What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-07-28 compared with 2021-04-28 · 121 added, 72 removed, 242 unchanged (44% of the section changed)

18 unchanged sentences

In addition, we believe that we are better capitalized than some of our competitors, which provides us with valuable flexibility to take on additional and more complex projects.

Since March 2020, the COVID-19 pandemic has had a significant impact on the global economy, including the US and Canadian economies.

The COVID-19 pandemic caused a slowdown of certain projects due to specific state, local, municipal and customer mandated stay-at-home orders and new project requirements that were established to protect construction workers and the general public, most of which have impacted our C&I segment.

Although the majority of stay-at-home orders have been phased out, we are still experiencing impacts associated with the COVID-19 project-specific protocols.

We expect the project-specific requirements to remain in place which will continue to impact project schedules and workflow going forward.

We had consolidated revenues for the three months ended March 31, 2021 of $592.5 million, of which 53.2% was attributable to our T&D customers and 46.8% was attributable to our C&I customers.

Our consolidated revenues for the three months ended March 31, 2020 were $518.5 million.

For the three months ended March 31, 2021, our net income and EBITDA (1) were $19.9 million and $39.3 million, respectively, compared to $9.9 million and $27.4 million, respectively, for the three months ended March 31, 2020.

We believe that the proposed legislative actions may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and renewable energy spending.

We are hopeful that proposed legislative actions will provide greater opportunity in both of our reporting segments.

We also believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion and connect to new sources of renewable generation.

Consequently, we anticipate that we will continue to see significant bidding activity on large transmission projects over the next two years.

We believe proposed legislative actions aimed at supporting infrastructure improvements in the United States may positively impact long-term demand, particularly in connection with electric power infrastructure, transportation and renewable energy spending.

We believe the proposed legislative actions are likely to provide greater opportunity in both of our reporting segments.

However due to the market disruption associated with the COVID-19 pandemic and market uncertainty, both of our segments may be subject to pricing volatility and materials availability delays which could contribute to an overall deceleration in project opportunities and awards.

We had consolidated revenues for the six months ended June 30, 2021 of $1.24 billion, of which 51.7% was attributable to our T&D customers and 48.3% was attributable to our C&I customers.

Our consolidated revenues for the six months ended June 30, 2020 were $1.03 billion.

For the six months ended June 30, 2021, our net income and EBITDA (1) were $41.1 million and $80.5 million, respectively, compared to $23.3 million and $58.9 million, respectively, for the six months ended June 30, 2020.

We believe there is an ongoing need for utilities to sustain investment in their transmission systems to improve reliability, reduce congestion and connect to new sources of renewable generation.

Consequently, we anticipate that we will continue to see significant bidding activity on large transmission projects going forward.

The timing of multi-year transmission project awards and substantial construction activity is difficult to predict due to regulatory requirements and the permitting needed to commence construction.

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Bidding and construction activity for small to medium-size transmission projects and upgrades remain active, and we expect this trend to continue, primarily due to reliability and economic drivers.

(1) EBITDA is a non-GAAP measure.

Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.

As a result of reduced spending by United States utilities on their distribution systems for several years, we believe there is a need for sustained investment by utilities in their distribution systems to properly maintain or meet reliability requirements.

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We believe electric utility employee retirements could increase with further economic recovery, which may result in an increase in outsourcing opportunities.

We expect to see an incremental increase in distribution opportunities in the United States in 2021, depending on the ultimate U.S.

economic recovery from the COVID-19 pandemic.

We expect C&I bidding opportunities to continue to be impacted by the ongoing COVID-19 pandemic and market uncertainty could contribute to an overall deceleration in projects coming out to bid.

Recovery of the C&I market will be heavily dependent on the timing and pace of the Unites States and Canada economic recoveries.

(1) EBITDA is a non-GAAP measure.

Refer to “Non-GAAP Measure—EBITDA” for a discussion of this measure.

We expect C&I bidding opportunities to continue to be impacted by various recent market disruptions, and as a result the ultimate recovery of the C&I market will be heavily dependent on the timing and pace of the United States and Canada economic recoveries.

We believe that the primary markets we serve may be somewhat less vulnerable to economic slowing, such as health care, transportation, data centers, warehousing, renewable energy and water projects.

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We continue to implement strategies that further expand our capabilities and allow opportunities to provide prudent capital returns.

We ended the first quarter of 2021 with $362.7 million available under our credit facility.

We ended the second quarter of 2021 with $362.7 million available under our credit facility.

We believe that our financial position, positive cash flows and other operational strengths will enable us to manage the challenges and uncertainties in the markets we serve and give us the flexibility to successfully execute our strategies.

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Additional information related to our remaining performance obligations is provided in Note 6–Revenue Recognition in the accompanying notes to our Consolidated Financial Statements.

Our backlog was $1.64 billion at March 31, 2021, compared to $1.65 billion at December 31, 2020 and $1.54 billion at March 31, 2020.

Our backlog at March 31, 2021 decreased 0.4% from December 31, 2020.

Backlog in the T&D segment decreased $59.4 million and C&I backlog increased $53.3 million compared to December 31, 2020.

Our backlog as of March 31, 2021 included our proportionate share of joint venture backlog totaling $19.2 million, compared to $24.8 million at December 31, 2020.

Our backlog was $1.57 billion at June 30, 2021, compared to $1.65 billion at December 31, 2020 and $1.55 billion at June 30, 2020.

Our backlog at June 30, 2021 decreased 4.7% from March 31, 2021.

Backlog in the T&D segment decreased $59.4 million and C&I backlog decreased $17.2 million compared to March 31, 2021.

Our backlog as of June 30, 2021 included our proportionate share of joint venture backlog totaling $15.2 million, compared to $19.2 million at March 31, 2021.

The following table summarizes that amount of our backlog that we believe to be firm as of the dates shown and the amount of our current backlog that we reasonably estimate will not be recognized within the next twelve months:

Backlog at March 31, 2021

Backlog at June 30, 2021

(in thousands) Total Amount estimated to not

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To date, we have not been required to make any reimbursements to our sureties for claims against our surety bonds.

As of March 31, 2021, we had approximately $1.20 billion in original face amount of surety bonds outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $632.8 million as of March 31, 2021.

As of June 30, 2021, we had approximately $1.30 billion in original face amount of surety bonds outstanding.

Our estimated remaining cost to complete these bonded projects was approximately $605.4 million as of June 30, 2021.

From time to time, we guarantee the obligations of our wholly owned subsidiaries, including obligations under certain contracts with customers, certain lease agreements, and, in some states, obligations in connection with obtaining contractors’ licenses.

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(dollars in thousands) Amount Percent Amount Percent

June 30, Six months ended

2021 2020 2021 2020

(dollars in thousands) Amount Percent Amount Percent Amount Percent Amount Percent

Contract revenues $ 649,573 100.0 % $ 513,051 100.0 % $ 1,242,059 100.0% $ 1,031,521 100.0 %

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Net income $ 21,219 3.3 % $ 13,385 2.6 % $ 41,147 3.3 % $ 23,317 2.3 %

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Revenues were $592.5 million for the three months ended March 31, 2021 compared to $518.5 million for the three months ended March 31, 2020.

The increase of $74.0 million, or 14.3%, was primarily due to an increase in revenue on large-sized T&D projects as well as an increase in revenue on medium-sized C&I projects.

Additionally, revenues during the three months ended March 31, 2020 were negatively impacted by a slight slowdown of C&I work in certain geographic areas related to the COVID-19 pandemic.

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Revenues were $649.6 million for the three months ended June 30, 2021 compared to $513.1 million for the three months ended June 30, 2020.

The increase of $136.5 million, or 26.6%, was primarily due to an increase in revenue on large-sized T&D projects as well as an increase in revenue on various-sized C&I projects.

Additionally, revenues during the three months ended June 30, 2020 were negatively impacted by a slight slowdown of C&I work in certain geographic areas related to the COVID-19 pandemic.

Gross margin.

Gross margin was 13.0% for the three months ended March 31, 2021 compared to 11.9% for the three months ended March 31, 2020.

The increase in gross margin was primarily due to better-than-anticipated productivity on certain projects and a favorable job close-out.

These improvements were partially offset by inclement weather experienced on a project, unfavorable pending change order adjustments on certain projects and labor inefficiencies on certain projects.

Changes in estimates of gross profit on certain projects resulted in a gross margin increase of 0.1% for each of the three months ended March 31, 2021 and 2020.

Gross margin was 12.5% for the three months ended June 30, 2021 compared to 11.9% for the three months ended June 30, 2020.

The increase in gross margin was primarily due to better-than-anticipated productivity on certain projects and favorable job close-outs, partially offset by labor and equipment inefficiencies on certain projects.

Changes in estimates of gross profit on certain projects resulted in a gross margin increases of 0.8% and 0.2% for the three months ended June 30, 2021 and 2020, respectively.

Gross profit.

Gross profit was $77.0 million for the three months ended March 31, 2021 compared to $61.6 million for the three months ended March 31, 2020.

Gross profit was $81.0 million for the three months ended June 30, 2021 compared to $61.3 million for the three months ended June 30, 2020.

The increase of $19.7 million, or 32.2%, was due to higher revenues and margins.

Selling, general and administrative expenses.

Selling, general and administrative expenses was $49.6 million for the three months ended March 31, 2021 compared to $45.0 million for the three months ended March 31, 2020.

The period-over-period increase of $4.6 million was primarily due to an increase in employee incentive compensation costs and an increase in contingent compensation expense related to a prior acquisition.

Selling, general and administrative expenses ("SG&A") were $51.9 million for the three months ended June 30, 2021 compared to $41.2 million for the three months ended June 30, 2020.

The period-over-period increase of $10.7 million was primarily due to higher employee incentive compensation costs and contingent compensation expense related to prior acquisitions.

Gain on sale of property and equipment .

Gains from the sale of property and equipment for the three months ended March 31, 2021 were $0.7 million compared to $1.1 million for the three months ended March 31, 2020.

Gains from the sale of property and equipment for the three months ended June 30, 2021 were $1.1 million compared to $0.4 million for the three months ended June 30, 2020.

Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

Interest expense .

Interest expense was $0.5 million for the three months ended March 31, 2021 compared to $1.5 million for the three months ended March 31, 2020.

The period-over-period decrease of $1.0 million was primarily due to the decrease in our outstanding debt during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020.

Interest expense was $0.7 million for the three months ended June 30, 2021 compared to $1.3 million for the three months ended June 30, 2020.

The period-over-period decrease of $0.6 million was primarily due to the decrease in our outstanding debt during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, partially offset by a prepayment penalty from an early retirement of an equipment note during the three months ended June 30, 2021.

Income tax expense.

Income tax expense was $7.1 million for the three months ended March 31, 2021, with an effective tax rate of 26.2%, compared to the expense of $4.1 million for the three months ended March 31, 2020, with an effective tax rate of 29.1%.

The decrease in the tax rate for the three months ended March 31, 2021 was primarily due to a favorable impact from stock compensation excess tax benefits.

Net income was $19.9 million for the three months ended March 31, 2021 compared to $9.9 million for the three months ended March 31, 2020.

Income tax expense was $7.9 million for the three months ended June 30, 2021, with an effective tax rate of 27.0%, compared to the expense of $5.0 million for the three months ended June 30, 2020, with an effective tax rate of 27.1%.

The decrease in the tax rate for the three months ended June 30, 2021 was primarily due to a favorable impact from stock compensation excess tax benefits, partially offset by excess tax expense pertaining to the impact of global intangible low tax income (“GILTI”).

Net income was $21.2 million for the three months ended June 30, 2021 compared to $13.4 million for the three months ended June 30, 2020.

The increase was primarily due to the reasons stated earlier.

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The following table sets forth, for the periods indicated, statements of operations data by segment, segment net sales as percentage of total net sales and segment operating income as a percentage of segment net sales:

Three months ended March 31,

Three months ended June 30,

(dollars in thousands) Amount Percent Amount Percent

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Transmission & Distribution

Revenues for our T&D segment for the three months ended March 31, 2021 were $314.9 million compared to $259.3 million for the three months ended March 31, 2020, an increase of $55.6 million, or 21.5%.

The increase in revenue was primarily related to an increase in revenue on large-sized projects.

Revenues from transmission projects represented 67.1% and 66.2% of T&D segment revenue for the three months ended March 31, 2021 and 2020, respectively.

Additionally, for the three months ended March 31, 2021, measured by revenue in our T&D segment, we provided 48.2% of our T&D services under fixed-price contracts, as compared to 46.7% for the three months ended March 31, 2020.

Operating income for our T&D segment for the three months ended March 31, 2021 was $28.7 million, an increase of $10.7 million, or 59.6%, from the three months ended March 31, 2020.

The increase in T&D operating income from the prior year was primarily due to higher revenues, better-than-anticipated productivity on certain projects and a favorable job close-out.

These increases were partially offset by inclement weather experienced on a project.

As a percentage of revenues, operating income for our T&D segment was 9.1% for the three months ended March 31, 2021 compared to 6.9% for the three months ended March 31, 2020.

Revenues for our T&D segment for the three months ended June 30, 2021 were $326.8 million compared to $276.8 million for the three months ended June 30, 2020, an increase of $50.0 million, or 18.1%.

The increase in revenue was primarily related to an increase in revenue on two large-sized projects associated with accelerated schedule requirements at the beginning of a project and battery delivery and installation at the close-out of another.

Revenues from transmission projects represented 64.5% and 65.5% of T&D segment revenue for the three months ended June 30, 2021 and 2020, respectively.

Operating income for our T&D segment for the three months ended June 30, 2021 was $32.8 million, an increase of $9.0 million, or 37.4%, from the three months ended June 30, 2020.

The increase in T&D operating income from the prior year was primarily due to higher revenues, favorable job close-outs and better-than-anticipated productivity on certain projects, partially offset by labor and equipment inefficiencies on certain projects.

As a percentage of revenues, operating income for our T&D segment was 10.0% for the three months ended June 30, 2021 compared to 8.6% for the three months ended June 30, 2020.

Commercial & Industrial

Revenues for our C&I segment for the three months ended March 31, 2021 were $277.6 million compared to $259.2 million for the three months ended March 31, 2020, an increase of $18.4 million, or 7.1%, primarily due to an increase in revenue on medium-sized projects.

Additionally, revenues during the three months ended March 31, 2020 were negatively impacted by a slight slowdown of work in certain geographic areas related to the COVID-19 pandemic.

Measured by revenue in our C&I segment, we provided 82.0% of our services under fixed-price contracts for the three months ended March 31, 2021, compared to 84.3% for the three months ended March 31, 2020.

Operating income for our C&I segment for the three months ended March 31, 2021 was $14.3 million, an increase of $5.0 million, over the three months ended March 31, 2020.

Revenues for our C&I segment for the three months ended June 30, 2021 were $322.7 million compared to $236.3 million for the three months ended June 30, 2020, an increase of $86.4 million, or 36.6%, primarily due to an increase in revenue on various-sized projects and accelerated schedules on two projects.

Additionally, revenues during the three months ended June 30, 2020 were negatively impacted by a slight slowdown of work in certain geographic areas related to the COVID-19 pandemic.

Operating income for our C&I segment for the three months ended June 30, 2021 was $14.5 million, an increase of $5.5 million, over the three months ended June 30, 2020.

The period-over-period increase in operating income was due to higher revenues and better-than-anticipated productivity on certain projects.

These increases were partially offset by unfavorable pending change order adjustments on certain projects and labor inefficiencies on certain projects.

As a percentage of revenues, operating income for our C&I segment was 5.1% for the three months ended March 31, 2021 compared to 3.6% for the three months ended March 31, 2020.

These increases were partially offset by labor and equipment inefficiencies on certain projects.

As a percentage of revenues, operating income for our C&I segment was 4.5% for the three months ended June 30, 2021 compared to 3.8% for the three months ended June 30, 2020.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues were $1.24 billion for the six months ended June 30, 2021 compared to $1.03 billion for the six months ended June 30, 2020.

The increase of $210.6 million, or 20.4%, was primarily due to an increase in revenue on large-sized T&D projects as well as an increase in revenue on various-sized C&I projects.

Additionally, revenues during the six months ended June 30, 2020 were negatively impacted by a slight slowdown of C&I work in certain geographic areas related to the COVID-19 pandemic.

Gross margin.

Gross margin was 12.7% for the six months ended June 30, 2021 compared to 11.9% for the six months ended June 30, 2020.

The increase in gross margin was primarily due to better-than-anticipated productivity on certain projects and favorable job close-outs.

These improvements were partially offset by labor and equipment inefficiencies on certain projects, unfavorable pending change order adjustments on certain projects and inclement weather experienced on a project.

Changes in estimates of gross profit on certain projects resulted in gross margin increase of 0.3% and decrease of 0.1% for the six months ended June 30, 2021 and 2020, respectively.

Gross profit.

Gross profit was $158.0 million for the six months ended June 30, 2021 compared to $122.9 million for the six months ended June 30, 2020, the increase of $35.1 million, or 28.5% was due to higher revenues and margins.

Selling, general and administrative expenses.

SG&A was $101.5 million for the six months ended June 30, 2021 compared to $86.2 million for the six months ended June 30, 2020.

The period-over-period increase of $15.3 million was primarily due to higher employee incentive compensation costs and contingent compensation expense related to prior acquisitions.

Gain on sale of property and equipment.

Gains from the sale of property and equipment for the six months ended June 30, 2021 were $1.8 million compared to $1.5 million for the six months ended June 30, 2020.

Gains from the sale of property and equipment are attributable to routine sales of property and equipment no longer useful or valuable to our ongoing operations.

Interest expense.

Interest expense was $1.2 million for the six months ended June 30, 2021 compared to $2.8 million for the six months ended June 30, 2020.

This decrease was primarily attributable to a decrease in our outstanding debt during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, partially offset by a prepayment penalty from an early retirement of an equipment note during the six months ended June 30, 2021.

Income tax expense.

Income tax expense was $14.9 million for the six months ended June 30, 2021, with an effective tax rate of 26.6%, compared to the expense of $9.0 million for the six months ended June 30, 2020, with an effective tax rate of 27.9%.

The decrease in the tax rate for the six months ended June 30, 2021 was primarily due to a favorable impact from stock compensation excess tax benefits, partially offset by excess tax expense pertaining to the impact of GILTI.

Net income was $41.1 million for the six months ended June 30, 2021 compared to $23.3 million for the six months ended June 30, 2020.

The increase was primarily due to the reasons stated earlier.

Segment Results

Six months ended June 30,

(dollars in thousands) Amount Percent Amount Percent

Contract revenues:

Transmission & Distribution $ 641,739 51.7 % $ 536,029 52.0 %

Commercial & Industrial 600,320 48.3 495,492 48.0

Total $ 1,242,059 100.0 % $ 1,031,521 100.0 %

Operating income (loss):

Transmission & Distribution $ 61,437 9.6 % $ 41,802 7.8 %

Commercial & Industrial 28,796 4.8 18,270 3.7

Total 90,233 7.3 60,072 5.8

General Corporate (33,157) (2.7) (24,322) (2.3)

Consolidated $ 57,076 4.6 % $ 35,750 3.5 %

Transmission & Distribution

Revenues for our T&D segment for the six months ended June 30, 2021 were $641.7 million compared to $536.0 million for the six months ended June 30, 2020, an increase of $105.7 million, or 19.7%.

The increase in revenue was primarily related to an increase in revenue on large-sized projects.

Revenues from transmission projects represented 65.8% of T&D segment revenue for each of the six months ended June 30, 2021 and 2020.

Operating income for our T&D segment for the six months ended June 30, 2021 was $61.4 million, an increase of $19.6 million, or 47.0%, from the six months ended June 30, 2020.

The increase in T&D operating income from the prior year was primarily due to higher revenues, favorable job close-outs and better-than-anticipated productivity on certain projects.

These increases were partially offset by labor and equipment inefficiencies and inclement weather experienced on a project.

As a percentage of revenues, operating income for our T&D segment was 9.6% for the six months ended June 30, 2021 compared to 7.8% for the six months ended June 30, 2020.

Commercial & Industrial

Revenues for our C&I segment for the six months ended June 30, 2021 were $600.3 million compared to $495.5 million for the six months ended June 30, 2020, an increase of $104.8 million, or 21.2%, primarily due an increase in revenues on various-sized projects.

Additionally, revenues during the six months ended June 30, 2020 were negatively impacted by a slight slowdown of work in certain geographic areas related to the COVID-19 pandemic.

Operating income for our C&I segment for the six months ended June 30, 2021 was $28.8 million, an increase of $10.5 million over the six months ended June 30, 2020.

The period-over-period increase in operating income was primarily due to higher revenues and better-than-anticipated productivity on certain projects.

These increases were partially offset by unfavorable change order adjustments on certain projects and labor and equipment inefficiencies on a project.

As a percentage of revenues, operating income for our C&I segment was 4.8% for the six months ended June 30, 2021 compared to 3.7% for the six months ended June 30, 2020.

Non-GAAP Measure—EBITDA

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(in thousands) 2021 2020 2021 2020

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June 30, Six months ended

(in thousands) 2021 2020 2021 2020

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Liquidity and Capital Resources

As of March 31, 2021, we had working capital of $217.5 million.

As of June 30, 2021, we had working capital of $221.5 million.

We define working capital as current assets less current liabilities.

During the three months ended March 31, 2021, operating activities of our business provided net cash of $59.4 million, compared to $35.2 million of cash provided for the three months ended March 31, 2020.

During the six months ended June 30, 2021, operating activities of our business provided net cash of $88.6 million, compared to $97.9 million of cash provided for the six months ended June 30, 2020.

Cash flow from operations is primarily influenced by demand for our services, operating margins, timing of contract performance and the type of services we provide to our customers.

The $24.1 million year-over-year increase in cash provided by operating activities was primarily due to favorable net changes in operating assets and liabilities of $12.8 million and an increase in net income of $10.0 million.

The favorable change in operating assets and liabilities was primarily due to the net favorable year-over-year increases in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $8.9 million and an unfavorable change of $7.5 million in other liabilities.

The increase in cash provided by working capital accounts, primarily related to construction activities, was primarily due to favorable changes in contract assets and contract liabilities due to the timing of billings and payments under our contracts.

The $9.4 million year-over-year decrease in cash used by operating activities was primarily due to unfavorable net changes in operating assets and liabilities of $28.8 million and an increase in net income of $17.8 million.

The unfavorable change in operating assets and liabilities was primarily due to the net unfavorable year-over-year changes in various working capital accounts that relate primarily to construction activities (accounts receivable, contract assets, accounts payable and contract liabilities) of $18.2 million and an unfavorable change of $16.8 million in other liabilities.

The unfavorable changes in cash provided by working capital accounts, primarily related to construction activities, was primarily due to unfavorable changes in contract assets and contract liabilities due to the timing of billings and payments under our contracts.

The unfavorable change of $16.8 million in other liabilities was primarily due to higher bonus accruals and the timing of employee related wage and tax payments.

In the three months ended March 31, 2021, we used net cash of $6.4 million in investing activities of consisting of $7.0 million for capital expenditures, partially offset by $0.7 million of proceeds from the sale of equipment.

In the three months ended March 31, 2021, financing activities used net cash of $2.8 million, consisting primarily of share repurchases of $2.6 million, all of which represented shares surrendered to satisfy tax obligations under our stock compensation programs.

We anticipate that our borrowing availability of $362.7 million at March 31, 2021 under our revolving line of credit and future cash flow from operations will provide sufficient cash to enable us to meet our future operating needs, debt service requirements, capital expenditures, acquisition and joint venture opportunities, share repurchases, and $25.2 million of remaining payroll tax deferrals provided under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") which will be paid within the next two years.

In the six months ended June 30, 2021, we used net cash of $19.4 million in investing activities of consisting of $21.0 million for capital expenditures, partially offset by $1.6 million of proceeds from the sale of equipment.

In the six months ended June 30, 2021, financing activities used net cash of $23.9 million, consisting primarily of payment of principal obligations under equipment notes of $20.6 million and share repurchases of $3.4 million, all of which represented shares surrendered to satisfy tax obligations under our stock compensation programs.

We anticipate that our borrowing availability of $362.7 million at June 30, 2021 under our revolving line of credit and future cash flow from operations will provide sufficient cash to enable us to meet our future operating needs, debt service requirements, capital expenditures, acquisition and joint venture opportunities, share repurchases, and $25.4 million of remaining payroll tax deferrals provided under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") which will be paid within the next two years.

Although we believe that we have adequate cash and borrowing capacity to meet our liquidity needs, any large projects or acquisitions may require additional capital.

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The Credit Agreement also contains a number of covenants, including limitations on asset sales, investments, indebtedness and liens.

We were in compliance with all of the financial covenants under the Credit Agreement as of March 31, 2021.

We had no debt outstanding under the Facility as of March 31, 2021 and December 31, 2020, and letters of credit outstanding of approximately $12.3 million and $10.4 million as of March 31, 2021 and December 31, 2020, respectively.

We were in compliance with all of the financial covenants under the Credit Agreement as of June 30, 2021.

We had no debt outstanding under the Facility as of June 30, 2021 and December 31, 2020, and letters of credit outstanding of approximately $12.3 million and $10.4 million as of June 30, 2021 and December 31, 2020, respectively.

Equipment Notes

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Each Equipment Note constitutes a separate, distinct and independent financing of equipment and contractual obligation.

As of March 31, 2021, we had four executed and outstanding Equipment Notes that are collateralized by equipment and vehicles owned by us.

The outstanding balance of these Equipment Notes was $29.4 million as of March 31, 2021 and December 31, 2020.

On April 13, 2021, the we prepaid our $7.0 million Equipment Note 7 using cash on hand.

As of June 30, 2021, we had two executed and outstanding Equipment Notes that are collateralized by equipment and vehicles owned by us.

In addition to regularly scheduled payments, we retired two of our Equipment Notes during the six months ended June 30, 2021, one of which contained a prepayment penalty.

The outstanding balance of our Equipment Notes was $8.8 million and $29.4 million as of June 30, 2021 and December 31, 2020, respectively.

On July 2, 2021, we prepaid our $3.8 million Equipment Note 9 using cash on hand.

This prepayment included an insignificant amount of accrued interest and there was no associated prepayment penalty.

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Under certain circumstances such as foreclosures or negotiated settlements, we may take title to the underlying assets in lieu of cash in settlement of receivables.

As of March 31, 2021 and 2020, none of our customers individually exceeded 10% of consolidated accounts receivable.

As of June 30, 2021 and 2020, none of our customers individually exceeded 10% of consolidated accounts receivable.

Management believes the terms and conditions in its contracts, billing and collection policies are adequate to minimize the potential credit risk.

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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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis