Business Segments

9 Months Ended

Sep. 30, 2018

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:


	Three Months Ended September 30, 2018						Three Months Ended September 30, 2017
	Net Sales		Segment Profit		Net Sales		Segment Profit
Rail Products and Services	$	84,517	$	5,299	$	62,095	$	3,179
Construction Products	41,534		1,603		39,118		3,846
Tubular and Energy Services	41,043		4,274		30,279		2,093
Total	$	167,094	$	11,176	$	131,492	$	9,118

	Nine Months Ended September 30, 2018						Nine Months Ended September 30, 2017
	Net Sales		Segment Profit		Net Sales		Segment Profit
Rail Products and Services	$	238,571	$	12,655	$	187,922	$	7,581
Construction Products	112,641		4,478		121,905		10,617
Tubular and Energy Services	111,226		10,704		85,227		1,287
Total	$	462,438	$	27,837	$	395,054	$	19,485

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:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2018		2017		2018		2017
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 expenses and other unallocated charges	(3,297)		(3,183)		(12,089)		(7,640)
Income before income taxes	$	4,725	$	3,014	$	8,841	$	4,522

The following table illustrates assets of the Company by segment:


	September 30, 2018		December 31, 2017
Rail Products and Services	$	171,183	$	192,038
Construction Products	92,996		83,154
Tubular and Energy Services	90,984		100,706
Unallocated corporate assets	15,383		20,658
Total	$	370,546	$	396,556