What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-16 compared with 2022-03-07 · 170 added, 210 removed, 1024 unchanged (27% of the section changed)

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OTHER INFORMATION

Following the departure of the Company’s Chief Financial Officer on October 29, 2021, our Chief Executive Officer, Mark R.

Stauffer (the former Chief Financial Officer), assumed the duties of Interim Chief Financial Officer while the Company conducts a search for a new Chief Financial Officer.

COVERED ISSUER

DISCLOSURE CONCERNING CERTAIN FOREIGN JURISDICTIONS THAT PREVENT

Not applicable.

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Directors, Executive Officers, Promoters and Control Persons

The information required by Paragraph (a), and Paragraphs (c) through (g) of Item 401 of Regulation S-K (except for information required by Paragraph (e) of that Item to the extent the required information pertains to our executive officers) and Item 405 of Regulation S-K is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2022.

The information required by Paragraphs (c) through (g) of Item 401 of Regulation S-K and Item 405 of Regulation S-K is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2023.

The following table presents the information required by Paragraph (b) of Item 401 of Regulation S-K.

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Chairman of the Board

President, Chief Executive Officer, Interim Chief Financial Officer and Director

President and Chief Executive Officer

Scott Thanisch

Executive Vice President and Chief Financial Officer

Executive Vice President, Chief Administrative Officer, Chief Compliance Officer, General Counsel and Secretary

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The information required by this Item is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2023.

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2023.

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Description of Registered Securities of Orion Group Holdings, Inc.

(Incorporated herein by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed with the Securities Exchange Commission on March 28, 2020 (File No.

(Incorporated herein by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K filed with the Securities Exchange Commission on February 28, 2020 (File No.

Form of Indemnity Agreement for Directors and Certain Officers dated November 24, 2008 (incorporated herein by reference to Exhibit 1.01 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2008 (File No.

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and BOKF, NA dba Bank of Texas, as Co-Syndication Agents.

(incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 7, 2022 (File No.

Consulting Agreement dated April 6, 2022 between Orion Group Holdings, Inc.

Stauffer (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2022 (File No.

Separation and General Release Agreement dated April 6, 2022 between Orion Group Holdings, Inc.

Stauffer (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2022)(File No.

2022 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 24, 2022 (File No.

Employment Offer Letter dated August 15, 2022 between Orion Group Holdings, Inc.

and Travis J.

Boone (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2022 (File No.

Employment Offer Letter dated August 29, 2022 between Orion Group Holdings, Inc.

and Gordon Scott Thanisch (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2022 (File No.

Consent Letter dated March 14, 2023, by and between Orion Marine Group, Inc.

as Borrower, certain subsidiaries of the Borrower, as Guarantors, the Lenders Party thereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A.

and BOKF, NA dba Bank of Texas, as Co-Syndication Agents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2023 (File No.

List of Subsidiaries.

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† Management contract or compensatory plan or arrangement

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

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March 16, 2023

President, Chief Executive Officer, Interim Chief Financial Officer and Director

/s/ Travis J.

President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

/s/ Travis J.

President, Chief Executive Officer and

March 16, 2023

Interim Chief Financial Officer

/s/ Scott Thanisch

Chief Financial Officer

March 16, 2023

Scott Thanisch

/s/ Austin J.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Substantial Doubt About the Entity’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and does not have sufficient liquidity to meet its Credit Facility obligations as they come due.

These conditions raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of estimated costs at completion for certain long-term, fixed-priced construction contracts

Evaluation of estimated costs at completion and variable consideration for certain long-term, fixed-priced construction contracts

As discussed in Note 3 to the consolidated financial statements, contract revenue is recognized over time because control of the promised goods and services is continually transferred to the customer.

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Contract costs include all direct costs, such as material and labor, and those indirect costs incurred that are related to contract performance.

The Company reported contract revenues of $601.4 million, which included revenue related to long-term, fixed price construction contracts.

We identified the evaluation of estimated costs at completion for certain long-term, fixed-priced construction contracts in the Marine segment as a critical audit matter.

Evaluating the Company’s estimated costs at completion for contracts in progress involved auditor judgment given the variability and estimation uncertainty associated with costs of material and labor to be incurred over a long-term contract period.

The Company estimates variable consideration related to claims and unapproved change orders based on the most likely amount to which it expects to be entitled.

The Company reported contract revenues of $748.3 million for the year-ended December 31, 2022, which included revenue related to long-term, fixed price construction contracts.

We identified the evaluation of estimated costs at completion and variable consideration for certain long-term, fixed-priced construction contracts in the Marine segment as a critical audit matter.

Evaluating the Company’s estimated costs at completion for contracts in progress involved subjective auditor judgment given the variability and estimation uncertainty associated with costs of material and labor to be incurred over a long-term contract period.

Additionally, evaluating the estimates of variable consideration involved subjective auditor judgment given the uncertainty in determining the costs the Company is entitled to recover under the contract.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue process, including controls over the estimation of costs to complete certain long-term, fixed-priced construction contracts.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue process, including controls over the estimation of costs to complete and variable consideration for certain long-term, fixed-priced construction contracts.

We evaluated the Company’s ability to estimate these amounts by comparing the Company’s previous estimates to actual results.

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● conducting interviews with and reviewing questionnaires prepared by project personnel to gain an understanding of the status, risks, and uncertainties of projects

● analyzing documentation for a selection of costs in the estimated costs at completion, including the cost of labor, materials, and subcontracts.

/s/ KPMG, LLP

● analyzing a selection of costs in the estimated costs at completion, including the cost of labor, materials, and subcontracts, as applicable, by comparing amounts to purchase orders, costs incurred to date on the project, and costs incurred on similar projects.

We evaluated variable consideration for a certain contract by:

● comparing a selection of costs underlying the claims and unapproved change orders to supporting documentation, including contractual documents and correspondence between the Company and the customer

● assessing management’s determination of the most likely amount to which it expects to be entitled by comparing it to the Company’s historical experience with similar claims and unapproved change orders

We have served as the Company’s auditor since 2017.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG, LLP

Houston, Texas

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Deferred income tax liability

Interest rate swap liability

Total liabilities

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

Accumulated other comprehensive loss

Additional paid-in capital

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Net (loss) income

Change in fair value of cash flow hedge, net of tax expense of $ 368 , tax benefit of $ 128 and tax benefit of $ 228 for the years ended December 31, 2021, 2020 and 2019, respectively

Change in fair value of cash flow hedge, net of tax expense of $ 368 and tax benefit of $ 128 for the years ended December 31, 2021 and 2020, respectively

Total comprehensive (loss) income

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Stock-based compensation

Exercise of stock options

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for share-based compensation

Cash flow hedge

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Stock-based compensation

Exercise of stock options

Issuance of restricted stock

Forfeiture of restricted stock

Purchase of vested stock-based awards

Payments related to tax withholding for share-based compensation

Cash flow hedge

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Stock-based compensation

Exercise of stock options

Issuance of restricted stock

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Payments related to tax withholding for share-based compensation

Cash flow hedge

Balance, December 31, 2022

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Contract liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

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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:

Borrowings from Credit Facility

Payments made on borrowings from Credit Facility

Borrowings on credit

Payments made on borrowings on credit

Proceeds from sale-leaseback arrangement

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Exercise of stock options

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Net change in cash, cash equivalents and restricted cash

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Cash, cash equivalents and restricted cash at end of period

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash shown above

Supplemental disclosures of cash flow information:

Cash paid during the period for:

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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.

Its concrete segment services the building sector by providing turnkey concrete construction services including pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial, structural and other associated business areas.

Its concrete segment services the building sector by providing turnkey concrete construction services including place and finish, site preparation, layout, forming, and rebar placement for large commercial, structural and other associated business areas.

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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and its wholly-owned subsidiaries and have been prepared in accordance with U.S.

GAAP on the going concern basis of accounting, which assumes the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

All intercompany balances and transactions have been eliminated in consolidation.

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

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.

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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 our ability to continue as a going concern.

The Company has sustained operating losses for the years ended December 31, 2022 and 2021.

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, and capital expenditures;

expected timing and proceeds of planned real estate transactions.

Also as described in Note 11, the Company had $ 35.0 million of outstanding indebtedness under its Credit Facility as of December 31, 2022 which matures on July 31, 2023.

As of the date of these financial statements, the Company’s existing cash and cash equivalents are not sufficient to satisfy the Company’s operating cash needs for at least one year after the issuance of these financial statements.

To alleviate these conditions, the Company is engaged in a syndication process to refinance the outstanding debt.

Based on the advanced nature of our discussions, the completion of substantial due diligence by potential lenders, agreement among the parties on key terms of a new credit facility, and the expected timeline for documentation and execution of a new credit agreement, Management believes it will successfully complete a refinancing transaction prior to the maturity of the current credit facility.

Additionally, the Company is exploring sales of underutilized assets as a source of liquidity.

The Company’s ability to continue as a going concern is dependent upon obtaining sufficient liquidity to repay its existing credit facility through a combination of proceeds from new debt, proceeds from the sale of underutilized assets, and operating cash flow.

As the Company’s refinancing activities are ongoing, there can be no assurances that the Company will be able to secure financing on terms that are acceptable to the Company or at all.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

While management has developed and is in process to implement plans that management believes could alleviate in the future the substantial doubt that was raised, management concluded at the date of the issuance of the financial statements that substantial doubt exists as those plans are not within the control of management.

The Company’s consolidated financial statements do not include adjustments, if any, that may arise from the outcome of this uncertainty.

There is an explanatory paragraph included in the report of the Company’s independent registered public accounting firm describing the uncertainty about the Company’s ability to continue as a going concern, which is considered an event of noncompliance under the Company’s Credit Facility.

Management has obtained a consent with respect to the delivery of annual financial statements with an audit opinion unqualified as to going concern from the Credit Facility lenders, and the Company is compliant with the financial covenants of the credit agreement.

Summary of Significant Accounting Policies

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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, however may 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 revenue 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.

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This method is used because management considers contract costs incurred to be the best available measure of progress on these contracts.

Contract costs include all direct costs, such as

material and labor, and those indirect costs incurred that are related to contract performance such as payroll taxes and insurance.

Contract costs include all direct costs, such as material and labor, and those indirect costs incurred that are related to contract performance such as payroll taxes and insurance.

General and administrative costs are charged to expense as incurred.

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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 December 31, 2021 and December 31, 2020.

The Company had significant investments in billed and unbilled receivables as of December 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.

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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 December 31, 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 December 31, 2022 and December 31, 2021, the Company had recorded an allowance for credit losses of $ 0.6 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.

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Where shipping and handling costs are incurred by the Company, these charges are included in inventory and charged to cost of contract revenue upon use.

Non-current inventory consists of spare parts (including engines, cutters and gears) that require special order or long-lead times for

manufacture or fabrication, but must be kept on hand to reduce downtime and is valued at the lower of cost (using historical average cost) or net realizable value.

Non-current inventory consists of spare parts (including engines, cutters and gears) that require special order or long-lead times for manufacture or fabrication, but must be kept on hand to reduce downtime and is valued at the lower of cost (using historical average cost) or net realizable value.

Property and Equipment

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Amortization related to dry-docking activities is included as a component of depreciation.

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

These costs and the related amortization periods are periodically reviewed to

determine if the estimates are accurate.

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

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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 December 31, 2021 or December 31, 2020.

There was $ 0.8 million of assets classified as held for sale as of December 31, 2022 included in prepaid expenses and other in the Company’s Consolidated Balance Sheets.

There was no assets classified as held for sale as of 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 Company recognizes compensation expense for equity awards over the vesting period based on the fair value of these awards at the date of grant.

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 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.

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 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.

Compensation expense is recognized only for stock-based payments expected to vest.

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The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on its consolidated tax return.

The Company evaluates and records any uncertain tax positions based

on the amount that management deems is more likely than not to be sustained upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates.

The Company evaluates and records any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates.

See Note 13 for additional discussion of income taxes.

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The administrator has purchased appropriate stop-loss coverage.

Losses on these policies up to the deductible amounts are accrued based upon known claims incurred and an estimate of claims incurred but not reported.

Losses on these

policies up to the deductible amounts are accrued based upon known claims incurred and an estimate of claims incurred but not reported.

The accruals are derived from known facts, historical trends and industry averages to determine the best estimate of the ultimate expected loss.

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The total accrual for insurance claims liabilities was $ 5.8 million and $ 19.8 million at December 31, 2022 and December 31, 2021, respectively, reflected as a component of accrued liabilities in the consolidated balance sheet.

The total accrual for insurance claims receivable was $ 13.3 million and $ 57.0 million at December 31, 2021 and December 31, 2020, respectively, reflected as a component of other current accounts receivable in the consolidated balance sheet.

Recent Accounting Pronouncements

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 Consolidated Financial Statements.

During the periods presented in these financial statements, the Company implemented other new accounting pronouncements other than those noted above that are discussed in the notes where applicable.

The total accrual for insurance claims receivable was none and $ 13.3 million at December 31, 2022 and December 31, 2021, respectively, reflected as a component of other current accounts receivable in the 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.

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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 individual responsible for managing 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.

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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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Contracts in Progress

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

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

Costs incurred on uncompleted contracts

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Property and Equipment

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

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

Automobiles and trucks

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Accident loss receivables

Other current receivables

Vendor receivables

Purchase incentive receivable

Bond premium dividend receivable

Other current accounts receivable

Total other current accounts receivable

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Accrued Liabilities

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

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

December 31, 2022

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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 Consolidated Balance Sheets.

Long-term Debt and Line of Credit

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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.

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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:

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.

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 yearly weighted average interest rate for the Credit Facility as of December 31, 2022 was 6.23 %.

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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

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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.

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 December 31, 2022, the Company had $ 35.0 million of borrowings under the revolving line of credit.

There were $ 1.5 million in outstanding letters of credit as of December 31, 2022, which reduced the maximum borrowing availability on the revolving line of credit to $ 6.0 million.

During the year ended December 31, 2021, the Company drew down $ 53.0

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 $ 34.0 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 ).

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 December 31, 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 Consolidated Balance Sheets.

During the year ended December 31, 2022, the Company drew down $ 24.0 million for general corporate purposes and made payments of $ 28.0 million on the revolving line of credit which resulted in a net decrease of $ 4.0 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 December 31, 2022, the carrying value of this debt was $ 1.0 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 Consolidated Balance Sheets.

Financial covenants

Restrictive financial covenants under the Credit Facility include:

• A minimum consolidated EBITDA requirement to not be less than the following during each noted period:

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

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

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

- Fiscal Quarter Ending September 30, 2022 and each Fiscal Quarter thereafter, to not exceed 3.00 to 1.00.

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

- Fiscal Quarter Ending December 31, 2022 and each Fiscal Quarter thereafter, to not be less than 1.25 to 1.00.

• Consolidated Leverage Ratio

- Fiscal Quarter Ending December 31, 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.

During the fourth quarter of 2021, the Company initiated discussions with the lead bank due to concerns it would not be in compliance with financial covenants.

The Company executed the Ninth Amendment during March 2022.

With the execution of the aforementioned amendment, the Company obtained a waiver on the financial covenants as of December 31, 2021.

For further details of the Ninth Amendment, see Note 20 in the Notes to the Financial Statements.

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 December 31, 2022, with the reported consolidated leverage ratio of 2.38 to 1.00 and the reported consolidated fixed charge coverage ratio of 1.76 to 1.00.

Management has obtained a consent with respect to the delivery of its annual financial statements with an audit opinion unqualified as to going concern from the Credit Facility lenders, and at the date of this filing is negotiating a new credit facility.

Other Long-Term Liabilities

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Consolidated effective tax rate

In the year ended 2022, the Company’s effective tax rate differed from the 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.

In the year ended 2021, the Company’s effective tax rate differed from the statutory federal rate of 21 % primarily due to the valuation allowance related to the current year net loss.

In the year ended 2020, the Company’s effective tax rate differed from the 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.

In the year ended 2019, the Company’s effective tax rate differed from the statutory federal rate of 21 % primarily due to the recording of an additional valuation allowance to offset net operating loss carryforwards and foreign tax credits generated during the period, foreign taxes, state income taxes and the non-deductibility of certain permanent items.

Deferred Taxes

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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 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.

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

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 of 2022 and authorized 2,175,000 shares, the maximum aggregate number to be issued, 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.

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

Options generally vest over a three to five-year period.

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Nonvested at December 31, 2022

Independent directors receive equity compensation in the form of grants.

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.

In May 2022, independent directors as well as Mr.

Shanfelter, the Company’s Executive Chairman, Interim Chief Executive Officer and Interim Chief Financial Officer, were awarded an aggregate of 623,655 shares of restricted common stock.

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.

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.

In March 2023, the remaining 250,896 time-vested restricted stock units cliff vested and were settled in stock as a result of Mr.

Shanfelter fulfilling his term as Executive Chairman.

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

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 November 2022, the Company granted an executive of the Company 64,935 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 $ 2.31 per share.

In May 2021, the Company’s six independent directors each received equity compensation grants of 14,975 shares, with a fair value of $ 6.01 per share.

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The fair value of all shares awarded on the date of grant was $ 5.49 .

In May 2020, the Company’s six independent directors each received equity compensation grants of 39,823 shares, with a fair value of $ 2.26 per share.

In January 2019, two new independent directors each received equity compensation grants of 8,427 shares, with a fair value of $ 4.45 per share.

In May 2019, five of the Company’s independent directors each received equity compensation grants of 45,918 shares, with a fair value of $ 1.96 per share.

In October 2019, a new independent director received an equity compensation grant of 14,218 shares, with a fair value of $ 4.22 per share.

In May 2021, certain officers and executives of the Company were awarded 160,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 6.01 per share.

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

In May 2021, the Company awarded certain executives 240,000 performance-based units.

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

The fair value of all units awarded on the date of the grant was $ 6.01 per unit.

In December 2021, certain officers and executives of the Company were awarded 139,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 3.75 per share.

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

In May 2020, the Company’s six independent directors each received equity compensation grants of 39,823 shares, with a fair value of $ 2.26 per share.

In May 2020, certain officers and executives of the Company were awarded 100,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 2.26 per share.

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

In December 2020, certain officers

and executives of the Company were awarded 95,000 shares with a vesting period of three years and a fair value of $ 4.92 per share.

In March 2019, the Company granted an executive of the Company 168,350 shares of restricted common stock, which vested one-third at March 31, June 30, and September 30, 2019, respectively.

The fair value of all shares awarded on the date of the grant was $ 2.97 per share.

In May 2019, certain officers and executives of the Company were awarded 62,500 shares with a vesting period of three years and a fair value of $ 1.96 per share.

In July 2019, certain officers and executives of the Company were awarded 46,500 shares with a vesting period of three years and a fair value of $ 3.66 .

In December 2019, certain officers and executives of the Company were awarded 31,500 shares with a vesting period of three years and a fair value of $ 5.08 per share.

Performance Units

In May 2020, the Company awarded certain executives 300,000 performance-based units.

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

The fair value of all units awarded on the date of the grant was $ 6.01 per unit.

In May 2020, the Company awarded certain executives 300,000 performance-based units.

The performance-based units will potentially vest 50 % if the target is met, with 25 % each vesting on the second and third anniversary of the determination that the target was met, with 100 % of the units to be earned based on the achievement of an objective, tiered return on invested capital, measured over a one-year performance period ending June 30,2021.

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As a result, the executives earned an additional 259,565 performance-based units 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 May 2019, the Company awarded certain executives 187,500 performance-based units.

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

The fair value of all units awarded on the date of the grant was $ 1.96 per unit.

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

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

In December 2020, certain officers and executives of the Company were awarded 95,000 shares with a vesting period of three years and a fair value of $ 4.92 per share.

Stock Options

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

For the year ended December 31, 2021, expense related to the purchase of vested stock-based awards for certain officers of the Company was approximately $ 0.9 million.

For the year ended December 31, 2020, expense related to the purchase of vested stock-based awards for certain officers of the Company was approximately $ 0.2 million.

For the years ended December 31, 2022, 2021 and 2020, payments related to tax withholding for share-based compensation for certain officers of the Company were approximately $ 0.4 million, $ 0.9 million and $ 0.2 million, respectively.

In the year ended December 31, 2021, the Company received proceeds of approximately $ 0.1 million upon the exercise of 28,546 options.

In the year ended December 31, 2020, no stock options were exercised.

In the year ended December 31, 2019, the Company received proceeds of less than $ 0.1 million upon the exercise of 7,021 options.

In the years ended December 31, 2022 and December 31, 2020, no stock options were exercised.

As of December 31, 2022, total unrecognized compensation expense related to unvested stock was approximately $ 3.1 million, which is expected to be recognized over a period of approximately 2.3 years.

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Employer matching contributions vest over a five-year period.

At its discretion, the Company may make additional matching and

profit-sharing contributions.

During the year ended December 31, 2021, 2020 and 2019, the Company contributed $ 0.9 million, less than $ 0.1 million and $ 0.1 million, respectively.

At its discretion, the Company may make additional matching and profit-sharing contributions.

During the year ended December 31, 2022, 2021 and 2020, the Company contributed $ 1.0 million, $ 0.9 million and less than $ 0.1 million, respectively.

The Company contributes to several multi-employer defined pension plans under the terms of collective-bargaining agreements that cover its union-represented employees.

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Cement Masons & Plasterers Trust Funds

Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund

Engineers - AGC Retirement Trust of the Inland Empire

Western Conference of Teamsters Pension Trust Fund

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Commitments and Contingencies

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

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

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 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.

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 December 31, 2021, we have recognized $ 206.7 million in total liabilities with respect to this incident, which includes approximately $ 192.0 million paid by the Company to date (including full settlements with 17 of the 18 crewmembers and wreck removal costs), and accruals totaling approximately $ 14.6 million for outstanding claims.

Since the end of the year the remaining crewmember claim has been settled, funded, and reimbursed, and the remaining property damages claim has settled, with funding and reimbursement pending.

Thus, 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 $ 189.6 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.

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 December 31, 2021, the current portion of the notes receivable was $ 0.8 million and the non-current portion was $ 1.1 million, net of $ 0.1 million of unamortized discount.

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

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

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

Segment Information

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Contract revenues

Operating income

Operating loss

Depreciation and amortization expense

Property and equipment, net

In connection with the preparation of the financial statements for the year ended December 31, 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 $ 12.9 million and $ 11.8 million for the years ended December 31, 2020 and December 31, 2019, respectively.

There was $ 0.2 million in intersegment revenues between the Company’s two reportable segments for the year ended December 31, 2022.

There was less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the year ended December 31, 2021.

There were $ 2.8 million in intersegment revenues between the Company’s two reportable segments for the year ended December 31, 2020.

The marine segment had foreign revenues of $ 6.7 million and $ 2.9 .

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Long-term lease obligations

Subsequent Event

During the fourth quarter of 2021, the Company initiated discussions with the lead bank due to concerns it would not be in compliance with financial covenants.

The Company executed the Ninth Amendment during March 2022.

With the execution of the aforementioned amendment, the Company obtained a waiver on the financial covenants as of December 31, 2021.

This amendment to the Credit Agreement will among other things, waive covenant defaults, reset the revolver limit, implement an anti-cash hoarding provision and institute temporary covenant requirements.

As of the execution date, the amendment will require a minimum consolidated EBITDA of $ 2.6 million in the first quarter of 2022 and a minimum consolidated EBITDA of $ 7.7 million in the second quarter of 2022 on a year-to-date basis.

The consolidated leverage ratio requirement will be reinstated at not to exceed 3.00 times in the third quarter of 2022.

The consolidated fixed charge coverage ratio requirement will be reinstated at not to be less than 1.25 times in the fourth quarter of 2022.

Additionally, as of the execution date, the amendment will reduce the commitment on the revolving line of credit to $ 42.5 million.

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

Subsequent Events

On March 10, 2023, the United States Navy awarded the Dragados/Hawaiian Dredging/Orion Joint Venture a $ 2.8 billion contract to complete the construction of a dry dock at Pearl Harbor Naval Shipyard.

The Orion portion of work totals $ 448 million.

The project work will be performed in Hawaii and is expected to be completed by September 2027.

This contract is part of the United States Navy’s Shipyard Infrastructure Optimization Program, a critical investment in increasing capacity and modernizing our nation’s shipyards to accommodate larger surface ships and Virginia-class submarines.

In accordance with the Navy’s mandate for the project, the work will be undertaken with consideration of how it impacts the environment, natural and cultural resources and water and air quality.

On March 14, 2023, Management obtained a consent with respect to the delivery of its annual financial statements with an audit opinion unqualified as to going concern from the Credit Facility lenders .

ORION GROUP HOLDINGS, INC.

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Allowance for credit losses

Deferred tax asset valuation allowance

Reserve for losses on uncompleted contracts

1 unchanged sentence

Allowance for credit losses

Deferred tax asset valuation allowance

Reserve for losses on uncompleted contracts

1 unchanged sentence

Allowance for credit losses

Deferred tax asset valuation allowance

Reserve for losses on uncompleted contracts

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

What changed 10-K

Item 9A. Controls and Procedures