What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-10-30 compared with 2020-07-31 · 172 added, 129 removed, 700 unchanged (30% of the section changed)

4 unchanged sentences

(In Thousands, Except Share and Per Share Information)

September 30,

Current assets:

35 unchanged sentences

Common stock -- $ 0.01 par value, 50,000,000 authorized, 31,126,326 and 30,303,395 issued;

30,348,870 and 29,592,164 outstanding at June 30, 2020 and December 31, 2019, respectively

Treasury stock, 711,231 shares, at cost, as of June 30, 2020 and December 31, 2019, respectively

30,415,095 and 29,592,164 outstanding at September 30, 2020 and December 31, 2019, respectively

Treasury stock, 711,231 shares, at cost, as of September 30, 2020 and December 31, 2019, respectively

Accumulated other comprehensive loss

8 unchanged sentences

(In Thousands, Except Share and Per Share Information)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Contract revenues

2 unchanged sentences

Amortization of intangible assets

Gain on sale of assets, net

Gain on disposal of assets, net

Operating income (loss)

4 unchanged sentences

Income (loss) before income taxes

Income tax expense (benefit)

Income tax expense

Net income (loss)

7 unchanged sentences

(In Thousands)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Net income (loss)

Change in fair value of cash flow hedge, net of tax expense of $ 9 and tax benefit of $ 217 for the three and six months ended June 30, 2020, respectively and net of tax benefit of $ 145 and $ 225 for the three and six months ended June 30, 2019.

Change in fair value of cash flow hedge, net of tax expense of $ 44 and tax benefit of $ 173 for the three and nine months ended September 30, 2020, respectively and net of tax benefit of $ 55 and $ 280 for the three and nine months ended September 30, 2019.

Total comprehensive income (loss)

19 unchanged sentences

Balance, June 30, 2020

Stock-based compensation

Issuance of restricted stock

Purchase of vested stock-based awards

Cash flow hedge

Balance, September 30, 2020

Accumulated Other

12 unchanged sentences

Balance, June 30, 2019

Stock-based compensation

Issuance of restricted stock

Cash flow hedge

Balance, September 30, 2019

The accompanying notes are an integral part of these condensed consolidated financial statements

3 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

9 unchanged sentences

Stock-based compensation

Gain on sale of property and equipment

Gain on disposal of assets, net

Allowance for credit losses

19 unchanged sentences

Payments made on borrowings from Credit Facility

Proceeds from sale-leaseback arrangement

Loan costs from Credit Facility

21 unchanged sentences

The tools used by the chief operating decision maker ("CODM") to allocate resources and assess performance are based on two reportable and operating segments:

marine, which operates under the Orion Marine Group brand and logo, and concrete, which operates under the TAS Commercial Concrete brand and logo.

marine, which operates under the Orion brand and logo, and concrete, which operates under the TAS Commercial Concrete brand and logo.

Although we describe the business in this report in terms of the services the Company provides, its base of customers and the areas in which it operates, the Company has determined that its operations currently comprise two reportable segments pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting .

20 unchanged sentences

Such adjustments are of a normal recurring nature.

Interim results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Interim results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation in the Company’s condensed consolidated statement of operations.

39 unchanged sentences

Variable consideration is included in the estimated recognition of revenue to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur.

Based on its reading of the contract and its performance, the Company believes collection of these claims is probable, although the full amount of the recorded claims may not be collected.

A determination that the collection of a claim is probable is based upon compliance with the terms of the contract and the extent to which the Company performed in accordance therewith but does not guarantee collection in full.

Contract assets and liabilities include the following:

8 unchanged sentences

Remaining performance obligations represent the transaction price of firm orders or other written contractual commitments from customers for which work has not been performed or is partially completed and excludes unexercised contract options and potential orders.

As of June 30, 2020, the aggregate amount of the remaining performance obligations was approximately $ 528.4 million.

Of this amount, the Company expects to recognize $ 465.4 million, or 88 %, in the next 12 months and the remaining balance thereafter.

As of September 30, 2020, the aggregate amount of the remaining performance obligations was approximately $ 428.8 million.

Of this amount, the current expectation of the Company is that it will recognize $ 386.6 million, or 90 %, in the next 12 months and the remaining balance thereafter.

Classification of Current Assets and Liabilities

4 unchanged sentences

The Company has not historically sustained losses on its cash balances in excess of federally insured limits.

Cash equivalents at June 30, 2020 and December 31, 2019 consisted primarily of overnight bank deposits.

Cash equivalents at September 30, 2020 and December 31, 2019 consisted primarily of overnight bank deposits.

Restricted cash of $ 1.0 million at December 31, 2019 consisted of collateral related to a marine project that was completed during the quarter ended June 30, 2020.

The Company had no restricted cash as of June 30, 2020.

The Company had no restricted cash as of September 30, 2020.

Risk Concentrations

1 unchanged sentence

The Company depends on its ability to continue to obtain federal, state and local governmental contracts, and indirectly, on the amount of funding available to these agencies for new and current governmental projects.

Therefore, a portion of the Company’s operations is dependent upon the level and timing of government funding.

Therefore, a portion of the Company’s operations is dependent upon the level and timing of government

Statutory mechanics liens provide the Company high priority in the event of lien foreclosures following financial difficulties of private owners, thus minimizing credit risk with private customers.

1 unchanged sentence

Accounts receivable are stated at the historical carrying value, net of allowances for credit losses.

The Company has significant investments in billed and unbilled receivables as of June 30, 2020 and December 31, 2019.

The Company has significant investments in billed and unbilled receivables as of September 30, 2020 and December 31, 2019.

Billed receivables represent amounts billed upon the completion of small contracts and progress billings on large contracts in accordance with contract terms and milestone achievements.

5 unchanged sentences

The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if it is determined that the amounts will not be collected or if a settlement is reached for an amount that is less than the carrying value.

As of June 30, 2020 and December 31, 2019, the Company has recorded an allowance for credit losses of $ 3.0 million and $ 2.6 million, respectively.

As of September 30, 2020, and December 31, 2019, the Company has recorded an allowance for credit losses of $ 0.4 million and $ 2.6 million, respectively.

Balances billed to customers but not paid pursuant to retainage provisions in construction contracts generally become payable upon contract completion and acceptance by the owner.

Retainage at June 30, 2020 totaled $ 38.0 million, of which $ 6.0 million is expected to be collected beyond June 30, 2021.

Retainage at September 30, 2020 totaled $ 36.2 million, of which $ 7.2 million is expected to be collected beyond September 30, 2021.

Retainage at December 31, 2019 totaled $ 42.5 million.

10 unchanged sentences

Environmental liabilities, if any, are recognized when the expenditure is considered probable and the amount can be reasonably estimated.

The Company did not recognize any environmental liabilities as of June 30, 2020 or December 31, 2019.

The Company did not recognize any environmental liabilities as of September 30, 2020 or December 31, 2019, other than those involved in insurance reserves.

See Note 16 for further discussion regarding matters pursuant to insurance reserves.

Fair Value Measurements

The Company evaluates and presents certain amounts included in the accompanying condensed consolidated financial statements at “fair value” in accordance with U.S.

GAAP, which requires the Company to base its estimates on assumptions that market participants, in an orderly transaction, would use to price an asset or liability, and to establish a hierarchy that prioritizes the information used to determine fair value.

GAAP, which requires the Company to base its

estimates on assumptions that market participants, in an orderly transaction, would use to price an asset or liability, and to establish a hierarchy that prioritizes the information used to determine fair value.

Refer to Note 8 for more information regarding fair value determination.

25 unchanged sentences

These costs and the related amortization periods are periodically reviewed to determine if the estimates are accurate.

If warranted, a significant upgrade of equipment may result in a revision to the useful life of the asset, in which case the change is accounted for prospectively.

If warranted, a significant upgrade of equipment may result in a revision to extend the useful life of the asset, in which case the change is accounted for prospectively.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at the

lower of the carrying amount or the fair value, less the costs to sell, and are no longer depreciated.

There were no assets classified as held for sale as of June 30, 2020 or December 31, 2019.

If the carrying amount of an asset exceeds its estimated future cash flows,

an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or the fair value, less the costs to sell, and are no longer depreciated.

There were no assets classified as held for sale as of September 30, 2020 or December 31, 2019.

The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019, on a prospective basis, forgoing comparative reporting.

25 unchanged sentences

The Company estimates forfeitures at the date of grant based on historical experience and future expectations.

This assessment is

updated on a periodic basis.

This assessment is updated on a periodic basis.

See Note 15 for further discussion of the Company’s stock-based compensation plan.

33 unchanged sentences

The self-funded plan is funded to the maximum exposure and, as a result, is expected to receive a partial refund after the policy expiration.

The total liability for insurance includes incurred but not reported claims of $ 3.2 million and $ 3.7 million at June 30, 2020 and December 31, 2019, respectively.

The total accrual for insurance claims liabilities was $ 24.5 million and $ 3.7 million at September 30, 2020 and December 31, 2019, respectively.

The total accrual for insurance claims receivable was $ 23.5 million and $ 1.1 million at September 30, 2020 and December 31, 2019, respectively.

Accounting Standards Adopted in 2020

4 unchanged sentences

The Company adopted the new standard on January 1, 2020.

For the Company’s trade receivables, certain other receivables and certain other financial instruments, the Company is required to use a new forward-looking “expected” credit loss model based on historical loss rates that replaced the prior “incurred” credit loss model, which generally results in earlier recognition of allowances for credit losses.

The adoption of the new standard generally results in earlier recognition of allowances for credit losses.

Adoption of the standard resulted in no adjustment for credit losses as the impact was immaterial;

however, subsequently primarily as a result of the COVID-19 pandemic additional bad debt expense of approximately $ 0.4 million was recorded as of June 30, 2020.

however, subsequently primarily as a result of the COVID-19 pandemic additional bad debt expense of approximately $ 0.4 million was recorded as of September 30, 2020.

Contract revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table represents a disaggregation of the Company’s contract revenues by service line for the marine and concrete segments:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Marine Segment

24 unchanged sentences

Balances billed to customers but not paid pursuant to retainage provisions generally become payable upon contract completion and acceptance by the owner.

The table below presents the concentrations of current receivables (trade and retainage) at June 30, 2020 and December 31, 2019, respectively:

June 30, 2020

The table below presents the concentrations of accounts receivable from customers (trade and retainage) at September 30, 2020 and December 31, 2019, respectively:

September 30, 2020

December 31, 2019

6 unchanged sentences

Net receivables

At June 30, 2020 one customer in the Private Companies category accounted for 10.3 % of total current receivables.

At September 30, 2020 no single customer accounted for more than 10.0% of total current receivables.

At December 31, 2019, no single customer accounted for more than 10.0% of total current receivables.

Additionally, the table below represents concentrations of contract revenue by type of customer for the three and six months ended June 30, 2020 and 2019, respectively:

Three months ended June 30,

Six months ended June 30,

Additionally, the table below represents concentrations of contract revenue by type of customer for the three and nine months ended September 30, 2020 and 2019, respectively:

Three months ended September 30,

Nine months ended September 30,

Federal Government

3 unchanged sentences

Total contract revenues

In the three months ended June 30, 2020, one customer in the Local Governments category accounted for 10.1 % of total contract revenues.

In the three months ended June 30, 2019, one customer in the Local Governments category accounted for 14.1 %.

In the six months ended June 30, 2020, no single customer accounted for more than 10% of total contract revenues.

In the six months ended June 30, 2019, one customer in the Local Governments category accounted for 11.4 % of total contract revenues.

In the three months ended September 30, 2020, one customer in the Local Governments category accounted for 13.8 % of total contract revenues.

In the three months ended September 30, 2019, no single customer accounted for more than 10% of total contract revenues.

In the nine months ended September 30, 2020, one customer in the Local Governments category accounted for 11.2 % of total contract revenues.

In the nine months ended September 30, 2019, no single customer accounted for more than 10% of total contract revenues.

The Company does not believe that the loss of any one of its customers would have a material adverse effect on the Company or its subsidiaries and affiliates since no single specific customer sustains such a large portion of receivables or contract revenue over time.

1 unchanged sentence

The loss of any one of these suppliers could adversely impact short-term operations.

Contract revenues generated outside the United States totaled 2.1 % and 1.4 % of total revenues for the three months ended June 30, 2020 and 2019, respectively, and 2.3 % and 0.9 % for the six months ended June 30, 2020 and 2019, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contract revenues generated outside the United States totaled 0.9 % and 2.3 % of total revenues for the three months ended September 30, 2020 and 2019, respectively, and 1.8 % and 1.5 % for the nine months ended September 30, 2020 and 2019, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contracts in Progress

Contracts in progress are as follows at June 30, 2020 and December 31, 2019:

Contracts in progress are as follows at September 30, 2020 and December 31, 2019:

September 30,

Costs incurred on uncompleted contracts

6 unchanged sentences

Billings in excess of costs and estimated earnings on uncompleted contracts

Included in cost and estimated earnings in excess of billings on uncompleted projects is approximately $ 1.7 million and $ 0.1 million at June 30, 2020 and December 31, 2019, respectively, related to claims and unapproved change orders.

Included in cost and estimated earnings in excess of billings on uncompleted projects is approximately $ 3.2 million and $ 0.1 million at September 30, 2020 and December 31, 2019, respectively, related to claims and unapproved change orders.

See Note 2 - Summary of Significant Accounting Policies to the Company’s condensed consolidated financial statements for discussion of the accounting for these claims.

6 unchanged sentences

Property and Equipment

The following is a summary of property and equipment at June 30, 2020 and December 31, 2019:

The following is a summary of property and equipment at September 30, 2020 and December 31, 2019:

September 30,

Automobiles and trucks

6 unchanged sentences

Construction in progress

For the three months ended June 30, 2020 and 2019, depreciation expense was $ 5.6 million and $ 6.0 million, respectively.

For the six months ended June 30, 2020 and 2019, depreciation expense was $ 11.3 million and $ 11.8 million, respectively.

For the three months ended September 30, 2020 and 2019, depreciation expense was $ 5.3 million and $ 5.8 million, respectively.

For the nine months ended September 30, 2020 and 2019, depreciation expense was $ 16.6 million and $ 17.6 million, respectively.

Substantially all depreciation expense is included in the cost of contract revenue in the Company’s Condensed Consolidated Statements of Operations.

2 unchanged sentences

See Note 2 to the Company’s condensed consolidated financial statements for further discussion of property and equipment.

Current inventory at both June 30, 2020 and December 31, 2019 of $ 2.0 million and $ 1.1 million, respectively, consisted primarily of spare parts and small equipment held for use in the ordinary course of business.

Non-current inventory at June 30, 2020 and December 31, 2019 totaled $ 6.4 million and $ 7.0 million, respectively, and consisted primarily of spare engine components or items which require longer lead times for sourcing or fabrication for certain of the Company’s assets to reduce equipment downtime.

Current inventory at both September 30, 2020 and December 31, 2019 of $ 1.9 million and $ 1.1 million, respectively, consisted primarily of spare parts and small equipment held for use in the ordinary course of business.

Non-current inventory at September 30, 2020 and December 31, 2019 totaled $ 6.5 million and $ 7.0 million, respectively, and consisted primarily of spare engine components or items which require longer lead times for sourcing or fabrication for certain of the Company’s assets to reduce equipment downtime.

Recurring Fair Value Measurements

7 unchanged sentences

The Company’s assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.

The following table sets forth by level within the fair value hierarchy the Company’s recurring financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2020 and December 31, 2019:

Fair Value Measurements

Carrying Value

June 30, 2020

September 30, 2020

Cash surrender value of life insurance policy

4 unchanged sentences

See Note 11 for additional information on the Company’s derivative instrument.

Our concrete segment has life insurance policies with a combined face value of $ 11.1 million as of June 30, 2020.

Our concrete segment has life insurance policies with a combined face value of $ 11.1 million as of September 30, 2020.

The policies are invested in mutual funds and the fair value measurement of the cash surrender balance associated with these policies is determined using Level 2 inputs within the fair value hierarchy and will vary with investment performance.

6 unchanged sentences

Other Fair Value Measurements

The fair value of the Company’s debt at June 30, 2020 and December 31, 2019 approximated its carrying value of $ 53.8 million and $ 73.3 million, respectively, as interest is based on current market interest rates for debt with similar risk and maturity.

The fair value of the Company’s debt at September 30, 2020 and December 31, 2019 approximated its carrying value of $ 42.1 million and $ 73.3 million, respectively, as interest is based on current market interest rates for debt with similar risk and maturity.

If the Company’s debt was measured at fair value, it would have been classified as Level 2 in the fair value hierarchy.

2 unchanged sentences

The tables below present the activity and amortizations of finite-lived intangible assets:

September 30,

Finite-lived intangible assets, beginning of period

8 unchanged sentences

Customer relationships were valued at approximately $ 18.8 million and are being amortized over eight years using an accelerated method based on the pattern in which the economic benefits of the assets are consumed.

For the six months ended June 30, 2020, $ 1.0 million of amortization expense was recognized for these assets.

For the nine months ended September 30, 2020, $ 1.6 million of amortization expense was recognized for these assets.

Future expense remaining of approximately $ 3.7 million will be amortized as follows:

10 unchanged sentences

Accrued Liabilities

Accrued liabilities at June 30, 2020 and December 31, 2019 consisted of the following:

June 30, 2020

Accrued liabilities at September 30, 2020 and December 31, 2019 consisted of the following:

September 30, 2020

December 31, 2019

Accrued salaries, wages and benefits

Accrual for insurance liabilities

Accrual for insurance claims liabilities

Property taxes

1 unchanged sentence

Accounting and audit fees

Equipment purchase

Other accrued expenses

11 unchanged sentences

Total debt issuance costs for the Fourth Amendment, which included underwriter fees, legal fees and syndication fees were approximately $ 0.9 million and were capitalized as non-current deferred charges and amortized using the effective interest rate method over the duration of the loan.

Additionally, the Company executed the Fifth Amendment during March 2019, which was made effective as of December 31, 2018, and executed the Sixth Amendment during May 2019.

The Company incurred additional debt issuance costs of

approximately $ 0.6 million and $ 0.9 million respectively for the Fifth and Sixth Amendments.

Additionally, the Company executed the Fifth Amendment during March 2019, which was made effective as of December 31, 2018, and

executed the Sixth Amendment during May 2019.

The Company incurred additional debt issuance costs of approximately $ 0.6 million and $ 0.9 million respectively for the Fifth and Sixth Amendments.

With the execution of the aforementioned Sixth Amendment, $ 50.0 million of the existing revolving line of credit was modified and accounted for under guidelines of ASC 470-50, Debt, Modifications and Extinguishments, and a pro-rated portion of unamortized debt issuance costs of approximately $ 0.4 million was recognized as interest expense as of May 2019.

4 unchanged sentences

Concurrent with this the Company executed an amendment to the Credit Agreement with its existing lenders (“also known as the “Seventh Amendment”) for the sole intent and outcome of executing the 364-Day Revolving Credit Facility.

The 364-Day Revolving Credit Facility, which may be amended from time to time, provides for borrowings under a new revolving line of credit (the “364-Day Revolving Loan”).

The 364-Day Revolving Credit Facility, which may be amended from time to time, provides for borrowings under a new revolving line of credit.

The 364-Day Revolving Credit Facility is guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and may be used to finance general corporate and working capital purposes, to finance Permitted Acquisitions, and to pay transaction fees, costs and expenses related to the consummation of the Seventh Amendment.

2 unchanged sentences

Principal balances drawn under the 364- Day Revolving Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty.

Amounts repaid under a 364-Day Revolving Loan may be re-borrowed.

Amounts repaid under the 364-Day Revolving Credit Facility may be re-borrowed.

The 364-Day Revolving Credit Facility matures on June 7, 2021.

Total debt issuance costs for the 364-Day Revolving Credit Facility, which included underwriter fees, legal fees and syndication fees were approximately $ 0.4 million and were capitalized as current deferred charges and will be amortized over the duration of the loan.

The quarterly weighted average interest rate for the Credit Facility as of June 30, 2020 was 3.15 %.

The quarterly weighted average interest rate for the Credit Facility as of September 30, 2020 was 2.58 %.

The Company’s obligations under debt arrangements consisted of the following:

June 30, 2020

September 30, 2020

December 31, 2019

9 unchanged sentences

The Company has a maximum borrowing availability under the revolving line of credit and swingline loans (as defined in the Credit Agreement) of $ 50.0 million.

There is a letter of credit sublimit that is equal to the lesser

of $ 20.0 million and the aggregate unused amount of the revolving commitments then in effect.

There is a letter of credit sublimit that is equal to the lesser of $ 20.0 million and the aggregate unused amount of the revolving commitments then in effect.

There is also a swingline sublimit equal to the lesser of $ 5.0 million and the aggregate unused amount of the revolving commitments then in effect.

8 unchanged sentences

During the fourth quarter of 2018, the Company determined it no longer has the intent to repay amounts drawn within the next twelve months.

As of March 31, 2020, the Company determined that it still does not have the intent to repay amounts drawn within the next twelve months.

As of September 30, 2020, the Company determined that it still does not have the intent to repay amounts drawn within the next twelve months.

Therefore, the Company has classified the entire outstanding balance of the revolving line of credit as non-current.

As of June 30, 2020, the outstanding balance for all borrowings under the revolving line of credit was $ 18.0 million, designated as an Adjusted LIBOR Rate Loan at a weighted average rate of 2.69 %.

There were also $ 2.1 million in outstanding letters of credit as of June 30, 2020, which reduced the maximum borrowing availability on the revolving line of credit to $ 29.9 million as of June 30, 2020.

During the six months ended June 30, 2020, the Company drew down $ 5.0 million for general corporate purposes and made payments of $ 23.0 million on the revolving line of credit which resulted in a net decrease of $ 18.0 million.

Provisions of the 364-day revolving loan

The Company has a maximum borrowing availability under the 364-day revolving loan of $ 20.0 million.

The 364-day revolving loans may be designated as Base Rate Loan or Adjusted LIBOR Rate Loans, at the Company’s request, and must be drawn in an aggregate minimum amount of $ 1.0 million and integral multiples of $ 250,000 in excess of that amount.

As of September 30, 2020, the outstanding balance for all borrowings under the revolving line of credit was $ 10.0 million, where $ 5.0 million was designated as an Adjusted LIBOR Rate Loan at a rate of 2.44 % and $ 5.0 million was designated as a Base Rate Loan at a rate of 4.5 %.

There were also $ 2.1 million in outstanding letters of credit as of September 30, 2020, which reduced the maximum borrowing availability on the revolving line of credit to $ 37.9 million as of September 30, 2020.

During the nine months ended September 30, 2020,

the Company drew down $ 10.0 million for general corporate purposes and made payments of $ 36.0 million on the revolving line of credit which resulted in a net decrease of $ 26.0 million.

Provisions of the 364-day revolving credit facility

The Company has a maximum borrowing availability under the 364-Day Revolving Credit Facility of $ 20.0 million.

Borrowings may be designated as Base Rate Loan or Adjusted LIBOR Rate Loans, at the Company’s request, and must be drawn in an aggregate minimum amount of $ 1.0 million and integral multiples of $ 250,000 in excess of that amount.

The Company may convert, change, or modify rate designations from time to time.

The Company is subject to a commitment fee for the unused portion of the maximum borrowing availability under the 364-day revolving line of credit.

The Company is subject to a commitment fee for the unused portion of the maximum borrowing availability under the 364-Day Revolving Credit Facility.

The commitment fee, which is due quarterly in arrears, is equal to the Applicable Margin of the actual daily amount by which the Aggregate Revolving Commitments exceeds the Total Revolving Outstanding.

The revolving line of credit termination date is the earlier of the Credit Facility termination date, June 7, 2021, or the date the outstanding balance is permanently reduced to zero, in accordance with the terms of the 364-Day Revolving Credit Facility.

As of June 30, 2020, there were no outstanding balances for borrowings under the 364-day revolving line of credit with $ 20.0 million of availability.

As of September 30, 2020, there were no outstanding borrowings under the 364-Day Revolving Credit Facility.

Provisions of the term loan

The original principal amount of $ 60.0 million for the term loan commitment is paid off in quarterly installment payments (as stated in the Credit Agreement).

At June 30, 2020, the outstanding term loan component of the Credit Facility totaled $ 35.8 million and was secured by specific assets of the Company.

At September 30, 2020, the outstanding term loan component of the Credit Facility totaled $ 32.1 million and was secured by specific assets of the Company.

The table below outlines the total remaining payment amounts annually for the term loan through maturity of the Credit Facility:

During the six months ended June 30, 2020 the Company made the scheduled quarterly principal payments of $ 1.5 million.

During the nine months ended September 30, 2020 the Company made the scheduled quarterly principal payments of $ 2.6 million, and an additional principal paydown of $ 2.6 million with proceeds from the sale of equipment which reduced the outstanding principal balance to $ 32.1 million as of September 30, 2020.

The current portion of debt is $ 4.5 million, and the non-current portion is $ 27.6 million.

As of June 30, 2020, the term loan was designated as an Adjusted LIBOR Rate Loan with an interest rate of 2.69 %.

As of September 30, 2020, the term loan was designated as an Adjusted LIBOR Rate Loan with an interest rate of 2.44 %.

Financial covenants

11 unchanged sentences

The Company believes that its cash position and available borrowings together with cash flow from its operations is adequate for general business requirements and to service its debt.

The Company was in compliance with all financial covenants as of June 30, 2020.

The Company was in compliance with all financial covenants as of September 30, 2020.

Derivative Financial Instruments

2 unchanged sentences

On December 6, 2018, the Company entered into a sixth receive-variable, pay-fixed interest rate swap to hedge the variability of interest payments.

The sixth swap will begin with a notional amount of $ 27.0 million on July 31, 2020 and will hedge the variability in the interest payments on the aggregate scheduled principal amount of the Regions Term Loan outstanding.

The sixth swap began with a notional amount of $ 27.0 million on July 31, 2020 and hedges the variability in the interest payments on the aggregate scheduled principal amount of the Regions Term Loan outstanding.

The sixth swap is scheduled to expire on July 31, 2023.

1 unchanged sentence

Gains and losses from hedge ineffectiveness are recognized in current earnings.

The change in fair market value of the swaps for the comparative periods ended June 30, 2020 and June 30, 2019, as reflected in accumulated other comprehensive loss in the Condensed Consolidated Statements of Stockholders’ Equity, is approximately $ 0.9 million and $ 1.0 million.

The fair market value of the swaps as of June 30, 2020 is reflected as a liability of $ 2.0 million on the Condensed Consolidated Balance Sheets.

The change in fair market value of the swaps for the comparative periods ended September 30, 2020 and September 30, 2019, as reflected in accumulated other comprehensive loss in the Condensed Consolidated Statements of Stockholders’ Equity, is approximately $ 0.8 million and $ 1.2 million.

The fair market value of the swaps as of September 30, 2020 is reflected as a liability of $ 1.8 million on the Condensed Consolidated Balance Sheets.

See Note 8 for more information regarding the fair value of the Company’s derivative instruments.

Other Long-Term Liabilities

Other long-term liabilities at June 30, 2020 and December 31, 2019 consisted of the following:

June 30, 2020

Other long-term liabilities at September 30, 2020 and December 31, 2019 consisted of the following:

September 30, 2020

December 31, 2019

1 unchanged sentence

Deferred compensation

Accrual for insurance liabilities

Accrual for insurance claims liabilities

Total other long-term liabilities

11 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Income tax expense (benefit)

Effective tax rate

The effective rate for the three and six months ended June 30, 2020 differed from the Company’s statutory federal rate of 21 % primarily due to movement in the valuation allowance to offset foreign tax credits and net operating loss carryforwards, foreign taxes, state income taxes and the non-deductibility of certain permanent items.

The effective rate for the three and nine months ended September 30, 2020 differed from the Company’s statutory federal rate of 21 % primarily due to movement in the valuation allowance to offset foreign tax credits and net operating loss carryforwards, foreign taxes, state income taxes and the non-deductibility of certain permanent items.

During the year ended December 31, 2019 the Company assessed the realizability of its deferred tax assets and determined that it was more likely than not that some portion or all the deferred tax assets would not be realized and therefore recorded a valuation allowance on the net deferred tax assets.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

The Company assesses the available

positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

The Company considers the scheduled reversal of deferred tax liabilities, available carryback periods, and tax-planning strategies in making this assessment.

For the period ended June 30, 2020 the Company evaluated all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized.

Based on the review of available evidence, Management believes that a valuation allowance on the net deferred tax assets at June 30, 2020 remains appropriate.

The Company does not expect that unrecognized tax benefits as of June 30, 2020 for certain federal income tax matters will significantly change due to any settlement and/or expiration of statutes of limitations over the next 12 months.

For the period ended September 30, 2020 the Company evaluated all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized.

Based on the review of available evidence, Management believes that a valuation allowance on the net deferred tax assets at September 30, 2020 remains appropriate.

The Company does not expect that unrecognized tax benefits as of September 30, 2020 for certain federal income tax matters will significantly change due to any settlement and/or expiration of statutes of limitations over the next 12 months.

The final outcome of these tax positions is not yet determinable.

3 unchanged sentences

Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding as well as the effect of all dilutive common stock equivalents during each period net income is generated.

For the three months ended June 30, 2020 and 2019, the Company had 1,117,301 and 1,651,916 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the six months ended June 30, 2020 and 2019, the Company had 1,287,763 and 1,699,936 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the three months ended September 30, 2020 and 2019, the Company had 1,086,882 and 1,614,192 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the nine months ended September 30, 2020 and 2019, the Company had 1,220,314 and 1,671,040 securities, respectively, that were potentially dilutive in earnings per share calculations.

Such dilution is dependent on the excess of the market price of our stock over the exercise price and other components of the treasury stock method.

The exercise price for certain stock options awarded by the Company exceeded the average market price of the Company’s common stock for the three and six months ended June 30, 2020 and 2019.

The exercise price for certain stock options awarded by the Company exceeded the average market price of the Company’s common stock for the three and nine months ended September 30, 2020 and 2019.

Such stock options are antidilutive and are not included in the computation of earnings (loss) per share for those periods.

The following table reconciles the denominators used in the computations of both basic and diluted earnings (loss) per share:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Weighted average shares outstanding

9 unchanged sentences

The Company applies a 3.2 % and a 5.5 % forfeiture rate, which is compounded over the vesting terms of the individual award, to its restricted stock and option grants, respectively, based on historical analysis.

In the three months ended June 30, 2020 and 2019, compensation expense related to stock-based awards outstanding was $ 1.1 million for both periods.

In the six months ended June 30, 2020 and 2019, compensation related to stock based awards outstanding was $ 1.6 million and $ 1.7 million, respectively.

In the three and six months ended June 30, 2020, expense related to the purchase of vested stock-based awards for certain officers and directors of the Company was less than $ 0.1 million.

In the three months ended September 30, 2020 and 2019, compensation expense related to stock-based awards outstanding was $ 0.3 million and $ 0.6 million, respectively.

In the nine months ended September 30, 2020 and 2019, compensation related to stock-based awards outstanding was $ 1.9 million and $ 2.3 million, respectively.

In the three and nine months ended September 30, 2020, expense related to the purchase of vested stock-based awards for certain officers and directors of the Company was approximately $ 0.2 million.

In February 2020, the Company granted an executive of the Company 15,121 shares of restricted common stock, which vested immediately on the date of grant.

The fair value of all shares awarded on the date of grant was $ 4.96 per share.

In March 2020, certain officers and executives of the Company were awarded 170,235 shares with a vesting period of three years and a fair value of $ 3.73 per share.

In March 2020, certain officers and executives of the Company were awarded 170,235 shares of restricted common stock with a vesting period of three years and a fair value of $ 3.73 per share.

In May 2020, independent directors as well as certain officers and executives of the Company were awarded 638,938 shares of restricted common stock.

The total number included 238,938 shares, which were awarded to the independent directors and vested immediately on the date of the grant, as well as 300,000 shares of performance-based stock awarded to certain executives.

The performance-based stock will potentially vest 50 % if the target is met, with 25 % each vesting on the second and third anniversary of the grant, with 100 % of the shares to be earned based on the achievement of an objective, tiered return on invested capital, measured over a one-year performance period.

The performance-based stock will potentially vest 50 % if the target is met, with 25 % each vesting on the second and third anniversary of the determination that the target was met, with 100 % of the shares to be earned based on the achievement of an objective, tiered return on invested capital, measured over a one-year performance period.

The Company evaluates the probability of achieving this each reporting period.

The fair value of all shares awarded on the date of the grant was $ 2.26 per share.

In the three and six months ended June 30, 2020, there were no options exercised.

In the three months ended June 30, 2019, there were no options exercised.

In the six months ended June 30, 2019, 7,021 options were exercised, generating proceeds to the Company of less than $ 0.1 million.

At June 30, 2020, total unrecognized compensation expense related to unvested stock and options was approximately $ 2.8 million, which is expected to be recognized over a period of approximately two years .

In August 2020, the Company determined the performance-based stock awarded on May 24, 2019 vested at the outperformance level established above the target set based on the achievement of an objective, tiered return on invested capital, measured over a one-year performance period ending June 30, 2020.

As a result, the executives earned an additional 93,750 shares of performance-based stock awards with a fair value of $ 1.96 , of which 50 % vested immediately on the date of determination and 25 % each will vest on the first and second anniversary of the date of determination.

In September 2020, the Company granted an executive of the Company 25,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 2.58 per share.

In the three and nine months ended September 30, 2020, there were no options exercised.

In the three months ended September 30, 2019, there were no options exercised.

In the nine months ended September 30, 2019, 7,021 options were exercised, generating proceeds to the Company of less than $ 0.1 million.

At September 30, 2020, total unrecognized compensation expense related to unvested stock and options was approximately $ 2.4 million, which is expected to be recognized over a period of approximately two years .

Commitments and Contingencies

5 unchanged sentences

The District Court granted the Company’s Motion to Dismiss the Complaint on June 29, 2020 and the ruling became final on July 20, 2020 after no appeal was filed.

In addition, from time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business.

These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, civil penalties or other losses, or injunctive or declaratory relief and on rare occasions punitive damages.

With respect to such lawsuits, the Company accrues reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated.

The Company does not believe any of these or any other proceedings, individually or in the aggregate, would be expected to have a material adverse effect on results of operations, cash flows, or financial condition

On August 21, 2020, a Company dredge, the Waymon L.

Boyd , was consumed by a fire while working on a project in the Port of Corpus Christi.

Four crewmembers were killed, several more were injured, some seriously, and the vessel was declared a total loss.

This incident also resulted in the discharge of approximately 18,000 gallons of oil, diesel fuel and contaminated water into the Corpus Christi Ship Channel, all of which was promptly cleaned up.

The Company is fully cooperating with the U.S.

Coast Guard, the Port of Corpus Christi Authority, and the National Transportation Safety Board, among others, while they investigate the cause of this incident.

The National Transportation Safety Board has named the Company as a party of interest in their investigation.

Thus far, seven individual lawsuits have been filed against the Company by certain crewmembers or their heirs under the general maritime law and the Jones Act.

In response thereto, the Company has filed an action in the U.S.

District Court for the Southern District of Texas seeking consolidation of these suits for procedural purposes since they all arise out of the same occurrence and seeking exoneration from or limitation of liability relating to the foregoing incident as provided for in the federal rules of procedure for maritime claims.

Other actions are anticipated that will likely claim property damages and business interruption, loss of profit, loss of use of natural resources and other economic damages for unspecified economic and compensatory damages.

In any case, the Company believes it has adequate insurance coverage for all pollution, marine, economic and other potential liabilities arising from the incident and does not expect the incident to have a material adverse effect on its business or financial condition.

The Company is also confident that it otherwise has adequate vessels, equipment and personnel to fulfill all ongoing, booked and reasonably foreseeable work.

In addition, the Company is involved in various other legal and other proceedings which are incidental to the conduct of its business, none of which in the opinion of management will have a material effect on the Company’s financial condition, results of operations or cash flows.

Management believes that it has recorded adequate accrued liabilities and believes that it has adequate insurance coverage or has meritorious defenses for these other claims and contingencies.

A legal matter was settled in the Company’s favor for $ 5.5 million during the first quarter of 2018.

Settlement amounts were recorded in Other gain from continuing operations in the Condensed Consolidated Statement of Operations, Prepaid expenses and other (current portion of the notes receivable) and Other non-current assets (non-current portion of the notes receivable) in the Condensed Consolidated Balance Sheets.

As of June 30, 2020, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 2.1 million, net of $ 0.3 million of unamortized discount.

As of September 30, 2020, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 2.0 million, net of $ 0.2 million of unamortized discount.

Legal fees related to this matter were expensed as incurred during the respective reporting period.

During the quarter ended September 30, 2020, the Company settled a long-standing dispute with a customer that resulted in recovery of $ 0.9 million of previously reserved accounts receivable.

Segment Information

1 unchanged sentence

marine and concrete.

The Company’s financial reporting systems present various data for management to run the business, including profit and loss statements

prepared according to the segments presented.

The Company’s financial reporting systems present various data for management to run the business, including profit and loss statements prepared according to the segments presented.

Management uses operating income to evaluate performance between the two segments.

1 unchanged sentence

Three months ended

Six months ended

Nine months ended

September 30,

Contract revenues

6 unchanged sentences

Property, plant and equipment, net

There were $ 0.4 million and $ 2.7 million in intersegment revenues between the Company’s two reportable segments for the three and six months ended June 30, 2020, respectively.

There were $ 0.2 million and $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three and six months ended June 30, 2019, respectively.

The marine segment had foreign revenues of $ 3.9 million and $ 2.4 million for the three months ended June 30, 2020 and 2019, respectively, and $ 7.9 million and $ 2.9 million for the six months ended June 30, 2020 and 2019, respectively.

There were less than $ 0.1 million and $ 2.7 million in intersegment revenues between the Company’s two reportable segments for the three and nine months ended September 30, 2020, respectively.

There were $ 0.3 million and $ 0.5 million in intersegment revenues between the Company’s two reportable segments for the three and nine months ended September 30, 2019, respectively.

The marine segment had foreign revenues of $ 1.8 million and $ 4.6 million for the three months ended September 30, 2020 and 2019, respectively, and $ 9.7 million and $ 7.5 million for the nine months ended September 30, 2020 and 2019, respectively.

These revenues are derived from projects in the Caribbean Basin and Mexico and are paid primarily in U.S.

5 unchanged sentences

Finance and operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date.

As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

As the implicit rate is not

determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.

The expected lease term includes options to extend or terminate the lease when it is reasonably certain the Company will exercise such option.

4 unchanged sentences

Leases recorded on the balance sheet consists of the following:

September 30,

Operating lease right-of-use assets, net (1)

3 unchanged sentences

Total liabilities

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 7.4 million as of June 30, 2020.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 6.7 million as of June 30, 2020.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 8.7 million as of September 30, 2020.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 7.1 million as of September 30, 2020.

Other information related to lease term and discount rate is as follows:

September 30,

Weighted Average Remaining Lease Term (in years)

6 unchanged sentences

The components of lease expense are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease costs:

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

9 unchanged sentences

Year ending December 31,

2020 (excluding the six months ended June 30, 2020)

2020 (excluding the nine months ended September 30, 2020)

Total future minimum lease payments

3 unchanged sentences

Long-term lease obligations

Subsequent Event

Effective, October 9, 2020, the Company entered into an amendment (the "Eighth Amendment") to its syndicated credit agreement (the "Credit Agreement"

, with Regions Bank, as Administrative Agent and Collateral Agent and Bank of America, N.A., BOKF, NA dba Bank of Texas, Iberiabank, NBH Bank, Truist Bank, and Trustmark National Bank, as Lenders.

The Eighth Amendment provides for administrative revisions to the Credit Agreement, including changes to repayment requirements for involuntary asset dispositions and changes to the timing of repayment for voluntary asset dispositions.

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 1. Financial Statements