~~Table of Contents~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)



☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended September 30, ~~2017~~2019

Or



☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission File Number: 000-10436

L.B. Foster Company

(Exact name of Registrant as specified in its charter)



Pennsylvania						25-1324733
(State of Incorporation)						(I. R. S. Employer Identification No.)




415 Holiday Drive, Suite 100, Pittsburgh, Pennsylvania						15220
(Address of principal executive offices)						(Zip Code)

(412) 928-3400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01

FSTR

NASDAQ Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer ☐

~~☐ (Do not check if a smaller reporting company)~~

Smaller reporting company

☐ ☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~Indicate the number~~

As of October 23, 2019, there were 10,579,259 shares ~~outstanding of each~~ of the ~~issuer’s classes of~~registrant’s common stock, ~~as of the latest practicable date.~~par value $0.01 per share, outstanding.



~~Class~~					~~Outstanding as of October 31, 2017~~
~~Common Stock, Par Value $0.01~~					~~10,340,576 Shares~~

L.B. FOSTER COMPANY AND SUBSIDIARIES

INDEX


			Page
PART I. Financial Information

Item 1. Financial Statements:

			~~Page~~
~~PART I. Financial Information~~

~~Item 1. Financial Statements (unaudited):~~

Condensed Consolidated Balance Sheets	3

Condensed Consolidated Statements of Operations			4

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~			5

Condensed Consolidated Statements of Cash Flows			6

Condensed Consolidated Statements of Stockholders' Equity			7

Notes to Condensed Consolidated Financial Statements			89

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23

Item 3. Quantitative and Qualitative Disclosures about Market Risk			3731

Item 4. Controls and Procedures			3731

PART II. Other Information			32

Item 1. Legal Proceedings			3832

Item 1A. Risk Factors			3832

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3832

Item 4. Mine Safety Disclosures			3832

Item 6. Exhibits			3933

Signature			4034

Table of Contents

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


						September 30, 2019						December 31, 2018
						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents						$	15,374					$	10,282
Accounts receivable - net (Note 5)						85,039						86,123
Inventories - net (Note 6)						128,741						124,504


Other current assets						6,326						5,763
Total current assets						235,480						226,672
Property, plant, and equipment - net (Note 7)						82,793						86,857
Operating lease right-of-use assets - net (Note 8)						13,234						—
Other assets:
Goodwill (Note 4)						18,930						19,258
Other intangibles - net (Note 4)						44,555						49,836


Other assets						1,295						626
TOTAL ASSETS						$	396,287					$	383,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable						$	73,246					$	78,269
Deferred revenue						8,710						6,619
Accrued payroll and employee benefits						12,407						12,993
Accrued warranty (Note 14)						1,222						2,057
Current portion of accrued settlement (Note 14)						8,000						10,000
Current maturities of long-term debt (Note 9)						2,978						629
Other accrued liabilities						14,153						13,624
Total current liabilities						120,716						124,191
Long-term debt (Note 9)						70,021						74,353
Deferred tax liabilities (Note 15)						4,668						5,287
Long-term portion of accrued settlement (Note 14)						36,000						40,000
Long-term operating lease liabilities (Note 8)						10,103						—
Other long-term liabilities						16,104						17,299
Stockholders' equity:
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at September 30, 2019 and December 31, 2018, 11,115,779; shares outstanding at September 30, 2019 and December 31, 2018, 10,420,635 and 10,366,007, respectively						111						111
Paid-in capital						49,014						48,040
Retained earnings						131,275						114,324
Treasury stock - at cost, 695,144 and 749,772 common stock shares at September 30, 2019 and December 31, 2018, respectively						(16,829)						(18,165)
Accumulated other comprehensive loss						(24,896)						(22,191)
Total stockholders' equity						138,675						122,119
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						$	396,287					$	383,249

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

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

3

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018


Sales of goods						$	119,256					$	120,272					$	392,566					$	339,176
Sales of services						35,020						46,822						113,112						123,262
Total net sales						154,276						167,094						505,678						462,438
Cost of goods sold						97,663						99,045						322,432						279,478
Cost of services sold						28,921						36,746						89,264						96,402
Total cost of sales						126,584						135,791						411,696						375,880
Gross profit						27,692						31,303						93,982						86,558
Selling and administrative expenses						22,264						21,662						67,036						65,488
Amortization expense						1,655						1,762						5,046						5,322

Interest expense - net						1,079						1,296						4,031						4,813


Other (income) expense - net						(421)						157						(823)						(320)
Total expenses						24,577						24,877						75,290						75,303
Income before income taxes						3,115						6,426						18,692						11,255
Income tax expense						51						18						2,374						1,271
Net income						$	3,064					$	6,408					$	16,318					$	9,984
Basic earnings per common share						$	0.29					$	0.62					$	1.57					$	0.96
Diluted earnings per common share						$	0.29					$	0.61					$	1.53					$	0.95

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

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

4

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Unaudited)

(In thousands)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
(Unaudited) (Unaudited)
Net income (loss) $ 3,222
$ (5,982 ) $ 3,824
$ (100,810 )
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 2,412
(1,431 ) 5,528
(3,438 )
Unrealized gain (loss) on cash flow hedges, net of tax expense (benefit) of $0, $88 and $0, ($815) 82
137
(119 ) (1,286 )
Reclassification of pension liability adjustments to earnings, net of tax expense of $0, $38 and $0, $115* 114
73
335
223
Other comprehensive income (loss) 2,608
(1,221 ) 5,744
(4,501 )
Comprehensive income (loss) $ 5,830
$ (7,203 ) $ 9,568
$ (105,311 )


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018


Net income						$	3,064					$	6,408					$	16,318					$	9,984
Other comprehensive loss, net of tax:
Foreign currency translation adjustment						(1,416)						(371)						(1,038)						(3,132)
Unrealized (loss) gain on cash flow hedges, net of tax expense of $0 for all periods						(151)						207						(1,309)						1,243
Reclassification of pension liability adjustments to earnings, net of tax expense of $0 for all periods*						90						137						275						392
Other comprehensive loss						(1,477)						(27)						(2,072)						(1,497)
Comprehensive income						$	1,587					$	6,381					$	14,246					$	8,487



*			Reclassifications out of accumulated other comprehensive loss for pension obligations are charged to selling and administrative ~~expense.~~expenses.

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

5

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(In thousands)~~

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

~~L.B. FOSTER COMPANY AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)~~(Unaudited)

(In thousands)


														Nine Months Ended September 30,
		Nine Months Ended September 30,												2019						2018
		2017				2016
		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:									CASH FLOWS FROM OPERATING ACTIVITIES:
Net income									Net income					$	16,318					$	9,984
Adjustments to reconcile net income to cash provided by operating activities:									Adjustments to reconcile net income to cash provided by operating activities:
Deferred income taxes									Deferred income taxes					(541)						(1,477)
Depreciation									Depreciation					8,295						8,685
Amortization									Amortization					5,046						5,322

Equity in (income) loss of nonconsolidated investments									Equity in (income) loss of nonconsolidated investments					(29)						7
(Gain) loss on sales and disposals of property, plant, and equipment									(Gain) loss on sales and disposals of property, plant, and equipment					(4)						498
Stock-based compensation									Stock-based compensation					2,910						2,838

Change in operating assets and liabilities:									Change in operating assets and liabilities:
Accounts receivable									Accounts receivable					910						(10,634)
Inventories									Inventories					(4,957)						(12,960)
Other current assets									Other current assets					480						(1,160)
Prepaid income tax									Prepaid income tax					(4,042)						(3,025)
Other noncurrent assets									Other noncurrent assets					(425)						1,132

Accounts payable									Accounts payable					(4,193)						19,604
Deferred revenue									Deferred revenue					2,143						2,278
Accrued payroll and employee benefits									Accrued payroll and employee benefits					(574)						(778)
Accrued settlement									Accrued settlement					(6,000)						—
Other current liabilities									Other current liabilities					(1,041)						2,287
Other long-term liabilities									Other long-term liabilities					(1,013)						(176)
Net cash provided by operating activities									Net cash provided by operating activities					13,283						22,425
CASH FLOWS FROM INVESTING ACTIVITIES:									CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property, plant, and equipment									Proceeds from the sale of property, plant, and equipment					253						2,267
Capital expenditures on property, plant, and equipment									Capital expenditures on property, plant, and equipment					(5,037)						(3,196)
Proceeds from sale of equity method investment									Proceeds from sale of equity method investment					—						3,875
Repayment of revolving line of credit from equity method investment									Repayment of revolving line of credit from equity method investment					—						1,235
Net cash (used in) provided by investing activities									Net cash (used in) provided by investing activities					(4,784)						4,181
CASH FLOWS FROM FINANCING ACTIVITIES:									CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt		(113,119		)		(134,200		)	Repayments of debt					(156,944)						(153,089)
Proceeds from debt		91,838				101,075			Proceeds from debt					154,961						99,592
Financing fees		—				(712		)

Debt issuance costs									Debt issuance costs					(836)						—
Treasury stock acquisitions		(103		)		(265		)	Treasury stock acquisitions					(600)						(316)
Cash dividends on common stock paid to shareholders		—				(1,244		)
Income tax deficiency from share-based compensation		—				(124		)
Net cash used by financing activities		(21,384		)		(35,470		)

Net cash used in financing activities									Net cash used in financing activities					(3,419)						(53,813)
Effect of exchange rate changes on cash and cash equivalents		2,460				152			Effect of exchange rate changes on cash and cash equivalents					12						(885)
Net increase (decrease) in cash and cash equivalents		4,645				(29,661		)	Net increase (decrease) in cash and cash equivalents					5,092						(28,092)
Cash and cash equivalents at beginning of period		30,363				33,312			Cash and cash equivalents at beginning of period					10,282						37,678
Cash and cash equivalents at end of period		$	35,008			$	3,651		Cash and cash equivalents at end of period					$	15,374					$	9,586
Supplemental disclosure of cash flow information:									Supplemental disclosure of cash flow information:
Interest paid		$	5,599			$	3,485		Interest paid					$	3,599					$	4,468
Income taxes (received) paid		$	(11,233	)		$	3,991
Income taxes paid									Income taxes paid					$	6,176					$	4,077

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(Dollars in thousands)


						Three Months Ended September 30, 2019
						Common Stock						Paid-in Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
Balance, June 30, 2019						$	111					$	48,159					$	128,211					$	(16,841)					$	(23,419)					$	136,221

Net income						—						—						3,064						—						—						3,064
Other comprehensive loss, net of tax:
Pension liability adjustment						—						—						—						—						90						90
Foreign currency translation adjustment						—						—						—						—						(1,416)						(1,416)
Unrealized derivative loss on cash flow hedges						—						—						—						—						(151)						(151)

Issuance of 543 common shares, net of shares withheld for taxes						—						(21)						—						12						—						(9)
Stock-based compensation						—						876						—						—						—						876

Balance, September 30, 2019						$	111					$	49,014					$	131,275					$	(16,829)					$	(24,896)					$	138,675


						Three Months Ended September 30, 2018
						Common Stock						Paid-in Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
Balance, June 30, 2018						$	111					$	46,129					$	149,068					$	(18,180)					$	(19,237)					$	157,891

Net income						—						—						6,408						—						—						6,408
Other comprehensive loss, net of tax:
Pension liability adjustment						—						—						—						—						137						137
Foreign currency translation adjustment						—						—						—						—						(371)						(371)
Unrealized derivative gain on cash flow hedges						—						—						—						—						207						207

Issuance of 662 common shares, net of shares withheld for taxes						—						(21)						—						15						—						(6)
Stock-based compensation						—						934						—						—						—						934

Balance, September 30, 2018						$	111					$	47,042					$	155,476					$	(18,165)					$	(19,264)					$	165,200

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(Dollars in thousands)


						Nine Months Ended September 30, 2019
						Common Stock						Paid-in Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
Balance, December 31, 2018						$	111					$	48,040					$	114,324					$	(18,165)					$	(22,191)					$	122,119
Adjustment to adopt ASU 2018-02						—						—						633						—						(633)						—
Net income						—						—						16,318						—						—						16,318
Other comprehensive loss, net of tax:
Pension liability adjustment						—						—						—						—						275						275
Foreign currency translation adjustment						—						—						—						—						(1,038)						(1,038)
Unrealized derivative loss on cash flow hedges						—						—						—						—						(1,309)						(1,309)

Issuance of 54,628 common shares, net of shares withheld for taxes						—						(1,936)						—						1,336						—						(600)
Stock-based compensation						—						2,910						—						—						—						2,910

Balance, September 30, 2019						$	111					$	49,014					$	131,275					$	(16,829)					$	(24,896)					$	138,675


						Nine Months Ended September 30, 2018
						Common Stock						Paid-in Capital						Retained Earnings						Treasury Stock						Accumulated Other Comprehensive Loss						Total Stockholders' Equity
Balance, December 31, 2017						$	111					$	45,017					$	145,797					$	(18,662)					$	(17,767)					$	154,496
Adjustment to adopt ASU 2016-16						—						—						(305)						—						—						(305)
Net income						—						—						9,984						—						—						9,984
Other comprehensive loss, net of tax:
Pension liability adjustment						—						—						—						—						392						392
Foreign currency translation adjustment						—						—						—						—						(3,132)						(3,132)
Unrealized derivative gain on cash flow hedges						—						—						—						—						1,243						1,243

Issuance of 25,431 common shares, net of shares withheld for taxes						—						(813)						—						497						—						(316)
Stock-based compensation						—						2,838						—						—						—						2,838

Balance, September 30, 2018						$	111					$	47,042					$	155,476					$	(18,165)					$	(19,264)					$	165,200

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

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L.B. FOSTER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except share data)

Note 1. ~~FINANCIAL STATEMENTS~~Financial Statements

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by ~~U.S. generally accepted accounting principles~~GAAP for complete financial statements. In the opinion of management, all estimates and adjustments (consisting of normal recurring ~~accruals)~~accruals, unless otherwise stated herein) considered necessary for a fair presentation of the financial position of L.B. Foster Company and subsidiaries as of September 30, 2019 and December 31, 2018, its Condensed Consolidated Statements of Operations and its Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018, and its Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, have been included. However, actual results could differ from those estimates. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2019. The ~~year-end~~ Condensed Consolidated Balance Sheet as of December 31, ~~2016~~2018 was derived from audited financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and footnotes thereto included in the L.B. Foster Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. In this Quarterly Report on Form 10-Q, references to “we,” “us,” “our,” and the “Company” refer collectively to L.B. Foster Company and its consolidated subsidiaries.

~~Assets Held for Sale~~

The Company classifies assets as held for sale when management approves and commits to a formal plan of sale with the expectation the sale will be completed within one year. The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell. See Note 7 Investments of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.

Recently Issued Accounting Standards

In ~~May 2014,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) ~~2014-09, “Revenue from Contracts with Customers (Topic 606)”~~2018-15, “Intangibles - Goodwill and Other - Internal-Use Software” (“ASU ~~2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification 605, “Revenue Recognition” (“ASC 605”~~2018-15”). The ASU ~~2014-09 is based on the principle that revenue is recognized to depict the transfer~~requires capitalization of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue, cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized fromcertain implementation costs incurred ~~to obtain or fulfill~~in a cloud computing arrangement that qualifies as a service contract. The amendments in the ASU ~~2014-09 is~~are effective for fiscal years beginning after December 15, ~~2017, including~~2019 and for interim periods ~~within that reporting period.~~therein with early adoption permitted. The Company ~~continues~~is currently evaluating the potential impact of the ASU on its ~~project adoption plan~~consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). The ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to trade receivables, other receivables, and most debt instruments. The CECL model does not have a minimum threshold for recognition of impairment losses, and entities will need to measure expected credit losses on assets that have a low risk of loss. This guidance is required to be adopted by ~~performing a detailed evaluation~~the Company beginning in fiscal year 2020. Management is currently evaluating the potential impact of ~~contracts and sales orders with customers and assessing the impact that this standard will have~~these changes on the Company’s ~~results of operations, cash flows,~~consolidated financial ~~position,~~statements, including accounting policies, processes, and backlog. We have also been assessing the impact to internal controls over financial reporting and disclosure requirements. We regularly brief our Audit Committee on our overall project plan as well as our progress towards adoption. The Company will adopt this standard as of January 1, 2018 and anticipates using the modified retrospective approach at adoption as it relates to ASU 2014-09.systems.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new accounting requirements include the accounting for, presentation of, and classification of leases. The guidance ~~will result~~resulted in most leases being capitalized as a ~~right of use~~right-of-use asset with a related ~~liability on our~~ balance ~~sheets.~~sheet liability. The requirements of the new standard are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods. The Company ~~is in~~adopted the ~~process of analyzing the impact~~provisions of ASU 2016-02 on ~~our financial position.~~January 1, 2019, using the modified retrospective approach as of the beginning of the period of adoption. Additionally, the Company has elected to apply the practical expedients for leases that commenced prior to the effective date, not to apply the recognition requirements in the standard to short-term leases, and not to separate non-lease components from lease components. The Company has a significant number of operating leases, and, as a result, expects this guidance to have a material impact on its Condensed Consolidated Balance Sheet. The Company does not anticipate early adoption as it relates topresented the disclosures required by ASU ~~2016-02.~~2016-02 in Note 8.

In ~~October 2016,~~February 2018, the FASB issued ASU ~~2016-16,~~2018-02, “Income ~~Taxes~~Statement – ~~Intra-Entity Transfers~~Reporting Comprehensive Income; Reclassification of ~~Assets~~Certain Tax Effects from Accumulated Other ~~Than Inventory (Topic 740),”~~Comprehensive Income” (“ASU ~~2016-16”~~2018-02”), which allows companies to reclassify stranded tax effects caused by the U.S. Tax Cuts and Jobs Act (the “Tax Act”) ~~which will require an entity~~from accumulated other comprehensive income to ~~recognize~~retained earnings. The amendments eliminate the stranded tax effects resulting from the Tax Act and improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax ~~consequences~~effects of ~~an intra-entity transfer of an asset, other than inventory, when~~ the ~~transfer occurs. The ASU is effective on January 1, 2018 with early adoption permitted. The Company continues to evaluate~~Tax Act, the ~~impact this standard will have on the Company’s financial statements but believes there will not be a material change once adopted. The Company will not elect early adoption of ASU 2016-16.~~

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715),” (“ASU 2017-07”) which improves the presentation of net periodic pension cost and net periodic postretirement benefit cost. Theunderlying guidance that requires that the ~~entity report~~effect of a change in tax laws or rates be included in income from continuing operations is not affected. The Company adopted ASU 2018-02 during the ~~service cost component~~first quarter of 2019 and has chosen to record the reclassification as of the beginning of the period of adoption. As a result of adopting this standard, we reclassified stranded tax effects of $633 from “Accumulated other comprehensive loss” to “Retained earnings.”

The SEC Disclosure Update and Simplification release announces the SEC's adoption of certain amendments in August 2018. While most of the amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial

9

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statement requirements to require a reconciliation of changes in stockholders’ equity in the ~~same line item~~notes to the financial statements or ~~items~~ as ~~other compensation costs arising from services rendered by~~a separate statement. This analysis should reconcile the ~~pertinent employees during~~beginning balance to the ending balance of each caption in stockholders’ equity for each period for which an income statement is required to be filed and ~~report~~comply with the ~~other components~~remaining content requirements of ~~net periodic pension cost~~Rule 3-04 of Regulation S-X. As a result, registrants are required to provide the reconciliation for both the comparable quarterly and ~~net~~

~~periodic postretirement benefit cost~~year-to-date periods in their Quarterly Reports on Form 10-Q but only for the year-to-date periods in registration statements, beginning in the ~~income statement separately from the service cost component and outside a subtotal~~first quarter of income from operations. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. The new standard will be effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods.2019. The Company ~~is evaluating its implementation approach and assessing~~has included the ~~impact~~reconciliation of ~~ASU 2017-07 on the presentation of operations.~~changes in stockholders’ equity as a separate statement.

Note 2. ~~BUSINESS SEGMENTS~~Business Segments

The Company is a leading manufacturer and distributor of products and services for transportation and energy infrastructure with locations in North America and Europe. The Company is organized and ~~evaluated by product group, which is~~operates in 3 different operating segments: the ~~basis for identifying reportable segments. Each~~Rail Products and Services segment, ~~represents a revenue-producing component~~the Construction Products segment, and the Tubular and Energy Services segment. The segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred; (b) whose operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”), who makes decisions about resources to be allocated to the segments, and (c) for which ~~separate~~discrete financial information is ~~produced internally that is subject to evaluation by the Company’s chief operating decision maker in deciding how to allocate resources. Each segment is~~available. Operating segments are evaluated ~~based upon its~~on their segment profit contribution to the ~~Company’s~~Company's consolidated results. Other income and expenses, interest, income taxes, and certain other items are managed on a consolidated basis. The Company's segment accounting policies are the same as those described in Note 2. Business Segments of the Notes to the Company's Consolidated Financial Statements contained in its Annual Report on Form 10-K for the year-ended December 31, 2018.

The following table illustrates the Company's revenues and ~~profits (losses)~~profit from operations ~~of the Company~~ by segment for the periods indicated:


						Three Months Ended September 30, 2019																		Three Months Ended September 30, 2018
						Net Sales						Segment Profit						Net Sales						Segment Profit
Rail Products and Services						$	67,741					$	3,417					$	84,517					$	5,299
Construction Products						47,175						1,848						41,534						1,603
Tubular and Energy Services						39,360						2,230						41,043						4,274
Total						$	154,276					$	7,495					$	167,094					$	11,176

						Nine Months Ended September 30, 2019																		Nine Months Ended September 30, 2018
						Net Sales						Segment Profit						Net Sales						Segment Profit
Rail Products and Services						$	244,836					$	14,815					$	238,571					$	12,655
Construction Products						139,926						6,095						112,641						4,478
Tubular and Energy Services						120,916						11,937						111,226						10,704
Total						$	505,678					$	32,847					$	462,438					$	27,837

Three Months Ended
September 30, 2017 Nine Months Ended
September 30, 2017
Net Sales Segment Profit Net Sales Segment Profit
Rail Products and Services $ 62,095
$ 3,472
$ 187,922
$ 8,938
Construction Products 39,118
3,387
121,905
9,156
Tubular and Energy Services 30,279
2,298
85,227
1,774
Total $ 131,492
$ 9,157
$ 395,054
$ 19,868

Three Months Ended
September 30, 2016 Nine Months Ended
September 30, 2016
Net Sales Segment Profit (Loss) Net Sales Segment Profit (Loss)
Rail Products and Services $ 56,891
$ (2,047 ) $ 188,686
$ (26,474 )
Construction Products 34,870
1,356
107,098
5,748
Tubular and Energy Services 22,883
(6,966 ) 81,164
(111,876 )
Total $ 114,644
$ (7,657 ) $ 376,948
$ (132,602 )

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

The following table provides a reconciliation of ~~reportable~~ segment net profit ~~(loss)~~ from operations to the Company’s consolidated total:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018
Profit for reportable segments						$	7,495					$	11,176					$	32,847					$	27,837
Interest expense - net						(1,079)						(1,296)						(4,031)						(4,813)

Other income (expense) - net						421						(157)						823						320


Unallocated corporate expenses and other unallocated charges						(3,722)						(3,297)						(10,947)						(12,089)
Income before income taxes						$	3,115					$	6,426					$	18,692					$	11,255

10

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Profit (loss) for reportable segments $ 9,157
$ (7,657 ) $ 19,868
$ (132,602 )
Interest expense (2,026 ) (1,520 ) (6,315 ) (4,342 )
Interest income 56
50
166
157
Other income 551
1,085
564
263
LIFO (expense) income (1,552 ) 917
(1,733 ) 1,442
Equity in income (loss) of nonconsolidated investments 50
(263 ) (5 ) (946 )
Corporate expense, cost of capital elimination, and other unallocated charges (3,222 ) (1,973 ) (8,023 ) (6,907 )
Income (loss) before income taxes $ 3,014
$ (9,361 ) $ 4,522
$ (142,935 )

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The following table illustrates assets of the Company by segment:


						September 30, 2019						December 31, 2018
Rail Products and Services						$	181,694					$	175,704
Construction Products						99,997						97,133
Tubular and Energy Services						86,531						90,402
Unallocated corporate assets						28,065						20,010
Total						$	396,287					$	383,249

Note 3. Revenue

Revenue from products or services provided to customers over time accounted for 33.4% and 26.8% of revenue for the three months ended September 30, 2019 and 2018, respectively, and 28.1% and 25.2% of revenue for the nine months ended September 30, 2019 and 2018, respectively. 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. Revenue recognized over time using an input measure was $37,488 and $33,225 for the three months ended September 30, 2019 and 2018, respectively, and $104,309 and $87,369 for the nine months ended September 30, 2019 and 2018, respectively. A certain portion of the Company’s revenue recognized over time under these long-term agreements is recognized using an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements. Revenue recognized over time using an output measure was $14,031 and $11,510 for the three months ended September 30, 2019 and 2018, respectively, and $37,553 and $29,064 for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 and December 31, 2018, the Company had contract assets of $34,792 and $26,692, respectively, that were recorded in “Inventories - net” within the Condensed Consolidated Balance Sheets. As of September 30, 2019 and December 31, 2018, the Company had contract liabilities of $3,343 and $1,505, respectively, that were recorded in “Deferred revenue” within the Condensed Consolidated Balance Sheets.

The majority of the Company’s revenue is from products transferred and services rendered to customers at a point in time. Point in time revenue accounted for 66.6% and 73.2% of revenue for the three months ended September 30, 2019 and 2018, respectively, and 71.9% and 74.8% of revenue for the nine months ended September 30, 2019 and 2018, respectively. The Company recognizes revenue at the point in time at which the customer obtains control of the product or service, which is generally when the product title passes to the customer upon shipment or the service has been rendered to the customer. In limited cases, title does not transfer and revenue is not recognized until the customer has received the products at a physical location.

The following table summarizes the Company's net sales by major product and service category:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018
Rail Products						$	39,224					$	49,234					$	153,420					$	139,600
Rail Technologies						28,517						35,283						91,416						98,971
Rail Products and Services						67,741						84,517						244,836						238,571
Piling and Fabricated Bridge						28,703						26,798						90,023						71,505
Precast Concrete Products						18,472						14,736						49,903						41,136
Construction Products						47,175						41,534						139,926						112,641
Test, Inspection, and Threading Services						12,249						15,296						40,777						44,517
Protective Coatings and Measurement Systems						27,111						25,747						80,139						66,709
Tubular and Energy Services						39,360						41,043						120,916						111,226
Total net sales						$	154,276					$	167,094					$	505,678					$	462,438

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September 30,
2017 December 31,
2016
Rail Products and Services $ 198,761
$ 174,049
Construction Products 88,542
81,074
Tubular and Energy Services 100,046
100,006
Unallocated corporate assets 21,815
37,894
Total $ 409,164
$ 393,023
Net sales by the timing of the transfer of products and services was as follows:


						Three Months Ended September 30, 2019
						Rail Products and Services						Construction Products						Tubular and Energy Services						Total
Point in time						$	46,712					$	29,375					$	26,670					$	102,757
Over time						21,029						17,800						12,690						51,519
Total net sales						$	67,741					$	47,175					$	39,360					$	154,276

						Three Months Ended September 30, 2018
						Rail Products and Services						Construction Products						Tubular and Energy Services						Total
Point in time						$	61,426					$	27,459					$	33,474					$	122,359
Over time						23,091						14,075						7,569						44,735
Total net sales						$	84,517					$	41,534					$	41,043					$	167,094

3. ~~GOODWILL AND OTHER INTANGIBLE ASSETS~~


						Nine Months Ended September 30, 2019
						Rail Products and Services						Construction Products						Tubular and Energy Services						Total
Point in time						$	183,905					$	90,565					$	89,346					$	363,816
Over time						60,931						49,361						31,570						141,862
Total net sales						$	244,836					$	139,926					$	120,916					$	505,678

						Nine Months Ended September 30, 2018
						Rail Products and Services						Construction Products						Tubular and Energy Services						Total
Point in time						$	176,592					$	74,581					$	94,832					$	346,005
Over time						61,979						38,060						16,394						116,433
Total net sales						$	238,571					$	112,641					$	111,226					$	462,438

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

Significant changes in contract assets during the nine months ended September 30, 2019 resulted from transfers to receivables from contract assets recognized at the beginning of the period of $22,320. Significant changes in contract liabilities during the nine months ended September 30, 2019 resulted from increases of $3,100 due to billings in excess of costs, excluding amounts recognized as revenue during the period. Contract liabilities were reduced due to revenue recognized during the three months ended September 30, 2019 and 2018 of $194 and $406, respectively, and reduced due to revenue recognized during the nine months ended September 30, 2019 and 2018 of $1,460 and $1,146, respectively, that were included in the contract liabilities at the beginning of each period.

As of September 30, 2019, the Company had approximately $194,083 of remaining performance obligations, which is also referred to as backlog. Approximately 7.7% of the September 30, 2019 backlog was related to projects that are anticipated to extend beyond September 30, 2020.

Note 4. Goodwill and Other Intangible Assets

The following table presents the goodwill balance by reportable segment:


						Rail Products and Services						Construction Products						Tubular and Energy Services						Total
Balance as of December 31, 2018						$	14,111					$	5,147					$	—					$	19,258
Foreign currency translation impact						(328)						—						—						(328)
Balance as of September 30, 2019						$	13,783					$	5,147					$	—					$	18,930

Rail Products and
Services Construction
Products Tubular and Energy
Services Total
Balance at December 31, 2016 $ 13,785
$ 5,147
$ —
$ 18,932
Foreign currency translation impact 767
—
—
767
Balance at September 30, 2017 $ 14,552
$ 5,147
$ —
$ 19,699

The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. Qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying

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amount. No interim goodwill impairment test was required in connection with ~~these evaluations for~~ the ~~nine months ended~~evaluation of qualitative factors as of September 30, 2017. The Company continues to monitor the recoverability of the long-lived assets associated with certain reporting units of the Company and the long-term financial projections of the businesses. Sustained declines in the markets we serve may result in future long-lived asset impairment.2019.

~~The following table represents the gross other intangible assets balance by reportable segment:~~

September 30,
2017 December 31,
2016
Rail Products and Services $ 57,538
$ 56,476
Construction Products 1,348
1,348
Tubular and Energy Services 29,179
29,179
$ 88,065
$ 87,003

The components of the Company’s intangible assets ~~are~~were as follows:


						September 30, 2019
						Weighted Average Amortization Period In Years						Gross Carrying Value						Accumulated Amortization						Net Carrying Amount
Non-compete agreements						4						$	1,227					$	(1,140)					$	87
Patents						10						369						(181)						188
Customer relationships						18						36,807						(13,021)						23,786
Trademarks and trade names						16						7,732						(3,382)						4,350
Technology						14						35,551						(19,407)						16,144
												$	81,686					$	(37,131)					$	44,555

						December 31, 2018
						Weighted Average Amortization Period In Years						Gross Carrying Value						Accumulated Amortization						Net Carrying Amount
Non-compete agreements						4						$	1,372					$	(1,046)					$	326
Patents						10						358						(165)						193
Customer relationships						18						37,129						(11,388)						25,741
Trademarks and trade names						15						8,481						(3,416)						5,065
Technology						14						35,640						(17,129)						18,511
												$	82,980					$	(33,144)					$	49,836

September 30, 2017
Weighted Average
Amortization
Period In Years Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Amount
Non-compete agreements 5 $ 4,233
$ (2,872 ) $ 1,361
Patents 10 392
(160 ) 232
Customer relationships 17 37,597
(8,542 ) 29,055
Trademarks and trade names 14 10,078
(3,879 ) 6,199
Technology 14 35,765
(13,477 ) 22,288
$ 88,065
$ (28,930 ) $ 59,135

December 31, 2016
Weighted Average
Amortization
Period In Years Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Amount
Non-compete agreements 5 $ 4,219
$ (2,217 ) $ 2,002
Patents 10 373
(143 ) 230
Customer relationships 18 36,843
(6,582 ) 30,261
Trademarks and trade names 14 10,018
(3,238 ) 6,780
Technology 14 35,550
(11,304 ) 24,246
$ 87,003
$ (23,484 ) $ 63,519

Intangible assets are amortized over their useful lives, which range from 4 to 25 years, with a total weighted average amortization period of approximately 15 years atas of September 30, ~~2017.~~2019. Amortization expense was $1,655 and $1,762 for the three months ended September 30, ~~2017~~2019 and ~~2016 was $1,764~~2018, respectively, and ~~$1,763, respectively. Amortization expense~~$5,046 and $5,322 for the nine months ended September 30, ~~2017~~2019 and ~~2016 was $5,218~~2018, respectively. During the nine months ended September 30, 2019, gross intangible assets and ~~$7,818, respectively.~~accumulated amortization were reduced as a result of the full amortization of certain intangible assets related to non-compete agreements of $124 and trademarks and trade names of $723.

~~Estimated~~As of September 30, 2019, estimated amortization expense for the remainder of ~~2017~~2019 and thereafter iswas as follows:


			Amortization Expense
Remainder of 2019			$	1,525
2020			5,815
2021			5,781
2022			5,698
2023			5,211
2024 and thereafter			20,525
			$	44,555

Amortization Expense
2017 $ 1,782
2018 7,024
2019 6,302
2020 5,980
2021 5,960
2022 and thereafter 32,087
$ 59,135

4. ~~ACCOUNTS RECEIVABLE~~Note 5. Accounts Receivable

Credit is extended based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment. Credit terms are consistent with industry standards and practices. The amounts of trade accounts receivable atas of September 30, ~~2017~~2019 and December 31, ~~2016~~2018 have been reduced by an allowance for doubtful accounts of ~~$2,138~~$1,152 and ~~$1,417,~~$932, respectively. Changes in reserves for uncollectable accounts, which are recorded as part of “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations, resulted in income of $96 and $267 for the three months ended September 30, 2019 and 2018, respectively, and expense of $8 and income of $986 for the nine months ended September 30, 2019 and 2018, respectively.

5. ~~INVENTORIES~~

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Note 6. Inventory

Inventories atas of September 30, ~~2017~~2019 and December 31, ~~2016~~2018 are summarized in the following table:


						September 30, 2019						December 31, 2018
Finished goods						$	69,563					$	69,041
Contract assets						34,792						26,692
Work-in-process						3,427						6,940
Raw materials						20,959						21,831
Inventories - net						$	128,741					$	124,504

September 30,
2017 December 31,
2016
Finished goods $ 58,588
$ 46,673
Work-in-process 30,507
21,716
Raw materials 19,851
18,032
Total inventories at current costs 108,946
86,421
Less: LIFO reserve (4,911 ) (3,178 )
$ 104,035
$ 83,243

~~Inventory is generally valued at the lower of last-in, first-out (“LIFO”) cost or market. Other inventories~~Inventories of the Company are valued at average cost or net realizable value, whichever is lower. ~~An actual valuation of inventory under the LIFO method is made at the end of each year based on the inventory levels~~

Note 7. Property, Plant, and ~~costs at that time. Interim LIFO calculations are based on management’s estimates of expected year-end levels and costs.~~

6. ~~PROPERTY, PLANT, AND EQUIPMENT~~Equipment

Property, plant, and equipment atas of September 30, ~~2017~~2019 and December 31, ~~2016 consist~~2018 consisted of the following:


						September 30, 2019						December 31, 2018
Land						$	12,370					$	12,440
Improvements to land and leaseholds						17,280						17,610
Buildings						35,914						34,608
Machinery and equipment, including equipment under finance leases						123,139						120,914
Construction in progress						1,333						3,083
Gross property, plant, and equipment						190,036						188,655
Less accumulated depreciation and amortization, including accumulated amortization of finance leases						(107,243)						(101,798)
Property, plant, and equipment - net						$	82,793					$	86,857

September 30,
2017 December 31,
2016
Land $ 14,866
$ 14,826
Improvements to land and leaseholds 17,404
17,408
Buildings 34,503
33,910
Machinery and equipment, including equipment under capitalized leases 120,414
118,060
Construction in progress 1,431
1,291
188,618
185,495
Less accumulated depreciation and amortization, including accumulated amortization of capitalized leases 90,082
81,522
$ 98,536
$ 103,973

Depreciation expense was $2,755 and $2,803 for the three months ended September 30, 2019 and 2018, respectively, and $8,295 and $8,685 for the nine months ended September 30, 2019 and 2018, respectively.

We review our property, plant, and equipment for recoverability whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. We recognize an impairment loss if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. There were ~~no asset~~0 impairments of property, plant, and equipment during the nine months ended September 30, ~~2017.~~2019 and 2018.

Depreciation expense for the three-month periods ended September 30, 2017 and 2016 was $3,178 and $3,295, respectively. For the nine-month periods ended September 30, 2017 and 2016, depreciation expense was $9,705 and $10,620, respectively.Note 8. Leases

7. ~~INVESTMENTS~~

The Company is a member of a joint venture, L B Pipe & Coupling Products, LLC (“L B Pipe JV”), in which it maintains a 45% ownership interest. L B Pipe JV manufactures, markets, and sells various machined components and precision coupling products for the energy, water well, and construction markets and is scheduled to terminate on June 30, 2019.

~~Under applicable guidance for variable interest entities in ASC 810, “Consolidation,”~~On January 1, 2019, the Company ~~previously determined that L B Pipe JV was a variable interest entity. The Company concluded that it was not~~adopted ASU 2016-02 and all the ~~primary beneficiary~~related amendments using the modified retrospective approach, which resulted in an increase in assets of ~~the variable interest entity, as the Company~~$13,585 and an increase in current and long-term liabilities of $3,322 and $10,263, respectively. This adoption did not ~~have a controlling financial interest and did not have the power to direct the activities that most significantly impact the economic performance~~affect our results of ~~L B Pipe JV.~~

During the quarter ended September 30, 2017, pursuant to the limited liability company agreement, the Company determined to sell its 45% ownership interest to the other 45% equity holder. The Company concluded that it has met the criteria under applicable guidance for a long-lived asset to be held for sale, and has, accordingly, reclassified L B Pipe JV investment of $4,288 as a current asset held for sale within other current assets. The asset was subsequently remeasured to its fair market value of $3,875. The difference between the fair market value and the Company's carrying amount of $413 was recorded as an other-than-temporary impairment for the three and nine months ended September 30, 2017.

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

The Company recorded equity in the income of L B Pipe JV of $434 and loss of $276 for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, the Company recorded equity in the income of L B Pipe JV of $386 and loss of $1,001, respectively.

During 2016, the Company and the other 45% member each executed a revolving line of credit with L B Pipe JV with an available limit of $1,350. The Company and the other 45% member each loaned $1,235 to L B Pipe JV in an effort to maintainoperations, cash flows, or our compliance with ~~L B Pipe JV’s debt~~the covenants ~~with an unaffiliated bank. The Company is to receive its outstanding loan balance at the 45% equity interest sale date.~~

~~The Company’s exposure to loss results from its capital contributions and loans, net~~ of the Company’s share of L B Pipe JV’s income or loss, and its net investment in the direct financing lease covering the facility used by L B Pipe JV for its operations, which is described below. The carrying amounts with the Company’s maximum exposure to loss at September 30, 2017 and December 31, 2016, respectively, are as follows:

September 30,
2017 December 31,
2016
L B Pipe JV equity method investment $ 3,875
$ 3,902
Revolving line of credit 1,235
1,235
Net investment in direct financing lease 770
871
$ 5,880
$ 6,008

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

~~The following is a schedule of the direct financing minimum lease payments for the remainder of 2017 and the years 2018 and thereafter:~~

Minimum Lease Payments
2017 $ 35
2018 150
2019 585
$ 770

8. ~~LONG-TERM DEBT~~

~~United States~~

~~Long-term debt consists of the following:~~

September 30,
2017 December 31,
2016
Revolving credit facility $ 123,494
$ 127,073
Term loan 13,131
30,000
Capital leases and financing agreements 1,660
2,492
Total 138,285
159,565
Less current maturities 9,887
10,386
Long-term portion $ 128,398
$ 149,179

~~On November 7, 2016, the Company, its domestic subsidiaries, and certain of its Canadian subsidiaries entered into the Second Amendment (the “Second Amendment”) to the Second~~ Amended and Restated Credit Agreement dated March 13, 2015, and as amended by the ~~First~~Second Amendment dated ~~June 29,~~November 7, 2016, ~~(the “Amended~~or the covenants of the Third Amended and Restated Credit Agreement dated April 30, 2019.

We determine if an arrangement is a lease at its inception. Operating leases are included in “Operating lease right-of-use assets,” “Other current liabilities,” and “Long-term operating lease liabilities” within our Condensed Consolidated Balance Sheets. Finance leases are included in “Property, plant, and equipment - net,” “Current maturities of long-term debt,” and “Long-term debt” in our Condensed Consolidated Balance Sheets.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. We use the implicit rate when readily determinable. The operating lease right-of-use asset also includes indirect costs incurred and lease payments made prior to the commencement date, less any lease incentives received. Our lease terms may include options to extend or terminate the lease and will be recognized when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components that we account for as a single lease component. Also, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease right-of-use assets and liabilities.

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Finance lease and lessor accounting recognition has remained substantially unchanged under ASU 2016-02. The adoption of ASU 2016-02 had no impact on the Company's balance sheet, results of operations, or cash flows for finance leases.

The Company has operating and finance leases for manufacturing facilities, corporate offices, sales offices, vehicles, and certain equipment. As of September 30, 2019, our leases had remaining lease terms of 1 to 12 years, some of which include options to extend the leases for up to 12 years, and some of which include options to terminate the leases within 1 year. As of September 30, 2019, the Company’s operating leases had a weighted average remaining lease term of 6 years and a weighted average discount rate of 5.0%. As of September 30, 2019, the Company’s finance leases had a weighted average remaining lease term of 2 years and a weighted average discount rate of 4.3%.

The balance sheet components of the Company's leases were as follows as of September 30, 2019:


						September 30, 2019
Operating leases
Operating lease right-of-use assets						$	13,234
Other current liabilities						$	3,131
Long-term operating lease liabilities						10,103
Total operating lease liabilities						$	13,234
Finance leases
Property, plant, and equipment						$	3,448
Accumulated amortization						(2,828)
Property, plant, and equipment - net						$	620
Current maturities of long-term debt						$	478
Long-term debt						142
Total finance lease liabilities						$	620

The components of lease expense within the Company's statements of operations were as follows for the three and nine months ended September 30, 2019:


						Three Months Ended						Nine Months Ended
						September 30, 2019						September 30, 2019
Finance lease cost:
Amortization of finance leases						$	182					$	539
Interest on lease liabilities						16						37
Operating lease cost						992						2,822
Sublease income						—						(18)
Total lease cost						$	1,190					$	3,380

The cash flow components of the Company's leases were as follows for the nine months ended September 30, 2019:


						Nine Months Ended
						September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	(3,287)

Financing cash flows from finance leases						(539)
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases						$	2,459

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As of September 30, 2019, estimated annual maturities of lease liabilities remaining for the year ending December 31, 2019 and thereafter were as follows:


						Operating Leases						Finance Leases
Remaining 2019						$	1,072					$	179
2020						3,438						424
2021						2,434						105
2022						2,148						52
2023						1,671						—
2024 and thereafter						5,054						—
Total undiscounted lease payments						15,817						760
Interest						(2,583)						(140)
Total						$	13,234					$	620

Note 9. Long-term Debt and Related Matters

Long-term debt consisted of the following:


						September 30, 2019						December 31, 2018
Revolving credit facility						$	48,004					$	74,008
Term loan						24,375						—
Finance leases and financing agreements						620						974
Total						72,999						74,982
Less current maturities						(2,978)						(629)
Long-term portion						$	70,021					$	74,353

On April 30, 2019, the Company, its domestic subsidiaries, and certain of its Canadian and European subsidiaries (collectively, the “Borrowers”), entered into the Third Amended and Restated Credit Agreement (“Amended Credit Agreement”), with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank, ~~of Pennsylvania,~~N.A., and ~~Branch Banking and Trust Company.~~BMO Harris Bank, N.A. This ~~Second Amendment modified~~Amended Credit Agreement modifies the ~~Amended and Restated Credit Agreement,~~prior revolving credit facility, which had a maximum ~~revolving~~ credit line of ~~$275,000.~~$195,000 and extends the maturity date from March 13, 2020 to April 30, 2024. The ~~Second Amendment reduced the permitted~~Amended Credit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of the Borrowers up to ~~$195,000~~$140,000 with a sublimit of the equivalent of $25,000 U.S. dollars that is available to the Canadian and ~~provided~~

United Kingdom borrowers in the aggregate. The Amended Credit Agreement’s incremental loan feature permits the Company to increase the available revolving borrowings under the facility by up to an additional $50,000 and provides for additional term loan ~~borrowing~~borrowings of ~~$30,000 (the “Term Loan”). The Term Loan is~~up to $25,000 subject to ~~quarterly straight line amortization until fully paid off upon~~ the ~~final payment on January 1, 2020. Furthermore,~~Company’s receipt of increased commitments from existing or new lenders and the satisfaction of certain ~~matters, including excess cash flow, asset sales,~~conditions.

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

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

~~The Second Amendment further provided for modifications~~bear interest at rates based upon either the base rate or Euro-rate plus applicable margins. Applicable margins are dictated by the ratio of the Company’s total net indebtedness to the ~~financial covenants~~Company’s consolidated EBITDA for four trailing quarters, as defined in the Amended ~~and Restated~~ Credit Agreement. The ~~Second Amendment calls for~~base rate is the ~~elimination~~highest of (a) the ~~Maximum Leverage Ratio covenant through~~Overnight Bank Funding Rate plus 50 basis points, (b) the ~~quarter ending June 30, 2018. After that period,~~Prime Rate, or (c) the Maximum Gross Leverage Ratio covenant will be reinstated to require a maximum ratio of 4.25 Consolidated Indebtedness to 1.00 Gross Leverage for the quarter ending September 30, 2018, and 3.75 to 1.00 for all periods thereafter until the maturity date of the credit facility. The Second Amendment also includes a Minimum Last Twelve Months EBITDA covenant (“Minimum EBITDA”). For the quarter ended December 31, 2016 through the quarter ended June 30, 2017, the Minimum EBITDA had to be at least $18,500. For each quarter thereafter, through the quarter ending June 30, 2018, the Minimum EBITDA requirement will increase by various increments. The incremental Minimum EBITDA requirement for the period ended September 30, 2017 was at least $23,000. At June 30, 2018, the Minimum EBITDA requirement will be $31,000. After the quarter ending June 30, 2018, the Minimum EBITDA covenant will be eliminated through the maturity of the Amended and Restated Credit Agreement. The Second Amendment also includes a Minimum Fixed Charge Coverage Ratio covenant. The covenant represents the ratio of the Company’s fixed charges to the last twelve months of EBITDA, and is required to be a minimum of 1.00 to 1.00 through the quarter ended December 31, 2017 and 1.25 to 1.00 for each quarter thereafter through the maturity of the credit facility. The final financial covenant included in the Second Amendment is a Minimum Liquidity covenant which calls for a minimum of $25,000 in undrawn availability on the revolving credit loan at all times through the quarter ending June 30, 2018. The Second Amendment includes several changes to certain non-financial covenantsDaily Euro-rate plus 100 basis points (each as defined in the Amended Credit Agreement). The base rate and ~~Restated~~Euro-rate spreads range from 25 to 125 basis points and 125 to 225 basis points, respectively.

The Amended Credit ~~Agreement. Through~~Agreement includes three financial covenants: (a) Maximum Gross Leverage Ratio, defined as the ~~maturity date~~Company’s consolidated Indebtedness divided by the Company’s consolidated EBITDA, which must not exceed (i) 3.25 to 1.00 for all testing periods other than during an Acquisition Period, as defined in the Amended Credit Agreement, and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period; (b) Minimum Consolidated Fixed Charge Coverage Ratio, defined as the Company's consolidated EBITDA divided by the Company's Fixed Charges, as defined in the Amended Credit Agreement, which must be less than 1.25 to 1.00; and (c) Minimum Working Capital to Revolving Facility Usage Ratio, defined as the sum of the ~~loan,~~inventory and accounts receivable of the Borrowers and certain other Guarantors divided by the Revolving Facility Usage, as defined in the Amended Credit Agreement, which must be less than 1.40 to 1.00.

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Table of Contents

The Amended Credit Agreement permits the Company ~~is now prohibited from making any future acquisitions. The limitation on permitted annual~~to pay dividends and make distributions and redemptions with respect to its stock provided no event of ~~dividends~~default or ~~redemptions~~potential default (as defined in the Amended Credit Agreement) has occurred prior to or after giving effect to the dividend, distribution, or redemption. Additionally, the Amended Credit Agreement permits the Company to complete acquisitions so long as (a) no event of default or potential default has occurred prior to or as a result of such acquisition; (b) the liquidity of the ~~Company’s stock was decreased from $4,000~~Borrowers is not less than $25,000 prior to ~~$1,700. The~~giving effect to such acquisition; and (c) the aggregate ~~limitation on loans to and investments in non-loan parties was decreased from $10,000 to $5,000. Furthermore,~~consideration for the ~~limitation on asset sales has been decreased from $25,000 annually with a carryover of up to $15,000 from the prior year to $25,000~~acquisition does not exceed: (i) $50,000 per acquisition; (ii) $50,000 in the aggregate ~~through~~for multiple acquisitions entered into during four consecutive quarters; and (iii) $100,000 in the ~~maturity date~~aggregate over the term of the ~~credit facility.~~Amended Credit Agreement.

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

As of September 30, ~~2017,~~2019, L.B. Foster was in compliance with the ~~Second Amendment’s covenants.~~

~~The Second Amendment provided for the elimination of the three lowest tiers of the pricing grid that had previously been defined~~covenants in the ~~First Amendment. Upon execution~~Amended Credit Agreement.

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

At September 30, ~~2017, L.B. Foster~~2019, the Company had outstanding letters of credit of approximately ~~$425~~$836 and had net available borrowing capacity of ~~$46,081.~~$91,160. The maturity date of the facility is ~~March 13, 2020.~~April 30, 2024.

~~United Kingdom~~

~~A subsidiary of~~On April 29, 2019, the ~~Company has a~~ credit facility with NatWest Bank for ~~its~~the Company's United Kingdom operations which includes an overdraft availability of £1,500 pounds sterling (approximately $2,010 at September 30, 2017). This credit facility supports the subsidiary’s working capital requirements and is collateralized by substantially all of the assets of its United Kingdom operations. The interest rate on this facility is the financial institution’s base rate plus 2.50%~~. Outstanding performance bonds reduce availability under this credit facility. The subsidiary of the Company had no outstanding borrowings under this credit facility at September 30, 2017. There~~ was approximately $999 in outstanding guarantees (as defined in the underlying agreement) at September 30, 2017. This credit facility was renewed and amended during the fourth quarter of 2016 with all underlying terms and conditions remaining unchanged as a result of the renewal. It is the Company’s intention to renew this credit facility with NatWest Bank during the annual review within the forth quarter of 2017.terminated.

The United Kingdom credit facility contains certain financial covenants that require the subsidiary to maintain senior interest and cash flow coverage ratios. The subsidiary was in compliance with these financial covenants at September 30, 2017. The subsidiary had available borrowing capacity of $1,011 at September 30, 2017.

9. ~~FAIR VALUE MEASUREMENTS~~Note 10. Fair Value Measurements

The Company determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions of what market participants would use. The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

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

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

LIBOR-based interest rate swaps - To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company entered into forward starting LIBOR-based interest rate swaps with notional values totaling $50,000. The fair value of the interest rate swaps is based on market-observable forward interest rates and represents the estimated amount that the Company would pay to terminate the agreements. As such, the swap agreements are classified as Level 2 within the fair value hierarchy. AtAs of September 30, ~~2017,~~2019, the interest rate swaps were recorded within ~~other~~“Other accrued liabilities.”


						Fair Value Measurements at Reporting Date																																													Fair Value Measurements at Reporting Date
						September 30, 2019						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)									December 31, 2018						Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Term deposits						$	17					$	17					$	—					$	—								$	16					$	16					$	—					$	—
Interest rate swaps						—						—						—						—									675						—						675						—
Total assets						$	17					$	17					$	—					$	—								$	691					$	16					$	675					$	—
Interest rate swaps						$	657					$	—					$	657					$	—								$	—					$	—					$	—					$	—
Total liabilities						$	657					$	—					$	657					$	—								$	—					$	—					$	—					$	—

Fair Value Measurements at Reporting Date and Using Fair Value Measurements at Reporting Date and Using
September 30,
2017 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) December 31,
2016 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Term deposits $ 17
$ 17
$ —
$ —
$ 16
$ 16
$ —
$ —
Total assets $ 17
$ 17
$ —
$ —
$ 16
$ 16
$ —
$ —
Interest rate swaps $ 323
$ —
$ 323
$ —
$ 334
$ —
$ 334
$ —
Total liabilities $ 323
$ —
$ 323
$ —
$ 334
$ —
$ 334
$ —

The interest rate swaps are accounted for as ~~fair value~~cash flow hedges and ~~substantially~~the objective of the hedges is to offset the ~~changes in fair value~~expected interest variability on payments associated with the interest rate of ~~the hedged portion of the underlying debt that are attributable to the changes in market risk. Therefore, the~~our debt. The gains and losses related to ~~changes in the fair value of~~ the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated Balance Sheets and included in ~~interest income or~~“Interest expense - net” in our Condensed Consolidated Statements of ~~Operations.~~Operations as the interest expense from our debt is recognized. For the three months ended September 30, ~~2017,~~2019 and 2018, we recognized interest ~~expense from interest rate swaps was $98. For~~income of $21 and $18, respectively, and for the nine

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months ended September 30, ~~2017,~~2019 and 2018, we recognized interest income of $142 and interest expense of $16, respectively, from interest rate ~~swaps was $302.~~swaps.

In accordance with the provisions of ~~ASC~~the FASB's Accounting Standards Codification (“ASC”) Topic 820, ~~"Fair~~“Fair Value Measurement,"” the Company measures certain nonfinancial assets and liabilities at fair value, which are recognized or disclosed on a nonrecurring basis. During the quarter ended September 30, 2017, a $413 other-than-temporary impairment charge was recorded against L B Pipe JV assets held for sale utilizing a Level 2 fair value measurement. The impairment was a result of the Company's carrying value being greater than the agreed-upon sales price, or fair market value. See

Note ~~7 Investments of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.~~

~~10.~~ ~~EARNINGS PER COMMON SHARE~~11. Earnings Per Common Share

(Share amounts in thousands)

The following table sets forth the computation of basic and diluted earnings ~~(loss)~~ per common share for the periods indicated:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018
Numerator for basic and diluted earnings per common share:
Net income						$	3,064					$	6,408					$	16,318					$	9,984
Denominator:
Weighted average shares outstanding						10,420						10,365						10,406						10,361
Denominator for basic earnings per common share						10,420						10,365						10,406						10,361
Effect of dilutive securities:
Stock compensation plans						254						124						225						120
Dilutive potential common shares						254						124						225						120
Denominator for diluted earnings per common share - adjusted weighted average shares outstanding						10,674						10,489						10,631						10,481
Basic earnings per common share						$	0.29					$	0.62					$	1.57					$	0.96
Diluted earnings per common share						$	0.29					$	0.61					$	1.53					$	0.95

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

~~There were approximately 34 and 80 anti-dilutive shares during the three- and nine-month periods ended September 30, 2016, respectively, excluded from the above calculation.~~

~~11.~~ ~~STOCK-BASED COMPENSATION~~Note 12. Stock-based Compensation

The Company applies the provisions of ~~FASB~~ ASC 718, “Compensation – Stock Compensation,” to account for the Company’s stock-based compensation. Stock-based compensation cost is measured at the grant date based on the calculated fair value of the award and is recognized over the employees’ requisite service ~~period.~~periods. The Company recorded stock compensation expense ~~of $503 and $320 for the three-month periods ended September 30, 2017 and 2016, respectively,~~ related to ~~fully-vested stock awards,~~ restricted stock awards and performance ~~unit awards. Stock compensation expense~~share units of ~~$1,228~~$876 and ~~$875 was recorded~~$934 for the ~~nine-month periods~~three months ended September 30, ~~2017~~2019 and ~~2016, respectively. At~~2018, respectively, and $2,910 and $2,838 for the nine months ended September 30, ~~2017,~~2019 and 2018, respectively. As of September 30, 2019, unrecognized compensation expense for unvested awards ~~that the Company expects to vest~~ approximated ~~$4,140.~~$5,063. The Company will recognize this expense over the upcoming 3.5 years through ~~March 2021.~~April 2023.

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

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

Restricted Stock Awards and Performance ~~Unit Awards~~Share Units

Under the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance ~~unit awards.~~share units. The forfeitable restricted stock awards granted ~~prior to March 2015 generally time-vest after a four-year period, and those granted subsequent to March 2015~~ generally time-vest ratably over a ~~three-year~~three-year period, unless indicated otherwise by the underlying restricted stock agreement. Since May 2018, awards of restricted stock are subject to a minimum one-year vesting period, including those granted to non-employee directors. Prior to May 2018, awards to non-employee directors were made in fully-vested shares. Performance ~~unit awards~~share units are offered annually under separate ~~three-year~~three-year long-term incentive programs. Performance share units are subject to forfeiture and will be converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples, as defined in the underlying program. If the Company’s estimate of the number of performance ~~stock awards~~share units expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period.

~~During the quarter ended June 30,~~Since May 1, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the 2006 Omnibus Incentive Plan, which permits Non-Employee Directors of the Companynon-employee directors have been permitted to defer receipt of ~~earned~~annual stock awards and equity elected to be received in lieu of quarterly cash ~~and/or~~compensation. If so elected, these deferred stock ~~compensation for~~units will be issued as common stock six months after separation from their service on the ~~Board. During~~Board of Directors. Since May 2018, there have been no non-employee directors who elected the ~~quarter ended March 31, 2017,~~option to receive deferred stock units of the Company’s common stock in lieu of director cash compensation.

18

Table of Contents

In February 2019, the Compensation Committee approved the ~~2017~~2019 Performance Share Unit Program and the Executive Annual Incentive Compensation Plan (consisting of cash and equity components). The Compensation Committee also certified the actual Company performance achievement ~~of participants~~ in the ~~2014~~2016 Performance Share Unit ~~Program. Actual~~Program, which actual performance resulted in no payout relative to the ~~2014~~2016 Performance Share Unit Program target performance metrics.

The following table summarizes the restricted stock ~~award,~~awards, deferred stock ~~award,~~units, and performance ~~unit award~~share units activity for the ~~period~~nine months ended September 30, ~~2017:~~2019:


						Restricted Stock						Deferred Stock Units						Performance Share Units						Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2018						191,825						41,774						300,373						$	18.61
Granted						62,125						12,304						89,092						18.63
Vested						(87,782)						—						—						19.51
Adjustment for incentive awards not expected to vest						—						—						(15,015)						19.26
Cancelled and forfeited						(6,500)						—						—						20.11
Outstanding as of September 30, 2019						159,668						54,078						374,450						$	18.58

Restricted
Stock Deferred
Stock Performance
Stock Units Weighted Average
Grant Date Fair Value
Outstanding at December 31, 2016 79,272
—
63,690
$ 21.66
Granted 170,196
24,927
120,583
14.24
Vested (22,808 ) —
—
28.88
Adjustment for incentive awards expected to vest —
—
53,385
18.33
Cancelled (44,854 ) —
(49,062 ) 15.40
Outstanding at September 30, 2017 181,806
24,927
188,596
$ 16.48

~~12.~~ ~~RETIREMENT PLANS~~Note 13. Retirement Plans

Retirement Plans

The Company has ~~seven~~3 retirement plans that cover its hourly and salaried employees in the United States: ~~three~~1 defined benefit ~~plans, all of~~plan, which ~~are~~is frozen, and ~~four~~2 defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Company’s policy and investment guidelines applicable to each respective plan. The Company’s policy is to contribute at least the minimum in accordance with the funding standards of ERISA.

The ~~Company’s subsidiary, L.B. Foster Rail Technologies, Inc. (“Rail Technologies”),~~Company maintains ~~two~~2 defined contribution plans for its employees in Canada, as well as aone post-retirement benefit plan. ~~In the United Kingdom, Rail Technologies~~The Company also maintains ~~two~~2 defined contribution plans and aone defined benefit ~~plan.~~plan for its employees in the United Kingdom.

United States Defined Benefit ~~Plans~~Plan

Net periodic pension costs for the United States defined benefit pension ~~plans~~plan for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2019 and ~~2016 are~~2018 were as follows:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018

Interest cost						$	162					$	155					$	486					$	466
Expected return on plan assets						(180)						(213)						(540)						(640)
Recognized net actuarial loss						31						24						94						72
Net periodic pension cost (income)						$	13					$	(34)					$	40					$	(102)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Service cost $ —
$ 9
$ —
$ 27
Interest cost 171
186
513
559
Expected return on plan assets (178 ) (179 ) (533 ) (538 )
Recognized net actuarial loss 33
69
98
207
Net periodic pension cost $ 26
$ 85
$ 78
$ 255

~~The~~During the nine months ended September 30, 2019, the Company ~~does not expect to contribute~~contributed approximately $550 to its United States defined benefit ~~plans in 2017.~~pension plan and expects no additional contributions during the remainder of 2019.

United Kingdom Defined Benefit ~~Plans~~Plan

Net periodic pension costs for the United Kingdom defined benefit pension plan for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2019 and ~~2016 are~~2018 were as follows:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018
Interest cost						$	53					$	51					$	159					$	153
Expected return on plan assets						(60)						(70)						(180)						(210)
Amortization of prior service costs and transition amount						10						5						30						15
Recognized net actuarial loss						52						48						156						144
Net periodic pension cost						$	55					$	34					$	165					$	102

19

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest cost $ 56
$ 73
$ 168
$ 223
Expected return on plan assets (67 ) (82 ) (201 ) (250 )
Amortization of prior service costs and transition amount 4
5
12
15
Recognized net actuarial loss 72
38
216
116
Net periodic pension cost $ 65
$ 34
$ 195
$ 104

Table of Contents

United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans. ~~Employer~~The Company anticipates contributions of approximately ~~$251 are anticipated~~$241 to the United Kingdom ~~Rail Technologies~~ pension plan during ~~2017.~~2019. For the nine months ended September 30, ~~2017,~~2019, the Company contributed approximately ~~$188~~$187 to the plan.

Defined Contribution Plans

The Company sponsors ~~eight~~6 defined contribution plans for hourly and salaried employees across our domestic and international facilities. The following table summarizes the expense associated with the contributions made to these ~~plans.~~plans:


						Three Months Ended September 30,																		Nine Months Ended September 30,
						2019						2018						2019						2018
United States						$	656					$	766					$	1,887					$	2,080
Canada						29						23						102						91
United Kingdom						103						114						328						328
						$	788					$	903					$	2,317					$	2,499

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
United States $ 415
$ 152
$ 1,276
$ 1,289
Canada 53
46
167
164
United Kingdom 93
64
306
281
$ 561
$ 262
$ 1,749
$ 1,734

~~13.~~ ~~COMMITMENTS AND CONTINGENT LIABILITIES~~Note 14. Commitments and Contingent Liabilities

Product Liability Claims

The Company is subject to product warranty claims that arise in the ordinary course of its business. For certain manufactured products, the Company maintains a product warranty accrual, which is adjusted on a monthly basis as a percentage of cost of sales. ~~The~~In addition, the product warranty accrual is adjusted periodically ~~adjusted~~ based on the identification or resolution of known individual product warranty claims.

The following table sets forth the Company’s product warranty accrual:


						Warranty Liability
Balance as of December 31, 2018						$	2,057
Additions to warranty liability						515
Warranty liability utilized						(1,350)
Balance as of September 30, 2019						$	1,222

Warranty Liability
Balance at December 31, 2016 $ 10,154
Additions to warranty liability 3,203
Warranty liability utilized (3,743 )
Balance at September 30, 2017 $ 9,614

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

Union Pacific Railroad ~~(UPRR)~~(“UPRR”) Concrete Tie Matter

On ~~July 12, 2011, UPRR notified (the “UPRR Notice”)~~March 13, 2019, the Company and its subsidiary, CXT Incorporated (“CXT”)~~, of~~ entered into a warranty claim under CXT’s 2005 supply contract relating to the sale of pre-stressed concrete railroad ties to UPRR. UPRR asserted that a significant percentage of concrete ties manufactured in 2006 through 2011 at CXT’s Grand Island, NE facility failed to meet contract specifications, had workmanship defects and were cracking and failing prematurely. Of the 3 million ties manufactured between 1998 and 2011 from the Grand Island, NE facility, approximately 1.6 million ties were sold during the period UPRR had claimed nonconformance.The 2005 contract called for each concrete tie which failed to conform to the specifications or had a material defect in workmanship to be replaced with 1.5 new concrete ties, provided, that, within five years of the sale of a concrete tie, UPRR notified CXT of such failure to conform or such defect in workmanship.

~~The UPRR Notice did not specify how many ties manufactured during this period were defective nor the exact nature of the alleged workmanship defect.~~

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

~~2012~~

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

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

~~2013~~

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

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

~~2014~~

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

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

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

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

~~2015~~

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

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

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

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

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

~~2016~~

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

~~2017~~

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

The expected payments under the UPRR ~~or any settlement or judgment amounts, will reasonably approximate our estimated accruals~~Settlement Agreement for ~~loss contingencies. Future potential costs pertaining to UPRR’s claims and~~ the ~~outcome~~remainder of the ~~UPRR litigation could result in a material adverse effect on our results~~year ending December 31, 2019 and thereafter are as follows:


Year Ending December 31,
Remainder of 2019						$	4,000
2020						8,000
2021						8,000
2022						8,000
2023						8,000
2024						8,000
Total						$	44,000

20

Table of ~~operations, financial condition, and cash flows.~~Contents

As a result of the preliminary status of the litigation and the uncertainty of any potential judgment, an estimate of any additional loss, or a range of additional loss, associated with this litigation cannot be made based upon currently available information.

Environmental and Legal Proceedings

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

On June 5, 2017, a General Notice Letter was received from the United States Environmental Protection Agency ~~("EPA"~~(“EPA”) indicating that the Company may be a potentially responsible party (“PRP”) regarding the Portland Harbor Superfund Site cleanup along with numerous other companies. More than 140 other companies received such a notice. The Company and a predecessor owned and operated a facility near the harbor site for a period prior to 1982. By letter dated March 16, 2018, the EPA informed the Company of the proposed schedule for consent decree negotiations to implement the Portland Harbor Superfund Site Record of Decision, with negotiations scheduled to commence by the end of 2019, and the EPA also set a proposed deadline of June 2019 to conclude negotiations with PRPs for the performance of remedial design work in the harbor. The net present value and undiscounted costs of the selected remedy throughout the harbor site are estimated by the EPA to be approximately $1.1 billion and $1.7 billion, respectively, and the remedial work is expected to take as long as 13 years to complete. The Company is reviewing the basis for its identification by the EPA and the nature of the historic operations of ~~an L.B. Foster~~a Company predecessor onnear the site. ~~Management~~Additionally, the Company executed a PRP agreement which provides for a private allocation process among almost 100 PRPs in a working group whose work is ongoing. We cannot predict the ultimate impact of these proceedings because of the large number of PRPs involved throughout the harbor site, the degree of contamination of various wastes, varying environmental impacts throughout the harbor site, the scarcity of data related to the facility once operated by the Company and a predecessor, and the speculative nature of the remediation costs. Based upon information currently available, management does not believe that the Company’s alleged PRP status regarding the Portland Harbor Superfund Site or other compliance with the present environmental protection laws will have a material adverse effect on the financial condition, results of operations, cash flows, competitive position, or capital expenditures of the Company.

AtAs of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the Company maintained environmental reserves approximating ~~$6,255~~$6,058 and ~~$6,270,~~$6,128, respectively. The following table sets forth the Company’s environmental obligation:


						Environmental liability
Balance as of December 31, 2018						$	6,128
Additions to environmental obligations						3
Environmental obligations utilized						(73)
Balance as of September 30, 2019						$	6,058

Environmental liability
Balance at December 31, 2016 $ 6,270
Additions to environmental obligations 7
Environmental obligations utilized (22 )
Balance at September 30, 2017 $ 6,255

The Company is also subject to other legal proceedings and claims that arise in the ordinary course of its business. Legal actions are subject to inherent uncertainties, and future events could change management's assessment of the probability or estimated amount of potential losses from pending or threatened legal actions. Based on available information, it is the opinion of management that the ultimate resolution of pending or threatened legal actions, both individually and in the aggregate, will not result in losses having a material adverse effect on the Company's financial position or liquidity atas of September 30, ~~2017.~~2019.

If management believes that, based on available information, it is at least reasonably possible that a material loss (or additional material loss in excess of any accrual) will be incurred in connection with any legal actions, the Company discloses an estimate of the possible loss or range of loss, either individually or in the aggregate, as appropriate, if such an estimate can be made, or discloses that an estimate cannot be made. Based on the Company's assessment atas of September 30, ~~2017,~~2019, no such disclosures were considered necessary.

~~14.~~ ~~INCOME TAXES~~Note 15. Income Taxes

For the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the Company recorded an income tax ~~benefit~~provision of ~~$208~~$51 and $18 on ~~pretax~~pre-tax income of ~~$3,014~~$3,115 and ~~$3,379 on pretax losses of $9,361,~~$6,426, respectively, for an effective income tax rate of ~~(6.9)%~~1.6% and ~~36.1%~~0.3%, respectively. For the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the Company recorded an income tax provision of ~~$698~~$2,374 and $1,271 on ~~pretax~~pre-tax income of ~~$4,522~~$18,692 and ~~an income tax benefit of $42,125 on pretax losses of $142,935,~~$11,255, respectively, for an effective income tax rate of ~~15.4%~~12.7% and ~~29.5%~~11.3%, respectively. The ~~Company’s~~Company's effective tax ~~provision~~rate for the three and nine months ended September 30, ~~2017 is~~2019 differed from the federal statutory rate of 21% primarily comprised of taxes on our Canadian and United Kingdom operations. However, as a result of the U.S. consolidated group's current year income, the Company's estimated annual effective tax rate was adjusted during the third quarterdue to ~~include~~ the realization of a portion of its U.S. deferred tax assets previously offset by a valuation allowance. The Company continued to maintain a full valuation allowance against its U.S. deferred tax assets, which is likely to result in significant variability of the effective tax rate in the current year. Changes in ~~pretax~~pre-tax income projections and the mix of income across jurisdictions could also impact the effective income tax rate.

~~15.~~ ~~SUBSEQUENT EVENTS~~Note 16. Subsequent Events

~~Management evaluated all~~On October 29, 2019, the Company announced to certain union and non-union employees at our CXT Concrete Buildings facility, located in Spokane, Washington, the intent to relocate the pre-fabricated concrete buildings manufacturing operation to Boise, Idaho. This move is part of an initiative focusing on regional growth opportunities and logistical savings associated with fabricating product in a more centralized location closer to the Company’s existing and prospective customer base. The Company expects to cease pre-fabricated building operations in Spokane, Washington, and commence operations in Boise, Idaho, in the first quarter of 2020.

21

Table of Contents

As a result of this relocation, the Company expects to incur certain exit and disposal charges consisting of severance, relocation, and employee retention expense, as well as site clean-up and facility restoration expense, totaling approximately $1,000 to $1,500 in its Construction Products operating segment. The approximate expense resulting from this relocation could change materially as a result of certain factors such as employee acceptances of the ~~activity~~severance packages offered and unknown or unforeseen costs as part of winding up operations at the Company and concluded that no subsequent events have occurred that would require recognition in the Condensed Consolidated Financial Statements or disclosure in the Notes to Condensed Consolidated Financial Statements.Spokane, Washington fabrication facility.

22

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Dollars in thousands, except share data)

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.”~~Operations” (“MD&A”). Forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are based on management's current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, L.B. Foster Company’s (the ~~“Company”~~“Company’s”) expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources, and results of operations; ~~the outcome of litigation and product warranty claims;~~ decisions regarding our strategic growth initiatives, market position, and product development; all of which are based on current estimates that involve inherent risks and uncertainties. The Company has based these forward-looking statements on current expectations and assumptions about future events.development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: a resumption of the economic slowdown we experienced in previous years in the markets we serve; a decrease in freight or passenger rail traffic; environmental matters, including any costs associated with any remediation and monitoring; ~~a resumption of the economic slowdown we have experienced in the previous two years in the markets we serve;~~ the risk of doing business in international markets; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses and realize anticipated benefits; costs of and impacts associated with shareholder activism; ~~a decrease in freight or passenger rail traffic;~~ the timeliness and availability of materials from our major suppliers as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers' concerns about conflict minerals; labor disputes; cyber-security risks such as data security breaches, malware, “hacking,” and identity theft, a failure of which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses or an adverse effect to our reputation; the continuing effective implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit ~~agreement;~~agreement or the terms of any new credit agreement, and reforms regarding the use of LIBOR as a benchmark for establishing applicable interest rates; the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact these amounts; foreign currency fluctuations; inflation; domestic and foreign government ~~regulations;~~regulations, including tariffs; economic conditions and regulatory changes caused by the United Kingdom’s pending exit from the European ~~Union;~~Union, including the possibility of a “no-deal Brexit;” sustained declines in energy prices; a lack of state or federal funding for new infrastructure projects; an increase in manufacturing or material costs; the ultimate number of concrete ties that will have to be replaced pursuant to the previously disclosed product warranty claim of the Union Pacific Railroad (“UPRR”) and an overall resolution of the related contract claims as well as the possible costs associated with the outcome of the lawsuit filed by the UPRR; the loss of future revenues from current customers; and risks inherent in ~~litigation.~~litigation and the outcome of litigation and product warranty claims. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018, or as updated and amended by Item 1A “Risk Factors,” in Part II of our ~~other periodic filings~~Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

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

General Overview

L.B. Foster Company (the “Company”) is a leading manufacturer and distributor of products and services for ~~the~~ transportation and energy infrastructure with locations in North America and Europe. The Company is comprised of three ~~business~~operating segments: Rail Products and Services, Construction Products, and Tubular and Energy Services.

~~Quarter-to-Date Results~~

23

Table of Contents

~~The segment gross profit measures presented within Management's Discussion and Analysis of Financial Condition and~~ Results of ~~Operations ("MD&A") tables constitute non-GAAP financial measures disclosed by management to provide investors and other users information to evaluate~~ the ~~performance~~Quarter


						Three Months Ended September 30,																		Percent Increase/ (Decrease)						Percent of Total Net Sales Three Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Net Sales:
Rail Products and Services						$	67,741					$	84,517					(19.8)		%				43.9		%				50.6		%
Construction Products						47,175						41,534						13.6						30.6						24.9
Tubular and Energy Services						39,360						41,043						(4.1)						25.5						24.5
Total net sales						$	154,276					$	167,094					(7.7)		%				100.0		%				100.0		%

						Three Months Ended September 30,																		Percent Increase/ (Decrease)						Gross Profit Percentage Three Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Gross Profit:
Rail Products and Services						$	14,480					$	16,416					(11.8)		%				21.4		%				19.4		%
Construction Products						6,097						5,770						5.7						12.9						13.9
Tubular and Energy Services						7,115						9,117						(22.0)						18.1						22.2
Total gross profit						$	27,692					$	31,303					(11.5)		%				17.9		%				18.7		%

						Three Months Ended September 30,																		Percent Increase/ (Decrease)						Percent of Total Net Sales Three Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Expenses:
Selling and administrative expenses						$	22,264					$	21,662					2.8		%				14.4		%				13.0		%
Amortization expense						1,655						1,762						(6.1)						1.1						1.1

Interest expense - net						1,079						1,296						(16.7)						0.7						0.8


Other (income) expense - net						(421)						157						**						(0.3)						0.1
Total expenses						$	24,577					$	24,877					(1.2)		%				15.9		%				14.9		%
Income before income taxes						$	3,115					$	6,426					(51.5)		%				2.0		%				3.8		%
Income tax expense						51						18						183.3						0.0						0.0
Net income						$	3,064					$	6,408					(52.2)		%				2.0		%				3.8		%

** Results of the ~~Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocations to the reportable segments:~~calculation are not considered meaningful for presentation purposes.

~~Allows users to understand the operational performance of our reportable segments;~~

Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and

~~Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.~~

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantities as well as production and service costs to better evaluate key profitability drivers and trends that may develop due to industry and competitive conditions.

Three months ended September 30, 2017 Rail Products and
Services Construction
Products Tubular and Energy
Services Total
Reportable Segment Profit $ 3,472
$ 3,387
$ 2,298
$ 9,157
Segment and Allocated Selling & Administrative 9,405
4,620
3,337
17,362
Amortization Expense 940
38
786
1,764
Asset Impairments —
—
—
—
Non-GAAP Segment Gross Profit $ 13,817
$ 8,045
$ 6,421
$ 28,283

Three months ended September 30, 2016 Rail Products and
Services Construction
Products Tubular and Energy
Services Total
Reportable Segment (Loss) Profit $ (2,047 ) $ 1,356
$ (6,966 ) $ (7,657 )
Segment and Allocated Selling & Administrative 8,926
4,783
4,290
17,999
Amortization Expense 958
38
767
1,763
Asset Impairments 4,383
—
2,563
6,946
Non-GAAP Segment Gross Profit $ 12,220
$ 6,177
$ 654
$ 19,051

Percent of Total Net Sales
Three Months Ended Three Months Ended Percent
Increase/
(Decrease)
September 30, September 30,

2017 2016 2017 2016 2017 vs. 2016
Net Sales:
Rail Products and Services $ 62,095
$ 56,891
47.2 % 49.6 % 9.1 %
Construction Products 39,118
34,870
29.7
30.4
12.2
Tubular and Energy Services 30,279
22,883
23.1
20.0
32.3
Total net sales $ 131,492
$ 114,644
100.0 % 100.0 % 14.7 %

Non-GAAP / Reported
Gross Profit Percentage Percent
Increase/
(Decrease)
Three Months Ended Three Months Ended
September 30, September 30,

2017 2016 2017 2016 2017 vs. 2016
Gross Profit:
Non-GAAP Rail Products and Services $ 13,817
$ 12,220
22.3 % 21.5 % 13.1 %
Non-GAAP Construction Products 8,045
6,177
20.6
17.7
30.2
Non-GAAP Tubular and Energy Services 6,421
654
21.2
2.9
**
Non-GAAP Segment gross profit 28,283
19,051

LIFO (expense) income (1,552 ) 917
(1.2 ) 0.8
**
Other (366 ) (165 ) (0.3 ) (0.1 ) 121.8
Total gross profit $ 26,365
$ 19,803
20.1 % 17.3 % 33.1 %
Percent
Increase/
(Decrease)
Percent of Total Net Sales
Three Months Ended Three Months Ended
September 30, September 30,
2017 2016 2017 2016 2017 vs. 2016
Expenses:
Selling and administrative expenses $ 20,218
$ 19,807
15.4 % 17.3 % 2.1 %
Amortization expense 1,764
1,763
1.3
1.5
0.1
Asset impairments —
6,946
—
6.1
(100.0 )
Interest expense 2,026
1,520
1.5
1.3
33.3
Interest income (56 ) (50 ) —
—
12.0
Equity in (income) loss of nonconsolidated investments (50 ) 263
—
0.2
(119.0 )
Other income (551 ) (1,085 ) (0.4 ) (0.9 ) 49.2
Total expenses $ 23,351
$ 29,164
17.8 % 25.4 % (19.9 )%
Income (loss) before income taxes $ 3,014
$ (9,361 ) 2.3 % (8.2 )% 132.2 %
Income tax benefit (208 ) (3,379 ) (0.2 ) (2.9 ) 93.8
Net income (loss) $ 3,222
$ (5,982 ) 2.5 % (5.2 )% 153.9 %



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

Third Quarter ~~2017~~2019 Compared to Third Quarter ~~2016~~2018 – Company Analysis

Net sales of ~~$131,492~~$154,276 for the ~~period~~three months ended September 30, ~~2017 increased~~2019 decreased by ~~$16,848,~~$12,818, or ~~14.7%~~7.7%, compared to the prior year quarter. The ~~change~~decline was attributable to ~~increases~~reductions within our Rail Products and Services segment of ~~32.3%, 12.2%,~~19.8% and ~~9.1%, in~~our Tubular and Energy Services segment of 4.1%. These declines were partially offset by Construction Products ~~and Rail Products and Services, respectively.~~sales increasing by 13.6%.

Gross profit decreased by $3,611 compared to the prior year quarter to $27,692 for the three months ended September 30, 2019. Gross profit margin for the ~~quarter~~three months ended September 30, ~~2017~~2019 was ~~20.1%~~17.9%, or ~~280~~80 basis points (“bps”) ~~higher~~, lower than the prior year quarter. ~~Each~~The decrease in gross profit margin was primarily due to reductions of ~~the three segments contributed to the increase with gains of 1,830 bps, 290~~410 bps and 80100 bps inwithin Tubular and Energy Services and Construction Products, ~~and~~respectively. The decreases were partially offset by an increase in gross profit margin of 200 bps within Rail Products and ~~Services, respectively.~~Services.

Selling and administrative expenses increased by ~~$411~~$602, or ~~2.1% from~~2.8%, compared to the prior ~~year.~~year quarter. The ~~increase~~rise in expense was primarily driven by ~~personnel related spending~~increases in third-party services and personnel-related expenses of ~~$821, which~~$771, rental expense of $180, and bad debt expense of $171 when compared to the prior year quarter. The increase was partially offset by ~~reduced litigation costs~~decreases in legal expenses of $597 related to the Union Pacific Railroad ~~("UPRR") matter~~concrete tie litigation. As a percent of ~~$468.~~

~~During the quarter ended September 30, 2016, the Company recorded total non-cash asset impairments of $6,946 from goodwill~~sales, selling and ~~definite-lived intangible assets.~~

~~Interest expense, net of interest income,~~administrative expenses increased by $500, or 34.0%, as a result of the increase in interest rates on outstanding debt. Other income decreased $534, or 49.2%, which primarily relates to losses on foreign exchange as the Canadian Dollar has strengthened140 bps compared to the ~~United States Dollar versus the~~ prior year ~~period.~~quarter.

The Company’s effective income tax rate for the ~~three-month period~~three months ended September 30, ~~2017~~2019 was ~~(6.9)%~~1.6%, compared to ~~36.1%~~0.3% in the prior year quarter. For the three months ended September 30, ~~2017,~~2019, the Company recorded a tax ~~benefit~~provision of ~~$208,~~$51, compared to ~~$3,379~~$18 in the

24

Table of Contents

three months ended September 30, ~~2016.~~2018. The Company's ~~income~~effective tax ~~benefit~~rate for the three months ended September 30, ~~2017 was~~2019 differed from the federal statutory rate of 21% primarily ~~related~~due to ~~changes in our estimated annual effective tax rate. The Company continued to maintain~~the realization of a ~~full valuation allowance against~~portion of its U.S. deferred tax ~~assets.~~assets previously offset by a valuation allowance.

Net income for the third quarter of ~~2017~~2019 was ~~$3,222,~~$3,064, or ~~$0.31~~$0.29 per diluted share, compared to ~~a net loss of $5,982,~~$6,408, or ~~$0.58~~$0.61 per diluted share, in the prior year quarter. ~~The following table provides a reconciliation of the GAAP earnings per share value to the non-GAAP adjusted earnings~~¹ ~~per share value for the three-month periods ended September 30, 2017 and 2016:~~

Three Months Ended
September 30,
2017 2016
(Unaudited)
Adjusted Diluted Earnings (Loss) Per Share Reconciliation
Net income (loss), as reported $ 3,222
$ (5,982 )
Asset impairments, net of tax benefits of $1,000 —
5,946
Adjusted net income (loss) $ 3,222
$ (36 )
Average number of common shares outstanding - Diluted 10,479
10,296
Diluted earnings (loss) per common share, as reported $ 0.31
$ (0.58 )
Diluted earnings (loss) per common share, as adjusted $ 0.31
$ (0.00 )

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

Results of Operations – Segment Analysis

Rail Products and Services


						Three Months Ended September 30,																		Increase/(Decrease)						Percent Increase/(Decrease)
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net sales						$	67,741					$	84,517					$	(16,776)					(19.8)		%
Gross profit						$	14,480					$	16,416					$	(1,936)					(11.8)		%
Gross profit percentage						21.4		%				19.4		%				2.0		%				10.1		%
Segment profit						$	3,417					$	5,299					$	(1,882)					(35.5)		%
Segment profit percentage						5.0		%				6.3		%				(1.3)		%				(19.5)		%

Three Months Ended
September 30, Increase Percent
Increase
2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $ 62,095
$ 56,891
$ 5,204
9.1 %
Segment Profit (Loss) $ 3,472
$ (2,047 ) $ 5,519
269.6 %
Segment Profit (Loss) Percentage 5.6 % (3.6 )% 9.2 % 255.6 %

Third Quarter ~~2017~~2019 Compared to Third Quarter ~~2016~~

Rail Products and Services segment sales increased by $5,204, or 9.1%, compared to the prior year period. The sales increase was primarily driven domestically by a $3,037 increase in our distribution business, which experienced increased demand as overall tonnage sold increased compared to the prior period, and Allegheny Rail Products, which increased by $2,017, following a 76% demand increase from Class 1 railroads.

2018

The Rail Products and Services segment ~~profit increased~~sales decreased by ~~$5,519~~$16,776, or 19.8%, compared to ~~5.6%~~the prior year quarter. The sales decline was driven by volume in our Rail Products business resulting in a decrease of ~~net sales. The increase~~$10,010, primarily from our new rail and concrete tie products due to the timing of transit projects. Partially offsetting the decline within Rail Products were sales increases in our insulated joint offerings. Also contributing to the segment sales decline was a reduction of $6,766 in our Rail Technologies business, primarily attributable to ~~2016 impairment charges of $4,383 related to~~reduced service activity levels from the London Crossrail project as it nears completion.

The Rail Products and Services gross profit decreased by $1,936, or 11.8%, from the prior year quarter. The decrease was primarily driven by the volume decline in our Rail Products business, which had lower new rail shipments, and our Rail Technologies ~~goodwill. Non-GAAP~~business, which had a reduction in services provided for the London Crossrail project. Segment gross profit ~~increased $1,597, or 13.1%,~~margin grew by 200 bps as a result of the increased ~~domestic distribution volumes.~~product mix contribution from our higher margin manufactured and service-based offerings. Segment profit was $3,417, a $1,882 decline over the prior year quarter. Selling, general, and administrative expenses incurred by the segment were flat to the prior year quarter.

During the current quarter, the Rail Products and Services segment had ~~an increase~~a decrease in new orders of ~~44.5%~~3.0% compared to the prior year ~~period, while backlog~~period. The decrease was ~~$85,764 at September 30, 2017, an increase of 60.6%, compared~~primarily related to ~~$53,392 at September 30, 2016. The Company is encouraged by continuing positive trends signaling a recovering freight rail market in North America~~activity within our global transit projects and ~~strength in the transit system projects globally.~~concrete tie products.

Construction Products


						Three Months Ended September 30,																		Increase/(Decrease)						Percent Increase/(Decrease)
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net sales						$	47,175					$	41,534					$	5,641					13.6		%
Gross profit						$	6,097					$	5,770					$	327					5.7		%
Gross profit percentage						12.9		%				13.9		%				(1.0)		%				(7.0)		%
Segment profit						$	1,848					$	1,603					$	245					15.3		%
Segment profit percentage						3.9		%				3.9		%				—		%				1.5		%

Three Months Ended
September 30, Increase Percent
Increase
2017 2016 2017 vs. 2016 2017 vs. 2016
Net Sales $ 39,118
$ 34,870
$ 4,248
12.2 %
Segment Profit $ 3,387
$ 1,356
$ 2,031
149.8 %
Segment Profit Percentage 8.7 % 3.9 % 4.8 % 123.1 %

Third Quarter ~~2017~~2019 Compared to Third Quarter ~~2016~~2018

The Construction Products segment sales increased by ~~$4,248,~~$5,641, or ~~12.2%~~13.6%, compared to the prior year ~~period. Fabricated Bridge and~~quarter. The growth was attributable to volume increases in both Precast Concrete Products ~~businesses increased by $4,411~~ and ~~$1,185, respectively.~~Piling and Fabricated Bridge, ~~generated favorable~~resulting in sales ~~in the current quarter due to bridge form projects as well as the continuation~~increases of ~~the Peace Bridge project.~~$3,736 and $1,905, respectively. Our Precast Concrete Products business unit was favorably impacted by ~~increased~~concrete building sales and installations as well as increased demand in septic tank and reinforced earth panel offerings. Piling continued product fulfillment during the current quarter, attributable to ~~state agencies. These increases were~~the Port Everglades project, while Fabricated Bridge experienced increased volume within its steel decking and railing product lines.

The Construction Products gross profit increased by $327, or 5.7%, over the prior year quarter. The increase was primarily attributable to the sales volume growth and manufacturing efficiencies within our Precast Concrete Products division and volume and favorable product mix within Fabricated Bridge. The increase was partially offset by a reduction in Piling ~~sales~~gross profit. Segment profit increased

25

Table of ~~$1,348, primarily related~~Contents

by $245 over the prior year quarter to ~~lower sheet piling volumes.~~

~~The Construction Products segment profit increased by $2,031 to 8.7%~~3.9% of net sales. ~~The increase was primarily volume related, improved manufacturing efficiencies, and to a lesser extent, reduced selling~~Selling and administrative expenses incurred by the segment were flat over the prior year quarter; however, the expenses were reduced by 110 bps as a percentage of ~~$163, or 3.4%. Non-GAAP gross profit increased by $1,868, or 30.2%, which was a result of volume increases and manufacturing efficiencies reducing costs.~~segment sales compared to the prior year quarter.

During the quarter, the Construction Products segment had a decrease in new orders of ~~11.1%~~38.7% compared to the prior year quarter, which was primarily related to the Port Everglades project that was booked in the prior year quarter within Piling and, to a lesser extent, Precast Concrete Products division.

Tubular and Energy Services


						Three Months Ended September 30,																		Decrease						Percent Decrease
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net sales						$	39,360					$	41,043					$	(1,683)					(4.1)		%
Gross profit						$	7,115					$	9,117					$	(2,002)					(22.0)		%
Gross profit percentage						18.1		%				22.2		%				(4.1)		%				(18.6)		%
Segment profit						$	2,230					$	4,274					$	(2,044)					(47.8)		%
Segment profit percentage						5.7		%				10.4		%				(4.7)		%				(45.6)		%

Third Quarter 2019 Compared to Third Quarter 2018

Tubular and Energy Services segment sales decreased by $1,683, or 4.1%, compared to the prior year period. The decrease ~~related to a 47.8% reduction Piling orders~~was primarily due to ~~lower sheet piling demand. This~~weakened conditions in the served upstream market that reduced drilling activity in the U.S. and negatively impacted demand for our testing and inspection services. The decline was partially offset by ~~increased new orders of 228.9%~~increases within our midstream products and ~~10.7% for our Fabricated Bridge and Precast Concrete Products businesses, respectively. Ending backlog in the Construction segment decreased by 1.1% to $74,910 from the prior year period.~~services.

~~Tubular and Energy Services~~

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

~~Third Quarter 2017 Compared to Third Quarter 2016~~

Tubular and Energy Services segment ~~sales increased~~gross profit decreased by ~~$7,396,~~$2,002, or ~~32.3%~~22.0%, ~~compared~~which was primarily attributable to the ~~prior year period. The increase related to strong bookings from Protective Coatings~~reduced volumes within our Test, Inspection, and ~~Test and Inspection~~Threading Services businesses, partially offset by a decrease in Precision Measurement Systems sales. The quarter showed continued improvement within the upstream oil and gas market. Sales in the Precision Measurement Systems business ~~are below prior year, although order input was very strong in the quarter as backlog is now 99.7% above prior year levels.~~

~~Tubular and Energy Services segment profit increased by $9,264, or 133.0%, compared to the prior year quarter. The quarter was favorably impacted by non-GAAP~~unit. Segment gross profit ~~of $5,767~~margin decreased by 410 bps over the prior year ~~period, with increases from each division~~quarter, which was primarily driven by reduced volume within the ~~segment. The~~Test, Inspection, and Threading Services business. Segment profit decreased by $2,044, or 47.8%, over the prior year ~~was negatively affected by impairment charges of $2,563 for the three months ended September 30, 2016.~~quarter.

The Tubular and Energy Services segment had ~~an increase~~a decrease of 24.0% in new orders ~~of 97.1%~~ compared to the prior year ~~period. Orders for Precision~~quarter. Our Protective Coatings and Measurement Systems business unit new orders were negatively impacted during the current quarter due to delays in anticipated projects. The Test, Inspection, and ~~Inspection~~Threading Services ~~and Protective Coatings increased 147.1%, 129.6%, and 89.2%, respectively. The upstream oil and gas market continues to show signs of recovery. We continue to be encouraged~~business decline was driven by ~~increased order activity~~reduced demand from unfavorable conditions in the ~~midstream~~upstream market ~~as well.~~we serve.

On July 31, 2017, the lease at our Birmingham, Alabama facility expired. During the third quarter ended September 30, 2017, the Company negotiated a lease renewal for this facility. The renewal is for a term

26

Table of ~~five years and is scheduled to expire July 31, 2022.~~Contents

~~Year-to-Date~~Nine Month Results

The segment gross profit measures presented within the MD&A tables constitute non-GAAP financial measures disclosed by management to provide investors and other users information to evaluate the performance of the Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocations to the reportable segments:


						Nine Months Ended September 30,																		Percent Increase/ (Decrease)						Percent of Total Net Sales Nine Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Net Sales:
Rail Products and Services						$	244,836					$	238,571					2.6		%				48.4		%				51.6		%
Construction Products						139,926						112,641						24.2						27.7						24.4
Tubular and Energy Services						120,916						111,226						8.7						23.9						24.0
Total net sales						$	505,678					$	462,438					9.4		%				100.0		%				100.0		%

						Nine Months Ended September 30,																		Percent Increase/ (Decrease)						Gross Profit Percentage Nine Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Gross Profit:
Rail Products and Services						$	47,647					$	44,733					6.5		%				19.5		%				18.8		%
Construction Products						19,564						16,844						16.1						14.0						15.0
Tubular and Energy Services						26,771						24,981						7.2						22.1						22.5
Total gross profit						$	93,982					$	86,558					8.6		%				18.6		%				18.7		%

						Nine Months Ended September 30,																		Percent Increase/ (Decrease)						Percent of Total Net Sales Nine Months Ended September 30,
						2019						2018						2019 vs. 2018						2019						2018
Expenses:
Selling and administrative expenses						$	67,036					$	65,488					2.4		%				13.3		%				14.2		%
Amortization expense						5,046						5,322						(5.2)						1.0						1.2

Interest expense - net						4,031						4,813						(16.2)						0.8						1.0


Other income - net						(823)						(320)						157.2						(0.2)						(0.1)
Total expenses						$	75,290					$	75,303					(0.0)		%				14.9		%				16.3		%
Income before income taxes						$	18,692					$	11,255					66.1		%				3.7		%				2.4		%
Income tax expense						2,374						1,271						86.8						0.5						0.3
Net income						$	16,318					$	9,984					63.4		%				3.2		%				2.2		%

~~Allows users to understand the operational performance of our reportable segments;~~

Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and

~~Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.~~

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantities as well as production and service costs to better evaluate key profitability drivers and trends that may develop due to industry and competitive conditions.

Nine months ended September 30, 2017 Rail Products and
Services Construction
Products Tubular and Energy
Services Total
Reportable Segment Profit $ 8,938
$ 9,156
$ 1,774
$ 19,868
Segment and Allocated Selling & Administrative 27,355
13,835
11,711
52,901
Amortization Expense 2,747
113
2,358
5,218
Asset Impairments —
—
—
—
Non-GAAP Segment Gross Profit $ 39,040
$ 23,104
$ 15,843
$ 77,987

Nine months ended September 30, 2016 Rail Products and
Services Construction
Products Tubular and Energy
Services Total
Reportable Segment (Loss) Profit $ (26,474 ) $ 5,748
$ (111,876 ) $ (132,602 )
Segment and Allocated Selling & Administrative 31,854
14,781
12,891
59,526
Amortization Expense 2,946
113
4,759
7,818
Asset Impairments 32,725
—
103,159
135,884
Non-GAAP Segment Gross Profit $ 41,051
$ 20,642
$ 8,933
$ 70,626

Percent of Total Net Sales
Nine Months Ended Nine Months Ended Percent
Increase/
(Decrease)
September 30, September 30,

2017 2016 2017 2016 2017 vs. 2016
Net Sales:
Rail Products and Services $ 187,922
$ 188,686
47.6 % 50.1 % (0.4 )%
Construction Products 121,905
107,098
30.9
28.4
13.8
Tubular and Energy Services 85,227
81,164
21.5
21.5
5.0
Total net sales $ 395,054
$ 376,948
100.0 % 100.0 % 4.8 %

Non-GAAP / Reported
Gross Profit Percentage Percent
Increase/
(Decrease)
Nine Months Ended Nine Months Ended
September 30, September 30,

2017 2016 2017 2016 2017 vs. 2016
Gross Profit:
Non-GAAP Rail Products and Services $ 39,040
$ 41,051
20.8 % 21.8 % (4.9 )%
Non-GAAP Construction Products 23,104
20,642
19.0
19.3
11.9
Non-GAAP Tubular and Energy Services 15,843
8,933
18.6
11.0
77.4
Non-GAAP Segment gross profit 77,987
70,626

LIFO (expense) income (1,733 ) 1,442
(0.4 ) 0.4
(220.2 )
Other (901 ) (492 ) (0.2 ) (0.1 ) 83.1
Total gross profit $ 75,353
$ 71,576
19.1 % 19.0 % 5.3 %
Percent
Increase/
(Decrease)
Percent of Total Net Sales
Nine Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016 2017 vs. 2016
Expenses:
Selling and administrative expenses $ 60,023
$ 65,941
15.2 % 17.5 % (9.0 )%
Amortization expense 5,218
7,818
1.3
2.1
(33.3 )
Asset impairments —
135,884
—
36.0
(100.0 )
Interest expense 6,315
4,342
1.6
1.2
45.4
Interest income (166 ) (157 ) —
—
5.7
Equity in loss of nonconsolidated investments 5
946
—
0.3
(99.5 )
Other income (564 ) (263 ) (0.1 ) (0.1 ) 114.4
Total expenses $ 70,831
$ 214,511
17.9 % 56.9 % (67.0 )%
Income (loss) before income taxes $ 4,522
$ (142,935 ) 1.1 % (37.9 )% 103.2 %
Income tax expense (benefit) 698
(42,125 ) 0.2
(11.2 ) 101.7
Net income (loss) $ 3,824
$ (100,810 ) 1.0 % (26.7 )% 103.8 %

First Nine Months ~~of 2017~~2019 Compared to First Nine Months ~~of 2016~~2018 – Company Analysis

Net sales of ~~$395,054~~$505,678 for the ~~period~~nine months ended September 30, ~~2017~~2019 increased by ~~$18,106,~~$43,240, or ~~4.8%~~9.4%, compared to the prior year period. The change was attributable to increases within each of ~~13.8% and 5.0% in the~~our three segments. Construction Products ~~and~~sales increased by 24.2%, Tubular and Energy Services ~~segments, respectively. This increase was partially offset~~sales increased by ~~a decrease of 0.4% in the~~8.7%, and Rail Products and Services ~~segment.~~sales increased by 2.6%.

Gross profit increased by $7,424 compared to the prior year period to $93,982 for the nine months ended September 30, 2019. Gross profit margin for the nine months ended September 30, ~~2017~~2019 was ~~19.1%~~18.6%, or 10 bps ~~higher~~lower than the prior year period. The decline in gross profit margin was primarily due to decreases of 100 bps and 40 bps within Construction Products and Tubular and Energy Services, respectively. The decrease was partially offset by an increase in gross profit margin of 70 bps within the Construction Products segment.

Selling and administrative expenses increased by $1,548 or 2.4% from the prior year. The escalation was primarily driven by increases in third-party services of $2,060, personnel-related expenses of $1,933, and bad debt of $994 when compared to the prior year period. The increase was ~~due to a 760 bps improvement within the Tubular and Energy Services segment. The increase was~~ partially offset by ~~reductions~~a reduction in legal expenses related to the Union Pacific Railroad concrete tie litigation of ~~100 bps and 30 bps, in Rail Products and Services and Construction Products, respectively.~~

~~Selling~~$4,165. As a percent of sales, selling and administrative expenses ~~decreased~~declined by ~~$5,918 or 9.0% from~~90 bps compared to the prior year. All three segments experienced decreases which were primarily driven by personnel and discretionary spending reductions of $4,021 and reduced litigation costs related to the UPRR matter of $1,419.year period.

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

Interest expense, net of interest income, ~~increased~~decreased by ~~$1,964,~~$782, or ~~46.9%~~16.2%, as a result of the ~~increase~~reduction in ~~interest rates on~~ outstanding ~~debt. Other income increased by $301, or 114.4%, which primarily related~~debt compared to the ~~gain on the sale~~prior year period.

27

Table of ~~certain assets, which was partially offset by the impact of a weaker United States Dollar relative to the Canadian Dollar in the nine months ended September 30, 2017.~~Contents

The Company’s effective income tax rate for the nine months ended September 30, ~~2017~~2019 was ~~15.4%~~12.7%, compared to ~~29.5%~~11.3% in the prior year period. For the ~~first~~ nine months ended September 30, ~~2017,~~2019, the Company recorded a tax provision of ~~$698,~~$2,374, compared to ~~a tax benefit of $42,125~~$1,271 in the nine months ended September 30, ~~2016.~~ 2018. The ~~Company’s~~Company's effective tax ~~provision~~rate for the nine months ended September 30, ~~2017 was~~2019 differed from the federal statutory rate of 21% primarily ~~comprised~~due to the realization of ~~taxes on our Canadian and United Kingdom operations. The Company continued to maintain~~ a ~~full valuation allowance against~~portion of its U.S. deferred tax ~~assets.~~assets previously offset by a valuation allowance.

Net income for the ~~first~~ nine months ~~of 2017~~ended September 30, 2018 was ~~$3,824,~~$16,318, or ~~$0.37~~$1.53 per diluted share, compared to ~~a net loss of $100,810,~~$9,984, or ~~$9.82~~$0.95 per diluted share, in the prior year period. ~~The following table provides a reconciliation of the GAAP earnings per share value to the non-GAAP adjusted earnings~~¹ ~~per share value for the nine-month periods ended September 30, 2017 and 2016:~~

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

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

Results of Operations – Segment Analysis

Rail Products and Services


						Nine Months Ended September 30,																		Increase						Percent Increase
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net sales						$	244,836					$	238,571					$	6,265					2.6		%
Gross profit						$	47,647					$	44,733					$	2,914					6.5		%
Gross profit percentage						19.5		%				18.8		%				0.7		%				3.8		%
Segment profit						$	14,815					$	12,655					$	2,160					17.1		%
Segment profit percentage						6.1		%				5.3		%				0.8		%				14.1		%

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

First Nine Months ~~of 2017~~2019 Compared to First Nine Months ~~of 2016~~2018

The Rail Products and Services segment sales ~~decreased $764,~~increased by $6,265, or ~~0.4%~~2.6%, compared to the prior year period. The ~~reduction~~sales growth was driven by our Rail Products business unit which increased by $13,820. The Rail Products growth was primarily attributable to domestic transit projects and, to a lesser extent, new rail and insulated joint products. Partially offsetting the increase was a decline in sales ~~is primarily related to a decrease in our domestic businesses~~within the European transit market as we approach the completion of ~~$5,956,~~the London Crossrail project.

The Rail Products and Services gross profit increased by $2,914, or ~~4.3%.~~6.5%, over the prior year period. The ~~sales declines were primarily volume~~increase was driven by volume growth in Rail Products. Segment gross profit margin increased by 70 bps as a result of the ~~domestic freight rail and transit markets. Our domestic rail distribution business~~increased contribution from higher margin product mix within Rail Products. Segment profit was ~~unfavorably impacted by both volume and pricing~~$14,815, a $2,160 increase compared to the prior year period. ~~The sales decrease was partially offset~~Selling and administrative expenses incurred by ~~sales increases in our foreign divisions of $5,192, or 10.6%, as we saw favorable results in both our Canadian and European markets.~~

~~The Rail Products and Services~~the segment ~~profit~~ increased by ~~$35,412 to 4.8% of net sales. The increase was primarily attributable to a reduction in selling, administrative, and allocated expenses of $4,430, or 13.9%, and~~$685 over the 2016 impairment charges of $32,725 related to Rail Technologies goodwill. This was partially offset by a decline in non-GAAP gross profit of $2,011, or 4.9%, which was primarily related to volume reductions and product mix within domestic transit products, as well as service related cost increases in our domestic Rail Technologies business.prior year period.

During the current year, the Rail Products and Services segment had ~~an increase~~a decrease in new orders of ~~28.9%~~13.6% compared to the prior year period. ~~The increase impacted each~~Backlog was $88,051 as of ~~the three business units within the segment and grew the backlog balance to $85,764 at~~ September 30, ~~2017,~~2019, a ~~60.6% increase over~~decrease of 19.1%, compared to $108,840 as of September 30, 2018. The decreases were primarily related to activity within our new rail distribution products, concrete ties, and activity levels on the ~~prior year. The Company is also encouraged by positive signs from order activity and resulting backlog during the first nine months of 2017.~~London Crossrail project.

Construction Products


						Nine Months Ended September 30,																		Increase/(Decrease)						Percent Increase/(Decrease)
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net sales						$	139,926					$	112,641					$	27,285					24.2		%
Gross profit						$	19,564					$	16,844					$	2,720					16.1		%
Gross profit percentage						14.0		%				15.0		%				(1.0)		%				(6.5)		%
Segment profit						$	6,095					$	4,478					$	1,617					36.1		%
Segment profit percentage						4.4		%				4.0		%				0.4		%				9.6		%

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

First Nine Months ~~of 2017~~2019 Compared to First Nine Months ~~of 2016~~2018

The Construction Products segment sales increased by ~~$14,807,~~$27,285, or ~~13.8%~~24.2%, compared to the prior year period. The increase ~~related~~was attributable to ~~Fabricated Bridge and~~growth within each of the businesses within the segment. Piling ~~businesses of $9,428 and $7,112, respectively. Fabricated Bridge continued to have favorable~~ sales involume increased considerably during the current year ~~due to several projects, including~~as the ~~continuation~~Port Everglades order was fulfilled, while Fabricated Bridge experienced increased sales volume within its steel decking and railing product lines which resulted in an increase of ~~the Peace Bridge project. The increase in Piling was primarily due to demand within the sheet piling product line. These increases were offset by a reduction in~~$18,518. Our Precast Concrete Products business unit was favorably impacted by concrete building sales, ~~of $1,733.~~most significantly in our southern U.S. region.

The Construction Products ~~segment~~gross profit increased by ~~$3,408~~$2,720, or 16.1%, over the prior year period. The increase was primarily attributable to ~~7.5%~~the sales volume growth in both business units within the segment. Segment profit increased by $1,617 over the prior year period to 4.4% of net sales. ~~The increase related to reductions in selling,~~Selling and administrative ~~and allocated~~ expenses incurred by the segment increased by $1,113 over the prior year period; however, the expenses as a percentage of ~~$947, or 6.4%. Non-GAAP gross profit increased $2,462, or 11.9%, which was primarily due~~segment sales were reduced by 130 bps compared to the ~~increased volumes from the Fabricated Bridge and Piling businesses within the~~prior year period.

28

Table of Contents

During the ~~period,~~first nine months of 2019, the Construction Products segment had a decrease in new orders of ~~8.7%~~17.4% compared to the prior year period, which was primarily related to the Port Everglades project recorded in the 2018 period. ~~Prior year Fabricated Bridge orders included the $15,000 Peace Bridge project. Piling saw a 6.3% reduction~~The decline in new orders ~~compared to~~was partially offset by a 7.5% increase in orders in Precast Concrete Products. The decrease in new orders resulted in segment backlog of $86,626 as of September 30, 2019, a 26.4% decrease from the prior year from recent declines in sheet piling demand. The Precast Concrete Products business saw an increase in new orders of 10.7% primarily from building orders from state agencies. The Construction Products segment had backlog at September 30, 2017 of $74,910, a 1.1% decrease over the prior year.period.

Tubular and Energy Services


						Nine Months Ended September 30,																		Increase/(Decrease)						Percent Increase/(Decrease)
						2019						2018						2019 vs. 2018						2019 vs. 2018
Net Sales						$	120,916					$	111,226					$	9,690					8.7		%
Gross profit						$	26,771					$	24,981					$	1,790					7.2		%
Gross profit percentage						22.1		%				22.5		%				(0.4)		%				(1.4)		%
Segment profit						$	11,937					$	10,704					$	1,233					11.5		%
Segment profit percentage						9.9		%				9.6		%				0.3		%				2.6		%

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

First Nine Months ~~of 2017~~2019 Compared to First Nine Months ~~of 2016~~2018

Tubular and Energy Services segment sales increased ~~$4,063,~~by $9,690, or ~~5.0%~~8.7%, compared to the prior year period. The increase ~~related~~was due to significant growth from ~~Test~~Protective Coatings and ~~Inspection Services and Protective Coating businesses, partially offset~~Measurement Systems when compared to the prior year period. This was additionally supported by ~~a decrease in Precision Measurement Systems. The period showed increased new well count and demand~~strong orders within the ~~upstream oil and gas~~midstream market ~~but was negatively impacted by a lag in~~during the ~~recovery of Precision Measurement Systems for midstream applications.~~current year.

Tubular and Energy Services segment gross profit ~~increases~~increased $1,790, or 7.2%, which was supported by ~~$113,650,~~the sales growth in Protective Coatings and Measurement Systems. Segment gross profit margin declined by 40 bps over the prior year period, which was primarily driven by volume in the 2019 period within the Test, Inspection, and Threading Services business. Segment profit increased by $1,233, or ~~101.6%~~11.5%, over the prior year period. Selling and administrative expense increased by $1,425 during the first nine months of 2019 when compared to the prior year ~~period. The~~ period, which was ~~favorably impacted~~driven by a reduction in amortization expense of $2,401 from the 2016 definite-lived intangible asset impairment. The prior period was also negatively affected by impairment charges of $103,159 for the nine months ended September 30, 2016. Segment profit was also favorably impacted by a non-GAAP gross profit increase of $6,910, or 77.4%.increased personnel-related and bad debt expenses.

The Tubular and Energy Services segment had an increase of 4.5% in new orders ~~of 47.6%~~ compared to the prior year period. Orders for Protective Coatings and ~~Test and Inspection Services businesses~~Measurement Systems increased by ~~151.2%~~16.5%, which was partially offset by a reduction in Test, Inspection, and ~~107.5%, respectively.~~Threading Services of 12.3%. The ~~upstream oil and gas market continued its recovery. We are also encouraged by positive trends in midstream order activity~~segment had a backlog as ~~we ended the nine-month period.~~

~~On July 31, 2017, the lease at our Birmingham, Alabama facility expired. During the third quarter ended~~of September 30, ~~2017,~~2019 of $19,406, a 22.8% decrease when compared to the ~~Company negotiated a lease renewal for this facility. The renewal is for a term of five years and is scheduled to expire July 31, 2022.~~prior year.

Other

Segment Backlog

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



						September 30, 2019						December 31, 2018						September 30, 2018
Rail Products and Services						$	88,051					$	97,447					$	108,840
Construction Products						86,626						95,419						117,654
Tubular and Energy Services						19,406						27,552						25,123
Total backlog						$	194,083					$	220,418					$	251,617

Backlog
September 30,
2017 December 31,
2016 September 30,
2016
Rail Products and Services $ 85,764
$ 62,743
$ 53,392
Construction Products 74,910
71,954
75,762
Tubular and Energy Services 28,931
12,759
14,650
Total Backlog $ 189,605
$ 147,456
$ 143,804

While a considerable portion of our business is backlog-driven, certain product lines within the Rail Products and Services and Tubular and Energy Services segments are not driven by ~~backlog and therefore have insignificant levels throughout the year.~~backlog.

~~Warranty~~

As of September 30, 2017, the Company maintained a total product warranty reserve of $9,614 for its estimate of all potential product warranty claims. Of this total, $7,607 reflects the current estimate of the Company’s exposure for potential concrete tie warranty claims. While the Company believes this is a reasonable estimate of its potential exposure related to identified concrete tie warranty matters, the Company may incur future charges associated with new customer claims or further development of information of existing customer claims. Thus, there can be no assurance that future potential costs pertaining to warranty claims will not have a material impact on the Company’s results of operations and financial condition. See Note 13 Commitments and Contingent Liabilities of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.

Liquidity and Capital Resources

Total debt was ~~$138,285~~$72,999 and ~~$159,565~~$74,982 as of September 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, and was primarily comprised of borrowings onunder our revolving credit ~~facility and term loan.~~

facility. Our need for liquidity relates primarily to working capital requirements for operations, capital expenditures, ~~joint venture capital obligations,~~and debt service ~~obligations, and share repurchases as authorized by the Board~~obligations.

29

Table of ~~Directors and as permitted under the Second Amended and Restated Credit Agreement dated March 13, 2015.~~Contents

The change in cash and cash equivalents for the ~~periods~~nine months ended September 30, ~~are~~2019 and 2018 is as follows:


						September 30,
						2019						2018
Net cash provided by operating activities						$	13,283					$	22,425
Net cash (used in) provided by investing activities						(4,784)						4,181
Net cash used in financing activities						(3,419)						(53,813)
Effect of exchange rate changes on cash and cash equivalents						12						(885)
Net increase (decrease) in cash and cash equivalents						$	5,092					$	(28,092)

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

Cash Flow from Operating Activities

During the ~~current 2017 nine-month period,~~nine months ended September 30, 2019, cash flows provided by operating activities were ~~$27,516~~$13,283, compared to ~~$11,876~~operations providing $22,425 during the prior year period. For the nine months ended September 30, ~~2017,~~2019, income and adjustments to income from operating activities provided ~~$18,985~~$31,995, compared to ~~$15,976~~$25,857 in the ~~2016~~2018 period. Working capital and other assets and liabilities ~~provided $8,531~~used $18,712 in the current period, compared to ~~a use of $4,100~~$3,432 in the prior year period. During the nine months ended September 30, ~~2017,~~2019, the Company ~~received $9,946 and $1,827 from our 2016 and 2015 federal income tax refunds, respectively.~~made payments totaling $6,000 under the terms of the concrete tie settlement agreement with Union Pacific Railroad.

The Company’s calculation for days sales outstanding at September 30, ~~2017~~2019 and December 31, 2018 was 50 days, ~~compared to 53 days at December 31, 2017,~~ and we believe our receivables portfolio is strong.

Cash Flow from Investing Activities

Capital expenditures for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 were ~~$5,335~~$5,037 and ~~$6,507,~~$3,196, respectively. The current year expenditures relate to ~~trackside rail lubricator units installed~~plant expansion and automation integration programs within our Tubular and Energy Services segment, as ~~part of a new multi-year service contract and~~well as general plant and operational ~~improvements.~~improvements throughout the Company. Expenditures for the nine months ended September 30, ~~2016~~2018 related to ~~the Birmingham, AL inside diameter coating line upgrade~~expenditures for general plant and ~~application development of~~operational improvements. During the ~~Company’s new enterprise resource planning system. During~~ nine months ended September 30, ~~2017,~~2019, the Company received ~~$1,388~~$253 in proceeds from the sale of certain property, plant, and equipment, as compared to ~~$923~~$2,267 in the prior year period. The Company ~~also loaned $635 to our joint venture, L B Pipe & Coupling Products, LLC (“L B Pipe JV”), as~~received $3,875 and $1,235 in proceeds from the sale of an equity investment and repayment of a line of a credit, respectively, during the nine months ended September 30, ~~2016.~~2018.

Cash Flow from Financing Activities

During the nine months ended September 30, ~~2017,~~2019, the Company had a decrease in outstanding debt of ~~$21,281,~~$1,983, primarily related to the reduction of working capital for operations. During the nine months ended September 30, 2018, the Company had a decrease in outstanding debt of $53,497, primarily related to payments against the revolving credit facility, ~~as well as~~which was facilitated by the ~~application~~repatriation of $31,517 in excess cash from our international locations. The Company paid $836 in debt issuance costs in connection with the ~~$9,946 federal income tax refund and quarterly principle payments against the term loan. During~~April 30, 2019 credit facility amendment during the nine months ended September 30, ~~2016, the Company had a decrease in outstanding debt of $33,125, primarily related to payments against the revolving credit facility.~~2019. Treasury stock acquisitions represent income tax withholdings from employees in connection with the vesting of restricted stock awards. ~~Cash outflows related to dividends were $1,244 for the nine-month periods ended September 30, 2016.~~

Financial Condition

As of September 30, ~~2017,~~2019, we had ~~$35,008~~$15,374 in cash and cash equivalents and a domestic credit facility with ~~$46,081~~$91,160 of net availability, while we had ~~$138,285~~$72,999 in total debt. We believe this liquidity will provide the flexibility to operate the business in a prudent manner and enable us to continue to service our revolving credit ~~facility and term loan.~~facility.

Our cash management priority continues to be short-term maturities and the preservation of our principal balances. ~~Approximately $33,976~~As of September 30, 2019, approximately $11,290 of our cash and cash equivalents was held in non-domestic bank ~~accounts, and, under current law, the foreign cash would be subject to U.S. federal income taxes less applicable foreign tax credits upon repatriation.~~accounts.

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

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

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

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

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

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company entered into forward starting LIBOR-based interest rate swaps with notional values totaling $50,000. The swaps became effective on February 28, 2017, at which point they effectively ~~convert~~converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. AtAs of September 30, ~~2017,~~2019, the swap liability was ~~$323~~$657 compared to ~~$334~~an asset of $675 as of December 31, ~~2016.~~2018.

~~Cost in Excess~~On April 30, 2019, the Company, its domestic subsidiaries, and certain of ~~Net Assets Acquired~~

~~At September~~its Canadian and European subsidiaries (collectively, the “Borrowers”), entered into the Third Amended and Restated Credit Agreement (“Amended Credit Agreement”) with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank, N.A., and BMO Harris Bank, N.A. This Amended Credit Agreement modifies the prior revolving credit facility, which had a maximum credit line of $195,000, and extends the maturity date from March 13, 2020 to April 30, ~~2017, L.B. Foster had $19,699~~2024. The Amended Credit Agreement provides for a five-year, revolving credit facility that permits aggregate borrowings of ~~goodwill on its consolidated balance sheet. Of~~ the ~~total, $14,552 related~~Borrowers up to $140,000 with a sublimit of the equivalent of $25,000 U.S. dollars that is available to the ~~Rail Products~~Canadian and ~~Services segment~~United Kingdom borrowers in the aggregate. The Amended Credit Agreement’s incremental loan feature permits the Company to increase the available revolving borrowings under the facility by up to an additional $50,000 and ~~$5,147 related~~provides for additional term loan

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borrowings of up to $25,000 subject to the ~~Construction Products segment. Goodwill is reviewed annually in~~Company’s receipt of increased commitments from existing or new lenders and the ~~fourth quarter~~satisfaction of ~~each year for impairment or more frequently if impairment indicators arise. The Company recorded~~certain conditions.

For a $32,725 partial goodwill impairment related to the Rail Products and Services segment during the year ended December 31, 2016. Based on considerations of current year financial results, including consideration of macroeconomic conditions, such as performancediscussion of the Company’s stock price, we do not believe that it is more-likely-than-not that the fair values of these reporting units have decreased below their carrying values at September 30, 2017. Consequently, management concluded that noneterms and availability of the ~~Company’s reporting units experienced any triggering event that would have required a step one interim goodwill impairment analysis at September 30, 2017. However,~~Company's credit facilities, please refer to Note 9 of the previously recorded partial impairment included assumptions for certain market recoveries throughout the years ending December 31, 2017 and 2018, if these recoveries do not fully develop, the Rail Products and Services segment may require an incremental goodwill impairment.Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

Critical Accounting Policies

The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. When more than one accounting principle, or method of its application, is generally accepted, management selects the principle or method that, in its opinion, is appropriate in the Company’s specific circumstances. Application of these accounting principles requires management to reach opinions regarding estimates about the future resolution of existing uncertainties. As a result, actual results could differ from these estimates. In preparing these financial statements, management has reached its opinions regarding the best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality. ~~There~~We have ~~been no material changes in the Company’s critical accounting~~updated our lease policies ~~or estimates~~ since December 31, ~~2016.~~2018, in conjunction with our adoption of Accounting Standards Codification Topic 842, “Leases” (“ASC 842”), as further described in Note 8 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. A summary of the Company’s critical accounting policies and estimates is included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include ~~operating leases,~~ purchase obligations and standby letters of credit. A schedule of the Company’s required payments under financial instruments and other commitments as of December 31, ~~2016~~2018 is included in ~~the “Liquidity~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital ~~Resources” section~~Resources -Tabular Disclosure of Contractual Obligations in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. On January 1, 2019, the Company adopted the provisions under ASC 842. As a result of the adoption, operating leases that were previously off-balance sheet arrangements are now recognized as right-of-use assets and liabilities within the Condensed Consolidated Balance Sheets. There were no other material changes to these off-balance sheet arrangements during the current quarter. These arrangements provide the Company with increased flexibility relative to the utilization and investment of cash resources.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~Interest Rate Risk~~

~~The Company~~This item is exposed to risks that increases in interest rates may adversely affect funding costs associated with its variable-rate debt. To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into forward starting interest rate swap agreements which effectively convert a portion of the debt from a variablenot applicable to a fixed-rate borrowing during the term of the swap contracts. See Note 9 Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.smaller reporting company.

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

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

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

~~Foreign Currency Exchange Rate Risk~~

The Company is subject to exposures to changes in foreign currency exchange rates. The Company may manage its exposure to changes in foreign currency exchange rates on firm sale and purchase commitments by entering into foreign currency forward contracts. The Company’s risk management objective is to reduce its exposure to the effects of changes in exchange rates on these transactions over the duration of the transactions. The Company did not engage in foreign currency hedging transactions during the nine-month periods ended September 30, 2017 and 2016.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

L.B. Foster Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, ~~2017.~~2019. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the chief executive officer, chief financial officer, or person performing such functions, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control Over Financial Reporting

On January 1, 2019, the Company adopted the standards of Accounting Standards Codification Topic 842, “Leases” (“ASC 842”). The adoption of ASC 842 required the Company to implement changes to our processes related to operating lease recognition and the control activities within them. This included the development of new policies and procedures, ongoing lease review and evaluation processes, and implementation of processes to obtain information responsive to the new disclosure requirements. There were no other changes into our “internal control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the nine months ended September 30, ~~2017,~~2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is currently evaluating the impact that Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" will have on our internal control over financial reporting at the January 1, 2018 adoption date.

Limitations on Effectiveness of Controls and Procedures

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

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PART II. OTHER INFORMATION

(Dollars in thousands, except share data)

Item 1. Legal Proceedings

See Note ~~13 Commitments and Contingent Liabilities~~14 of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016. You should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 8, 2017, which could materially affect our business, financial condition, financial results, or future performance. The risks described in our Annual Report on Form 10-K and quarterly reports on Form 10-Q areThis item is not ~~the only risks facing the Company. Additional risks and uncertainties not currently known or that we currently deem~~applicable to ~~be immaterial may also materially affect our business, financial condition, and/or results of operations.~~a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s purchases of equity securities for the three months ended September 30, ~~2017~~2019 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
July 1, 2019 - July 31, 2019						—						$	—					—						$	—
August 1, 2019 - August 31, 2019						—						—						—						—
September 1, 2019 - September 30, 2019						388						21.90						—						—
Total						388						$	21.90					—						$	—

(1) Shares withheld by the Company to pay taxes upon vesting of restricted stock awards.

Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (2) Approximate dollar value of shares that may yet be purchased under the plans or programs
July 1, 2017 - July 31, 2017 —
$ —
—
$ 29,933
August 1, 2017 - August 31, 2017 324
18.40
—
29,933
September 1, 2017 - September 30, 2017 —
—
—
29,933
Total 324
$ 18.40
—
$ 29,933


~~(1)~~	~~Shares withheld by the Company to pay taxes upon vesting of restricted stock. These shares do not impact the remaining authorization to repurchase shares under approved plans or programs.~~

~~(2)~~

On December 9, 2015, the Board of Directors authorized the repurchase of up to $30,000 of the Company’s common shares until December 31, 2017. This authorization became effective January 1, 2016. The $30,000 repurchase authorization is restricted under the terms of the Second Amendment to the Second Amended and Restated Credit Agreement dated March 13, 2015. Dividends, distributions, and redemptions under the Second Amendment are capped at a maximum annual amount of $1,700 throughout the life of the repurchase authorization. For the three-month period ended September 30, 2017, there were no share repurchases as part of the authorized program.

Item 4. Mine Safety Disclosures

This item is not applicable to the Company.

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Item 6. Exhibits

See Exhibit Index below.

Exhibit Index


Exhibit Number						Description

~~Exhibit Number~~10.1						~~Description~~

~~10.1~~		~~Second Amendment dated November 7, 2016 to the Second~~Third Amended and Restated Credit Agreement dated ~~March 13, 2015, and as amended by the First Amendment dated June 29, 2016, among~~April 30, 2019, between Registrant and PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank, ~~of Pennsylvania,~~N.A., and ~~Branch Banking and Trust Company~~BMO Harris Bank, N.A. is incorporated herein by reference to Exhibit 10.1 to the Current Report on Form ~~8-K/A~~8-K, File No. 0-10436, filed on ~~November 8, 2016, File No. 0-10436.~~May 2, 2019.

~~10.2~~*31.1						~~Deferred Compensation Plan for Non-Employee Directors under the 2006 Omnibus Incentive Plan.~~

*31.1		Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2						Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

*32.0						Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS						XBRL Instance ~~Document.~~Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*101.SCH						XBRL Taxonomy Extension Schema Document.

*101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

*101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.

*101.LAB						XBRL Taxonomy Extension Label Linkbase Document.

*101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.

*104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)



*			Exhibits marked with an asterisk are filed herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

L.B. FOSTER COMPANY

(Registrant)

Date:

~~November 8, 2017~~October 30, 2019

By: /s/ James P. Maloney

James P. Maloney

Senior Vice President and

Chief Financial Officer ~~and Treasurer~~

(Duly Authorized Officer of Registrant)

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