L.B. FOSTER COMPANY
(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" ("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, the Company's expectations relating to our strategy, goals, projections,
and plans regarding our financial position, liquidity, capital resources, and
results of operations and decisions regarding our strategic growth initiatives,
market position, and product development. While the Company considers these
expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory, and other risks and
uncertainties, most of which are difficult to predict and many of which are
beyond the Company's control. The Company cautions readers that various factors
could cause the actual results of the Company to differ materially from those
indicated by forward-looking statements. Accordingly, investors should not place
undue reliance on forward-looking statements as a prediction of actual results.
Among the factors that could cause the actual results to differ materially from
those indicated in the forward-looking statements are risks and uncertainties
related to: the COVID-19 pandemic, including the impact of any worsening of the
pandemic on our financial condition or results of operations, and any future
global health crises, and the related social, regulatory, and economic impacts
and the response thereto by the Company, our employees, our customers, and
national, state, or local governments; a continued deterioration in the prices
of oil and natural gas and the related impact on the upstream and midstream
energy markets; a continuation or worsening of the adverse economic conditions
in the markets we serve, whether as a result of the current COVID-19 pandemic,
including its impact on travel and demand for oil and gas, the continued
deterioration in the prices for oil and gas, governmental travel restrictions,
project delays, and budget shortfalls, or otherwise; volatility in the global
capital markets, including interest rate fluctuations, which could adversely
affect our ability to access the capital markets on terms that are favorable to
us; restrictions on our ability to draw on our credit agreement, including as a
result of any future inability to comply with restrictive covenants contained
therein; a continuing decrease in freight or transit rail traffic, including as
a result of the COVID-19 pandemic; environmental matters, including any costs
associated with any remediation and monitoring; the risk of doing business in
international markets, including compliance with anti-corruption and bribery
laws, foreign currency fluctuations and inflation, and trade restrictions or
embargoes; our ability to effectuate our strategy, including cost reduction
initiatives, and our ability to effectively integrate acquired businesses or to
divest businesses, such as the 2020 disposition of the IOS Test and Inspection
Services business and acquisition of LarKen Precast, LLC and to realize
anticipated benefits; costs of and impacts associated with shareholder activism;
continued customer restrictions regarding the on-site presence of third party
providers due to the COVID-19 pandemic; the timeliness and availability of
materials from our major suppliers, including any continuation or worsening of
the disruptions in the supply chain experienced as a result of the COVID-19
pandemic, as well as the impact on our access to supplies of customer
preferences as to the origin of such supplies, such as customers' concerns about
conflict minerals; labor disputes; cyber-security risks such as data security
breaches, malware, ransomware, "hacking," and identity theft, including as
experienced in 2020, which could disrupt our business and may result in misuse
or misappropriation of confidential or proprietary information, and could result
in the significant disruption or damage to our systems, increased costs and
losses, or an adverse effect to our reputation; the effectiveness of our
continued implementation of an enterprise resource planning system; changes in
current accounting estimates and their ultimate outcomes; the adequacy of
internal and external sources of funds to meet financing needs, including our
ability to negotiate any additional necessary amendments to our credit agreement
or the terms of any new credit agreement, and reforms regarding the use of 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 taxes; domestic and
foreign government regulations, including tariffs; economic conditions and
regulatory changes caused by the United Kingdom's exit from the European Union ;
a lack of state or federal funding for new infrastructure projects; an increase
in manufacturing or material costs; the loss of future revenues from current
customers; and risks inherent in litigation and the outcome of litigation and
product warranty claims. Should one or more of these risks or uncertainties
materialize, or should the assumptions underlying the forward-looking statements
prove incorrect, actual outcomes could vary materially from those indicated.
Significant risks and uncertainties that may affect the operations, performance,
and results of the Company's business and forward-looking statements include,
but are not limited to, those set forth under Item 1A, "Risk Factors," and
elsewhere in our Annual Report on Form 10-K for the year ended December 31,
2020 , or as updated and/or amended by other current or periodic filings with the
Securities and Exchange Commission .
The forward-looking statements in this report are made as of the date of this report and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by the federal securities laws.
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General Overview and Business Update
L.B. Foster Company provides products and services for the rail industry and
solutions to support critical infrastructure projects. The Company's innovative
engineering and product development solutions inspire the safety, reliability,
and performance of its customers' challenging requirements. The Company
maintains locations in North America , South America , Europe , and Asia . The
Company is organized and operates in two business segments: Rail Technologies
and Services ("Rail") and Infrastructure Solutions. The Rail segment is
comprised of several manufacturing and distribution businesses that provide a
variety of products and services for freight and passenger railroads and
industrial companies throughout the world. The Infrastructure Solutions segment
is composed of precast concrete products, piling, fabricated bridge, protective
coating, threading, and precision measurement offerings across North America .
Results for the quarter ended March 31, 2021 reflect the continued deferral of
projects by the midstream pipeline markets for protective coatings and
measurement systems. In addition, the pandemic-related working restrictions
imposed in certain areas, particularly in the United Kingdom , has kept the
Company from converting more backlog to sales revenue during the quarter.
Conversely, the Company did experience some favorable impacts from the
dissipation of some pandemic restrictions, most notably in sales of friction
management consumables, which benefited from increased rail traffic as COVID
restrictions were eased. The Precast Concrete Products and Fabricated Steel
Products businesses also experienced favorable sales results during the current
quarter.
The first quarter has historically been the Company's weakest quarter due to the
seasonality of several of its divisions. Net sales for the first quarter of 2021
were $116,080 , a $5,827 decrease, or 4.8%, compared to the prior year quarter.
The sales decrease was attributable to both of the Company's segments, with the
Rail and Infrastructure Solutions segments declining by 5.7% and 3.6%,
respectively, from the prior year quarter. The $3,972 decline in the Rail
segment was attributable to the Rail Products business unit due to the timing of
deliveries and customer delays, including certain projects that did not ship due
to poor weather. The $1,855 decline in the Infrastructure Solutions segment was
wholly attributable to the Coatings and Measurement business unit, which
continues to face a challenging environment in the midstream energy market due
to excess infrastructure capacity. The decrease in Infrastructure Solutions was
partially offset by revenue increases in both its Precast Concrete Products and
Fabricated Steel Products business units. These divisions have increased backlog
as demand for their products and services was increasing with greater activity
among general infrastructure projects.
Gross profit for the first quarter of 2021 was $18,830 , a $4,292 decrease, or
18.6%, from the prior year quarter. The consolidated gross profit margin of
16.2% decreased by 280 basis points when compared to the prior year quarter,
with the decline attributable to the Infrastructure Solutions segment. In the
Infrastructure Solutions segment, gross profit declined from the prior year
quarter by $4,605 , driven by the decline in revenues in the Coatings and
Measurement business line. Infrastructure Solution's gross profit margin was
down 850 basis points compared to last year's first quarter. Gross profit
increased in the Rail segment by $313 , driven by the 150 basis point improvement
in gross profit margin due primarily to increases in friction management
consumable sales within the Rail Technologies business unit.
Selling and administrative expenses in the first quarter of 2021 decreased by
$2,311 , or 11.4%, from the prior year quarter, primarily driven by decreases in
personnel related costs, including travel expenses, of $1,783 . Selling and
administrative expenses as a percent of net sales decreased to 15.5%, down 120
basis points from the prior year quarter.
Net loss from continuing operations for the first quarter of 2021 was $1,270 , or
$0.12 per diluted share, a reduction of $1,265 , or $0.12 per diluted share, from
the prior year quarter.
Backlog in the first quarter of 2021 increased by 16.5% for the Infrastructure
Solutions segment and 12.4% for the Rail segment compared to the prior year
period. This increase highlights the ongoing spending in the infrastructure
markets served by these two segments despite pockets of weakness associated with
traffic volume and delays in certain transportation related projects due to the
pandemic, and the ongoing challenges experienced by the midstream energy market.
The Infrastructure Solutions segment backlog increase was driven by a strong
quarter of order activity in the Precast Concrete Products business line coupled
with steady order activity in the Fabricated Steel Products business. These
business lines saw key projects drive growth in the segment's backlog, as it
increased sequentially from December 31, 2020 by $22,482 , or 17.7%. The backlog
for bridge decking is expected to continue to result in production rates at near
capacity levels. The Precast Concrete Products business line continues to
benefit from new infrastructure in the regions that the Company serves. While
this business depends on municipal, state, and federal spending for certain
programs that may experience budget pressures, these programs could benefit from
continued government spending on infrastructure and economic stimulus efforts
related to civil construction projects, including projects funded by the Great
American Outdoors Act, which was signed into law on August 4, 2020 . The Coatings
and Measurement business line continues to be affected by the on-going deferral
of infrastructure investment in the midstream pipeline markets. Due to a
significant decline in order activity in the Coatings and Measurement business
line, its backlog is down by $19,553 compared to March 31, 2020 , partially
offsetting the aggregate increase in the Infrastructure Solutions backlog of
$21,153 year-over-year.
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The primary driver of the year-over-year improvement of $13,551 in backlog in
the Rail segment was in the Rail Products business line, a portion of which is
attributable to the timing of deliveries and customer delays. The Rail segment
is anticipating further recovery in its Rail Technologies business line,
particularly products and services related to its operations in the United
Kingdom , barring any new COVID-19 restrictive measures. Also, while ridership
levels and rail traffic volumes have not yet recovered to pre-pandemic levels,
they have improved during the quarter. The Company expects this to result in an
increase in the volume of its friction management consumable sales going forward
if this trend continues. In addition, recently passed U.S. federal legislation
includes significant funding for transit agencies, including Amtrak, that the
Company serves; these measures should help to bridge substantial funding gaps
that those entities were facing. The American Rescue Plan Act of 2021, which was
signed into law on March 11, 2021 , provides $30.0 billion in support of transit
agencies, with an incremental $1.5 billion in funding for Amtrak.
The Company's consolidated backlog stood at $271,944 as of March 31, 2021 , an
increase of $23,712 , or 9.6%, from December 31, 2020 , and an increase of
$34,704 , or 14.6%, over the prior year period. The Company expects that railway
and general infrastructure projects to continue to move forward, and the Company
expects less disruption from pandemic-related issues as the year progresses.
Railway traffic volume and an increase in on-site service-related activity is
expected to have a favorable impact on consumable sales and service-related
revenue. The served midstream energy market has longer-term projects associated
with it, and certain of these projects are expected to continue based on
projected needs once the market returns to a more historically normalized volume
level. However, the Coatings and Measurement business line is expected to remain
weak for the foreseeable future, and still poses a significant challenge as the
Company strives to reach pre-pandemic profit levels. There could be additional
shutdowns or furlough periods in the Coatings and Measurement business line if
order rates do not improve in the coming months. Despite the headwinds driven by
the midstream market, the combination of a strong backlog and an improving
macroeconomic outlook and operating environment support the Company's
expectations for a strong sequential increase in sales from the first quarter to
the second quarter of 2021 accompanied by increasing profitability. Gross profit
margins are expected to improve as sales on certain consumables and service work
return, and leverage on operating cost is realized. Selling and administrative
expenses should leverage favorably with the increase in sales, although absolute
spending levels are expected to increase over the first quarter as more normal
commercial and operating activities return.
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Results of the Quarter
Percent Percent of Total Net Sales
Three Months Ended Increase/ Three Months Ended
March 31, (Decrease) March 31,
2021 2020 2021 vs. 2020 2021 2020
Net Sales :
Rail Technologies and Services $ 66,232 $ 70,204 (5.7) % 57.1 % 57.6 %
Infrastructure Solutions 49,848 51,703 (3.6) 42.9 42.4
Total net sales $ 116,080 $ 121,907 (4.8) % 100.0 % 100.0 %
Percent Gross Profit Percentage
Three Months Ended Increase/ Three Months Ended
March 31, (Decrease) March 31,
2021 2020 2021 vs. 2020 2021 2020
Gross Profit:
Rail Technologies and Services $ 12,805 $ 12,492 2.5 % 19.3 % 17.8 %
Infrastructure Solutions 6,025 10,630 (43.3) 12.1 20.6
Total gross profit $ 18,830 $ 23,122 (18.6) % 16.2 % 19.0 %
Percent Percent of Total Net Sales
Three Months Ended Increase/ Three Months Ended
March 31, (Decrease) March 31,
2021 2020 2021 vs. 2020 2021 2020
Expenses:
Selling and administrative expenses
(11.4) % 15.5 % 16.7 % Amortization expense 1,465 1,430 2.4 1.3 1.2 Interest expense - net 871 812 7.3 0.8 0.7 Other expense - net 59 606 (90.3) 0.1 0.5 Loss from continuing operations before income taxes$ (1,591) $ (63) ** (1.4) % (0.1) % Income tax benefit (321) (58) ** (0.3) 0.0 Loss from continuing operations$ (1,270) $ (5) ** (1.1) % 0.0 % Net loss attributable to noncontrolling interest (12) - ** 0.0 - Loss from continuing operations attributable to L.B. Foster Company$ (1,258) $ (5) ** (1.1) % 0.0 %
** Results of the calculation are not considered meaningful for presentation purposes.
First Quarter 2021 Compared to First Quarter 2020 - Company Analysis Net sales of$116,080 for the three months endedMarch 31, 2021 decreased by$5,827 , or 4.8%, compared to the prior year quarter. The decline was attributable to reductions within both of the segments, due in part to disruptions, which include weather related delays and continued pandemic safety precautions across each of the segments. Sales for the Rail Technologies and Services segment decreased by 5.7% and the Infrastructure Solutions segment decreased by 3.6%. Gross profit decreased by$4,292 compared to the prior year quarter to$18,830 for the three months endedMarch 31, 2021 . The decline in gross profit was attributable to the Infrastructure Solutions segment, which decreased by 43.3%, driven primarily by the year-over-year decline in revenues in the Coatings and Measurement business line. This was partially offset by the Rail Technologies and Services segment's gross profit, which increased by 2.5%. Gross profit margin for the three months endedMarch 31, 2021 was 16.2%, or 280 basis points ("bps") lower than the prior year quarter, due to Infrastructure Solutions. Selling and administrative expenses decreased by$2,311 , or 11.4%, compared to the prior year quarter. The decrease in expense was primarily driven by reductions in personnel related expenses, including travel expenses, of$1,783 , due in part to cost containment measures across the Company. As a percent of sales, selling and administrative expenses decreased 120 bps compared to the prior year quarter, despite the 4.8% reduction in sales. Other expenses - net was reduced by$547 , or 90.3%, compared to the prior year quarter primarily from non-routine relocation and restructuring charges of$677 incurred in the prior year quarter. 26 -------------------------------------------------------------------------------- Table of Contents The Company's effective income tax rate for the three months endedMarch 31, 2021 was 20.2%, compared to 92.1% in the prior year quarter. The Company's effective income tax rate for the quarter endedMarch 31, 2021 differed from the federal statutory rate of 21% primarily due to state income taxes, nondeductible expenses, and research tax credits. Net loss from continuing operations for the first quarter of 2021 was$1,270 , or$0.12 per diluted share, compared to$5 , or less than$0.01 per diluted share, in the prior year quarter. The Company believes that March sales patterns as well as orders and backlog activity could be indicative of portions of the segment beginning to rebound from pandemic-related conditions. This potential rebound could be further supported by favorable anticipated infrastructure spending trends as well as new and prospective legislation that could drive positive conditions and increases in demand in markets served as 2021 continues to progress. Results of Operations - Segment Analysis Rail Technologies and Services Three Months Ended Percent March 31, (Decrease)/Increase (Decrease)/Increase 2021 2020 2021 vs. 2020 2021 vs. 2020 Net sales$ 66,232 $ 70,204 $ (3,972) (5.7) % Gross profit$ 12,805 $ 12,492 $ 313 2.5 % Gross profit percentage 19.3 % 17.8 % 1.5 % 8.7 % Segment profit$ 2,532 $ 1,171 $ 1,361 116.2 % Segment profit percentage 3.8 % 1.7 % 2.1 % 123.5 % First Quarter 2021 Compared to First Quarter 2020 The Rail Technologies and Services segment sales for the three months endedMarch 31, 2021 decreased by$3,972 , or 5.7%, compared to the prior year quarter. The sales decline was primarily driven by the Rail Products business unit, which decreased by$4,091 , or 8.5%, due primarily to the timing of deliveries and customer and weather-related delays. Partially offsetting the sales decline was the Rail Technologies business, which increased by$117 , or 0.5%, from the prior year. This was primarily related to the increase in demand for our friction management consumables and services resulting from increased rail traffic as certain COVID-19 restrictions were eased. The Company was pleased with the strong sales volumes in the month of March leading into the second quarter, which accounted for 48.0% of overall segment revenue for the first quarter. The Rail Technologies and Services segment gross profit increased by$313 , or 2.5%, from the prior year quarter. The increase was primarily driven by increased sales volume from higher margin products within the Rail Technologies business. Segment gross profit margin increased by 150 bps as a result of increased sales and services of friction management consumables. Segment profit was$2,532 , a$1,361 increase over the prior year quarter. Selling and administrative expenses incurred by the segment decreased by$1,237 compared to the prior year quarter, primarily attributable to decreased personnel related costs, including travel expenses, and, to a lesser extent, third-party professional service costs, as cost containment remained a key focus given the challenging market conditions. During the current quarter, the Rail Technologies and Services segment had a decrease in new orders of 8.9% compared to the prior year period. The decrease was primarily related to activity within the served North American transit market, including transit projects and concrete tie products. Backlog as ofMarch 31, 2021 was$122,461 , an increase of$13,551 , or 12.4%, fromMarch 31, 2020 . Infrastructure Solutions Three Months Ended Percent March 31, Decrease Decrease 2021 2020 2021 vs. 2020 2021 vs. 2020 Net sales$ 49,848 $ 51,703 $ (1,855) (3.6) % Gross profit$ 6,025 $ 10,630 $ (4,605) (43.3) % Gross profit percentage 12.1 % 20.6 % (8.5) % (41.2) % Segment (loss) profit$ (666) $ 1,604 $ (2,270) (141.5) % Segment (loss) profit percentage (1.3) % 3.1 % (4.4) % (143.1) % 27
-------------------------------------------------------------------------------- Table of Contents First Quarter 2021 Compared to First Quarter 2020 The Infrastructure Solutions segment sales for the three months endedMarch 31, 2021 decreased by$1,855 , or 3.6%, compared to the prior year quarter. The decline was wholly attributable to the Coatings and Measurement business unit, which experienced a sales reduction of$13,220 compared to the quarter endedMarch 31, 2020 , driven by unfavorable conditions in the midstream energy market, which has resulted in current excess capacity inU.S. pipeline infrastructure and general lack of pipeline infrastructure investment. Partially offsetting the overall segment sales decline, both Fabricated Steel Products andPrecast Concrete Products had increases in sales compared to the prior year quarter of$9,330 and$2,035 , respectively. Infrastructure Solutions revenue for the quarter was also driven by especially strong sales volumes in the month of March, which accounted for 45.0% of segment revenue for the quarter, including a notable increase in sales within piling products during the month of March. Infrastructure Solutions gross profit decreased by$4,605 , or 43.3%, from the prior year quarter. The decrease was primarily attributable to decreases in sales volume in the Coatings and Measurement business unit, which accounted for a significant portion of the overall segment gross profit decline, and also served as the primary driver of segment gross profit margin decline of 850 bps for the first quarter of 2021 when compared to the prior year quarter. The segment loss of$666 was a reduction of$2,270 from the prior year quarter segment profit of$1,604 . During the quarter, the Infrastructure Solutions segment had an increase in new orders of 20.7% compared to the prior year quarter, driven by increases in both the Fabricated Steel Products andPrecast Concrete Products business units, which were partially offset by order declines in the Coatings and Measurement business unit. Backlog as ofMarch 31, 2021 was$149,483 , an increase of 17.7% overDecember 31, 2020 , due to increases in backlog across all business units. TheMarch 31, 2021 backlog also increased$21,153 , or 16.5%, fromMarch 31, 2020 .
Other
Segment BacklogTotal Company backlog is summarized by business segment in the following table for the periods indicated: March 31, December 31, March 31, 2021 2020 2020 Rail Technologies and Services$ 122,461 $ 121,231 $ 108,910 Infrastructure Solutions 149,483 127,001 128,330 Total backlog$ 271,944 $ 248,232 $ 237,240 The Company's backlog represents the sales price of received customer purchase orders and any contracts for which the performance obligations have not been met, and therefore are precluded from revenue recognition. Although the Company believes that the orders included in backlog are firm, customers may cancel or change their orders with limited advance notice; however, these instances have been rare. Backlog should not be considered a reliable indicator of the Company's ability to achieve any particular level of revenue or financial performance. While a considerable portion of the Company's business is backlog-driven, certain product lines within the Company are not driven by backlog as the orders are fulfilled shortly after they are received. Liquidity and Capital Resources The Company's principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility, which provides for a total commitment of up to$115,000 . Its primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, and payments related to the Union Pacific Railroad Settlement. The Company's total debt was$36,793 and$45,024 as ofMarch 31, 2021 andDecember 31, 2020 , respectively, and was primarily comprised of borrowings under its revolving credit facility. The following table reflects available funding capacity as ofMarch 31, 2021 : March 31, 2021 Cash and cash equivalents$ 5,015 Credit agreement: Total availability under the credit agreement 115,000
Outstanding borrowings on revolving credit facility (36,538) Letters of credit outstanding
(844)
Net availability under the revolving credit facility 77,618
Total available funding capacity$ 82,633 28
-------------------------------------------------------------------------------- Table of Contents The Company's cash flows are impacted from period to period by fluctuations in working capital. While the Company places an emphasis on working capital management in its operations, factors such as its contract mix, commercial terms, customer payment patterns, and market conditions as well as seasonality may impact its working capital. The Company regularly assesses its receivables for collectability, and provides allowances for doubtful accounts where appropriate. The Company believes that its reserves for doubtful accounts are appropriate as ofMarch 31, 2021 , but adverse changes in the economic environment and adverse financial conditions of its customers resulting from, among other things, the COVID-19 pandemic, may impact certain of its customers' ability to access capital and pay the Company for its products and services, as well as impact demand for its products and services.
The changes in cash and cash equivalents for the three months ended
Three Months Ended
2021 2020
Net cash provided by (used in) continuing operating activities
(1,327) (2,805)
Net cash (used in) provided by continuing financing activities (8,446) 4,360
Effect of exchange rate changes on cash and cash equivalents (206) (772)
Net cash used in discontinued operations (184) (3,641)
Net decrease in cash and cash equivalents $
(2,549)
Cash Flow from Operating Activities During the three months endedMarch 31, 2021 , cash flows provided by continuing operating activities were$7,614 , compared to a use of$4,902 during the prior year to date period. For the three months endedMarch 31, 2021 , the net loss from continuing operations and adjustments to net loss from continuing operating activities provided$2,310 , compared to$4,752 in the 2020 period. Working capital and other assets and liabilities provided$5,304 in the current period, compared to a use of$9,654 in the prior year period. During the three months endedMarch 31, 2021 and 2020, the Company was not required to make any payments under the terms of the concrete tie settlement agreement withUnion Pacific Railroad .
The Company's calculation for days sales outstanding at
Cash Flow from Investing Activities Capital expenditures for the three months endedMarch 31, 2021 and 2020 were$1,327 and$2,806 , respectively. The current period expenditures primarily relate to the expansion of thePrecast Concrete Products business line inTexas . Expenditures for the three months endedMarch 31, 2020 related to the purchase of a continuous welded rail car and unloader within the Rail Technologies and Services segment, facility start-up expenditures within the Infrastructure Solutions segment, and general plant and operational improvements throughout the Company. Cash Flow from Financing Activities During the three months endedMarch 31, 2021 , the Company had a reduction in outstanding debt of$8,295 , primarily attributable to the utilization of excess cash generated through operating activities. During the three months endedMarch 31, 2020 , the Company had an increase in outstanding debt of$6,017 , primarily related to the increase in working capital for operations.Treasury stock acquisitions of$547 and$1,657 for the three months endedMarch 31, 2021 and 2020, respectively, represent income tax withholdings from employees in connection with the vesting of stock awards. Financial Condition As ofMarch 31, 2021 , the Company had$5,015 in cash and cash equivalents. The Company's cash management priority continues to be short-term maturities and the preservation of its principal balances. As ofMarch 31, 2021 , approximately$4,488 of the Company's cash and cash equivalents were held in non-domestic bank accounts. The Company principally maintains its cash and cash equivalents in accounts held by major banks and financial institutions. The Company's principal uses of cash in recent years have been to fund its operations, including capital expenditures, and to service its indebtedness. The Company views its liquidity as being dependent on its results of operations, changes in working capital, and its borrowing capacity. As ofMarch 31, 2021 , its revolving credit facility had$77,618 of net availability, while the Company had$36,793 in total debt. The Company's current ratio as ofMarch 31, 2021 was 1.86. OnJune 26, 2020 , the Company entered into the First Amendment that reduced the total commitments under the revolving credit facility to$120,000 from$140,000 . The First Amendment requires additional$5,000 annual reductions to the revolving credit facility 29 -------------------------------------------------------------------------------- Table of Contents capacity beginning onDecember 31, 2020 through the maturity of the facility. As a result, the revolving credit facility has$115,000 of total capacity as ofMarch 31, 2021 . In addition, the First Amendment terminated the existing term loan by drawing on the revolving credit facility. Borrowings under the First Amendment bear interest rates based upon either the base rate or Euro-rate plus applicable margins, and are subject to an interest rate floor of 100 basis points. The Company believes that the combination of its cash and cash equivalents, cash generated from operations, and the capacity under its revolving credit facility should provide the Company with sufficient liquidity to provide the flexibility to operate the business in a prudent manner and enable the Company to continue to service its outstanding debt. For a discussion of the terms and availability of the credit facilities, please refer to Note 10 of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. 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 onFebruary 28, 2017 , at which point they effectively converted a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. During 2020, the Company de-designated its cash flow hedges and accounts for all existing and future interest rate swaps on a mark-to-market basis with changes in fair value recorded in current period earnings. As ofMarch 31, 2021 andDecember 31, 2020 , the swap liability was$863 and$1,097 , respectively. Critical Accounting Policies The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted inthe 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. 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 endedDecember 31, 2020 . Item 3. Quantitative and Qualitative Disclosures about Market Risk This item is not applicable to a smaller reporting company. Item 4. Controls and Procedures Evaluation ofDisclosure 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 ofMarch 31, 2021 . Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of such date such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in theSEC's rules and forms and (ii) accumulated and communicated to management, including the chief executive officer, chief financial officer, or person performing such functions, as appropriate to allow timely decisions regarding disclosure. Changes in Internal Control Over Financial Reporting There were no changes to 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 three months endedMarch 31, 2021 , and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures In designing and evaluating 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. 30
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