and an increase of $881 in the Coatings and Measurement business unit.

Steel Products and Measurement gross profit decreased by $1,556, or 27.6%, from the prior year quarter, due to lower sales volume associated with the sale of the Piling Products business. The gross profit margin increased 230 basis points to 17.1%, as a result of a more favorable mix in 2022 due to the sale of the lower margin Piling Products business. The segment operating profit was $303, a $330 increase from the prior year quarter. Selling and administrative expenses incurred by the segment decreased by $1,936 compared to the prior year quarter, primarily attributable to expenses associated with the Piling Products divestiture in 2021.

During the quarter, the Steel Products and Measurement segment new orders increased domestic distribution volumes.by $18,542, or 58.8% compared to the prior year quarter, due to a $32,763 increase in Coatings and Measurement, driven primarily by a large order in the Company’s line pipe coating facility in Birmingham, AL, to support a carbon capture and sequestration pipeline project. This increase was offset by a $13,237 decrease in orders due to the sale of the Piling division in the prior year period. Backlog as of September 30, 2022 was $77,301, an increase of $24,954, or 47.7%, from September 30, 2021, driven by the order increase in Coatings and Measurement business unit, which was partially offset by a decrease in Fabricated Steel Products business unit, including reductions due to the Piling divestiture.



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Nine Month Results
Nine Months Ended
September 30,		Percent
Increase/
(Decrease)		Percent of Total Net Sales
Nine Months Ended
September 30,
202220212022 vs. 202120222021
Net Sales:
Rail, Technologies, and Services$222,857 $228,956 (2.7)%61.9 %57.1 %
Precast Concrete Products67,477 50,723 33.0 18.7 12.7 
Steel Products and Measurement69,990 120,976 (42.1)19.4 30.2 
Total net sales$360,324 $400,655 (10.1)%100.0 %100.0 %
Nine Months Ended
September 30,		Percent
Increase/
(Decrease)		Gross Profit Percentage
Nine Months Ended
September 30,
202220212022 vs. 202120222021
Gross Profit:
Rail, Technologies, and Services$41,564 $43,393 (4.2)%18.7 %19.0 %
Precast Concrete Products11,439 9,127 25.3 17.0 18.0 
Steel Products and Measurement9,834 14,747 (33.3)14.1 12.2 
Total gross profit$62,837 $67,267 (6.6)%17.4 %16.8 %
Nine Months Ended
September 30,		Percent
Increase/
(Decrease)		Percent of Total Net Sales
Nine Months Ended
September 30,
202220212022 vs. 202120222021
Expenses:
Selling and administrative expenses$59,310 $57,849 2.5 %16.5 %14.4 %
Amortization expense4,454 4,397 1.3 1.2 1.1 
Operating profit (loss)(927)5,021 (118.5)(0.3)1.3 
Interest expense - net1,747 2,454 (28.8)0.5 0.6 
Other (income) expense - net(1,096)(2,751)60.2 (0.3)(0.7)
Income tax expense137 1,494 (90.8)0.0 0.4 
Net (loss) income$(1,715)$3,824 (144.8)%(0.5)%1.0 %
Net loss attributable to noncontrolling interest(82)(64)28.1 (0.0)(0.0)
Net (loss) income attributable to L.B. Foster Company$(1,633)$3,888 (142.0)%(0.5)%1.0 %
Results of Operations - Segment Analysis
Rail, Technologies, and Services
Nine Months Ended
September 30,		(Decrease)/IncreasePercent
(Decrease)/Increase
202220212022 vs. 20212022 vs. 2021
Net sales$222,857 $228,956 $(6,099)(2.7 %)
Gross profit$41,564 $43,393 $(1,829)(4.2 %)
Gross profit percentage18.7 %19.0 %(0.3 %)(1.6 %)
Segment operating profit$5,576 $10,970 $(5,394)(49.2 %)
Segment operating profit percentage2.5 %4.8 %(2.3 %)(47.8 %)

First Nine Months 2022 Compared to First Nine Months 2021
On June 21, 2022, the Company entered into an agreement to purchase the stock of Skratch Enterprises Ltd. (“Skratch”) for $7,402. Skratch reported $856 in sales and $430 in gross profit within the Rail, Technologies, and Services nine months ended September 30, 2022 results. On August 1, 2022, the Company divested the assets of its Track Components business. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments.
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The Rail, Technologies, and Services segment sales for the nine months ended September 30, 2022 decreased by $6,099, or 2.7%, compared to the prior year period. The decrease in sales was driven by the Rail Products business unit, which declined by $5,225, or 3.3%, and the Technology Services and Solutions business unit, which declined by $4,666 or 12.9%, offsetting sales increases in the Global Friction Management business unit of $3,792. The decrease in the Rail Products business unit was driven by the Track Components divestiture, accounting for $2,439 of the decline, as well as differences in customer order fulfillment timing between the periods. The decrease in the Technology Services and Solutions business unit is primarily attributable to the $3,956 adjustment from the customer settlement related to the Crossrail project, along with foreign currently-related headwinds. The sales increase in the Global Friction Management business unit is due to strength primarily in North American markets served.

The Rail, Technologies, and Services segment gross profit decreased by $1,829, or 4.2%, from the prior year quarter. Rail Products gross profit decreased by $750, commensurate with the sales volume decline, while Global Friction Management gross profit increased by $1,224, commensurate with the sales volume increase. Technology Services and Solutions gross profit decreased by $2,784, with the adverse impact of the Crossrail adjustment accounting for $3,956 of the decline, offsetting modest increases across the balance of the business unit. Segment gross profit margins decreased by 30 basis points, driven by the Crossrail adjustment impact on segment margins. Operating profit was $5,576, a $5,394 decrease over the prior year period, due in part to the decrease in gross profit and a $1,386 increase in selling and administrative expense.

During the current quarter, the Rail, ProductsTechnologies, and Services segment had an increase in new orders of 44.5%7.8% compared to the prior year period, while backlog was $85,764 at September 30, 2017, an increase of 60.6%, compareddriven by improvements in all business units, despite the $4,434 decline in new orders due to $53,392 at September 30, 2016. The Company is encouraged by continuing positive trends signaling a recovering freight rail market in North America and strength in the transit system projects globally.Track Components divestiture.


ConstructionPrecast Concrete Products
Nine Months Ended
September 30,		Increase/(Decrease)Percent
Increase/(Decrease)
202220212022 vs. 20212022 vs. 2021
Net sales$67,477 $50,723 $16,754 33.0 %
Gross profit$11,439 $9,127 $2,312 25.3 %
Gross profit percentage17.0 %18.0 %(1.0)%(5.8)%
Segment operating profit$329 $1,175 $(846)(72.0)%
Segment operating profit percentage0.5 %2.3 %(1.8)%(79.0)%
  Three Months Ended
September 30,		 Increase Percent
Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $39,118
 $34,870
 $4,248
 12.2%
Segment Profit $3,387
 $1,356
 $2,031
 149.8%
Segment Profit Percentage 8.7% 3.9% 4.8% 123.1%


Third Quarter 2017First Nine Months 2022 Compared to Third Quarter 2016First Nine Months 2021
ConstructionThe Precast Concrete Products segment sales for the nine months ended September 30, 2022 increased by $4,248,$16,754, or 12.2%33.0%, compared to the prior year period. Fabricated Bridgeperiod, which is primarily a result of the VanHooseCo acquisition and a continued reflection of the strong demand environment both in the southern and northeastern United States markets served.

Precast Concrete Products businesses increased by $4,411 and $1,185, respectively. Fabricated Bridge generated favorable sales in the current quarter due to bridge form projects as well as the continuation of the Peace Bridge project. Precast Concrete Products was favorably impacted by increased building sales to state agencies. These increases were partially offset by a reduction in Piling sales of $1,348, primarily related to lower sheet piling volumes.

The Construction Products segmentgross profit increased by $2,031$2,312, or 25.3%, from the prior year quarter, which is attributable to 8.7%overall higher sales volumes, due in part to the VanHooseCo acquisition. However, VanHooseCo gross profit was subject to an expense of net sales. The increase was primarily volume$851 from a temporary purchase accounting adjustment related improved manufacturing efficiencies,to the acquired inventory, partially diluting the uplift on gross profit from the acquisition. Segment gross profit margin declined by 100 bps for the nine months ended September 30, 2022 versus the prior year period due to continued inflationary pressures and unfavorable building sales mix and, to a lesser extent, reduced sellingmanufacturing inefficiencies due to supply chain disruption. Operating profit for the nine months ended September 30, 2022 of $329 reflects a $846 decline from the prior year period, due to increased salary, incentive, and administrative expenses of $163, or 3.4%. Non-GAAP gross profit increased by $1,868, or 30.2%, which was a result of volume increases and manufacturing efficiencies reducingtravel costs.


During the quarter, the Construction Products segment had a decrease in new orders of 11.1% compared to the prior year period. The decrease related to a 47.8% reduction Piling orders due to lower sheet piling demand. This was partially offset by increased new orders of 228.9% and 10.7% for our Fabricated Bridge and Precast Concrete Products businesses, respectively. Ending backlog in the Construction segment decreased by 1.1% to $74,910 from the prior year period.

Tubular and Energy Services
  Three Months Ended
September 30,		 Increase Percent
Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $30,279
 $22,883
 $7,396
 32.3%
Segment Profit (Loss) $2,298
 $(6,966) $9,264
 133.0%
Segment Profit (Loss) Percentage 7.6% (30.4)% 38.0% 125.0%

Third Quarter 2017 Compared to Third Quarter 2016
Tubular and Energy Services segment sales increased by $7,396, or 32.3%, compared to the prior year period. The increase related to strong bookings from Protective Coatings and Test and Inspection Services businesses, partially offset by a decrease in Precision Measurement Systems sales. The quarter showed continued improvement within the upstream oil and gas market. Sales in the Precision Measurement Systems business are below prior year, although order input was very strong in the quarter as backlog is now 99.7% above prior year levels.

Tubular and Energy Services segment profit increased by $9,264, or 133.0%, compared to the prior year quarter. The quarter was favorably impacted by non-GAAP gross profit of $5,767 over the prior year period, with increases from each division within the segment. The prior year was negatively affected by impairment charges of $2,563 for the three months ended September 30, 2016.

The Tubular and Energy Services segment had an increase in new orders of 97.1%3.1% compared to the prior year period. Orders for Precision Measurement Systems, Testperiod, and Inspection Services,an increase in backlog of 24.5% as of September 30, 2022 versus the prior year. New orders and Protective Coatings increased 147.1%, 129.6%, and 89.2%, respectively. The upstream oil and gas market continues to show signs of recovery. Webacklog continue to be encouraged by increased order activityremain strong given the robust demand environment in the midstream market as well.markets served.


On July 31, 2017, the lease at our Birmingham, Alabama facility expired. During the third quarter ended September 30, 2017, the Company negotiated a lease renewal for this facility. The renewal is for a term
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Table of five yearsContents
Steel Products and is scheduled to expire July 31, 2022.Measurement

Nine Months Ended
September 30,		(Decrease)/IncreasePercent
(Decrease)/Increase
202220212022 vs. 20212022 vs. 2021
Net Sales$69,990 $120,976 $(50,986)(42.1)%
Gross profit$9,834 $14,747 $(4,913)(33.3)%
Gross profit percentage14.1 %12.2 %1.9 %15.3 %
Segment operating loss$(1,083)$(140)$(943)**
Segment operating loss percentage(1.5)%(0.1)%(1.4)%**
Year-to-Date** Results
The segment gross profit measures presented within the MD&A tables constitute non-GAAP financial measures disclosed by management to provide investors and other users information to evaluate the performance of the Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocations to the reportable segments:calculation are not considered meaningful for presentation purposes.

Allows users to understand the operational performance of our reportable segments;
Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and
Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantities as well as production and service costs to better evaluate key profitability drivers and trends that may develop due to industry and competitive conditions.
Nine months ended September 30, 2017 Rail Products and
Services		 Construction
Products		 Tubular and Energy
Services		 Total
Reportable Segment Profit $8,938
 $9,156
 $1,774
 $19,868
Segment and Allocated Selling & Administrative 27,355
 13,835
 11,711
 52,901
Amortization Expense 2,747
 113
 2,358
 5,218
Asset Impairments —
 —
 —
 —
Non-GAAP Segment Gross Profit $39,040
 $23,104
 $15,843
 $77,987
         
Nine months ended September 30, 2016 Rail Products and
Services		 Construction
Products		 Tubular and Energy
Services		 Total
Reportable Segment (Loss) Profit $(26,474) $5,748
 $(111,876) $(132,602)
Segment and Allocated Selling & Administrative 31,854
 14,781
 12,891
 59,526
Amortization Expense 2,946
 113
 4,759
 7,818
Asset Impairments 32,725
 —
 103,159
 135,884
Non-GAAP Segment Gross Profit $41,051
 $20,642
 $8,933
 $70,626

      Percent of Total Net Sales  
  Nine Months Ended Nine Months Ended Percent
Increase/
(Decrease)
  September 30, September 30, 
  
 2017 2016 2017 2016 2017 vs. 2016
Net Sales:          
Rail Products and Services $187,922
 $188,686
 47.6 % 50.1 % (0.4)%
Construction Products 121,905
 107,098
 30.9
 28.4
 13.8
Tubular and Energy Services 85,227
 81,164
 21.5
 21.5
 5.0
Total net sales $395,054
 $376,948
 100.0 % 100.0 % 4.8 %
           
      Non-GAAP / Reported
Gross Profit Percentage		 Percent
Increase/
(Decrease)
  Nine Months Ended Nine Months Ended 
  September 30, September 30, 
  
 2017 2016 2017 2016 2017 vs. 2016
Gross Profit:          
Non-GAAP Rail Products and Services $39,040
 $41,051
 20.8 % 21.8 % (4.9)%
Non-GAAP Construction Products 23,104
 20,642
 19.0
 19.3
 11.9
Non-GAAP Tubular and Energy Services 15,843
 8,933
 18.6
 11.0
 77.4
Non-GAAP Segment gross profit 77,987
 70,626
      
LIFO (expense) income (1,733) 1,442
 (0.4) 0.4
 (220.2)
Other (901) (492) (0.2) (0.1) 83.1
Total gross profit $75,353
 $71,576
 19.1 % 19.0 % 5.3 %
        Percent
Increase/
(Decrease)
      Percent of Total Net Sales 
  Nine Months Ended Nine Months Ended 
  September 30, September 30, 
  2017 2016 2017 2016 2017 vs. 2016
Expenses:          
Selling and administrative expenses $60,023
 $65,941
 15.2 % 17.5 % (9.0)%
Amortization expense 5,218
 7,818
 1.3
 2.1
 (33.3)
Asset impairments —
 135,884
 —
 36.0
 (100.0)
Interest expense 6,315
 4,342
 1.6
 1.2
 45.4
Interest income (166) (157) —
 —
 5.7
Equity in loss of nonconsolidated investments 5
 946
 —
 0.3
 (99.5)
Other income (564) (263) (0.1) (0.1) 114.4
Total expenses $70,831
 $214,511
 17.9 % 56.9 % (67.0)%
Income (loss) before income taxes $4,522
 $(142,935) 1.1 % (37.9)% 103.2 %
Income tax expense (benefit) 698
 (42,125) 0.2
 (11.2) 101.7
Net income (loss) $3,824
 $(100,810) 1.0 % (26.7)% 103.8 %


First Nine Months of 20172022 Compared to First Nine Months of 2016 – Company Analysis2021
Net sales of $395,054 for the period ended September 30, 2017 increased by $18,106, or 4.8%, compared to the prior year period. The change was attributable to increases of 13.8% and 5.0% in the ConstructionSteel Products and Tubular and Energy Services segments, respectively. This increase was partially offset by a decrease of 0.4% in the Rail Products and Services segment.

Gross profit marginMeasurement segment sales for the nine months ended September 30, 2017 was 19.1% or 10 bps higher than the prior year period. The increase was due to a 760 bps improvement within the Tubular and Energy Services segment. The increase was partially offset by reductions of 100 bps and 30 bps, in Rail Products and Services and Construction Products, respectively.

Selling and administrative expenses2022 decreased by $5,918$50,986, or 9.0% from the prior year. All three segments experienced decreases which were primarily driven by personnel and discretionary spending reductions of $4,021 and reduced litigation costs related to the UPRR matter of $1,419.

Amortization decreased $2,600, or 33.3%, as a result of the June 1, 2016 interim intangible asset impairment test, which was finalized during the three months ended September 30, 2016, resulting in a $59,786 impairment of definite-lived intangible assets. During the nine months ended September 30, 2016, the Company recorded total non-cash asset impairments of $135,884 from goodwill, definite-lived intangible assets, and property, plant, and equipment.

Interest expense, net of interest income, increased by $1,964, or 46.9%, as a result of the increase in interest rates on outstanding debt. Other income increased by $301, or 114.4%, which primarily related to the gain on the sale of certain assets, which was partially offset by the impact of a weaker United States Dollar relative to the Canadian Dollar in the nine months ended September 30, 2017.

The Company’s effective income tax rate for the nine months ended September 30, 2017 was 15.4%, compared to 29.5% in the prior year period. For the first nine months ended September 30, 2017, the Company recorded a tax provision of $698, compared to a tax benefit of $42,125 in the nine months ended September 30, 2016. The Company’s tax provision for the nine months ended September 30, 2017 was primarily comprised of taxes on our Canadian and United Kingdom operations. The Company continued to maintain a full valuation allowance against its U.S. deferred tax assets.

Net income for the first nine months of 2017 was $3,824, or $0.37 per diluted share, compared to a net loss of $100,810, or $9.82 per diluted share, in the prior year period. The following table provides a reconciliation of the GAAP earnings per share value to the non-GAAP adjusted earnings1 per share value for the nine-month periods ended September 30, 2017 and 2016:

  Nine Months Ended
September 30,
  2017 2016
  (Unaudited)
Adjusted Diluted Earnings (Loss) Per Share Reconciliation    
Net income (loss), as reported $3,824
 $(100,810)
Asset impairments, net of tax benefits of $39,038 —
 96,846
Adjusted net income (loss) $3,824
 $(3,964)
Average number of common shares outstanding - Diluted 10,435
 10,264
Diluted earnings (loss) per common share, as reported $0.37
 $(9.82)
Diluted earnings (loss) per common share, as adjusted $0.37
 $(0.39)

1 All results in this Quarterly Report that exclude asset impairment charges are non-GAAP measures used for management reporting purposes. Management believes that these measures provide useful information to investors because they will assist investors in evaluating earnings performance on a comparable year-over-year basis.

Results of Operations – Segment Analysis
Rail Products and Services
  Nine Months Ended
September 30,		 (Decrease)/Increase Percent
(Decrease)/Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $187,922
 $188,686
 $(764) (0.4)%
Segment Profit (Loss) $8,938
 $(26,474) $35,412
 133.8 %
Segment Profit (Loss) Percentage 4.8% (14.0)% 18.8% 134.3 %

First Nine Months of 2017 Compared to First Nine Months of 2016
Rail Products and Services segment sales decreased $764, or 0.4%42.1%, compared to the prior year period. The reduction inperiod, due entirely to the impact of the divested Piling Products business, which drove a sales is primarily related to a decrease in our domestic businessesdecline of $5,956, or 4.3%. The sales declines were primarily volume driven by the domestic freight rail and transit markets. Our domestic rail distribution business was unfavorably impacted by both volume and pricing compared to$59,208 versus the prior year period. The decline in sales decrease was partially offset by sales increases in our foreign divisionsthe balance of $5,192, or 10.6%, as we saw favorable resultsthe business, in both our CanadianFabricated Steel Products, excluding Piling, and European markets.Coatings and Measurement.


The RailSteel Products and Services segment profit increased by $35,412 to 4.8% of net sales. The increase was primarily attributable to a reduction in selling, administrative, and allocated expenses of $4,430, or 13.9%, and the 2016 impairment charges of $32,725 related to Rail Technologies goodwill. This was partially offset by a decline in non-GAAPMeasurement gross profit decreased by $4,913, or 33.3%, from the prior year period, due to lower sales volumes associated with the Piling Products business and inflationary pressures. However, the gross profit margin for the segment increased 190 basis points to 14.1%, a result of $2,011, or 4.9%, whicha more favorable mix in 2022 given the divestiture of the lower margin Piling Products business. The segment loss was primarily related to volume reductions and product mix within domestic transit products, as well as service related cost increases in our domestic Rail Technologies business.

During the current year, the Rail Products and Services segment had$1,083, an increase in new ordersincreased loss of 28.9% compared to$943 from the prior year period. The increase impacted eachin segment loss was due to lower gross profit levels, partially offset by a $4,128 decline in selling and administrative expenses. The decline in selling and administrative expenses in 2022 is due to a reduction of expenses associated with the sale of the three business units within the segment and grew the backlog balance to $85,764 at September 30, 2017, a 60.6% increase over the prior year. The Company is also encouraged by positive signs from order activity and resulting backlog duringPiling business.

During the first nine months of 2017.

Construction2022, the Steel Products
  Nine Months Ended
September 30,		 Increase Percent
Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $121,905
 $107,098
 $14,807
 13.8%
Segment Profit $9,156
 $5,748
 $3,408
 59.3%
Segment Profit Percentage 7.5% 5.4% 2.1% 38.9%

First Nine Months of 2017 Compared to First Nine Months of 2016
Construction Products and Measurement segment sales increasednew orders decreased by $14,807,$18,407, or 13.8%,15.5% compared to the prior year period. The increase related to Fabricated Bridge and Piling businesses of $9,428 and $7,112, respectively. Fabricated Bridge continued to have favorable sales in the current year due to several projects, including the continuation of the Peace Bridge project. The increase in Piling was primarily due to demand within the sheet piling product line. These increases were offsetperiod, driven by a reduction in Precast Concrete Products sales of $1,733.

The Construction Products segment profit increased by $3,408 to 7.5% of net sales. The increase related to reductions in selling, administrative, and allocated expenses of $947, or 6.4%. Non-GAAP gross profit increased $2,462, or 11.9%, which was primarily due to the increased volumes$58,898 decline from the Fabricated Bridge anddivested Piling businesses within the period.

During the period, the Construction Products segment had adivision. This decrease in new orders of 8.7% compared to the prior year period. Prior year Fabricated Bridge orders included the $15,000 Peace Bridge project. Piling saw a 6.3% reduction in new orders compared to the prior year from recent declines in sheet piling demand. The Precast Concrete Products business sawwas partially offset by an increase in newboth Fabricated Steel Products, excluding the divested Piling Products division, of $7,367, and an increase of $33,124 in Coatings and Measurement. Coatings and Measurement orders of 10.7% primarily from building orders from state agencies. The Construction Products segment had backlog at September 30, 2017 of $74,910, a 1.1% decrease over the prior year.

Tubular and Energy Services
  Nine Months Ended
September 30,		 Increase Percent
Increase
  2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $85,227
 $81,164
 $4,063
 5.0%
Segment Profit (Loss) $1,774
 $(111,876) $113,650
 101.6%
Segment Profit (Loss) Percentage 2.1% (137.8)% 139.9% 101.5%

First Nine Months of 2017 Compared to First Nine Months of 2016
Tubular and Energy Services segment sales increased $4,063, or 5.0%, compared to the prior year period. The increase related to growth from Test and Inspection Services and Protective Coating businesses, partially offset by a decrease in Precision Measurement Systems. The period showed increased new well count and demand within the upstream oil and gas market, but was negatively impacted by a lag in the recovery of Precision Measurement Systems for midstream applications.

Tubular and Energy Services segment profit increases by $113,650, or 101.6%, compared to the prior year period. The period waswere favorably impacted by a reductionlarge order in amortization expense of $2,401 from the 2016 definite-lived intangible asset impairment. The prior period was also negatively affected by impairment charges of $103,159 for the nine months ended September 30, 2016. Segment profit was also favorably impacted byCompany’s line pipe coating facility in Birmingham, AL, to support a non-GAAP gross profit increase of $6,910, or 77.4%.carbon capture and sequestration pipeline project.

The Tubular and Energy Services segment had an increase in new orders of 47.6% compared to the prior year period. Orders for Protective Coatings and Test and Inspection Services businesses increased by 151.2% and 107.5%, respectively. The upstream oil and gas market continued its recovery. We are also encouraged by positive trends in midstream order activity as we ended the nine-month period.

On July 31, 2017, the lease at our Birmingham, Alabama facility expired. During the third quarter ended September 30, 2017, the Company negotiated a lease renewal for this facility. The renewal is for a term of five years and is scheduled to expire July 31, 2022.


Other
Segment Backlog
Total Company backlog is summarized by business segment in the following table for the periods indicated:
September 30,
2022		December 31,
2021		September 30,
2021
Rail, Technologies, and Services$108,864 $96,573 $109,815 
Precast Concrete Products86,612 68,636 69,564 
Steel Products and Measurement77,301 44,980 52,347 
Total backlog$272,777 $210,189 $231,726 
  Backlog
  September 30,
2017		 December 31,
2016		 September 30,
2016
Rail Products and Services $85,764
 $62,743
 $53,392
Construction Products 74,910
 71,954
 75,762
Tubular and Energy Services 28,931
 12,759
 14,650
Total Backlog $189,605
 $147,456
 $143,804


Backlog levels as of September 30, 2021 in the above table includes $1,792 in the Rail, Technologies, and Services segment related to the divested Track Components division, and $1,961 in the Steel Products and Measurement segment related to the divested Piling Products division. Backlog levels as of December 31, 2021 in the above table includes $1,531 in the Rail, Technologies, and Services segment related to the divested Track Components division.

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 ourthe Company’s business is backlog-driven, certain product lines within the Rail Products and Services and Tubular and Energy Services segmentsCompany are not driven by backlog as the orders are fulfilled shortly after they are received.

Liquidity and therefore have insignificant levelsCapital 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, payments related to the Union Pacific Railroad Settlement, and periodic acquisitions. The Company’s total debt was $98,919 and
34
Table of Contents
$31,251 as of September 30, 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 September 30, 2022:
September 30, 2022
Cash and cash equivalents$4,943 
Credit agreement:
Total availability under the credit agreement130,000 
Outstanding borrowings on revolving credit facility(98,763)
Letters of credit outstanding(564)
Net availability under the revolving credit facility30,673 
Total available funding capacity$35,616 

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 September 30, 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 nine months ended September 30, 2022 and 2021 were as follows:
Nine Months Ended September 30,
20222021
Net cash used in continuing operating activities$(18,836)$(6,810)
Net cash (used in) provided by continuing investing activities(54,061)18,910 
Net cash provided by (used in) continuing financing activities68,568 (13,030)
Effect of exchange rate changes on cash and cash equivalents(1,100)24 
Net cash used in discontinued operations— (253)
Net decrease in cash and cash equivalents$(5,429)$(1,159)

Cash Flow from Operating Activities
During the nine months ended September 30, 2022, cash flows used in operating activities were $18,836, compared to cash flows used in continuing operating activities of $6,810 during the prior year to date period. For the nine months ended September 30, 2022, the net income and adjustments to net income from continuing operating activities provided $9,134, compared to $13,880 in the 2021 period. Working capital and other assets and liabilities used $27,970 in the current period, compared to using $20,690 in the prior year period. The Company received $5,638 during the nine months ended September 30, 2022 associated with its federal income tax refund.

The Company’s calculation for days sales outstanding at September 30, 2022 and December 31, 2021 was 47 and 46 days, respectively, and the Company believes it has a high quality receivables portfolio.

Cash Flow from Investing Activities
Capital expenditures for the nine months ended September 30, 2022 and 2021 were $4,559 and $3,568, 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 year.Company. Expenditures for the nine months ended September 30, 2021 primarily relate to the expansion of the Precast Concrete Products business line in Texas. On June 21, 2022, the Company entered into an agreement to purchase the stock of Skratch for $7,402, and on August 12, 2022, the Company entered into an agreement to purchase the operating assets of VanHooseCo for $52,203, which drove a cash outflow of $58,561 during the nine months ended September 30, 2022. During the nine months ended September 30, 2022, the Company received cash proceeds from the 2022 Track Components divestiture and final proceeds from the 2021 Piling Products divestiture totaling $8,800. During the nine months ended September 30, 2021, the Company received cash proceeds from the Piling divestiture of $22,707.


Warranty
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Table of Contents
Cash Flow from Financing Activities
During the nine months ended September 30, 2022 and 2021, the Company had an increase in outstanding debt of $69,155 and a decrease of $12,519, respectively. The increase in debt for the nine months ended September 30, 2022 was due largely to the acquisition of VanHooseCo on August 12, 2022, as well as the acquisition of Skratch on June 21, 2022, and the funding working of capital and other assets and liabilities. The decrease in net debt for the 2021 period was primarily attributable to the utilization of excess cash generated through operating activities. Treasury stock acquisitions of $405 and $549 for the nine months ended September 30, 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 September 30, 2017,2022, the Company maintained a total product warranty reservehad $4,943 in cash and cash equivalents. The Company’s cash management priority continues to be short-term maturities and the preservation of $9,614 for its estimateprincipal balances. As of all potential product warranty claims. Of this total, $7,607 reflects the current estimateSeptember 30, 2022, approximately $3,976 of the Company’s exposure for potential concrete tie warranty claims. While thecash and cash equivalents were held in non-domestic bank accounts. The Company believes this is a reasonable estimateprincipally maintains its cash and cash equivalents in accounts held by major banks and financial institutions.

The Company’s principal uses of cash have been to fund its potential exposure relatedoperations, including capital expenditures, acquisitions, and to identified concrete tie warranty matters, theservice its indebtedness. The Company may incur future charges associated with new customer claims or further development of information of existing customer claims. Thus, there can be no assurance that future potential costs pertaining to warranty claims will not have a material impactviews its liquidity as being dependent on the Company’sits results of operations, changes in working capital needs, and its borrowing capacity. As of September 30, 2022, its revolving credit facility had $30,673 of net availability, while the Company had $98,919 in total debt.

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. On August 12, 2022, the Company amended its Credit Agreement to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial condition. Seecovenants to accommodate the transaction. The Second Amendment permitted the Company to acquire the operating assets of VanHooseCo and modified the maximum gross leverage ratio covenant through June 30, 2023 to accommodate the transaction. The Second Amendment also added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings. For a discussion of the terms and availability of the credit facilities, please refer to Note 13 Commitments and Contingent Liabilities10 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.10-Q.

Liquidity and Capital Resources
Total debt was $138,285 and $159,565 as of September 30, 2017 and December 31, 2016, respectively, and was primarily comprised of borrowings on our revolving credit facility and term loan.

Our need for liquidity relates primarily to working capital requirements for operations, capital expenditures, joint venture capital obligations, debt service obligations, and share repurchases as authorized by the Board of Directors and as permitted under the Second Amended and Restated Credit Agreement dated March 13, 2015.

The change in cash and cash equivalents for the periods ended September 30 are as follows:
  September 30,
  2017 2016
Net cash provided by operating activities $27,516
 $11,876
Net cash used by investing activities (3,947) (6,219)
Net cash used by financing activities (21,384) (35,470)
Effect of exchange rate changes on cash and cash equivalents 2,460
 152
Net increase (decrease) in cash and cash equivalents $4,645
 $(29,661)

Cash Flow from Operating Activities
During the current 2017 nine-month period, cash flows provided by operating activities were $27,516 compared to $11,876 during the prior year period. For the nine months ended September 30, 2017, income and adjustments to income from operating activities provided $18,985 compared to $15,976 in the 2016 period. Working capital and other assets and liabilities provided $8,531 in the current period compared to a use of $4,100 in the prior year period. During the nine months ended September 30, 2017, the Company received $9,946 and $1,827 from our 2016 and 2015 federal income tax refunds, respectively.

The Company’s calculation for days sales outstanding at September 30, 2017 was 50 days compared to 53 days at December 31, 2017, and we believe our receivables portfolio is strong.

Cash Flow from Investing Activities
Capital expenditures for the nine months ended September 30, 2017 and 2016 were $5,335 and $6,507, respectively. The current year expenditures relate to trackside rail lubricator units installed as part of a new multi-year service contract and general plant and operational improvements. Expenditures for the nine months ended September 30, 2016 related to the Birmingham, AL inside diameter coating line upgrade and application development of the Company’s new enterprise resource planning system. During nine months ended September 30, 2017, the Company received $1,388 in proceeds from the sale of certain property, plant, and equipment as compared to $923 in the prior year period. The Company also loaned $635 to our joint venture, L B Pipe & Coupling Products, LLC (“L B Pipe JV”), as of September 30, 2016.

Cash Flow from Financing Activities
During the nine months ended September 30, 2017, the Company had a decrease in outstanding debt of $21,281, primarily related to payments against the revolving credit facility as well as the application of the $9,946 federal income tax refund and quarterly principle payments against the term loan. During the nine months ended September 30, 2016, the Company had a decrease in outstanding debt of $33,125, primarily related to payments against the revolving credit facility. Treasury stock acquisitions represent income tax withholdings from employees in connection with the vesting of restricted stock awards. Cash outflows related to dividends were $1,244 for the nine-month periods ended September 30, 2016.

Financial Condition
As of September 30, 2017, we had $35,008 in cash and cash equivalents and a domestic credit facility with $46,081 of net availability while we had $138,285 in total debt. We believe this liquidity will provide the flexibility to operate the business in a prudent manner, and enable us to continue to service our revolving credit facility and term loan.

Our cash management priority continues to be short-term maturities and the preservation of our principal balances. Approximately $33,976 of our cash and cash equivalents was held in non-domestic bank accounts, and, under current law, the foreign cash would be subject to U.S. federal income taxes less applicable foreign tax credits upon repatriation.

On November 7, 2016, the Company, its domestic subsidiaries, and certain of its Canadian subsidiaries entered into the Second Amendment (the “Second Amendment”) to the Second Amended and Restated Credit Agreement dated March 13, 2015 and as amended by the First Amendment dated June 29, 2016 (the “Amended and Restated Credit Agreement”), with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank of Pennsylvania, and Branch Banking and Trust Company. This Second Amendment modified the Amended and Restated Credit Agreement, which had a maximum revolving credit line of $275,000.

The Second Amendment reduced the permitted revolving credit borrowings to $195,000 and provided for additional term loan borrowings of $30,000 (the “Term Loan”). The Term Loan is subject to quarterly straight line amortization until fully paid off upon the final payment on January 1, 2020. Furthermore, certain matters, including excess cash flow, asset sales, and equity issuances, trigger mandatory prepayments to the Term Loan. Term Loan borrowings are not available to draw upon once they have been repaid. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Second Amendment or Amended and Restated Credit Agreement, as applicable.

The Second Amendment further provided for modifications to the financial covenants as defined in the Amended and Restated Credit Agreement. The Second Amendment calls for the elimination of the Maximum Leverage Ratio covenant through the quarter ending June 30, 2018. After that period, the Maximum Gross Leverage Ratio covenant will be reinstated to require a maximum ratio of 4.25 Consolidated Indebtedness to 1.00 Gross Leverage for the quarter ending September 30, 2018, and 3.75 to 1.00 for all periods thereafter until the maturity date of the credit facility. The Second Amendment also includes a Minimum Last Twelve Months EBITDA (as defined by the Amendment) covenant (“Minimum EBITDA”). For the quarter ended December 31, 2016 through the quarter ended June 30, 2017, the Minimum EBITDA must be at least $18,500. For each quarter thereafter, through the quarter ending June 30, 2018, the Minimum EBITDA requirement will increase by various increments. The incremental Minimum EBITDA requirement for the period ending September 30, 2017 must be at least $23,000. During the third quarter ended September 30, 2017, the rolling 12-month EBITDA calculation, as defined by the Amended and Restated Credit Agreement, was $32,063. At June 30, 2018, the Minimum EBITDA requirement will be $31,000. After the quarter ending June 30, 2018, the Minimum EBITDA covenant will be eliminated through the maturity of the Amended and Restated Credit Agreement. The Second Amendment also includes a Minimum Fixed Charge Coverage Ratio covenant. The covenant represents the ratio of the Company’s fixed charges to the last twelve months of EBITDA, and is required to be a minimum of 1.00 to 1.00 through the quarter ending December 31, 2017 and 1.25 to 1.00 for each quarter thereafter through the maturity of the credit facility. The final financial covenant included in the Second Amendment is a Minimum Liquidity covenant which calls for a minimum of $25,000 in undrawn availability on the revolving credit loan at all times through the quarter ending June 30, 2018.

The Second Amendment includes several changes to certain non-financial covenants, as defined in the Amended and Restated Credit Agreement. Through the maturity date of the loan, the Company is now prohibited from making any future acquisitions. The limitation on permitted annual distributions of dividends or redemptions of the Company’s stock was decreased from $4,000 to $1,700. The aggregate limitation on loans to and investments in non-loan parties was decreased from $10,000 to $5,000. Furthermore, the limitation on asset sales has been decreased from $25,000 annually with a carryover of up to $15,000 from the prior year to $25,000 in the aggregate through the maturity date of the credit facility.

The Second Amendment provided for the elimination of the three lowest tiers of the pricing grid that had previously been defined in the First Amendment. Upon execution of the Second Amendment through the quarter ending March 31, 2018, the Company will be locked into the highest tier of the pricing grid, which provides for pricing of the prime rate plus 225 basis points on base rate loans and the applicable LIBOR rate plus 325 basis points on euro rate loans. For each quarter after March 31, 2018 and through the maturity date of the credit facility, the Company’s position on the pricing grid will be governed by a Minimum Net Leverage ratio, which is the ratio of Consolidated Indebtedness less cash on hand in excess of $15,000 to EBITDA. If, after March 31, 2018, the Minimum Net Leverage ratio positions the Company on the lowest tier of the pricing grid, pricing will be the prime rate plus 150 basis points on base rate loans or the applicable LIBOR rate plus 250 basis points on euro rate loans.


To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into forward starting LIBOR-basedSOFR-based interest rate swaps with notional values totaling $50,000. The swaps became$20,000 and $20,000, effective on February 28, 2017August 12, 2022 and August 31, 2022, respectively, at which point they effectively convertconverted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. AtDuring 2020, the Company designated 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 September 30, 2017,2022 the swap liabilityasset was $323 compared to $334$1,960 and as of December 31, 2016.2021 the swap asset and liability were $175 and $159, respectively.

Cost in Excess of Net Assets Acquired
At September 30, 2017, L.B. Foster had $19,699 of goodwill on its consolidated balance sheet. Of the total, $14,552 related to the Rail Products and Services segment and $5,147 related to the Construction Products segment. Goodwill is reviewed annually in the fourth quarter of each year for impairment or more frequently if impairment indicators arise. The Company recorded a $32,725 partial goodwill impairment related to the Rail Products and Services segment during the year ended December 31, 2016. Based on considerations of current year financial results, including consideration of macroeconomic conditions, such as performance of the Company’s stock price, we do not believe that it is more-likely-than-not that the fair values of these reporting units have decreased below their carrying values at September 30, 2017. Consequently, management concluded that none of the Company’s reporting units experienced any triggering event that would have required a step one interim goodwill impairment analysis at September 30, 2017. However, the previously recorded partial impairment included assumptions for certain market recoveries throughout the years ending December 31, 2017 and 2018, if these recoveries do not fully develop, the Rail Products and Services segment may require an incremental goodwill impairment.


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. There have been no material changes in the Company’s critical accounting policies or estimates since December 31, 2016. 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, 2016.2021.

Off-Balance Sheet Arrangements
The Company’s off-balance sheet arrangements include operating leases, purchase obligations, and standby letters of credit. A schedule of the Company’s required payments under financial instruments and other commitments as of December 31, 2016 is included in the “Liquidity and Capital Resources” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to these off-balance sheet arrangements during the current quarter. These arrangements provide the Company with increased flexibility relative to the utilization and investment of cash resources.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
The CompanyThis item is exposed to risks that increases in interest rates may adversely affect funding costs associated with its variable-rate debt. To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into forward starting interest rate swap agreements which effectively convert a portion of the debt from a variablenot applicable to a fixed-rate borrowing during the termsmaller reporting company.
36
Table of the swap contracts. See Note 9 Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.Contents

For the nine months ended September 30, 2017, a 1% change in the interest rate for variable rate debt as of September 30, 2017 would increase or decrease interest expense by approximately $1,069.

The Company does not purchase or hold any derivative financial instruments for trading purposes. It does enter into interest rate hedges to reduce the risk in the variability of interest rate fluctuations. At contract inception, the Company designates its derivative instruments as hedges. The Company recognizes all derivative instruments on the balance sheet at fair value. Fluctuations in the fair values of derivative instruments designated as cash flow hedges are recorded in accumulated other comprehensive income and reclassified into earnings within other income as the underlying hedged items affect earnings. To the extent that a change in a derivative does not perfectly offset the change in the value of the interest rate being hedged, the ineffective portion is recognized in earnings immediately.

As of September 30, 2017 and December 31, 2016, the Company recorded a current liability of $323 and $334, respectively, related to its LIBOR-based interest rate swap agreements.

Foreign Currency Exchange Rate Risk
The Company is subject to exposures to changes in foreign currency exchange rates. The Company may manage its exposure to changes in foreign currency exchange rates on firm sale and purchase commitments by entering into foreign currency forward contracts. The Company’s risk management objective is to reduce its exposure to the effects of changes in exchange rates on these transactions over the duration of the transactions. The Company did not engage in foreign currency hedging transactions during the nine-month periods ended September 30, 2017 and 2016.
Item 4. Controls and Procedures
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 September 30, 2017.2022. 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 into 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 nine months ended September 30, 2017,2022, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is currently evaluating the impact that Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" will have on our internal control over financial reporting at the January 1, 2018 adoption date.


Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the 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.


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Table of Contents
PART II. OTHER INFORMATION
(Dollars in thousands, except share data)
Item 1. Legal Proceedings
See Note 13 Commitments and Contingent Liabilities15 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
Item 1A. Risk Factors
There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016. You should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 8, 2017, which could materially affect our business, financial condition, financial results, or future performance. The risks described in our Annual Report on Form 10-K and quarterly reports on Form 10-Q areThis item is not the only risks facing the Company. Additional risks and uncertainties not currently known or that we currently deemapplicable to be immaterial may also materially affect our business, financial condition, and/or results of operations.a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The Company’s purchases of equity securities for the three months ended September 30, 20172022 were as follows:
Total number of shares purchased (1)Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programsApproximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2022 - July 31, 2022— $— — $— 
August 1, 2022 - August 31, 2022— — — — 
September 1, 2022 - September 30, 2022416 9.74 — — 
Total416 $9.74 — $— 

1.Reflects shares withheld by the Company to pay taxes upon vesting of restricted stock.
Item 3. Defaults Upon Senior Securities
  Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2017 - July 31, 2017 —
 $—
 —
 $29,933
August 1, 2017 - August 31, 2017 324
 18.40
 —
 29,933
September 1, 2017 - September 30, 2017 —
 —
 —
 29,933
Total 324
 $18.40
 —
 $29,933
Not applicable.
(1)Shares withheld by the Company to pay taxes upon vesting of restricted stock. These shares do not impact the remaining authorization to repurchase shares under approved plans or programs.

(2)On December 9, 2015, the Board of Directors authorized the repurchase of up to $30,000 of the Company’s common shares until December 31, 2017. This authorization became effective January 1, 2016. The $30,000 repurchase authorization is restricted under the terms of the Second Amendment to the Second Amended and Restated Credit Agreement dated March 13, 2015. Dividends, distributions, and redemptions under the Second Amendment are capped at a maximum annual amount of $1,700 throughout the life of the repurchase authorization. For the three-month period ended September 30, 2017, there were no share repurchases as part of the authorized program.
Item 4. Mine Safety Disclosures
This item is not applicable to the Company.

Item 5. Other Information
None.
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Table of Contents
Item 6. Exhibits
See Exhibit Index below.


Exhibit Index
Exhibit NumberDescription
2.1
10.1
Second Amendment dated November 7, 2016 to the Second Amended and Restated CreditAsset Purchase Agreement dated March 13, 2015,August 12, 2022 between VanHooseCo Precast, LLC and as amended by the First Amendment dated June 29, 2016, among Registrant and PNC Bank N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank of Pennsylvania, and Branch Banking and Trust CompanyCXT Incorporated is incorporated herein by reference to Exhibit 10.12.1 to the Current Report on Form 8-K/A, File No. 0-10436,filed on November 8, 2016, File No. 0-10436.August 18, 2022.
10.210.1
Deferred Compensation Plan for Non-Employee Directors underSecond Amendment dated August 12, 2022 to the 2006 Omnibus Incentive Plan.Fourth Amended and Restated Credit Agreement dated August 13, 2021, between Registrant and PNC Bank, Citizens Bank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A., and BMO Harris Bank, National Association is incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K/A, File No. 0-10436, filed on August 18, 2022.
*31.1
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
*32.0
Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
*101.INSXBRL Instance Document.Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
*101.SCHXBRL Taxonomy Extension Schema Document.
*101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
*101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
*101.LABXBRL Taxonomy Extension Label Linkbase Document.
*101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
*104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*Exhibits marked with an asterisk are filed herewith.



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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
L.B. FOSTER COMPANY
(Registrant)
Date:November 8, 20172022By: /s/ James P. MaloneyWilliam M. Thalman
James P. MaloneyWilliam M. Thalman
Senior Vice President
and Chief Financial Officer and Treasurer
(Duly Authorized Officer of Registrant)



40