What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 139 added, 115 removed, 646 unchanged (28% of the section changed)

4 unchanged sentences

(In Thousands, Except Share and Per Share Information)

September 30,

Current assets:

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Common stock -- $ 0.01 par value, 50,000,000 authorized, 32,766,116 and 31,712,457 issued;

31,255,584 and 31,001,226 outstanding at June 30, 2022 and December 31, 2021, respectively

Treasury stock, 711,231 shares, at cost, as of June 30, 2022 and December 31, 2021, respectively

32,054,885 and 31,001,226 outstanding at September 30, 2022 and December 31, 2021, respectively

Treasury stock, 711,231 shares, at cost, as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 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

3 unchanged sentences

Gain on disposal of assets, net

Operating (loss) income

Operating income (loss)

Other (expense) income:

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Other expense, net

(Loss) income before income taxes

Income (loss) before income taxes

Income tax (benefit) expense

Net (loss) income

Basic (loss) earnings per share

Diluted (loss) earnings per share

Shares used to compute (loss) income per share:

Net income (loss)

Basic income (loss) per share

Diluted income (loss) per share

Shares used to compute income (loss) per share:

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

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

Three months ended June 30,

Six months ended June 30,

Net (loss) income

Change in fair value of cash flow hedge, net of tax expense of $ 315 and $ 368 for the three and six months ended June 30, 2021

Total comprehensive (loss) income

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 $ 368 for the nine months ended September 30, 2021.

Total comprehensive income (loss)

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

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Balance, June 30, 2022

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for share-based compensation

Balance, September 30, 2022

Accumulated Other

13 unchanged sentences

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

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:

Net (loss) income

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

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

Operating activities:

44 unchanged sentences

Description of Business

Orion Group Holdings, Inc., its subsidiaries and affiliates (hereafter collectively referred to as the "Company"), 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.

Orion Group Holdings, Inc., its subsidiaries and affiliates (hereafter collectively referred to as the “Company”), 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.

The Company’s marine segment services the infrastructure sector through marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services.

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The Company is headquartered in Houston, Texas with offices throughout its operating areas.

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

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

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Environmental Protection Agency and U.S.

Occupational Safety and Health Administration ("OSHA"), among others.

Occupational Safety and Health Administration (“OSHA”), among others.

Additionally, the segment is driven by macro-economic considerations including the level of import/export seaborne transportation, development of energy-related infrastructure, cruise line expansion and operations, marine bridge infrastructure development, waterway pipeline crossings and the maintenance of waterways.

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Such adjustments are of a normal recurring nature.

Interim results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Interim results of operations for the three and nine months ended September 30, 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.

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The assessment of the liquidity and going concern requires the Company to make estimates of future activity and judgments about whether the Company is compliant with financial covenant calculations under its debt and other agreements and 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, our ability to repay amounts borrowed on our Credit Facility, limit spending on the ERP system implementation and improve working capital.

Significant assumptions used in the Company's forecasted model of liquidity include forecasted sales, costs, our ability to manage spending on capital expenditures, our ability to complete certain asset sales, collect claims and unapproved change order revenue, limit spending on the Enterprise Resource Planning (“ERP”) system implementation and improve working capital.

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

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

Cash equivalents at June 30, 2022 and December 31, 2021 consisted primarily of overnight bank deposits.

Cash equivalents at September 30, 2022 and December 31, 2021 consisted primarily of overnight bank deposits.

Risk Concentrations

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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, 2022 and December 31, 2021.

The Company had significant investments in billed and unbilled receivables as of September 30, 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.

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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 June 30, 2022 and December 31, 2021, the Company has recorded an allowance for credit losses of $ 0.4 million and $ 0.3 million, respectively.

As of September 30, 2022 and December 31, 2021, the Company had recorded an allowance for credit losses of $ 0.5 million and $ 0.3 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, 2022 totaled $ 49.9 million, of which $ 5.7 million is expected to be collected beyond June 30, 2023.

Retainage at September 30, 2022 totaled $ 46.9 million, of which $ 3.8 million is expected to be collected beyond September 30, 2023.

Retainage at December 31, 2021 totaled $ 41.4 million.

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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 June 30, 2022 or December 31, 2021.

The Company did not recognize any environmental liabilities as of September 30, 2022 or December 31, 2021.

Fair Value Measurements

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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, 2022 or December 31, 2021.

There were no assets classified as held for sale as of September 30, 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.

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The computed fair value of these awards is recognized as a non-cash cost over the period the employee provides services, which is typically the vesting period of the award.

The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires the use of subjective assumptions in the computation.

Changes in these assumptions can cause significant fluctuations in the fair value of the option award.

The fair value of restricted stock grants and restricted stock units is equivalent to the fair value of the stock issued on the date of grant and is measured as the closing price of the stock on the date of grant.

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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 $ 4.6 million and $ 19.8 million at June 30, 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 $ 0.5 million and $ 13.3 million at June 30, 2022 and December 31, 2021, respectively, reflected as a component of other current accounts receivable in the condensed consolidated balance sheet.

The total accrual for insurance claims liabilities was $ 4.0 million and $ 19.8 million at September 30, 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 $ 0.1 million and $ 13.3 million at September 30, 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Marine Segment

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Structural services include elevated concrete pouring for products such as columns, elevated beams and structural walls.

Light commercial services include horizontally poured concrete for products such as sidewalks, ramps, tilt walls and trenches.

Light commercial services include horizontally poured concrete for products such as slabs, sidewalks, ramps and tilt walls.

Other services comprise labor related to concrete pouring such as rebar installation and pumping services and typically support the Company’s structural and light commercial services.

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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, 2022 and December 31, 2021, respectively:

June 30, 2022

The table below presents the concentrations of current receivables (trade and retainage) at September 30, 2022 and December 31, 2021, respectively:

September 30, 2022

December 31, 2021

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Net receivables

At both June 30, 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 and six months ended June 30, 2022 and 2021, respectively:

Three months ended June 30,

Six months ended June 30,

At both September 30, 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 and nine months ended September 30, 2022 and 2021, respectively:

Three months ended September 30,

Nine months ended September 30,

Federal Government

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Total contract revenues

In the three and six months ended June 30, 2022 and 2021, no single customer exceeded 10.0% of total contract revenues.

In the three and nine months ended September 30, 2022 and 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.

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

Contract revenues generated outside the United States totaled 1.0 % and 0.2 % of total revenues for the three months ended June 30, 2022 and 2021, respectively, and 0.7 % and 0.9 % for the six months ended June 30, 2022 and 2021, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contract revenues generated outside the United States totaled 1.4 % and 0.0 % of total revenues for the three months ended September 30, 2022 and 2021, respectively, and 0.9 % and 0.6 % for the nine months ended September 30, 2022 and 2021, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contracts in Progress

Contracts in progress are as follows at June 30, 2022 and December 31, 2021:

Contracts in progress are as follows at September 30, 2022 and December 31, 2021:

September 30,

Costs incurred on uncompleted contracts

6 unchanged sentences

Contract liabilities

Included in contract assets is approximately $ 9.3 million and $ 3.8 million at June 30, 2022 and December 31, 2021, respectively, related to claims and unapproved change orders.

Included in contract assets is approximately $ 13.3 million and $ 3.8 million at September 30, 2022 and December 31, 2021, respectively, related to claims and unapproved change orders, primarily related to two customers in the marine segment.

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 June 30, 2022, the aggregate amount of the remaining performance obligations was approximately $ 603.2 million.

As of September 30, 2022, the aggregate amount of the remaining performance obligations was approximately $ 548.6 million.

Of this amount, the current expectation of the Company is that it will recognize $ 456.0 million, or 83 %, in the next 12 months and the remaining balance thereafter.

Property and Equipment

The following is a summary of property and equipment at June 30, 2022 and December 31, 2021:

The following is a summary of property and equipment at September 30, 2022 and December 31, 2021:

September 30,

Automobiles and trucks

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Construction in progress

For the three months ended June 30, 2022 and 2021, depreciation expense was $ 5.0 million and $ 5.2 million, respectively.

For the six months ended June 30, 2022 and 2021, depreciation expense was $ 10.2 million and $ 10.6 million, respectively.

For the three months ended September 30, 2022 and 2021, depreciation expense was $ 4.9 million and $ 5.2 million, respectively.

For the nine months ended September 30, 2022 and 2021, depreciation expense was $ 15.1 million and $ 15.7 million, respectively.

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

Substantially all of the assets of the Company are pledged as collateral under the Company’s Credit Agreement (as defined in Note 11 ).

In the three and nine months ended September 30, 2022, the Company sold underutilized equipment .

The book value of the assets and related accumulation were removed from the balance sheet and the Company recognized a net gain on the sales of $ 3.4 million and $ 4.6 million, respectively.

In the three and nine months ended September 30, 2021, the Company sold underutilized equipment .

The book value of the assets and related accumulation were removed from the balance sheet and the Company recognized a net gain on the sales of $ 0.8 million and $ 3.1 million, respectively.

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

3 unchanged sentences

Other Current Accounts Receivable

Other current accounts receivable at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022

Other current accounts receivable at September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022

December 31, 2021

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Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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, 2022 and December 31, 2021:

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.

Fair Value Measurements

Carrying Value

June 30, 2022

September 30, 2022

Cash surrender value of life insurance policy

1 unchanged sentence

Cash surrender value of life insurance policy

Our concrete segment has life insurance policies with a combined face value of $ 11.1 million as of June 30, 2022.

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

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Other Fair Value Measurements

The fair value of the Company’s debt at June 30, 2022 and December 31, 2021 approximated its carrying value of $ 33.5 million and $ 39.4 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, 2022 and December 31, 2021 approximated its carrying value of $ 31.1 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.

1 unchanged sentence

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

September 30,

Finite-lived intangible assets, beginning of period

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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, 2022, $ 0.6 million of amortization expense was recognized for these assets.

For the three and nine months ended September 30, 2022, $ 0.3 million and $ 0.9 million, respectively, of amortization expense was recognized for these assets.

Future expense remaining of approximately $ 0.7 million will be amortized as follows:

1 unchanged sentence

Accrued Liabilities

Accrued liabilities at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022

Accrued liabilities at September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022

December 31, 2021

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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 June 30, 2022 was 5.19 %.

The quarterly weighted average interest rate for the Credit Facility as of September 30, 2022 was 6.88 %.

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

June 30, 2022

September 30, 2022

December 31, 2021

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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 Ninth Amendment to the Credit Agreement.

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

Provisions of the revolving line of credit

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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.

As of June 30, 2022, the Company had $ 32.4 million of borrowings under the revolving line of credit.

There were $ 1.7 million in outstanding letters of credit as of June 30, 2022, which reduced the maximum borrowing availability on the revolving line of credit to $ 8.4 million.

During the six months ended June 30, 2022, the Company drew down $ 5.0 million for general corporate purposes and made payments of $ 11.6 million on the revolving line of credit which resulted in a net decrease of $ 6.6 million.

As of September 30, 2022, the Company had $ 30.0 million of borrowings under the revolving line of credit.

There were $ 1.7 million in outstanding letters of credit as of September 30, 2022, which reduced the maximum borrowing availability on the revolving line of credit to $ 10.8 million.

During the nine months ended September 30, 2022, the Company drew down $ 9.0 million for general corporate purposes and made payments of $ 18.0 million on the revolving line of credit which resulted in a net decrease of $ 9.0 million.

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 June 30, 2022, the carrying value of this debt is $ 1.1 million.

As of September 30, 2022, the carrying value of this debt was $ 1.1 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.

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Restrictive financial covenants under the Credit Facility include:

• Consolidated EBITDA minimum of:

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

• Consolidated Leverage Ratio

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and events constituting a change of control.

The Company was in compliance with all financial covenants as of June 30, 2022.

The Company was in compliance with all financial covenants as of September 30, 2022, with the reported consolidated leverage ratio of 2.88 to 1.00.

Other Long-Term Liabilities

Other long-term liabilities at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022

Other long-term liabilities at September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022

December 31, 2021

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Three months ended

Six months ended

Nine months ended

September 30,

Income tax (benefit) expense

Effective tax rate

The effective rate for the three and six months ended June 30, 2022 differed from the Company’s statutory federal rate of 21 % primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

The effective rate for the three and nine months ended September 30, 2022 differed from the Company’s statutory federal rate of 21 % primarily due to the tax impact from 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.

1 unchanged sentence

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, 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 June 30, 2022 remains appropriate.

The Company does not expect that unrecognized tax benefits as of June 30, 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.

For the period ended September 30, 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 September 30, 2022 remains appropriate.

The Company does not expect that unrecognized tax benefits as of September 30, 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 June 30, 2022 and 2021, the Company had 662,289 and 893,604 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the six months ended June 30, 2022 and 2021, the Company had 671,318 and 904,486 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the three months ended September 30, 2022 and 2021, the Company had 322,637 and 793,028 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the nine months ended September 30, 2022 and 2021, the Company had 553,813 and 866,925 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, 2022 and 2021.

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, 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Weighted average shares outstanding

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Stock-Based Compensation

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 2022 Long Term Incentive Plan (the "2022 LTIP"), which was approved by shareholders in May 2022 and authorized the maximum aggregate number of shares to be issued of 2,175,000 plus any shares available for grant under prior long term incentive plans as of the date the 2022 LTIP was approved, and any shares subject to awards granted under the prior plans that expire or are cancelled, forfeited, exchanged, settled in cash or otherwise terminated.

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 2022 Long Term Incentive Plan (the “2022 LTIP”), which was approved by shareholders in May 2022 and authorized the maximum aggregate number of shares to be issued of 2,175,000 plus any shares available for grant under prior long term incentive plans as of the date the 2022 LTIP was approved, and any shares subject to awards granted under the prior plans that expire or are cancelled, forfeited, exchanged, settled in cash or otherwise terminated.

In general , the Company’s 2022 LTIP provides for grants of restricted stock, performance based awards and stock options to be issued with a per-share price not less than the fair market value of a share of common stock on the date of grant.

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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 June 30, 2022 and 2021, compensation expense related to stock-based awards outstanding was $ 0.8 million and $ 1.2 million, respectively.

In the six months ended June 30, 2022 and 2021, compensation expense related to stock-based awards outstanding was $ 1.2 million and $ 1.6 million, respectively.

In the three and six months ended June 30, 2022 and 2021, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.1 million and $ 0.2 million, respectively.

In the three months ended September 30, 2022 and 2021, compensation expense related to stock-based awards outstanding was $ 1.0 million and $ 0.5 million, respectively.

In the nine months ended September 30, 2022 and 2021, compensation expense related to stock-based awards outstanding was $ 2.1 million and $ 2.2 million, respectively.

In the three months ended September 30, 2022 and 2021, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.3 million and $ 0.7 million, respectively.

In the nine months ended September 30, 2022 and 2021, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.4 million and $ 0.9 million, respectively.

In January 2022, the Company granted an independent director 8,929 shares of restricted common stock, which vested immediately on the date of grant and had a fair value on the date of grant of $ 3.36 per share.

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The total number included 193,548 shares, which were awarded to the six independent directors and vested immediately on the date of the grant, as well as 430,107 shares of time-vested restricted stock units awarded to Mr.

The time-vested restricted stock units will vest as follows:

(1) 179,211 will cliff vest and will be settled in stock, unless the Company's Compensation Committee exercises its discretion to settle all or a portion in cash (on a one-for-one basis), provided Mr.

Shanfelter fulfills his term as Interim Chief Executive Officer, which the Company expects to occur prior to April 6, 2023 and (2) 250,896 will cliff vest and will be settled in stock, unless the Company's Compensation Committee exercises its

discretion to settle all or a portion in cash (on a one-for-one basis), provided Mr.

In September 2022, 179,211 of the time-vested restricted stock units cliff vested and were settled in stock as a result of Mr.

Shanfelter fulfilling his term as Interim Chief Executive Officer.

The remaining 250,896 time-vested restricted stock units will cliff vest and will be settled

in stock, unless the Company's Compensation Committee exercises its discretion to settle all or a portion in cash (on a one-for-one basis), provided Mr.

Shanfelter fulfills his term as Executive Chairman, which the Company expects to occur prior to April 6, 2023.

The fair value on the date of the grant of all shares awarded in May 2022 was $ 2.79 per share.

In the three and six months ended June 30, 2022, there were no options exercised.

In the three months ended June 30, 2021, there were no options exercised.

In the six months ended June 30, 2021 there were 23,755 options exercised generating proceeds to the Company of approximately $ 0.1 million.

At June 30, 2022, total unrecognized compensation expense related to unvested stock was approximately $ 2.1 million, which is expected to be recognized over a period of approximately 1.4 years.

In August 2022, the Company granted an executive 446,097 shares of restricted common stock with a vesting period of three years .

In addition, the Company granted the executive 241,636 performance-based units.

The performance-based units will potentially vest 100 % if the target is met, with 100 % of the units 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 grants awarded in August 2022 was $ 2.69 per unit.

In September 2022, the Company granted an executive 130,909 shares of restricted common stock with a vesting period of three years .

In addition, the Company granted the executive 87,273 performance-based units.

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

The fair value of all grants awarded in September 2022 was $ 2.75 per unit.

In the three and nine months ended September 30, 2022, there were no options exercised.

In the three months ended September 30, 2021, there were 4,791 options exercised, generated 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.

At September 30, 2022, total unrecognized compensation expense related to unvested stock was approximately $ 3.7 million, which is expected to be recognized over a period of approximately 2.4 years.

Commitments and Contingencies

12 unchanged sentences

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 June 30, 2022, the Company has recognized $ 206.4 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 $ 0.3 million for outstanding claims.

As of September 30, 2022, the Company had recognized

$ 206.4 million in total liabilities with respect to this incident, which includes approximately $ 206.1 million paid by the Company to date including full settlements with crewmembers and wreck removal costs, and accruals totaling approximately $ 0.3 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 $ 205.3 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.

1 unchanged sentence

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, 2022, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 0.7 million, net of $ 0.1 million of unamortized discount.

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

Segment Information

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Three months ended

Six months ended

Nine months ended

September 30,

Contract revenues

Operating income

Operating income (loss)

Depreciation and amortization expense

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Property and equipment, net

There were $ 0.1 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three months ended June 30, 2022 and 2021, respectively.

There were $ 0.1 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the six months ended June 30, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 1.9 million and $ 0.4 million for the three months ended June 30, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 2.6 million and $ 2.8 million for the six months ended June 30, 2022 and 2021, respectively.

There were less than $ 0.1 million and no intersegment revenues between the Company’s two reportable segments for the three months ended September 30, 2022 and 2021, respectively.

There were $ 0.1 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the nine months ended September 30, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 2.5 million and less than $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 5.1 million and $ 2.8 million for the nine months ended September 30, 2022 and 2021, respectively.

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

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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 $ 8.8 million and $ 9.5 million as of June 30, 2022 and December 31, 2021, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 3.5 million and $ 2.7 million as of June 30, 2022 and December 31, 2021, respectively.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 9.6 million and $ 9.5 million as of September 30, 2022 and December 31, 2021, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 4.4 million and $ 2.7 million as of September 30, 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)

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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:

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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:

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Year ending December 31,

2022 (excluding the six months ended June 30, 2022)

2022 (excluding the nine months ended September 30, 2022)

Total future minimum lease payments

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements