What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-03-02 compared with 2020-02-28 · 76 added, 45 removed, 237 unchanged (34% of the section changed)

9 unchanged sentences

Many of these contracts include express or implied certifications of compliance with applicable laws and contract provisions.

As a result, any violations of these regulations could bring about litigation, including the possibility of qui tam (“Whistle Blower”) litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, and could cause termination of other existing government contracts and result in the loss of future government contracts.

Due to the significant competition in the marketplace and the level of regulations on government contracts, we could suffer reductions in new projects and see lower revenues and profit

margins on those projects, which could have a material adverse effect on the business, operating results and financial condition.

Any violations of these regulations could bring about litigation, including the possibility of qui tam (“whistleblower”) litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, and could cause termination of other existing government contracts and result in the loss of future government contracts.

Due to the significant competition in the marketplace and the level of regulations on government contracts, we could suffer reductions in new projects and see lower revenues and profit margins on those projects, which could have a material adverse effect on the business, operating results and financial condition.

Our operations are susceptible to a variety of adverse conditions including weather conditions, natural disasters, health epidemics or pandemics or other contagious outbreaks and terrorist attacks that could negatively impact the markets in which we operate.

1 unchanged sentence

Repercussions of severe weather conditions could cause significant interruption of projects in process and have safety implications to personnel at those sites.

Our business, operating results and financial condition could be materially and adversely affected if a public health epidemic or pandemic or other contagious outbreak, including the novel coronavirus (referred to as COVID-19) reported to have originated in Wuhan, China, interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.

Our business, operating results and financial condition could be materially and adversely affected if a public health epidemic or pandemic or other contagious outbreak, such as the recent coronavirus (“COVID-19”) pandemic (as discussed in greater detail below), interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.

Terrorist attacks, targeted at ports, marine facilities, shipping or metropolitan areas could affect the markets in which we operate our business and our expectations.

1 unchanged sentence

These attacks or armed conflicts may affect our operations or those of our customers or suppliers and could impact our revenues, our production capability and our ability to complete contracts in a timely manner.

The current COVID-19 pandemic has affected and may continue to adversely affect our business and results of operations and financial condition.

In March of 2020, outbreak a pandemic, and the President of the United States declared the outbreak a national emergency.

In response to the COVID-19 pandemic, federal, provincial, state, county and local governments and public health organizations and authorities around the world implemented a variety of measures intended to control the spread of the virus, including quarantines, “shelter-in-place,” “stay-at-home” and similar orders, travel restrictions, school closures, business curtailments and closures, social distancing and hygiene requirements, and other measures.

We provide a broad range of specialty construction services in the infrastructure, industrial and building sectors of the continental United States, Alaska, Canada and the Caribbean Basin , which are generally considered essential services exempt from many of the above measures.

Since March 2020, when the World Health Organization declared the COVID-19 to be a global pandemic, we have continued to provide these services to our customers, but with added focused attention on the safety and health of our employees.

However, the COVID-19 pandemic and related governmental and business responses has had and will continue to have an adverse effect on our operations.

For example, as a result of the pandemic

and various governmental orders, a significant number of our corporate employees have been working from home, and we have altered our operations to allow for appropriate social distancing and hygiene, which has led to decreased efficiency and productivity in our workforce and our operations.

In addition, management is focused on mitigating the effects of the COVID-19 pandemic, which has required and will continue to require a substantial investment of time, energy, resources and focus.

The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that are uncertain and that we are not able to predict, including:

the severity of the virus;

the duration and scope of the pandemic;

the impact of the vaccines, including the speed at which they are approved and disseminated and their effectiveness against COVID-19 and its evolving strains;

governmental, business, individual and other actions taken in response to the pandemic;

the effect on our suppliers and disruptions to the global supply chain;

the impact on economic activity;

the extent and duration of the impact on consumer and business confidence and spending;

the effect on our end-user customers;

the effect of any closures or other changes in operations of our and our suppliers’, distributors’ and end-user customers’ facilities;

the health of and the effect on our employees and our ability to meet staffing needs in our construction and other critical functions, particularly if employees become ill, are quarantined as a result of exposure, or are reluctant to show up for work;

our ability to provide services, including as a result of travel restrictions, work from home requirements and arrangements, and other restrictions or changes in behavior or preferences for interactions;

the effect on employee healthcare costs;

restrictions or disruptions to transportation, including reduced availability of ground, sea or air transport;

the ability of our end-user customers to pay for our services;

the potential effects on our internal controls, including those over financial reporting, as a result of changes in working arrangements that are applicable to our employees and business partners;

and the effect on our ability to access capital on favorable terms and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur in the future.

We depend on continued growth in population in our geographic market areas in Texas to support residential and nonresidential construction for our concrete construction segment.

19 unchanged sentences

Any such predictions may be impacted by these factors as well as others that are beyond our control and might not turn out to be accurate.

Fluctuations in commodity prices may affect our customers’

investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards.

Fluctuations in commodity prices may affect our customers’ investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards.

Additionally, fluctuations in commodity prices can negatively affect our project costs.

8 unchanged sentences

We may be unable to obtain sufficient bonding capacity for our contracts and the need for performance and surety bonds may adversely affect our business.

As more fully described in “Insurance and Bonding”

under “Item 1.

Business,”

we are generally required to post bonds in connection with government and certain private sector contracts to ensure job completion.

As more fully described in “Insurance and Bonding” under “Item 1.

Business,” we are generally required to post bonds in connection with government and certain private sector contracts to ensure job completion.

We have entered into a bonding agreement with a large multinational surety which acts as surety, issues bid bonds, performance bonds and payment bonds, and obligates itself upon other contracts of guaranty required by us in the day-to-day operations of our business.

11 unchanged sentences

We may not be able to fully realize the revenue value reported in our backlog.

As of December 31, 2019, we had a backlog of work to be completed on contracts totaling approximately $340.7 million in our marine segment and approximately $231.6 million in our concrete segment.

As of December 31, 2020, we had a backlog of work to be completed on contracts totaling approximately $236.9 million in our concrete segment and approximately $202.6 million in our marine segment.

Backlog develops as a result of new awards, which represent the potential revenue value realizable pursuant to new project commitments received by us during a given period.

18 unchanged sentences

● changes in the costs of equipment, materials, labor or subcontractors;

our suppliers’

or subcontractors’

failure to perform;

● our suppliers’ or subcontractors’ failure to perform;

● difficulties in our customers obtaining required governmental permits or approvals;

20 unchanged sentences

In the current economic environment, third parties may find it difficult to obtain sufficient financing to help fund their operations.

The inability to obtain financing could adversely affect a third party’s ability to provide materials, equipment or services which could have a material adverse impact on our business, financial condition, and results of operations.

In addition, a failure by a third party subcontractor, supplier or manufacturer to comply with applicable laws, regulations or client requirements could negatively impact our business and, for government clients, could result in fines, penalties, suspension or even debarment being imposed on us, which could have a material adverse impact on our business, financial condition, and results of operations.

16 unchanged sentences

disruptive to our operations and could have a material adverse effect on the business, operating results and financial condition.

Our business is subject to significant operating risks and hazards that could result in damage or destruction to property, which could result in losses or liabilities to us.

Our business is subject to significant operating risks and hazards that could result in damage or destruction to property, injuries or loss of life, which could result in losses or liabilities to us.

Construction and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, or other construction or worksite hazards.

1 unchanged sentence

Our safety record is an important consideration for us and for our customers.

If serious accidents or fatalities occur or our safety record was to deteriorate, we may be ineligible to bid on certain work, expose ourselves to possible lawsuits, and existing service arrangements could be terminated, thus having a material adverse impact on our financial position, results of operations, cash flows and liquidity.

If serious accidents or fatalities occur or our safety record was to deteriorate, we may be excluded from bidding for on certain work, expose ourselves to possible lawsuits, and existing service arrangements could be terminated, thus having a material adverse impact on our financial position, results of operations, cash flows and liquidity.

Further, regulatory changes implemented by OSHA or the U.S.

6 unchanged sentences

Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.

We maintain various insurance policies, including general liability and workers’

compensation.

We maintain various insurance policies, including general liability and workers’ compensation.

We are partially self-insured under some of our policies, and our insurance does not cover all types or amounts of liabilities.

We are not required to, and do not, specifically set aside funds for our self-insurance programs.

At any given time, we are subject to multiple workers’

compensation and personal injury claims.

We maintain substantial loss accruals for workers’

compensation claims, and, until recently, our workers’

compensation and insurance costs have been rising for several years notwithstanding our emphasis on safety.

At any given time, we are subject to multiple workers’ compensation and personal injury claims.

We maintain substantial loss accruals for workers’ compensation claims, and, until recently, our workers’ compensation and insurance costs have been rising for several years notwithstanding our emphasis on safety.

Our insurance policies may not be adequate to protect us from liabilities that we incur in our business.

In addition, some of the projects that we bid on require us to maintain high levels of builder’s risk insurance.

We may not be able to obtain similar levels of insurance on reasonable terms, or at all.

4 unchanged sentences

If we were to experience insurance claims or costs above our estimates, we might be required to use working capital to satisfy these costs rather than to maintain or expand our operations.

To the extent that we experience a material increase in the frequency or severity of accidents or workers’

compensation and health claims, or unfavorable developments on existing claims, our operating results and financial condition could be materially and adversely affected.

To the extent that we experience a material increase in the frequency or severity of accidents or workers’ compensation and health claims, or unfavorable developments on existing claims, our operating results and financial condition could be materially and adversely affected.

Our employees in the marine segment are covered by federal laws that provide seagoing employees remedies for job-related claims in addition to those provided by state laws.

Many of our marine segment employees are covered by federal maritime law, including provisions of the Jones Act, the Longshore and Harbor Workers Act, (“USL&H”) and the Seaman’s Wage Act.

Jones Act laws typically operate to make liability limits established by USL&H and state workers’

compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue litigation against employers for job-related injuries.

Because in some cases we are not protected by the limits imposed by state workers’

compensation statutes, we have greater exposure for claims made by these employees as compared to employers whose employees are not covered by these provisions.

Many of our marine segment employees are covered by federal maritime law, including provisions of the Jones Act, the Longshore and Harbor Workers Act, (“USL&H”) and the Seaman’s Wage Act.

Jones Act laws typically operate to make liability limits established by USL&H and state workers’ compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue litigation against employers for job-related injuries.

Because in some cases we are not protected by the limits imposed by state workers’ compensation statutes, we have greater exposure for claims made by these employees as compared to employers whose employees are not covered by these provisions.

For example, in the normal course of business, we are a defendant in various personal injury lawsuits.

19 unchanged sentences

We may not be able to recover some or any of these costs through insurance or increased revenues, which may have a material adverse effect on our business, operating results and financial condition.

See “Business - Environmental Matters”

for more information.

See “Business - Environmental Matters” for more information.

Our concrete segment is subject to extensive and complex regulations that affect land development and building construction, including zoning, density restrictions, building design and building standards.

21 unchanged sentences

As a result, the sales price for that portion of our marine segment may not attain the amount that could be obtained in an unregulated market.

Risk Factors Relating to Our Employees

We may be subject to unionization, work stoppages, slowdowns or increased labor costs.

Only a small percentage of our marine segment workforce, located in the Pacific Northwest and Alaska, is currently unionized.

If at any time, a majority of our employees unionized, it could limit the flexibility of the workforce and could result in demands that might increase our operating expenses and adversely affect our profitability.

Each of our different employee groups could unionize at any time and would require separate collective bargaining agreements.

If any group of our employees were to unionize and we were unable to agree on the terms of their collective bargaining agreement or we were to experience widespread employee dissatisfaction, we could be subject to work slowdowns or stoppages.

In addition, we may be subject to disruptions by organized labor groups protesting our non-union status.

Any of these events would be disruptive to our operations and could have a material adverse effect on the business, operating results and financial condition.

Our employees in the marine segment are covered by federal laws that provide seagoing employees remedies for job-related claims in addition to those provided by state laws.

Many of our marine segment employees are covered by federal maritime law, including provisions of the Jones Act, the Longshore and Harbor Workers Act, (“USL&H”) and the Seaman’s Wage Act.

For example, in the normal course of business, we are a defendant in various personal injury lawsuits.

We maintain insurance to cover claims that arise from injuries to our workforce subject to a deductible.

During 2020, we recorded approximately $0.9 million of expense for our self-insured portion of these liabilities.

We believe our recorded self-insurance reserves represent our best estimate of the outcomes of these claims.

Should negative trends persist;

we could continue to be negatively impacted in the future.

General Risk Factors

Our strategy of growing through strategic acquisitions may not be successful.

13 unchanged sentences

Moreover, to the extent an acquisition transaction financed by non-equity consideration results in additional goodwill, it will reduce our tangible net worth, which might have an adverse effect on our credit and bonding capacity.

Risk Factors Relating to Our Accounting, Financial Results and Financing Plans

Our bonding requirements may limit our ability to incur indebtedness.

We generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain government and private sector contracts.

Our ability to obtain surety bonds depends upon various factors including our capitalization, working capital and amount of our indebtedness.

In order to help ensure that we can obtain required bonds, we may be limited in our ability to incur additional indebtedness that may be needed for potential acquisitions and operations.

Our inability to incur additional indebtedness could have a material adverse effect on our business, operating results and financial condition.

Systems and information technology interruption or failure and data security breaches could adversely impact our ability to operate or expose us to significant financial losses and reputational harm.

4 unchanged sentences

Any of these or other events could cause interruptions, delays, loss of critical and/or sensitive data or similar effects, which could have a material adverse impact on our business, financial condition, protection of intellectual property, and results of operations, as well as those of our clients.

In addition, we face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to and disclosure of our and our clients’

proprietary or classified information.

We rely on industry accepted security measures and technology to securely maintain all confidential and proprietary information on our computer systems, but they may still be vulnerable to these threats.

1 unchanged sentence

Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Risks Related to Our Indebtedness

Risk Factors Relating to Our Indebtedness and Financing Plans

Our bonding requirements may limit our ability to incur indebtedness.

We generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain government and private sector contracts.

Our ability to obtain surety bonds depends upon various factors including our capitalization, working capital and amount of our indebtedness.

In order to help ensure that we can obtain required bonds, we may be limited in our ability to incur additional indebtedness that may be needed for potential acquisitions and operations.

Our inability to incur additional indebtedness could have a material adverse effect on our business, operating results and financial condition.

Our indebtedness requires significant debt service payments that could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness.

5 unchanged sentences

● make payments in respect of or redeem or acquire any debt or equity issued by us;

● sell assets;

● make loans or investments;

10 unchanged sentences

If we incur additional indebtedness in the future, it likely would be under our existing Credit Agreement or under arrangements that may have terms and conditions at least as restrictive as those contained in our existing Credit Agreement.

At December 31, 2019, available capacity to borrow on the Revolving Line of Credit was $12.6 million.

At December 31, 2020, available capacity to borrow on the revolving lines of credit was $63.3 million.

Failure to comply with the terms and conditions of any existing or future indebtedness would constitute an event of default.

5 unchanged sentences

We use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates.

However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks, including risks discussed in "Risks Related to Our Business" above.

In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument.

1 unchanged sentence

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-K

Item 1A. Risk Factors