What changed in this filing

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Item 1. Financial Statements

2022-04-29 compared with 2021-10-29 · 164 added, 262 removed, 587 unchanged (42% of the section changed)

4 unchanged sentences

(In Thousands, Except Share and Per Share Information)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable:

Trade, net of allowance for credit losses of $ 323 and $ 411 , at September 30, 2021 and December 31, 2020, respectively

Trade, net of allowance for credit losses of $ 323 and $ 323 , respectively

Income taxes receivable

25 unchanged sentences

Deferred income tax liability

Interest rate swap liability

Total liabilities

2 unchanged sentences

Common stock -- $ 0.01 par value, 50,000,000 authorized, 31,676,725 and 31,712,457 issued;

31,068,475 and 30,460,573 outstanding at September 30, 2021 and December 31, 2020, respectively

Treasury stock, 711,231 shares, at cost, as of September 30, 2021 and December 31, 2020, respectively

Accumulated other comprehensive loss

30,965,494 and 31,001,226 outstanding at March 31, 2022 and December 31, 2021, respectively

Treasury stock, 711,231 shares, at cost, as of March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(In Thousands, Except Share and Per Share Information)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Contract revenues

19 unchanged sentences

(In Thousands)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Net (loss) income

Change in fair value of cash flow hedge, net of tax expense of $ 368 for the nine months ended September 30, 2021 and net of tax expense of $ 44 and tax benefit of $ 173 for the three and nine months ended September 30, 2020, respectively.

Change in fair value of cash flow hedge, net of tax expense of $ 53 for the three months ended March 31, 2021

Total comprehensive (loss) income

9 unchanged sentences

Stock-based compensation

Exercise of stock options

Payments related to tax withholding for stock-based compensation

Cash flow hedge

Balance, March 31, 2021

Stock-based compensation

Issuance of restricted stock

1 unchanged sentence

Payments related to tax withholding for stock-based compensation

Cash flow hedge

Balance, June 30, 2021

Stock-based compensation

Exercise of stock options

Issuance of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, September 30, 2021

Balance, March 31, 2022

Accumulated Other

3 unchanged sentences

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Cash flow hedge

Balance, March 31, 2020

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Exercise of stock options

Payments related to tax withholding for stock-based compensation

Cash flow hedge

Balance, June 30, 2020

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Purchase of vested stock-based awards

Cash flow hedge

Balance, September 30, 2020

Balance, March 31, 2021

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

3 unchanged sentences

(in Thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Operating activities:

2 unchanged sentences

Amortization of ROU finance leases

Write-off of debt issuance costs upon debt extinguishment

Amortization of deferred debt issuance costs

2 unchanged sentences

Gain on disposal of assets, net

Allowance for credit losses

Change in operating assets and liabilities:

Accounts receivable

Income tax receivable

Prepaid expenses and other

9 unchanged sentences

Purchase of property and equipment

Contributions to CSV life insurance

Insurance claim proceeds related to property and equipment

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

3 unchanged sentences

Payments of finance lease liabilities

Payments related to tax withholding for stock-based compensation

Payments related to tax withholding for share-based compensation

Exercise of stock options

3 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

Supplemental disclosures of cash flow information:

Cash paid during the period for:

35 unchanged sentences

Such adjustments are of a normal recurring nature.

Interim results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Interim results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

In connection with preparing consolidated financial statements for each annual and interim reporting period, the Company is required to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Substantial doubt exists when conditions and events, considered in aggregate, indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued.

This evaluation initially does not take into consideration the potential mitigating effect of management’s plans and actions that have not been fully implemented as of the date that the financial statements are issued.

When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern.

The mitigating effect of management’s plans, however, is only considered if both:

(1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued;

and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.

The assessment of the liquidity and going concern requires the Company to make estimates of future activity and judgments about whether the Company has adequate liquidity to operate.

Significant assumptions used in the Company's forecasted model of liquidity include forecasted sales, costs, our ability to manage spending on capital expenditures, limit spending on the ERP system implementation and improve working capital.

Based on a careful assessment of these factors management believes that the Company will have adequate liquidity for its operations for at least the next 12 months.

Therefore, management’s conclusion is that substantial doubt is not raised as to the Company’s ability to continue as a going concern.

Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

revenues and expenses during the reporting period.

Management’s estimates, judgments and assumptions are continually evaluated based on available information and experience;

10 unchanged sentences

The Company’s revenue is derived from contracts to provide marine construction, dredging, turnkey concrete services, and other specialty services.

The Company’s projects are typically brief in duration and very rarely span a period of over one year.

The Company determines the appropriate accounting treatment for each contract

before work begins and, subject to qualifications discussed in the next paragraph, generally records contract over time.

The Company’s projects are typically brief in duration, but occasionally, span a period of over one year.

The Company determines the appropriate accounting treatment for each contract before work begins and, subject to qualifications discussed in the next paragraph, generally records contract over time.

Performance obligations are promises in a contract to transfer distinct goods or services to the customer and are the unit of account under Topic 606.

9 unchanged sentences

The effect of changes in estimates of contract revenue or contract costs is recognized as an adjustment to recognized revenue on a cumulative catch-up basis.

When the Company anticipates a loss on a contract that is not yet complete, it recognizes the entire loss in the period in which such losses are determined.

When the Company anticipates a loss on a contract that is not yet complete, it recognizes the entire loss in the period in which such

losses are determined.

Revenue is recorded net of any sales taxes collected and paid on behalf of the customer, if applicable.

12 unchanged sentences

The Company includes in current assets and liabilities amounts realizable and payable in the normal course of contract completion.

Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

1 unchanged sentence

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

Cash equivalents at September 30, 2021 and December 31, 2020 consisted primarily of overnight bank deposits.

The Company had no restricted cash as of September 30, 2021 and December 31, 2020.

Cash equivalents at March 31, 2022 and December 31, 2021 consisted primarily of overnight bank deposits.

Risk Concentrations

5 unchanged sentences

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 September 30, 2021 and December 31, 2020.

The Company has significant investments in billed and unbilled receivables as of March 31, 2022 and December 31, 2021.

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.

4 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 with respect to a disputed receivable is reached for an amount that is less than the carrying value.

As of September 30, 2021, and December 31, 2020, the Company has recorded an allowance for credit losses of $ 0.3 million and $ 0.4 million, respectively.

As of both March 31, 2022 and December 31, 2021, the Company has recorded an allowance for credit losses of $ 0.3 million.

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 September 30, 2021

totaled $ 39.2 million, of which $ 4.3 million is expected to be collected beyond September 30, 2022.

Retainage at March 31, 2022 totaled $ 43.5 million, of which $ 5.2 million is expected to be collected beyond March 31, 2023.

Retainage at December 31, 2021 totaled $ 41.4 million.

10 unchanged sentences

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

The Company did not recognize any environmental liabilities as of September 30, 2021 or December 31, 2020.

The Company did not recognize any environmental liabilities as of March 31, 2022 or December 31, 2021.

Fair Value Measurements

32 unchanged sentences

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, 2021 or December 31, 2020.

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 March 31, 2022 or December 31, 2021.

Management determines if a contract is or contains a lease at inception of the contract or modification of the contract.

33 unchanged sentences

The Company determines its consolidated income tax provision using the asset and liability method prescribed by U.S.

GAAP, which requires the recognition of income tax expense for the amount of taxes payable or

refundable for the current period and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns.

GAAP, which requires the recognition of income tax expense for the amount of taxes payable or refundable for the current period and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns.

The Company must make significant assumptions, judgments and estimates to determine its current provision for income taxes, its deferred tax assets and liabilities, and any valuation allowance to be recorded against any deferred tax asset.

26 unchanged sentences

Actual claims may vary from estimates.

Any adjustments to such reserves are included in the Condensed Consolidated Results of Operations in the period in which they become known.

Any adjustments to such reserves are included in the Condensed Consolidated Statements of Operations in the period in which they become known.

The Company’s concrete segment employee health care is provided through two policies.

1 unchanged sentence

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 accrual for insurance claims liabilities was $ 67.4 million and $ 60.4 million at September 30, 2021 and December 31, 2020, respectively, reflected as a component of accrued liabilities in the condensed consolidated balance sheet.

The total accrual for insurance claims receivable was $ 63.9 million and $ 57.0 million at September 30, 2021 and December 31, 2020, respectively, reflected as a component of other current accounts receivable in the condensed consolidated balance sheet.

Accounting Standards Adopted in 2021

The Financial Accounting Standards Board (“FASB”) issues accounting standards and updates (each, an "ASU") from time to time to its Accounting Standards Codification (‘ASC’), which is the primary source of U.S.

The Company regularly monitors ASUs as they are issued and considers applicability to its business.

All ASUs are adopted by their respective due dates and in the manner prescribed by the FASB.

In December 2019, the FASB issued ASU 2019-12, Income Taxes:

Simplifying the Accounting for Income Taxes (Topic 740).

This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within that year.

The adoption of this ASU had no material impact on the Company’s Condensed Consolidated Financial Statements.

The total accrual for insurance claims liabilities was $ 5.2 million and $ 19.8 million at March 31, 2022 and December 31, 2021, respectively, reflected as a component of accrued liabilities in the condensed consolidated balance sheet.

The total accrual for insurance claims receivable was $ 1.6 million and $ 13.3 million at March 31, 2022 and December 31, 2021, respectively, reflected as a component of other current accounts receivable in the condensed consolidated balance sheet.

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 September 30,

Nine months ended September 30,

Three months ended March 31,

Marine Segment

9 unchanged sentences

The Company’s contracts are often estimated and bid as one project and evaluated as to performance as one project, not by individual services performed by each.

Both the marine and concrete segments have a single Executive Vice President responsible for the entire segment, not by service lines of the segments.

Both the marine and concrete segments have a single leader responsible for the entire segment, not by service lines of the segments.

Resources are allocated by segment and financial and budgetary information is compiled and reviewed by segment, not service line.

8 unchanged sentences

Concentration of Risk and Enterprise-Wide Disclosures

Accounts receivable in both reportable segments include amounts billed to governmental agencies and private customers and do not bear interest.

In both reportable segments accounts receivable include amounts billed to governmental agencies and private customers and do not bear interest.

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 accounts receivable from customers (trade and retainage) at September 30, 2021 and December 31, 2020, respectively:

September 30, 2021

The table below presents the concentrations of current receivables (trade and retainage) at March 31, 2022 and December 31, 2021, respectively:

March 31, 2022

December 31, 2021

6 unchanged sentences

Net receivables

At September 30, 2021, no single customer accounted for more than 10.0 % of total current receivables.

At December 31, 2020, 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 nine months ended September 30, 2021 and 2020, respectively:

Three months ended September 30,

Nine months ended September 30,

At both March 31, 2022 and December 31, 2021, 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 months ended March 31, 2022 and 2021, respectively:

Three months ended March 31,

Federal Government

State Governments

Local Government

Local Governments

Private Companies

Total contract revenues

In the three months ended September 30, 2021, no single customer exceeded 10.0% 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 nine months ended September 30, 2021, no single customer exceeded 10.0% 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 three months ended March 31, 2022, one customer in the Federal Government category accounted for 10.4 % of total contract revenues.

In the three months ended March 31, 2021, no single customer exceeded 10.0% 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 0.0 % and 0.9 % of total revenues for the three months ended September 30, 2021 and 2020, respectively, and 0.6 % and 1.8 % for the nine months ended September 30, 2021 and 2020, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contract revenues generated outside the United States totaled 0.4 % and 1.6 % of total revenues for the three months ended March 31, 2022 and 2021, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contracts in Progress

Contracts in progress are as follows at September 30, 2021 and December 31, 2020:

September 30,

Contracts in progress are as follows at March 31, 2022 and December 31, 2021:

Costs incurred on uncompleted contracts

6 unchanged sentences

Contract liabilities

Included in contract assets is approximately $ 3.8 million and $ 3.1 million at September 30, 2021 and December 31, 2020, 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.

Included in contract assets is approximately $ 5.3 million and $ 3.8 million at March 31, 2022 and December 31, 2021, respectively, related to claims and unapproved change orders.

See Note 2 to the Company’s consolidated financial statements for discussion of the accounting for these claims.

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 September 30, 2021, the aggregate amount of the remaining performance obligations was approximately $ 572.8 million.

As of March 31, 2022, the aggregate amount of the remaining performance obligations was approximately $ 604.1 million.

Of this amount, the current expectation of the Company is that it will recognize $ 495.8 million, or 82 %, in the next 12 months and the remaining balance thereafter.

Property and Equipment

The following is a summary of property and equipment at September 30, 2021 and December 31, 2020:

September 30,

The following is a summary of property and equipment at March 31, 2022 and December 31, 2021:

Automobiles and trucks

6 unchanged sentences

Construction in progress

During the quarter ended June 30, 2021 the Company sold its land, building and improvements located in Tampa, Florida.

The book value of the assets and related accumulated depreciation have been removed from the balance sheet and the Company recognized a net gain on the sale of $ 6.7 million.

For the three months ended September 30, 2021 and 2020, depreciation expense was $ 5.2 million and $ 5.3 million, respectively.

For the nine months ended September 30, 2021 and 2020, depreciation expense was $ 15.7 million and $ 16.6 million, respectively.

For the three months ended March 31, 2022 and 2021, depreciation expense was $ 5.2 million and $ 5.3 million, respectively.

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

3 unchanged sentences

Other Current Accounts Receivable

Other current accounts receivable at September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021

Other current accounts receivable at March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022

December 31, 2021

12 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 September 30, 2021 and December 31, 2020:

Fair Value Measurements

Carrying Value

September 30, 2021

March 31, 2022

Cash surrender value of life insurance policy

1 unchanged sentence

Cash surrender value of life insurance policy

The Company’s derivatives, which previously consisted of interest rate swaps, were valued using a discounted cash flow analysis that incorporated observable market parameters, such as interest rate yield curves and credit risk adjustments that were necessary to reflect the probability of default by us or the counterparty.

These derivatives were classified as a Level 2 measurement within the fair value hierarchy.

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 September 30, 2021.

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.

Our concrete segment has life insurance policies with a combined face value of $ 11.1 million as of March 31, 2022.

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.

These assets are included in the "Other noncurrent"

5 unchanged sentences

Other Fair Value Measurements

The fair value of the Company’s debt at September 30, 2021 and December 31, 2020 approximated its carrying value of $ 19.4 million and $ 35.1 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 March 31, 2022 and December 31, 2021 approximated its carrying value of $ 28.6 million and $ 39.4 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 amortization 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 nine months ended September 30, 2021, $ 1.1 million of amortization expense was recognized for these assets.

For the three months ended March 31, 2022, $ 0.3 million of amortization expense was recognized for these assets.

Future expense remaining of approximately $ 1.4 million will be amortized as follows:

Additionally, the Company has one indefinite-lived intangible asset, a trade name, which is tested for impairment annually on October 31, or whenever events or circumstances indicate that the carrying amount of the trade name may not be recoverable.

Impairment is calculated as the excess of the trade name’s carrying value over its fair value.

The fair value of the trade name is determined using the relief from royalty method, a variation of the income approach.

This method assumes that if a company owns intellectual property it does not have to "rent"

the asset and is, therefore, "relieved"

from paying a royalty.

Once a supportable royalty rate is determined, the rate is then applied to the projected revenues over the expected remaining life of the intangible assets to estimate the royalty savings.

This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables.

The most recent annual impairment test concluded that the fair value of the trade name was in excess of the carrying value, therefore no impairment was recorded.

The most recent annual impairment test of the Company’s indefinite-lived intangible asset concluded that the fair value of the trade name was in excess of the carrying value, therefore no impairment was recorded.

Accrued Liabilities

Accrued liabilities at September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021

Accrued liabilities at March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022

December 31, 2021

Accrued salaries, wages and benefits

Accrual for insurance claims liabilities

Accrued liabilities expected to be covered by insurance

Property taxes

1 unchanged sentence

Accounting and audit fees

Equipment purchase

Other accrued expenses

Total accrued liabilities

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which among other things includes an optional payment deferral of the employer's portion of the Social Security taxes that were otherwise due through December 31, 2020.

The Company elected to defer payments of approximately $ 7.6 million with $ 3.8 million paid in December 2021 and the remaining $ 3.8 million due December 2022, reflected in accrued liabilities in the Company’s Condensed Consolidated Balance Sheets.

Long-term Debt and Line of Credit

1 unchanged sentence

Bank of America, N.A., BOKF, NA dba Bank of Texas, KeyBank National Association, NBH Bank, IBERIABANK, Trustmark National Bank, First Tennessee Bank NA, and Branch Banking and Trust Company.

The Credit Agreement was subsequently amended in March 2019 (the “Fifth Amendment”), May 2019 (the “Sixth Amendment”) June 2020 (the “Seventh Amendment”) and October 2020 (the “Eighth Amendment”).

The Credit Agreement was subsequently amended in March 2019 (the “Fifth Amendment”), May 2019 (the “Sixth Amendment”), June 2020 (the “Seventh Amendment”), October 2020 (the “Eighth Amendment”), and March 2022 (the “Ninth Amendment”).

The Company incurred debt issuance costs related to the initial Credit Agreement and several of the subsequent amendments.

6 unchanged sentences

Amounts repaid under the revolving line of credit may be re-borrowed.

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 scheduled for amortization using the effective interest rate method over the duration of the loan.

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.

The then remaining debt issuance costs of approximately $ 0.9 million related to the Fourth, Fifth, and Sixth Amendments were scheduled to be amortized over the duration of the term loan, which coincides with the term of the Credit Facility.

On June 8, 2020, the Company entered into a new syndicated credit agreement (the “ 364-Day Revolving Credit Facility”) with Regions Bank, as administrative agent and collateral agent, and the following co-syndication agents:

Bank of America, N.A.

and BOKF, NA dba Bank of Texas.

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 provided for borrowings of up to $ 20 million under a new revolving line of credit.

No funds were ever drawn on the 364-Day Revolving Credit Facility.

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

Effective, October 9, 2020, the Company entered into the Eighth Amendment to 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.

There were no debt issuance costs incurred with respect to the Eighth Amendment.

The quarterly weighted average interest rate for the Credit Facility as of September 30, 2021 was 2.92 %.

Effective, March 1, 2022, the Company entered into the Ninth Amendment to the Credit Agreement to, among other things, waive certain covenant defaults, reset the revolver limit, implement an anti-cash hoarding provision and institute temporary covenant requirements.

The amendment reduced the commitment on the revolving line of credit to $ 42.5 million.

With the execution of the Ninth Amendment, the existing Credit Facility was treated as a modification of debt and accounted for under the guidelines of ASC 470-50, Debt, Modifications and Extinguishments.

The new debt issuance costs of approximately $ 1.0 million, inclusive of appraisal and bank consulting fees, related to the execution of the Ninth Amendment will be amortized through the maturity date.

The quarterly weighted average interest rate for the Credit Facility as of March 31, 2022 was 4.73 %.

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

September 30, 2021

March 31, 2022

December 31, 2021

2 unchanged sentences

Revolving line of credit

Term loan - current

Total current debt

Revolving line of credit

Term loan - long-term

Total long-term debt

(1) Total debt issuance costs include underwriter fees, legal fees and syndication fees and fees related to the execution of the Fourth, Fifth, Sixth, Seventh and Eighth Amendments to the Credit Agreement.

(1) Total debt issuance costs include underwriter fees, legal fees and syndication fees and fees related to the execution of the Ninth Amendment to the Credit Agreement.

Provisions of the revolving line of credit

8 unchanged sentences

The revolving line of credit termination date is the earlier of the Credit Facility termination date, July 31, 2023, or the date the outstanding balance is permanently reduced to zero, in accordance with the terms of the amended Credit Facility.

The maturity date for amounts drawn under the revolving line of credit is the earlier of the Facility termination date of July 31, 2023, or the date the outstanding balance is permanently reduced to zero.

As of September 30, 2021, the Company had $ 19.0 million of borrowings under the revolving line of credit.

There were $ 1.7 million in outstanding letters of credit as of September 30, 2021, which reduced the maximum borrowing availability on the revolving line of credit to $ 29.3 million.

During the nine months ended September 30, 2021, the Company drew down $ 33.0 million for general corporate purposes and made payments of $ 19.0 million on the revolving line of credit which resulted in a net increase of $ 14.0 million.

Provisions of the term loan

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

During the quarter ended June 30, 2021, the term loan component of the Credit Facility was fully extinguished, in part using proceeds of the sale of property in Tampa, Florida (see Note 6 – Property and Equipment).

The extinguishment of the term loan reduced the Company’s exposure to variability in interest rates and eliminated future loan amortization payment commitments.

Concurrent with extinguishing the term loan, the Company canceled the remaining open position on its interest rate swap, resulting in a $ 1.3 million loss on the mark to market value of the swap at the date of termination.

The $ 1.3 million was paid to the counterparty, cleared from the balance sheet as an interest rate swap liability, removed from Other Comprehensive Income and charged to interest expense during the quarter ended June 30, 2021.

Further, the remaining $ 0.8 million of unamortized deferred debt issuance costs were charged to interest expense related to the early extinguishment of the term loan.

There were no penalties incurred related to early payment of the term loan.

The Company entered into a debt agreement with De Lage Landen Financial Services, Inc.

for the purpose of financing a piece of equipment purchased.

As of September 30, 2021, the carrying value of this debt is $ 0.4 million.

The agreement is secured by the financed equipment asset and the debt is included as a component of current debt and long-term debt on the Condensed Consolidated Balance Sheets.

As of March 31, 2022, the Company had $ 27.4 million of borrowings under the revolving line of credit.

There were $ 1.7 million in outstanding letters of credit as of March 31, 2022, which reduced the maximum borrowing

availability on the revolving line of credit to $ 13.4 million.

During the three months ended March 31, 2022, the Company made payments of $ 11.6 million on the revolving line of credit.

The Company has entered into debt agreements with De Lage Landen Financial Services, Inc.

and Mobilease for the purpose of financing equipment purchased.

As of March 31, 2022, the carrying value of this debt is $ 1.2 million.

The agreements are secured by the financed equipment assets and the debt is included as a component of current debt and long-term debt on the Condensed Consolidated Balance Sheets.

Financial covenants

Restrictive financial covenants under the Credit Facility include:

● A consolidated Fixed Charge Coverage Ratio to not be less than the following during each noted period:

- Fiscal Quarter Ending December 31, 2019 and each Fiscal Quarter thereafter, to not be less than 1.25 to 1.00.

● A consolidated Leverage Ratio to not exceed the following during each noted period:

- Fiscal Quarter Ending March 31, 2020 and each Fiscal Quarter thereafter, to not exceed 3.00 to 1.00.

• Consolidated EBITDA minimum of:

- Fiscal Quarter Ending March 31, 2022 - $ 2.6 million

- Fiscal Quarter Ending June 30, 2022 - $ 7.7 million on a year-to-date basis

• Consolidated Leverage Ratio

- Fiscal Quarter Ending September 30, 2022 and each Fiscal Quarter thereafter, maximum of 3.00 to 1.00

• Consolidated Fixed Charge Coverage Ratio

- Fiscal Quarter Ending December 31, 2022 and each Fiscal Quarter thereafter, minimum of 1.25 to 1.00.

In addition, the Credit Facility contains events of default that are usual and customary for similar arrangements, including non-payment of principal, interest or fees;

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and events constituting a change of control.

The Company was in compliance with all financial covenants as of September 30, 2021.

Derivative Financial Instruments

On September 16, 2015, the Company entered into a series of receive-variable, pay-fixed interest rate swaps to hedge the variability in the interest payments on 50 % of the aggregate principal amount of the Regions Term Loan outstanding, beginning with a notional amount of $ 67.5 million.

There was a total of five sequential interest rate swaps to achieve the hedged position and each year on August 31, with the exception of the final swap, the existing interest rate swap was scheduled to expire and be immediately replaced with a new interest rate swap until the expiration of the final swap on July 31, 2020.

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

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

At inception, these interest rate swaps were designated as cash flow hedges for hedge accounting, and as such, the effective portion of unrealized changes in market value were recorded in other comprehensive income (loss) and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

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

Upon fully extinguishing the Term Loan during the quarter ended June 30, 2021, the Company canceled the remaining term of the sixth swap and no longer owns derivative financial instruments.

The Company was in compliance with all financial covenants as of March 31, 2022.

Other Long-Term Liabilities

Other long-term liabilities at September 30, 2021 and December 31, 2020 consisted of the following:

September 30, 2021

Other long-term liabilities at March 31, 2022 and December 31, 2021 consisted of the following:

March 31, 2022

December 31, 2021

Sale-leaseback arrangement

CARES Act deferred payroll taxes

Deferred compensation

Accrual for insurance claims liabilities

Accrued liabilities expected to be covered by insurance

Total other long-term liabilities

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Under the Lease Agreement, the Company has two consecutive options to extend the term of the Lease by ten years for each such option.

This transaction was recorded as a failed sale-leaseback.

This transaction was recorded as a failed sale-

The Company recorded a liability for the amounts received, will continue to depreciate the non-land portion of the asset, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining assets will be zero at the end of the initial lease term.

Concurrently with the sale, the Company paid $ 18.2 million towards the Term loan portion of the Company’s Credit Facility, consistent with terms of the Sixth Amendment.

On March 27, 2020, the U.S.

The Company elected to defer payments of approximately $ 7.6 million with $ 3.8 million due December 2021 reflected in accrued liabilities included in the Company’s Condensed Consolidated Balance Sheets and the remaining $ 3.8 million due

December 2022 reflected in other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets.

The Company’s effective tax rate is based on expected income, statutory rates and tax planning opportunities available to it.

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Three months ended

Nine months ended

September 30,

Income tax expense

Effective tax rate

The effective rate for the three and nine months ended September 30, 2021 differed from the Company’s statutory federal rate of 21 % primarily due to the movement in the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

The effective rate for the three months ended March 31, 2022 differed from the Company’s statutory federal rate of 21 % primarily due to the movement in the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

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.

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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 September 30, 2021 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, 2021 remains appropriate.

The Company does not expect that unrecognized tax benefits as of September 30, 2021 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 March 31, 2022 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 March 31, 2022 remains appropriate.

The Company does not expect that unrecognized tax benefits as of March 31, 2022 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.

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Diluted earnings 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 September 30, 2021 and 2020, the Company had 793,028 and 1,086,882 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the nine months ended September 30, 2021 and 2020, the Company had 866,925 and 1,220,314 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the three months ended March 31, 2022 and 2021, the Company had 680,447 and 915,489 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.

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, 2021 and 2020.

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 months ended March 31, 2022 and 2021.

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

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Weighted average shares outstanding

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The Compensation Committee of the Company’s Board of Directors is responsible for the administration of the Company’s stock incentive plans, which include the balance of shares remaining under the 2011 Long Term Incentive Plan (the "2011 LTIP") and 2017 Long Term Incentive Plan (the "2017 LTIP"), which was approved by shareholders in May 2017 and authorized the maximum aggregate number of shares to be issued of 2,400,000 .

In general, the Company’s 2017 LTIP provides for grants of restricted stock and stock options to be issued with a per-share price equal to the fair market value of a share of common stock on the date of grant.

In general, the Company’s 2017 LTIP provides for grants of restricted stock, performance based units and stock options to be issued with a per-share price equal to the fair market value of a share of common stock on the date of grant.

Option terms are specified at each grant date but generally are 10 years from the date of issuance.

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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 September 30, 2021 and 2020, compensation expense related to stock-based awards outstanding was $ 0.5 million and $ 0.3 million, respectively.

In the nine months ended September 30, 2021 and 2020, compensation related to stock-based awards outstanding was $ 2.2 million and $ 1.9 million, respectively.

In the three months ended September 30, 2021 and 2020, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.7 million and $ 0.2 million, respectively.

In the nine months ended September 30, 2021 and 2020, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.9 million and $ 0.2 million, respectively.

In May 2021, independent directors as well as certain officers and executives of the Company were granted 489,850 shares of restricted common stock.

The total number included 89,850 shares, which were awarded to the six independent directors and vested immediately on the date of the grant, as well as 240,000 shares of performance-based stock awards to certain executives.

The performance-based stock will potentially vest 100 % if the target is met, with 100 % of the shares to be earned based on the achievement of an objective, tiered return on invested capital, measured over a three-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 $ 6.01 per share.

In August 2021, the Company determined the performance-based stock awarded in May 2020 vested near 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, 2021.

As a result, the executives earned an additional 259,565 shares of performance-based stock awards with a fair value of $ 2.26 , 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 2021, the Company granted an independent director 18,215 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 $ 5.49 .

In September 2021, the Company granted an executive of the Company 9,901 shares of restricted common stock with a vesting period of three year and a fair value of $ 5.05 per share.

In the three months ended September 30, 2021, there were 4,791 options exercised generating proceeds to the Company of less than $ 0.1 million.

In the nine months ended September 30, 2021, there were 28,546 options exercised generating proceeds to the Company of approximately $ 0.1 million.

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

At September 30, 2021, total unrecognized compensation expense related to unvested stock was approximately $ 3.8 million, which is expected to be recognized over a period of approximately 2.3 years.

In both the three months ended March 31, 2022 and 2021, compensation expense related to stock-based awards outstanding was $ 0.4 million.

In both the three months ended March 31, 2022 and 2021, payments related to tax withholding for stock-based compensation for certain officers of the Company was less than $ 0.1 million.

In January 2022, the Company granted an independent director 8,929 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 $ 3.36 per share.

In the three months ended March 31, 2022, there were no options exercised.

In the three months ended March 31, 2021, there were 23,755 options exercised generating proceeds to the Company of approximately $ 0.1 million.

At March 31, 2022, total unrecognized compensation expense related to unvested stock was approximately $ 2.7 million, which is expected to be recognized over a period of approximately 2.0 years.

Commitments and Contingencies

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

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

Five 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, eight separate 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 the lawsuits 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.

The Company has fully cooperated with the U.S.

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

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

A total of eight separate lawsuits were filed against the Company by certain crewmembers or their heirs under the general maritime law and the Jones Act.

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

District Court for the Southern District of Texas that requested consolidation of the lawsuits for procedural purposes since they all arose out of the same occurrence and sought exoneration from or limitation of liability relating to the foregoing incident as provided for in the federal rules of procedure for maritime claims.

The Limitation Court set a deadline of February 17, 2021 by which all claims were required to be filed and as of the Court’s deadline, thirteen persons, estates and/or entities filed claims in the Limitation for personal injuries, death, property damages and business interruption, loss of profit, loss of use of natural resources and other economic damages for unspecified economic and compensatory damages.

Some of these claimants may lack standing to bring their claims and will be challenged.

Further, the Company filed a Default Motion with the Court which was granted on April 8, 2021 that bars the filing of any further claims.

Applicable accounting guidance under ASC 450 would require the Company to recognize a loss if the loss is determined to be probable and reasonably estimable.

As at September 30, 2021, we have recognized $ 102.1 Million in total liabilities with respect to this incident to date, which includes approximately $ 39.6 Million paid to date (including full settlements with 12 of the 18 crewmembers and wreck removal costs) and accruals totaling approximately $ 62.4 Million.

However, this is a multi-party, complex tort proceeding, and it is too early in the proceedings for the Company to establish loss accruals regarding the balance of the claims.

In any event, insurance coverage

is available, the carriers of such insurance have taken over the costs of the defense of the claims and have reimbursed the Company $37.8 Million to date.

In addition, the Company continues to believe that it has adequate insurance coverage for all pollution, marine, economic, and other potential liabilities arising from the incident.

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

Discovery has commenced and a trial date has been scheduled for March 21, 2022.

The Company then filed a Default Motion with the Court, which was granted on April 8, 2021 that barred the filing of any further claims.

Applicable accounting guidance under ASC 450 required the Company to recognize a loss if the loss is determined to be probable and reasonably estimable.

As of March 31, 2022, we have recognized $ 206.5 million in total liabilities with respect to this incident, which includes approximately $ 206.0 million paid by the Company to date including full settlements with crewmembers and wreck removal costs, and accruals totaling approximately $ 0.5 million for outstanding claims.

All claims arising from the August 21, 2020 incident have been settled within insurance coverage limits, the carriers of such insurance have reimbursed the Company $ 203.9 million, to date, and the Company remains 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.

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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 September 30, 2021, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 1.3 million, net of $ 0.1 million of unamortized discount.

As of March 31, 2022, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 0.9 million, net of $ 0.1 million of unamortized discount.

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

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Three months ended

Nine months ended

September 30,

Contract revenues

Operating (loss) income

Operating income

Depreciation and amortization expense

1 unchanged sentence

Contract revenues

Operating (loss) income

Operating loss

Depreciation and amortization expense

Property and equipment, net

In connection with the preparation of the financial statements for the quarter ended September 30, 2021, the Company has identified and corrected certain immaterial errors in segment reporting for all periods presented.

In connection with the preparation of the financial statements for the quarter ended June 30, 2021, the Company has identified and corrected certain immaterial errors in segment reporting for all periods presented.

Specifically, certain corporate overhead costs previously recorded to the marine segment as part of operating income (loss) and allocated from the marine segment to the concrete segment below operating income in the other income (expense) line have been allocated from the marine segment to the concrete segment as part of the determination of operating income for each segment .

These corrections resulted in an offsetting change in operating income (loss) for each segment of $ 3.0 million for the three months ended September 30, 2020 and $ 2.9 million and $ 9.2 million for the nine months ended September 30, 2021 and 2020, respectively.

There were none and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three months ended September 30, 2021 and 2020, respectively.

There were less than $ 0.1 million and $ 2.7 million in intersegment revenues between the Company’s two reportable segments for the nine months ended September 30, 2021 and 2020, respectively.

The marine segment had foreign revenues of less than $ 0.1 million and $ 1.8 million for the three months ended September 30, 2021 and 2020, respectively.

The marine segment had foreign revenues of $ 2.8 million and $ 9.7 million for the nine months ended September 30, 2021 and 2020, respectively.

These corrections resulted in an offsetting change in operating income (loss) for each segment of $ 2.9 million the three months ended March 31, 2021.

There were none and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three months ended March 31, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 0.7 million and $ 2.4 million for the three months ended March 31, 2022 and 2021, respectively.

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

2 unchanged sentences

Leases recorded on the balance sheet consists of the following:

September 30,

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

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Total liabilities

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 8.9 million and $ 9.0 million as of September 30, 2021 and December 31, 2020, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 2.1 million and $ 6.4 million as of September 30, 2021 and December 31, 2020, respectively.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 10.0 million and $ 9.5 million as of March 31, 2022 and December 31, 2021, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 3.4 million and $ 2.7 million as of March 31, 2022 and December 31, 2021, respectively.

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

September 30,

Weighted Average Remaining Lease Term (in years)

4 unchanged sentences

Financing leases

(1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established on January 1, 2019.

The components of lease expense are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease costs:

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

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

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Year ending December 31,

2021 (excluding the nine months ended September 30, 2021)

2022 (excluding the three months ended March 31, 2022)

Total future minimum lease payments

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Long-term lease obligations

Subsequent Events

Effective April 6, 2022, Mark R.

Stauffer, the President, Chief Executive Officer, and Interim Chief Financial Officer of the Company, and a member of its Board of Directors, separated from the Company in all capacities.

Effective April 6, 2022, the Board appointed Austin J.

Shanfelter, age 64, as the Company’s Interim Chief Executive Officer and Interim Chief Financial Officer.

Shanfelter is currently the Chairman of the Company’s Board of Directors, and he will also continue to serve in that capacity.

In connection with Mr.

Shanfelter’s appointment, the Board has designated Richard L.

Daerr, Jr., a current member of the Board, as Lead Independent Director.

In connection with Mr.

Stauffer’s separation from the Company, he and the Company entered into a consulting agreement effective April 6, 2022 (the “Consulting Agreement”).

Pursuant to the terms of the Consulting Agreement, Mr.

Stauffer has agreed to provide transition assistance to Mr.

Shanfelter in his role as Interim Chief Executive Officer and Interim Chief Executive Officer through June 30, 2022, for a weekly fee of $ 13,900 .

Stauffer and the Company also entered into a Separation and General Release Agreement, effective April 6, 2022 (the “Separation Agreement”).

Pursuant to the terms of the Separation Agreement, in consideration for signing a customary general release and waiver of claims, Mr.

Stauffer will receive (i) the cash severance payments due him under the terms of his Employment Agreement with the Company, dated January 1, 2015, as amended by the First through Fourth Amendments, as previously disclosed by the Company, (ii) accelerated vesting of certain outstanding equity awards which were scheduled to vest on or prior to August 31, 2022, and (iii) the unmodified right to exercise any previously vested stock options.

The Company will incur expenses of approximately $ 1.1 million, primarily in the second fiscal quarter of 2022, related to the Separation Agreement.

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