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What changed in FOSTER L B CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FOSTER L B CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+250 added−235 removedSource: 10-K (2024-03-06) vs 10-K (2023-03-10)

Top changes in FOSTER L B CO's 2023 10-K

250 paragraphs added · 235 removed · 161 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

43 edited+18 added−9 removed40 unchanged
Biggest changeThe following table shows the net sales for each business segment as a percentage of total net sales for the years ended December 31, 2022 and 2021: Percentage of Net Sales 2022 2021 Rail, Technologies, and Services 60 % 58 % Precast Concrete Products 21 14 Steel Products and Measurement 19 28 100 % 100 % Financial information concerning these segments is set forth in Part II, Item 8, Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements contained in this Annual Report on Form 10-K, which is incorporated by reference into this Item 1.
Biggest changeFinancial information concerning these segments is set forth in Part II, Item 8, Financial Statements and Supplementary Data, Note 2 to the Consolidated Financial Statements contained in this Annual Report on Form 10-K, which is incorporated by reference into this Item 1.
Friedman was employed by ABB Ltd from 2012 to 2019 in various roles including Director Global Product Management and Manufacturing Unit Manager. Previously, he served in various research and development and operations role for Hunter Fan Company from 2001 to 2012. Mr.
Friedman was employed by ABB Ltd from 2012 to 2019 in various roles including Director Global Product Management and Manufacturing Unit Manager. Previously, he served in various research and development and operations roles for Hunter Fan Company from 2001 to 2012. Mr.
Leadership and Talent Management The Company’s executive leadership team sets the Company’s strategic direction and is dedicated to sustainable profitable growth through its commitment to providing quality products and services to its customers and treating our customers, suppliers, and employees as partners. L.B.
Leadership and Talent Management The Company’s executive leadership team sets the Company’s strategic direction and is dedicated to sustainable, profitable growth through its commitment to providing quality products and services to customers and treating customers, suppliers, and employees as partners. L.B.
Treacy was appointed Senior Vice President and Chief Growth Officer in October 2021, and was previously Senior Vice President - Infrastructure Solutions in 2021, Vice President - Infrastructure Solutions from November 2020 to February 2021, Vice President - Tubular and Energy Services from 2017 to 2020. Mr.
Treacy was appointed Executive Vice President and Chief Growth Officer in October 2021, and was previously Senior Vice President - Infrastructure Solutions in 2021, Vice President - Infrastructure Solutions from November 2020 to February 2021, Vice President - Tubular and Energy Services from 2017 to 2020. Mr.
Environmental Disclosures Information regarding environmental matters is included in Part II, Item 8, Financial Statements and Supplementary Data, Note 18 to the Consolidated Financial Statements included in this Annual Report on Form 10-K, which is incorporated by reference into this Item 1. Human Capital Management People are the heart of L.B. Foster’s success.
Environmental Disclosures Information regarding environmental matters is included in Part II, Item 8, Financial Statements and Supplementary Data, Note 18 to the Consolidated Financial Statements included in this Annual Report on Form 10-K, which is incorporated by reference into this Item 1. 6 Table of Contents Human Capital Management People are the heart of L.B. Foster’s success.
The Company’s purchases from foreign suppliers are subject to foreign currency exchange rate changes and the risks associated with changes in international conditions, as well as U.S. and international laws that could impose import restrictions on selected classes of products and for anti-dumping duties if products are sold in the U.S. at prices that are below specified prices.
The Company’s purchases from foreign suppliers are subject to foreign currency exchange rate changes and the risks associated with changes in international conditions, as well as US and international laws that could impose import restrictions on selected classes of products and for anti-dumping duties if products are sold in the US at prices that are below specified prices.
The Company also entered into license agreements for VanHooseCo’s ENVIROCAST ® pre-insulated concrete walls and ENVIROKEEPER ® water retention and management product lines. The acquisition expands L.B.
The Company also entered into license agreements for VanHooseCo’s ENVIROCAST ® pre-insulated concrete walls and ENVIROKEEPER ® water retention and management product lines. The acquisition expanded L.B.
Technology Services and Solutions The Company’s Technology Services and Solutions business unit engineers and manufactures railroad condition monitoring systems and equipment, wheel impact load detection systems, wayside data collection and management systems, and rockfall, flood, earthworks, and bridge strike monitoring.
Technology Services and Solutions The Company’s Technology Services and Solutions business unit engineers and manufactures Total Track Monitoring railroad condition monitoring systems and equipment including wheel impact load detection systems, wayside data collection and management systems, and rockfall, flood, earthworks, and bridge strike monitoring.
In August of 2022, the Company acquired the operating assets of VanHooseCo Precast, LLC (“VanHooseCo”), a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and forms for the commercial and residential infrastructure markets. VanHooseCo has an existing manufacturing site in Loudon, near Knoxville, and a new facility recently commissioned in Lebanon, TN near Nashville.
In August of 2022, the Company acquired the operating assets of VanHooseCo Precast, LLC (“VanHooseCo”), a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and forms for the commercial and residential infrastructure markets. VanHooseCo has a manufacturing site in Loudon, near Knoxville, and a facility in Lebanon, TN near Nashville.
Prior to re-joining the Company in 2000, Mr. Lippard served as Vice President - International Trading for Tube City, Inc. from 1998. Mr. Lippard served in various other capacities with the Company after his initial employment in 1991. Mr.
From 2000 to 2017, he served as Vice President - Rail Product Sales. Prior to re-joining the Company in 2000, Mr. Lippard served as Vice President - International Trading for Tube City, Inc. from 1998. Mr. Lippard served in various other capacities with the Company after his initial employment in 1991. Mr.
These products, systems, and services are designed, engineered, serviced, and marketed in the U.S., U.K., and Germany. In June of 2022, the Company acquired the stock of Skratch Enterprises Ltd. (“Skratch”), located in Telford, United Kingdom. Skratch offers a single-point supply solution model for clients, and enables large scale deployments of its intelligent digital signage solutions.
These products, systems, and services are designed, engineered, serviced, and marketed in the US, UK, and Germany. In June of 2022, the Company acquired the stock of Skratch Enterprises Ltd. (“Skratch”), located in Telford, UK. Skratch offers a single-point supply solution model for clients, and enables large scale deployments of its intelligent digital signage solutions.
Steel Products and Measurement The Company’s Steel Products and Measurement segment provides custom engineered solutions and services that help to build and maintain critical civil and energy infrastructure throughout the Americas. Steel Products and Measurement designs, manufactures, and supplies a variety of steel bridge products to contractors performing installation and repair work to North American transportation infrastructure network.
Steel Products The Company’s Steel Products business unit provides custom engineered solutions and services that help to build and maintain critical civil and energy infrastructure throughout North America. Steel Products designs, manufactures, and supplies a variety of steel bridge products to contractors performing installation and repair work to North American transportation infrastructure network.
Friction management products include mobile and wayside systems that apply lubricants and liquid or solid friction modifiers. These products and systems are designed, engineered, manufactured, fabricated, serviced, and marketed in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), and Germany.
Friction management products include mobile and wayside systems that apply lubricants and liquid or solid friction modifiers. These products and systems are designed, engineered, manufactured, fabricated, serviced, and marketed in the United States (“US”), Canada, the United Kingdom (“UK”), and Germany.
The Company uses these six principles to guide its employees every day. The expectation of all employees, at every level of the organization, is to execute our business strategy in a manner that adheres to these core values and demonstrates commitment to the L.B. Foster SPIRIT.
The expectation of all employees, at every level of the organization, is to execute our business strategy in a manner that adheres to these core values and demonstrates commitment to the L.B. Foster SPIRIT.
The following is a summary of those product and service offerings: Protective Coatings - There are two pipeline coating services locations that make up our Protective Coatings division. Our Birmingham, AL facility coats the outside and inside diameter of pipe primarily for oil and gas transmission pipelines.
Protective Pipe Coatings - There are two pipeline coating services locations that make up our Protective Coatings division. Our Birmingham, AL facility coats the outside and inside diameter of pipe primarily for oil and gas transmission pipelines.
The Company strives to create and promote a culture that makes L.B. Foster a great place to work. The Company seeks to attract and retain employees that embody and demonstrate its values, which are 6 Table of Contents summarized in our SPIRIT model, focusing on Safety, People, Integrity, Respect, Innovation, and Teamwork.
The Company strives to create and promote a culture that makes L.B. Foster a great place to work. The Company seeks to attract and retain employees that embody and demonstrate its values, which are summarized in our SPIRIT model, focusing on Safety, People, Integrity, Respect, Innovation, and Teamwork. The Company uses these six principles to guide its employees every day.
Precision Measurement Products and Systems - The Company manufactures and provides turnkey solutions for metering and injection systems primarily for the oil, and, to a lesser extent, gas industry. The Willis, TX location operates a fabrication plant that builds metering systems for custody transfer applications, including crude oil and other petroleum-based products.
Precision Measurement Products and Systems - The Company manufactured and provided turnkey solutions for metering and injection systems primarily for the oil, and, to a lesser extent, gas industry via its Chemtec Energy Services LLC (“Chemtec”) business. The Willis, TX location operated a fabrication plant that built metering systems for custody transfer applications, including crude oil and other petroleum-based products.
Thalman was appointed Senior Vice President and Chief Financial Officer of the Company in February 2021. Prior to joining the Company, Mr. Thalman was employed by Kennametal, Inc. from February 2004 through February 2021, most recently serving as Vice President - Advanced Material Solutions since 2016 and Vice President - Transformation Office since 2019.
Thalman was employed by Kennametal, Inc. from February 2004 through February 2021, most recently serving as Vice President - Advanced Material Solutions since 2016 and Vice President - Transformation Office since 2019.
The Company completed the sale of the assets of this division in August of 2022. 4 Table of Contents Global Friction Management The Company’s Global Friction Management business unit engineers, manufactures, and fabricates friction management products and application systems for its rail customers. It also provides aftermarket services managing its friction management solutions for customers.
Global Friction Management The Company’s Global Friction Management business unit engineers, manufactures, and fabricates friction management products and application systems for its rail customers. It also provides aftermarket services managing its friction management solutions for customers.
Allegheny Rail Products (“ARP”) - ARP engineers and manufactures insulated rail joints and related accessories for freight and passenger railroads and industrial customers. Insulated joints are manufactured domestically at the Company’s facilities in Pueblo, CO and Niles, OH. Transit Products - This division supplies designed, engineered, and outsourced-manufactured direct fixation fasteners, coverboards, and special accessories primarily for passenger railroad systems.
Insulated joints are manufactured domestically at the Company’s facilities in Pueblo, CO and Niles, OH. 4 Table of Contents Transit Products - This division supplies designed, engineered, and outsourced-manufactured direct fixation fasteners, coverboards, and special accessories primarily for passenger railroad systems. Transit Products also manufactures power rail, also known as third rail, at its facility in Niles, OH.
Mr. Kasel served as Vice President of Operations for Mammoth, Inc., a Nortek company from 2000 to 2003. Mr. Kelly serves as Senior Vice President - Human Resources and Administration and was elected Vice President - Human Resources and Administration in 2012, having previously served as Vice President, Human Resources since 2006. Prior to joining the Company, Mr.
Kelly was elected Executive Vice President - Human Resources and Administration in June of 2023, having previously served as Senior Vice President - Human Resources and Administration, and was elected Vice President - Human Resources and Administration in 2012, having previously served as Vice President, Human Resources since 2006. Prior to joining the Company, Mr.
Reilly was appointed Controller and Principal Accounting Officer of the Company in January 2022. Prior to joining the Company, Mr. Reilly most recently served as Vice President of Finance - Metal Cutting Division, at Kennametal, Inc. since April 2019. Prior to that role, Mr.
Reilly most recently served as Vice President of Finance - Metal Cutting Division, at Kennametal, Inc. since April 2019. Prior to that role, Mr.
Transit Products also manufactures power rail, also known as third rail, at its facility in Niles, OH. These products are usually sold to contractors or by sealed bid to passenger railroads. Concrete Ties - This division manufactures engineered concrete railroad ties for freight and passenger railroads and industrial accounts at its facility in Spokane, WA.
These products are usually sold to contractors or by sealed bid to passenger railroads. Concrete Ties (“Ties”) - This division manufactures engineered concrete railroad ties for freight and passenger railroads and industrial accounts at its facility in Spokane, WA. The Company completed the sale of the operating assets of this division in June of 2023.
Thalman 56 Senior Vice President and Chief Financial Officer William F. Treacy 63 Senior Vice President and Chief Growth Officer Mr. Friedman was elected Vice President - Steel Products and Measurement in October 2021, having previously served as Vice President - Coatings and Measurement since joining the Company in May of 2019. Prior to joining the Company, Mr.
Friedman was elected Senior Vice President - Steel Products and Special Projects in December of 2023, having previously served as Senior Vice President, Steel Products, Vice President - Steel Products and Measurement, and Vice President - Coatings and Measurement since joining the Company in May of 2019. Prior to joining the Company, Mr.
Two collective bargaining agreements covering approximately 24 and 20 employees are scheduled to expire in March 2025, and September 2025, respectively. The Company divested its Track Components division on August 1, 2022, which included the collective bargaining agreement with employees of that business division.
The Company has one collective bargaining agreement covering 11 employees which is scheduled to expire in March 2025. The Company divested its Ties and Track Components divisions on June 30, 2023 and August 1, 2022, respectively, which included collective bargaining agreements with employees of those business divisions.
Lippard serves as Senior Vice President - Rail, and was previously Vice President - Rail Technologies and Services from 2020 to 2021, Vice President - Rail from January 2020 to November 2020 and Vice President - Rail Products from 2017 to 2019. From 2000 to 2017, he served as Vice President - Rail Product Sales.
Lippard was elected Senior Vice President - Rail, Technologies, and Services in December of 2023 and was previously Senior Vice President - Rail from 2021 to 2023, Vice President - Rail, Technologies, and Services from 2020 to 2021, Vice President - Rail from January 2020 to November 2020 and Vice President - Rail Products from 2017 to 2019.
It also provides solutions in corrosion protection, measurement, and control systems for the safe transportation and accurate measurement of gas and liquids in pipelines as well as threaded pipe for water well applications. The Steel Products and Measurement reporting segment is comprised of the Fabricated Steel Products and Coatings and Measurement business units.
It also provides solutions in corrosion protection for the safe transportation of gas and liquids in pipelines as well as threaded pipe for water well applications.
Workforce As of December 31, 2022, the Company had 1,131 employees, 867 located within the U.S., 43 within Canada, 215 in Europe, and 6 within other locations. There were 527 hourly production workers and 604 salaried employees. Of the hourly production workers, approximately 44 were represented by unions.
Workforce As of December 31, 2023, the Company had 1,065 employees of which 820 were located within the US, 43 within Canada, 196 in Europe, and 6 within other locations. There were 497 hourly production workers and 568 salaried employees. Of the hourly production workers, 11 were represented by unions.
Ness was elected Vice President - Precast Concrete Products in January 2021, having previously served as Director, Operations of CXT Precast since June 2020. Previously, Mr. Ness served as the Rail Business Controller beginning from 2012 to 2020 and Division Controller role he had held since his initial employment with the Company in 2006. Mr.
Ness served as the Rail Business Controller beginning from 2012 to 2020 and Division Controller role he had held since his initial employment with the Company in 2006. Mr. Reilly was appointed Controller and Principal Accounting Officer of the Company in January 2022. Prior to joining the Company, Mr.
Foster Rail Technologies (UK) Ltd having held the latter position from 2010 to 2021. Prior to L.B. Foster, Mr. Jones held the position of Managing Director of Portec Rail Products (UK) Ltd from 2006 to 2010. 8 Table of Contents Mr.
Jones was elected Senior Vice President - UK Services and Solutions in October 2021, having previously served as Vice President - Global Technology and Managing Director of L.B. Foster Rail 8 Table of Contents Technologies (UK) Ltd, having held the latter position from 2010 to 2021. Prior to L.B. Foster, Mr.
Rail, Technologies, and Services The Company’s Rail, Technologies, and Services (“Rail”) segment is comprised of several manufacturing, distribution, and service businesses that provide a variety of products, solutions, and services for freight and passenger railroads and other industrial companies throughout the world.
The following table shows the net sales for each reporting segment as a percentage of total net sales for the years ended December 31, 2023 and 2022: Percentage of Net Sales 2023 2022 Rail, Technologies, and Services 57 % 60 % Infrastructure Solutions 43 40 100 % 100 % Rail, Technologies, and Services The Company’s Rail segment is comprised of several manufacturing, distribution, and service businesses that provide a variety of products, solutions, and services for freight and passenger railroads and other industrial companies throughout the world.
The major markets for the Company’s products are highly competitive. Product availability, quality, service, and price are principal factors of competition within each of these markets. No other company provides the same product mix to the various markets the Company serves. However, there are one or more companies that compete with the Company in each product line.
No other company provides the same product mix to the various markets the Company serves. However, there are one or more companies that compete with the Company in each product line. Therefore, the Company faces significant competition from different groups of companies.
Heinz Company from 1997 to 2013, last serving as Vice President - Corporate Governance and Securities and Assistant Secretary. Mr. Jones has worked at L.B. Foster since 2010. Mr. Jones was elected Vice President - Technology Services and Solutions in October 2021, having previously served as Vice President - Global Technology and Managing Director of L.B.
Guinee served as Vice President - Securities and Corporate and Assistant Secretary at Education Management Corporation from 2013 to early 2014, and was employed by H. J. Heinz Company from 1997 to 2013, last serving as Vice President - Corporate Governance and Securities and Assistant Secretary. Mr. Jones has worked at L.B. Foster since 2010. Mr.
The Company has 10 locations/businesses throughout North America and Europe that Environmental Management Systems has independently assessed and are compliant with the requirements of ISO 14001:2015 and ISO 45001:2018. Additionally, the Company has facilitated the formation of an internal, employee-led Wellness Committee to promote initiatives and values Company-wide that focus on all aspects of health and wellness.
The Company has 9 locations/businesses throughout North America and Europe that Environmental Management Systems has independently assessed and are compliant with the requirements of ISO 14001:2015 and ISO 45001:2018.
The Company employs a sales force of approximately 79 people that is supplemented with a network of agents across Europe, South America, and Asia to reach current customers and cultivate potential customers in these areas. For the years ended December 31, 2022 and 2021, approximately 24% of the Company’s total sales were outside the U.S.
The Company employs a global sales force of approximately 78 people of which 17 are located outside of the US to reach current customers and cultivate potential customers in these areas. For the years ended December 31, 2023 and 2022, approximately 15% and 24%, respectively, of the Company’s total sales were outside the US.
The Rail reporting segment is comprised of the Rail Products, Global Friction Management, and Technology Services and Solutions business units. Rail Products The Rail Products business unit is comprised of the Company’s Rail Distribution, Allegheny Rail Products, Transit Products, and Concrete Tie divisions.
The Rail reporting segment is comprised of the Rail Products, Global Friction Management, and Technology Services and Solutions business units. Within Rail Products and Global Friction Management, we offer a full suite of track components and friction management products and services.
Therefore, the Company faces significant competition from different groups of companies. Raw Materials and Supplies The Company purchases a variety of raw materials from its supplier base including steel, aggregate, epoxy, electronics, and components, from both domestic and foreign suppliers.
Raw Materials and Supplies The Company purchases a variety of raw materials from its supplier base including steel, aggregate, epoxy, electronics, and components, from both domestic and foreign suppliers. Products are also purchased in the form of finished or semi-finished products with the majority of product being supplied by domestic and foreign steel producers.
Guinee serves as Senior Vice President, General Counsel, and Secretary and was elected Vice President, General Counsel, and Secretary in 2014. Prior to joining the Company, Mr. Guinee served as Vice President - Securities and Corporate and Assistant Secretary at Education Management Corporation from 2013 to early 2014, and was employed by H. J.
Guinee was elected Executive Vice President, General Counsel, and Secretary in June of 2023, having previously served as Senior Vice President, General Counsel, and Secretary, and was elected Vice President, General Counsel, and Secretary in 2014. Prior to joining the Company, Mr.
Water Well Threading - The Company’s Magnolia, TX facility cuts, threads, and paints pipe primarily for water well applications for the agriculture industry and municipal water authorities and, to a lesser extent, threading services for the Oil Country Tubular Goods markets. Piling Products - On September 24, 2021, the Company completed the sale of its Piling Products division.
The Company discontinued its grid deck product line in the third quarter of 2023 and expects to complete any remaining customer obligations in 2024. 5 Table of Contents Water Well Products - The Company’s Magnolia, TX facility cuts, threads, and paints pipe primarily for water well applications for the agriculture industry and municipal water authorities and, to a lesser extent, threading services for oil and gas production.
Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring. Precast Concrete Products The Precast Concrete Products (“Precast”) segment manufactures precast concrete products for the North American civil infrastructure market.
Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring. Infrastructure Solutions The Infrastructure segment uses its industry expertise to design, manufacture, and deploy advanced technologies that positively impact the built environment, including precast concrete buildings and products, bridge products, and pipe protective coatings and threading.
Foster Company generally markets its Rail products and services directly in all major industrial areas of the U.S., Canada, and Europe. Precast and Steel Products and Measurement products and services are primarily marketed domestically.
The Company completed the sale of the Chemtec business, which included all of the operating assets of this division, in March of 2023. International Operations L.B. Foster Company generally markets its Rail products and services directly in all major industrial areas of North America, South America, Europe and Asia. Infrastructure products and services are primarily marketed domestically.
Kasel 57 President and Chief Executive Officer Brian H. Kelly 63 Senior Vice President - Human Resources and Administration Gregory W. Lippard 54 Senior Vice President - Rail Robert A. Ness 59 Vice President - Precast Concrete Products Sean M. Reilly 50 Corporate Controller and Principal Accounting Officer William M.
Lippard 55 Senior Vice President - Rail, Technologies, and Services Robert A. Ness 60 Senior Vice President - Infrastructure Solutions Sean M. Reilly 51 Corporate Controller and Principal Accounting Officer William M. Thalman 57 Executive Vice President and Chief Financial Officer William F. Treacy 64 Executive Vice President and Chief Growth Officer Mr.
Executive Officers of the Registrant Information concerning the executive officers of the Company is set forth below: Name Age Position Brian H. Friedman 44 Vice President - Steel Products and Measurement Patrick J. Guinee 53 Senior Vice President, General Counsel, and Secretary Peter D. V. Jones 56 Vice President - Technology Services and Solutions John F.
Friedman 45 Senior Vice President - Steel Products and Special Projects Patrick J. Guinee 54 Executive Vice President, General Counsel, and Secretary Peter D. V. Jones 57 Senior Vice President - UK Services and Solutions John F. Kasel 58 President and Chief Executive Officer Brian H. Kelly 64 Executive Vice President - Human Resources and Administration Gregory W.
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Foster Company and its subsidiaries, unless the context indicates otherwise.
Added
Foster Company and its subsidiaries, unless the context indicates otherwise. Business Segments The Company has historically operated under three reporting segments: (1) Rail, Technologies, and Services, (2) Precast Concrete Products, and (3) Steel Products and Measurement. During 2023, the Company made certain organizational changes, which included the appointment of an executive leader for the Infrastructure Solutions business.
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Track Components - The Track Components division manufactured track spikes and anchors at a facility in St-Jean-sur-Richelieu, Quebec.
Added
The Infrastructure Solutions business comprises both the historic Precast Concrete Products and Steel Products and Measurement (since renamed “Steel Products”) reporting segments.
Removed
Fabricated Steel Products The Fabricated Steel Products business unit provides fabricated bridge products to infrastructure end markets and provides threading services for agricultural, municipal and industrial water well applications. The Fabricated Steel Products business unit markets and sells products primarily in North America.
Added
After evaluation of the organizational change along with the acquisitions and divestitures that the Company completed, the Company concluded that, beginning in the fourth quarter of 2023, it will operate under two reporting segments, and has restated segment information for the historical periods presented herein to conform to the current presentation.
Removed
The Company retained all pre-closing receivables and liabilities associated with the division. The sale included substantially all inventory and fixed assets associated with the division. 5 Table of Contents Coatings and Measurement The Coatings and Measurement business unit provides protective coating services and precision measurement products to infrastructure end markets.
Added
Accordingly, the Company now operates in two reporting segments: (1) Rail, Technologies, and Services (“Rail”) and (2) Infrastructure Solutions (“Infrastructure”).
Removed
These systems are used at well sites, pipelines, refineries, chemical plants, and loading/unloading facilities. The Willis, TX location also manufactures and installs additive and dye injection systems. These systems are used to inject performance additives and/or dyes into petroleum products. Marketing and Competition L.B.
Added
The Company’s reportable operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities, the manner in which we organize segments for making operating decisions and assessing performance, and the availability of separate financial results.
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Products are also purchased in the form of finished or semi-finished products which the majority of it is supplied from domestic and foreign steel producers. Generally, the Company has a number of vendor options.
Added
Within Technology Services and Solutions, we focus on innovation, creating leading edge engineering and digital communication technology solutions for rail, infrastructure, and the built environment, including control and digital display, contract services and condition monitoring solutions. The Technology Services and Solutions business unit also offers Total Track Monitoring railroad condition monitoring systems, equipment, and services.
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Environmental, Social, and Governance Matters As part of its ongoing commitment to good corporate stewardship, in 2022 the Company hired an employee in a newly created full-time role to focus on and enhance its sustainability and environmental, social, and governance (“ESG”) initiatives.
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Rail Products The Rail Products business unit is comprised of the Company’s Rail Distribution, Allegheny Rail Products, and Transit Products. The Concrete Ties business was also included in Rail Products until it was sold in June of 2023.
Removed
The position is intended to facilitate collaboration with the Board of Directors, senior leadership, investors, employees, customers, and societal and civic organizations to integrate ESG policies, frameworks, goals, and metrics into the Company’s business risk and opportunity strategies. The new role leads cross-functional efforts to coordinate, execute, improve, and communicate the Company’s ESG efforts.
Added
Allegheny Rail Products (“ARP”) - ARP engineers and manufactures insulated rail joints and related accessories for freight and passenger railroads and industrial customers.
Removed
Additionally, the Company has created an employee-led Social Responsibility Committee to promote and execute the Company's values surrounding social responsibility internally. Health and Safety L.B.
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The Infrastructure segment is composed of nine operating facilities across the US providing engineered precast concrete solutions, fabricated bridge products, and protective pipe coating and threading offerings across North America. Precast Concrete Products The Precast Concrete Products (“Precast”) business unit manufactures precast concrete products for the North American civil infrastructure market.
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Our international sales and long-lived assets are presented in Note 2 of the Company’s consolidated financial statements, set forth in Item 8 of this Annual Report. Marketing and Competition The major markets for the Company’s products are highly competitive. Product availability, quality, service, and price are principal factors of competition within each of these markets.
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Generally, the Company has a number of vendor options.
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Environmental, Social, and Governance Matters The Company is committed to good corporate citizenship and promoting the highest standards of environmental performance, corporate governance, and ethical behavior to positively impact the communities in which we operate. With a focus on continuous improvement, the Company has adopted safety and environmental policies in support of long term environmental, health, safety, and sustainability excellence.
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Among our core values are safety, teamwork, and innovation which we rely on to create more advanced solutions around sustainability. We also emphasize continual improvement in preventing pollution and reducing the environmental impact of our operations while maximizing opportunities for environmental and social benefits. Health and Safety L.B.
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Our website and the information posted thereto is not part of this Annual Report on Form 10-K and unless otherwise stated is specifically not incorporated by reference herein. Executive Officers of the Registrant Information concerning the executive officers of the Company is set forth below: Name Age Position Brian H.
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Jones held the position of Managing Director of Portec Rail Products (UK) Ltd from 2006 to 2010. Effective February 29, 2024, Mr. Jones retired from his position as Senior Vice President - UK Services and Solutions. Mr.
Added
Mr. Kasel served as Vice President of Operations for Mammoth, Inc., a Nortek company from 2000 to 2003. Mr.
Added
Ness was elected Senior Vice President - Infrastructure Solutions in December 2023, having previously served as Vice President - Precast Concrete Products since January 2021, and as Director, Operations of CXT Precast from June 2020 to January 2021. Previously, Mr.
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Thalman was elected Executive Vice President and Chief Financial Officer in June 2023, having previously served as Senior Vice President and Chief Financial Officer of the Company from February 2021. Prior to joining the Company, Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+9 added−11 removed63 unchanged
Biggest changeU.S. and non-domestic governmental and private pandemic mitigation measures such as stay-at-home orders have slowed travel and movement of goods throughout the world, contributing to a reduction in demand for our products and services. Such measures have also contributed to a tight labor market which in turn adversely impacts our supply chain.
Biggest changeA pandemic-related outbreak or other disaster affecting any one of our facilities could result in production delays or otherwise interrupt our operations. US and non-domestic governmental and private pandemic mitigation measures such as stay-at-home orders can slow travel and movement of goods throughout the world, contributing to a reduction in demand for our products and services.
Material acquisitions, dispositions, and other strategic transactions involve numerous risks, including, but not limited to: 9 Table of Contents • we may not be able to identify suitable acquisition candidates, or we may not be able to dispose of assets, at prices we consider attractive; • we may not be able to compete successfully for identified acquisition candidates, complete future acquisitions or accurately estimate the financial effect of acquisitions on our business; • future acquisitions may require us to spend significant cash and incur additional debt, resulting in additional leverage; • we may have difficulty retaining an acquired company’s key employees or clients; • we may not be able to realize the operating efficiencies, synergies, costs savings, or other benefits expected; • we may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management or other control systems, or the need to significantly update and improve the acquired business’s systems and internal controls; • we may assume potential liabilities for actions of the target before the acquisition, including as a result of a failure to comply with applicable laws; • we may be subject to material indemnification obligations related to any assets that we dispose; • acquisitions or dispositions may disrupt our business or divert our management from other responsibilities; and • as a result of an acquisition, we may need to record write-downs from future impairments of intangible assets, which could reduce our future reported earnings.
Material acquisitions, dispositions, and other strategic transactions and initiatives involve numerous risks, including, but not limited to the following: • we may not be able to identify suitable acquisition candidates, or we may not be able to dispose of assets, at prices we consider attractive; • we may not be able to compete successfully for identified acquisition candidates, complete future acquisitions or accurately estimate the financial effect of acquisitions on our business; • future acquisitions may require us to spend significant cash and incur additional debt, resulting in additional leverage; • we may have difficulty retaining an acquired company’s key employees or clients; • we may not be able to realize the operating efficiencies, synergies, costs savings, or other benefits expected; • we may have difficulty integrating acquired businesses, resulting in unforeseen difficulties, such as incompatible accounting, information management or other control systems, or the need to significantly update and improve the acquired business’s systems and internal controls; • we may assume potential liabilities for actions of the target before the acquisition, including as a result of a failure to comply with applicable laws; • we may be subject to material indemnification obligations related to any assets that we dispose; • acquisitions or dispositions may disrupt our business or divert our management from other responsibilities; and • as a result of an acquisition, we may need to record write-downs from future impairments of intangible assets, which could reduce our future reported earnings.
Much of our future success depends on the continued availability and service of key personnel, including our Chief Executive Officer, the executive team, and other highly skilled employees. As a result of the pandemic, the Company is experiencing a tight labor market which has constricted the labor pool and driven up labor costs as we compete for talent.
Much of our future success depends on the continued availability and service of key personnel, including our Chief Executive Officer, the executive team, and other highly skilled employees. The Company is experiencing a tight labor market which has constricted the labor pool and driven up labor costs as we compete for talent.
As a result, if we earn net taxable income, our ability to use our pre-change U.S. net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
As a result, if we earn net taxable income, our ability to use our pre-change US net operating loss carryforwards to offset US federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
Data and security breaches can also occur as a result of non-technical issues, including an intentional or inadvertent breach by our employees or by persons with whom we have commercial relationships.
Data and security breaches can also occur as a result of non-technical issues, including an intentional or inadvertent physical or electronic data or security breach by our employees or by persons with whom we have commercial relationships.
We also use significant amounts of cement and aggregate in our precast products and ties offerings. Our technology based solutions and services are dependent on electronic components and the ability to source these items. During 2022, the Company experienced increased raw material costs due to supply chain constraints and the inflationary environment.
We also use significant amounts of cement and aggregate in our precast products offerings. Our technology based solutions and services are dependent on electronic components and the ability to source these items. During 2023, the Company experienced increased raw material costs due to supply chain constraints and the inflationary environment.
We expect that these adverse impacts will continue but we are unable to predict the extent, nature, or duration of the impacts on our results of operations and financial condition at this time. 10 Table of Contents Our success is in part dependent on the accuracy and proper utilization of our management information and communications systems.
We expect that these adverse impacts will continue but we are unable to predict the extent, nature, or duration of the impacts on our results of operations and financial condition at this time. Our success is in part dependent on the accuracy and proper utilization of our management information and communications systems.
Our business employs systems and websites that allow for the storage and transmission of proprietary or confidential information regarding our customers, employees, job applicants, and other parties, including financial information, intellectual property, and personal identification information. Security breaches and other disruptions could compromise our information, expose us to liability, and harm our reputation and business.
Our business employs systems and websites that allow for the storage and transmission of proprietary or confidential information regarding our customers, employees, job applicants, and other parties, including financial information, intellectual property, and personal identification information. Physical or electronic data or security breaches and other disruptions could compromise our information, expose us to liability, and harm our reputation and business.
Government actions in the U.S. or other countries where we have a higher concentration of business may change tax policy, trade policy, or enact other legislation that could create an unfavorable environment for the Company, making it more difficult to compete or adversely impact our operating results.
Government actions in the US or other countries where we have a higher concentration of business may change tax policy, trade policy, or enact other legislation that could create an unfavorable environment for the Company, making it more difficult to compete or adversely impact our operating results.
Changes in exchange rates for foreign currencies may reduce international demand for our products or increase our labor or supply costs in non-U.S. markets. Fluctuations in the relative values of the U.S. dollar, Canadian dollar, British pound, and Euro may result in volatile earnings that reflect exchange rate translation in our Canadian and European sales and operations.
Changes in exchange rates for foreign currencies may reduce international demand for our products or increase our labor or supply costs in non-US markets. Fluctuations in the relative values of the US dollar, Canadian dollar, British pound, and Euro may result in volatile earnings that reflect exchange rate translation in our Canadian and European sales and operations.
During 2022 and 2021, the Company experienced increased costs in labor and materials as a result of the inflationary environment, competitive labor market, and supply chain constraints, which adversely impacted the Company’s profitability.
During 2023 and 2022, the Company experienced increased costs in labor and materials as a result of the inflationary environment, competitive labor market, and supply chain constraints, which adversely impacted the Company’s profitability.
We are required under U.S. generally accepted accounting principles to review intangible and long-lived assets for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. In addition, goodwill is required to be tested for impairment at least annually.
We are required under US generally accepted accounting principles to review intangible and long-lived assets for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. In addition, goodwill is required to be tested for impairment at least annually.
We possess and in some cases license intellectual property including proprietary rail product and precast concrete formulations and systems and component designs, and we own a number of patents and trademarks under the intellectual property laws of the U.S., Canada, Europe, and other countries in which product sales are possible.
We possess and in some cases license intellectual property including proprietary rail product and precast concrete formulations and systems and component designs, and we own a number of patents and trademarks under the intellectual property laws of the US, Canada, Europe, and other countries in which product sales are possible.
An uncured default with respect to one or more of the covenants could result in the amounts outstanding being declared immediately due and payable, which may also trigger an obligation to redeem our outstanding debt securities and repay all other outstanding indebtedness.
An uncured default with respect to one or more of the covenants could result in the amounts outstanding being declared immediately due and 13 Table of Contents payable, which may also trigger an obligation to redeem our outstanding debt securities and repay all other outstanding indebtedness.
Doing business outside the U.S. subjects the Company to various risks, including changing economic and political conditions, work stoppages, exchange controls, currency fluctuations, armed conflicts, and unexpected changes in U.S. and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments, and taxation.
Doing business outside the US subjects the Company to various risks, including changing economic and political conditions, work stoppages, exchange controls, currency fluctuations, armed conflicts, and unexpected changes in US and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments, and taxation.
Prolonged negative economic conditions, volatile energy prices, and other unfavorable changes in U.S., global, or regional economic and market conditions could adversely affect our business. We could be adversely impacted by prolonged negative economic conditions affecting either our suppliers or customers, as well as the capital markets.
Prolonged negative economic conditions, volatile energy prices, and other unfavorable changes in US, global, or regional economic and market conditions could adversely affect our business. We could be adversely impacted by prolonged negative economic conditions affecting either our suppliers or customers, as well as the capital markets.
This, and failure to continue such licenses, could impede growth into new markets where we do not have such protections and result in a greater supply of similar 12 Table of Contents products in such markets, which in turn could result in a loss of pricing power and reduced revenue.
This, and failure to continue such licenses, could impede growth into new markets where we do not have such protections and result in a greater supply of similar products in such markets, which in turn could result in a loss of pricing power and reduced revenue.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. We have certain tax attributes, including U.S. federal, state and foreign operating loss carryforwards, and federal research and development credits, which may be available to offset future taxable income in certain jurisdictions.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. We have certain tax attributes, including US federal, state and foreign operating loss carryforwards, and federal research and development credits, which may be available to offset future taxable income in certain jurisdictions.
If the U.S. dollar strengthens in value as compared to the value of the Canadian dollar, British pound, or Euro, our reported earnings in dollars from sales in those currencies will be unfavorable. Conversely, a favorable result will be reported if the U.S. dollar weakens in value as compared to the value of the Canadian dollar, British pound, or Euro.
If the US dollar strengthens in value as compared to the value of the Canadian dollar, British pound, or Euro, our reported earnings in dollars from sales in those currencies will be unfavorable. Conversely, a favorable result will be reported if the US dollar weakens in value as compared to the value of the Canadian dollar, British pound, or Euro.
Efforts to improve pricing could negatively impact our sales volume in all product categories. We may be required to invest more heavily to maintain and expand our product offerings. There can be no assurance that new product offerings will be widely accepted in the markets we serve.
Efforts to improve pricing could negatively impact our sales volume in all product categories. We may be required to invest more heavily to maintain and expand our product 12 Table of Contents offerings. There can be no assurance that new product offerings will be widely accepted in the markets we serve.
Economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union could adversely affect our business. Pursuant to a June 2016 referendum, the U.K. left the E.U. on January 31, 2020, commonly referred to as “Brexit.” The U.K. government and the E.U. operated under a transitional arrangement that expired on December 31, 2020.
Economic conditions and regulatory changes caused by the United Kingdom’s exit from the European Union could adversely affect our business. Pursuant to a June 2016 referendum, the UK left the EU on January 31, 2020, commonly referred to as “Brexit.” The UK government and the EU operated under a transitional arrangement that expired on December 31, 2020.
Similar rules apply under U.S. state tax laws. We have, and may in the future, experience ownership changes as a result of shifts in our stock ownership.
Similar rules apply under US state tax laws. We have, and may in the future, experience ownership changes as a result of shifts in our stock ownership.
In addition, we could suffer a significant loss of business from a customer who is dissatisfied with the resolution of a warranty claim. Violations of the U.S.
In addition, we could suffer a significant loss of business from a customer who is dissatisfied with the resolution of a warranty claim.
Brexit is an unprecedented event, and, accordingly, it is unclear what long-term economic, financial, trade, and legal effects will result. The majority of our U.K. operations are heavily concentrated within the U.K. borders; however, this could adversely affect the future growth of our U.K. operations into other European locations.
Brexit is an unprecedented event, and, accordingly, it is unclear what long-term economic, financial, trade, and legal effects will result. 15 Table of Contents The majority of our UK operations are heavily concentrated within the UK borders; however, this could adversely affect the future growth of our UK operations into other European locations.
No assurances can be given that our financial results would not be adversely affected if prices or availability of these materials were to change in a significantly unfavorable manner. Labor disputes may have a material and adverse effect on our operations and profitability. Two of our manufacturing facilities are staffed by employees represented by labor unions.
No assurances can be given that our financial results would not be adversely affected if prices or availability of these materials were to change in a significantly unfavorable manner. 11 Table of Contents Labor disputes may have a material and adverse effect on our operations and profitability. One of our manufacturing facilities is staffed by employees represented by labor unions.
Increasing sales to foreign countries, including Brazil, Canada, China, India, Mexico, the U.K., and countries within the E.U., expose the Company to increased risk of loss from foreign currency fluctuations and exchange controls as well as longer accounts receivable payment cycles.
Increasing sales to foreign countries, including Brazil, Canada, China, India, Mexico, the UK, and countries within the EU, expose the Company to increased risk of loss from foreign currency fluctuations and exchange controls as well as longer accounts receivable payment cycles.
The EU-UK Trade and Cooperation Agreement was agreed in principle and became provisionally operative on January 1, 2021, and formally in force on May 1, 2021, and terms of this new relationship between the U.K. and the E.U. remains subject to uncertainties.
The EU-UK Trade and Cooperation Agreement was agreed in principle and became provisionally operative on January 1, 2021, and formally in force on May 1, 2021, and terms of this new relationship between the UK and the EU remain subject to uncertainties.
The withdrawal of the U.K. from the E.U. has also created market volatility and could continue to contribute to instability in global financial and foreign exchange markets, political institutions, and regulatory agencies as negotiations of trade deals between the U.K. and the E.U., and also between the U.K. and other countries, possibly including the U.S., occur during the near future.
The withdrawal of the UK from the EU has also created market volatility and could continue to contribute to instability in global financial and foreign exchange markets, political institutions, and regulatory agencies as negotiations of trade deals between the UK and the EU, and also between the UK and other countries, possibly including the US, occur during the near future.
As part of our business strategy, we acquire or divest businesses or assets, enter into strategic alliances and joint ventures, or make investments to realize anticipated benefits, which are actions that involve a number of inherent risks and uncertainties.
As part of our publicly-announced business strategy, we acquire or divest businesses or assets, enter into strategic alliances and joint ventures, make investments to realize anticipated benefits, or undertake cost-cutting initiatives, all of which are actions that involve a number of inherent risks and uncertainties.
Foreign Corrupt Practices Act and similar worldwide anti-corruption laws and other foreign governmental regulations, could result in fines, penalties, and criminal sanctions against the Company, its officers, or both and could have a material and adverse effect on our business. The U.S. Foreign Corrupt Practices Act and other similar worldwide anti-corruption laws, such as the U.K.
Violations of the US Foreign Corrupt Practices Act and similar worldwide anti-corruption laws and other foreign governmental regulations, could result in fines, penalties, and criminal sanctions against the Company, its officers, or both and could have a material and adverse effect on our business.
Disputes with regard to the terms of these agreements or our potential inability to renegotiate acceptable contracts with these unions could result in, among other things, strikes, work stoppages, slowdowns, or lockouts, which could cause a disruption of our operations and have a material and adverse effect on our results of operations, financial condition, and liquidity.
Disputes with regard to the terms of this agreement or our potential inability to renegotiate an acceptable contract with this union could result in, among other things, strikes, work stoppages, slowdowns, or lockouts, which could cause a disruption of our operations and have a material and adverse effect on our results of operations, financial condition, and liquidity.
The costs of compliance with, and other burdens imposed by, such data privacy laws and regulations, including those of the European Union (“E.U.”) and the U.K. which are, in some respects, more stringent than U.S. standards, could be significant.
The costs of compliance with, and other burdens imposed by, such data privacy laws and regulations, including those of the European Union (“EU”) and the UK which are, in some respects, more stringent than US standards, could be significant.
In 2022, the Company recorded goodwill impairment related to its Fabricated Bridge reporting unit. No impairments of goodwill or intangible assets were recorded in 2021. Impairment charges were recorded on long-lived assets related to the Company's precision measurement products and systems business during 2022 and the since divested IOS Test and Inspection Services business during 2020.
In 2022, the Company recorded goodwill impairment related to its Fabricated Bridge reporting unit. No impairments of goodwill or intangible assets were recorded in 2023. Impairment charges were recorded on long-lived assets related to the Company's precision measurement products and systems business during 2022.
Greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. Such events could have a negative effect on our business.
Legislative or regulatory initiatives related to climate change could have a material adverse effect on our business. Greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. Such events could have a negative effect on our business.
There has been volatility in 15 Table of Contents currency exchange rate fluctuations between the U.S. dollar relative to the British pound, which could continue.
There has been volatility in currency exchange rate fluctuations between the US dollar relative to the British pound, which could continue.
Potential material modifications to USMCA, or certain other international trade agreements, including with respect to the modification of trade agreements with or among the E.U. and the U.K., may have a material adverse effect on our business, financial condition, and results of operations. Legislative or regulatory initiatives related to climate change could have a material adverse effect on our business.
Potential material modifications to USMCA, or certain other international trade agreements, including with respect to the modification of trade agreements with or among the EU and the UK, may have a material adverse effect on our business, financial condition, and results of operations.
Some investors seek to increase short-term shareholder value by advocating corporate actions, such as financial restructuring, increased borrowing, special dividends, stock repurchases, or even sales of assets or the entire company. 11 Table of Contents While the Company welcomes varying opinions from all shareholders, activist campaigns that contest or conflict with our strategic direction could have an adverse effect on the Company’s results of operations and financial condition, as responding to proxy contests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of the Company’s board and senior management from the pursuit of business strategies.
While the Company welcomes varying opinions from all shareholders, activist campaigns that contest or conflict with our strategic direction could have an adverse effect on the Company’s results of operations and financial condition, as responding to proxy contests and other actions by activist shareholders can disrupt our operations, be costly and time-consuming, and divert the attention of the Company’s board and senior management from the pursuit of business strategies.
Our U.K. operations represented approximately 9% and 11% of our total revenue for the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021 less than 1% of our consolidated net revenue was from the U.K. operation’s sales exported to E.U. members.
Our UK operations represented approximately 8% and 9% of our total revenue for the years ended December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022 less than 1% of our consolidated net revenue was from the UK operation’s sales exported to EU members. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Actions of activist shareholders could be disruptive and potentially costly and the possibility that activist shareholders may seek changes that conflict with our strategic direction could cause uncertainty about the strategic direction of our business. Activist investors may attempt to effect changes in the Company’s strategic direction and how the Company is governed, or to acquire control over the Company.
Actions of activist shareholders could be disruptive and potentially costly and the possibility that activist shareholders may seek changes that conflict with our strategic direction could cause uncertainty about the strategic direction of our business.
Bribery Act, prohibit improper payments for the purpose of obtaining or retaining business. Although we have established an internal control structure, corporate policies, compliance, and training processes to reduce the risk of violation, we cannot ensure that these procedures protect us from violations of such policies by our employees or agents.
Although we have established an internal control structure, corporate policies, compliance, and training processes to reduce the risk of violation, we cannot ensure that these procedures protect us from violations of such policies by our employees or agents. Failure to comply with applicable laws or regulations could subject us to fines, penalties, and suspension or debarment from contracting.
Changes in demographics, training requirements, and the availability of qualified personnel could negatively affect our ability to compete and lead to a reduction in our profitability. A pandemic could continue to adversely affect our business.
Changes in demographics, training requirements, and the availability of qualified personnel could negatively affect our ability to compete and lead to a reduction in our profitability. We may not foresee or be able to control certain events that could adversely affect our business or the stability of our supply chain.
One should carefully consider the following risk factors and other information contained in this Annual Report on Form 10-K and any other risks discussed in our other periodic filings with the SEC before deciding to invest in our common stock.
One should carefully consider the following risk factors and other information contained in this Annual Report on Form 10-K and any other risks discussed in our other periodic filings with the SEC before deciding to invest in our common stock. 9 Table of Contents Business and Operational Risks Our inability to successfully manage acquisitions, divestitures, and other significant transactions or to otherwise execute our strategic plan could harm our financial results, business, and prospects.
Federal, state, and foreign government bodies and agencies have adopted or are considering the adoption of laws and regulations regarding the collection, use, and disclosure of personal information obtained from customers and individuals.
Compliance with such rules could be costly and burdensome, and failure to adequately comply could have an adverse impact on the Company and its reputation. Federal, state, and foreign government bodies and agencies have adopted or are considering the adoption of laws and regulations regarding the collection, use, and disclosure of personal information obtained from customers and individuals.
In October 2020, we experienced a cyber-attack on our information technology systems. While the cyber-attack caused temporary disruption and interference with our operations, it did not result in a material adverse effect on our business operations. Despite the steps we take to deter and mitigate cybersecurity risks, we may not be successful.
Cyber attacks on information systems constitute an ongoing risk across companies and industries, and although they have not historically had a material adverse effect on our business, in the past they have caused temporary disruption and interference with our operations. Despite the steps we take to deter and mitigate cybersecurity risks, we may not be successful.
Sustained declines or significant and frequent fluctuations in the price of oil and natural gas may have a material and adverse effect on our operations and financial condition. Our ability to maintain or improve our profitability could be adversely impacted by cost pressures. Our profitability is dependent upon the efficient use of our resources.
Sustained declines or significant and frequent fluctuations in the price of oil and natural gas may have a material and adverse effect on our operations and financial condition.
Any such acceleration of our indebtedness would have a material and adverse effect on our business, financial condition, and results of operations. The phase-out of LIBOR and transition to SOFR as a benchmark interest rate will have uncertain and possibly adverse side effects.
Any such acceleration of our indebtedness would have a material and adverse effect on our business, financial condition, and results of operations.
The system implementations are intended to enable us to better meet the information requirements of our users, increase our integration efficiencies, and identify additional synergies in the future. The implementation of our ERP system is complex because of the wide range of processes and systems to be integrated across our business.
The implementation of our ERP system is complex because of the wide range of processes and systems to be integrated across our business.
We are currently working through an enterprise resource planning (“ERP”) system transition. Certain divisions of our Company migrated into the new ERP system during 2016, additional divisions have since migrated, including during 2022. We also began the implementation of a global financial planning and consolidation system during 2021 that became operational in 2022.
We recently completed an enterprise resource planning (“ERP”) system transition. Certain divisions of our Company migrated into the new ERP system during 2016 and additional divisions have since migrated, with the most recent migration completed in 2022. Acquired entities are also regularly assessed for transition onto the Company’s central ERP system.
Approximately 44 employees employed at these facilities are currently working under two separate collective bargaining agreements.
Approximately 11 employees employed at this facility are currently working under a collective bargaining agreement.
The COVID-19 pandemic is adversely affecting, and any future pandemics could adversely affect, our operations and supply chains and we have experienced and expect to continue to experience unpredictable reductions in demand for certain of our products and services.
For example, we have in the past experienced unpredictable reductions in demand for certain of our products and services due to a global health pandemic, which adversely affected our operations and supply chain.
The United States-Mexico-Canada Trade Agreement (“USMCA”) and certain other international trade agreements could affect our business, financial condition, and results of operations. On July 1, 2020, the USMCA became effective, replacing the North American Free Trade Agreement. It is uncertain how the USMCA will impact foreign trade and our international operations.
Additionally, international trade agreements, including The United States-Mexico-Canada Trade Agreement (“USMCA”), could affect our business, financial condition, and results of operations.
Violations of such laws or allegations of violation could disrupt our business and result in material adverse results to our operating results or future profitability. Our foreign operations are subject to governmental regulations in the countries in which we operate, as well as U.S. laws.
Our foreign operations are subject to governmental regulations in the countries in which we operate, as well as US laws.
Failure to comply with applicable laws or regulations could subject us to fines, penalties, and suspension or debarment from contracting. Events of non-compliance could harm our reputation, reduce our revenues and profits, and subject us to criminal and civil enforcement actions.
Events of non-compliance could harm our reputation, reduce our revenues and profits, and subject us to criminal and civil enforcement actions. Violations of such laws or allegations of violation could disrupt our business and result in material adverse results to our operating results or future profitability.
Removed
Business and Operational Risks Our inability to successfully manage acquisitions, divestitures, and other significant transactions could harm our financial results, business, and prospects.
Added
Volatility in energy prices may also impact the Company’s plant costs, as well as overall conditions in passenger transit markets served. 10 Table of Contents Our ability to maintain or improve our profitability could be adversely impacted by cost pressures. Our profitability is dependent upon the efficient use of our resources.
Removed
Though we have implemented and enhanced safety measures and protocols in accordance with local government orders, a pandemic-related outbreak at any one of our facilities could result in production delays or otherwise interrupt our operations.
Added
We also began the implementation of a global financial planning and consolidation system during 2021 that became operational in 2022. The system implementations are intended to enable us to better meet the information requirements of our users, increase our integration efficiencies, and identify additional synergies in the future.
Removed
While the COVID-19 pandemic has adversely affected each of the markets we serve, the impact on the midstream energy markets has been particularly adverse, and has contributed to volatility in the prices of oil and natural gas, weakened demand, and reduced customer spending.
Added
In 2023, the United States Securities and Exchange Commission adopted new cybersecurity rules requiring disclosure of material cybersecurity incidents and processes assessing, identifying, and managing material cybersecurity risks and the corporate governance structure designed to address such risks.
Removed
In the rail, transit, friction management, and fabricated steel products businesses, governmental stay-at-home orders and government and business work-from-home orders and arrangements in the U.S. and globally, particularly in the U.K., have resulted in reduced traffic and demand for our products and services, and many public works projects have been deferred or delayed as a result of governmental pandemic mitigation efforts, adversely impacting our businesses.
Added
In April of 2023, the Company entered into an agreement with an activist investor, 22NW, LP, and various of its affiliates (collectively, “22NW”) that had filed a Schedule 13D with the SEC with respect to the Company, which agreement provided that 22NW could appoint a non-voting Board Observer.
Removed
We expect that these adverse impacts will continue but we are unable to predict the extent, nature, or duration of the impacts on our results of operations and financial condition at this time. We may not foresee or be able to control certain events that could adversely affect our business.
Added
In January of 2024, the Company entered into a new cooperation agreement with 22NW providing for the nomination of the Board Observer to stand for election to the Board of Directors of the Company at the 2024 Annual Meeting of Shareholders in return for certain customary confidentiality and standstill provisions. 22NW remains a greater than 5% owner of Company stock.
Removed
In advance of the cessation of the London Interbank Offered Rate (“LIBOR”) on June 30, 2023, on August 12, 2022, the Company amended its Credit Agreement to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction.
Added
Activist investors may attempt to effect changes in the Company’s strategic direction and how the Company is governed, or to acquire control over the Company. Some investors seek to increase short-term shareholder value by advocating corporate actions, such as financial restructuring, increased borrowing, special dividends, stock repurchases, or even sales of assets or the entire company.
Removed
The Second Amendment also provided for the conversion from LIBOR-based to be based on the Secured Overnight Financing Rate (“SOFR”).
Added
Events such as these, or other catastrophic events, could in the future adversely affect our business and results of operations, including with respect to disruptions of our supply chain.
Removed
Due to the broad use of LIBOR as a reference rate, the impact of this transition to SOFR could adversely affect our financing costs, including spread pricing on our senior secured facilities and any other variable rate debt obligations, as well as our operations and cash flows.
Added
Our supply chain could be negatively affected by global shipping disruptions, trade restrictions or embargoes or similar impacts arising from geopolitical conflict, including but not limited to the ongoing conflicts between Ukraine and Russia, or Israel and Hamas. Such conditions can also contribute to a tight labor market which in turn may adversely impact our supply chain.
Removed
There is no guarantee that the transition from LIBOR to SOFR will not 13 Table of Contents result in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could affect our interest expense and earnings and may have an adverse effect on our business, results of operations, financial condition, and stock price.
Added
The US Foreign Corrupt Practices Act and other similar worldwide anti-corruption laws, such as the UK Bribery Act, prohibit improper payments for the purpose of obtaining or retaining business.
Removed
Whether or not SOFR attains market acceptance as a LIBOR replacement tool remains uncertain.
Removed
However, given the amount of North American trade that moves by truck and rail, it could have a significant impact on supply and demand for the raw materials that we use in manufacturing processes and for finished goods in the markets we serve, and could adversely impact the amount, movement, and patterns of products that we ship.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed1 unchanged
Biggest changePROPERTIES The location and general description of the principal properties that are owned or leased by the Company, together with the segment of the Company’s business using such properties, are set forth in the following table: Location Function Acres Business Segment Lease Expiration Bedford, PA Bridge component fabricating plant 16 Steel Products and Measurement Owned Birmingham, AL Protective coatings facility 32 Steel Products and Measurement 2027 Burnaby, BC, Canada Friction management products plant N/A Rail, Technologies, and Services 2024 Columbia City, IN Rail processing facility and yard storage 22 Rail, Technologies, and Services Owned Hillsboro, TX Precast concrete facility 9 Precast Concrete Products Owned Lebanon, TN Precast concrete facility 10 Precast Concrete Products 2028 Loudon, TN Precast concrete facility 51 Precast Concrete Products Owned Magnolia, TX Threading facility 34 Steel Products and Measurement Owned Nampa, ID Precast concrete facility 12 Precast Concrete Products 2029 Niles, OH Rail fabrication, friction management products, and yard storage 35 Rail, Technologies, and Services Owned Nottingham, United Kingdom Technology solutions manufacturing 4 Rail, Technologies, and Services Owned Pueblo, CO Rail joint manufacturing facility 9 Rail, Technologies, and Services Owned Sheffield, United Kingdom Track component and friction management products facility N/A Rail, Technologies, and Services 2030 Spokane, WA Concrete tie plant 13 Rail, Technologies, and Services 2025 Waverly, WV Precast concrete facility 85 Precast Concrete Products Owned Willis, TX Protective coatings facility 16 Steel Products and Measurement Owned Willis, TX Measurement services facility 13 Steel Products and Measurement Owned Included in the table above are certain facilities leased by the Company for which there is no acreage included in the lease.
Biggest changeThe location and general description of the material principal properties that are owned or leased by the Company, together with the segment of the Company’s business using such properties, are set forth in the following table: Location Function Acres Business Segment Lease Expiration Bedford, PA Bridge component fabricating plant 16 Infrastructure Owned Birmingham, AL Protective coatings facility 32 Infrastructure 2027 Burnaby, BC, Canada Friction management products plant N/A Rail 2024 Columbia City, IN Rail processing facility and yard storage 22 Rail Owned Dublin, OH Rail safety device manufacturing facility 1 Rail 2026 Hillsboro, TX Precast concrete facility 9 Infrastructure Owned Lebanon, TN Precast concrete facility 10 Infrastructure 2028 London, United Kingdom Technology services facility N/A Rail 2024 Loudon, TN Precast concrete facility 51 Infrastructure Owned Magnolia, TX Threading facility 34 Infrastructure Owned Nampa, ID Precast concrete facility 12 Infrastructure 2029 Niles, OH Rail fabrication, friction management products, and yard storage 35 Rail Owned Nottingham, United Kingdom Technology solutions manufacturing 4 Rail Owned Pueblo, CO Rail joint manufacturing facility 9 Rail Owned Sheffield, United Kingdom Track component and friction management products facility N/A Rail 2030 Telford, United Kingdom Technology solutions manufacturing N/A Rail 2033 Waverly, WV Precast concrete facility 85 Infrastructure Owned Willis, TX Protective coatings facility 16 Infrastructure Owned Included in the table above are certain facilities leased by the Company for which there is no acreage included in the lease.
For these properties a “N/A” has been included in the “Acres” column. Including the properties listed above, the Company has a total of 17 sales offices, including its headquarters in Pittsburgh, PA, and 19 warehouses, plants, and yard facilities located throughout the U.S., Canada, Europe, China, and Brazil.
For these properties a “N/A” has been included in the “Acres” column. The properties listed above include our material warehouses, plants, and yards. We also have a network of sales offices, including our corporate headquarters in Pittsburgh, PA that we own or lease throughout the United States, Canada, Europe, China, and Brazil.
Added
ITEM 2. PROPERTIES Our corporate headquarters is located at 415 Holiday Drive, Suite 100, Pittsburgh, PA 15220.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−11 removed2 unchanged
Biggest changeIssuer Purchases of Equity Securities The Company’s purchases of equity securities for the three months ended December 31, 2022 were as follows: Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2022 - October 31, 2022 — $ — — $ — November 1, 2022 - November 30, 2022 — — — — December 1, 2022 - December 31, 2022 600 9.35 — — Total 600 $ 9.35 — $ — 1.
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See Equity Compensation Plans in Item 12 "Security Ownership of Certain Beneficial Owners and Management." Issuer Purchases of Equity Securities The Company’s purchases of equity securities for the three months ended December 31, 2023 were as follows: Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2023 - October 31, 2023 — $ — — $ 14,122 November 1, 2023 - November 30, 2023 — — 33,331 13,459 December 1, 2023 - December 31, 2023 — — 37,534 12,690 Total — $ — 70,865 $ 12,690 1.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES (Dollars in thousands, except share data unless otherwise noted) Stock Market Information The Company had 305 common shareholders of record on February 28, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES (Dollars in thousands, except share data unless otherwise noted) Stock Market Information The Company had 315 common shareholders of record on February 29, 2024.
Dividends During 2022 and 2021 the Company did not declare any quarterly dividends.
Dividends During 2023 and 2022 the Company did not declare any quarterly dividends, however, there is potential for ordinary or special dividends in future years.
Reflects shares withheld by the Company to pay taxes upon vesting of restricted stock. 18 Table of Contents
Reflects shares withheld by the Company to pay taxes upon vesting of restricted stock. 2. On March 3, 2023, the Board of Directors authorized the repurchase of up to $15,000 of the Company's common shares until February 2026.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans Under the 2006 Omnibus Incentive Plan, as amended and restated in May 2018 (“Omnibus Plan”), and continuing under the 2022 Equity and Incentive Compensation Plan (“Equity and Incentive Plan”) approved by shareholders on June 2, 2022, since May 2018, at each annual meeting of shareholders, where non-employee directors were elected or reelected, as part of their compensation, the non-employee members of the Board of Directors (“Board”) have received annual awards of forfeitable restricted shares subject to a one-year vesting requirement from the date of the grant.
Removed
Prior to that date, such directors received fully-vested shares. During 2022, pursuant to the Equity and Incentive Compensation Plan, the Company issued approximately 46,000 shares of the Company’s common stock for the annual non-employee director equity award, which shares vest on the one-year anniversary of the date of grant.
Removed
Commencing in 2020 and ending in December 2021, in addition to the annual restricted stock award, those non-employee directors serving on the Board Strategy Committee were awarded restricted shares on an annual basis subject to a one-year vesting requirement from the date of grant until that committee was disbanded in 2021.
Removed
During 2022, there were no non-employee directors who elected the option to receive fully-vested shares of the Company’s common stock in lieu of director cash compensation.
Removed
Through December 31, 2022, there were approximately 321,000 fully vested shares issued under the Omnibus Plan to all non-employee directors who were serving at the time of grant or on the date of vesting of the underlying award.
Removed
During the quarter ended June 30, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the Omnibus Plan, as amended and restated effective December 1, 2022 pursuant to the 2022 Equity and Incentive Compensation Plan, which permits non-employee directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board.
Removed
As of December 31, 2022, approximately 46,000 deferred share units were allotted to the accounts of non-employee directors pursuant to the Deferred Compensation Plan for Non-Employee Directors. The Company grants eligible employees restricted stock and performance unit awards under the Omnibus Plan and Equity and Incentive Plans.
Removed
The forfeitable restricted stock awards generally time-vest ratably over a three-year period, unless indicated otherwise in the underlying restricted stock award agreement. Performance unit awards are offered annually under separate three-year long-term incentive programs.
Removed
Performance units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program.
Removed
Commencing in 2022, performance units may be earned annually and converted into performance restricted stock units which settle in common stock at the end of the three year program. Since 2017, the Company has withheld shares of restricted stock for satisfaction of tax withholding obligations. During 2022 and 2021, the Company withheld 27,636 and 45,288 shares, respectively, for this purpose.
Removed
The values of the shares withheld were $410 and $732 in 2022 and 2021, respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+61 added−43 removed17 unchanged
Biggest changeYear Ended December 31, 2022 2021 Adjusted EBITDA Reconciliation Net (loss) income, as reported $ (45,677) $ 3,471 Interest expense - net 3,340 2,956 Income tax expense 36,681 1,119 Depreciation expense 8,635 8,051 Amortization expense 6,144 5,836 Total EBITDA from continuing operations $ 9,123 $ 21,433 Acquisition and divestiture costs 2,235 — Commercial contract settlement 3,956 — Insurance proceeds (790) — Loss on divestiture of Track Components 467 — Gain on divestiture of Piling Products (489) (2,741) VanHooseCo inventory adjustment to fair value amortization 1,135 — VanHooseCo contingent consideration 526 — Impairment expense 8,016 — Adjusted EBITDA $ 24,179 $ 18,692 20 Table of Contents December 31, 2022 2021 Net Debt Reconciliation Total debt $ 91,879 $ 31,251 Less: cash and cash equivalents (2,882) (10,372) Net debt $ 88,997 $ 20,879 Acquisitions and Divestitures On June 21, 2022 and August 12, 2022, the Company acquired the stock of Skratch for $7,402, and acquired the operating assets of VanHooseCo for $52,146, net of cash acquired at closing, respectively.
Biggest changeYear Ended December 31, 2023 2022 Adjusted EBITDA Reconciliation Net income (loss), as reported $ 1,299 $ (45,677) Interest expense - net 5,528 3,340 Income tax (benefit) expense (355) 36,681 Depreciation expense 9,949 8,635 Amortization expense 5,314 6,144 Total EBITDA $ 21,735 $ 9,123 Loss (gain) on divestitures 3,074 (22) Acquisition and divestiture costs — 2,235 Commercial contract settlement — 3,956 Insurance proceeds — (790) VanHooseCo inventory adjustment to fair value amortization — 1,135 VanHooseCo contingent consideration (26) 526 Bridge grid deck exit impact 4,454 — Impairment expense — 8,016 Bad debt provision 1,862 — Restructuring costs 676 — Adjusted EBITDA $ 31,775 $ 24,179 20 Table of Contents December 31, 2023 2022 Net Debt Reconciliation Total debt $ 55,273 $ 91,879 Less: cash and cash equivalents (2,560) (2,882) Net debt $ 52,713 $ 88,997 Change in Consolidated Sales Year Ended December 31, Percent Change 2022 net sales, as reported $ 497,497 Decrease due to divestitures (31,995) (6.4) % Increase due to acquisitions 19,834 4.0 % Change due to organic sales 58,408 11.7 % 2023 net sales, as reported $ 543,744 9.3 % Total sales change, 2022 vs 2023 $ 46,247 9.3 % Change in Rail Sales Year Ended December 31, Percent Change 2022 net sales, as reported $ 300,592 Decrease due to divestitures (15,976) (5.3) % Increase due to acquisitions 1,504 0.5 % Change due to organic sales 26,040 8.7 % 2023 net sales, as reported $ 312,160 3.8 % Total sales change, 2022 vs 2023 $ 11,568 3.8 % Change in Infrastructure Sales Year Ended December 31, Percent Change 2022 net sales, as reported $ 196,905 Decrease due to divestitures (16,019) (8.1) % Increase due to acquisitions 18,330 9.3 % Change due to organic sales 32,368 16.4 % 2023 net sales, as reported $ 231,584 17.6 % Total sales change, 2022 vs 2023 $ 34,679 17.6 % Acquisitions, Divestitures and Product Line Exit On June 21, 2022 and August 12, 2022, the Company acquired the stock of Skratch for $7,402, and acquired the operating assets of VanHooseCo for $52,146, net of cash acquired at closing, respectively.
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, at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.
To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into SOFR-based interest rate swaps with notional values totaling $20,000 and $20,000 effective August 12, 2022 and August 31, 2022, respectively, at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract.
There has been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period. The accounting estimate related to asset impairments is highly susceptible to change from period to period because it requires management to make assumptions about the existence of impairment indicators and cash flows over future years.
There have been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period. The accounting estimate related to asset impairments is highly susceptible to change from period to period because it requires management to make assumptions about the existence of impairment indicators and cash flows over future years.
The Company’s performance obligations under long-term agreements with its customers are generally satisfied as over time.
The Company’s performance obligations under long-term agreements with its customers are generally satisfied over time.
On August 1, 2022, the Company divested the assets of its rail spikes and anchors Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments, resulting in a pre-tax loss of $467.
On August 1, 2022, the Company divested the assets of its rail spikes and anchors Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada. Cash proceeds from the transaction were $7,795, subject to indemnification obligations and working capital adjustments, resulting in a pre-tax loss of $3,074.
Revenue under these long-term agreements is generally recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated 27 Table of Contents total labor costs, depending upon which measure the Company believes best depicts the Company’s performance to date under the terms of the contract.
Revenue under these long-term agreements is generally recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts the Company’s performance to date under the terms of the contract.
Should management determine that the cash balances of its foreign subsidiaries exceed its projected working capital needs, excess funds may be repatriated and subject to additional income taxes. On August 13, 2021, the Company entered into the Fourth Amended and Restated Credit Agreement (as amended, modified and supplemented, the “Credit Agreement”).
Should management determine that the cash balances of its foreign subsidiaries exceed its projected working capital needs, excess funds may be repatriated and subject to additional income taxes. On August 13, 2021, the Company entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”).
There has been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period. Future estimates may differ materially from current estimates and assumptions.
There have been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period. Future estimates may differ materially from current estimates and assumptions.
Other income for the year ended December 31, 2022 included pre-tax income of $489 from the 2021 sale of the Piling Products division, $790 in insurance proceeds, and $325 received to recover costs associated with environmental cleanup activities. Other expense for the year ended December 31, 2022 included a $467 loss related to the sale of the Track Components business.
Other income for the year ended December 31, 2022 included pre-tax income of $489 from the 2021 sale of the Piling Products division, $790 in insurance proceeds, and $325 received to recover costs associated with environmental cleanup activities partially offset by a $467 loss related to the sale of the Track Components business.
In addition to local country tax laws and regulations, this rate depends on the extent earnings are indefinitely reinvested outside of the U.S. Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company. There has been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period.
In addition to local country tax laws and regulations, this rate depends on the extent earnings are indefinitely reinvested outside of the US Indefinite reinvestment is determined by management’s judgment about and intentions concerning the future operations of the Company. There have been no material changes in the underlying assumptions and estimates used in these calculations in the relevant period.
Contract estimates may include additional revenue for submitted contract modifications if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgment at that time.
Contract estimates may include additional revenue for submitted contract modifications, including at times unapproved change orders, if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgment at that time.
The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, payments related to the Union Pacific Railroad Settlement, tax obligations, outstanding purchase obligations, and acquisitions.
The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, payments related to the Union Pacific Railroad Settlement, tax obligations, outstanding purchase obligations, acquisitions, and to support the share repurchase program.
These assumptions impact the amount of an impairment, which would have an impact on the Consolidated Statements of Operations. Additional information concerning the impairments is set forth in Part II, Item 8, Financial Statements and Supplementary Data, Note 5 to the Consolidated Financial Statements included herein, which is incorporated by reference into this Item 7. 28 Table of Contents
These assumptions impact the amount of an impairment, which could materially adversely impact the Consolidated Statements of Operations. Additional information concerning the impairments is set forth in Part II, Item 8, Financial Statements and Supplementary Data, Note 5 to the Consolidated Financial Statements included herein, which is incorporated by reference into this Item 7.
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 debt to the non-GAAP financial measures are presented below.
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, organic sales growth, and net debt to the non-GAAP financial measures are presented in this Item 7.
The Company believes that its reserves for credit losses are appropriate as of December 31, 2022, but adverse changes in the economic environment and adverse financial conditions of its customers resulting from, among other things, pandemics including COVID-19, may impact certain of its customers’ ability to access capital and compensate the Company for its products and services, as well as impact demand for its products and services.
The Company believes that its reserves for credit losses are appropriate as of December 31, 2023, but adverse changes in the economic environment and adverse financial conditions of its customers may impact certain of its customers’ ability to access capital and compensate the Company for its products and services, as well as impact demand for its products and services.
The Company may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount. The quantitative goodwill impairment analysis involves comparing the fair value of a reporting unit to its carrying value, including goodwill.
When evaluating for impairment the Company may first consider qualitative factors to assess whether there are indicators that it is more likely than not that the fair value of a reporting unit may not exceed its carrying amount.
The Credit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of the Borrowers (as defined in the Credit Agreement) up to $130,000 (a $15,000 increase over the previous commitment) with a sublimit of the equivalent of $25,000 U.S. dollars that is available to the Canadian and United Kingdom borrowers in the aggregate.
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 US dollars that is available to the Canadian and United Kingdom borrowers in the aggregate.
The Company performs its annual impairment test in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Goodwill - We evaluate goodwill for impairment annually during the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Principal uses of cash in recent years have been to fund operations, including capital expenditures, and service indebtedness. The Company views its short and long-term liquidity as being dependent on its results of operations, changes in working capital, and borrowing capacity. Non-domestic cash balances of $2,012 are held in various locations throughout the world.
The Company views its short and long-term liquidity as being dependent on its results of operations, changes in working capital, and borrowing capacity. Non-domestic cash balances of $2,192 are held in various locations throughout the world.
The change in cash and cash equivalents for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 Net cash used in continuing operating activities $ (10,576) $ (810) Net cash (used in) provided by continuing investing activities (56,418) 17,822 Net cash provided by (used in) continuing financing activities 60,240 (13,904) Effect of exchange rate changes on cash and cash equivalents (736) (47) Net cash used in discontinued operations — (253) Net (decrease) increase in cash and cash equivalents $ (7,490) $ 2,808 Cash Flows from Operating Activities During the year ended December 31, 2022, net cash used in operating activities was $10,576, compared to $810 from continuing operations during the prior year.
The change in cash and cash equivalents for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 37,376 $ (10,576) Net cash provided by (used in) investing activities 2,066 (56,418) Net cash (used in) provided by financing activities (39,296) 60,240 Effect of exchange rate changes on cash and cash equivalents (468) (736) Net decrease in cash and cash equivalents $ (322) $ (7,490) Cash Flows from Operating Activities During the year ended December 31, 2023, net cash provided by operating activities was $37,376, compared to a use of $10,576 during the prior year.
On August 1, 2022, the Company divested the assets of its Track Components division for $7,795, subject to indemnification obligations and working capital adjustments. The Track Components division was included in the Rail Products business unit within the Rail, Technologies, and Services segment.
On August 1, 2022, the Company divested the assets of its Track Components division for $7,795, subject to indemnification obligations and working capital adjustments, generating a $467 loss on sale, recorded in “Other expense (income) - net” for the year ended December 31, 2022. The Track Components division was included in the Rail Products business unit within the Rail segment.
The Company’s calculation of DSO was 48 days as of December 31, 2022 compared to 45 days as of December 31, 2021. Cash Flows from Investing Activities For the year ended December 31, 2022, the Company had capital expenditures of $7,633, a $3,013 increase from 2021.
The Company’s calculation of DSO was 43 days as of December 31, 2023 compared to 48 days as of December 31, 2022. Cash Flows from Investing Activities For the year ended December 31, 2023, the Company had capital expenditures of $4,933, a $2,700 decrease from 2022.
Cash used for investing activities for the year ended December 31, 2022 included cash paid of $57,852 for the acquisitions of VanHooseCo and Skratch in 2022.
In 2022 the Company received cash proceeds of $8,800 primarily from the sale of its Track Components business. Cash used for investing activities for the year ended December 31, 2022 included cash paid of $57,852 for the acquisitions of VanHooseCo and Skratch.
Included in the organic sales growth of 5.6% is a $3,956 reduction in sales related to the multi-year Crossrail project in the Company’s Technology Services and Solutions group in the United Kingdom (“Crossrail Settlement”). This settlement reduced both sales and gross profit in 2022.
Net sales for the year ended December 31, 2022 included a $3,956 reduction from the settlement of certain long-term commercial contracts related to the multi-year Crossrail project (“Crossrail Settlement”) in the Company’s Technology Services and Solutions business in the United Kingdom. This settlement reduced both sales and gross profit in 2022.
The Company estimates profit on these long-term agreements as the difference between total estimated revenues and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years.
Accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs. The Company estimates profit on these long-term agreements as the difference between total estimated revenues and expected costs to complete a contract and recognizes that profit over the life of the contract.
If the carrying amount of the reporting unit exceeds its fair value, an impairment loss equal to the excess amount up to the goodwill balance is recorded as an impairment to goodwill of the reporting unit. The Company uses a combination of a discounted cash flow method and a market approach to determine the fair values of the reporting units.
If the carrying amount of the reporting unit exceeds its fair value, an impairment loss equal to the excess amount up to the goodwill balance is recorded as an impairment to goodwill of the reporting unit.
Critical Accounting Policies and Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. The preparation of the consolidated financial statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses, and the related disclosure of contingent assets and liabilities.
The preparation of the consolidated financial statements requires management to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, and expenses, and the related disclosure of contingent assets and liabilities.
In 2021 the Company received cash proceeds of $22,707 from the sale of the Piling Products business. 25 Table of Contents Cash Flows from Financing Activities The Company increased its outstanding debt by $60,832 during the year ended December 31, 2022, primarily from the borrowings used to fund the acquisitions of Skratch and VanHooseCo.
Cash Flows from Financing Activities The Company decreased its outstanding debt by $37,260 during the year ended December 31, 2023, primarily due to the proceeds from divestitures and improved operating cash flows. During the year ended December 31, 2022, the Company increased outstanding debt by $60,832, primarily from the borrowings used to fund the acquisitions of Skratch and VanHooseCo.
In 2022, the Company made adjustments to exclude acquisition and divestiture related costs, VanHooseCo acquisition-related inventory step-up amortization and contingent consideration expense, the gain from insurance proceeds, the Crossrail project settlement amount, impairment charges, and the loss (gain) on the sale of the Track Components and Piling Products businesses, respectively.
In 2022, the Company made adjustments to exclude acquisition and divestiture related costs, VanHooseCo acquisition-related inventory step-up amortization and contingent consideration expense, the gain from insurance proceeds, the Crossrail project settlement amount, impairment charges, and the loss (gain) on the sale of the Track Components and Piling Products businesses, respectively. 28 Table of Contents 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 useful to investors as an indicator of our ability to incur additional debt and to service our existing debt.
The segment’s backlog as of December 31, 2022 was $86,509, a 92.3% increase compared to the prior year end driven by all business units but primarily the Coatings and Measurement business unit. 24 Table of Contents Liquidity and Capital Resources The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under its revolving credit facility, which provides for a total commitment of up to $130,000, of which $37,814 was available for borrowing as of December 31, 2022, subject to covenant restrictions.
Liquidity and Capital Resources The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under its revolving credit facility, which provides for a total commitment of up to $130,000, of which $72,133 was available for borrowing as of December 31, 2023, subject to covenant restrictions.
While the Company places an emphasis on working capital management in its operations, factors such as its contract mix, commercial terms, days sales outstanding (“DSO”), and market conditions as well as seasonality may impact its working capital. The Company regularly assesses its receivables and contract assets for collectability and realization, and provides allowances for credit losses where appropriate.
The Company’s cash flows are impacted from period to period by fluctuations in working capital, as well as its overall profitability. While the Company places an emphasis on working capital management in its operations, factors such as its contract mix, commercial terms, days sales outstanding (“DSO”), and market conditions as well as seasonality may impact its working capital.
A number of significant assumptions and estimates are involved in the estimation of the fair value of reporting units, including the identification of macroeconomic conditions, industry and market considerations, cost factors, and overall financial performance.
The Company uses a combination of a discounted cash flow method and a market approach to determine the fair values of the reporting units. 27 Table of Contents A number of significant assumptions and estimates are involved in the estimation of the fair value of reporting units, including the identification of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, which may drive changes to revenue growth, EBITDA contribution, and market participant assumptions.
The Company’s current year income tax provision included $37,895 expense related to the increase in its valuation allowance against deferred tax assets. For further discussion on the valuation allowance, refer to Note 14 of the Notes to the Consolidated Financial Statements.
Such tax benefits were offset by an increase in the Company’s valuation allowance against its deferred tax assets in the UK and other foreign jurisdictions. For further discussion on the valuation allowance, refer to Note 14 of the Notes to the Consolidated Financial Statements.
On August 12, 2022, the Company amended its Credit Agreement to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction. The Second Amendment 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.
On August 12, 2022, the Company entered into a second amendment to its Credit Agreement (the “Second Amendment”) to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction.
Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail, Technologies, and Services segment and VanHooseCo has been included within the Precast Concrete Products segment. Skratch and VanHooseCo’s net sales were $2,975 and $17,788, respectively, for the year ended December 31, 2022.
Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail segment and VanHooseCo has been included within the Precast Concrete Products business unit within the Infrastructure segment.
Results of Operations — Segment Analysis Rail, Technologies, and Services Year Ended December 31, Increase/(Decrease) Percent Increase/(Decrease) 2022 2021 2022 vs. 2021 2022 vs. 2021 Net Sales $ 300,592 $ 299,749 $ 843 0.3 % Gross Profit $ 59,499 $ 57,249 $ 2,250 3.9 % Gross Profit Percentage 19.8 % 19.1 % 0.7 % 3.6 % Segment Operating Profit $ 11,454 $ 14,165 $ (2,711) (19.1) % Segment Operating Profit Percentage 3.8 % 4.7 % (0.9) % (19.4) % Rail, Technologies, and Services segment sales increased by $843, or 0.3%, compared to the prior year.
Results of Operations — Segment Analysis Rail, Technologies, and Services Year Ended December 31, Change Percent Change 2023 2022 2023 vs. 2022 2023 vs. 2022 Net sales $ 312,160 $ 300,592 $ 11,568 3.8 % Gross profit $ 64,689 $ 59,499 $ 5,190 8.7 % Gross profit margin 20.7 % 19.8 % 90 bps 4.7 % Segment operating profit $ 11,940 $ 11,454 $ 486 4.2 % Segment operating profit margin 3.8 % 3.8 % 0 bps 0.4 % Rail segment sales increased by $11,568, or 3.8%, over the prior year.
The expenditures were primarily related to plant expansions within our Precast segment, including those related to the second VanHooseCo operating location, implementations of the Company’s ERP system, and general plant and operational improvements throughout the Company.
Expenditures for the year ended December 31, 2022 related to plant expansions within our Infrastructure segment, including those related to the second VanHooseCo operating location, implementations of the Company’s ERP system, and general plant and operational improvements throughout the Company. In 2023, the Company received cash proceeds of $7,706 from the sale of its Ties and Chemtec businesses.
During the year ended December 31, 2021, the Company reduced outstanding debt by $13,735, primarily from the net proceeds from the sale of the Piling Products division. During the years ended December 31, 2022 and 2021, the Company paid financing fees of $182 and $406, respectively, related to its Credit Agreement (as defined below).
During the year ended December 31, 2022, the Company paid financing fees of $182 related to its Credit Agreement (as defined below).
During February 2022, the $50,000 tranche of interest rate swaps expired. As of December 31, 2022 and December 31, 2021 the swap asset was $1,930 and $175, respectively. The swap liability was $159 as of December 31, 2021.
Prior to the 2022 forward interest rate swaps, the Company had $50,000 of interest rate swaps that were accounted for on a mark-to-market basis. During February 2022, the $50,000 tranche of interest rate swaps expired. As of December 31, 2023 and December 31, 2022 the swap asset was $1,225 and $1,930, respectively.
(a) The following tables display reconciliations of non-GAAP financial measures for the years ended December 31, 2022 and 2021. EBITDA is a financial metric utilized by management to evaluate the Company’s performance on a comparable basis.
The Company reports organic sales growth at the consolidated and segment levels. EBITDA is a non-GAAP financial measure that has been used in discussing the financial performance of the business for the years ended December 31, 2023 and 2022. EBITDA is a financial metric utilized by management to evaluate the Company’s performance on a comparable basis.
The following critical accounting policies, which are reviewed by the Company’s Audit Committee of the Board of Directors, relate to the Company’s more significant estimates and judgments used in the preparation of its consolidated financial statements. Actual results could differ from those estimates.
The following critical accounting estimates, which are reviewed by the Company’s Audit Committee of the Board of Directors, are those management believes are the most critical to understand and evaluate our financial condition and results and require subjective or complex judgements. Actual results could differ from those estimates.
These assumptions include, among other things, labor productivity, cost and availability of materials, and timing of funding by customers. The nature of these long-term agreements may give rise to several types of variable considerations, such as claims, awards, and incentive fees. Historically, these amounts of variable consideration have not been considered significant.
Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, cost and availability of materials, and timing of project execution. The nature of these long-term agreements may give rise to several types of variable considerations, such as discounts and claims.
As a result of the pre-tax $8,016 impairment charges, the $3,956 pre-tax Crossrail Settlement, and the valuation allowance, the net loss for the year ended December 31, 2022 was $45,677, or $4.25 per diluted share, compared to net income for the 2021 year of $3,471, or $0.34 per diluted share.
Net income for the year ended December 31, 2023 was $1,299, or $0.13 per diluted share, compared to net loss for the 2022 year of $45,677, or $4.25 per diluted share.
The Piling Products division was included in the Fabricated Steel business unit within the Steel Products and Measurement segment.
The Chemtec business was reported in the Steel Products business unit within the Infrastructure segment.
For the years ended December 31, 2022 and 2021, the Company repurchased 27,636 and 45,288 shares of its stock, respectively, for $410 and $732, respectively, all of which were withheld from employees to pay their withholding taxes in connection with the vesting of stock awards.
For the years ended December 31, 2023 and 2022, the Company also repurchased 24,886 and 27,636 shares of its stock, respectively, for $315 and $410 from employees to pay their withholding taxes in connection with the vesting of stock awards. 25 Table of Contents Financial Condition The Company generated $37,376 from cash flows from operations during 2023, which was utilized to pay down debt, fund capital expenditures and repurchase shares.
The Second Amendment also added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings. For a discussion of the terms and availability of the credit facilities, please refer to Note 10 of the Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K.
For a discussion of the terms and availability of the credit agreement, please refer to Note 10 of the Notes to Consolidated Financial Statements contained in this Annual Report on Form 10-K. As of December 31, 2023, the Company was in compliance with the covenants in the Credit Agreement.
These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. As significant changes in the above estimates could impact the timing and amount of revenue and profitability of our long-term contracts, we review and update contract-related estimates regularly.
These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. As a result of management’s reviews of contract-related estimates the Company makes adjustments to contract estimates that impact our revenue and profit totals.
Gross profit increased by $3,309, or 3.8%, and gross profit margin expanded by 120 basis points to 18.0% despite the impact of the $3,956 Crossrail Settlement. The improvement in gross profit is due to the portfolio changes that are a part of the Company’s strategic transformation.
Gross profit increased by $23,199, or 25.9%, and gross profit margin expanded by 270 basis points to 20.7%. The improvement in gross profit is due primarily to the portfolio changes that are a part of the Company’s strategic transformation, as well as uplift from increased sales volumes, product mix, and pricing.
The segment operating loss of $10,824, up $8,422 over last year, was driven by a goodwill impairment charge of $3,011 in the Fabricated Bridge business unit and the $5,005 impairment charge for intangible assets related to its Precision Measurement Products and Systems business based in Willis, TX.
Segment profit in 2022 was negatively impacted by a goodwill impairment charge of $3,011 in the Fabricated Bridge business and a $5,005 impairment charge for intangible assets related to the Chemtec business.
The Piling Products division net sales were $60,819 for the year ended December 31, 2021. 21 Table of Contents Year-to-date Results Comparison Results of Operations Year Ended December 31, Percent Increase/(Decrease) Percent of Total Net Sales Year Ended December 31, 2022 2021 2022 vs. 2021 2022 2021 Net sales $ 497,497 $ 513,620 (3.1) % 100.0 % 100.0 % Gross profit 89,611 86,302 3.8 18.0 16.8 Expenses: Selling and administrative expenses 82,657 75,995 8.8 16.6 14.8 Amortization expense 6,144 5,836 5.3 1.2 1.1 Goodwill and long-lived assets impairment charges (Note 5) 8,016 — 100.0 1.6 — Operating (loss) profit (7,206) 4,471 ** (1.4) 0.9 Interest expense - net 3,340 2,956 13.0 0.7 0.6 Other income - net (1,550) (3,075) 49.6 (0.3) (0.6) (Loss) income from continuing operations before income taxes (8,996) 4,590 ** (1.8) 0.9 Income tax expense 36,681 1,119 ** 7.4 0.2 (Loss) income from continuing operations $ (45,677) $ 3,471 ** (9.2) % 0.7 % Diluted (loss) earnings per common share $ (4.25) $ 0.34 ** Data excluded as management believes it is not meaningful.
Full Year Results Comparison Results of Operations Year Ended December 31, Change 2023 2022 2023 vs. 2022 Net sales $ 543,744 $ 497,497 $ 46,247 Gross profit 112,810 89,611 23,199 Gross profit margin 20.7 % 18.0 % 270 bps Expenses: Selling and administrative expenses $ 97,358 $ 82,657 $ 14,701 Selling and administrative expenses as a percent of sales 17.9 % 16.6 % 130 bps Amortization expense 5,314 6,144 (830) Goodwill and long-lived assets impairment charges (Note 5) — 8,016 (8,016) Operating profit (loss) 10,138 (7,206) 17,344 Operating profit (loss) margin 1.9 % (1.4) % 330 bps Interest expense - net 5,528 3,340 2,188 Other expense (income) - net 3,666 (1,550) 5,216 Income (loss) before income taxes 944 (8,996) 9,940 Income tax (benefit) expense (355) 36,681 (37,036) Net income (loss) $ 1,299 $ (45,677) $ 46,976 Diluted earnings (loss) per common share $ 0.13 $ (4.25) $ 4.38 Fiscal 2023 Compared to Fiscal 2022 — Company Analysis Net sales of $543,744 for the year ended December 31, 2023 increased by $46,247, or 9.3%, over the prior year.
The Company’s annual goodwill test included a quantitative analysis to determine whether it was more likely than not that the fair value of each reporting unit is less than its carrying value.
If we do not perform a qualitative assessment, or if we determine that it is more like than not that the fair value of the reporting unit does not exceed its carrying value, we perform a quantitative assessment by comparing the fair value of a reporting unit to its carrying value, including goodwill.
Declines from divestitures were partially offset by organic growth in all three segments and the acquisitions of Skratch and VanHooseCo in 2022. Divestitures drove a 12.8% decline in sales, while organic growth and acquisitions drove a 5.6% and 4.0% increase in sales, respectively.
The increase in sales is due to organic sales growth of 11.7% and a 4.0%, or $19,834, increase from the acquisitions of Skratch and VanHooseCo, partially offset by a 6.4%, or $31,995, decline in sales due to the divestitures of Track Components, Chemtec, and Ties.
Financial Condition The Company used $10,576 from cash flows from operations during 2022, which was primarily utilized to fund working capital needs. As of December 31, 2022, the Company had $2,882 in cash and cash equivalents and $37,814 of availability under its revolving credit facility, subject to covenant restrictions.
As of December 31, 2023, the Company had $2,560 in cash and cash equivalents and $72,133 of availability under its revolving credit facility, subject to covenant restrictions. Principal uses of cash in recent years have been to fund operations, including capital expenditures, repurchase shares and service indebtedness.
The Company believes that the combination of its cash and cash equivalents, cash generated from operations, and the capacity under its revolving credit facility will provide sufficient liquidity to provide the flexibility to operate the business in a prudent manner, continue to service outstanding debt, and to selectively pursue accretive acquisitions to further the Company’s strategic initiatives. 26 Table of Contents Backlog Although backlog is not necessarily indicative of future operating results, the following table provides the backlog by business segment: December 31, 2022 2021 Rail, Technologies, and Services $ 105,241 $ 96,573 Precast Concrete Products 80,501 68,636 Steel Products and Measurement 86,509 44,980 Total backlog $ 272,251 $ 210,189 While a considerable portion of the Company’s business is backlog driven, certain businesses, including the Global Friction Management business unit, are not driven by backlog and therefore have insignificant levels of backlog throughout the year.
Backlog Although backlog is not necessarily indicative of future operating results, the following table provides the backlog by business segment: December 31, 2023 2022 Rail, Technologies, and Services $ 84,418 $ 105,241 Infrastructure Solutions 129,362 167,010 Total backlog $ 213,780 $ 272,251 While a considerable portion of the Company’s business is backlog driven, certain businesses, including the Global Friction Management business unit, are not driven by backlog and therefore have insignificant levels of backlog throughout the year.
The following table reflects available funding capacity as of December 31, 2022: December 31, 2022 Cash and cash equivalents $ 2,882 Credit agreement: Total availability under the credit agreement $ 130,000 Outstanding borrowings on revolving credit facility (91,567) Letters of credit outstanding (619) Net availability under the revolving credit facility 37,814 Total available funding capacity $ 40,696 The Company’s cash flows are impacted from period to period by fluctuations in working capital, as well as its overall profitability.
The Company’s total debt, including finance leases, was $55,273 and $91,879 as of December 31, 2023 and December 31, 2022, respectively, and was primarily comprised of borrowings under its revolving credit facility. 24 Table of Contents The following table reflects available funding capacity as of December 31, 2023: December 31, 2023 Cash and cash equivalents $ 2,560 Credit agreement: Total availability under the credit agreement $ 130,000 Outstanding borrowings on revolving credit facility (55,060) Letters of credit outstanding (2,807) Net availability under the revolving credit facility 72,133 Total available funding capacity $ 74,693 As of December 31, 2023 and December 31, 2022 we were in compliance with all covenants of the Credit Agreement and have $74,693 available funding capacity as of December 31, 2023.
For the year ended December 31, 2022, net loss and adjustments to reconcile net loss from operating activities provided $15,246, compared to $16,745 in 2021. Working capital and other assets and liabilities used $25,822 in the current period compared to $17,555 during 2021, including payments of $8,000 in 2022 and 2021 related to the Union Pacific Railroad Concrete Tie Settlement.
During 2023, cash flow provided by operating activities consisted of net income and non-cash items amounting to $21,453 and changes in certain assets and liabilities netting to a cash inflow of $15,923. In 2022, working capital and other assets and liabilities were a use of $25,822. Both periods include payments of $8,000 for the Union Pacific Railroad Concrete Tie Settlement.
Gross profit was also impacted in 2022 by the $3,956 Crossrail Settlement. The Rail, Technologies, and Services segment gross profit margin increased by 70 basis points from the prior year due to the portfolio changes made and higher gross profit margins realized in Rail Products. Segment operating profit declined by $2,711, or 19.1%, compared to the prior year.
The Rail segment gross profit margin increased by 90 basis points from the prior year due to improved volumes and pricing in Rail Products and Global Friction Management and the portfolio changes made; the acquired Skratch business reported higher margins than the divested Track Components and Ties businesses and higher margins realized in Rail Products.
In 2021, the Company sold the Piling Products business and in 2022 it sold the Track Components business, both of which have a lower gross profit margin than the Skratch and VanHooseCo businesses that were acquired in 2022. Gross profit was also negatively impacted in 2022 by a $1,135 purchase accounting adjustment related to the VanHooseCo acquired inventory.
In 2023, gross profit was also impacted by a reduction in profitability of $3,051 22 Table of Contents due to the Bridge Exit. In 2022, gross profit was negatively impacted by a $1,135 purchase accounting adjustment related to the VanHooseCo acquired inventory along with the $3,956 reduction from the Crossrail Settlement.
Selling and administrative expenses as a percentage of net sales increased to 16.6% from 14.8% due to the increased spending. The net impact of the acquisitions and divestitures was not significant to the change in selling and administrative expenses year over year; however, the 2022 expense included $526 of retention costs associated with the VanHooseCo acquisition.
Selling and administrative expenses as a percentage of net sales increased to 17.9% from 16.6% due to the increased spending. Interest expense increased by $2,188, or 65.5%, due to higher outstanding debt, on average, throughout the year as well as the higher interest rate environment in 2023.
Removed
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except share data unless otherwise noted) 2022 Developments During 2022, the Company: • Produced net sales of $497,497, a decrease of $16,123, or 3.1%, over 2021, reflective of organic growth of 5.6% and growth due to acquisitions of 4.0%, which was offset by a 12.8% reduction due to divestitures; • Reported gross profit margin of 18.0% for the year, a 120-basis point improvement over prior year; • Continued its business transformation with the acquisitions of Skratch Enterprises Ltd. and VanHooseCo Precast LLC, for consideration of $7,402 and $52,146, respectively, which contributed to the $68,118 increase in its net debt; • Divested the Track Components business, resulting in cash proceeds of $7,795; • Incurred a net loss of $45,677 due to a $37,895 deferred tax asset valuation allowance, pre-tax asset impairment charges of $8,016, and an unfavorable impact from the settlement of long-term commercial contracts for $3,956; • Reported adjusted EBITDA (a) (earnings before interest, taxes, depreciation, amortization, and certain adjustments), of $24,179; an increase of 29.4% compared to the prior year; • Amended its Credit Agreement to obtain approval for the VanHooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except share data unless otherwise noted) Our Business L.B. Foster Company is innovating to solve global infrastructure challenges.
Removed
In 2021, the Company made adjustments to exclude the gain associated with the sale of the Piling Products business.
Added
Our technology innovations enable safety, improve information flow, keep things moving, monitor conditions, and enhance environments, improving the lives of people who rely on us to keep our world moving. We enjoy a market-leading reputation for high-quality, high-performance engineering solutions in rail and infrastructure.
Removed
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 useful to investors as an indicator of our ability to incur additional debt and to service our existing debt.
Added
The Company is organized and operates in two reporting segments: Rail, Technologies, and Services (“Rail”) and Infrastructure Solutions (“Infrastructure”). Our financial statements presented herein are prepared using accounting principles generally accepted in the United States of America (“US GAAP”).
Removed
The Track Components division's net sales were $9,244 and $14,139 for the year ended December 31, 2022 and 2021, respectively. On September 24, 2021, the Company completed the sale of its Piling Products division for $23,902 in total proceeds. The Company retained all pre-closing receivables and liabilities associated with the division.
Added
Throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”), we refer to measures used by management to evaluate performance. We also refer to a number of financial measures that are not defined under US GAAP, including organic sales growth, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, and net debt.
Removed
The sale included substantially all inventory associated with the division, as well as the related fixed assets. The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement segment.
Added
The explanation at the end of the MD&A provides the definition of these non-GAAP financial measures.
Removed
Fiscal 2022 Compared to Fiscal 2021 — Company Analysis Net sales of $497,497 for the year ended December 31, 2022 decreased by $16,123, or 3.1%, compared to the prior year. The change in sales is due in part to the divestitures of the Track Components and Piling Products businesses.
Added
A reconciliation of each non-GAAP financial measure to its most directly comparable respective US GAAP financial measure is presented below. 2023 Developments During 2023, the Company: • Produced net sales of $543,744, an increase of $46,247, or 9.3%, over 2022, reflective of organic sales growth of 11.7% and growth due to acquisitions of 4.0%, which was partially offset by a 6.4% reduction due to divestitures; • Reported gross profit margin of 20.7% for the year, a 270-basis point improvement over prior year; • Continued its strategic transformation with the divestitures of the Chemtec and Ties businesses; • Generated net cash flow from operations in 2023 of $37,376; • Reduced net debt during 2023 by $36,284 to $52,713; • Reported adjusted EBITDA of $31,775; an increase of 31.4% compared to the prior year; • Announced that its Board of Directors has authorized the repurchase of up to $15,000 of its common stock through February 2026 and repurchased 134,208 shares of the Company’s stock, or 1.2% of its outstanding shares, at a cost of $2,310.
Removed
In the Company’s legacy business, gross profit was negatively impacted by raw material and labor inflation which was mitigated by pricing actions in the latter part of 2022. Selling and administrative expenses increased by $6,662, or 8.8%, over the prior year.
Added
Skratch and VanHooseCo’s net sales were $4,624 and $33,742, respectively, for the year ended December 31, 2023, and $2,975 and $17,788, respectively, for the year ended December 31, 2022.
Removed
The increase was primarily attributable to strategic transformation costs of $2,235 in 2022, an increase in personnel related costs of $2,676, including a $435 increase in stock-based compensation expense, and an increase in third-party supplies and services of $1,231 compared to the prior year.
Added
The Track Components division’s net sales were $9,244 for the year ended December 31, 2022.
Removed
During 2022, the Company recorded a non-cash impairment charge of $3,011 associated with the Fabricated Bridge reporting unit goodwill, which resides in the Steel Products and Measurement segment, as a result of its annual goodwill test. No other reporting units were impaired as a result of goodwill testing procedures.
Added
On March 30, 2023, the Company sold substantially all the operating assets of its Chemtec business for $5,344 in proceeds, subject to final working capital adjustments, generating a $2,065 loss on sale, recorded in “Other expense (income) - net” for the year ended December 31, 2023.
Removed
The Company also recorded an impairment charge of $4,883 for intangible assets as a result of procedures performed. Such procedures determined that the carrying value of the long-lived asset group related to its Precision Measurement Products and Systems business would not be recoverable. The now fully impaired assets were part of the Steel Products and Measurement segment.
Added
Chemtec’s net sales for the year ended December 31, 2023 and December 31, 2022 were $9,259 and $21,119, respectively. 21 Table of Contents On June 30, 2023, the Company sold substantially all the operating assets of the Ties business, 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” for the year ended December 31, 2023.
Removed
For further discussion on the impairment charges, refer to Note 5 of the Notes to the Consolidated Financial Statements. Interest expense increased by $384, or 13.0%, due to higher outstanding debt throughout the year. The outstanding debt balance increased to $91,879 as of December 31, 2022, compared to $31,251 as of December 31, 2021.

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