What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-07-28 compared with 2023-05-15 · 185 added, 137 removed, 564 unchanged (36% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Restricted cash

Accounts receivable:

31 unchanged sentences

Common stock -- $ 0.01 par value, 50,000,000 authorized, 33,122,768 and 32,770,550 issued;

32,174,741 and 32,059,319 outstanding at March 31, 2023 and December 31, 2022, respectively

Treasury stock, 711,231 shares, at cost, as of March 31, 2023 and December 31, 2022, respectively

32,411,537 and 32,059,319 outstanding at June 30, 2023 and December 31, 2022, respectively

Treasury stock, 711,231 shares, at cost, as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

(In Thousands, Except Share and Per Share Information)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Contract revenues

3 unchanged sentences

Gain on disposal of assets, net

Operating loss

Operating income (loss)

Other (expense) income:

3 unchanged sentences

Loss before income taxes

Income tax expense

Income tax (benefit) expense

Basic loss per share

12 unchanged sentences

Balance, March 31, 2023

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Purchase of vested stock-based awards

Balance, June 30, 2023

Balance, December 31, 2021

4 unchanged sentences

Balance, March 31, 2022

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, June 30, 2022

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

3 unchanged sentences

(in Thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of ROU finance leases

Write-off of debt issuance costs upon debt modification

Amortization of deferred debt issuance costs

17 unchanged sentences

Purchase of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Borrowings from Credit Facility

Payments made on borrowings from Credit Facility

Loan costs from Credit Facility

Borrowings on credit

Payments made on borrowings on credit

Proceeds from failed sale-leaseback arrangement

Proceeds from sale-leaseback financing

Loan costs from borrowings on credit

Payments of finance lease liabilities

4 unchanged sentences

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:

11 unchanged sentences

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

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

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.

In making this determination, the Company considered the similar economic characteristics of its operations that comprise its marine segment.

19 unchanged sentences

Such adjustments are of a normal recurring nature.

Interim results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Interim results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results realizable for the year ending December 31, 2023.

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.

9 unchanged sentences

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

Also as described in Note 11, the Company had $ 40.0 million of outstanding indebtedness under its Credit Facility as of March 31, 2023 which matures on July 31, 2023.

Also as described in Note 11, the Company had $ 40.0 million of outstanding indebtedness under its Credit Facility as of March 31, 2023 which was scheduled to mature on July 31, 2023.

As of the date of the filing of the Company’s 2022 Form 10-K on March 16, 2023, the Company’s existing cash and cash equivalents were not sufficient to satisfy the Company’s operating cash needs for at least one year after the issuance of the financial statements.

1 unchanged sentence

As such, management concluded at the date of the issuance of the financial statements included in the Company’s 2022 Form 10-K that substantial doubt existed as to going concern.

To alleviate this condition, the Company engaged in a syndication process to refinance the outstanding debt.

On May 15, 2023, the Company entered into a new three-year $ 103.0 million senior secured credit facility with White Oak ABL, LLC and White Oak Commercial Finance, LLC (collectively, “White Oak”) which includes a $ 65.0 million asset based revolving credit facility (the “Revolver”) and a $ 38.0 million fixed asset term loan (the “Term Loan”).

At the beginning of 2023, the Company began a process to refinance the outstanding debt.

On May 15, 2023, the Company entered into a new three-year $ 103.0 million senior secured credit facility (the “Credit Agreement”) with White Oak ABL, LLC and White Oak Commercial Finance, LLC (collectively, “White Oak”) which includes a $ 65.0 million asset based revolving credit facility (the “Revolver”) and a $ 38.0 million fixed asset term loan (the “Term Loan”).

See Note 11 for more information regarding the debt refinancing.

45 unchanged sentences

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

Cash and Cash Equivalents

Cash and Cash Equivalents and Restricted Cash

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

1 unchanged sentence

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

Cash equivalents at March 31, 2023 and December 31, 2022 consisted primarily of overnight bank deposits.

Cash equivalents at June 30, 2023 and December 31, 2022 consisted primarily of overnight bank deposits.

Restricted cash of $ 1.5 million at June 30, 2023 consisted of collateral related to the Company’s outstanding letters of credit.

The Company had no restricted cash as of December 31, 2022.

Risk Concentrations

5 unchanged sentences

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

The Company had significant investments in billed and unbilled receivables as of March 31, 2023 and December 31, 2022.

The Company had significant investments in billed and unbilled receivables as of June 30, 2023 and December 31, 2022.

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

4 unchanged sentences

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

As of March 31, 2023 and December 31, 2022, the Company had recorded an allowance for credit losses of $ 0.5 million and $ 0.6 million, respectively.

As of both June 30, 2023 and December 31, 2022, the Company had recorded an allowance for credit losses of $ 0.6 million.

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

Retainage at March 31, 2023 totaled $ 52.9 million, of which $ 4.5 million is expected to be collected beyond March 31, 2024.

Retainage at June 30, 2023 totaled $ 48.2 million, of which $ 6.1 million is expected to be collected beyond June 30, 2024.

Retainage at December 31, 2022 totaled $ 50.9 million.

1 unchanged sentence

Unsuccessful negotiations of claims could result in a change to contract revenue that is less than amounts previously recorded, which could result in the recording of a loss in the amount of the shortfall.

Successful claims negotiations could

result in the recovery of previously recorded losses.

Successful claims negotiations could result in the recovery of previously recorded losses.

Significant losses on receivables could adversely affect the Company’s financial position, results of operations and overall liquidity.

6 unchanged sentences

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

The Company did not recognize any environmental liabilities as of March 31, 2023 or December 31, 2022.

The Company did not recognize any environmental liabilities as of June 30, 2023 or December 31, 2022.

Fair Value Measurements

33 unchanged sentences

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 was $ 0.8 million of assets classified as held for sale as of both March 31, 2023 and December 31, 2022 included in prepaid expenses and other in the Company’s condensed consolidated balance sheets.

There was $ 0.8 million of assets classified as held for sale as of both June 30, 2023 and December 31, 2022 included in prepaid expenses and other in the Company’s condensed consolidated balance sheets.

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

31 unchanged sentences

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

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

The Company must make significant assumptions, judgments and estimates to determine its current provision for income taxes, its

deferred tax assets and liabilities, and any valuation allowance to be recorded against any deferred tax asset.

The current provision for income tax is based upon the current tax laws and the Company’s interpretation of these laws, as well as the probable outcomes of any tax audits.

The value of any net deferred tax asset depends

upon estimates of the amount and category of future taxable income reduced by the amount of any tax benefits that the Company does not expect to realize.

The value of any net deferred tax asset depends upon estimates of the amount and category of future taxable income reduced by the amount of any tax benefits that the Company does not expect to realize.

Actual operating results and the underlying amount and category of income in future years could render current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate, thus impacting the Company’s financial position and results of operations.

21 unchanged sentences

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.

The accruals are derived from known facts, historical trends and

industry averages to determine the best estimate of the ultimate expected loss.

Actual claims may vary from estimates.

Any adjustments to such reserves are included in the condensed consolidated statements of operations in the period in which they become known.

The Company’s concrete segment employee health care

is provided through two policies.

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

A fully funded policy is offered primarily to salaried employees and their dependents while a partially self-funded plan with an appropriate stop-loss is offered primarily to hourly employees and their dependents.

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 $ 4.9 million and $ 5.8 million at December 31, 2022 and December 31, 2021, respectively, reflected as a component of accrued liabilities in the condensed consolidated balance sheets.

The total accrual for insurance claims liabilities was $ 3.8 million and $ 5.8 million at June 30, 2023 and December 31, 2022, respectively, reflected as a component of accrued liabilities in the condensed consolidated balance sheets.

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 March 31,

Three months ended June 30,

Six months ended June 30,

Marine Segment

13 unchanged sentences

Construction services include construction, restoration, maintenance, dredging and repair of marine transportation facilities, marine pipelines, bridges and causeways and marine environmental structures.

Dredging services generally enhance or preserve the navigability of waterways or the protection of shorelines

through the removal or replenishment of soil, sand or rock.

Dredging services generally enhance or preserve the navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock.

Specialty services include design, salvage, demolition, surveying, towing, diving and underwater inspection, excavation and repair.

6 unchanged sentences

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

The table below presents the concentrations of current receivables (trade and retainage) at March 31, 2023 and December 31, 2022, respectively:

March 31, 2023

The table below presents the concentrations of current receivables (trade and retainage) at June 30, 2023 and December 31, 2022, respectively:

June 30, 2023

December 31, 2022

6 unchanged sentences

Net receivables

At March 31, 2023, one customer in the Private Companies category accounted for 10.9 % of total current receivables.

At June 30, 2023, one customer in the Federal Government category accounted for 13.0 % of total current receivables.

At December 31, 2022, no single customer accounted for more than 10.0% of total current receivables.

Additionally, the table below represents concentrations of contract revenue by type of customer for the three months ended March 31, 2023 and 2022, respectively:

Three months ended March 31,

Additionally, the table below represents concentrations of contract revenue by type of customer for the three and six months ended June 30, 2023 and 2022, respectively:

Three months ended June 30,

Six months ended June 30,

Federal Government

3 unchanged sentences

Total contract revenues

In the three months ended March 31, 2023, one customer in the Private Companies category accounted for 10.9 % of total contract revenues.

In the three months ended March 31, 2022, one customer in the Federal Government category accounted for 10.4 % of total contract revenues.

In the three months ended June 30, 2023, one customer in the Federal Government category accounted for 14.0 % of total contract revenues.

In the six months ended June 30, 2023, no single customer accounted for

more than 10.0% of total contract revenues.

In the three and six months ended June 30, 2022, no single customer accounted for more than 10.0% of total contract revenues.

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

1 unchanged sentence

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

Contract revenues generated outside the United States totaled 1.7 % and 0.4 % of total revenues for the three months ended March 31, 2023 and 2022, respectively, and were primarily located in the Caribbean Basin.

Contract revenues generated outside the United States totaled 4.0 % and 1.0 % of total revenues for the three months ended June 30, 2023 and 2022, respectively, and 2.9 % and 0.7 % for the six months ended June 30, 2023 and 2022, respectively, and were primarily located in the Caribbean Basin.

Contracts in Progress

Contracts in progress are as follows at March 31, 2023 and December 31, 2022:

Contracts in progress are as follows at June 30, 2023 and December 31, 2022:

Costs incurred on uncompleted contracts

6 unchanged sentences

Contract liabilities

Included in contract assets is approximately $ 12.6 million and 13.4 million at March 31, 2023 and December 31, 2022, respectively, related to claims and unapproved change orders.

Included in contract assets is approximately $ 14.2 million and $ 13.4 million at June 30, 2023 and December 31, 2022, respectively, related to claims and unapproved change orders.

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

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

As of March 31, 2023, the aggregate amount of the remaining performance obligations was approximately $ 467.4 million.

As of June 30, 2023, the aggregate amount of the remaining performance obligations was approximately $ 818.7 million.

Of this amount, the current expectation of the Company is that it will recognize $ 560.8 million, or 69 %, in the next 12 months and the remaining balance thereafter.

Property and Equipment

The following is a summary of property and equipment at March 31, 2023 and December 31, 2022:

The following is a summary of property and equipment at June 30, 2023 and December 31, 2022:

Automobiles and trucks

6 unchanged sentences

Construction in progress

For the three months ended March 31, 2023 and 2022, depreciation expense was $ 4.6 million and $ 5.2 million, respectively.

For the three months ended June 30, 2023 and 2022, depreciation expense was $ 4.4 million and $ 5.0 million, respectively.

For the six months ended June 30, 2023 and 2022, depreciation expense was $ 9.0 million and $ 10.2 million, respectively.

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

3 unchanged sentences

Other Current Accounts Receivable

Other current accounts receivable at March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023

Other current accounts receivable at June 30, 2023 and December 31, 2022 consisted of the following:

June 30, 2023

December 31, 2022

Accident loss receivables

Vendor receivables

Purchase incentive receivable

Bond premium dividend receivable

Vendor receivables

Other current accounts receivable

2 unchanged sentences

The fair value of financial instruments is the amount at which the instrument could be exchanged in a current transaction between willing parties.

Due to their short-term nature, the Company believes that the carrying value of its accounts receivable, other current assets, accounts payable and other current liabilities approximate their fair values.

Due to their short-term nature, the Company believes that the carrying

value of its accounts receivable, other current assets, accounts payable and other current liabilities approximate their fair values.

The Company classifies financial assets and liabilities into the following three levels based on the inputs used to measure fair value in the order of priority indicated:

7 unchanged sentences

Carrying Value

March 31, 2023

June 30, 2023

Cash surrender value of life insurance policy

1 unchanged sentence

Cash surrender value of life insurance policy

Our concrete segment had life insurance policies with a combined face value of $ 11.1 million as of March 31, 2023.

Our concrete segment had life insurance policies with a combined face value of $ 11.1 million as of June 30, 2023.

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

6 unchanged sentences

Other Fair Value Measurements

The fair value of the Company’s debt at March 31, 2023 and December 31, 2022 approximated its carrying value of $ 40.0 million and $ 35.7 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 June 30, 2023 and December 31, 2022 approximated its carrying value of $ 42.6 million and $ 36.0 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.

11 unchanged sentences

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

For the three months ended March 31, 2023 and 2022, $ 0.2 million and $ 0.3 million, respectively, of amortization expense was recognized for these assets.

For the three months ended June 30, 2023 and 2022, $ 0.2 million and $ 0.3 million, respectively, of amortization expense was recognized for these assets.

For the six months ended June 30, 2023 and 2022, $ 0.3 million and $ 0.6 million, respectively, of amortization expense was recognized for these assets.

Future expense remaining of approximately $ 0.1 million will be amortized as follows:

1 unchanged sentence

Accrued Liabilities

Accrued liabilities at March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023

Accrued liabilities at June 30, 2023 and December 31, 2022 consisted of the following:

June 30, 2023

December 31, 2022

Accrued salaries, wages and benefits

Sale-leaseback arrangements

Accrued liabilities expected to be covered by insurance

Property taxes

Sale-leaseback arrangement

Accounting and audit fees

1 unchanged sentence

Total accrued liabilities

The Company entered into an amended syndicated credit agreement (the “Credit Agreement” also known as the “Fourth Amendment”) on July 31, 2018 with Regions Bank, as administrative agent and collateral agent, and the following co-syndication agents:

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”), 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.

The Credit Facility had a maturity date of July 31, 2023.

The Credit Agreement provided for borrowings under a revolving line of credit and a term loan (together, the “Credit Facility”).

The Credit Facility was guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and was used to finance general corporate and working capital purposes, to finance capital expenditures, to refinance existing indebtedness, to finance permitted acquisitions and associated fees, and to pay for all related expenses to the Credit Facility.

Interest was due and was computed based on the designation of the loan, with the option of a Base Rate Loan (the base rate plus the Applicable Margin), or an Adjusted LIBOR Rate Loan (the adjusted LIBOR rate plus the Applicable Margin).

Interest was due on the last day of each quarter end for Base Rate Loans and at the end of the LIBOR rate period for Adjusted LIBOR Rate Loans.

Principal balances drawn under the Credit Facility could be prepaid at any time, in whole or in part, without premium or penalty.

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

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 was amortized and will be written off at the early termination of the Credit Agreement.

The quarterly weighted average interest rate for the Credit Facility as of March 31, 2023 was 10.22 %.

On May 15, 2023, the Company entered into a new Credit Agreement with White Oak ABL, LLC and White Oak Commercial Finance, LLC which includes a $ 65.0 million asset based revolving credit facility and a $ 38.0 million fixed asset term loan.

The Company incurred debt issuance costs related to the Credit Agreement of $ 5.9 million which will be amortized over the life of the agreement.

The Credit Facility has a maturity date of May 15, 2026.

The Company used the proceeds of the new Credit Agreement to repay the $ 40.0 million outstanding on the Company’s prior credit facility.

In connection, with the extinguishment of the prior credit facility the Company wrote off the remaining $ 0.1 million in debt issuance costs associated with the prior credit facility.

The Credit Agreement provides for borrowings under a revolving line of credit and a term loan (together, the “Credit Facility”).

The Credit Facility is secured by substantially all of the assets of the Company and its subsidiaries, including fixed assets and account receivables and is used to finance general corporate and working capital purposes, to finance capital expenditures, to refinance existing indebtedness, to finance permitted acquisitions and associated fees, and to pay for all related expenses to the Credit Facility.

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

The Revolver initially bears interest at a rate of the 30-day SOFR plus 5.5 % and the Term Loan at a rate of the 30-day SOFR plus 8.0 %, subject to a SOFR floor of 4.0 %.

The quarterly weighted average interest rate for the Credit Facility, inclusive of the Company’s prior credit facility as of June 30, 2023 was 11.64 %.

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

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Revolving line of credit

Term loan - current

Total current debt

Refinancing debt issuance costs

Term loan - long-term

Total long-term debt

(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 and the refinancing of the Company’s debt further discussed in Note19.

(1) Total debt issuance costs include underwriter fees, legal fees, syndication fees and fees related to the execution of the Credit Agreement and the termination and repayment of the Company’s prior credit facility.

Provisions of the revolving line of credit

The Company had a maximum borrowing availability under the revolving line of credit and swingline loans (as defined in the Credit Agreement) of $ 42.5 million.

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

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

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

Swingline loans could be drawn in an aggregate minimum amount of $ 250,000 and integral multiples of $ 50,000 in excess of that amount.

The Company could convert, change, or modify such designations from time to time.

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

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

The revolving line of credit termination date was 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 March 31, 2023, the Company had $ 40.0 million of borrowings under the revolving line of credit.

There were $ 1.5 million in outstanding letters of credit as of March 31, 2023, which reduced the maximum borrowing availability on the revolving line of credit to $ 1.0 million.

During the three months ended March 31, 2023, the Company drew down $ 5.0 million for general corporate purposes on the revolving line of credit.

The Company has a maximum borrowing capacity under the revolving line of credit (as defined in the Credit Agreement) of $ 65.0 million.

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

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

The revolving line of credit termination date is the earlier of the Credit Facility termination date, May 15, 2026, or the date the outstanding balance is permanently reduced to zero, in accordance with the terms of the Credit Facility.

As of June 30, 2023, the Company has no borrowings under the revolving line of credit.

The Company’s borrowing availability under its revolving credit facility at June 30, 2023 was approximately $ 51.2 million.

During the six months ended June 30, 2023, the Company drew down $ 14.8 million on the revolver.

During the six months ended June 30, 2023, the Company repaid the full $ 14.8 million outstanding on the revolver using proceeds from the sale- leasebacks discussed in Note 12 .

Financial covenants

Restrictive financial covenants under the Credit Facility include:

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

- Fiscal Quarter Ending September 30, 2024 and each Fiscal Quarter thereafter, to not be less than 1.10 to 1.00.

● A Revolver Loan Turnover Ratio to not be less than the following during each noted period:

- Fiscal Quarter Ending June 30, 2023 and each Fiscal Quarter thereafter, to not be less than 2.50 to 1.00.

● A Term Loan Loan-to-Value Ratio to not be greater than the following during each noted period:

- Fiscal Quarter Ending June 30, 2023 and each Fiscal Quarter thereafter, to not be more than 60 % .

● A Minimum EBITDA to not be less than the following during each noted period

- Quarterly Test Period Ended June 30, 2023 - $ 1,039,102

- Semi-Annual Test Period Ended September 30, 2023 - $ 8,657,960

- Tri-Quarterly Test Period Ended December 31, 2023 - $ 14,975,675

- Last-Twelve-Months Test Period Ended March 31, 2024 - $ 29,703,993

- Last-Twelve-Months Test Period Ended June 30, 2024 - $ 45,857,579

● The Company shall maintain Liquidity of greater than $ 15.0 million at all times.

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;

breaches of representations and warranties that are not timely cured;

violation of covenants;

bankruptcy and insolvency events;

and events constituting a change of control.

The Company was in compliance with all financial covenants as of June 30, 2023.

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

and Mobilease for the purpose of financing equipment purchased.

As of March 31, 2023, the carrying value of this debt was

$ 0.9 million.

As of June 30, 2023 and December 31, 2022, the carrying value of this debt was $ 2.2 million and $ 1.0 million, respectively.

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

Financial covenants

The Company obtained from the Credit Facility lenders an extension of the consent with respect to the delivery of its annual financial statements with an audit opinion unqualified as to going concern and a consent for the Consolidated Leverage Ratio to exceed 3.00 to 1.00 and for the Consolidated Fixed Charge Coverage Ratio to be less than 1.25 to 1.00 for the Fiscal Quarter Ending March 31, 2023.

Debt Refinancing

On May 15, 2023, the Company entered into a new three-year $ 103.0 million senior secured credit facility with White Oak which includes a $ 65.0 million asset based revolving credit facility and a $ 38.0 million fixed asset term loan.

See Note 19 for more information regarding the debt refinancing.

On June 23, 2023, the Company closed on a land-sale leaseback contract for the Company’s Port Lavaca South Yard property located in Port Lavaca, Texas for a purchase price of $ 12.0 million.

A portion of the operating lease above the fair value of the land was financed by the Company.

As of June 30, 2023, the carrying value of this debt was $ 2.4 million.

Other Long-Term Liabilities

Other long-term liabilities at March 31, 2023 and December 31, 2022 consisted of the following:

March 31, 2023

Other long-term liabilities at June 30, 2023 and December 31, 2022 consisted of the following:

June 30, 2023

December 31, 2022

Sale-leaseback arrangement

Sale-leaseback arrangements

Deferred compensation

1 unchanged sentence

Total other long-term liabilities

Sale-Leaseback Arrangement

On September 27, 2019, the Company entered into a purchase and sale agreement (the “Purchase and Sale Agreement”).

Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its 17300 & 17140 Market Street location in Channelview, Texas (the “Property”) for a purchase price of $ 19.1 million.

Concurrent with the sale of the Property, the Company entered into a fifteen-year lease agreement (the “Lease Agreement”), whereby the Company will lease back the Property at an annual rental rate of approximately $ 1.5 million, subject to annual rent increases of 2.0 %.

Sale-Leaseback Arrangements

On May 15, 2023, the Company entered into a $ 13.0 million sale-leaseback of certain equipment in which the Company will leaseback the equipment for terms ranging from one to three years .

The transaction above was recorded as failed sale-leasebacks.

Concurrent with the sale of Company’s Port Lavaca South Yard property, the Company entered into a twenty-year lease agreement whereby the Company will lease back the property at an annual rental rate of approximately $ 1.1 million, subject to annual rent increases of 2.5 %.

Under the lease agreement, the Company has four consecutive options to extend the term of the lease by five years for each such option.

The portion of the above transaction above related to the building was recorded as a failed sale-leaseback.

On September 27, 2019, the Company entered into a purchase and sale agreement.

Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its 17300 & 17140 Market Street location in Channelview, Texas for a purchase price of $ 19.1 million.

Concurrent with the sale of the property, the Company entered into a fifteen-year lease agreement whereby the Company will lease back the property at an annual rental rate of approximately $ 1.5 million, subject to annual rent increases of 2.0 %.

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

This transaction was recorded as a failed sale-leaseback.

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

The transaction above was recorded as failed sale-leasebacks.

Related to the failed sale-leasebacks the Company recorded liabilities for the amounts received, will continue to depreciate the non-land portion of the assets, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining assets will be zero at the end of the initial lease terms.

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

2 unchanged sentences

Three months ended

Income tax expense

Six months ended

Income tax (benefit) expense

Effective tax rate

The effective rate for the three months ended March 31, 2023 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 six months ended June 30, 2023 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 March 31, 2023 the Company evaluated all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized.

Based on the review of available evidence, Management believes that a valuation allowance on the net deferred tax assets at March 31, 2023 remains appropriate.

The Company does not expect that unrecognized tax benefits as of March 31, 2023 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 June 30, 2023 the Company evaluated all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be

Based on the review of available evidence, management believes that a valuation allowance on the net deferred tax assets at June 30, 2023 remains appropriate.

The Company does not expect that unrecognized tax benefits as of June 30, 2023 for certain federal income tax matters will significantly change due to any settlement and/or expiration of statutes of limitations over the next 12 months.

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

3 unchanged sentences

Diluted earnings 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 March 31, 2023 and 2022, the Company had 280,644 and 680,447 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the three months ended June 30, 2023 and 2022, the Company had 247,945 and 662,289 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the six months ended June 30, 2023 and 2022, the Company had 264,204 and 671,318 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 months ended March 31, 2023 and 2022.

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, 2023 and 2022.

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 March 31,

Three months ended June 30,

Six months ended June 30,

Weighted average shares outstanding

9 unchanged sentences

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

In the three months ended March 31, 2023, compensation expense related to stock-based awards outstanding was $ 0.5 million and $ 0.4 million, respectively.

In the three months ended March 31, 2023 and 2022, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.2 million and less than $ 0.1 million, respectively.

In the three months ended June 30, 2023 and 2022, compensation expense related to stock-based awards outstanding was $ 0.9 million and $ 0.8 million, respectively.

In the six months ended June 30, 2023 and 2022, compensation expense related to stock-based awards outstanding was $ 1.5 million and $ 1.2 million, respectively.

In the three months ended June 30, 2023 and 2022, payments related to tax withholding for stock-based compensation for certain officers of the Company was less than $ 0.1 million and $ 0.1 million, respectively.

In the six months ended June 30, 2023 and 2022, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.2 million and $ 0.1 million, respectively.

In January 2023, certain officers and executives of the Company were awarded a total of 180,833 shares of restricted common stock with a vesting period of three years and a fair value of $ 3.00 per share.

3 unchanged sentences

The fair value of all grants awarded in March 2023 was $ 2.65 per unit.

In the three months ended March 31, 2023 and 2022, there were no options exercised.

At March 31, 2023, total unrecognized compensation expense related to unvested stock was approximately $ 3.1 million, which is expected to be recognized over a period of approximately 2.4 years.

In May 2023, the Company granted an executive of the Company 4,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 2.50 per share.

In May 2023, the Company’s seven independent directors were awarded an aggregate of 238,637 shares of restricted common stock.

The shares vested immediately on the date of the grant.

The fair value on the date of grant of all shares awarded was $ 2.64 per share.

In the three and six months ended June 30, 2023 and 2022, there were no options exercised.

At June 30, 2023, total unrecognized compensation expense related to unvested stock was approximately $ 2.8 million, which is expected to be recognized over a period of approximately 2.2 years.

Commitments and Contingencies

8 unchanged sentences

Three months ended

Six months ended

Contract revenues

Operating (loss) income

Operating income (loss)

Depreciation and amortization expense

4 unchanged sentences

Property and equipment, net

There were less than $ 0.1 million and no intersegment revenues between the Company’s two reportable segments for the three months ended March 31, 2023 and 2022, respectively.

The marine segment had foreign revenues of $ 2.8 million and $ 0.7 million for the three months ended March 31, 2023 and 2022, respectively.

There were none and $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three months ended June 30, 2023 and 2022, respectively.

There were less than $ 0.1 million and $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the six months ended June 30, 2023 and 2022, respectively.

The marine segment had foreign revenues of $ 7.3 million and $ 1.9 million for the three months ended June 30, 2023 and 2022, respectively.

The marine segment had foreign revenues of $ 10.0 million and $ 2.6 million for the six months ended June 30, 2023 and 2022, respectively.

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

7 unchanged sentences

Total liabilities

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 11.0 million and $ 10.5 million as of March 31, 2023 and December 31, 2022, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 5.7 million and $ 5.1 million as of March 31, 2023 and December 31, 2022, respectively.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 11.3 million and $ 10.5 million as of June 30, 2023 and December 31, 2022, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 6.3 million and $ 5.1 million as of June 30, 2023 and December 31, 2022, respectively.

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

6 unchanged sentences

The components of lease expense are as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease costs:

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Three Months Ended March 31,

Six Months Ended June 30,

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

9 unchanged sentences

Year ending December 31,

2023 (excluding the three months ended March 31, 2023)

2023 (excluding the six months ended June 30, 2023)

Total future minimum lease payments

3 unchanged sentences

Long-term lease obligations

Subsequent Events

On April 26, 2023, the Company entered into a Land Sale Contract with Equity Resource Partners - East West, LLC, a Georgia limited liability company, who, subject to normal due diligence conditions, has agreed to purchase two parcels of land in Harris County, Texas (approximately 341.3 acres), previously used by the Company as dredge placement areas.

The purchase price is approximately $ 36.0 million, and closing is anticipated on or before September 29, 2023.

On, May 5, 2023, the Company obtained from the Credit Facility lenders an extension of the consent with respect to the delivery of its annual financial statements with an audit opinion unqualified as to going concern and a consent for the Consolidated Leverage Ratio to exceed 3.00 to 1.00 and for the Consolidated Fixed Charge Coverage Ratio to be less than 1.25 to 1.00 for the Fiscal Quarter Ending March 31, 2023.

On May 15, 2023, the Company entered into a new three-year $ 103.0 million senior secured credit facility with White Oak.

This credit facility has replaced the Company’s $ 42.5 million revolver with Regions Bank and other lenders.

At the same time, the Company entered into a $ 13.0 million sale-leaseback of certain concrete segment equipment with Gordon Brothers (the “Sale-Leaseback”).

The new credit facility includes a $ 65.0 million asset based revolving credit facility and a $ 38.0 million fixed asset term loan.

The Revolver will initially bear interest at a rate of the 30-day SOFR plus 5.5 % and the Term Loan at a rate of the 30-day SOFR plus 8.0 %, subject to a SOFR floor of 4.0 %.

At closing, the Company made an initial Revolver draw of $ 9.5 million.

Borrowings from the facility will primarily be used to refinance existing debt as well as for other general corporate and working capital purposes.

The Sale-Leaseback includes equipment on lease schedules of 24-months and 36-months .

Related Party Transaction

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 Company’s portion of work as a dedicated subcontractor totals $ 435.4 million.

For the three and six months ended June 30, 2023 the Company’s revenue related to the joint venture subcontract was approximately $ 25.5 million.

Subsequent Event

On July 28, 2023, the Company received a termination notice from Equity Resource Partners - East West, LLC, a Georgia limited liability company, who had contracted to purchase two parcels of land in Harris County, Texas (approximately 341.3 acres), previously used by the Company as dredge placement areas.

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