x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Pennsylvania | 25-1324733 | |||||||
(State of Incorporation) | (I. R. S. Employer Identification No.) |
415 Holiday Drive, Pittsburgh, Pennsylvania | 15220 | |||||||
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ☐ | Accelerated filer x | |||||||||||||
Non-accelerated filer ☐ | Smaller reporting company ☐ | |||||||||||||
Emerging growth company ☐ |
Class | Outstanding as of October 31, 2018 | |||||||||||||||||||
Common Stock, Par Value $0.01 | 10,562,832 Shares |
Page | |||||
September 30, 2018 | December 31, 2017 | |||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable - net | ||||||||||||||
Inventories - net | ||||||||||||||
Prepaid income tax | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant, and equipment - net | ||||||||||||||
Other assets: | ||||||||||||||
Goodwill | ||||||||||||||
Other intangibles - net | ||||||||||||||
Investments | ||||||||||||||
Other assets | ||||||||||||||
TOTAL ASSETS | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Deferred revenue | ||||||||||||||
Accrued payroll and employee benefits | ||||||||||||||
Accrued warranty | ||||||||||||||
Current maturities of long-term debt | ||||||||||||||
Other accrued liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Deferred tax liabilities | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Common stock, par value $0.01, authorized 20,000,000 shares; shares issued at September 30, 2018 and December 31, 2017, 11,115,779; shares outstanding at September 30, 2018 and December 31, 2017, 10,366,007 and 10,340,576, respectively | ||||||||||||||
Paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Treasury stock - at cost, 749,772 and 775,203 common stock shares at September 30, 2018 and December 31, 2017, respectively | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total stockholders' equity | ||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||
Sales of goods | $ | $ | $ | $ | ||||||||||||||||||||||
Sales of services | ||||||||||||||||||||||||||
Total net sales | ||||||||||||||||||||||||||
Cost of goods sold | ||||||||||||||||||||||||||
Cost of services sold | ||||||||||||||||||||||||||
Total cost of sales | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Selling and administrative expenses | ||||||||||||||||||||||||||
Amortization expense | ||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||
Interest income | ( | ( | ( | ( | ||||||||||||||||||||||
Equity in loss (income) of nonconsolidated investments | ( | |||||||||||||||||||||||||
Other expense (income) | ( | ( | ( | |||||||||||||||||||||||
Total expenses | ||||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Income tax (benefit) expense | ( | ( | ||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ||||||||||||||||||||||||
Unrealized gain (loss) on cash flow hedges, net of tax expense of $0 for all periods | ( | |||||||||||||||||||||||||
Reclassification of pension liability adjustments to earnings, net of tax expense of $0 for all periods* | ||||||||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ||||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
* |
Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
(Unaudited) | ||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to cash provided (used) by operating activities: | ||||||||||||||
Deferred income taxes | ( | ( | ||||||||||||
Depreciation | ||||||||||||||
Amortization | ||||||||||||||
Equity in loss of nonconsolidated investments | ||||||||||||||
Loss (gain) on sales and disposals of property, plant, and equipment | ( | |||||||||||||
Stock-based compensation | ||||||||||||||
Change in operating assets and liabilities: | ||||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Inventories | ( | ( | ||||||||||||
Other current assets | ( | ( | ||||||||||||
Prepaid income tax | ( | |||||||||||||
Other noncurrent assets | ||||||||||||||
Accounts payable | ||||||||||||||
Deferred revenue | ||||||||||||||
Accrued payroll and employee benefits | ( | |||||||||||||
Other current liabilities | ( | |||||||||||||
Other long-term liabilities | ( | ( | ||||||||||||
Net cash provided by operating activities | ||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Proceeds from the sale of property, plant, and equipment | ||||||||||||||
Capital expenditures on property, plant, and equipment | ( | ( | ||||||||||||
Proceeds from sale of equity method investment | ||||||||||||||
Repayment of revolving line of credit from equity method investment | ||||||||||||||
Net cash provided by (used in) investing activities | ( | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Repayments of debt | ( | ( | ||||||||||||
Proceeds from debt | ||||||||||||||
Treasury stock acquisitions | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | |||||||||||||
Net (decrease) increase in cash and cash equivalents | ( | |||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ | ||||||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Interest paid | $ | $ | ||||||||||||
Income taxes paid (received) | $ | $ | ( | |||||||||||
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||||||||||||
Net Sales | Segment Profit | Net Sales | Segment Profit | |||||||||||||||||||||||
Rail Products and Services | $ | $ | $ | $ | ||||||||||||||||||||||
Construction Products | ||||||||||||||||||||||||||
Tubular and Energy Services | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||||||||||||
Net Sales | Segment Profit | Net Sales | Segment Profit | |||||||||||||||||||||||
Rail Products and Services | $ | $ | $ | $ | ||||||||||||||||||||||
Construction Products | ||||||||||||||||||||||||||
Tubular and Energy Services | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Profit for reportable segments | $ | $ | $ | $ | ||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Other (expense) income | ( | |||||||||||||||||||||||||
LIFO expense | ( | ( | ( | ( | ||||||||||||||||||||||
Equity in (loss) income of nonconsolidated investments | ( | ( | ( | |||||||||||||||||||||||
Unallocated corporate expenses and other unallocated charges | ( | ( | ( | ( | ||||||||||||||||||||||
Income before income taxes | $ | $ | $ | $ |
September 30, 2018 | December 31, 2017 | |||||||||||||
Rail Products and Services | $ | $ | ||||||||||||
Construction Products | ||||||||||||||
Tubular and Energy Services | ||||||||||||||
Unallocated corporate assets | ||||||||||||||
Total | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Rail Products | $ | $ | $ | $ | ||||||||||||||||||||||
Rail Technologies | ||||||||||||||||||||||||||
Rail Products and Services | ||||||||||||||||||||||||||
Piling and Fabricated Bridge | ||||||||||||||||||||||||||
Precast Concrete Products | ||||||||||||||||||||||||||
Construction Products | ||||||||||||||||||||||||||
Test, Inspection, and Threading | ||||||||||||||||||||||||||
Protective Coatings and Measurement Solutions | ||||||||||||||||||||||||||
Tubular and Energy Services | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Three Months Ended September 30, 2018 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Point in time | $ | $ | $ | $ | ||||||||||||||||||||||
Over time | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Three Months Ended September 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Point in time | $ | $ | $ | $ | ||||||||||||||||||||||
Over time | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Nine Months Ended September 30, 2018 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Point in time | $ | $ | $ | $ | ||||||||||||||||||||||
Over time | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Nine Months Ended September 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Point in time | $ | $ | $ | $ | ||||||||||||||||||||||
Over time | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Rail Products and Services | Construction Products | Tubular and Energy Services | Total | |||||||||||||||||||||||
Balance as of December 31, 2017 | $ | $ | $ | $ | ||||||||||||||||||||||
Foreign currency translation impact | ( | ( | ||||||||||||||||||||||||
Balance as of September 30, 2018 | $ | $ | $ | $ |
September 30, 2018 | December 31, 2017 | |||||||||||||
Rail Products and Services* | $ | $ | ||||||||||||
Construction Products | ||||||||||||||
Tubular and Energy Services | ||||||||||||||
$ | $ |
September 30, 2018 | ||||||||||||||||||||||||||
Weighted Average Amortization Period In Years | Gross Carrying Value | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||
Non-compete agreements | $ | $ | ( | $ | ||||||||||||||||||||||
Patents | ( | |||||||||||||||||||||||||
Customer relationships | ( | |||||||||||||||||||||||||
Trademarks and trade names | ( | |||||||||||||||||||||||||
Technology | ( | |||||||||||||||||||||||||
$ | $ | ( | $ | |||||||||||||||||||||||
December 31, 2017 | ||||||||||||||||||||||||||
Weighted Average Amortization Period In Years | Gross Carrying Value | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||
Non-compete agreements | $ | $ | ( | $ | ||||||||||||||||||||||
Patents | ( | |||||||||||||||||||||||||
Customer relationships | ( | |||||||||||||||||||||||||
Trademarks and trade names | ( | |||||||||||||||||||||||||
Technology | ( | |||||||||||||||||||||||||
$ | $ | ( | $ |
Amortization Expense | |||||
Remainder of 2018 | $ | ||||
2019 | |||||
2020 | |||||
2021 | |||||
2022 | |||||
2023 and thereafter | |||||
$ |
September 30, 2018 | December 31, 2017 | |||||||||||||
Finished goods | $ | $ | ||||||||||||
Contract assets | ||||||||||||||
Work-in-process | ||||||||||||||
Raw materials | ||||||||||||||
Total inventories at current costs | ||||||||||||||
Less LIFO reserve | ( | ( | ||||||||||||
$ | $ |
September 30, 2018 | December 31, 2017 | |||||||||||||
Land | $ | $ | ||||||||||||
Improvements to land and leaseholds | ||||||||||||||
Buildings | ||||||||||||||
Machinery and equipment, including equipment under capitalized leases | ||||||||||||||
Construction in progress | ||||||||||||||
Less accumulated depreciation and amortization, including accumulated amortization of capitalized leases | ( | ( | ||||||||||||
$ | $ |
September 30, 2018 | December 31, 2017 | |||||||||||||
L B Pipe JV investment | $ | $ | ||||||||||||
Revolving line of credit | ||||||||||||||
Net investment in direct financing lease | ||||||||||||||
$ | $ |
Minimum Lease Payments | |||||
Remainder of 2018 | $ | ||||
2019 | |||||
$ |
September 30, 2018 | December 31, 2017 | |||||||||||||
Revolving credit facility | $ | $ | ||||||||||||
Capital leases and financing agreements | ||||||||||||||
Total | ||||||||||||||
Less current maturities | ( | ( | ||||||||||||
Long-term portion | $ | $ |
Fair Value Measurements at Reporting Date | Fair Value Measurements at Reporting Date | |||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | December 31, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||||||||||||||
Term deposits | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swaps | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Numerator for basic and diluted earnings per common share: | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||||||||
Denominator for basic earnings per common share | ||||||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock compensation plans | ||||||||||||||||||||||||||
Dilutive potential common shares | ||||||||||||||||||||||||||
Denominator for diluted earnings per common share - adjusted weighted average shares outstanding | ||||||||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | $ |
Restricted Stock | Deferred Stock Units | Performance Share Units | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
Outstanding as of December 31, 2017 | $ | |||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Vested | ( | |||||||||||||||||||||||||
Adjustment for incentive awards expected to vest | ||||||||||||||||||||||||||
Cancelled and forfeited | ( | ( | ||||||||||||||||||||||||
Outstanding as of September 30, 2018 | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Interest cost | $ | $ | $ | $ | ||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Recognized net actuarial loss | ||||||||||||||||||||||||||
Net periodic pension (income) cost | $ | ( | $ | $ | ( | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Interest cost | $ | $ | $ | $ | ||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of prior service costs and transition amount | ||||||||||||||||||||||||||
Recognized net actuarial loss | ||||||||||||||||||||||||||
Net periodic pension cost | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
United States | $ | $ | $ | $ | ||||||||||||||||||||||
Canada | ||||||||||||||||||||||||||
United Kingdom | ||||||||||||||||||||||||||
$ | $ | $ | $ |
Warranty Liability | |||||
Balance as of December 31, 2017 | $ | ||||
Additions to warranty liability | |||||
Warranty liability utilized | ( | ||||
Balance as of September 30, 2018 | $ |
Environmental liability | |||||
Balance as of December 31, 2017 | $ | ||||
Additions to environmental obligations | |||||
Environmental obligations utilized | ( | ||||
Balance as of September 30, 2018 | $ |
Three months ended September 30, 2018 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Segment profit | $ | 5,299 | $ | 1,603 | $ | 4,274 | $ | 11,176 | ||||||||||||||||||
Segment and allocated selling and administrative | 10,250 | 4,172 | 4,096 | 18,518 | ||||||||||||||||||||||
Amortization expense | 938 | 38 | 786 | 1,762 | ||||||||||||||||||||||
Non-GAAP segment gross profit | $ | 16,487 | $ | 5,813 | $ | 9,156 | $ | 31,456 |
Three months ended September 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Segment profit | $ | 3,179 | $ | 3,846 | $ | 2,093 | $ | 9,118 | ||||||||||||||||||
Segment and allocated selling and administrative | 9,698 | 4,161 | 3,542 | 17,401 | ||||||||||||||||||||||
Amortization expense | 940 | 38 | 786 | 1,764 | ||||||||||||||||||||||
Non-GAAP segment gross profit | $ | 13,817 | $ | 8,045 | $ | 6,421 | $ | 28,283 |
Three Months Ended September 30, | Percent of Total Net Sales Three Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Net Sales: | ||||||||||||||||||||||||||||||||
Rail Products and Services | $ | 84,517 | $ | 62,095 | 50.6 | % | 47.2 | % | 36.1 | % | ||||||||||||||||||||||
Construction Products | 41,534 | 39,118 | 24.9 | 29.7 | 6.2 | |||||||||||||||||||||||||||
Tubular and Energy Services | 41,043 | 30,279 | 24.5 | 23.1 | 35.5 | |||||||||||||||||||||||||||
Total net sales | $ | 167,094 | $ | 131,492 | 100.0 | % | 100.0 | % | 27.1 | % | ||||||||||||||||||||||
Three Months Ended September 30, | Reported/Non-GAAP Gross Profit Percentage Three Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Gross Profit: | ||||||||||||||||||||||||||||||||
Total gross profit | $ | 29,602 | $ | 26,365 | 17.7 | % | 20.1 | % | 12.3 | % | ||||||||||||||||||||||
LIFO expense | (1,701) | (1,552) | (1.0) | (1.2) | 9.6 | |||||||||||||||||||||||||||
Other | (153) | (366) | (0.1) | (0.3) | 58.2 | |||||||||||||||||||||||||||
Non-GAAP segment gross profit (1) | $ | 31,456 | $ | 28,283 | ||||||||||||||||||||||||||||
(1) Non-GAAP segment gross profit is reconciled within Results of the Quarter comparison above and consists of the following: | ||||||||||||||||||||||||||||||||
Non-GAAP Rail Products and Services (a) | $ | 16,487 | $ | 13,817 | 19.5 | % | 22.3 | % | 19.3 | % | ||||||||||||||||||||||
Non-GAAP Construction Products (a) | 5,813 | 8,045 | 14.0 | 20.6 | (27.7) | |||||||||||||||||||||||||||
Non-GAAP Tubular and Energy Services (a) | 9,156 | 6,421 | 22.3 | 21.2 | 42.6 | |||||||||||||||||||||||||||
Non-GAAP segment gross profit (a) | $ | 31,456 | $ | 28,283 | ||||||||||||||||||||||||||||
(a) Non-GAAP segment gross profit, by segment, is reconciled to the above table in total. | ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Percent of Total Net Sales Three Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Selling and administrative expenses | $ | 21,662 | $ | 20,218 | 13.0 | % | 15.4 | % | 7.1 | % | ||||||||||||||||||||||
Amortization expense | 1,762 | 1,764 | 1.1 | 1.3 | (0.1) | |||||||||||||||||||||||||||
Interest expense | 1,367 | 2,026 | 0.8 | 1.5 | (32.5) | |||||||||||||||||||||||||||
Interest income | (71) | (56) | — | — | 26.8 | |||||||||||||||||||||||||||
Equity in loss (income) of nonconsolidated investments | 4 | (50) | — | — | 108.0 | |||||||||||||||||||||||||||
Other expense (income) | 153 | (551) | 0.1 | (0.4) | 127.8 | |||||||||||||||||||||||||||
Total expenses | $ | 24,877 | $ | 23,351 | 14.9 | % | 17.8 | % | 6.5 | % | ||||||||||||||||||||||
Income before income taxes | $ | 4,725 | $ | 3,014 | 2.8 | % | 2.3 | % | 56.8 | % | ||||||||||||||||||||||
Income tax benefit | (246) | (208) | (0.1) | (0.2) | 18.3 | |||||||||||||||||||||||||||
Net income | $ | 4,971 | $ | 3,222 | 3.0 | % | 2.5 | % | 54.3 | % |
Three Months Ended September 30, | Increase | Percent Increase | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net sales | $ | 84,517 | $ | 62,095 | $ | 22,422 | 36.1 | % | ||||||||||||||||||
Segment profit | $ | 5,299 | $ | 3,179 | $ | 2,120 | 66.7 | % | ||||||||||||||||||
Segment profit percentage | 6.3 | % | 5.1 | % | 1.2 | % | 22.5 | % |
Three Months Ended September 30, | Increase/(Decrease) | Percent Increase/(Decrease) | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net sales | $ | 41,534 | $ | 39,118 | $ | 2,416 | 6.2 | % | ||||||||||||||||||
Segment profit | $ | 1,603 | $ | 3,846 | $ | (2,243) | (58.3) | % | ||||||||||||||||||
Segment profit percentage | 3.9 | % | 9.8 | % | (6.0) | % | (60.7) | % |
Three Months Ended September 30, | Increase | Percent Increase | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net sales | $ | 41,043 | $ | 30,279 | $ | 10,764 | 35.5 | % | ||||||||||||||||||
Segment profit | $ | 4,274 | $ | 2,093 | $ | 2,181 | 104.2 | % | ||||||||||||||||||
Segment profit percentage | 10.4 | % | 6.9 | % | 3.5 | % | 50.6 | % |
Nine months ended September 30, 2018 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Segment profit | $ | 12,655 | $ | 4,478 | $ | 10,704 | $ | 27,837 | ||||||||||||||||||
Segment and allocated selling and administrative | 29,356 | 12,334 | 11,981 | 53,671 | ||||||||||||||||||||||
Amortization expense | 2,851 | 113 | 2,358 | 5,322 | ||||||||||||||||||||||
Non-GAAP segment gross profit | $ | 44,862 | $ | 16,925 | $ | 25,043 | $ | 86,830 |
Nine months ended September 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total | ||||||||||||||||||||||
Segment profit | $ | 7,581 | $ | 10,617 | $ | 1,287 | $ | 19,485 | ||||||||||||||||||
Segment and allocated selling and administrative | 28,712 | 12,374 | 12,198 | 53,284 | ||||||||||||||||||||||
Amortization expense | 2,747 | 113 | 2,358 | 5,218 | ||||||||||||||||||||||
Non-GAAP segment gross profit | $ | 39,040 | $ | 23,104 | $ | 15,843 | $ | 77,987 |
Nine Months Ended September 30, | Percent of Total Net Sales Nine Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Net Sales: | ||||||||||||||||||||||||||||||||
Rail Products and Services | $ | 238,571 | $ | 187,922 | 51.6 | % | 47.6 | % | 27.0 | % | ||||||||||||||||||||||
Construction Products | 112,641 | 121,905 | 24.4 | 30.9 | (7.6) | |||||||||||||||||||||||||||
Tubular and Energy Services | 111,226 | 85,227 | 24.0 | 21.5 | 30.5 | |||||||||||||||||||||||||||
Total net sales | $ | 462,438 | $ | 395,054 | 100.0 | % | 100.0 | % | 17.1 | % | ||||||||||||||||||||||
Nine Months Ended September 30, | Reported/Non-GAAP Gross Profit Percentage Nine Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Gross Profit: | ||||||||||||||||||||||||||||||||
Total gross profit | $ | 84,144 | $ | 75,353 | 18.2 | % | 19.1 | % | 11.7 | % | ||||||||||||||||||||||
LIFO expense | (2,414) | (1,733) | (0.5) | (0.4) | 39.3 | |||||||||||||||||||||||||||
Other | (272) | (901) | (0.1) | (0.2) | 69.8 | |||||||||||||||||||||||||||
Non-GAAP segment gross profit (1) | $ | 86,830 | $ | 77,987 | ||||||||||||||||||||||||||||
(1) Non-GAAP segment gross profit is reconciled within Nine Month Results comparison above and consists of the following: | ||||||||||||||||||||||||||||||||
Non-GAAP Rail Products and Services (a) | $ | 44,862 | $ | 39,040 | 18.8 | % | 20.8 | % | 14.9 | % | ||||||||||||||||||||||
Non-GAAP Construction Products (a) | 16,925 | 23,104 | 15.0 | 19.0 | (26.7) | |||||||||||||||||||||||||||
Non-GAAP Tubular and Energy Services (a) | 25,043 | 15,843 | 22.5 | 18.6 | 58.1 | |||||||||||||||||||||||||||
Non-GAAP segment gross profit (a) | $ | 86,830 | $ | 77,987 | ||||||||||||||||||||||||||||
(a) Non-GAAP segment gross profit, by segment, is reconciled to the above table in total. | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | Percent of Total Net Sales Nine Months Ended September 30, | Percent Increase/ (Decrease) | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | 2018 vs. 2017 | ||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Selling and administrative expenses | $ | 65,488 | $ | 60,023 | 14.2 | % | 15.2 | % | 9.1 | % | ||||||||||||||||||||||
Amortization expense | 5,322 | 5,218 | 1.2 | 1.3 | 2.0 | |||||||||||||||||||||||||||
Interest expense | 4,979 | 6,315 | 1.1 | 1.6 | (21.2) | |||||||||||||||||||||||||||
Interest income | (166) | (166) | — | — | — | |||||||||||||||||||||||||||
Equity in loss of nonconsolidated investments | 7 | 5 | — | — | 40.0 | |||||||||||||||||||||||||||
Other income | (327) | (564) | (0.1) | (0.1) | 42.0 | |||||||||||||||||||||||||||
Total expenses | $ | 75,303 | $ | 70,831 | 16.3 | % | 17.9 | % | 6.3 | % | ||||||||||||||||||||||
Income before income taxes | $ | 8,841 | $ | 4,522 | 1.9 | % | 1.1 | % | 95.5 | % | ||||||||||||||||||||||
Income tax expense | 952 | 698 | 0.2 | 0.2 | 36.4 | |||||||||||||||||||||||||||
Net income | $ | 7,889 | $ | 3,824 | 1.7 | % | 1.0 | % | 106.3 | % |
Nine Months Ended September 30, | Increase | Percent Increase | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net sales | $ | 238,571 | $ | 187,922 | $ | 50,649 | 27.0 | % | ||||||||||||||||||
Segment profit | $ | 12,655 | $ | 7,581 | $ | 5,074 | 66.9 | % | ||||||||||||||||||
Segment profit percentage | 5.3 | % | 4.0 | % | 1.3 | % | 31.5 | % |
Nine Months Ended September 30, | Decrease | Percent Decrease | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net sales | $ | 112,641 | $ | 121,905 | $ | (9,264) | (7.6) | % | ||||||||||||||||||
Segment profit | $ | 4,478 | $ | 10,617 | $ | (6,139) | (57.8) | % | ||||||||||||||||||
Segment profit percentage | 4.0 | % | 8.7 | % | (4.7) | % | (54.4) | % |
Nine Months Ended September 30, | Increase | Percent Increase | ||||||||||||||||||||||||
2018 | 2017 | 2018 vs. 2017 | 2018 vs. 2017 | |||||||||||||||||||||||
Net Sales | $ | 111,226 | $ | 85,227 | $ | 25,999 | 30.5 | % | ||||||||||||||||||
Segment profit | $ | 10,704 | $ | 1,287 | $ | 9,417 | 731.7 | % | ||||||||||||||||||
Segment profit percentage | 9.6 | % | 1.5 | % | 8.1 | % | 537.3 | % |
September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||||||
Rail Products and Services | $ | 108,840 | $ | 68,850 | $ | 85,764 | ||||||||||||||
Construction Products | 117,654 | 71,318 | 74,910 | |||||||||||||||||
Tubular and Energy Services | 25,123 | 26,737 | 28,931 | |||||||||||||||||
Total Backlog | $ | 251,617 | $ | 166,905 | $ | 189,605 |
September 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
Net cash provided by operating activities | $ | 22,425 | $ | 27,516 | ||||||||||
Net cash provided by (used in) investing activities | 4,181 | (3,947) | ||||||||||||
Net cash used in financing activities | (53,813) | (21,384) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (885) | 2,460 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | $ | (28,092) | $ | 4,645 |
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, 2018 - July 31, 2018 | — | $ | — | — | $ | — | ||||||||||||||||||||
August 1, 2018 - August 31, 2018 | — | — | — | — | ||||||||||||||||||||||
September 1, 2018 - September 30, 2018 | 268 | 22.40 | — | — | ||||||||||||||||||||||
Total | 268 | $ | 22.40 | — | $ | — |
Exhibit Number | Description | |||||||
*31.1 | ||||||||
*31.2 | ||||||||
*32.0 | ||||||||
*101.INS | XBRL Instance 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. |
* | Exhibits marked with an asterisk are filed herewith. |
L.B. FOSTER COMPANY | |||||||||||
(Registrant) | |||||||||||
Date: | November 2, 2018 | By: /s/ James P. Maloney | |||||||||
James P. Maloney | |||||||||||
Senior Vice President, | |||||||||||
Chief Financial Officer, and Treasurer | |||||||||||
(Duly Authorized Officer of Registrant) |
1 | I have reviewed this Quarterly Report on Form 10-Q of L.B. Foster Company; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: | November 2, 2018 | /s/ Robert P. Bauer | ||||||||||||||||||
Name: Robert P. Bauer | ||||||||||||||||||||
Title: President and Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of L.B. Foster Company; |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4 | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5 | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Date: | November 2, 2018 | /s/ James P. Maloney | ||||||||||||||||||
Name: James P. Maloney | ||||||||||||||||||||
Title: Senior Vice President, | ||||||||||||||||||||
Chief Financial Officer, and Treasurer |
Date: | November 2, 2018 | /s/ Robert P. Bauer | ||||||||||||||||||
Name: Robert P. Bauer | ||||||||||||||||||||
Title: President and Chief Executive Officer |
Date: | November 2, 2018 | /s/ James P. Maloney | ||||||||||||||||||
Name: James P. Maloney | ||||||||||||||||||||
Title: Senior Vice President, | ||||||||||||||||||||
Chief Financial Officer, and Treasurer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Oct. 31, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | FOSTER L B CO | |
Entity Central Index Key | 0000352825 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 10,562,832 | |
Trading Symbol | fstr |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 20,000,000 | 20,000,000 |
Common stock, issued (shares) | 11,115,779 | 11,115,779 |
Common stock, shares outstanding (shares) | 10,366,007 | 10,340,576 |
Treasury stock shares - at cost, common stock (shares) | 749,772 | 775,203 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Sales of goods | $ 120,272 | $ 103,058 | $ 339,176 | $ 318,414 |
Sales of services | 46,822 | 28,434 | 123,262 | 76,640 |
Total net sales | 167,094 | 131,492 | 462,438 | 395,054 |
Cost of goods sold | 100,746 | 82,460 | 281,892 | 256,152 |
Cost of services sold | 36,746 | 22,667 | 96,402 | 63,549 |
Total cost of sales | 137,492 | 105,127 | 378,294 | 319,701 |
Gross profit | 29,602 | 26,365 | 84,144 | 75,353 |
Selling and administrative expenses | 21,662 | 20,218 | 65,488 | 60,023 |
Amortization expense | 1,762 | 1,764 | 5,322 | 5,218 |
Interest expense | 1,367 | 2,026 | 4,979 | 6,315 |
Interest income | (71) | (56) | (166) | (166) |
Equity in loss (income) of nonconsolidated investments | 4 | (50) | 7 | 5 |
Other (expense) income | 153 | (551) | (327) | (564) |
Total expenses | 24,877 | 23,351 | 75,303 | 70,831 |
Income before income taxes | 4,725 | 3,014 | 8,841 | 4,522 |
Income tax (benefit) expense | (246) | (208) | 952 | 698 |
Net income | $ 4,971 | $ 3,222 | $ 7,889 | $ 3,824 |
Basic earnings per common share (usd per share) | $ 0.48 | $ 0.31 | $ 0.76 | $ 0.37 |
Diluted earnings per common share (usd per share) | $ 0.47 | $ 0.31 | $ 0.75 | $ 0.37 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Statement of Comprehensive Income [Abstract] | ||||||
Net income | $ 4,971 | $ 3,222 | $ 7,889 | $ 3,824 | ||
Other comprehensive (loss) income, net of tax: | ||||||
Foreign currency translation adjustment | (371) | 2,412 | (3,132) | 5,528 | ||
Unrealized gain (loss) on cash flow hedges, net of tax expense of $0 for all periods | 207 | 82 | 1,243 | (119) | ||
Reclassification of pension liability adjustments to earnings, net of tax expense of $0 for all periods | [1] | 137 | 114 | 392 | 335 | |
Other comprehensive (loss) income | (27) | 2,608 | (1,497) | 5,744 | ||
Comprehensive income | $ 4,944 | $ 5,830 | $ 6,392 | $ 9,568 | ||
|
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain (loss) on cash flow hedges, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Reclassification of pension liability adjustments to earnings, tax | $ 0 | $ 0 | $ 0 | $ 0 |
Financial Statements |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Quarterly Financial Data [Abstract] | |
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 GAAP for complete financial statements. In the opinion of management, all estimates and adjustments (consisting of normal recurring 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, 2018 and December 31, 2017, its condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017, and its statements of cash flows for the nine months ended September 30, 2018 and 2017, 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, 2018. The Condensed Consolidated Balance Sheet as of December 31, 2017 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 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. Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 in most leases being capitalized as a right-of-use asset with a related balance 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 the process of analyzing the impact of ASU 2016-02 on our financial position. 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 change will not affect the covenants of the Amended and Restated Credit Agreement dated March 13, 2015 and as amended by the Second Amendment dated November 7, 2016 as defined in Note 9. Long-Term Debt of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The Company has gathered the agreements covered by ASU 2016-02 and will continue to evaluate the impact that ASU 2016-02 will have on its financial statements, related disclosures, and internal controls. Regular updates are provided to the Audit Committee regarding the progress and milestones of the adoption. The Company does not anticipate early adoption of ASU 2016-02. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income” (“ASU 2018-02”), that will permit companies the option to reclassify stranded tax effects caused by the newly-enacted US Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. Adoption of the ASU will be optional and a company will need to disclose if it elects not to adopt the ASU. The ASU will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption will be permitted, including adoption in any interim period, for financial statements that have not yet been issued or made available for issuance. Entities will have the option to apply the amendments retrospectively or to record the reclassification as of the beginning of the period of adoption. The Company is evaluating the impact of ASU 2018-02 on its financial position and whether or not it will choose to adopt the ASU. The SEC Disclosure Update and Simplification release (“DUSTR”) adopted certain amendments in August 2018. While most of the amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to require a reconciliation of changes in stockholders’ equity in the notes to the financial statements or as a separate statement. This analysis should reconcile the 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 comply with the remaining content requirements of Rule 3-04 of Regulation S-X. As a result, registrants will be required to provide the reconciliation for both the comparable quarterly and year-to-date periods in its Quarterly Report on Form 10-Q but only for the year-to-date periods in registration statements, beginning in the first quarter of 2019. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition” (“ASC 605”). ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer 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 from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Revenue from the Company's product and service sales continue to be recognized when products are shipped or services are rendered. Revenue from the Company's product and service sales provided under long-term agreements is recognized as the Company transfers control of the product or renders service to its customers, which approximates the previously used percentage-of-completion method of accounting. The adoption of ASU 2014-09 had no material effect on the Company's financial position, results of operations, cash flows, or backlog, and no adjustment to January 1, 2018 opening retained earnings was needed. The Company has presented the disclosures required by ASC 606, “Revenue from Contracts with Customers” (“ASC 606”) in Note 3. Revenue of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. In October 2016, the FASB issued ASU 2016-16, “Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory (Topic 740),” (“ASU 2016-16”) which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU was effective on January 1, 2018 and was adopted by the Company on that date, using the modified retrospective approach. Under this approach, the Company recorded a reduction to its January 1, 2018 opening retained earnings of $305 as a result of prior intra-entity transactions. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the Tax Act enacted on December 22, 2017. The Company recognized estimated income tax effects of the Tax Act in its 2017 Consolidated Financial Statements in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”). Refer to Note 15. Income Taxes of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for further information regarding the provisional amounts recorded by the Company as of December 31, 2017 through September 30, 2018. 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. The guidance requires that the entity report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, and report the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement separately from the service cost component and not within 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 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The adoption of ASU 2017-07 had no impact to the Company. Reclassifications and Disclosures Certain amounts in previously issued financial statements have been reclassified to conform to the current period presentation. These reclassifications represent the change in allocated corporate expenses as disclosed in Note 2. Business Segments and the adoption of ASC 606 disclosed in Note 3. Revenue, Note 5. Accounts Receivable, and Note 6. Inventories of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
|
Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | BUSINESS SEGMENTSThe 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 operates in three different operating segments: the Rail Products and Services segment, 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 discrete financial information is available. Operating segments are evaluated on their segment profit contribution to the Company's consolidated results. Other income and expenses, interest, income taxes, and certain other items are managed on a consolidated basis. The Company's segment accounting policies, unless otherwise noted, are the same as those described in the 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, 2017. The following table illustrates the Company's revenues and profit from operations by segment for the periods indicated:
Segment profit from operations, as shown above, includes allocated corporate operating expenses. Prior to January 1, 2018, the allocation of corporate operating expenses reflected a cost of capital for the assets used in each segment at a rate of generally 1% per month. In 2018, operating expenses related to corporate headquarter functions that directly support the segment activity are allocated based on segment headcount, revenue contribution, or activity of the business units within the segments, based on the corporate activity type provided to the segment. The expense allocation excludes certain corporate costs that are separately managed from the segments. The prior year periods have been updated to reflect the change in allocating corporate operating expenses. Management believes the current allocation of corporate operating expenses provides a more accurate presentation of how the segments utilize corporate support activities as compared to the cost of capital method previously used. This provides the CODM more meaningful segment profitability reporting to support operating decisions and the allocation of resources. The following table provides a reconciliation of segment net profit from operations to the Company’s consolidated total:
The following table illustrates assets of the Company by segment:
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Revenue |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | REVENUE On January 1, 2018, the Company adopted ASU 2014-09, and all the related amendments using the modified retrospective approach, which did not result in any changes to the previously reported financial information. The updates related to ASU 2014-09 were applied only to contracts that were not complete as of January 1, 2018. The Company’s revenues are comprised of product and service sales, including products and services provided under long-term agreements with its customers. All revenue is recognized when the Company satisfies its performance obligations under the contract, either implicit or explicit, by transferring the promised product or rendering a service to its customer either when or as its customer obtains control of the product or the service is rendered. A performance obligation is a promise in a contract to transfer a distinct product or render a service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer products or render services is not separately identifiable from other promises in the contract and, therefore, not distinct. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. Revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales, value added, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis. Shipping and handling costs are included in cost of goods sold. The Company’s performance obligations under long-term agreements with its customers are generally satisfied as over time. Over time revenue is primarily comprised of transit infrastructure projects within Rail Products and Rail Technologies, long-term bridge projects within Piling and Fabricated Bridge, precast concrete buildings within Precast Concrete Products, and custom precision metering systems within Protective Coatings and Measurement Solutions. Revenue from products or services provided to customers over time accounted for 26.8% and 24.0% of revenue for the three months ended September 30, 2018 and 2017, respectively, and 25.2% and 23.3% of revenue for the nine months ended September 30, 2018 and 2017, 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 $33,225 and $20,447 for the three months ended September 30, 2018 and 2017, respectively, and $87,369 and $61,892 for the nine months ended September 30, 2018 and 2017, 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 $11,510 and $11,096 for the three months ended September 30, 2018 and 2017, respectively, and $29,064 and $30,108 for the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018 and December 31, 2017, the Company had contract assets of $27,796 and $25,320, respectively, that were recorded in inventory within the Condensed Consolidated Balance Sheets. As of September 30, 2018 and December 31, 2017, the Company had contract liabilities of $2,423 and $1,420, respectively, that were recorded in deferred revenue within the Condensed Consolidated Balance Sheets. Accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs. The Company estimates profit on these long-term agreements as the difference between total estimated revenues and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, cost and availability of materials, and timing of funding by customers. The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards, and incentive fees. Historically, these amounts of variable consideration have not been considered significant. Contract estimates may include additional revenue for submitted contract modifications if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgment at that time. These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. Changes in judgments related to the estimates above could impact the timing and amount of revenue recognized and, accordingly, the timing and amount of associated income. In the event that a contract loss becomes known, the entire amount of the estimated loss is recognized in the Condensed Consolidated Statements of Operations. The majority of the Company’s revenue is from products transferred and services rendered to customers at a point in time, which is inherent in all major product and service categories. Point in time revenue accounted for 73.2% and 76.0% of revenue for the three months ended September 30, 2018 and 2017, respectively, and 74.8% and 76.7% of revenue for the nine months ended September 30, 2018 and 2017, respectively. The Company recognizes revenue at the point in time in which the customer obtains control of the product or service, which is generally when product title passes to the customer upon shipment or the service has been rendered to the customer. In limited cases, title does not transfer and revenue is not recognized until the customer has received the products at a designated physical location. The following table summarizes the Company's net sales by major product and service category:
Net sales by the timing of the transfer of goods and services is as follows:
The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (contract assets, included in inventory), 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, 2018 include transfers to receivables from contract assets recognized at the beginning of the period of $14,528. Significant changes in contract liabilities during the nine months ended September 30, 2018 included $1,146 of revenue recognized that was included in the contract liability at the beginning of the period, and increases of $1,754 due to billings in excess of costs, excluding amounts recognized as revenue during the period. As of September 30, 2018, the Company had approximately $251,617 of remaining performance obligations, which is also referred to as backlog. Approximately 10.0% of the September 30, 2018 backlog is related to projects that are anticipated to extend beyond September 30, 2019.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS The following table presents the goodwill balance by reportable segment:
The Company performs goodwill impairment tests annually during the fourth quarter, and also performs interim goodwill impairment tests if it is determined that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. Qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. No interim goodwill impairment test was required in connection with the evaluation of qualitative factors as of September 30, 2018. The Company continues to monitor the recoverability of the long-lived assets associated with certain reporting units of the Company and their long-term financial projections. Sustained declines in the markets we serve may result in future long-lived asset impairment. The following table represents the gross balances of other intangible asset by reportable segment:
* Gross balances include the impact of foreign currency translation adjustments. The components of the Company’s intangible assets were as follows:
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 as of September 30, 2018. Amortization expense was $1,762 and $1,764 for the three months ended September 30, 2018 and 2017, respectively, and $5,322 and $5,218 for the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, estimated amortization expense for the remainder of 2018 and thereafter was as follows:
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Accounts Receivable |
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Accounts Receivable Additional Disclosures [Abstract] | |
Accounts Receivable | ACCOUNTS RECEIVABLECredit 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 as of September 30, 2018 and December 31, 2017 have been reduced by an allowance for doubtful accounts of $1,297 and $2,151, respectively. Changes in reserves for uncollectable accounts are recorded as part of selling and administrative expenses in the Condensed Consolidated Statements of Operations, and were income of $268 and expense of $208 for the three months ended September 30, 2018 and 2017, respectively, and income of $987 and expense of $737 for the nine months ended September 30, 2018 and 2017, respectively. |
Inventories |
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Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories as of September 30, 2018 and December 31, 2017 are summarized in the following table:
Inventory is generally valued at the lower of last-in, first-out (“LIFO”) cost or market. Other 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 and costs at that time. Interim LIFO calculations are based on management’s estimates of expected year-end levels and costs. Prior to the adoption of ASU 2014-09, contract assets were classified within work-in-process inventory.
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Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment as of September 30, 2018 and December 31, 2017 consisted of the following:
Depreciation expense for the three months ended September 30, 2018 and 2017 was $2,803 and $3,178, respectively, and $8,685 and $9,705 for the nine months ended September 30, 2018 and 2017, 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 impairments of property, plant, and equipment during the nine months ended September 30, 2018 and 2017. During the nine months ended September 30, 2018, the Company sold 54.5 acres of land in exchange for cash proceeds of $2,047, resulting in a loss of $269.
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Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | INVESTMENTS During the quarter ended September 30, 2017, pursuant to the limited liability company agreement, the Company determined to sell its 45% ownership interest in L B Pipe and Coupling Products, LLC (“L B Pipe JV”) to the other 45% equity holder. The Company concluded that it had met the criteria under applicable guidance for a long-lived asset to be held for sale, and, accordingly, reclassified its 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 during 2017. On August 1, 2018, the Company executed the sale of its 45% ownership interest in L B Pipe JV. Under the terms of the agreement, the Company received payment of $3,875 for its 45% ownership interest and $1,235, plus $159 in accrued interest, as repayment of the outstanding revolving line of credit. As of September 30, 2018 and December 31, 2017, the Company had a nonconsolidated equity method investment of $155 and $162, respectively. The Company recorded equity in the income of L B Pipe JV of $0 and $434 for the three months ended September 30, 2018 and 2017, respectively, and $0 and $386, respectively, for the nine months ended September 30, 2018 and 2017. 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 maintain compliance with L B Pipe JV’s debt covenants with an unaffiliated bank. The Company received its outstanding loan balance, including accrued interest, at the August 1, 2018 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. The carrying amounts with the Company’s maximum exposure to loss as of September 30, 2018 and December 31, 2017, respectively, were as follows:
The Company is leasing five acres of land and two facilities to L B Pipe JV. Subsequent to the Company's sale of its 45% ownership interest in L B Pipe JV, the Company and L B Pipe JV agreed upon a lease extension through June 30, 2020, with no further renewal period. The current monthly lease payments approximate $17, with a balloon payment of approximately $488, which is required to be paid on or before April 1, 2019. This lease qualifies as a direct financing lease under the applicable guidance in ASC 840-30, “Leases.” The following is a schedule as of September 30, 2018 of the direct financing minimum lease payments for the remainder of 2018 and the year 2019:
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Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | LONG-TERM DEBT North America Long-term debt consisted of the following:
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 borrowing of $30,000 (the “Term Loan”). During 2017, the Company paid off the balance of the Term Loan. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Second Amendment or Amended and Restated Credit Agreement filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 2017, 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 ended 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 ended 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 ended June 30, 2018, the Minimum EBITDA requirement increased by various increments. On June 30, 2018, the Minimum EBITDA requirement was $31,000. After the quarter ended June 30, 2018, the Minimum EBITDA covenant was eliminated through the remainder 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 was a Minimum Liquidity covenant which called for a minimum of $25,000 in undrawn availability on the revolving credit loan at all times through the quarter ended 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 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. As of September 30, 2018, 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 in the First Amendment. Upon execution of the Second Amendment through the quarter ended March 31, 2018, the Company was locked into the highest tier of the pricing grid, which provided 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 is 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. As of September 30, 2018, L.B. Foster had outstanding letters of credit of approximately $425 and had net available borrowing capacity of $119,174. The maturity date of the facility is March 13, 2020. United Kingdom A subsidiary of the Company has a credit facility with NatWest Bank for its United Kingdom operations, which includes an overdraft availability of £1,500 pounds sterling (approximately $1,955 as of September 30, 2018). 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 variable 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 as of September 30, 2018. There was approximately $319 in outstanding guarantees (as defined in the underlying agreement) as of September 30, 2018. This credit facility was renewed during the third quarter of 2018 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 third quarter of 2019. 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 as of September 30, 2018. The subsidiary had available borrowing capacity of $1,636 as of September 30, 2018.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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. As of September 30, 2018, the interest rate swaps were recorded within other current assets.
The interest rate swaps are accounted for as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate of our debt. The gains and losses related to the interest rate swaps are reclassified from accumulated other comprehensive loss and included in interest income or expense in our Condensed Consolidated Statements of Operations as the interest expense from our debt is recognized. For the three months ended September 30, 2018 and 2017, interest income from interest rate swaps was $18 and expense of $98, respectively. Interest expense from the interest rate swaps was $16 and $302 for the nine months ended September 30, 2018 and 2017, respectively. In accordance with the provisions of ASC 820, "Fair Value Measurement," the Company measures certain nonfinancial assets and liabilities at fair value, which are recognized or disclosed on a nonrecurring basis.
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Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | EARNINGS PER COMMON SHARE (Share amounts in thousands) The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:
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Stock-Based Compensation |
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Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | STOCK-BASED COMPENSATIONThe Company applies the provisions of 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. The Company recorded stock compensation expense related to fully-vested stock awards, restricted stock awards, and performance share units of $934 and $503 for the three-month periods ended September 30, 2018 and 2017, respectively, and $2,838 and $1,228 for the nine-month periods ended September 30, 2018 and 2017, respectively. As of September 30, 2018, unrecognized compensation expense for awards that the Company expects to vest approximated $4,647. The Company will recognize this expense over the upcoming 3.6 years through April 2022. 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. Restricted Stock Awards and Performance Share Units Under the 2006 Omnibus Plan, the Company grants eligible employees restricted stock and performance share units. The forfeitable restricted stock awards granted prior to March 2015 generally time-vest after a -year period, and those granted subsequent to March 2015 generally time-vest ratably over a -year period, unless indicated otherwise by the underlying restricted stock agreement. Since May 2018, awards of restricted stock are subject to a minimum -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 share units are offered annually under separate -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 share units expected to vest changes in a subsequent accounting period, cumulative compensation expense could increase or decrease. The change will be recognized in the current period for the vested shares and would change future expense over the remaining vesting period. Since May 1, 2017, non-employee directors have been permitted to defer receipt of annual stock awards and equity elected to be received in lieu of quarterly cash compensation. If so elected, these deferred stock units will be issued as common stock six months after the separation from their service on the Board of Directors. During the quarter ended March 31, 2018, the Compensation Committee approved the 2018 Performance Share Unit Program and the Executive Annual Incentive Compensation Plan (consisting of cash and equity components). The Compensation Committee also certified the actual performance achievement of participants in the 2015 Performance Share Unit Program. Actual performance resulted in no payout relative to the 2015 Performance Share Unit Program target performance metrics. The following table summarizes the restricted stock award, deferred stock units, and performance share units activity for the nine months ended September 30, 2018:
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Retirement Plans |
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Employee-related Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans | RETIREMENT PLANS Retirement Plans The Company has three retirement plans that cover its hourly and salaried employees in the United States: one defined benefit plan, which is frozen, and two defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Company’s policy and investment guidelines applicable to each respective plan. The Company’s policy is to contribute at least the minimum in accordance with the funding standards of ERISA. The Company maintains two defined contribution plans for its employees in Canada, as well as one post-retirement benefit plan. The Company also maintains two defined contribution plans and one defined benefit plan for its employees in the United Kingdom. United States Defined Benefit Plan Net periodic pension costs for the United States defined benefit pension plan for the three- and nine-month periods ended September 30, 2018 and 2017 were as follows:
The Company does not expect to contribute to its United States defined benefit pension plan in 2018. United Kingdom Defined Benefit Plan Net periodic pension costs for the United Kingdom defined benefit pension plan for the three- and nine-month periods ended September 30, 2018 and 2017 were as follows:
United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans. The Company anticipates contributions of approximately $244 to the United Kingdom Rail Technologies pension plan during 2018. For the nine months ended September 30, 2018, the Company contributed approximately $189 to the plan. Defined Contribution Plans The Company sponsors six 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:
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Commitments and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingent Liabilities | 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. In addition, the product warranty accrual is 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:
Included within the above table are concrete tie warranty reserves of approximately $7,701 and $7,595 as of September 30, 2018 and December 31, 2017, respectively. During the nine months ended September 30, 2018, the Company incurred a charge of $611 within our Rail Products and Services segment related to a commercial decision to support a customer concern related to a previous project. Union Pacific Railroad (UPRR) Concrete Tie Matter On July 12, 2011, UPRR notified (the “UPRR Notice”) the Company and its subsidiary, CXT Incorporated (“CXT”), of 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 work with UPRR to identify, replace, and reconcile defective ties related to the warranty claim in accordance with the amended 2005 supply agreement. The 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 in the District Court for Douglas County, NE (“Complaint”) against the Company and its subsidiary, CXT, asserting, among other matters, that the Company breached its express warranty, breached an implied covenant of good faith and fair dealing, and anticipatorily repudiated its warranty obligations, and that UPRR’s exclusive and limited remedy provisions in the supply agreement have failed of their essential purpose which entitles UPRR to recover all incidental and consequential damages. The Complaint seeks to cancel all duties of UPRR 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. The amended 2005 supply agreement provides that UPRR’s exclusive remedy is to receive 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 lieu of all other express 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 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. Throughout 2017, the parties continued to conduct discovery, with various disputes that required and will likely require court resolution. 2018 By Fourth Amended Scheduling Order dated March 21, 2018, certain interim pretrial deadlines for the close of discovery and various submittals were changed but the October 1, 2018 trial date set forth in UPRR's Second Amended Notice of Trial under the prior Third Amended Scheduling Order remained in place. By Order dated August 20, 2018, the Fourth Amended Scheduling Order was amended to reschedule the trial date from October 1, 2018 to April 29, 2019, establish a January 21, 2019 deadline for the completion of fact discovery, and change the other interim pretrial deadlines. During the first six months ended June 30, 2018, the Company continued fact discovery and prepared and exchanged expert reports. During the second and third quarters, the Company engaged and intends to continue to engage in both trial preparation efforts and also discussions and efforts with UPRR to resolve the matter. However, we cannot predict that such discussions will be successful, or that the results of the litigation with UPRR, or any settlement or judgment amounts, will reasonably approximate our estimated accruals for loss contingencies. Future potential costs pertaining to UPRR’s claims and the outcome of the UPRR litigation could result in a material adverse effect on our results of operations, financial condition, and cash flows. As a result of the pretrial status of the litigation and the unresolved nature of the parties' fact and legal disputes 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”) indicating that the Company may be a potentially responsible party regarding the Portland Harbor Superfund Site cleanup along with numerous other companies. 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. The Company is reviewing the basis for its identification by the EPA and the nature of the historic operations of an L.B. Foster predecessor on the site. Management does not believe that 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. As of September 30, 2018 and December 31, 2017, the Company maintained environmental reserves approximating $6,137 and $6,144, respectively. The following table sets forth the Company’s environmental obligation:
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 as of September 30, 2018. 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 as of September 30, 2018, no such disclosures were considered necessary.
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Income Taxes |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ended September 30, 2018 and 2017, the Company recorded an income tax benefit of $246 and $208 on pre-tax income of $4,725 and $3,014 for an effective income tax rate of (5.2)% and (6.9)%, respectively. For the nine months ended September 30, 2018 and 2017, the Company recorded an income tax expense of $952 and $698 on pre-tax income of $8,841 and $4,522 for an effective income tax rate of 10.8% and 15.4%, respectively. The Company's tax provision for the three and nine months ended September 30, 2018 is 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 quarter 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 pre-tax income projections and the mix of income across jurisdictions could also impact the effective income tax rate. The Tax Act was enacted on December 22, 2017. The Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. Due to the complexities involved in accounting for the enactment of the Tax Act, SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”) allowed the Company to record provisional amounts in earnings for the year ended December 31, 2017. The Company has not completed its accounting for the tax effects of the enactment of the Tax Act; however, as described below, the Company made reasonable estimates of the effects of the Tax Act on existing deferred tax balances and the one-time transition tax. In 2017, the Company recognized a $1,508 provisional tax benefit related to the remeasurement of certain deferred tax assets and liabilities, as well as a $3,298 provisional tax expense related to the one-time transition tax on mandatory deemed repatriation of foreign earnings, and related items. During the nine-month period ended September 30, 2018, there were no changes made to the provisional amounts recognized in 2017. The Company will continue to analyze the effects of the Tax Act on its Condensed Consolidated Financial Statements. Additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement period provided for in SAB No. 118, which extends up to one year from the enactment date. The final impact of the Tax Act may differ from the provisional amounts that have been recognized, possibly materially, due to, among other things, changes in the Company’s interpretation of the Tax Act, legislative or administrative actions to clarify the intent of the statutory language provided that differ from the Company’s current interpretation, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates utilized to calculate the impacts. The Company also continues to evaluate the impact of the global intangible low-taxed income (“GILTI”) provisions of the Tax Act, which are complex and subject to continuing regulatory interpretation. The Company has not yet completed its assessment to make an accounting policy election to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. Adjustments related to the amount of GILTI tax recorded in its consolidated financial statements may be required based on the outcome of this election.
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Subsequent Events |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSThe Company has evaluated subsequent events through the date these financial statements were issued 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. |
Financial Statements (Policies) |
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Sep. 30, 2018 | |
Quarterly Financial Data [Abstract] | |
Basis of presentation | 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 GAAP for complete financial statements. In the opinion of management, all estimates and adjustments (consisting of normal recurring 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, 2018 and December 31, 2017, its condensed consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017, and its statements of cash flows for the nine months ended September 30, 2018 and 2017, 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, 2018. The Condensed Consolidated Balance Sheet as of December 31, 2017 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2017. 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.
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Recently issued accounting standards | Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 in most leases being capitalized as a right-of-use asset with a related balance 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 the process of analyzing the impact of ASU 2016-02 on our financial position. 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 change will not affect the covenants of the Amended and Restated Credit Agreement dated March 13, 2015 and as amended by the Second Amendment dated November 7, 2016 as defined in Note 9. Long-Term Debt of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. The Company has gathered the agreements covered by ASU 2016-02 and will continue to evaluate the impact that ASU 2016-02 will have on its financial statements, related disclosures, and internal controls. Regular updates are provided to the Audit Committee regarding the progress and milestones of the adoption. The Company does not anticipate early adoption of ASU 2016-02. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income” (“ASU 2018-02”), that will permit companies the option to reclassify stranded tax effects caused by the newly-enacted US Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. Adoption of the ASU will be optional and a company will need to disclose if it elects not to adopt the ASU. The ASU will be effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption will be permitted, including adoption in any interim period, for financial statements that have not yet been issued or made available for issuance. Entities will have the option to apply the amendments retrospectively or to record the reclassification as of the beginning of the period of adoption. The Company is evaluating the impact of ASU 2018-02 on its financial position and whether or not it will choose to adopt the ASU. The SEC Disclosure Update and Simplification release (“DUSTR”) adopted certain amendments in August 2018. While most of the amendments eliminate outdated or duplicative disclosure requirements, the final rule amends the interim financial statement requirements to require a reconciliation of changes in stockholders’ equity in the notes to the financial statements or as a separate statement. This analysis should reconcile the 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 comply with the remaining content requirements of Rule 3-04 of Regulation S-X. As a result, registrants will be required to provide the reconciliation for both the comparable quarterly and year-to-date periods in its Quarterly Report on Form 10-Q but only for the year-to-date periods in registration statements, beginning in the first quarter of 2019. Recently Adopted Accounting Standards In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition” (“ASC 605”). ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer 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 from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Revenue from the Company's product and service sales continue to be recognized when products are shipped or services are rendered. Revenue from the Company's product and service sales provided under long-term agreements is recognized as the Company transfers control of the product or renders service to its customers, which approximates the previously used percentage-of-completion method of accounting. The adoption of ASU 2014-09 had no material effect on the Company's financial position, results of operations, cash flows, or backlog, and no adjustment to January 1, 2018 opening retained earnings was needed. The Company has presented the disclosures required by ASC 606, “Revenue from Contracts with Customers” (“ASC 606”) in Note 3. Revenue of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q. In October 2016, the FASB issued ASU 2016-16, “Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory (Topic 740),” (“ASU 2016-16”) which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The ASU was effective on January 1, 2018 and was adopted by the Company on that date, using the modified retrospective approach. Under this approach, the Company recorded a reduction to its January 1, 2018 opening retained earnings of $305 as a result of prior intra-entity transactions. In March 2018, the FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118,” which allowed SEC registrants to record provisional amounts in earnings for the year ended December 31, 2017 due to the complexities involved in accounting for the enactment of the Tax Act enacted on December 22, 2017. The Company recognized estimated income tax effects of the Tax Act in its 2017 Consolidated Financial Statements in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB No. 118”). Refer to Note 15. Income Taxes of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for further information regarding the provisional amounts recorded by the Company as of December 31, 2017 through September 30, 2018. 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. The guidance requires that the entity report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period, and report the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement separately from the service cost component and not within 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 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The adoption of ASU 2017-07 had no impact to the Company.
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Reclassifications and Disclosures | Reclassifications and Disclosures Certain amounts in previously issued financial statements have been reclassified to conform to the current period presentation. These reclassifications represent the change in allocated corporate expenses as disclosed in Note 2. Business Segments and the adoption of ASC 606 disclosed in Note 3. Revenue, Note 5. Accounts Receivable, and Note 6. Inventories of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
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Inventory | Inventory is generally valued at the lower of last-in, first-out (“LIFO”) cost or market. Other 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 and costs at that time. Interim LIFO calculations are based on management’s estimates of expected year-end levels and costs. Prior to the adoption of ASU 2014-09, contract assets were classified within work-in-process inventory. |
Share based compensation | The Company applies the provisions of 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 |
Business Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated | The following table illustrates the Company's revenues and profit from operations by segment for the periods indicated:
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following table provides a reconciliation of segment net profit from operations to the Company’s consolidated total:
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Reconciliation of Assets from Segment to Consolidated | The following table illustrates assets of the Company by segment:
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Revenue (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes the Company's net sales by major product and service category:
Net sales by the timing of the transfer of goods and services is as follows:
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Goodwill and Other Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table presents the goodwill balance by reportable segment:
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Schedule of Finite-Lived Intangible Assets | The following table represents the gross balances of other intangible asset by reportable segment:
* Gross balances include the impact of foreign currency translation adjustments.
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Schedule of Intangible Assets | The components of the Company’s intangible assets were as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of September 30, 2018, estimated amortization expense for the remainder of 2018 and thereafter was as follows:
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Inventories (Tables) |
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories as of September 30, 2018 and December 31, 2017 are summarized in the following table:
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Property, Plant and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant, and equipment as of September 30, 2018 and December 31, 2017 consisted of the following:
|
Investments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The carrying amounts with the Company’s maximum exposure to loss as of September 30, 2018 and December 31, 2017, respectively, were as follows:
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Schedule of Direct Financing Future Minimum Lease Payments for Capital Leases | The following is a schedule as of September 30, 2018 of the direct financing minimum lease payments for the remainder of 2018 and the year 2019:
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Long-Term Debt (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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Earnings Per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | (Share amounts in thousands) The following table sets forth the computation of basic and diluted earnings per common share for the periods indicated:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Share Activity | The following table summarizes the restricted stock award, deferred stock units, and performance share units activity for the nine months ended September 30, 2018:
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Retirement Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Costs of Retirement Plans | The following table summarizes the expense associated with the contributions made to these plans:
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Pension Plan | United States | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | Net periodic pension costs for the United States defined benefit pension plan for the three- and nine-month periods ended September 30, 2018 and 2017 were as follows:
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Pension Plan | United Kingdom | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | Net periodic pension costs for the United Kingdom defined benefit pension plan for the three- and nine-month periods ended September 30, 2018 and 2017 were as follows:
|
Commitments and Contingent Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | The following table sets forth the Company’s product warranty accrual:
|
||||||||||||||||||||||||||||||||||||
Environmental Loss Contingencies | The following table sets forth the Company’s environmental obligation:
|
Financial Statements (Narratives) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Reduction to retained earnings | $ (145,364) | $ (137,780) |
Adjustments | ASU2016-16 | ||
Reduction to retained earnings | $ 305 |
Business Segments (Reconciliation of Revenue from Segments to Consolidated) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Segment Reporting Information | ||||
Net Sales | $ 167,094 | $ 131,492 | $ 462,438 | $ 395,054 |
Segment Profit (Loss) | 11,176 | 9,118 | 27,837 | 19,485 |
Rail Products and Services | ||||
Segment Reporting Information | ||||
Net Sales | 84,517 | 62,095 | 238,571 | 187,922 |
Segment Profit (Loss) | 5,299 | 3,179 | 12,655 | 7,581 |
Construction Products | ||||
Segment Reporting Information | ||||
Net Sales | 41,534 | 39,118 | 112,641 | 121,905 |
Segment Profit (Loss) | 1,603 | 3,846 | 4,478 | 10,617 |
Tubular and Energy Services | ||||
Segment Reporting Information | ||||
Net Sales | 41,043 | 30,279 | 111,226 | 85,227 |
Segment Profit (Loss) | $ 4,274 | $ 2,093 | $ 10,704 | $ 1,287 |
Business Segments (Reconciliation of Operating Profit (Loss) from Segments to Consolidated) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Segment Reporting [Abstract] | ||||
Profit for reportable segments | $ 11,176 | $ 9,118 | $ 27,837 | $ 19,485 |
Interest expense | (1,367) | (2,026) | (4,979) | (6,315) |
Interest income | 71 | 56 | 166 | 166 |
Other (expense) income | (153) | 551 | 327 | 564 |
LIFO expense | (1,701) | (1,552) | (2,414) | (1,733) |
Equity in (loss) income of nonconsolidated investments | (4) | 50 | (7) | (5) |
Unallocated corporate expense and other unallocated charges | (3,297) | (3,183) | (12,089) | (7,640) |
Income before income taxes | $ 4,725 | $ 3,014 | $ 8,841 | $ 4,522 |
Business Segments (Reconciliation of Assets from Segment to Consolidated) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting Information | ||
Assets | $ 370,546 | $ 396,556 |
Operating Segments | Rail Products and Services | ||
Segment Reporting Information | ||
Assets | 171,183 | 192,038 |
Operating Segments | Construction Products | ||
Segment Reporting Information | ||
Assets | 92,996 | 83,154 |
Operating Segments | Tubular and Energy Services | ||
Segment Reporting Information | ||
Assets | 90,984 | 100,706 |
Unallocated corporate assets | ||
Segment Reporting Information | ||
Assets | $ 15,383 | $ 20,658 |
Business Segments - Narratives (Details) |
Dec. 31, 2017 |
---|---|
Segment Reporting [Abstract] | |
Monthly allocation of corporate expenses | 1.00% |
Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Amortization expense | $ 1,762 | $ 1,764 | $ 5,322 | $ 5,218 |
Minimum | ||||
Finite lived intangible asset, useful life | 4 years | |||
Maximum | ||||
Finite lived intangible asset, useful life | 25 years | |||
Weighted Average | ||||
Finite lived intangible asset, useful life | 15 years |
Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Goodwill | |
Goodwill, beginning balance | $ 19,785 |
Foreign currency translation impact | (336) |
Goodwill, ending balance | 19,449 |
Rail Products and Services | |
Goodwill | |
Goodwill, beginning balance | 14,638 |
Foreign currency translation impact | (336) |
Goodwill, ending balance | 14,302 |
Construction Products | |
Goodwill | |
Goodwill, beginning balance | 5,147 |
Foreign currency translation impact | 0 |
Goodwill, ending balance | 5,147 |
Tubular and Energy Services | |
Goodwill | |
Goodwill, beginning balance | 0 |
Foreign currency translation impact | 0 |
Goodwill, ending balance | $ 0 |
Goodwill and Other Intangible Assets (Schedule of Gross Other Intangible Assets) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Gross intangible assets balance by reportable segment | $ 87,678 | $ 88,181 |
Rail Products and Services | ||
Gross intangible assets balance by reportable segment | 57,151 | 57,654 |
Construction Products | ||
Gross intangible assets balance by reportable segment | 1,348 | 1,348 |
Tubular and Energy Services | ||
Gross intangible assets balance by reportable segment | $ 29,179 | $ 29,179 |
Goodwill and Other Intangible Assets (Schedule of Expected Amortization Expense) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 1,667 | |
2019 | 6,262 | |
2020 | 5,942 | |
2021 | 5,923 | |
2022 | 5,881 | |
2023 and thereafter | 26,126 | |
Net Carrying Amount | $ 51,801 | $ 57,440 |
Accounts Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Accounts Receivable Additional Disclosures [Abstract] | |||||
Allowance doubtful accounts, receivables | $ 1,297 | $ 1,297 | $ 2,151 | ||
Reserve for uncollectable accounts | $ (268) | $ 208 | $ (987) | $ 737 |
Inventories (Schedule of Inventory) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 55,988 | $ 55,846 |
Contract assets | 27,796 | 25,320 |
Work-in-process | 8,364 | 4,059 |
Raw materials | 22,653 | 17,505 |
Total inventories at current costs | 114,801 | 102,730 |
Less LIFO reserve | (7,601) | (5,187) |
Inventory | $ 107,200 | $ 97,543 |
Investments (Schedule of Variable Interest Entities) (Details) - LB Pipe & Coupling Products, LLC - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Equity Method Investments | ||
Maximum exposure to loss | $ 602 | $ 5,845 |
LB Pipe JV investments | ||
Schedule of Equity Method Investments | ||
Maximum exposure to loss | 0 | 3,875 |
Revolving line of credit | ||
Schedule of Equity Method Investments | ||
Maximum exposure to loss | 0 | 1,235 |
Net Investment In direct financing lease | ||
Schedule of Equity Method Investments | ||
Maximum exposure to loss | $ 602 | $ 735 |
Investments (Schedule of Direct Financing Future Minimum Lease Payments for Capital Leases) (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Investments [Abstract] | |
Remainder of 2018 | $ 35 |
2019 | 567 |
Total future capital lease receivable | $ 602 |
Long-Term Debt (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Disclosure [Abstract] | ||
Revolving credit facility | $ 75,401 | $ 128,470 |
Capital leases and financing agreements | 1,069 | 1,496 |
Total | 76,470 | 129,966 |
Less current maturities | (630) | (656) |
Long-term debt | $ 75,840 | $ 129,310 |
Long-Term Debt (Narrative - United Kingdom) (Details) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018
GBP (£)
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Line of Credit Facility | |||
Line of credit facility, amount outstanding | $ 75,401,000 | $ 128,470,000 | |
Foreign Line of Credit | Natwest Bank | |||
Line of Credit Facility | |||
Line of credit facility, maximum borrowing capacity | £ 1,500,000 | 1,955,000 | |
Line of credit facility, amount outstanding | 0 | ||
Line of credit facility, current borrowing capacity | 1,636,000 | ||
Foreign Line of Credit | Natwest Bank | Base Rate | |||
Line of Credit Facility | |||
Debt instrument, basis spread on variable rate | 2.50% | ||
Foreign Line of Credit | Natwest Bank Outstanding Guarantees | |||
Line of Credit Facility | |||
Line of credit facility, amount outstanding | $ 319,000 |
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Interest income | $ 71 | $ 56 | $ 166 | $ 166 |
Interest expense | 1,367 | 2,026 | 4,979 | 6,315 |
Swap | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||||
Derivative, notional amount | 50,000 | 50,000 | ||
Interest income | $ 18 | |||
Interest expense | $ 98 | $ 16 | $ 302 |
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Term deposits | $ 17 | $ 17 |
Interest rate swaps | 1,476 | 222 |
Total assets | 1,493 | 239 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Term deposits | 17 | 17 |
Interest rate swaps | 0 | 0 |
Total assets | 17 | 17 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Term deposits | 0 | 0 |
Interest rate swaps | 1,476 | 222 |
Total assets | 1,476 | 222 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Term deposits | 0 | 0 |
Interest rate swaps | 0 | 0 |
Total assets | $ 0 | $ 0 |
Earning Per Common Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Numerator for basic and diluted earnings per common share: | ||||
Net income | $ 4,971 | $ 3,222 | $ 7,889 | $ 3,824 |
Denominator: | ||||
Weighted average shares outstanding (shares) | 10,365 | 10,341 | 10,361 | 10,332 |
Denominator for basic earnings per common share (shares) | 10,365 | 10,341 | 10,361 | 10,332 |
Effect of dilutive securities: | ||||
Other stock compensation plans (shares) | 124 | 138 | 120 | 103 |
Dilutive potential common shares (shares) | 124 | 138 | 120 | 103 |
Denominator for diluted earnings per common share - adjusted weighted average shares outstanding and assumed conversions (shares) | 10,489 | 10,479 | 10,481 | 10,435 |
Basic earnings per common share (usd per share) | $ 0.48 | $ 0.31 | $ 0.76 | $ 0.37 |
Diluted earnings per common share (usd per share) | $ 0.47 | $ 0.31 | $ 0.75 | $ 0.37 |
Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 5 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Mar. 31, 2015 |
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award | |||||||
Stock-based compensation | $ 934 | $ 503 | $ 2,838 | $ 1,228 | |||
Expected cost on shares expected to vest | $ 4,647 | $ 4,647 | $ 4,647 | ||||
Recognition period for compensation expense not yet recognized | 3 years 7 months 6 days | ||||||
Restricted Stock | Vesting Period 1 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||
Vesting period | 4 years | ||||||
Restricted Stock | Vesting Period 2 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||
Vesting period | 3 years | 1 year | |||||
Performance Share Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||||
Vesting period | 3 years |
Retirement Plans (Narrative) (Details) - Pension Plan $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
plan
| |
Defined Benefit Plan Disclosure | |
Defined contribution plan number | 6 |
United States | |
Defined Benefit Plan Disclosure | |
Number of retirement plans | 3 |
Defined Benefit Plan Number | 1 |
Defined contribution plan number | 2 |
Canada | |
Defined Benefit Plan Disclosure | |
Defined contribution plan number | 2 |
United Kingdom | |
Defined Benefit Plan Disclosure | |
Defined contribution plan number | 2 |
Defined benefit plans, estimated future employer contributions in current fiscal year | $ | $ 244 |
Defined benefit plan, contributions by employer | $ | $ 189 |
Retirement Plans (Schedule Of Net Benefit Costs) (Details) - Pension Plan - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
United States | ||||
Defined Benefit Plan Disclosure | ||||
Interest cost | $ 155 | $ 171 | $ 466 | $ 513 |
Expected return on plan assets | (213) | (178) | (640) | (533) |
Recognized net actuarial loss | 24 | 33 | 72 | 98 |
Net periodic pension (income) cost | (34) | 26 | (102) | 78 |
United Kingdom | ||||
Defined Benefit Plan Disclosure | ||||
Interest cost | 51 | 56 | 153 | 168 |
Expected return on plan assets | (70) | (67) | (210) | (201) |
Amortization of prior service costs and transition amount | 5 | 4 | 15 | 12 |
Recognized net actuarial loss | 48 | 72 | 144 | 216 |
Net periodic pension (income) cost | $ 34 | $ 65 | $ 102 | $ 195 |
Retirement Plans (Schedule of Costs of Retirement Plans) (Details) - Pension Plan - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Defined Contribution Plan Disclosure | ||||
Expenses associated with contributions made | $ 903 | $ 561 | $ 2,499 | $ 1,749 |
United States | ||||
Defined Contribution Plan Disclosure | ||||
Expenses associated with contributions made | 766 | 415 | 2,080 | 1,276 |
Canada | ||||
Defined Contribution Plan Disclosure | ||||
Expenses associated with contributions made | 23 | 53 | 91 | 167 |
United Kingdom | ||||
Defined Contribution Plan Disclosure | ||||
Expenses associated with contributions made | $ 114 | $ 93 | $ 328 | $ 306 |
Commitments and Contingent Liabilities (Schedule of Product Warranty Liability) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Movement in Standard Product Warranty Accrual | |
Beginning balance | $ 8,682 |
Additions to warranty liability | 1,452 |
Warranty liability utilized | (771) |
Ending balance | $ 9,363 |
Commitments and Contingent Liabilities (Environmental Loss Contingencies) (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Accrual for Environmental Loss Contingencies | |
Environmental liability, beginning balance | $ 6,144 |
Additions to environmental obligations | 53 |
Environmental obligations utilized | (60) |
Environmental liability, ending balance | $ 6,137 |
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Tax (benefit) provisions | $ (246) | $ (208) | $ 952 | $ 698 | |
Pre-tax income | $ 4,725 | $ 3,014 | $ 8,841 | $ 4,522 | |
Effective income tax rate, Percent | (5.20%) | (6.90%) | 10.80% | 15.40% | |
Tax benefit adjustments related to tax cuts and jobs act | $ 1,508 | ||||
Additional tax expense from foreign tax positions, related to tax and jobs act | $ 3,298 |
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