8 unchanged sentences
• our ability to comply with the covenants in our credit agreement;
−Removed: • the impact to our business of changes in crude oil, natural gas and other commodity prices;
+Added: • the impact to our business from economic, market or business conditions in general and in the oil, natural gas, power, petrochemical, agricultural and mining industries in particular;
• the impact of inflation on our operating expenses and our business operations;
• the likely impact of new or existing regulations or market forces on the demand for our services;
−Removed: • the impact to our business of the COVID-19 pandemic;
+Added: • the impact to our business from disruptions to supply chains, inflation and availability of materials and labor;
• our expectations with respect to the likelihood of a future impairment;
7 unchanged sentences
• delays in the commencement or progression of major projects, whether due to permitting issues or other factors;
−Removed: • reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, and other commodity prices which affect our customers' businesses;
+Added: • reduced creditworthiness of our customer base and the higher risk of non-payment of receivables;
• the inherently uncertain outcome of current and future litigation;
18 unchanged sentences
Finally, we offer tank products, including geodesic domes, aluminum internal floating roofs, floating suction and skimmer systems, roof drain systems and floating roof seals.
−Removed: We evaluate performance and allocate resources based on operating income.
−Removed: We eliminate intersegment sales;
−Removed: therefore, no intercompany profit or loss is recognized.
−Removed: Corporate selling, general and administrative expenses are excluded from our three reportable segments in order to better align controllable costs with the responsibility of segment management, and to be consistent with how our chief operating decision-maker assesses segment performance and allocates resources.
Operational Update
−Removed: Bidding activity and the volume of project awards have both improved as the economy emerges from the pandemic.
−Removed: However, we have not been able to generate enough revenue to fully recover construction overhead and SG&A costs despite the significant reductions in our cost structure.
−Removed: In addition, increased forecasted costs to complete certain projects have further pressured profitability during the fiscal year (see the discussion of our three and nine months results for more details).
−Removed: In fiscal 2022, we commenced the second phase of our ongoing business improvement plan to focus on centralization of support functions, including business development, accounting, human resources, procurement and project services into shared service centers.
−Removed: Since the beginning of fiscal 2020, we estimate that we have reduced our cost structure by approximately $82 million, or approximately 30%, with approximately one-third of those reductions related to SG&A and the rest related to construction overhead, which is included in cost of revenue in the Condensed Consolidated Statements of Income.
−Removed: Financial Statements, Note 10 - Restructuring Costs, for more information about our business improvement plan.
−Removed: Based on improving market conditions and strong bidding activity, we are expecting project awards to pick up in the fourth quarter and continue the momentum into fiscal 2023.
−Removed: We expect this to result in higher revenue volume, increased cost leverage and improved earnings in the future.
−Removed: Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021
−Removed: Consolidated revenue was $177.0 million for the three months ended March 31, 2022, compared to $148.3 million in the same period last year.
−Removed: On a segment basis, revenue increased in the Process and Industrial Facilities and Utility and Power Infrastructure segments by $26.1 million and $14.6 million, respectively.
−Removed: The increases were partially offset by a decrease in revenue of $12.0 million in the Storage and Terminal Solutions segment.
−Removed: Consolidated gross profit (loss) decreased to ($1.8) million in the three months ended March 31, 2022 compared to $1.6 million in the same period last year.
−Removed: Gross margin (loss) decreased to (1.0%) in the three months ended March 31, 2022 compared to 1.1% in the same period last year.
−Removed: Gross margins in the third quarter of fiscal 2022 were negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs and an increase in forecasted costs on a midstream gas processing project in the Process and Industrial Facilities segment.
−Removed: Gross margins in fiscal 2021 were largely impacted negatively by a lower than previously forecasted margin on a large capital project in the Utility and Power Infrastructure segment.
−Removed: These negative impacts were partially offset by increases in estimated recoveries on other completed capital projects.
−Removed: Consolidated SG&A expenses were $17.0 million in the three months ended March 31, 2022 compared to $17.2 million in the same period a year earlier.
−Removed: In the third quarter, we recorded $18.3 million of goodwill impairment.
−Removed: Financial Statements, Note 4 - Goodwill and Other Intangible Assets, for more information.
−Removed: As a result of restructuring activities, we recorded a credit of $1.6 million to restructuring costs in the three months ended March 31, 2022.
−Removed: The credit was due to a favorable settlement of a restructuring obligation related to our exit from the domestic iron and steel industry in fiscal 2020.
−Removed: Financial Statements, Note 10 - Restructuring Costs, for more information.
−Removed: Interest expense was $0.2 million in the three months ended March 31, 2022 compared to $0.3 million in the three months ended March 31, 2021.
−Removed: Interest expense in the three months ended March 31, 2022 consisted primarily of letter of credit fees, unused capacity fees and amortization of deferred debt issuance costs.
−Removed: Our effective tax rates for the three months ended March 31, 2022 and March 31, 2021 were 0.4% and 28.2%, respectively.
−Removed: The effective tax rate during fiscal 2022 was impacted by valuation allowances of $7.7 million.
−Removed: The income tax benefit recorded for the three months ended March 31, 2022 was the result of a change in estimate of our uncertain tax positions.
−Removed: Financial Statements, Note 6 - Income Taxes, for more information about the valuation allowances.
−Removed: The effective tax rates were negatively impacted by $1.9 million of valuation allowances on certain deferred tax assets in the third quarter of fiscal 2021.
−Removed: For the three months ended March 31, 2022, we had a net loss of $34.9 million, or $1.30 per fully diluted share, compared to a net loss of $12.9 million, or $0.49 per fully diluted share, in the three months ended March 31, 2021.
−Removed: Utility and Power Infrastructure
−Removed: Revenue for the Utility and Power Infrastructure segment was $59.3 million in the three months ended March 31, 2022 compared to $44.7 million in the same period last year.
−Removed: The increase is primarily due to higher volumes of power delivery and power generation work.
−Removed: The segment gross margin (loss) was (0.8%) in fiscal 2022 compared to (10.5%) in fiscal 2021.
−Removed: The segment gross margin for the third quarter of fiscal 2022 was negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs, an increase in forecasted cost on a capital project, and lower margins on capital work bid competitively.
−Removed: The fiscal 2021 segment gross margin was negatively impacted by an increase in the forecasted costs to complete a large capital project.
−Removed: Process and Industrial Facilities
−Removed: Revenue for the Process and Industrial Facilities segment was $69.0 million in the three months ended March 31, 2022 compared to $42.8 million in the same period last year.
−Removed: The increase was primarily due to higher volumes of refinery maintenance and turnaround work.
−Removed: The segment gross loss was (0.6%) for the three months ended March 31, 2022 compared to (0.4%) in the same period last year.
−Removed: The segment gross loss in the third quarter of fiscal 2022 was negatively impacted by an increase in forecasted costs to complete a midstream gas processing project, which resulted in a $4.8 million reduction to gross profit.
−Removed: The increase in forecasted costs was primarily due to performance of a, now terminated, subcontractor, which will require rework in order to meet our client's expectations.
−Removed: In addition, the mix of work, which was impacted by increased reimbursable maintenance activity also contributed to lower margins.
−Removed: The higher revenue led to improvement in the recovery of construction overhead costs, but the segment still had some under recovery that impacted the segment gross margin.
−Removed: Project execution generally met our expectations in the third quarter of fiscal 2021.
−Removed: However, segment gross margin in the same period was negatively impacted by low volumes, which led to the under recovery of construction overhead costs, and an adjustment related to the Company's assessment of the amount due on a completed project.
−Removed: Storage and Terminal Solutions
−Removed: Revenue for the Storage and Terminal Solutions segment was $48.7 million in the three months ended March 31, 2022 compared to $60.7 million in the same period last year.
−Removed: The decrease in segment revenue is primarily a result of lower volumes of crude oil tank and terminal capital work, and tank repair and maintenance work.
−Removed: The segment gross margin (loss) was (0.9%) for the three months ended March 31, 2022 compared to 10.6% in the same period last year.
−Removed: The fiscal 2022 segment gross margin was negatively impacted by low revenue volume, which led to under recovery of construction overhead costs, and smaller competitively priced capital projects.
−Removed: The fiscal 2021 segment gross margin was positively impacted by additional estimated recoveries of unpriced change orders on a large crude oil terminal project following the achievement of mechanical completion and demobilization from the project site.
−Removed: Unallocated corporate expenses were $7.2 million during the three months ended March 31, 2022 compared to $6.2 million in the same period last year.
−Removed: The increase is primarily attributable to centralizing support costs under the second phase of our business improvement plan (see Item 1.
−Removed: Financial Statements, Note 10 - Restructuring Costs, and "Operational Update" in this Results of Operations section for more information).
−Removed: Nine Months Ended March 31, 2022 Compared to the Nine Months Ended March 31, 2021
−Removed: Consolidated revenue was $507.1 million for the nine months ended March 31, 2022, compared to $498.5 million in the same period last year.
−Removed: On a segment basis, revenue increased in the Process and Industrial Facilities and Utility and Power Infrastructure segments by $23.2 million and $13.9 million, respectively.
−Removed: The increases were partially offset by a decrease in revenue of $28.5 million in the Storage and Terminal Solutions segment.
−Removed: Consolidated gross profit (loss) decreased to ($2.1) million in the nine months ended March 31, 2022 compared to $31.2 million in the same period last year.
−Removed: Gross margin (loss) decreased to (0.4%) in the nine months ended March 31, 2022 compared to 6.3% in the same period last year.
−Removed: Gross margins in fiscal 2022 were negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs.
−Removed: In addition, the competitive environment and project adjustments negatively impacted gross margins.
−Removed: Gross margins in fiscal 2021 were negatively impacted by lower than forecasted volumes, which led to under recovery of construction overhead costs as well as a lower than previously forecasted margin on a large capital project in the Utility and Power Infrastructure segment.
−Removed: Consolidated SG&A expenses were $49.6 million in the nine months ended March 31, 2022 compared to $52.0 million in the same period a year earlier.
−Removed: The decrease is primarily attributable to implemented cost reductions.
−Removed: In the third quarter, we recorded $18.3 million of goodwill impairment.
−Removed: Financial Statements, Note 4 - Goodwill and Other Intangible Assets, for more information.
−Removed: As a result of restructuring activities, we recorded ($0.3) million of restructuring costs in the nine months ended March 31, 2022.
−Removed: The credit included a $1.6 million favorable settlement of a restructuring obligation related to our exit from the domestic iron and steel industry in fiscal 2020.
−Removed: Financial Statements, Note 10 - Restructuring Costs, for more information.
−Removed: Interest expense was $2.7 million in the nine months ended March 31, 2022 compared to $1.1 million in the nine months ended March 31, 2021.
−Removed: Interest expense in fiscal 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees (see Item 1.
−Removed: Financial Statements, Note 5 - Debt, for more information).
−Removed: The remaining interest expense in fiscal 2022 was comprised of letter of credit fees, unused capacity fees and amortization of deferred debt issuance costs.
−Removed: Our effective tax rates for the nine months ended March 31, 2022 and March 31, 2021 were (7.8%) and 22.6%, respectively.
−Removed: The effective tax rate during fiscal 2022 was impacted by a $21.9 million valuation allowance placed on our deferred tax assets.
−Removed: Financial Statements, Note 6 - Income Taxes, for more information about the valuation allowances.
−Removed: The effective tax rates were negatively impacted by $1.9 million of valuation allowances on certain deferred tax assets in the third quarter of fiscal 2021, and $1.2 million of other deferred tax adjustments in the first half of fiscal 2021.
−Removed: For the nine months ended March 31, 2022, we had a net loss of $77.4 million, or $2.90 per fully diluted share, compared to a net loss of $20.5 million, or $0.78 per fully diluted share, in the nine months ended March 31, 2021.
−Removed: Utility and Power Infrastructure
−Removed: Revenue for the Utility and Power Infrastructure segment was $171.3 million in the nine months ended March 31, 2022 compared to $157.4 million in the same period last year.
−Removed: The increase is primarily due to higher volumes of power generation and power delivery work, partially offset by lower volumes of natural gas utility peak shaving and storm response service work.
−Removed: The segment gross margin (loss) was (4.1%) in fiscal 2022 compared to 5.0% in fiscal 2021.
−Removed: The segment gross margin in fiscal 2022 was negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs.
−Removed: In addition, the fiscal 2022 segment gross margin was materially impacted by changes in the forecasted costs to complete a large capital project.
−Removed: Improved execution during the third quarter of fiscal 2022 resulted in an increase in gross profit of $0.8 million on this project during the three months ended March 31, 2022.
−Removed: However, increases in the forecasted costs to complete the project during the first half of fiscal 2022 resulted in the project reducing gross profit by $5.1 million during the nine months ended March 31, 2022.
−Removed: The increase in forecasted costs during the first half of the fiscal year was principally due to unexpected equipment repairs during commissioning that delayed the scheduled completion and increased the estimated costs to complete.
−Removed: We achieved a critical performance milestone during the second quarter of fiscal 2022, which significantly reduced our financial exposure on the project.
−Removed: We expect to complete the project during the fourth quarter of fiscal 2022.
−Removed: In addition, segment gross margin was negatively impacted by an unfavorable settlement of a claim with a customer.
−Removed: The fiscal 2021 segment gross margin was negatively impacted by an increase in the forecasted costs to complete a large capital project.
−Removed: In addition, segment gross margin was negatively impacted by low volumes, which led to the under recovery of construction overhead costs.
−Removed: These negative impacts were partially offset by good project execution in the remainder of the segment.
−Removed: Process and Industrial Facilities
−Removed: Revenue for the Process and Industrial Facilities segment was $163.2 million in the nine months ended March 31, 2022 compared to $140.0 million in the same period last year.
−Removed: The increase was primarily due to higher levels of refinery maintenance and turnaround work.
−Removed: The segment gross margin was 4.1% for the nine months ended March 31, 2022 compared to 8.1% in the same period last year.
−Removed: Despite generally strong project execution and higher volumes, the segment gross margin in fiscal 2022 was negatively impacted by under recovered construction overhead costs and a $4.8 million increase in forecasted costs to complete a midstream gas processing project.
−Removed: The increase in forecasted costs was primarily due to performance of a, now terminated, subcontractor, which will require rework in order to meet our client's expectations.
−Removed: Segment gross margin in fiscal 2021 was positively impacted by strong project execution and the positive impact of a one-time workers' compensation item recorded in the second quarter, but these positive impacts were partially offset by lower revenue volumes, which led to the under recovery of construction overhead costs.
−Removed: Storage and Terminal Solutions
−Removed: Revenue for the Storage and Terminal Solutions segment was $172.6 million in the nine months ended March 31, 2022 compared to $201.1 million in the same period last year.
−Removed: The decrease in segment revenue is primarily a result of lower volumes of crude oil tank and terminal capital work.
−Removed: The segment gross margin (loss) was (0.1%) for the nine months ended March 31, 2022 compared to 6.0% in the same period last year.
−Removed: The fiscal 2022 segment gross margin was negatively impacted by low revenue volume, which led to under recovery of construction overhead costs and a lower than previously forecasted margin on a thermal energy storage tank repair and maintenance project due to changes in repair scope, expanded client weld testing and associated schedule delays, which reduced segment gross profit by $5.5 million.
−Removed: In addition, segment gross margin was negatively impacted by smaller competitively priced capital projects.
−Removed: The fiscal 2021 segment gross margin was negatively impacted by increases in the costs to complete a large crude oil terminal project, partially offset by an increase in the estimated recovery of those costs.
−Removed: Unallocated corporate expenses were $21.5 million during the nine months ended March 31, 2022 compared to $20.2 million in the same period last year.
−Removed: The increase is primarily attributable to an increase in legal costs for outstanding litigation (see Item 1.
−Removed: Financial Statements, Note 7 - Commitment and Contingencies, for more information), third party consulting services and centralization of support costs related to restructuring activities (see "Operational Update" in this Results of Operations section), partially offset by cost reductions we implemented.
−Removed: We define backlog as the total dollar amount of revenue that we expect to recognize as a result of performing work that has been awarded to us through a signed contract, limited notice to proceed or other type of assurance that we consider firm.
−Removed: The following arrangements are considered firm:
−Removed: • fixed-price awards;
−Removed: • minimum customer commitments on cost plus arrangements;
−Removed: • certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.
−Removed: For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months.
−Removed: For arrangements in which we have received a limited notice to proceed ("LNTP"), we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding as high.
−Removed: For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.
−Removed: The following table provides a summary of changes in our backlog for the three months ended March 31, 2022:
−Removed: Utility and Power Infrastructure Process and Industrial Facilities Storage and Terminal Solutions Total
−Removed: (In thousands)
−Removed: Backlog as of December 31, 2021 $ 150,368 $ 250,970 $ 190,222 $ 591,560
−Removed: Project awards 23,366 104,729 51,575 179,670
−Removed: Revenue recognized (59,341) (68,971) (48,691) (177,003)
−Removed: Backlog as of March 31, 2022 $ 114,393 $ 286,728 $ 193,106 $ 594,227
−Removed: Book-to-bill ratio (1)
−Removed: 0.4 1.5 1.1 1.0
−Removed: (1) Calculated by dividing project awards by revenue recognized during the period.
−Removed: The following table provides a summary of changes in our backlog for the nine months ended March 31, 2022:
−Removed: Utility and Power Infrastructure Process and Industrial Facilities Storage and Terminal Solutions Total
−Removed: (In thousands)
−Removed: Backlog as of June 30, 2021 $ 170,043 $ 134,777 $ 157,741 $ 462,561
−Removed: Project awards 115,648 315,143 207,936 638,727
−Removed: Revenue recognized (171,298) (163,192) (172,571) (507,061)
−Removed: Backlog as of March 31, 2022 $ 114,393 $ 286,728 $ 193,106 $ 594,227
−Removed: Book-to-bill ratio (1)
−Removed: 0.7 1.9 1.2 1.3
−Removed: (1) Calculated by dividing project awards by revenue recognized during the period.
−Removed: Strong bidding activity has led to project awards of $179.7 million and $638.7 million during the three and nine months ended March 31, 2022, respectively, leading to a book-to-bill ratios of 1.0 and 1.3 for the three and nine months ended March 31, 2022, respectively.
−Removed: Project awards through the first half of fiscal 2022 surpassed project awards for the full year of fiscal 2021.
−Removed: Total backlog increased by 0.5% and 28.5% during the three and nine months ended March 31, 2022, respectively.
−Removed: In the Utility and Power Infrastructure segment, backlog decreased by 23.9% as we booked $23.4 million of project awards during the three months ended March 31, 2022.
−Removed: Backlog decreased by 32.7% as we booked $115.6 million of project awards during the nine months ended March 31, 2022.
−Removed: Bidding activity is strong in the power delivery portion of the business.
−Removed: During fiscal 2022, we received several key contracts for electrical infrastructure services including substation and transmission line rebuilds, relay upgrades, and fiber installation.
−Removed: Our opportunity pipeline for LNG peak shaving projects is also building, however those awards, while significant, can be less frequent.
−Removed: In addition, we expect the $1.2 trillion Infrastructure Investment and Jobs Act passed by congress will lead to increased opportunities in this segment.
−Removed: In the Process and Industrial Facilities segment, backlog increased by 14.2% as we booked $104.7 million of project awards during the three months ended March 31, 2022.
−Removed: Backlog increased by 112.7% as we booked $315.1 million of project awards during the nine months ended March 31, 2022.
−Removed: Client spending related to refinery maintenance operations has returned to near-normal levels.
−Removed: During fiscal 2022, we received key awards for two thermal vacuum chamber projects, a midstream gas processing plant, a borate mining facility, and other renewable energy capital projects.
−Removed: We continue to see strong demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals and chemicals.
−Removed: In addition, we are seeing more opportunities for midstream gas work, including some larger scale projects.
−Removed: In the Storage and Terminal Solutions segment, backlog increased by 1.5% as we booked $51.6 million of project awards during the three months ended March 31, 2022.
−Removed: Backlog increased by 22.4% as we booked $207.9 million of project awards during the nine months ended March 31, 2022.
−Removed: Oil and natural gas producers have remained cautious with capital spending, which has limited new production volumes and opportunities in crude oil tanks and terminals.
−Removed: However, the price of crude oil increased significantly during the third quarter of fiscal 2022 primarily due to increased foreign supply pressures from the sanctions against Russia.
−Removed: While the impact of the price increase remains uncertain, if sustained, we expect it could strengthen our existing opportunities for crude oil tanks and terminals, and export facilities in the coming quarters.
−Removed: This segment also includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, hydrogen, NGLs and other forms of renewable energy.
−Removed: Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete.
−Removed: It is common for awards to shift from one period to another as the timing of awards is dependent upon a number of factors including changes in market conditions, permitting, off take agreements, project financing and other factors.
−Removed: Backlog volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant.
−Removed: The level of awards presented above only represents an interim period and may not be indicative of full year awards.
−Removed: Seasonality and Other Factors
−Removed: Our operating results can exhibit seasonal fluctuations, especially in our Process and Industrial Facilities segment, for a variety of reasons.
−Removed: Turnarounds and planned outages at customer facilities are typically scheduled in the spring and the fall when the demand for energy is lower.
−Removed: Within the Utility and Power Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest.
−Removed: Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.
−Removed: Our business can also be affected, both positively and negatively, by seasonal factors such as energy demand or weather conditions including hurricanes, snowstorms, wildfires and abnormally low or high temperatures.
−Removed: Some of these seasonal factors may cause some of our offices and projects to close or reduce activities temporarily.
−Removed: In addition to the above noted factors, the general timing of project starts and completions could exhibit significant fluctuations.
−Removed: Accordingly, results for any interim period may not necessarily be indicative of operating results for the full year.
−Removed: Other factors impacting operating results in all segments come from decreased work volume during holidays, work site permitting delays or customers accelerating or postponing work.
−Removed: The differing types, sizes, and durations of our contracts, combined with their geographic diversity and stages of completion, often results in fluctuations in our operating results.
−Removed: Our overhead cost structure is generally fixed.
−Removed: Significant fluctuations in revenue usually leads to over or under recovery of fixed overhead costs, which can have a material impact on our gross margin and profitability.
−Removed: Non-GAAP Financial Measures
+Added: Bidding activity, project award volumes, and revenue volumes all continued to improve from the two year period impacted by the pandemic and we are now beginning to see these trends positively affect our operating results.
+Added: Repair and maintenance activities have increased significantly and returned to near pre-pandemic levels.
+Added: In addition, capital project award opportunities have strengthened during the past year, which has resulted in more project awards and is beginning to drive higher revenue volumes.
+Added: We expect these trends to continue and expect significant project awards in the second quarter of fiscal 2023.
+Added: Gross margins are also improving as lower margin projects bid competitively during the pandemic continue to be completed and are being replaced by projects with an improved margin profile.
+Added: Higher revenue volumes have also resulted in improved overhead cost recovery, which is critical to improved gross margin and operating income performance.
+Added: We have still not reached the level of revenue that allows us to fully recover construction overhead costs and to adequately leverage SG&A costs, but we expect to see significant progress towards those objectives as we progress through fiscal 2023.
Adjusted Net Loss
In order to more clearly depict our core profitability, the following tables present our operating results after certain adjustments:
−Removed: Reconciliation of Adjusted Net Loss and Diluted Loss per Common Share (1)
+Added: Reconciliation of Net Loss to Adjusted Net Loss (1)
(In thousands, except per share data)
−Removed: Three Months Ended Nine Months Ended
−Removed: March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
+Added: Three Months Ended
+Added: September 30, 2022 September 30, 2021
Net loss, as reported $ (6,512) $ (17,538)
−Removed: Restructuring costs incurred (1,578) 1,860 (278) 6,585
−Removed: Goodwill impairment 18,312 — 18,312 —
+Added: Restructuring costs 1,287 605
Accelerated amortization of deferred debt amendment fees (2)
+Added: Tax impact of above adjustments (331) (546)
Deferred tax asset valuation allowance (3)
−Removed: 7,671 — 21,869 —
−Removed: Tax impact of adjustments (2,911) (479) (3,636) (1,695)
Adjusted net loss $ (4,162) $ (15,961)
−Removed: Loss per fully diluted share, as reported $ (1.30) $ (0.49) $ (2.90) $ (0.78)
−Removed: Adjusted loss per fully diluted share $ (0.50) $ (0.43) $ (1.48) $ (0.59)
−Removed: (1) This table presents non-GAAP financial measures of our adjusted net loss and adjusted diluted loss per common share for the three and nine months ended March 31, 2022 and 2021.
−Removed: The most directly comparable financial measures are net loss and net loss per diluted share, respectively, presented in the Condensed Consolidated Statements of Income.
+Added: Loss per share, as reported $ (0.24) $ (0.66)
+Added: Adjusted loss per share $ (0.15) $ (0.60)
+Added: (1) This table presents non-GAAP financial measures of our adjusted net loss and adjusted loss per share for the three months ended September 30, 2022 and 2021.
+Added: The most directly comparable financial measures are net loss and loss per share, respectively, presented in the Condensed Consolidated Statements of Income.
We have presented these non-GAAP financial measures because we believe they more clearly depict our core operating results during the periods presented and provide a more comparable measure of our operating results to other companies considered to be in similar businesses.
−Removed: Since adjusted net loss and adjusted diluted loss per common share are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, the most directly comparable GAAP financial measures.
−Removed: (2) Interest expense in fiscal 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees (see Item 1.
−Removed: Financial Statements, Note 5 - Debt, for more information).
+Added: Since adjusted net loss and adjusted loss per share are not measures of performance calculated in accordance with GAAP, they should be considered in addition to, rather than as a substitute for, the most directly comparable GAAP financial measures.
+Added: (2) Interest expense in fiscal 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees.
(3) See Item 1.
8 unchanged sentences
Our non-GAAP performance measure, Adjusted EBITDA, has certain material limitations as follows:
−Removed: • It does not include impairment to goodwill.
−Removed: While impairment to goodwill is a non-cash expense in the period recognized, cash or other consideration was still transferred in exchange for goodwill in the period of the acquisition.
−Removed: Any measure that excludes impairment to goodwill has material limitations since this expense represents the loss of an asset that was acquired in exchange for cash or other assets.
• It does not include restructuring costs.
14 unchanged sentences
A reconciliation of Adjusted EBITDA to net loss follows:
−Removed: Three Months Ended Nine Months Ended
−Removed: 2022 March 31,
−Removed: 2021 March 31,
−Removed: 2022 March 31,
+Added: Three Months Ended
+Added: September 30,
+Added: 2022 September 30,
(In thousands)
Net loss $ (6,512) $ (17,538)
−Removed: Goodwill impairment 18,312 — 18,312 —
Restructuring costs 1,287 605
1 unchanged sentence
Interest expense 372 1,999
−Removed: Provision (benefit) for income taxes (147) (5,060) 5,564 (6,002)
+Added: Benefit for federal, state and foreign income taxes — (5,265)
Depreciation and amortization 3,642 4,052
Adjusted EBITDA $ 844 $ (14,278)
+Added: Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021
+Added: Consolidated revenue was $208.4 million for the three months ended September 30, 2022, compared to $168.1 million in the same period last year.
+Added: On a segment basis, revenue increased in the Process and Industrial Facilities and Storage and Terminal Solutions segments by $42.7 million and $9.9 million, respectively.
+Added: The increases were partially offset by a decrease in revenue of $12.3 million in the Utility and Power Infrastructure segment.
+Added: Consolidated gross profit increased to $13.0 million in the three months ended September 30, 2022 compared to a gross loss of $3.5 million in the same period last year.
+Added: Gross margin (loss) increased to 6.2% in the three months ended September 30, 2022 compared to (2.1%) in the same period last year.
+Added: Gross margins in the first quarter of fiscal 2023 improved significantly from recent quarters, but were still negatively impacted by the under recovery of construction overhead costs.
+Added: Gross margins in the first quarter of fiscal 2022 were negatively impacted by a lower than previously forecasted margin on a large capital project and an unfavorable settlement of a claim with a customer, both in the Utility and Power Infrastructure segment, and by lower than previously forecasted margins on a limited number of projects in the Storage and Terminal Solutions segment.
+Added: In addition, gross margins in the first quarter of fiscal 2022 were also negatively impacted by lower than forecasted volumes, which led to under recovery of construction overhead costs.
+Added: Consolidated SG&A expenses were $16.8 million in the three months ended September 30, 2022 compared to $16.6 million in the same period last year.
+Added: We recorded restructuring costs of $1.3 million in the three months ended September 30, 2022 compared to $0.6 million in the same period last year.
+Added: Financial Statements, Note 11 - Restructuring Costs, for more information about our business improvement plan.
+Added: Interest expense was $0.4 million in the three months ended September 30, 2022 compared to $2.0 million in the three months ended September 30, 2021.
+Added: Interest expense in the three months ended September 30, 2022 consisted primarily of interest on debt outstanding, unused capacity fees, amortization of deferred debt issuance costs, and letter of credit fees.
+Added: Interest expense in fiscal 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees associated with terminating our prior credit facility.
+Added: Our effective tax rates for the three months ended September 30, 2022 and September 30, 2021 were 0.0% and 23.1%, respectively.
+Added: The effective tax rate during the first quarter of fiscal 2023 was impacted by a $1.4 million valuation allowance placed on deferred tax assets generated during the quarter.
+Added: We placed a full valuation allowance on our deferred tax assets in the second quarter of fiscal 2022 due to the existence of a cumulative loss over a three-year period.
+Added: We will continue to place valuation allowances on newly generated deferred tax assets and will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided to the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated.
+Added: For the three months ended September 30, 2022, we had a net loss of $6.5 million, or $0.24 per fully diluted share, compared to a net loss of $17.5 million, or $0.66 per fully diluted share, in the three months ended September 30, 2021.
+Added: Utility and Power Infrastructure
+Added: Revenue for the Utility and Power Infrastructure segment was $44.9 million in the three months ended September 30, 2022 compared to $57.2 million in the same period last year.
+Added: The decrease is primarily due to lower volumes of LNG peak shaving work, partially offset by higher volumes of power delivery and power generation work.
+Added: The segment gross margin (loss) was 3.8% in fiscal 2023 compared to (10.7%) in fiscal 2022.
+Added: The segment gross margin for the first quarter of fiscal 2023 was negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs, and work on a large capital project with a previously reduced gross margin.
+Added: The fiscal 2022 segment gross margin was negatively impacted by an increase in the forecasted costs to complete a large capital project, which resulted in a decrease in gross profit of $5.9 million.
+Added: The change in estimate was principally due to unexpected equipment repairs during commissioning that delayed the scheduled completion and increased the estimated costs to complete.
+Added: In addition, segment gross margin was negatively impacted by an unfavorable settlement of a claim with a customer, and low volumes, which led to the under recovery of construction overhead costs.
+Added: Process and Industrial Facilities
+Added: Revenue for the Process and Industrial Facilities segment was $86.6 million in the three months ended September 30, 2022 compared to $43.9 million in the same period last year.
+Added: This 97.3% increase reflects the improved market environment and was primarily due to higher volumes of refinery maintenance and turnaround work, work on a capital project at a biodiesel facility, and higher volumes of midstream gas processing capital work.
+Added: The segment gross margin was 5.0% for the three months ended September 30, 2022 compared to 6.5% in the same period last year.
+Added: The segment gross margin in the first quarter of fiscal 2023 was negatively impacted by work on a midstream gas processing project that experienced increases in forecasted costs to complete in the prior year, which reduced the remaining margin realized on the project.
+Added: In addition, revenue volumes were still too low to fully recover construction overhead costs, which negatively impacted segment gross margin.
+Added: The segment gross margin in fiscal 2022 was negatively impacted by low revenue volume, which led to the under recovery of construction overhead costs.
+Added: Storage and Terminal Solutions
+Added: Revenue for the Storage and Terminal Solutions segment was $76.9 million in the three months ended September 30, 2022 compared to $67.0 million in the same period last year.
+Added: The increase in segment revenue is primarily a result of higher volumes of LNG and specialty vessel tank and terminal capital work.
+Added: The segment gross margin was 9.8% for the three months ended September 30, 2022 compared to 0.6% in the same period last year.
+Added: The fiscal 2023 segment gross margin was positively impacted by strong project execution, partially offset by low revenue volume, which led to under recovery of construction overhead costs.
+Added: The fiscal 2022 segment gross margin was negatively impacted by lower than previously forecasted margins on a limited number of projects and a higher percentage of lower margin maintenance work.
+Added: Segment gross margin in fiscal 2022 was also negatively impacted by low revenue volume, which led to under recovery of construction overhead costs.
+Added: Unallocated corporate expenses were $7.9 million during the three months ended September 30, 2022 compared to $7.6 million in the same period last year.
+Added: We define backlog as the total dollar amount of revenue that we expect to recognize as a result of performing work that has been awarded to us through a signed contract, limited notice to proceed or other type of assurance that we consider firm.
+Added: The following arrangements are considered firm:
+Added: • fixed-price awards;
+Added: • minimum customer commitments on cost plus arrangements;
+Added: • certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts.
+Added: For long-term maintenance contracts with no minimum commitments and other established customer agreements, we include only the amounts that we expect to recognize as revenue over the next 12 months.
+Added: For arrangements in which we have received a limited notice to proceed ("LNTP"), we include the entire scope of work in our backlog if we conclude that the likelihood of the full project proceeding as high.
+Added: For all other arrangements, we calculate backlog as the estimated contract amount less revenue recognized as of the reporting date.
+Added: The following table provides a summary of changes in our backlog for the three months ended September 30, 2022:
+Added: Utility and Power Infrastructure Process and Industrial Facilities Storage and Terminal Solutions Total
+Added: (In thousands)
+Added: Backlog as of June 30, 2022 $ 102,059 $ 292,287 $ 195,114 $ 589,460
+Added: Project awards 42,618 59,982 132,028 234,628
+Added: Revenue recognized (44,870) (86,628) (76,933) (208,431)
+Added: Backlog as of September 30, 2022 $ 99,807 $ 265,641 $ 250,209 $ 615,657
+Added: Book-to-bill ratio (1)
+Added: 0.9 0.7 1.7 1.1
+Added: (1) Calculated by dividing project awards by revenue recognized during the period.
+Added: Backlog increased $26.2 million or 4.4% in the first quarter of fiscal 2023 on project awards of $234.6 million and a book-to-bill ratio of 1.1.
+Added: In the Utility and Power Infrastructure segment, backlog decreased by 2.2% as we booked $42.6 million of project awards during the first quarter of fiscal 2023, primarily related to power delivery work.
+Added: Our opportunity pipeline for LNG peak shaving projects continues to be promising, however those awards, while significant, can be less frequent.
+Added: While we did not book any LNG peak shaver projects in the first quarter of fiscal 2023, early in the second quarter, the Company was awarded the engineering, procurement, and construction of upgrades being made to an existing LNG peak shaving facility that include a new gas liquefaction system and vaporization system.
+Added: Project opportunities and bidding activity are strong for both the power delivery portion of the business and LNG peak shaving.
+Added: In the Process and Industrial Facilities segment, backlog decreased by 9.1% as we booked $60.0 million of project awards during the first quarter of fiscal 2023.
+Added: Client spending related to refinery maintenance and turnaround operations has returned to near-normal pre-pandemic levels.
+Added: We continue to see strong demand for thermal vacuum chambers in the coming quarters, as well as increasing opportunities in mining and minerals, and chemicals.
+Added: In addition, we are seeing more opportunities for midstream gas work, including some larger scale projects.
+Added: In the Storage and Terminal Solutions segment, backlog increased by 28.2% as we booked $132.0 million of project awards during the first quarter of fiscal 2023.
+Added: We received an LNTP on a significant ethane/ethylene tank EPC project during the quarter and booked several other storage projects related to a variety of other refined products.
+Added: We were also awarded a large-scale specialty vessel project early in the second quarter of fiscal 2023.
+Added: This segment includes significant opportunities for storage infrastructure projects related to natural gas, LNG, ammonia, hydrogen, NGLs and other forms of renewable energy.
+Added: We believe LNG and hydrogen projects in particular will be key growth drivers for this segment.
+Added: Bidding activity on LNG projects has been strong and we have been positioning ourselves for growth in hydrogen by entering into key relationships, such as the signing of a memorandum of understanding ("MOU") with Korea Gas Corporation in August 2022 to support South
+Added: Korea’s development of a hydrogen economy as it transforms itself from natural gas and the signing of a MOU with Chart Industries, Inc.
+Added: in January of 2021 to support the development of hydrogen solutions.
+Added: Oil and natural gas producers have remained cautious with capital spending, which has limited opportunities in crude oil tanks and terminals.
+Added: However, the price of crude oil and natural gas increased significantly since the world emerged from the COVID-19 pandemic, which, if sustained, may lead to higher production volumes and more opportunities for crude oil tanks, terminals and export facilities in the coming quarters.
+Added: Project awards in all segments are cyclical and are typically the result of a sales process that can take several months or years to complete.
+Added: It is common for awards to shift from one period to another as the timing of awards is dependent upon a number of factors including changes in market conditions, permitting, off take agreements, project financing and other factors.
+Added: Backlog volatility may increase for some segments from time to time when individual project awards are less frequent, but more significant.
+Added: The level of awards presented above only represents an interim period and may not be indicative of full year awards.
+Added: Seasonality and Other Factors
+Added: Our operating results can exhibit seasonal fluctuations, especially in our Process and Industrial Facilities segment, for a variety of reasons.
+Added: Turnarounds and planned outages at customer facilities are typically scheduled in the spring and the fall when the demand for energy is lower.
+Added: Within the Utility and Power Infrastructure segment, transmission and distribution work is generally scheduled by the public utilities when the demand for electricity is at its lowest.
+Added: Therefore, revenue volume in the summer months is typically lower than in other periods throughout the year.
+Added: Our business can also be affected, both positively and negatively, by seasonal factors such as energy demand or weather conditions including hurricanes, snowstorms, wildfires and abnormally low or high temperatures.
+Added: Some of these seasonal factors may cause some of our offices and projects to close or reduce activities temporarily.
+Added: In addition to the above noted factors, the general timing of project starts and completions could exhibit significant fluctuations.
+Added: Accordingly, results for any interim period may not necessarily be indicative of operating results for the full year.
+Added: Other factors impacting operating results in all segments come from decreased work volume during holidays, work site permitting delays or customers accelerating or postponing work.
+Added: The differing types, sizes, and durations of our contracts, combined with their geographic diversity and stages of completion, often results in fluctuations in our operating results.
+Added: Our overhead cost structure is generally fixed.
+Added: Significant fluctuations in revenue usually leads to over or under recovery of fixed overhead costs, which can have a material impact on our gross margin and profitability.
LIQUIDITY AND CAPITAL RESOURCES
We define liquidity as the ongoing ability to pay our liabilities as they become due, fund business operations and meet all monetary contractual obligations.
−Removed: Our primary sources of liquidity at March 31, 2022 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations.
−Removed: Unrestricted cash and cash equivalents at March 31, 2022 totaled $34.1 million and availability under the ABL Facility totaled $52.7 million, resulting in total liquidity of $86.8 million.
+Added: Our primary sources of liquidity at September 30, 2022 were unrestricted cash and cash equivalents on hand, capacity under our ABL Facility, and cash generated from operations.
+Added: Unrestricted cash and cash equivalents at September 30, 2022 totaled $14.3 million and availability under the ABL Facility totaled $42.3 million, resulting in total liquidity of $56.6 million.
The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Condensed Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows (in thousands):
+Added: September 30,
2022 June 30,
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Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 39,342 $ 77,371
−Removed: While bidding activity and the volume of project awards have both improved as the economy emerges from the pandemic, the market environment is still uncertain.
−Removed: Therefore we continue to maintain a strong balance sheet, which we believe is sufficient to support our near- to intermediate-term needs.
+Added: The following table provides a summary of changes in our liquidity for the three months ended September 30, 2022 (in thousands):
+Added: Liquidity at June 30, 2022 $ 94,831
+Added: Cash used by operating activities (35,229)
+Added: Capital expenditures (1,578)
+Added: Decrease in availability under ABL Facility (186)
+Added: Cash used by financing activities (245)
+Added: Liquidity at September 30, 2022 $ 56,616
+Added: As a result of rising revenue volumes, especially for cost-reimbursable and maintenance-type work, we have invested heavily into working capital during the first quarter of fiscal 2023, which is the primary driver of the decrease in liquidity since June 30, 2022.
+Added: While bidding activity, project award volumes, and revenue volumes all continued to improve as we moved into fiscal 2023, the market environment is still uncertain.
+Added: As a result, we continue to cautiously manage our liquidity, which is adequate to support our needs.
We are continuing to take the following actions:
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• proactively managing our the cost structure and working capital;
−Removed: • limiting capital expenditures to critical needs.
+Added: • limiting capital expenditures.
Factors that routinely impact our short-term liquidity and may impact our long-term liquidity include, but are not limited to:
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◦ some of our large construction projects may require security in the form of letters of credit or significant retentions.
−Removed: The timing of collection of retentions is often uncertain;
−Removed: • other changes in working capital;
+Added: Retentions are normally held until certain contractual milestones are achieved;
+Added: • other changes in working capital, including the timing of tax payments and refunds;
• capital expenditures.
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• issuances of letters of credit;
−Removed: • strategic investments in new operations.
+Added: • strategic investments in new operations or divestitures of existing operations.
Other factors that may impact long-term liquidity include:
2 unchanged sentences
• purchases of shares under our stock buyback program.
−Removed: ABL Credit Facility and Senior Secured Revolving Credit Facility
ABL Credit Facility
−Removed: On September 9, 2021, we and our primary U.S.
−Removed: and Canada operating subsidiaries entered into an asset-backed credit agreement (the "ABL Facility") as borrowers with Bank of Montreal, as Administrative Agent, Swing-Line Lender, a Letter of Credit Issuer and a Lender.
+Added: On October 5, 2022, our primary U.S.
+Added: and Canada operating subsidiaries entered into the First Amendment and Waiver to Credit Agreement (the “Amendment”), which amended our asset-backed credit agreement (the "ABL Facility"), dated as of September 9, 2021 with Bank of Montreal, as Administrative Agent, Swing Line Lender and a Letter of Credit Issuer, and the lenders named therein.
+Added: The Amendment (i) waived an event of default resulting from our failure to deliver the Administrative Agent and the lenders our audited financial statements for the fiscal year ended June 30, 2022 by September 28, 2022 (the “Audited Financial Statements”), provided we deliver the Audited Financial Statements by October 14, 2022, (ii) reduced the maximum amount of loans under the ABL Facility to $90.0 million from $100.0 million and (iii) replaced the London interbank offered rate with the forward term rate based on the secured overnight financing rate (the “SOFR”) as the interest rate benchmark.
+Added: We subsequently delivered the Audited Financial Statements on October 11, 2022.
The ABL Facility is guaranteed by substantially all of our remaining U.S.
and Canadian subsidiaries.
−Removed: The ABL Facility provides for available borrowings of up to $100.0 million, which may be increased further by an amount not to exceed $15.0 million, subject to certain conditions, including obtaining additional commitments.
+Added: The ABL Facility available borrowings may be increased by an amount not to exceed $15.0 million, subject to certain conditions, including obtaining additional commitments.
The ABL Facility is intended to be used for working capital, capital expenditures, issuances of letters of credit and other lawful purposes.
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The ABL Facility matures and any outstanding amounts become due and payable on September 9, 2026.
−Removed: At March 31, 2022, our borrowing base was $76.4 million and we had $23.7 million in letters of credit outstanding issued by Bank of Montreal, which resulted in availability of $52.7 million under the ABL Facility.
−Removed: Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate equal to any of a base rate (“Base Rate”), Canadian prime rate, CDOR rate or a LIBOR rate, plus an applicable margin.
−Removed: The Base Rate is defined as a fluctuating interest rate equal to the greatest of (i) rate of interest announced by Bank of Montreal from time to time as its prime rate;
+Added: At September 30, 2022, our borrowing base was $79.0 million, we had $15.0 million of outstanding borrowings, and $21.7 million in letters of credit outstanding, which resulted in availability of $42.3 million under the ABL Facility.
+Added: Borrowings under the ABL Facility bear interest through maturity at a variable rate based upon, at our option, an annual rate of either a base rate (“Base Rate”), an Adjusted Term SOFR ("Adjusted Term SOFR"), or at the Canadian Prime Rate, plus an applicable margin.
+Added: The Adjusted Term SOFR is defined as (i) the SOFR plus (ii) 11.448 basis points for a one-month tenor and 26.161 basis points for a three-month tenor;
+Added: provided that the Adjusted Term SOFR cannot be below zero.
+Added: The Base Rate is defined as a fluctuating interest rate equal to the greater of:
+Added: (i) rate of interest announced by Bank of Montreal from time to time as its prime rate;
(ii) the U.S.
federal funds rate plus 0.50%;
−Removed: (iii) LIBOR rate for one month period plus 1.00%;
−Removed: and (iv) 1.00%.
−Removed: Depending on the amount of average availability, the applicable margin is between 1.00% to 1.50% for either U.S.
−Removed: Base Rate Loans or Canadian prime rate, and between 2.00% and 2.50% for CDOR and LIBOR rate borrowings.
−Removed: Interest is payable either (i) monthly for Base Rate borrowings or (ii) the last day of the interest period for LIBOR or CDOR rate borrowings, as set forth in the Credit Agreement.
+Added: (iii) Adjusted Term SOFR for one month period plus 1.00%;
+Added: or (iv) 1.00%.
+Added: Depending on the amount of average availability, the applicable margin is between 1.00% to 1.50% for Base Rate and Canadian Prime Rate borrowings, which includes either U.S.
+Added: or Canadian prime rate, and between 2.00% and 2.50% for Adjusted Term SOFR borrowings.
+Added: Interest is payable either (i) monthly for Base Rate or Canadian Prime Rate borrowings or (ii) the last day of the interest period for Adjusted Term SOFR borrowings, as set forth in the ABL Facility.
The fee for undrawn amounts is 0.25% per annum and is due quarterly.
+Added: The interest rate in effect for borrowings outstanding at September 30, 2022, including applicable margin, was 7.50%.
The ABL Facility contains customary conditions to borrowings, events of default and covenants, including, but not limited to, covenants that restrict our ability to sell assets, engage in mergers and acquisitions, incur, assume or permit to exist additional indebtedness and guarantees, create or permit to exist liens, pay cash dividends, issue equity instruments, make distribution or redeem or repurchase capital stock.
−Removed: In the event that our availability is less than the greater of (i) $15.0 million and (ii) 15.00% of the commitments under the ABL Facility then in effect, a consolidated Fixed Charge Coverage Ratio of at least 1.00 to 1.00 must be maintained.
−Removed: We are in compliance with all covenants of the ABL Facility as of March 31, 2022.
−Removed: Senior Secured Revolving Credit Facility
−Removed: The ABL Facility replaced the Fifth Amended and Restated Credit Agreement (the "Prior Credit Agreement"), that was entered into on November 2, 2020, and subsequently amended on May 4, 2021, by and among us and certain foreign subsidiaries, as Borrowers, various subsidiaries of ours, as Guarantors, JPMorgan, as Administrative Agent, Sole Lead Arranger and Sole Book Runner, and the other Lenders party thereto.
−Removed: The Prior Credit Agreement provided for a three-year senior secured revolving credit facility of $200.0 million that was set to expire November 2, 2023.
−Removed: We had no borrowings and $41.3 million of letters of credit outstanding under the Prior Credit Agreement as of the date we commenced the ABL Facility.
−Removed: Interest expense during the nine months ended March 31, 2022 included $1.5 million of accelerated amortization of deferred debt amendment fees associated with the Prior Credit Agreement.
−Removed: Cash Flow for the Nine Months Ended March 31, 2022
+Added: In the event that our availability is less than the greater of (i) $15.0 million and (ii) 15.00% of the lesser of (1) the current borrowing base and (2) the commitments under the ABL Facility then in effect, a consolidated Fixed Charge Coverage Ratio of at least 1.00 to 1.00 must be maintained.
+Added: Except for the covenant to deliver Audited Financial Statements by September 28, 2022, which was waived in the Amendment, we were in compliance with all covenants of the ABL Facility as of September 30, 2022.
+Added: Cash Flow for the Three Months Ended September 30, 2022
Cash Flows Used by Operating Activities
−Removed: Cash used by operating activities for the nine months ended March 31, 2022 totaled $22.5 million.
+Added: Cash used by operating activities for the three months ended September 30, 2022 totaled $35.2 million.
The various components are as follows:
2 unchanged sentences
Net loss $ (6,512)
−Removed: Non-cash expenses 18,276
−Removed: Goodwill impairment 18,312
−Removed: Deferred income tax 5,323
+Added: Depreciation and amortization 3,642
+Added: Stock-based compensation 2,055
+Added: Other non-cash expenses 40
Cash effect of changes in operating assets and liabilities (34,454)
Net cash used by operating activities $ (35,229)
−Removed: Cash effect of changes in operating assets and liabilities at March 31, 2022 in comparison to June 30, 2021 include the following:
−Removed: • Accounts receivable decreased $10.3 million during the nine months ended March 31, 2022, which increased cash flows from operating activities.
+Added: Cash effect of changes in operating assets and liabilities at September 30, 2022 in comparison to June 30, 2022 include the following:
+Added: • Accounts receivable, excluding credit losses recognized during the period, decreased $4.6 million during the three months ended September 30, 2022, which increased cash flows from operating activities.
The variance is primarily attributable to the timing of billing and collections.
• Costs and estimated earnings in excess of billings on uncompleted contracts ("CIE") increased $14.9 million, which decreased cash flows from operating activities.
−Removed: Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") increased $20.0 million, which increased cash flows from operating activities.
+Added: The increase in CIE was primarily due to increased revenue on time and materials-type work during the first quarter of fiscal 2023.
+Added: Billings on uncompleted contracts in excess of costs and estimated earnings ("BIE") decreased $11.8 million, which decreased cash flows from operating activities.
+Added: The decrease in BIE was primarily due to continued work on capital projects that received upfront billings in the prior year.
CIE and BIE balances can experience significant fluctuations based on business volumes and the timing of when job costs are incurred and the timing of customer billings and payments.
−Removed: • Inventories, income taxes receivable, other current assets, operating right-of-use lease assets and other assets, non-current, decreased $1.0 million during the nine months ended March 31, 2022, which increased cash flows from operating activities.
+Added: • Inventories, income taxes receivable, prepaid expenses, other current assets, operating right-of-use lease assets and other assets, non-current, increased $0.7 million during the three months ended September 30, 2022, which decreased cash flows from operating activities.
These operating assets can fluctuate based on the timing of inventory builds and draw-downs, accrual and receipt of income taxes receivable;
3 unchanged sentences
and other timing differences.
−Removed: • Accounts payable, accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $1.8 million during the nine months ended March 31, 2022, which decreased cash flows from operating activities.
+Added: • Accounts payable, accrued wages and benefits, accrued insurance, operating lease liabilities, other accrued expenses, and other liabilities, non-current decreased by $11.6 million during the three months ended September 30, 2022, which decreased cash flows from operating activities.
These operating liabilities can fluctuate based on the timing of vendor payments;
3 unchanged sentences
Cash Flows Used by Investing Activities
−Removed: Investing activities used $0.1 million of cash in the nine months ended March 31, 2022 primarily due to $1.4 million of capital expenditures, partially offset by $1.3 million of proceeds from other asset sales.
+Added: Investing activities used $1.6 million of cash in the three months ended September 30, 2022 primarily due to capital expenditures.
Cash Flows Used by Financing Activities
−Removed: Financing activities used $1.9 million of cash in the nine months ended March 31, 2022 primarily due to $1.1 million paid in fees to enter into our ABL Facility and $0.9 million paid to repurchase our stock for payment of withholding taxes due on equity-based compensation.
+Added: Financing activities used $0.2 million of cash in the three months ended September 30, 2022 primarily due to $0.3 million paid to repurchase our stock for payment of withholding taxes due on equity-based compensation.
Dividend Policy
6 unchanged sentences
The program will continue unless and until it is modified or revoked by the Board of Directors.
−Removed: We made no repurchases under the program in the nine months ended March 31, 2022 and have no current plans to repurchase stock.
−Removed: As of March 31, 2022, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
+Added: We made no repurchases under the program in the three months ended September 30, 2022 and have no current plans to repurchase stock.
+Added: As of September 30, 2022, there were 1,349,037 shares available for repurchase under the Stock Buyback Program.
The terms of our ABL Facility limit share repurchases to $2.5 million per fiscal year provided that we meet certain availability thresholds and do not violate our Fixed Charge Coverage Ratio financial covenant.
Treasury Shares
−Removed: We had 1,104,952 treasury shares as of March 31, 2022 and intend to utilize these treasury shares in connection with equity awards under the our stock incentive plans and for sales to the Employee Stock Purchase Plan.
+Added: We had 932,707 treasury shares as of September 30, 2022 and intend to utilize these treasury shares in connection with equity awards under the our stock incentive plans and for sales to the Employee Stock Purchase Plan.
CRITICAL ACCOUNTING POLICIES
65 unchanged sentences
Claims are more fully discussed in Note 8 - Commitments and Contingencies of the Notes to Financial Statements.
−Removed: Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $9.3 million at March 31, 2022 and $14.6 million at June 30, 2021.
+Added: Costs and estimated earnings in excess of billings on uncompleted contracts included revenues for unpriced change orders and claims of $13.7 million at September 30, 2022 and $8.9 million at June 30, 2022.
The amounts ultimately realized may be significantly different than the recorded amounts resulting in a material adjustment to future earnings.
−Removed: Goodwill represents the excess of the purchase price of acquisitions over the acquisition date fair value of the net identifiable tangible and intangible assets acquired.
+Added: Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net identifiable tangible and intangible assets acquired at the acquisition date.
In accordance with current accounting guidance, goodwill is not amortized, but is tested at least annually for impairment at the reporting unit level, which is a level below our reportable segments.
24 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.