fstr-20230930false2023Q30000352825--12-311http://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesCurrent00003528252023-01-012023-09-3000003528252023-11-01xbrli:shares00003528252023-09-30iso4217:USD00003528252022-12-31iso4217:USDxbrli:shares0000352825us-gaap:ProductMember2023-07-012023-09-300000352825us-gaap:ProductMember2022-07-012022-09-300000352825us-gaap:ProductMember2023-01-012023-09-300000352825us-gaap:ProductMember2022-01-012022-09-300000352825us-gaap:ServiceMember2023-07-012023-09-300000352825us-gaap:ServiceMember2022-07-012022-09-300000352825us-gaap:ServiceMember2023-01-012023-09-300000352825us-gaap:ServiceMember2022-01-012022-09-3000003528252023-07-012023-09-3000003528252022-07-012022-09-3000003528252022-01-012022-09-3000003528252021-12-3100003528252022-09-300000352825us-gaap:CommonStockMember2023-06-300000352825us-gaap:AdditionalPaidInCapitalMember2023-06-300000352825us-gaap:RetainedEarningsMember2023-06-300000352825us-gaap:TreasuryStockCommonMember2023-06-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000352825us-gaap:NoncontrollingInterestMember2023-06-3000003528252023-06-300000352825us-gaap:RetainedEarningsMember2023-07-012023-09-300000352825us-gaap:NoncontrollingInterestMember2023-07-012023-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000352825us-gaap:TreasuryStockCommonMember2023-07-012023-09-300000352825us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000352825us-gaap:CommonStockMember2023-09-300000352825us-gaap:AdditionalPaidInCapitalMember2023-09-300000352825us-gaap:RetainedEarningsMember2023-09-300000352825us-gaap:TreasuryStockCommonMember2023-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000352825us-gaap:NoncontrollingInterestMember2023-09-300000352825us-gaap:CommonStockMember2022-06-300000352825us-gaap:AdditionalPaidInCapitalMember2022-06-300000352825us-gaap:RetainedEarningsMember2022-06-300000352825us-gaap:TreasuryStockCommonMember2022-06-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000352825us-gaap:NoncontrollingInterestMember2022-06-3000003528252022-06-300000352825us-gaap:RetainedEarningsMember2022-07-012022-09-300000352825us-gaap:NoncontrollingInterestMember2022-07-012022-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000352825us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000352825us-gaap:TreasuryStockCommonMember2022-07-012022-09-300000352825us-gaap:CommonStockMember2022-09-300000352825us-gaap:AdditionalPaidInCapitalMember2022-09-300000352825us-gaap:RetainedEarningsMember2022-09-300000352825us-gaap:TreasuryStockCommonMember2022-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000352825us-gaap:NoncontrollingInterestMember2022-09-300000352825us-gaap:CommonStockMember2022-12-310000352825us-gaap:AdditionalPaidInCapitalMember2022-12-310000352825us-gaap:RetainedEarningsMember2022-12-310000352825us-gaap:TreasuryStockCommonMember2022-12-310000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000352825us-gaap:NoncontrollingInterestMember2022-12-310000352825us-gaap:RetainedEarningsMember2023-01-012023-09-300000352825us-gaap:NoncontrollingInterestMember2023-01-012023-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000352825us-gaap:TreasuryStockCommonMember2023-01-012023-09-300000352825us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000352825us-gaap:CommonStockMember2021-12-310000352825us-gaap:AdditionalPaidInCapitalMember2021-12-310000352825us-gaap:RetainedEarningsMember2021-12-310000352825us-gaap:TreasuryStockCommonMember2021-12-310000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000352825us-gaap:NoncontrollingInterestMember2021-12-310000352825us-gaap:RetainedEarningsMember2022-01-012022-09-300000352825us-gaap:NoncontrollingInterestMember2022-01-012022-09-300000352825us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300000352825us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300000352825us-gaap:TreasuryStockCommonMember2022-01-012022-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2023-07-012023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2022-07-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2023-07-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2022-07-012022-09-300000352825us-gaap:OperatingSegmentsMember2023-07-012023-09-300000352825us-gaap:OperatingSegmentsMember2022-07-012022-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2022-01-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2023-01-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2022-01-012022-09-300000352825us-gaap:OperatingSegmentsMember2023-01-012023-09-300000352825us-gaap:OperatingSegmentsMember2022-01-012022-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:RailTechnologiesAndServicesSegmentMember2022-12-310000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2023-09-300000352825us-gaap:OperatingSegmentsMemberfstr:PrecastConcreteProductsMember2022-12-310000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:OperatingSegmentsMember2022-12-310000352825us-gaap:CorporateNonSegmentMember2023-09-300000352825us-gaap:CorporateNonSegmentMember2022-12-310000352825us-gaap:SegmentDiscontinuedOperationsMemberfstr:BridgeGridDeckProductMember2023-07-012023-09-300000352825us-gaap:SegmentDiscontinuedOperationsMemberfstr:BridgeGridDeckProductMember2022-07-012022-09-300000352825us-gaap:SegmentDiscontinuedOperationsMemberfstr:BridgeGridDeckProductMember2023-01-012023-09-300000352825us-gaap:SegmentDiscontinuedOperationsMemberfstr:BridgeGridDeckProductMember2022-01-012022-09-300000352825us-gaap:SegmentDiscontinuedOperationsMemberfstr:BridgeGridDeckProductMembersrt:ScenarioForecastMember2023-10-012023-12-310000352825fstr:RailProductsBusinessUnitMember2023-06-302023-06-300000352825fstr:CoatingsAndMeasurementMember2023-03-302023-03-300000352825fstr:RailProductsBusinessUnitMember2023-03-302023-03-300000352825fstr:RailProductsAndFrictionManagementMemberfstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825fstr:RailProductsAndFrictionManagementMemberfstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825fstr:RailProductsAndFrictionManagementMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825fstr:RailProductsAndFrictionManagementMemberfstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825fstr:RailTechnologiesProductsMemberfstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825fstr:RailTechnologiesProductsMemberfstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825fstr:RailTechnologiesProductsMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825fstr:RailTechnologiesProductsMemberfstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825fstr:PrecastConcreteBuildingsMemberfstr:PrecastConcreteProductsMember2023-07-012023-09-300000352825fstr:PrecastConcreteBuildingsMemberfstr:PrecastConcreteProductsMember2022-07-012022-09-300000352825fstr:PrecastConcreteBuildingsMemberfstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825fstr:PrecastConcreteBuildingsMemberfstr:PrecastConcreteProductsMember2022-01-012022-09-300000352825fstr:PrecastInfrastructureProductsMemberfstr:PrecastConcreteProductsMember2023-07-012023-09-300000352825fstr:PrecastInfrastructureProductsMemberfstr:PrecastConcreteProductsMember2022-07-012022-09-300000352825fstr:PrecastInfrastructureProductsMemberfstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825fstr:PrecastInfrastructureProductsMemberfstr:PrecastConcreteProductsMember2022-01-012022-09-300000352825fstr:PrecastConcreteProductsMember2023-07-012023-09-300000352825fstr:PrecastConcreteProductsMember2022-07-012022-09-300000352825fstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825fstr:PrecastConcreteProductsMember2022-01-012022-09-300000352825fstr:FabricatedSteelProductsMemberfstr:SteelProductsAndMeasurementMember2023-07-012023-09-300000352825fstr:FabricatedSteelProductsMemberfstr:SteelProductsAndMeasurementMember2022-07-012022-09-300000352825fstr:FabricatedSteelProductsMemberfstr:SteelProductsAndMeasurementMember2023-01-012023-09-300000352825fstr:FabricatedSteelProductsMemberfstr:SteelProductsAndMeasurementMember2022-01-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberfstr:CoatingsAndMeasurementMember2023-07-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberfstr:CoatingsAndMeasurementMember2022-07-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberfstr:CoatingsAndMeasurementMember2023-01-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberfstr:CoatingsAndMeasurementMember2022-01-012022-09-300000352825fstr:SteelProductsAndMeasurementMember2023-07-012023-09-300000352825fstr:SteelProductsAndMeasurementMember2022-07-012022-09-300000352825fstr:SteelProductsAndMeasurementMember2023-01-012023-09-300000352825fstr:SteelProductsAndMeasurementMember2022-01-012022-09-300000352825us-gaap:TransferredAtPointInTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825fstr:PrecastConcreteProductsMemberus-gaap:TransferredAtPointInTimeMember2023-07-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredAtPointInTimeMember2023-07-012023-09-300000352825us-gaap:TransferredAtPointInTimeMember2023-07-012023-09-300000352825us-gaap:TransferredOverTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2023-07-012023-09-300000352825us-gaap:TransferredOverTimeMemberfstr:PrecastConcreteProductsMember2023-07-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredOverTimeMember2023-07-012023-09-300000352825us-gaap:TransferredOverTimeMember2023-07-012023-09-300000352825us-gaap:TransferredAtPointInTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825fstr:PrecastConcreteProductsMemberus-gaap:TransferredAtPointInTimeMember2022-07-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredAtPointInTimeMember2022-07-012022-09-300000352825us-gaap:TransferredAtPointInTimeMember2022-07-012022-09-300000352825us-gaap:TransferredOverTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2022-07-012022-09-300000352825us-gaap:TransferredOverTimeMemberfstr:PrecastConcreteProductsMember2022-07-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredOverTimeMember2022-07-012022-09-300000352825us-gaap:TransferredOverTimeMember2022-07-012022-09-300000352825us-gaap:TransferredAtPointInTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825fstr:PrecastConcreteProductsMemberus-gaap:TransferredAtPointInTimeMember2023-01-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredAtPointInTimeMember2023-01-012023-09-300000352825us-gaap:TransferredAtPointInTimeMember2023-01-012023-09-300000352825us-gaap:TransferredOverTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825us-gaap:TransferredOverTimeMemberfstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredOverTimeMember2023-01-012023-09-300000352825us-gaap:TransferredOverTimeMember2023-01-012023-09-300000352825us-gaap:TransferredAtPointInTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825fstr:PrecastConcreteProductsMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-09-300000352825us-gaap:TransferredAtPointInTimeMember2022-01-012022-09-300000352825us-gaap:TransferredOverTimeMemberfstr:RailTechnologiesAndServicesSegmentMember2022-01-012022-09-300000352825us-gaap:TransferredOverTimeMemberfstr:PrecastConcreteProductsMember2022-01-012022-09-300000352825fstr:SteelProductsAndMeasurementMemberus-gaap:TransferredOverTimeMember2022-01-012022-09-300000352825us-gaap:TransferredOverTimeMember2022-01-012022-09-300000352825fstr:OverTimeInputMethodMember2023-07-012023-09-300000352825fstr:OverTimeInputMethodMember2022-07-012022-09-30xbrli:pure0000352825fstr:OverTimeOutputMethodMember2023-07-012023-09-300000352825fstr:OverTimeOutputMethodMember2022-07-012022-09-300000352825fstr:OverTimeInputMethodMember2023-01-012023-09-300000352825fstr:OverTimeInputMethodMember2022-01-012022-09-300000352825fstr:OverTimeOutputMethodMember2023-01-012023-09-300000352825fstr:OverTimeOutputMethodMember2022-01-012022-09-3000003528252023-10-012023-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2022-12-310000352825fstr:PrecastConcreteProductsMember2022-12-310000352825fstr:SteelProductsAndMeasurementMember2022-12-310000352825fstr:VanHooseCoEnterprisesLtdMemberfstr:RailTechnologiesAndServicesSegmentMember2023-01-012023-09-300000352825fstr:VanHooseCoEnterprisesLtdMemberfstr:PrecastConcreteProductsMember2023-01-012023-09-300000352825fstr:VanHooseCoEnterprisesLtdMemberfstr:SteelProductsAndMeasurementMember2023-01-012023-09-300000352825fstr:VanHooseCoEnterprisesLtdMember2023-01-012023-09-300000352825fstr:RailTechnologiesAndServicesSegmentMember2023-09-300000352825fstr:PrecastConcreteProductsMember2023-09-300000352825fstr:SteelProductsAndMeasurementMember2023-09-300000352825us-gaap:PatentsMembersrt:WeightedAverageMember2023-09-300000352825us-gaap:PatentsMember2023-09-300000352825us-gaap:CustomerRelationshipsMembersrt:WeightedAverageMember2023-09-300000352825us-gaap:CustomerRelationshipsMember2023-09-300000352825srt:WeightedAverageMemberus-gaap:TrademarksAndTradeNamesMember2023-09-300000352825us-gaap:TrademarksAndTradeNamesMember2023-09-300000352825us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2023-09-300000352825us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-300000352825srt:WeightedAverageMemberus-gaap:OffMarketFavorableLeaseMember2023-09-300000352825us-gaap:OffMarketFavorableLeaseMember2023-09-300000352825us-gaap:NoncompeteAgreementsMember2023-09-300000352825us-gaap:NoncompeteAgreementsMembersrt:WeightedAverageMember2022-12-310000352825us-gaap:NoncompeteAgreementsMember2022-12-310000352825us-gaap:PatentsMembersrt:WeightedAverageMember2022-12-310000352825us-gaap:PatentsMember2022-12-310000352825us-gaap:CustomerRelationshipsMembersrt:WeightedAverageMember2022-12-310000352825us-gaap:CustomerRelationshipsMember2022-12-310000352825srt:WeightedAverageMemberus-gaap:TrademarksAndTradeNamesMember2022-12-310000352825us-gaap:TrademarksAndTradeNamesMember2022-12-310000352825us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMember2022-12-310000352825us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-310000352825srt:WeightedAverageMemberus-gaap:OffMarketFavorableLeaseMember2022-12-310000352825us-gaap:OffMarketFavorableLeaseMember2022-12-310000352825us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-07-012023-09-300000352825us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-012022-09-300000352825us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-09-300000352825us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-09-300000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberus-gaap:RevolvingCreditFacilityMemberfstr:FourthAmendedAndRestatedCreditAgreementMember2021-08-132021-08-130000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberus-gaap:RevolvingCreditFacilityMemberfstr:FourthAmendedAndRestatedCreditAgreementMember2021-08-130000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberfstr:FourthAmendedAndRestatedCreditAgreementMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2023-09-30fstr:covenant0000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberfstr:FourthAmendedAndRestatedCreditAgreementMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-08-130000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMemberfstr:FourthAmendedAndRestatedCreditAgreementMember2021-08-130000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberfstr:FourthAmendedAndRestatedCreditAgreementMember2021-08-130000352825fstr:PNCBankNACitizensBankNAWellsFargoBankNationalAssociationBankOfAmericaNAAndBMOHarrisBankNationalAssociationMemberus-gaap:RevolvingCreditFacilityMember2023-09-300000352825fstr:RestrictedStockAndPerformanceUnitAwardsMember2023-07-012023-09-300000352825fstr:RestrictedStockAndPerformanceUnitAwardsMember2022-07-012022-09-300000352825fstr:RestrictedStockAndPerformanceUnitAwardsMember2023-01-012023-09-300000352825fstr:RestrictedStockAndPerformanceUnitAwardsMember2022-01-012022-09-300000352825us-gaap:RestrictedStockMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2023-01-012023-09-300000352825us-gaap:RestrictedStockMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMembersrt:MinimumMember2023-01-012023-09-300000352825us-gaap:PerformanceSharesMember2023-01-012023-09-300000352825srt:DirectorMember2023-01-012023-09-300000352825us-gaap:RestrictedStockMember2022-12-310000352825fstr:DeferredStockUnitsMember2022-12-310000352825us-gaap:PerformanceSharesMember2022-12-310000352825us-gaap:RestrictedStockMember2023-01-012023-09-300000352825fstr:DeferredStockUnitsMember2023-01-012023-09-300000352825us-gaap:RestrictedStockMember2023-09-300000352825fstr:DeferredStockUnitsMember2023-09-300000352825us-gaap:PerformanceSharesMember2023-09-300000352825us-gaap:SwapMember2022-08-120000352825fstr:Swap2Member2022-08-310000352825us-gaap:FairValueInputsLevel1Member2023-09-300000352825us-gaap:FairValueInputsLevel2Member2023-09-300000352825us-gaap:FairValueInputsLevel3Member2023-09-300000352825us-gaap:FairValueInputsLevel1Member2022-12-310000352825us-gaap:FairValueInputsLevel2Member2022-12-310000352825us-gaap:FairValueInputsLevel3Member2022-12-3100003528252022-01-012022-12-310000352825us-gaap:SwapMember2023-07-012023-09-300000352825us-gaap:SwapMember2023-01-012023-09-300000352825us-gaap:SwapMember2022-01-012022-09-300000352825country:US2023-01-012023-09-30fstr:plan0000352825country:CA2023-01-012023-09-300000352825country:GB2023-01-012023-09-300000352825country:US2023-07-012023-09-300000352825country:US2022-07-012022-09-300000352825country:US2022-01-012022-09-300000352825country:US2023-09-300000352825country:GB2023-07-012023-09-300000352825country:GB2022-07-012022-09-300000352825country:GB2022-01-012022-09-300000352825country:GB2023-09-300000352825us-gaap:PensionPlansDefinedBenefitMember2023-01-012023-09-300000352825country:CA2023-07-012023-09-300000352825country:CA2022-07-012022-09-300000352825country:CA2022-01-012022-09-300000352825fstr:UPRRMember2019-03-132019-03-130000352825fstr:UPRRMember2019-03-130000352825fstr:UprrMember2019-03-130000352825fstr:UprrMember2021-09-3000003528252017-06-05fstr:companyfstr:potentially_responsible_party00003528252020-03-26fstr:party
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, 2023
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) |
| | | | |
| | | | | | | | |
Pennsylvania | | 25-1324733 |
(State of Incorporation) | | (I. R. S. Employer Identification No.) |
| | | | | | | | |
415 Holiday Drive, Suite 100, Pittsburgh, Pennsylvania | | 15220 |
(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 class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, par value $0.01 | | FSTR | | NASDAQ 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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer ☐ | | | | Accelerated filer ☒ |
Non-accelerated filer ☐ | | | | 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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 1, 2023, there were 11,076,168 shares of the registrant’s common stock, par value $0.01 per share, outstanding.
L.B. FOSTER COMPANY AND SUBSIDIARIES
INDEX
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, 2023 | | December 31, 2022 |
| | (Unaudited) | | |
ASSETS | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ | 2,969 | | | $ | 2,882 | |
Accounts receivable - net (Note 5) | | 64,638 | | | 82,455 | |
Contract assets - net (Note 3) | | 30,503 | | | 33,613 | |
Inventories - net (Note 6) | | 82,020 | | | 75,721 | |
| | | | |
| | | | |
Other current assets | | 9,712 | | | 11,061 | |
| | | | |
Total current assets | | 189,842 | | | 205,732 | |
Property, plant, and equipment - net | | 75,867 | | | 85,344 | |
Operating lease right-of-use assets - net | | 15,440 | | | 17,291 | |
Other assets: | | | | |
Goodwill (Note 4) | | 30,856 | | | 30,733 | |
Other intangibles - net (Note 4) | | 20,006 | | | 23,831 | |
| | | | |
Deferred tax assets (Note 9) | | — | | | 24 | |
Other assets | | 2,580 | | | 2,355 | |
| | | | |
TOTAL ASSETS | | $ | 334,591 | | | $ | 365,310 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | |
Current liabilities: | | | | |
Accounts payable | | $ | 44,900 | | | $ | 48,782 | |
Deferred revenue | | 16,003 | | | 19,452 | |
Accrued payroll and employee benefits | | 12,358 | | | 10,558 | |
| | | | |
Current portion of accrued settlement (Note 13) | | 8,000 | | | 8,000 | |
Current maturities of long-term debt (Note 7) | | 97 | | | 127 | |
Other accrued liabilities | | 14,679 | | | 16,192 | |
| | | | |
Total current liabilities | | 96,037 | | | 103,111 | |
Long-term debt (Note 7) | | 71,592 | | | 91,752 | |
Deferred tax liabilities (Note 9) | | 1,131 | | | 3,109 | |
Long-term portion of accrued settlement (Note 13) | | 4,000 | | | 8,000 | |
Long-term operating lease liabilities | | 12,312 | | | 14,163 | |
Other long-term liabilities | | 7,391 | | | 7,577 | |
| | | | |
Stockholders’ equity: | | | | |
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at September 30, 2023 and December 31, 2022, 11,115,779; shares outstanding at September 30, 2023 and December 31, 2022, 10,804,800 and 10,776,827, respectively | | 111 | | | 111 | |
Paid-in capital | | 41,832 | | | 41,303 | |
Retained earnings | | 125,063 | | | 123,169 | |
Treasury stock - at cost, 310,979 and 338,952 common stock shares at September 30, 2023 and December 31, 2022, respectively | | (5,062) | | | (6,240) | |
Accumulated other comprehensive loss | | (20,123) | | | (21,165) | |
Total L.B. Foster Company stockholders’ equity | | 141,821 | | | 137,178 | |
Noncontrolling interest | | 307 | | | 420 | |
Total stockholders’ equity | | 142,128 | | | 137,598 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 334,591 | | | $ | 365,310 | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | | |
| | | | |
Sales of goods | | $ | 131,065 | | | $ | 117,302 | | | $ | 361,770 | | | $ | 318,307 | |
Sales of services | | 14,280 | | | 12,713 | | | 47,097 | | | 42,017 | |
Total net sales | | 145,345 | | | 130,015 | | | 408,867 | | | 360,324 | |
Cost of goods sold | | 103,061 | | | 93,737 | | | 282,195 | | | 258,913 | |
Cost of services sold | | 14,060 | | | 13,181 | | | 42,905 | | | 38,574 | |
Total cost of sales | | 117,121 | | | 106,918 | | | 325,100 | | | 297,487 | |
Gross profit | | 28,224 | | | 23,097 | | | 83,767 | | | 62,837 | |
Selling and administrative expenses | | 24,160 | | | 22,618 | | | 70,111 | | | 59,310 | |
Amortization expense | | 1,379 | | | 1,599 | | | 4,119 | | | 4,454 | |
Operating profit (loss) | | 2,685 | | | (1,120) | | | 9,537 | | | (927) | |
| | | | | | | | |
Interest expense - net | | 1,442 | | | 993 | | | 4,404 | | | 1,747 | |
| | | | | | | | |
| | | | | | | | |
Other expense (income) - net | | 917 | | | 168 | | | 3,463 | | | (1,096) | |
| | | | | | | | |
Income (loss) before income taxes | | 326 | | | (2,281) | | | 1,670 | | | (1,578) | |
Income tax (benefit) expense | | (121) | | | (176) | | | (99) | | | 137 | |
Net income (loss) | | 447 | | | (2,105) | | | 1,769 | | | (1,715) | |
Net loss attributable to noncontrolling interest | | (68) | | | (28) | | | (125) | | | (82) | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Net income (loss) attributable to L.B. Foster Company | | $ | 515 | | | $ | (2,077) | | | $ | 1,894 | | | $ | (1,633) | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Basic earnings (loss) per common share | | $ | 0.05 | | | $ | (0.20) | | | $ | 0.18 | | | $ | (0.16) | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Diluted earnings (loss) per common share | | $ | 0.05 | | | $ | (0.20) | | | $ | 0.17 | | | $ | (0.16) | |
| | | | | | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
(In thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | | |
| | | | |
Net income (loss) | | $ | 447 | | | $ | (2,105) | | | $ | 1,769 | | | $ | (1,715) | |
Other comprehensive (loss) income, net of tax: | | | | | | | | |
Foreign currency translation adjustment | | (1,651) | | | (4,341) | | | 852 | | | (8,933) | |
Unrealized gain on cash flow hedges, net of tax expense of $0, $217, $0, and $455, respectively | | 1 | | | 632 | | | 79 | | | 1,330 | |
Cash flow hedges reclassified to earnings, net of tax expense of $0, $0, $0, and $66, respectively | | — | | | — | | | — | | | 93 | |
Reclassification of pension liability adjustments to earnings, net of tax expense of $1, $8, $5, and $40, respectively* | | 42 | | | 50 | | | 123 | | | 149 | |
Total comprehensive (loss) income | | (1,161) | | | (5,764) | | | 2,823 | | | (9,076) | |
Less comprehensive (loss) income attributable to noncontrolling interest: | | | | | | | | |
Net loss attributable to noncontrolling interest | | (68) | | | (28) | | | (125) | | | (82) | |
Foreign currency translation adjustment | | (21) | | | (21) | | | 12 | | | 3 | |
Amounts attributable to noncontrolling interest | | (89) | | | (49) | | | (113) | | | (79) | |
Comprehensive (loss) income attributable to L.B. Foster Company | | $ | (1,072) | | | $ | (5,715) | | | $ | 2,936 | | | $ | (8,997) | |
| | | | | |
* | Reclassifications out of “Accumulated other comprehensive loss” for pension obligations are charged to “Selling and administrative expenses” within the Condensed Consolidated Statements of Operations. |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands) | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2023 | | 2022 |
| | | | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | |
Net income (loss) | | $ | 1,769 | | | $ | (1,715) | |
Adjustments to reconcile net income (loss) to cash used in operating activities: | | | | |
Deferred income taxes | | (1,958) | | | (962) | |
Depreciation | | 7,449 | | | 6,083 | |
Amortization | | 4,119 | | | 4,454 | |
| | | | |
Equity in loss (income) of nonconsolidated investments | | 6 | | | (38) | |
Gain on sales and disposals of property, plant, and equipment | | (366) | | | (214) | |
Stock-based compensation | | 2,757 | | | 1,570 | |
Loss (gain) on asset divestitures | | 3,074 | | | (44) | |
| | | | |
Change in operating assets and liabilities: | | | | |
Accounts receivable | | 15,927 | | | (23,760) | |
Contract assets | | (261) | | | (1,037) | |
Inventories | | (16,047) | | | (21,571) | |
Other current assets | | 1,108 | | | 2,309 | |
| | | | |
Other noncurrent assets | | (762) | | | 2,468 | |
| | | | |
Accounts payable | | 1,201 | | | 12,307 | |
Deferred revenue | | 782 | | | 7,493 | |
Accrued payroll and employee benefits | | 1,809 | | | (417) | |
Accrued settlement | | (4,000) | | | (4,000) | |
Other current liabilities | | (1,044) | | | 54 | |
Other long-term liabilities | | (253) | | | (1,816) | |
Net cash provided by (used in) operating activities | | 15,310 | | | (18,836) | |
| | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | |
Proceeds from the sale of property, plant, and equipment | | 539 | | | 259 | |
Capital expenditures on property, plant, and equipment | | (2,784) | | | (4,559) | |
Proceeds from business dispositions | | 7,706 | | | 8,800 | |
Acquisitions, net of cash acquired | | 337 | | | (58,561) | |
Net cash provided by (used in) investing activities | | 5,798 | | | (54,061) | |
| | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | |
Repayments of debt | | (150,115) | | | (128,771) | |
Proceeds from debt | | 129,853 | | | 197,926 | |
| | | | |
| | | | |
Debt issuance costs | | — | | | (182) | |
Treasury stock acquisitions | | (1,193) | | | (405) | |
| | | | |
Investment of noncontrolling interest | | 334 | | | — | |
Net cash (used in) provided by financing activities | | (21,121) | | | 68,568 | |
| | | | |
Effect of exchange rate changes on cash and cash equivalents | | 100 | | | (1,100) | |
Net increase (decrease) in cash and cash equivalents | | 87 | | | (5,429) | |
Cash and cash equivalents at beginning of period | | 2,882 | | | 10,372 | |
Cash and cash equivalents at end of period | | $ | 2,969 | | | $ | 4,943 | |
Supplemental disclosure of cash flow information: | | | | |
Interest paid | | $ | 4,351 | | | $ | 1,337 | |
Income taxes received | | $ | (271) | | | $ | (5,151) | |
| | | | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2023 |
| | Common Stock | | Paid-in Capital | | Retained Earnings | | Treasury Stock | | Accumulated Other Comprehensive Loss | | Noncontrolling Interest | | Total Stockholders’ Equity |
Balance, June 30, 2023 | | $ | 111 | | | $ | 40,919 | | | $ | 124,548 | | | $ | (4,846) | | | $ | (18,536) | | | $ | 396 | | | $ | 142,592 | |
| | | | | | | | | | | | | | |
Net income (loss) | | — | | | — | | | 515 | | | — | | | — | | | (68) | | | 447 | |
Other comprehensive income, net of tax: | | | | | | | | | | | | | | |
Pension liability adjustment | | — | | | — | | | — | | | — | | | 42 | | | — | | | 42 | |
Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | (1,630) | | | (21) | | | (1,651) | |
Unrealized derivative gain on cash flow hedges | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
| | | | | | | | | | | | | | |
Purchase of 12,102 common shares for treasury | | — | | | — | | | — | | | (216) | | | — | | | — | | | (216) | |
Issuance of 0 common shares, net of shares withheld for taxes | | — | | | (15) | | | — | | | — | | | — | | | — | | | (15) | |
Stock-based compensation | | — | | | 928 | | | — | | | — | | | — | | | — | | | 928 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Balance, September 30, 2023 | | $ | 111 | | | $ | 41,832 | | | $ | 125,063 | | | $ | (5,062) | | | $ | (20,123) | | | $ | 307 | | | $ | 142,128 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 income (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 | |
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
L.B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2023 |
| | Common Stock | | Paid-in Capital | | Retained Earnings | | Treasury Stock | | Accumulated Other Comprehensive Loss | | Noncontrolling Interest | | Total Stockholders’ Equity |
Balance, December 31, 2022 | | $ | 111 | | | $ | 41,303 | | | $ | 123,169 | | | $ | (6,240) | | | $ | (21,165) | | | $ | 420 | | | $ | 137,598 | |
| | | | | | | | | | | | | | |
Net income (loss) | | — | | | — | | | 1,894 | | | — | | | — | | | (125) | | | 1,769 | |
Other comprehensive income, net of tax: | | | | | | | | | | | | | | |
Pension liability adjustment | | — | | | — | | | — | | | — | | | 123 | | | — | | | 123 | |
Foreign currency translation adjustment | | — | | | — | | | — | | | — | | | 840 | | | 12 | | | 852 | |
Unrealized derivative gain on cash flow hedges | | — | | | — | | | — | | | — | | | 79 | | | — | | | 79 | |
| | | | | | | | | | | | | | |
Purchase of 63,343 common shares for treasury | | — | | | — | | | — | | | (878) | | | — | | | — | | | (878) | |
Issuance of 91,316 common shares, net of shares withheld for taxes | | — | | | (2,228) | | | — | | | 2,056 | | | — | | | — | | | (172) | |
Stock-based compensation | | — | | | 2,757 | | | — | | | — | | | — | | | — | | | 2,757 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Balance, September 30, 2023 | | $ | 111 | | | $ | 41,832 | | | $ | 125,063 | | | $ | (5,062) | | | $ | (20,123) | | | $ | 307 | | | $ | 142,128 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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 income (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.
L.B. FOSTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except share data)
Note 1. Financial 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 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all estimates and adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in L.B. Foster Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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.
Note 2. Business Segments
The 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. The Company’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 Chief Operating Decision Maker, who uses such information to make decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available. Operating segments are evaluated on 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, 2022.
The operating results of the Company’s reportable segments were as follows for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2023 | | Three Months Ended September 30, 2022 |
| | Net Sales | | Segment Operating Profit (Loss) | | Net Sales | | Segment Operating Profit |
Rail, Technologies, and Services | | $ | 86,866 | | | $ | 3,865 | | | $ | 77,350 | | | $ | 539 | |
Precast Concrete Products | | 38,642 | | | 3,389 | | | 28,856 | | | 1,245 | |
Steel Products and Measurement | | 19,837 | | | (1,521) | | | 23,809 | | | 303 | |
Total | | $ | 145,345 | | | $ | 5,733 | | | $ | 130,015 | | | $ | 2,087 | |
| | | | | | | | |
| | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2023 | | Nine Months Ended September 30, 2022 |
| | Net Sales | | Segment Operating Profit (Loss) | | Net Sales | | Segment Operating Profit (Loss) |
Rail, Technologies, and Services | | $ | 242,866 | | | $ | 12,880 | | | $ | 222,857 | | | $ | 5,576 | |
Precast Concrete Products | | 96,795 | | | 4,337 | | | 67,477 | | | 329 | |
Steel Products and Measurement | | 69,206 | | | (73) | | | 69,990 | | | (1,083) | |
Total | | $ | 408,867 | | | $ | 17,144 | | | $ | 360,324 | | | $ | 4,822 | |
| | | | | | | | |
| | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Segment profit (loss) from operations, as shown above, includes allocated corporate operating expenses. Operating expenses related to corporate headquarter functions that directly support the segment activity are allocated based on segment headcount, revenue contribution, or activity of the 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 the segments.
The following table demonstrates a reconciliation of reportable segment net profit to the Company’s consolidated total for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Operating profit for reportable segments | | $ | 5,733 | | | $ | 2,087 | | | $ | 17,144 | | | $ | 4,822 | |
Interest expense - net | | (1,442) | | | (993) | | | (4,404) | | | (1,747) | |
| | | | | | | | |
Other (expense) income - net | | (917) | | | (168) | | | (3,463) | | | 1,096 | |
| | | | | | | | |
| | | | | | | | |
Unallocated corporate expenses and other unallocated charges | | (3,048) | | | (3,207) | | | (7,607) | | | (5,749) | |
Income (loss) before income taxes | | $ | 326 | | | $ | (2,281) | | | $ | 1,670 | | | $ | (1,578) | |
The following table illustrates assets of the Company by reportable segment for the periods presented: | | | | | | | | | | | | | | |
| | September 30, 2023 | | December 31, 2022 |
Rail, Technologies, and Services | | $ | 164,728 | | | $ | 172,111 | |
Precast Concrete Products | | 106,243 | | | 108,598 | |
Steel Products and Measurement | | 36,481 | | | 54,516 | |
Unallocated corporate assets | | 27,139 | | | 30,085 | |
Total | | $ | 334,591 | | | $ | 365,310 | |
On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line. The Bedford, PA based operations supporting the product line are expected to cease in the fourth quarter of 2023. For the three months ended September 30, 2023 and 2022, the product line had $283 and $2,967 in sales, respectively, and for the nine months ended September 30, 2023 and 2022, the product line had $3,749 and $12,975 in sales, respectively. The Company incurred $1,069 of exit costs recorded in “Other expense (income) - net,” which includes $345 in inventory write-downs, $462 in personnel expenses, and $262 in other exit costs. The Company expects to incur an additional $520 of personnel expenses associated with the exit through 2024. During the three months ended September 30, 2023 the Company also recorded a $1,977 reduction in net sales and a $3,051 reduction in gross profit stemming from changes in expected value of certain commercial projects associated with the exit of the product line. The grid deck product line was reported in the Bridge Products business unit within the Steel Products and Measurement segment.
On June 30, 2023, the Company sold substantially all the operating assets of the prestressed concrete railroad tie business operated by its wholly-owned subsidiary, CXT Incorporated (“Ties”), located in Spokane, WA, for $2,362 in proceeds, subject to final working capital adjustments, generating a $1,009 loss on the sale, which was recorded in “Other expense (income) - net.” The Ties business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment.
On March 30, 2023, the Company sold substantially all the operating assets of its Precision Measurement Products and Systems business, Chemtec Energy Services LLC (“Chemtec”), for $5,344 in proceeds, subject to final working capital adjustments, generating a $2,065 loss on the sale, which was recorded in “Other expense (income) - net.” The Chemtec business was reported in the Coatings and Measurement business unit within the Steel Products and Measurement segment.
Note 3. Revenue
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, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Rail Products and Global Friction Management | | $ | 76,262 | | | $ | 69,573 | | | $ | 214,236 | | | $ | 192,527 | |
Technology Services and Solutions | | 10,604 | | | 7,777 | | | 28,630 | | | 30,330 | |
Rail, Technologies, and Services | | 86,866 | | | 77,350 | | | 242,866 | | | 222,857 | |
Precast Concrete Buildings | | 20,127 | | | 15,525 | | | 50,338 | | | 41,306 | |
Precast Infrastructure Products | | 18,515 | | | 13,331 | | | 46,457 | | | 26,171 | |
Precast Concrete Products | | 38,642 | | | 28,856 | | | 96,795 | | | 67,477 | |
Fabricated Steel Products | | 14,218 | | | 15,300 | | | 39,589 | | | 45,871 | |
Coatings and Measurement | | 5,619 | | | 8,509 | | | 29,617 | | | 24,119 | |
Steel Products and Measurement | | 19,837 | | | 23,809 | | | 69,206 | | | 69,990 | |
Total net sales | | $ | 145,345 | | | $ | 130,015 | | | $ | 408,867 | | | $ | 360,324 | |
The majority of the Company’s revenue is from products transferred and services rendered to customers at a point in time. The Company recognizes revenue at the point in time at which the customer obtains control of the product or service, 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 designated physical location.
Net sales by the timing of the transfer of goods and services was as follows for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, 2023 |
| | Rail, Technologies, and Services | | Precast Concrete Products | | Steel Products and Measurement | | Total |
Point in time | | $ | 72,246 | | | $ | 18,516 | | | $ | 20,018 | | | $ | 110,780 | |
Over time | | 14,620 | | | 20,126 | | | (181) | | | 34,565 | |
Total net sales | | $ | 86,866 | | | $ | 38,642 | | | $ | 19,837 | | | $ | 145,345 | |
| | | | | | | | |
| | Three Months Ended September 30, 2022 |
| | Rail, Technologies, and Services | | Precast Concrete Products | | Steel Products and Measurement | | Total |
Point in time | | $ | 64,913 | | | $ | 13,331 | | | $ | 20,871 | | | $ | 99,115 | |
Over time | | 12,437 | | | 15,525 | | | 2,938 | | | 30,900 | |
Total net sales | | $ | 77,350 | | | $ | 28,856 | | | $ | 23,809 | | | $ | 130,015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, 2023 |
| | Rail, Technologies, and Services | | Precast Concrete Products | | Steel Products and Measurement | | Total |
Point in time | | $ | 202,003 | | | $ | 46,458 | | | $ | 56,151 | | | $ | 304,612 | |
Over time | | 40,863 | | | 50,337 | | | 13,055 | | | 104,255 | |
Total net sales | | $ | 242,866 | | | $ | 96,795 | | | $ | 69,206 | | | $ | 408,867 | |
| | | | | | | | |
| | Nine Months Ended September 30, 2022 |
| | Rail, Technologies, and Services | | Precast Concrete Products | | Steel Products and Measurement | | Total |
Point in time | | $ | 179,951 | | | $ | 26,171 | | | $ | 56,897 | | | $ | 263,019 | |
Over time | | 42,906 | | | 41,306 | | | 13,093 | | | 97,305 | |
Total net sales | | $ | 222,857 | | | $ | 67,477 | | | $ | 69,990 | | | $ | 360,324 | |
During the three and nine months ended September 30, 2023, the Company recorded a $1,977 reduction in net sales stemming from changes in expected value of certain commercial projects associated with the exit of the bridge grid deck product line.
The Company’s performance obligations under long-term agreements with its customers are generally satisfied over time. Revenue under long-term agreements is at times recognized 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. The Company’s revenue recognized over time under long-term agreements is also at times recognized using an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements. The use of an input or an output measure to recognize revenue is determined based on what is most appropriate given the nature of the work performed and terms of the associated agreement.
Revenue recognized over time was as follows for the periods presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Percentage of Total Net Sales Three Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Over time input method | | $ | 12,642 | | | $ | 14,380 | | | 8.7 | % | | 11.1 | % |
Over time output method | | 21,923 | | | 16,520 | | | 15.1 | | | 12.7 | |
Total over time sales | | $ | 34,565 | | | $ | 30,900 | | | 23.8 | % | | 23.8 | % |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 30, | | Percentage of Total Net Sales Nine Months Ended September 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Over time input method | | $ | 44,577 | | | $ | 53,791 | | | 10.9 | % | | 14.9 | % |
Over time output method | | 59,678 | | | 43,514 | | | 14.6 | | | 12.1 | |
Total over time sales | | $ | 104,255 | | | $ | 97,305 | | | 25.5 | % | | 27.0 | % |
| | | | | | | | |
The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (included in “Contract assets - net”), and billings in excess of costs (contract liabilities), included in “Deferred revenue” within the Condensed Consolidated Balance Sheets.
The following table sets forth the Company’s contract assets:
| | | | | | | | |
| | Contract Assets |
Balance as of December 31, 2022 | | $ | 33,613 | |
Net additions to contract assets | | 3,718 | |
Transfers from contract asset balance to accounts receivable | | (6,828) | |
Balance as of September 30, 2023 | | $ | 30,503 | |
The following table sets forth the Company’s contract liabilities:
| | | | | | | | |
| | Contract Liabilities |
Balance as of December 31, 2022 | | $ | 6,781 | |
Revenue recognized from contract liabilities | | (4,421) | |
Increase in billings in excess of cost, excluding revenue recognized | | 3,635 | |
Other adjustments, including business divestiture | | (1,904) | |
Balance as of September 30, 2023 | | $ | 4,091 | |
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 is based on historical collection trends, accuracy of estimates within contract margin reporting, as well as the expectation that collection patterns and margin reporting 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, 2023, the Company had approximately $243,219 of obligations under new contracts and remaining performance obligations, which is also referred to as backlog. Approximately 10.9% of the September 30, 2023 backlog was related to projects that are anticipated to extend beyond September 30, 2024.
Note 4. Goodwill and Other Intangible Assets
The following table presents the changes in goodwill balance by reportable segment for the period presented:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Rail, Technologies, and Services | | Precast Concrete Products | | Steel Products and Measurement | | Total |
Balance as of December 31, 2022 | | $ | 19,948 | | | $ | 10,785 | | | $ | — | | | $ | 30,733 | |
| | | | | | | | |
VanHooseCo acquisition | | — | | | 242 | | | — | | | 242 | |
Foreign currency translation impact | | (119) | | | — | | | — | | | (119) | |
| | | | | | | | |
| | | | | | | | |
Balance as of September 30, 2023 | | $ | 19,829 | | | $ | 11,027 | | | $ | — | | | $ | 30,856 | |
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, which included the impacts of current economic conditions, including but not limited to labor markets, supply chains, and other inflationary costs. However, these factors can be unpredictable and are subject to change. No interim goodwill impairment test was required as a result of the evaluation of qualitative factors as of September 30, 2023. However, future impairment charges could result if future projections diverge unfavorably from current expectations.
As of September 30, 2023 and December 31, 2022, the components of the Company’s intangible assets were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2023 | | |
| | Weighted Average Amortization Period In Years | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Amount | | |
| | | | | | | | | | |
Patents | | 10 | | $ | 330 | | | $ | (194) | | | $ | 136 | | | |
Customer relationships | | 16 | | 27,276 | | | (16,200) | | | 11,076 | | | |
Trademarks and trade names | | 16 | | 7,942 | | | (4,424) | | | 3,518 | | | |
Technology | | 13 | | 32,474 | | | (27,461) | | | 5,013 | | | |
Favorable lease | | 6 | | 327 | | | (64) | | | 263 | | | |
| | | | $ | 68,349 | | | $ | (48,343) | | | $ | 20,006 | | | |
During the nine months ended September 30, 2023, certain fully amortized intangible assets of $27 related to non-compete agreements were eliminated from gross intangible assets and accumulated amortization.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2022 |
| | Weighted Average Amortization Period In Years | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Amount |
Non-compete agreements | | 1 | | $ | 27 | | | $ | (16) | | | $ | 11 | |
Patents | | 10 | | 330 | | | (187) | | | 143 | |
Customer relationships | | 16 | | 27,184 | | | (14,129) | | | 13,055 | |
Trademarks and trade names | | 16 | | 7,933 | | | (3,989) | | | 3,944 | |
Technology | | 14 | | 32,201 | | | (25,827) | | | 6,374 | |
Favorable lease | | 6 | | 327 | | | (23) | | | 304 | |
| | | | $ | 68,002 | | | $ | (44,171) | | | $ | 23,831 | |
On June 21, 2022, the Company acquired the stock of Skratch Enterprises Ltd. (“Skratch”). On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast LLC (“VanHooseCo”). As of September 30, 2023, the purchase accounting for these transactions is final. Purchase accounting adjustments recognized during the nine months ended September 30, 2023 were immaterial.
Note 5. Accounts Receivable
Changes in reserves for uncollectible accounts, which are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, were recorded as an expense of $763 and income of $40 for the three months ended September 30, 2023 and 2022, respectively, and an expense of $1,174 and $171 for the nine months ended September 30, 2023 and 2022, respectively.
The Company establishes the allowance for credit losses based on historical collection patterns and other subjective conditions as necessary, including current and expected market conditions. Trade receivables are pooled based on age, which groups receivables of similar credit risk together. 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, 2022 | | $ | 813 | |
Current period provision | | 1,174 | |
Write-off against allowance | | (244) | |
| | |
Balance as of September 30, 2023 | | $ | 1,743 | |
| | |
| | |
Note 6. Inventory
Inventory is valued at average cost or net realizable value, whichever is lower. The Company’s components of inventory as of September 30, 2023 and December 31, 2022 are summarized in the following table:
| | | | | | | | | | | | | | |
| | September 30, 2023 | | December 31, 2022 |
Finished goods | | $ | 46,740 | | | $ | 41,431 | |
Work-in-process | | 8,673 | | | 9,693 | |
Raw materials | | 26,607 | | | 24,597 | |
Inventories - net | | $ | 82,020 | | | $ | 75,721 | |
Note 7. Long-Term Debt and Related Matters
Long-term debt consisted of the following:
| | | | | | | | | | | | | | |
| | September 30, 2023 | | December 31, 2022 |
Revolving credit facility | | $ | 71,476 | | | $ | 91,567 | |
| | | | |
Finance leases and financing agreements | | 213 | | | 312 | |
Total | | 71,689 | | | 91,879 | |
Less current maturities | | (97) | | | (127) | |
Long-term portion | | $ | 71,592 | | | $ | 91,752 | |
On August 13, 2021, the Company, its domestic subsidiaries, and certain of its Canadian and United Kingdom subsidiaries (collectively, the “Borrowers”), entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) with PNC Bank, N.A., Citizens Bank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A., and BMO Harris Bank, National Association. The Credit Agreement, as amended, modifies the prior revolving credit facility, as amended, on terms more favorable to the Company and extends the maturity from April 30, 2024 to August 13, 2026. The Credit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of the Borrowers up to $130,000 with a sublimit of the equivalent of $25,000 U.S. dollars that is available to the Canadian and United 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 $50,000 subject to the Company’s receipt of increased commitments from existing or new lenders and the satisfaction of certain conditions.
Borrowings under the Credit Agreement, as amended, will bear interest at rates based upon either the base rate or SOFR rate plus applicable margins. 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 (as defined in the Credit Agreement), and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period, 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.
On August 12, 2022, the Company entered into a second amendment to its Credit Agreement (“Second Amendment”) to obtain approval for the acquisition of VanHooseCo Precast, LLC (“VanHooseCo”) and temporarily modify certain financial covenants 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.
As of September 30, 2023, the Company was in compliance with the covenants in the Credit Agreement, as amended, and had outstanding letters of credit of approximately $2,544.
Note 8. 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, |
| | 2023 | | 2022 | | 2023 | | 2022 |
Numerator for basic and diluted earnings per common share: | | | | | | | | |
Net income (loss) attributable to L.B. Foster Company | | $ | 515 | | | $ | (2,077) | | | $ | 1,894 | | | $ | (1,633) | |
| | | | | | | | |
| | | | | | | | |
Denominator: | | | | | | | | |
Weighted average shares outstanding | | 10,813 | | | 10,731 | | | 10,804 | | | 10,710 | |
Denominator for basic earnings (loss) per common share | | 10,813 | | | 10,731 | | | 10,804 | | | 10,710 | |
Effect of dilutive securities: | | | | | | | | |
Stock compensation plans | | 160 | | | — | | | 91 | | | — | |
Dilutive potential common shares | | 160 | | | — | | | 91 | | | — | |
Denominator for diluted earnings (loss) per common share - adjusted weighted average shares outstanding | | 10,973 | | | 10,731 | | | 10,895 | | | 10,710 | |
| | | | | | | | |
| | | | | | | | |
Basic earnings (loss) per common share | | $ | 0.05 | | | $ | (0.20) | | | $ | 0.18 | | | $ | (0.16) | |
| | | | | | | | |
| | | | | | | | |
Diluted earnings (loss) per common share | | $ | 0.05 | | | $ | (0.20) | | | $ | 0.17 | | | $ | (0.16) | |
| | | | | | | | |
There were 109 and 108 anti-dilutive shares for the three and nine months ended September 30, 2022, respectively, excluded from the calculation.
Note 9. Income Taxes
For the three months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $121 and $176, respectively, on pre-tax income of $326 and pre-tax losses of $2,281, respectively, for an effective income tax rate of (37.1%) and 7.7%, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $99 and income tax expense of $137, respectively, on pre-tax income of $1,670 and pre-tax losses of $1,578, respectively, for an effective income tax rate of (5.9%) and (8.7%), respectively. The Company's effective income tax rate for the three and nine months ended September 30, 2023 differed from the federal statutory rate of 21% primarily due to changes in the valuation allowance established against U.S. and United Kingdom deferred tax assets. Changes in pre-tax income projections, combined with the seasonal nature of our businesses, could also impact the effective income tax rate each quarter.
Note 10. Stock-Based Compensation
The Company recorded stock-based compensation expense of $928 and $387 for the three months ended September 30, 2023 and 2022, respectively, and $2,757 and $1,570 for the nine months ended September 30, 2023 and 2022, respectively, related to restricted stock awards and performance share units. As of September 30, 2023, unrecognized compensation expense for awards that the Company expects to vest approximated $6,059. The Company will recognize this unrecognized compensation expense over the upcoming 2.4 years through March 1, 2026.
Shares issued as a result of vested stock-based compensation awards generally will be issued 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, Performance Share Units, and Performance-Based Stock Awards
Under the 2022 Equity and Incentive Compensation Plan, as amended, successor 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. Awards of restricted stock are 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. The Company has, on occasion, issued performance share units with longer performance periods as incentivization and retention tools. 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 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 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 2023, the Compensation Committee approved the 2023-2025 Long Term Incentive Plan which includes grants of performance share units and restricted stock. The following table summarizes the restricted stock, deferred stock units, and performance-based stock and share unit activity for the nine months ended September 30, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Restricted Stock | | Deferred Stock Units | | Performance-Based Stock and Share Units | | Weighted Average Grant Date Fair Value |
Outstanding as of December 31, 2022 | | 174,173 | | | 46,268 | | | 108,478 | | | $ | 17.77 | |
Granted | | 181,914 | | | — | | | 367,558 | | | 11.78 | |
Vested | | (88,367) | | | (33,864) | | | — | | | 15.97 | |
Adjustment for incentive awards expected to vest | | — | | | — | | | 20,104 | | | 15.36 | |
Cancelled and forfeited | | (2,750) | | | — | | | — | | | 14.46 | |
Outstanding as of September 30, 2023 | | 264,970 | | | 12,404 | | | 496,140 | | | $ | 14.20 | |
Note 11. Fair Value Measurements
The Company determines the fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:
Level 1: Observable inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
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 in “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.
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 SOFR-based interest rate swaps with notional values totaling $20,000 and $20,000 effective August 12, 2022 and August 31, 2022, respectively. The fair value of the interest rate swaps are 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. As of September 30, 2023 and December 31, 2022, 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 our Condensed Consolidated Balance Sheets.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements at Reporting Date | | | Fair Value Measurements at Reporting Date |
| | September 30, 2023 | | Level 1 | | Level 2 | | Level 3 | | | December 31, 2022 | | Level 1 | | Level 2 | | Level 3 |
Term deposits | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | $ | 17 | | | $ | 17 | | | $ | — | | | $ | — | |
Interest rate swaps | | 2,009 | | | — | | | 2,009 | | | — | | | | 1,930 | | | — | | | 1,930 | | | — | |
Total assets | | $ | 2,009 | | | $ | — | | | $ | 2,009 | | | $ | — | | | | $ | 1,947 | | | $ | 17 | | | $ | 1,930 | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
The $20,000 interest rate swap agreements that became effective August 2022 are accounted for as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate on our debt. The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated
Balance Sheets and included in “Interest expense - net” in our Condensed Consolidated Statements of Operations as the interest expense from our debt is recognized.
For the three months ended September 30, 2023, the Company recognized interest income of $329 from interest rate swaps. For the nine months ended September 30, 2023 and 2022, the Company recognized interest income and interest expense of $869 and $78, respectively, from interest rate swaps.
Note 12. Retirement Plans
Retirement Plans
The Company has three retirement plans that cover its hourly and salaried employees in the United States: one defined benefit plan, which is frozen, and two 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 maintains one defined contribution plan for its employees in Canada. In the United Kingdom, the Company maintains two defined contribution plans and a defined benefit plan, which is frozen. These plans are discussed in further detail below.
United States Defined Benefit Plan
Net periodic pension costs for the United States defined benefit