• Increasing Momentum Evident in L.B. Foster’s Second Quarter Operating Results; Company Increases 2023 Profitability Guidance

    Source: Nasdaq GlobeNewswire / 08 Aug 2023 08:00:01   America/New_York

    • Second quarter net sales of $148.0 million up 12.6% year over year (13.3% organic); gross profit of $32.3 million up 38.5% year over year, with gross margins improving 410 bps to 21.8%.
    • Completed sale of prestressed concrete railroad tie business (“Ties”) operating assets within the Rail, Technologies, and Services segment, in line with its strategic playbook.
    • Second quarter net income of $3.5 million up $1.5 million year over year, despite $1.0 million loss on Ties sale; second quarter adjusted EBITDA1 of $10.6 million (7.2% of sales) up $4.5 million, or 72.9%, year over year.
    • Seasonal working capital needs increased net debt1 $8.2 million during the quarter to $85.6 million at quarter end; Gross Leverage Ratio1 of 2.5x was up slightly from 2.4x at the start of the quarter.
    • New orders1 in the second quarter were $183.7 million, up 29.9% over last year, with a book-to-bill ratio1 of 1.24:1.00; backlog1 finished the quarter at a record $290.1 million, up 15.6% year over year.
    • 2023 Adjusted EBITDA guidance range increased to $28 million to $32 million (previously $27 million to $31 million); net sales guidance range unchanged at $520 million to $550 million despite Ties sale.

    PITTSBURGH, Aug. 08, 2023 (GLOBE NEWSWIRE) -- L.B. Foster Company (Nasdaq: FSTR), a global technology solutions provider of products and services for the rail and infrastructure markets (the “Company”), today reported its 2023 second quarter operating results.

    CEO Comments

    John Kasel, President and Chief Executive Officer, commented, “Our second quarter results reflect the continuing favorable impact of our strategic transformation. Net sales growth was a robust 12.6% and we saw strong gains in Precast Concrete (up 43.4%) and Rail, Technologies, and Services (up 12.0%). All segments generated organic sales growth in the quarter. Momentum in our segments generated by our business portfolio actions and profitability initiatives drove gross margins up 410 bps year over year to 21.8%, which translated into a 72.9% increase in adjusted EBITDA, with the adjusted EBITDA margin of 7.2% representing the highest quarterly result achieved since the second quarter of 2020. We’re pleased to see the expected benefits of our strategy execution coming through in the results.”

    Mr. Kasel continued, “As previously announced, we completed the sale of our Ties business at the end of the second quarter. Cash proceeds received at closing were $2.4 million and were used to pay down our revolving credit facility. Net debt at quarter end was $85.6 million, in line with our expectations as we funded working capital to support strong sales and order book growth. We also initiated our first actions under the Board-approved share buyback program, repurchasing approximately 0.5% of the outstanding shares during the quarter. We’re focused on our objective of executing a balanced approach to capital allocation while managing our leverage.”

    Mr. Kasel concluded, “We can confidently report that the expected tailwinds from the numerous government infrastructure investment programs have begun to translate into increasing orders and backlog in the majority of our businesses. Despite some isolated weakness in the U.K. market, the consolidated book-to-bill ratio for the quarter was 1.24:1.00, with all segments expanding their order books in the quarter. With our record $290.1 million backlog and the prospects for a multi-year infrastructure super cycle in front of us, we remain optimistic in our outlook for 2023 and beyond. Against this backdrop, we’re raising our profitability outlook for 2023 and maintaining our sales guidance despite the sale of the Ties business. We look forward to reporting our continuing progress in the coming quarters.”

    1  See “Non-GAAP Financial Measures” and “Non-GAAP Disclosures” at the end of this press release for a description of and information regarding adjusted EBITDA, Gross Leverage Ratio per the Company’s credit agreement, net debt, new orders, backlog, book-to-bill ratio, adjusted EBITDA leverage, and related reconciliations to their most comparable GAAP financial measure. June 30, 2023 backlog levels reflect a decline of $5.5 million from the Ties divestiture.

    2023 Financial Guidance

    As a result of the improved profitability achieved in its year-to-date results, the Company is updating its 2023 financial guidance, with adjusted EBITDA now expected to range between $28 million to $32 million (up from $27 million to $31 million previously). With the strong order rates realized year to date and record backlog, net sales guidance for 2023 remains unchanged at between $520 million to $550 million despite the impact of divestitures.

    Second Quarter Consolidated Highlights

    The Company’s second quarter performance highlights are reflected below:

      Three Months Ended
    June 30,    		 Change Percent
    Change
      2023 2022 2023 vs. 2022 2023 vs. 2022
      (Unaudited)    
    Net sales $148,034 $131,515 $16,519 12.6%
    Gross profit  32,252  23,293  8,959 38.5 
    Selling and administrative expenses  24,528  19,394  5,134 26.5 
    Operating profit  6,349  2,480  3,869 156.0 
    Net income  3,493  1,976  1,517 76.8 
    Adjusted EBITDA  10,601  6,131  4,470 72.9 
    New orders  183,742  141,439  42,303 29.9 
    Backlog  290,076  250,845  39,231 15.6 
                 
    • On June 30, 2023, the Company sold substantially all the operating assets of its prestressed concrete railroad tie business for $2.4 million, subject to working capital adjustments, generating a $1.0 million loss on the sale. The Ties business contributed sales of $1.4 million and $8.8 million in the quarter and trailing-twelve months ended June 30, 2023, respectively, which is included in the Rail, Technologies, and Services segment.
    • Net sales for the 2023 second quarter were $148.0 million, up $16.5 million, or 12.6%, over the second quarter of 2022. Net sales increased 13.3% organically and 6.0% from acquisitions, offset by a 6.8% reduction for divestitures.
    • Gross profit for the 2023 second quarter was $32.3 million, a $9.0 million increase year over year, or 38.5%, and gross profit margins expanded by 410 basis points to 21.8%. The strong improvement in gross profit was due to the business portfolio changes in line with the Company’s strategic transformation along with an uplift from sales volume, product mix, and pricing.
    • Selling and administrative expenses for the 2023 second quarter were $24.5 million, a $5.1 million increase, or 26.5%, from the prior year quarter. The increase was primarily attributed to increased personnel costs as well as the net impact from business portfolio actions. Selling and administrative expenses as a percentage of net sales increased to 16.6% in the current quarter, up from 14.7% last year.
    • Operating profit for the 2023 second quarter was $6.3 million, a $3.9 million increase over the prior year quarter. The improvement in operating profit was due to increased sales volume and gross profit expansion, partially offset by increased selling and administrative expenses.
    • Net income for the 2023 second quarter was $3.5 million, or $0.32 per diluted share, and includes the $1.0 million loss on the sale of Ties.
    • Adjusted EBITDA for the 2023 second quarter, which adjusts for the loss on divestitures and acquisition-related contingent consideration adjustments, was $10.6 million, a $4.5 million increase, or 72.9%, versus the prior year quarter, with adjusted EBITDA leverage1 of 27.1%.
    • New orders totaling $183.7 million for the 2023 second quarter increased 29.9% from the prior year quarter. Backlog totaling $290.1 million increased by $39.2 million, or 15.6%, compared to the prior year quarter.
    • Cash used by operating activities totaled $10.3 million in the second quarter, an increased use of $4.5 million over the prior year quarter. Second quarter average working capital percent of sales1 of 20.7% was up 190 bps versus last year due in part to business mix, project completion delays and increased early payment discounts taken.
    • Net debt of $85.6 million and Gross Leverage Ratio of 2.5x as of June 30, 2023 improved from $94.0 million and 3.3x, respectively, as of September 30, 2022, the period immediately after the completion of the Company’s most recent acquisitions. Both net debt and Gross Leverage Ratio increased slightly during the quarter due to seasonal working capital requirements. All credit agreement covenants were met.

    Second Quarter Business Results by Segment

    Rail, Technologies, and Services Segment

      Three Months Ended
    June 30,    		 Change Percent
    Change
      2023 2022 2023 vs. 2022 2023 vs. 2022
    Net sales $91,616  $81,797  $9,819  12.0%
    Gross profit $19,847  $15,661  $4,186  26.7%
    Gross profit percentage  21.7%  19.1%  2.6% 13.1%
    Segment operating profit $6,627  $3,998  $2,629  65.8%
    Segment operating profit percentage  7.2%  4.9%  2.3% 46.9%
    New orders $115,985  $92,937  $23,048  24.8%
    Backlog $132,451  $132,017  $434  0.3%
                    
    • Net sales for the 2023 second quarter were $91.6 million, a $9.8 million increase, or 12.0%, over the prior year quarter. Net sales increased 17.0% organically and 0.8% from acquisitions, offset by a 5.8% decrease from divestitures. The increase in organic sales was driven by strength in both Rail Products and Global Friction Management, partially offset by declines in the Company’s U.K.-based Technology Services and Solutions business.
    • Gross profit for the 2023 second quarter was $19.8 million, a $4.2 million increase, and gross profit margins expanded by 260 basis points to 21.7%. The improvement in gross profit was due primarily to the portfolio changes in line with the Company’s strategic transformation, partially offset by softness in profitability in the Technology Services and Solutions business.
    • Segment operating profit for the 2023 second quarter was $6.6 million, a $2.6 million increase over the prior year quarter.
    • Orders increased by $23.0 million, driven primarily by Rail Products, as well as Global Friction Management and Technology Services and Solutions. Backlog increased $18.9 million during the quarter to $132.5 million, despite a $7.0 million decline from the Ties divestiture, remaining relatively flat versus the prior year quarter.

    Precast Concrete Products Segment

      Three Months Ended
    June 30,    		 Change Percent
    Change
      2023 2022 2023 vs. 2022 2023 vs. 2022
    Net sales $33,865  $23,611  $10,254  43.4%
    Gross profit $7,676  $3,347  $4,329  129.3%
    Gross profit percentage  22.7%  14.2%  8.5% 59.9%
    Segment operating profit (loss) $1,296  $(125) $1,421  **
    Segment operating profit (loss) percentage  3.8% (0.5)%  4.3% **
    New orders $37,799  $22,904  $14,895  65.0%
    Backlog $91,669  $71,507  $20,162  28.2%
                    

    ** Results of calculation not considered meaningful.

    • Net sales for the 2023 second quarter were $33.9 million, up $10.3 million, or 43.4% over the second quarter of 2022. Net sales increased 12.8% organically and 30.6% from the acquisition of VanHooseCo Precast, LLC (“VanHooseCo”).
    • Gross profit for the 2023 second quarter was $7.7 million, a $4.3 million increase, and gross profit margins expanded by 850 basis points to 22.7%. The increase in gross profit was driven by higher volumes from the VanHooseCo acquisition and margin gains in the legacy Precast business driven primarily by favorable mix, pricing, and input costs.
    • Segment operating profit for the 2023 second quarter was $1.3 million, favorable $1.4 million over the prior year quarter on improved gross margins, partially offset by higher selling and administrative expenses from the VanHooseCo acquisition.
    • Second quarter new orders were $37.8 million, up $14.9 million over the prior year quarter, with VanHooseCo accounting for $15.8 million of the increase, while orders in the legacy Precast declined slightly year over year. Backlog of $91.7 million reflects a $20.2 million increase over the prior year quarter, driven by VanHooseCo.

    Steel Products and Measurement Segment

      Three Months Ended
    June 30,    		 Change Percent
    Change
      2023  2022  2023 vs. 2022 2023 vs. 2022
    Net sales $22,553  $26,107  $(3,554) (13.6)%
    Gross profit $4,729  $4,285  $444  10.4%
    Gross profit percentage  21.0%  16.4%  4.6% 27.8%
    Segment operating profit $1,456  $762  $694  91.1%
    Segment operating profit percentage  6.5%  2.9%  3.6% 124.1%
    New orders $29,958  $25,598  $4,360  17.0%
    Backlog $65,956  $47,321  $18,635  39.4%
                    
    • Net sales for the 2023 second quarter were $22.6 million, a decrease of $3.6 million or 13.6% compared to the prior year quarter. Sales increased 2.4% organically, and declined 16.0% due to divestiture activity. Organic sales were driven by Protective Coatings, partially offset by Fabricated Steel Products.
    • Steel Products and Measurement gross profit increased by $0.4 million, an improvement of 460 basis points, due primarily to the segment’s favorable portfolio shift as well as margin increases in Protective Coatings driven by improved volume.
    • Segment operating profit for the 2023 second quarter was $1.5 million, an improvement of $0.7 million over the prior year quarter primarily due to improved volume and margins in Protective Coatings.
    • New orders and backlog in Steel Products and Measurement increased by $4.4 million and $18.6 million, respectively, during the quarter. Increases in both Protective Coatings and Fabricated Steel Products orders more than offset a $6.0 million decline due to the divestiture of the Company’s precision measurement products and systems business.

    First Six Months Consolidated Highlights

    The Company’s first six months performance highlights are presented below.

      Six Months Ended
    June 30,    		 Change Percent
    Change
      2023 2022 2023 vs. 2022 2023 vs. 2022
      (Unaudited)    
    Net sales $263,522 $230,309 $33,213 14.4%
    Gross profit  55,543  39,740  15,803 39.8
    Selling and administrative expenses  45,951  36,692  9,259 25.2
    Operating profit  6,852  193  6,659 **
    Net income  1,322  390  932 239.0
    Adjusted EBITDA  15,083  7,386  7,697 104.2
    New orders  323,258  276,844  46,414 16.8
    Backlog  290,076  250,845  39,231 15.6
                

    ** Results of calculation not considered meaningful.

    • Net sales for the first six months of 2023 were $263.5 million, up $33.2 million, or 14.4%, over the prior year period. Net sales increased 10.8% organically and 7.4% from acquisitions, offset by a 3.7% reduction from divestitures.
    • Gross profit for the first six months of 2023 was $55.5 million, a $15.8 million increase year over year, or 39.8%, and gross profit margins expanded by 380 basis points to 21.1%. The improvement in gross profit was due to the business portfolio changes in line with the Company’s strategic transformation along with an uplift from sales volume, product mix, and pricing.
    • Selling and administrative expenses for the first six months of 2023 were $46.0 million, a $9.3 million increase, or 25.2%, from the prior year period. The increase was primarily attributed to increased personnel costs, as well as higher selling and administrative expenses from the net impact of business portfolio actions. Selling and administrative expenses as a percentage of net sales increased to 17.4% in the current year period, up from 15.9% last year.
    • Operating profit for the first six months of 2023 was $6.9 million, a $6.7 million increase over the prior year period. The improvement in operating profit was due to increased sales volume and gross profit expansion, partially offset by increased selling and administrative expenses.
    • Net income for the first six months of 2023 was $1.3 million, or $0.12 per diluted share, and includes $3.1 million in losses from divestitures.
    • Adjusted EBITDA for the first six months of 2023, which adjusts for the loss on divestitures and acquisition-related contingent consideration adjustments, was $15.1 million, a $7.7 million increase, or 104.2%, versus the prior year period, with adjusted EBITDA leverage1 of 23.2%.
    • New orders totaling $323.3 million for the first six months of 2023 increased 16.8% from the prior year period. Backlog totaling $290.1 million increased by $39.2 million, or 15.6%, compared to the prior year.
    • Cash used by operating activities totaled $3.3 million in the six months ended June 30, 2023, favorable $10.0 million compared to the use in the prior year period.

    Second Quarter Conference Call

    L.B. Foster Company will conduct a conference call and webcast to discuss its second quarter 2023 operating results on Tuesday, August 8, 2023 at 11:00 AM ET. The call will be hosted by Mr. John Kasel, President and Chief Executive Officer. Listen via audio and access the slide presentation on the L.B. Foster web site: www.lbfoster.com, under the Investor Relations page. A conference call replay will be available through August 15, 2023 via webcast through L.B. Foster’s Investor Relations page of the company’s website.

    Those interested in participating in the question-and-answer session may register for the call at https://register.vevent.com/register/BI7c68dd565b304553aa8d4acdc4b470b1 to receive the dial-in numbers and unique PIN to access the call. The registration link will also be available on the Company’s Investor Relations page of its website.

    About L.B. Foster Company

    Founded in 1902, L.B. Foster Company is a global technology solutions provider of engineered, manufactured products and services that builds and supports infrastructure. The Company’s innovative engineering and product development solutions address the safety, reliability, and performance needs of its customers’ most challenging requirements. The Company maintains locations in North America, South America, Europe, and Asia. For more information, please visit www.lbfoster.com.

    Non-GAAP Financial Measures

    This press release contains financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures are provided as additional information for investors. The presentation of this additional information is not meant to be considered in isolation or as a substitute for GAAP measures. For definitions of the non-GAAP financial measures used in this press release and reconciliations to the most directly comparable respective GAAP measures, see the “Non-GAAP Disclosures” section below.

    The Company has not reconciled the forward-looking adjusted EBITDA to the most directly comparable GAAP measure because this cannot be done without unreasonable effort due to the variability and low visibility with respect to certain costs, the most significant of which are acquisition and divestiture-related costs and impairment expense. These underlying expenses and others that may arise during the year are potential adjustments to future earnings. The Company expects the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

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

    The Company views its Gross Leverage Ratio per its credit agreement, as defined in the Second Amendment to its Fourth Amended and Restated Credit Agreement dated August 12, 2022, as an important indication of the Company’s financial health and believes it is useful to investors as an indicator of the Company’s ability to service its existing indebtedness and borrow additional funds for its investing and operational needs.

    The Company defines quarterly average working capital as a percent of sales as the average working capital for the trailing four months divided by four times net sales for the quarter.

    Forward-Looking Statements

    This release may contain “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. 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 earnings release are based on management’s current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company’s expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: 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; a continuation or worsening of the adverse economic conditions in the markets we serve, including recession, 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 decrease in freight or transit rail traffic; environmental matters, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, and trade restrictions or embargoes; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses or to divest businesses, such as the recent dispositions of the Track Components, Chemtec, and Ties businesses, 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; the timeliness and availability of materials from our major suppliers, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers’ concerns about conflict minerals; labor disputes; cyber-security risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation; the continuing effectiveness of our ongoing implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, and reforms regarding the use of SOFR as a benchmark for establishing applicable interest rates; the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union; geopolitical conditions, including the conflict in Ukraine; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the loss of future revenues from current customers; and risks inherent in litigation and the outcome of litigation and product warranty claims. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022, 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 release are made as of the date of this release 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.

    Investor Relations:
    Stephanie Schmidt
    (412) 928-3417
    investors@lbfoster.com

    L.B. Foster Company
    415 Holiday Drive
    Suite 100
    Pittsburgh, PA 15220

     
    L.B. FOSTER COMPANY AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)
    (In thousands, except per share data)
     
      Three Months Ended
    June 30,    		 Six Months Ended
    June 30,
       2023   2022   2023   2022 
             
    Sales of goods $132,167  $116,584  $230,705  $201,005 
    Sales of services  15,867   14,931   32,817   29,304 
    Total net sales  148,034   131,515   263,522   230,309 
    Cost of goods sold  101,069   95,331   179,134   165,176 
    Cost of services sold  14,713   12,891   28,845   25,393 
    Total cost of sales  115,782   108,222   207,979   190,569 
    Gross profit  32,252   23,293   55,543   39,740 
    Selling and administrative expenses  24,528   19,394   45,951   36,692 
    Amortization expense  1,375   1,419   2,740   2,855 
    Operating profit  6,349   2,480   6,852   193 
    Interest expense - net  1,574   384   2,962   754 
    Other expense (income) - net  719   (701)  2,546   (1,264)
    Income before income taxes  4,056   2,797   1,344   703 
    Income tax expense  563   821   22   313 
    Net income  3,493   1,976   1,322   390 
    Net loss attributable to noncontrolling interest  (38)  (34)  (57)  (54)
    Net income attributable to L.B. Foster Company $3,531  $2,010  $1,379  $444 
    Basic earnings per common share $0.32  $0.18  $0.12  $0.04 
    Diluted earnings per common share $0.32  $0.18  $0.12  $0.04 
    Average number of common shares outstanding - Basic  10,807   10,715   10,800   10,700 
    Average number of common shares outstanding - Diluted  10,878   10,814   10,866   10,809 
                     


    L.B. FOSTER COMPANY AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands)
     
      June 30,
    2023    		 December 31,
    2022
      (Unaudited)  
    ASSETS    
    Current assets:    
    Cash and cash equivalents $3,880  $2,882 
    Accounts receivable - net  74,249   82,455 
    Contract assets - net  34,011   33,613 
    Inventories - net  79,451   75,721 
    Other current assets  12,182   11,061 
    Total current assets  203,773   205,732 
    Property, plant, and equipment - net  76,948   85,344 
    Operating lease right-of-use assets - net  15,770   17,291 
    Other assets:    
    Goodwill  31,404   30,733 
    Other intangibles - net  21,256   23,831 
    Deferred tax assets  —   24 
    Other assets  2,417   2,355 
    TOTAL ASSETS $351,568  $365,310 
    LIABILITIES AND STOCKHOLDERS’ EQUITY    
    Current liabilities:    
    Accounts payable $43,933  $48,782 
    Deferred revenue  15,969   19,452 
    Accrued payroll and employee benefits  8,709   10,558 
    Current portion of accrued settlement  8,000   8,000 
    Current maturities of long-term debt  102   127 
    Other accrued liabilities  14,928   16,192 
    Total current liabilities  91,641   103,111 
    Long-term debt  89,403   91,752 
    Deferred tax liabilities  1,718   3,109 
    Long-term portion of accrued settlement  6,000   8,000 
    Long-term operating lease liabilities  12,669   14,163 
    Other long-term liabilities  7,545   7,577 
    Stockholders’ equity:    
    Common stock  111   111 
    Paid-in capital  40,919   41,303 
    Retained earnings  124,548   123,169 
    Treasury stock  (4,846)  (6,240)
    Accumulated other comprehensive loss  (18,536)  (21,165)
    Total L.B. Foster Company stockholders’ equity  142,196   137,178 
    Noncontrolling interest  396   420 
    Total stockholders’ equity  142,592   137,598 
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $351,568  $365,310 
             

    Non-GAAP Disclosures
    (Unaudited)

    This earnings release discloses earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, net debt, and adjusted EBITDA leverage, which are non-GAAP financial measures. The Company believes that EBITDA is useful to investors as a supplemental way to evaluate the ongoing operations of the Company’s business since EBITDA may enhance investors’ ability to compare historical periods as it adjusts for the impact of financing methods, tax law and strategy changes, and depreciation and amortization. In addition, EBITDA is a financial measure that management and the Company’s Board of Directors use in their financial and operational decision-making and in the determination of certain compensation programs. Adjusted EBITDA adjusts for certain charges to EBITDA from continuing operations that the Company believes are unusual, non-recurring, unpredictable, or non-cash. The Company believes adjusted EBITDA leverage is a useful metric for investors as it enhances investors’ ability to understand the change adjusted EBITDA respective to the change in sales.

    In the three and six months ended June 30, 2023, the Company made adjustments to exclude the loss on divestitures and VanHooseCo contingent consideration. In the three and six months ended June 30, 2022, the Company made adjustments to exclude acquisition costs, insurance proceeds, and the gain on the sale of its steel Piling Products business. The Company believes the results adjusted to exclude these items are useful to investors as these items are nonroutine in nature.

    The Company views net debt, which is total debt less cash and cash equivalents, as an important metric of the operational and financial health of the organization and believes it is useful to investors as indicators of its ability to incur additional debt and to service its existing debt.

    Non-GAAP financial measures are not a substitute for GAAP financial results and should only be considered in conjunction with the Company’s financial information that is presented in accordance with GAAP. Quantitative reconciliations of EBITDA, adjusted EBITDA, and net debt (in thousands):

      Three Months Ended
    June 30,    		 Six Months Ended
    June 30,
      2023  2022   2023   2022 
      (Unaudited) (Unaudited)
    Adjusted EBITDA Reconciliation        
    Net income, as reported $3,493 $1,976  $1,322  $390 
    Interest expense - net  1,574  384   2,962   754 
    Income tax expense  563  821   22   313 
    Depreciation expense  2,484  1,876   4,989   3,814 
    Amortization expense  1,375  1,419   2,740   2,855 
    Total EBITDA $9,489 $6,476  $12,035  $8,126 
    Loss (gain) on divestitures  1,041  (489)  3,074   (489)
    Acquisition costs  —  462   —   539 
    Insurance proceeds  —  (318)  —   (790)
    VanHooseCo contingent consideration  71  —   (26)  — 
    Adjusted EBITDA $10,601 $6,131  $15,083  $7,386 


      Three Months Ended
    June 30,    		 Change Six Months Ended
    June 30,    		 Change
      2023 2022 2023 vs. 2022 2023 2022 2023 vs. 2022
    Adjusted EBITDA Leverage Reconciliation            
    Adjusted EBITDA $10,601 $6,131 $4,470  $15,083 $7,386 $7,697 
    Total net sales  148,034  131,515  16,519   263,522  230,309  33,213 
    Adjusted EBITDA leverage      27.1%      23.2%


      June 30,
    2023    		 March 31,
    2023    		 September 30,
    2022
    Net Debt Reconciliation      
    Total debt $89,505  $80,096  $98,919 
    Less: cash and cash equivalents  (3,880)  (2,639)  (4,943)
    Net debt $85,625  $77,457  $93,976 

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