FSTR 10-K & 10-Q changes, risk factors and insider trading

If these factors limit our ability to integrate the operations of our acquisitions or to execute other strategic transactions or initiatives successfully or on a timely basis, we may not meet our expectations for future results of operations. In addition, our growth and operating strategies for businesses we acquire may be different from the strategies that such target businesses currently are pursuing. If our strategies are not the proper strategies for a company we acquire or with which we partner, it could have a material adverse effect on our business, financial condition, and results of operations. Further, there can be no assurance that we will be able to maintain or enhance the profitability of any acquired business or consolidate the operations of any acquired business to achieve cost savings.

In addition, volatile market conditions and fluctuations in energy prices could continue for an extended period, which would negatively affect our business prospects and reduce profitability. Historically, oil and natural gas prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty, a trend toward renewable or alternative energy resources, and a variety of additional factors that are beyond our control. Sustained declines or significant and frequent fluctuations in the price of oil and natural gas may have a material and adverse effect on our operations and financial condition. Volatility in energy prices may also impact the Company’s plant costs, as well as overall conditions in passenger transit markets served.

Our business employs systems and websites that allow for the storage and transmission of proprietary or confidential information regarding our customers, employees, job applicants, and other parties, including financial information, intellectual property, and personalpersonally identificationidentifiable information. Physical or electronic data or security breaches and other disruptions could compromise our information, expose us to liability, and harm our reputation and business. Cyber attacks on information systems constitute an ongoing risk across companies and industries, and although they have not historically had a material adverse effect on our business, in the past they have caused temporary disruption and interference with our operations. Despite the steps we take to deter and mitigate cybersecurity risks, we may not be successful. We may not have the resources or technical sophistication to anticipate or prevent current or rapidly evolving types of cyber attacks including data and security breaches, malware, ransomware, hacking, and identity theft.theft, as well as emerging threats enabled by artificial intelligence (“AI”) such as AI-generated phishing, deepfakes for social engineering, or unauthorized use of generative AI tools that could inadvertently expose sensitive data. Data and security breaches can also occur as a result of non-technical issues, including an intentional or inadvertent physical or electronic data or security breach by our employees or by persons with whom we have commercial relationships. In 2023, the United States Securities and Exchange CommissionSEC adopted new cybersecurity rules requiring disclosure of material cybersecurity incidents and processes assessing, identifying, and managing material cybersecurity risks and the corporate governance structure designed to address such risks. Compliance with such rules could be costly and burdensome, and failure to adequately comply could have an adverse impact on the Company and its reputation. Federal, state, and foreign government bodies and agencies have adopted or are considering the adoption of laws and regulations regarding the collection, use, and disclosure of personal information obtained from customers and individuals. The costs of compliance with, and other burdens imposed by, such data privacy laws and regulations, including those of the European Union (“EU”) and the UK which are, in some respects, more stringent than US standards, could be significant. Any compromise or breach of our security,security including from the cyber-attack that we experienced or any future attack,systems could result in a violation of applicable privacy and other laws, legal and financial exposure, negative impacts on our customers’ willingness to transact business with us, and a loss of confidence in our security measures, which could have an adverse effect on our results of operations and our reputation. Our Board, often through its Audit Committee, oversees cybersecurity risks as part of its broader enterprise risk management responsibilities, with input from management regarding the assessment and mitigation of such threats, including those involving rapidly evolving technologies like AI. Refer to “Item 1C - Cybersecurity” contained in this Annual Report on Form 10-K for further details of cybersecurity.

Many of our businesses utilize steel as a significant product component. The steel industry is cyclical and prices and availability are subject to these cycles, as well as to domestic and international fiscal policy, including tariffs and other market forces. We also use significant amounts of cement and aggregate in our precast products offerings. Our technology based solutions and services are dependent on electronic components and the ability to source these items. In February 2025, the new U.S. presidential administrationUS announced the imposition of widespread tariffs, including tariffs on steel imports.imports, which have been legally challenged and our national tariff policy is subject to volatility. These tariffs, along with potential retaliatory measures by other countries, could significantly increase our raw material costs, disrupt supply chains, and reduce our competitiveness. No assurances can be given that our financial results would not be adversely affected if prices or availability of these materials were to change in a significantly unfavorable manner.

One of our manufacturing facilities is staffed by employees represented by a labor union. Approximately 87 employees employed at this facility are currently working under a collective bargaining agreement, which is scheduled to expire in March 2025 and is currently being negotiated.2030. Disputes with regard to the terms of this agreement or our potential inability to renegotiate an acceptable contract with this union could result in, among other things, strikes, work stoppages, slowdowns, or lockouts, which could cause a disruption of our operations.

In April 2023, the Company entered into an agreement with an activist investor, 22NW, LP, and various of its affiliates (collectively, “22NW”) that had filed a Schedule 13D with the SEC with respect to the Company, which agreement provided that 22NW could appoint a non-voting Board Observer. In January of 2024, the Company entered into a new cooperation agreement with 22NW providing for the nomination of the Board Observer to stand for election to the Board of Directors of the Company at the 2024 Annual Meeting of Shareholders in return for certain customary confidentiality and standstill provisions. In addition, the term of the cooperation agreement was mutually extended to 2026 upon commitment by the Company to renominate the former Board Observer to stand for reelection as a director to the Board of Directors at the 2025 Annual Meeting of Shareholders. The former Board Observer resigned from the Board in December 2025 and the cooperation agreement expired in January 2026. 22NW is a greater than 5% owner of Company stock.

Much ofExecuting our futurestrategy successand being successful as a company depends on the continuedability availabilityto attract, develop, and serviceretain of keytalented personnel, including our Chief Executive Officer, the executive team, and other highly skilled employees. TheIncreased Company is experiencing a tight labor market which has constricted the labor pool and driven up labor costs as we competecompetition for talent.skilled Changesemployees, changes in demographics, trainingrising requirements,labor costs, and the availabilityneed ofto qualifiedprovide personnelcompetitive compensation and development opportunities could negatively affect our ability to compete and lead to a reduction in our profitability.

Events such as these, or other catastrophic events, could in the future adversely affect our business and results of operations, including with respect to disruptions of our supply chain. If we do not successfully manage our supply chain or identify new sources of supplies, we may be unable to satisfy customer orders, which could harm our reputation and customer relationships and materially adversely affect our business, financial condition, and operating results. A pandemic-related outbreak or other disaster affecting any one of our facilities could result in production delays or otherwise interrupt our operations. US and non-domestic governmental and private pandemic mitigation measures such as stay-at-home orders can slow travel and movement of goods throughout the world, contributing to a reduction in demand for our products and services. Our supply chain could be negatively affected by global shipping disruptions, trade restrictions or embargoes or similar impacts arising from geopolitical conflict, including but not limited to the ongoing conflicts between Ukraine and Russia, orconflicts Israelin the Middle East and Hamas.increasing tensions between China and Taiwan. Such conditions can also contribute to a tight labor market which in turn may adversely impact our supply chain.

The US Foreign Corrupt Practices Act and other similar worldwideglobal anti-corruption laws, such as the UK Bribery Act,Act and the proposed EU Anti-Corruption Directive, prohibit improper payments forand theother purposecorrupt ofpractices obtainingintended to obtain or retainingretain business. Although we have established an internal control structure, corporate policies, compliance, and training processes to reduce the risk of violation, we cannot ensure that these procedures protect us from violations of such policies by our employees or agents. Failure to comply with applicable laws or regulations could subject us to fines, penalties, and suspension or debarment from contracting. Events of non-compliance could harm our reputation, reduce our revenues and profits, and subject us to criminal and civil enforcement actions. Violations of such laws or allegations of violation could disrupt our business and result in material adverse results to our operating results or future profitability.

Government actions in the US or other countries where we have a higher concentration of business may further change tax policy, trade policy, or other regulatory priorities, or may enact other legislation that could create an unfavorable environment for the Company, making it more difficult to compete or adversely impact our operating results.

Legislative or regulatory initiatives related to climate policy change could have a material adverse effect on our business.

Greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. Such events could have a negative effect on our business. ConcernAlthough the current US federal administration has recently taken steps to reduce federal environmental regulation, concern over climate change may continue to result in new or additionalchanging legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation cost, and utility increases. Moreover, natural disasters and extreme weather conditions may impact the productivity of our facilities, the operation of our supply chain, or consumer buying patterns. Any of these risks could have a material adverse effect on our business.

Our operations and properties are also subject to extensive federal, state, local, and foreign environmental laws and regulations relating to protection of the environment and human health and safety, including those concerning the treatment, storage and disposal of wastes, the investigation and remediation of contaminated soil and groundwater, the discharge of effluents into waterways, the emission of substances into the air, as well as various health and safety matters. Environmental laws and regulations are subject to frequent amendment and reinterpretation, and although the current US federal administration has taken steps to reduce environmental regulation, these regulations have historicallyin the past and may again in the future become more stringentstringent. overOur time.costs required to comply with new or evolving environmental regulations at the federal, state, local, and foreign jurisdictions in which we operate could be material. We could incur significant costs if we fail to comply with regulations and responsibilities under environmental laws and regulations, including cleanup costs, civil and criminal penalties, injunctive relief and denial or loss of, or imposition of significant restrictions on, environmental permits. In addition, we could be subject to suit by private parties in connection with alleged violations of, or liabilities under, environmental laws and regulations. Additional information on environmental matters is available in this Part I, Item 1A, Risk Factors and Part II, Item 8, Financial Statements and Supplementary Data, Note 1716 to the Consolidated Financial Statements.

Doing business outside the US subjects the Company to various risks, including changing economic and political conditions, work stoppages, exchange controls, currency fluctuations, armed conflicts, transportation regulations, foreign investments, and taxation. Following the recent change of administration in the US, theThe US government has imposed tariffs on certain foreign goods, including steel and aluminum.aluminum, Changesand inhas USindicated the possibility of additional tariffs on other goods. In response, several foreign tradegovernments policies,have including tariffs, could result inimposed retaliatory tariffs oron US goods. Uncertainties surrounding tariffs, trade restrictionsagreements, withor USany tradingpotential partnerstrade whichdisputes could cause disruptions in our operations and increase our costs.

Additionally, international trade agreements, including The United States-Mexico-Canada Trade Agreement (“USMCA”), could affect our business, financial condition, and results of operations. Potential material modifications to USMCA, which is subject to joint review in July 2026, or certain other international trade agreements, including with respect to the modification of trade agreements with or among the EU and the UK,UK which remain subject to uncertainties, may have a material adverse effect on our business, financial condition, and results of operations. Our UK operations represented approximately 6% and 8% of our total revenue for the years ended December 31, 2025 and 2024, respectively. During the years ended December 31, 2025 and 2024 less than 1% of our consolidated net revenue was from the UK operation’s sales exported to EU members.

Our financial statements presented herein are prepared using accounting principles generally accepted in the United States of America (“US GAAP”). Throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations (the “MD&A”), we refer to measures used by management to evaluate performance. We also refer to a number of financial measures that are not defined under US GAAP, including organicConsolidated sales growthEBITDA (declineas defined in the Credit Agreement), earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted EBITDA, net debt, funding capacity, new orders, net, and backlog. The explanation at the end of the MD&A provides the definition of these non-GAAP financial measures. A reconciliation of EBITDA, adjusted EBITDA, organic sales growth (decline), net debt, and funding capacity to its most directly comparable respective US GAAP financial measure is presented in the “Liquidity and Capital Resources” section below.

Acquisitions, Divestitures and Product Line ExitExits

On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line (“Bridge Exit”) which was reported in the Steel Products business unit within the Infrastructure segment. The Bedford, PA based operations supporting the product line expectscompleted to complete any remainingall customer obligations inas of December 31, 2025. For the years ended December 31, 20242025 and 2023,2024, the product line had $3,700$1,637 and $6,146$3,700 in sales, respectively. The decision to exit the bridge grid deck product line iswas a result of a weak bridge grid deck market condition and outlook due to customer adoption of newer technologies replacing the grid deck solution. During the year ended 2023, the Company incurred $1,403 of Bridge Exit costs, of which $1,141 was recorded in “Cost of goods sold” and $262 was recorded in “Selling and administrative expenses.” These expenses included $474 in inventory write-downs, $667 in personnel related expenses, and $262 in other exit costs; the majority of cash payments were made in early 2024. During the year ended December 31, 2024, the Company incurred an immaterial amount of exit costs, all of which were personnel expenses. The Company does not expect to incur additional material exit costs in 2025. During 2023, the Company also recorded a $1,977 reduction in net sales and a $3,051 reduction in gross profit stemming from changes in expected value of certain commercial projects associated with the Bridge Exit.

Net interestAmortization expense for the year ended December 31, 20242025 decreased by $536,$1,317, or 9.7%,28.5%, from the prior year due to decliningacquired interestintangible ratesassets andbecoming lowerfully debt levelsamortized during the year.

Other (income) expense - net decreasedwas favorable by $1,559$1,496 fromcompared to the prior year. Other expense - net in for the year ended December 31, 2024 was primarily attributable to $1,722 of pension termination costs associated with the termination of the frozen L.B. Foster Company Merged Retirement Plan (the “US DB Plan”). Other expense - net forin the year ended December 31, 2023 was attributable to a $3,074 loss on the divestitures of Ties and Chemtec.US.

The Company’s effective income tax rate for 20242025 was (196.6)%,57.4%, compared to (37.6196.6)% in the prior year period. The Company's 2025 effective income tax rate differed from the federal statutory rate of 21% primarily due to the impact of pre-tax losses in the United Kingdom, for which no income tax benefit was recognized due to a valuation allowance. The Company's 2024 effective income tax rate differed from the federal statutory rate of 21% primarily due to the change in valuation allowance previously recorded against certain U.S. federal and state deferred tax assets. For further discussion on the valuation allowance, refer to Note 13 of the Notes to the Consolidated Financial Statements.

The Rail segment operating income increasedfor bythe $9,606,year ended December 31, 2025 decreased $6,320, or 78.1%,28.8%, overfrom the prior year. The increasedecrease was driven by the improvementdecline in gross profit, aspartially welloffset asby a decreasedecreases in selling and administrative expenses due primarily to the $1,862 of bad debt expense incurred in the year ended December 31, 2023$2,600 due to alower UKpersonnel customercosts filingand foramortization administrativeexpense protection.of $1,219.

In August 2024, the Company announced an enterprise restructuring program aligned with its strategy to reduce costs and enable investment in its growth platforms. The restructuring action has been completed as of December 31, 2024. For the year ended December 31, 2024, the Company incurred $1,456 of restructuring expense, related primarily to severance costs. Of the total restructuring costs, $245 was recorded in “Cost of goods sold” and is$1,211 expectedwas toreported providein run-rate“Selling pre-taxand savingsadministrative expense.” By business segment, the Company incurred $1,134 of approximatelyrestructuring $4,500, of which approximately $2,000 was recognizedcosts in 2024.Rail, $113 in Infrastructure, and $209 in Corporate.

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under its revolving credit facility, which provides for a total commitment of up to $130,000,$150,000, of which $82,124$106,930 was available for borrowing as of December 31, 2024,2025, subject to covenant restrictions. The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, tax obligations, outstanding purchase obligations, acquisitions, restructuring payments, and to support share repurchase programs. During 2024 and 2023, the Company paid $8,000 annually as a result of the Settlement Agreement (the “Settlement Agreement”) with Union Pacific Railroad Company (“UPRR”). As of December 31, 2024 the UPRR Settlement Agreement has been fully paid. The Company’s total debt, including finance leases, was $46,940$42,756 and $55,273$46,940 as of December 31, 20242025 and December 31, 2023,2024, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The change in cash and cash equivalents for the years ended December 31, 20242025 and 20232024 werewas as follows:

During the year ended December 31, 2024,2025, net cash provided by operating activities was $22,632,$35,619, compared to $36,956$22,632 during the prior year. During 2025, cash flow provided by operating activities consisted of net income and non-cash items amounting to $34,678 and changes in certain assets and liabilities netting to a cash inflow of $941. In 2024, cash flow provided by operating activities consisted of net income and non-cash items amounting to $27,195 and changes in certain assets and liabilities netting to a cash outflow of $4,563. In 2023, cash flow provided by operating activities consisted of net income and non-cash items amounting to $21,453 and changes in certain assets and liabilities netting to a cash inflow of $15,503. Both periods include payments of $8,000 for the UPRR Settlement, which was fully paid as of December 31, 2024.

ForDuring the year ended December 31, 2024,2025, the Company had capital expenditures of $9,791,$10,424, a $5,278$633 increase fromover 2023.2024. Capital expenditures in both periods primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives.initiatives, including investments in our new Precast Concrete facility in Lake County, Florida. In 2024, the Company sold the facility and land of its former joint venture in Magnolia, Texas and fixed assets associated with the Bridge Exit generating cash inflow of $3,895. In 2023, the Company received cash proceeds of $7,706 primarily from the sale of its Ties and Chemtec businesses.

This item is not applicable to athe smaller reporting company.Company.

This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Many of the forward-looking statements provide management's current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q are based on management's current expectations and assumptions about future events that involve inherent risks and uncertainties and may concern, among other things, the Company’s expectations relating to our strategy, goals, projections, valuations and impairments, and plans regarding our financial position, liquidity, capital resources, results of operations and decisions regarding our strategic growth initiatives, market position, and product development. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: adverse economic conditions in the markets we serve, including recession, the volatility in the prices for oil and gas, tariffs, duties or trade wars, inflation, rising labor costs, project delays, and budget shortfalls, or otherwise; the disruption of government funding programs as a result of potential periodic government shutdowns; volatility in the global capital markets, including interest rate fluctuations, which could adversely affect our ability to access the capital markets on terms that are favorable to us; restrictions on our ability to draw on our credit agreement, including as a result of any future inability to comply with restrictive covenants contained therein; a decrease in freight or transit rail traffic; a decrease in construction activity; environmental matters and the impact of environmental regulations, including any costs associated with any remediation and monitoring of such matters; the risk of doing business in international markets, including compliance with anti-corruption and bribery laws, foreign currency fluctuations and inflation, global shipping disruptions, the imposition of increased or new tariffs, and trade restrictions or embargoes, or uncertainties relating to the imposition and enforcement of tariffs; our ability to timely effectuate our strategy, including cost reduction initiatives, including but not limited to the exit of certain product lines in the UK-based Tew Engineering business, and our ability to effectively integrate acquired businesses or to divest businesses, and to realize anticipated synergies and benefits; costs of and impacts associated with shareholder activism; the timeliness, cost, and availability of materials from our major suppliers, as well as the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customers’ concerns about conflict minerals; labor disputes; emerging technologies, including those related to or arising from artificial intelligence, and resultant risks to our business and operations; cybersecurity risks such as data security breaches, malware, ransomware, “hacking,” and identity theft, either with respect to our systems or those of third parties on whom we rely, which could disrupt our business and may result in misuse or misappropriation of confidential or proprietary information, and could result in the disruption or damage to our systems, increased costs and losses, or an adverse effect to our reputation, business or financial condition; the continuing effectiveness of our ongoing implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement or the terms of any new credit agreement, the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes, including estimates that may impact taxes; domestic and foreign government regulations, including tariffs; our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures; any change in policy or other change due to the results of the UK’s parliamentary elections and the U.S. presidential and congressional elections that could affect UK or US business conditions; other geopolitical conditions, including the ongoing conflicts between Russia and Ukraine, conflicts in the Middle East, and increasing tensions between China and Taiwan; a lack of, freezing of, or delay in state or federal funding for infrastructure projects; an increase in manufacturing or material costs, including volatility in steel prices, oil prices, and wage inflation; the loss of future revenues from current customers; any future global health crises, and the related social, regulatory, and economic impacts and the response thereto by the Company, our employees, our customers, and national, state, or local governments, including any governmental travel restrictions; and risks inherent in litigation and the outcome of litigation and product warranty claims. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025, or as updated and/or amended by our other current or periodic filings with the Securities and Exchange Commission.

Product Line ExitExits

On August 30, 2023, the Company announced the discontinuation of its Bridge Products grid deck product line which was reported in the Steel Products business unit within the Infrastructure segment. For the three and six months ended MarchJune 31,30, 2025, the product line had net sales of $501$498 and the$999, respectively. The Company completed all customer obligations as of December 31,in 2025.

During the second quarter of 2025, the Company announced the discontinuation of its Automation and Materials Handling (“AMH”) product line which was reported in the Technology Services and Solutions business unit within the Rail segment.segment (the “AMH Exit”). For the three and six months ended June 30, 2025, AMH had net sales of $407$813 forand $1,220, respectively. The Company incurred a total of $1,351 in exit costs associated with the threeAMH monthsExit, endedwhich Marchincluded 31,$655 2025.in inventory and fixed asset write-downs, $507 in personnel expenses, and $189 in other exit costs. Exit costs of $1,085 were recorded in “Cost of goods sold” and $266 were recorded in “Selling and administrative expenses” within our Rail segment. The Company completed the remaining customer obligations in 2025 and all exit costs were incurred in the second quarter of 2025.

FirstSecond Quarter 2026 Compared to FirstSecond Quarter 2025

Net sales for the three months ended MarchJune 31,30, 2026 increaseddecreased $23,352,$5,008, or 23.9%,3.5%, overfrom the prior year quarter. The increase wasquarter, driven by Raillower sales growthin ofboth $20,761,segments. Rail net sales declined $3,961, or 38.4%,5.2%, withwhile Infrastructure salesdeclined also improving $2,591,$1,047, or 5.9%.1.5%.

Gross profit for the three months ended MarchJune 31,30, 2026 increasedwas $5,545,flat orcompared 27.5%, overto the prior year quarterquarter. Rail gross profit declined $321, as benefits from favorable business mix were offset by $2,084 of costs related to the Tew Exit, compared to $1,085 of costs associated with the AMH Exit in the prior year quarter. Infrastructure gross profit improved $295 driven primarily by higher volumes in Rail which improved $4,113 and improved volumes,favorable business mix, and manufacturing execution in Infrastructure which contributed $1,432.mix. Gross profit margins improved 6080 basis points to 21.2%.22.3%.

Selling and administrative expenses for the three months ended MarchJune 31,30, 2026 increased $2,081,$1,723, or 9.9%,7.7%, over the prior year quarter, primarily attributable to higherincreased personnelemployment costs drivenincluding byhigher merit,variable incentiveincentive-based costs,compensation and a $675 accelerated stock expense due to retirement-eligible participants.costs. Selling and administrative expenses as a percentage of net sales decreasedincreased by 240180 bps to 19.0%.17.4%.

Amortization expense for the three months ended MarchJune 31,30, 2026 decreased $504,$222, or 44.9%,26.4%, from the prior year quarter due to acquired intangible assets becoming fully amortized.

Net interest expense for the three months ended MarchJune 31,30, 2026 decreased $292$599 from the prior year quarter. The Company's outstanding debt balance was $59,684$47,993 as of MarchJune 31,30, 2026, compared to $82,498$81,628 as of MarchJune 31,30, 2025.

The Company’s effective income tax rate for the three months ended MarchJune 31,30, 2026 was (5.7)%,42.9%, compared to 23.0%54.8% in the prior year quarter. The Company'scurrent effectivequarter income tax rate for the three months ended March 31, 2026 differed from the statutory rate of 21% primarily due to the impact of excess tax benefits related to share-based compensation, offset by the impact of pre-tax losses in the United Kingdom for which no income tax benefit was recognized due to a valuation allowance.

Net income attributable to the Company for the three months ended MarchJune 31,30, 2026 was $1,500,$3,112, or $0.14$0.29 per diluted share, compared to net lossincome in the prior year quarter of $2,110,$2,885, or $0.20$0.27 per diluted share. The increase is due to improvedreduced grossinterest profit partially offset by higher sellingexpense and administrativea expenses.lower effective income tax rate.

Rail net sales for the three months ended MarchJune 31,30, 2026 increaseddecreased $20,761,$3,961, or 38.45.2 %, overfrom the prior year quarter. Rail Products net sales increaseddecreased $11,960,$13,001, or 40.8%,27.3%, reflectingprimarily due to the recoverytiming of large orders. This decline was offset by an increase of $3,703, or 18.1%, in the Rail Distribution business following softer demand in early 2025. Global Friction Management sales increased $6,144, or 39.5%, driven by strong domestic demand and an increase of $5,337, or 66.9%, in domestic markets. Technology Services and Solutions (“TS&S”) sales increased $2,657, or 29.1%, driven by short term project work in the UK.

Rail operating income for the three months ended MarchJune 31,30, 2026 increaseddecreased $4,676$758, overor 20.2 %, from the prior year quarter duedriven primarilyby to improvedthe gross profit decline coupled with $641 of higher selling and loweradministrative amortization expense.costs.

For the three months ended MarchJune 31,30, 2026, Rail had new orders, net of $80,629,$112,207, a decrease of $2,623$2,138 from the prior year quarter primarily attributable to athe 18.6%timing declineof inlarge orders associated with Rail Products which declined 20.0%. Global Friction Management associated with order timing. Rail Products and TS&S modestly improved 0.9%27.8% and 2.3%126.4%, overrespectively. The improvement in TS&S was primarily attributable to increased short-term project work in the prior year quarter, respectively.UK. Backlog as of MarchJune 31,30, 2026, was $102,126,$141,395, a $10,402,$10,686, or 11.3%,8.2%, increase over the prior year quarter as a result of a large, multi-yearlarge order received in our UK business.

Infrastructure net sales for the three months ended MarchJune 31,30, 2026, increaseddecreased $2,591$1,047 or 5.9%,1.5%, overfrom the prior year quarterquarter. The decline was driven primarilyby $1,996, or 9.3%, in Steel Products, which was partially offset by sales growth of $4,841,$949, or 17.2%,2.1%, in Precast Concrete Products (“Precast”). The increase was partially offset by a decline in Steel Products sales of $2,250, or 14.4%.

Infrastructure gross profit for the three months ended MarchJune 31,30, 2026 increased $1,432,$295, or 17.61.9 %, over the prior year quarter. Precast gross profit increasedimproved $1,991$615 due to the higher sales volume, coupled with improved business mix and manufacturing execution which was partially offset by lower volumes inmix. Steel Products resulting in a $559 decrease in gross profit.profit declined $320 due to lower sales volumes. Gross profit margins improved 20080 basis points to 20.6% driven by improved mix and manufacturing execution in Precast.24.1%.

Infrastructure operating income for the three months ended MarchJune 31,30, 2026 increaseddecreased $973,$195, or 219.1%,2.9%, overfrom the prior year quarter due to improved gross profit offset in part by an increase in selling, general and administrative expenses.expenses, offset in part by improved gross profit.

For the three months ended MarchJune 31,30, 2026, Infrastructure had new orders, net of $61,457,$63,869, aan decreaseincrease of $4,355,$2,458, fromover the prior year quarter.quarter due primarily to a 73.3% increase in Steel Products newstemming orders,from net decreased by 26.7% due to strong prior year order activity in theimproving Protective Coatings businesses.demand. This decreaseincrease was partially offset by Precasta which15.4% improveddecrease 5.5%.in Precast. Backlog as of MarchJune 31,30, 2026, was $107,447,$104,718, a decrease of $38,044,$34,502, or 26.1%,24.8%, from the prior year quarter attributable to a 2025 order cancellation in Steel Products which resulted in a 57.5%41.1% decline, coupled with a decline of 8.5%17.1% in Precast.

Unallocated corporate expense - net for the three months ended MarchJune 31,30, 2026 was $3,304$3,409 compared to $1,623$2,835 for the three months ended MarchJune 31,30, 2025. CorporateDuring managementthe stock-basedquarter, compensationthe expenseCompany increasedincurred $1,131$292 dueof primarilycosts toassociated acceleratedwith stockstrategic expenseinitiatives. Public company costs decreased by $572 due to retirement-eligiblelower participants.professional service fees. Corporate executive management costs and stock-based compensation increased $570$709 and $145, respectively, due to higherincreased professionalvariable fees.incentive-based compensation expense.

The Company’s principal sources of liquidity are its existing cash and cash equivalents, cash generated by operations, and the available capacity under the revolving credit facility. The revolving credit facility provides for a total commitment of up to $150,000, of which $90,019$101,695 was available for borrowing as of MarchJune 31,30, 2026, subject to covenant restrictions. The Company’s primary needs for liquidity relate to working capital requirements for operations, capital expenditures, debt service obligations, tax obligations, outstanding purchase obligations, acquisitions, restructuring payments, and to support the share repurchase program. The Company’s total debt, including finance leases, was $59,684$47,993 and $42,756 as of MarchJune 31,30, 2026 and December 31, 2025, respectively, and was primarily comprised of borrowings under its revolving credit facility.

The following table reflects available funding capacity as of MarchJune 31,30, 2026:

As of MarchJune 31,30, 2026, we were in compliance with all covenants of the Credit Agreement and have $94,010$107,478 available funding capacity, subject to covenant restrictions.

The Company’s operating cash flows are impacted from period to period by fluctuations in working capital needs, as well as its overall profitability. While the Company places an emphasis on working capital management in its operations, factors such as its business mix, commercial terms, and market conditions as well as seasonality may impact its working capital. The Company regularly assesses its receivables and contract assets for collectability and realization, and provides allowances for credit losses where appropriate. The Company believes that its reserves for credit losses are appropriate as of MarchJune 31,30, 2026, but adverse changes in the economic environment and adverse financial conditions of its customers may impact certain of its customers’ ability to access capital and compensate the Company for its products and services, as well as impact demand for its products and services.

The changes in cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026 and 2025 were as follows:

During the threesix months ended MarchJune 31,30, 2026, net cash usedprovided inby operating activities was $10,438,$7,422, compared to net cash used in operating activities of $26,136$15,734 during the prior year period. For the threesix months ended MarchJune 31,30, 2026, net income and adjustments to reconcile net income from operating activities provided $6,095,$16,129, compared to $1,324$12,553 in the prior year period. Working capital and other assets and liabilities were a use of $16,533$8,707 in the current period, compared to a use of $27,460$28,287 in the prior year period. The increase in operating cash flow for the threesix months ended MarchJune 31,30, 2026 compared to the prior year period was largely driven by lower working capital needs and improved profitability. Changes in payment timing can impact accounts receivable in any given quarter due to the seasonality of our businesses.

Capital expenditures for the threesix months ended MarchJune 31,30, 2026 and 2025 were $2,960$6,521 and $2,575,$5,248, respectively. Capital expenditures in both periods primarily relate to general plant and operational improvements throughout the Company, as well as organic growth initiatives.

During the threesix months ended MarchJune 31,30, 20262026, theoutstanding Companydebt hadincreased $5,271 compared with an increase in outstanding debt of $16,945 compared to a $34,891 increase$32,340 during the threesix months ended MarchJune 31,30, 2025. The decreaselower increase in borrowings from the prior year quarterperiod was primarily driven by drivenoperating cash generation from lower working capital needsrequirements and a reduction in treasury stock repurchases. During the threesix months ended MarchJune 31,30, 2026, the Company repurchased $3,846$4,263 of its stock to satisfy employee tax withholding obligations related to the issuance of equity-based compensation awards. The Company also made deferred acquisition-related payments of $403 and $782, during the six months ended June 30, 2026 and 2025, respectively, related to the June 2022 acquisition of Skratch Enterprises Ltd. These payments were deferred at the date of the acquisition in accordance with the purchase agreement. Additionally, during the six months ended June 30, 2025, the Company incurred debt issuance costs of $706 associated with entering into the June 27, 2025 Fifth Amended and Restated Credit Agreement.

The Board of Directors previously authorized the repurchase of up to $15,000 of the Company's common shares until February 2025, pursuant to the terms of the previously disclosed stock repurchase program adopted March 3, 2023, as amended August 5, 2024. On March 3, 2025, the Company's Board of Directors approved a new authorization to repurchase up to $40,000 of the Company's common stock in open market transactions and/or 10b5-1 trading plans through February 29, 2028. The Company did not repurchase any shares during the threesix months ended MarchJune 31,30, 2026 under this program. From February 2023 through MarchJune 31,30, 2026, the Company repurchased a total of 1,016,899 shares of its stock for $23,554 under both programs.

As of MarchJune 31,30, 2026, the Company had $3,991$5,783 in cash and cash equivalents and $90,019$101,695 of availability under its revolving credit facility, subject to covenant restrictions. As of MarchJune 31,30, 2026, approximately $3,621$4,430 of the Company’s cash and cash equivalents were held in non-domestic bank accounts.