What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-10-27 compared with 2023-07-28 · 88 added, 91 removed, 136 unchanged (57% of the section changed)

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While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control, including unforeseen productivity delays and other difficulties encountered in project execution, levels of government funding or other governmental budgetary constraints, contract modifications and changes, including change orders and contract cancellation at the discretion of the customer .

These and other important factors, including those described under “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”) may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

These and other important factors, including those described under “Risk Factors” in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10K”) may cause our actual results, performance- or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

The forward-looking statements in this Quarterly Report on Form 10Q speak only as of the date of this report;

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MD&A provides a narrative analysis explaining the reasons for material changes in the Company’s (i) financial condition since the most recent fiscal year-end, and (ii) results of operations during the current fiscal year-to-date period and current fiscal quarter as compared to the corresponding periods of the preceding fiscal year.

In order to better understand such changes, this MD&A should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in our 2022 Form 10-K, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2022 Form 10-K and

with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

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 throughout the continental United States, Alaska, 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 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.

order to better understand such changes, this MD&A should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in our 2022 Form 10K, Part 11, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2022 Form 10K and with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

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, provides services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through its marine segment and its concrete segment.

The Company’s marine segment provides construction and dredging services relating to 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 provides turnkey concrete construction services including place and finish, site prep, layout, forming, and rebar placement for large commercial, structural and other associated business areas.

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

Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors.

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Our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed.

Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a

twelve-month period.

Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve-month period.

We have not been adversely affected by contract cancellations or modifications in the past, however we may be in the future, especially in periods of economic uncertainty.

Backlog as of the periods ended below are as follows (in millions):

September 30, 2023

June 30, 2023

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September 30, 2022

June 30, 2022

Marine segment

Concrete segment

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $2.8 billion of quoted bids outstanding at quarter end, of which over $84 million we have been awarded contracts subsequent to the end of the fiscal quarter ended June 30, 2023.

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $2.8 billion of quoted bids outstanding at quarter end, of which over $43 million resulted in the award of contracts subsequent to the end of the fiscal quarter ended September 30, 2023.

These estimates are subject to fluctuations based upon the scope of services to be provided, as well as factors affecting the time required to complete the project.

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Delays in decisions on pending awards also have a negative impact on the timing and amount by which we are able to increase backlog.

Three months ended June 30, 2023 compared with three months ended Jun 30, 2022.

Three months ended June 30,

Three months ended September 30, 2023 compared with three months ended September 30, 2022.

Three months ended September 30,

(dollar amounts in thousands)

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Loss before income taxes

Income tax benefit

Income tax expense (benefit)

Net (loss) income

Contract Revenues.

Contract revenues for the three months ended June 30, 2023 of $182.5 million decreased $12.1 million or 6.2% as compared to $194.6 million in the prior year period.

The decrease was primarily due to our decision to exit the unprofitable concrete business in central Texas, partially offset by an increase in marine segment revenue primarily related to the Pearl Harbor, Hawaii drydock project.

Contract revenues for the three months ended September 30, 2023 of $168.5 million decreased $14.1 million or 7.7% as compared to $182.6 million in the prior year period.

The decrease was primarily due to our decision to exit the unprofitable concrete business in central Texas, partially offset by an increase in marine segment revenue related to the Pearl Harbor, Hawaii drydock project (the “Pearl Harbor Project”).

Gross Profit.

Gross profit was $13.8 million for the three months ended June 30, 2023 compared to $14.3 million in the prior year period, a decrease of $0.5 million or 3.7%.

Gross profit in the second quarter was 7.6% of total contract revenues as compared to 7.4% in the prior year period.

The increase in gross profit margin was primarily driven by margin improvements in the concrete business, partially offset by lower equipment and labor utilization in our marine segment as compared to the prior year period.

Gross profit was $19.1 million for the three months ended September 30, 2023 compared to $13.4 million in the prior year period, an increase of $5.7 million or 42.0%.

Gross profit in the third quarter was 11.3% of total contract revenues as compared to 7.4% in the prior year period.

The increase in gross profit dollars and margin was primarily driven by margin improvements in both segments stemming from higher quality projects and improved execution, partially offset by lower equipment and labor utilization in our dredging business.

Selling, General and Administrative Expense.

Selling, general and administrative (“SG&A”) expenses were $18.1 million for the three months ended June 30, 2023 compared to $17.2 million in the prior year period, an increase of $0.9 million or 5.1%.

As a percentage of total contract revenues, SG&A expenses increased from 8.9% to 9.9%, primarily due to lower revenues in the current period.

The increase in SG&A dollars reflected an increase in compensation expense for key new hires, partially offset by lower consulting expense related to the completion of the management transition.

Selling, general and administrative (“SG&A”) expenses were $17.1 million for the three months ended September 30, 2023 compared to $15.4 million in the prior year period, an increase of $1.7 million or 11.4%.

As a percentage of total contract revenues, SG&A expenses increased from 8.5% to 10.2%, primarily due to lower revenues and an increase in SG&A in the third quarter.

The increase in SG&A dollars reflected an increase in IT and business development spending and higher legal costs related to customer claims.

Gain on Disposal of Assets, net.

During the three months ended June 30, 2023 and 2022, we realized $6.5 million and $0.4 million, respectively, of net gains on disposal of assets.

The three months ended June 30, 2023 included a gain of $5.2 million related to the sale-leaseback of our Port Lavaca South Yard property in Texas.

During the three months ended September 30, 2023 and 2022, we realized $0.7 million and $3.4 million, respectively, of net gains on disposal of assets.

Other Income, net of Expense.

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Income Tax Benefit.

We recorded tax benefit of less than $0.1 million in the three months ended June 30, 2023, compared to tax benefit of $0.7 million in the prior year period.

Our effective tax rate for the three months ended June 30, 2023 differs from the federal statutory 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.

Six months ended June 30, 2023 compared with six months ended June 30, 2022.

Six months ended June 30,

We recorded tax benefit of $0.1 million in the three months ended September 30, 2023, compared to tax benefit of $0.2 million in the prior year period.

Our effective tax rate for the three months ended September 30, 2023 differs from the federal statutory 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.

Nine months ended September 30, 2023 compared with nine months ended September 30, 2022.

Nine months ended September 30,

(dollar amounts in thousands)

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Contract Revenues.

Contract revenues for the six months ended June 30, 2023 of $341.7 million decreased $27.8 million or 7.5% as compared to $369.5 million in the prior year period.

The decrease was primarily due

to weather and customer delays in both businesses and a reduction of concrete segment revenue in central Texas, partially offset by an increase in marine segment revenue primarily related to the Hawaii drydock project.

Contract revenues for the nine months ended September 30, 2023 of $510.2 million decreased $41.9 million or 7.6% as compared to $552.1 million in the prior year period.

The decrease was primarily due to weather and customer delays in both businesses in the first quarter of 2023 and a reduction of concrete segment revenue in central Texas, partially offset by an increase in marine segment revenue primarily related to the Pearl Harbor Project.

Gross Profit.

Gross profit was $19.6 million for the six months ended June 30, 2023 compared to $27.1 million in the prior year period, a decrease of $7.5 million or 27.6%.

Gross profit in the six months ended June 30, 2023 was 5.7% of total contract revenues as compared to 7.3% in the prior year period.

This decrease was primarily due to the impact of weather in Texas in the first quarter of 2023, which lowered labor and equipment utilization and the completion of low-margin projects resulting in write-downs in both the marine and concrete businesses.

This was partly offset by actions to manage costs during project delays including reallocating equipment, reducing the size of the fleet and headcount reductions, as well as realizing margin improvements in the concrete business that reflected our margin improvement initiatives.

Gross profit was $38.7 million for the nine months ended September 30, 2023 compared to $40.6 million in the prior year period, a decrease of $1.9 million or 4.6%.

Gross profit in the nine months ended September 30, 2023 was 7.6% of total contract revenues as compared to 7.3% in the prior year period.

The decrease in gross profit dollars was primarily due to the impact of weather in Texas in the first quarter of 2023, which lowered labor and equipment utilization and the completion of low-margin projects resulting in write-downs in both the marine and concrete businesses.

The increase in gross profit margin was primarily due to actions to manage costs during project delays including reallocating equipment, reducing the size of the fleet and headcount reductions, as well as realizing margin improvements in the concrete business that reflected our margin improvement initiatives.

Selling, General and Administrative Expense.

SG&A expenses were $35.1 million for the six months ended June 30, 2023 compared to $33.4 million in the prior year period, an increase of $1.7 million or 5.2%.

As a percentage of total contract revenues, SG&A expenses increased from 8.9% to 10.2%, primarily due to lower revenues in the current period.

SG&A expenses were $52.3 million for the nine months ended September 30, 2023 compared to $48.8 million in the prior year period, an increase of $3.5 million or 7.2%.

As a percentage of total contract revenues, SG&A expenses increased from 8.7% to 10.3%, primarily due to lower revenues and increased SG&A in the current period.

The increase in SG&A dollars was primarily due to an increase in compensation expense, partially offset by lower consulting expense related to the completion of the management transition.

Gain on Disposal of Assets, net.

During the six months ended June 30, 2023 and 2022, we realized $7.2 million and $1.2 million, respectively, of net gains on disposal of assets.

The six months ended June 30, 2023 included a gain of $5.2 million related to the sale-leaseback of our Port Lavaca South Yard property in Texas.

During the nine months ended September 30, 2023 and 2022, we realized $7.9 million and $4.6 million, respectively, of net gains on disposal of assets.

The nine months ended September 30, 2023 included a gain of $5.2 million related to the sale-leaseback of our Port Lavaca South Yard property in Texas.

Other Income, net of Expense.

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Income Tax Expense.

We recorded tax expense of $0.6 million in both the six months ended June 30, 2023, and in the prior year period.

Our effective tax rate for the six months ended June 30, 2023 differs from the federal statutory 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.

We recorded tax expense of $0.5 million in the nine months ended September 30, 2023, compared to $0.4 million of tax expense in the prior year period.

Our effective tax rate for the nine months ended September 30, 2023 differs from the federal statutory 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.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment, segment revenues as a percentage of consolidated revenues and segment operating (loss) income as a percentage of segment revenues.

Three months ended June 30, 2023 compared with three months ended June 30, 2022.

Three months ended June 30,

Three months ended September 30, 2023 compared with three months ended September 30, 2022.

Three months ended September 30,

(dollar amounts in thousands)

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Marine Segment

Revenues for our marine segment for the three months ended June 30, 2023 were $100.5 million compared to $82.3 million for the three months ended June 30, 2022, an increase of $18.2 million, or 22.1%.

The increase was primarily related to the Hawaii drydock project.

Operating income for our marine segment for the three months ended June 30, 2023 was $3.5 million, compared to $2.5 million for the three months ended June 30, 2022, an increase in operating income of $1.0 million.

Adjusted for the gain on the Port Lavaca South Yard property sale-leaseback in Texas operating loss for the three months ended June 30, 2023 was $1.7 million or a decrease of $4.2 million.

This decrease in operating income was primarily due to lower labor and equipment utilization.

Revenues for our marine segment for the three months ended September 30, 2023 were $80.9 million compared to $76.1 million for the three months ended September 30, 2022, an increase of $4.8 million, or 6.3%.

The increase was primarily related to the Pearl Harbor Project.

Operating income for our marine segment for the three months ended September 30, 2023 was $2.0 million, compared to $5.2 million for the three months ended September 30, 2022, a decrease in operating income of $3.2 million.

This decrease in operating income was primarily due to a larger gain from asset sales in the prior year period.

Concrete Segment

Revenues for our concrete segment for the three months ended June 30, 2023 were $82.0 million compared to $112.3 million for the three months ended June 30, 2022, a decrease of $30.3 million, or 27.0%.

Revenues for our concrete segment for the three months ended September 30, 2023 were $87.6 million compared to $106.5 million for the three months ended September 30, 2022, a decrease of $18.9 million, or 17.8%.

This decrease was primarily due to a reduction of revenue in central Texas in 2023.

Operating loss for our concrete segment for the three months ended June 30, 2023 was $1.5 million, compared to $5.4 million for the three months ended June 30, 2022, a decrease in operating loss of $3.9 million.

This decrease in operating loss was primarily due to higher gross margin on delivered projects.

Six months ended June 30, 2023 compared with six months ended June 30, 2022.

Six months ended June 30,

Operating income for our concrete segment for the three months ended September 30, 2023 was $0.6 million, compared to an operating loss of $4.1 million for the three months ended September 30, 2022, an increase of $4.7 million.

This increase was primarily due to higher gross margin on delivered projects.

Nine months ended September 30, 2023 compared with nine months ended September 30, 2022.

Nine months ended September 30,

(dollar amounts in thousands)

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Marine Segment

Revenues for our marine segment for the six months ended June 30, 2023 were $179.8 million compared to $166.8 million for the six months ended June 30, 2022, an increase of $13.0 million, or 7.8%.

The increase was primarily related to the Hawaii drydock replacement project.

Operating loss for our marine segment for the six months ended June 30, 2023 was $2.6 million, compared to operating income of $4.4 million for the six months ended June 30, 2022, a decrease in operating income of $7.0 million.

Adjusted for the gain on the Port Lavaca South Yard property sale-leaseback in Texas operating loss for the six months ended June 30, 2023 was $7.8 million or a decrease of $12.2 million.

This decrease in operating income was primarily due to the completion of low-margin projects resulting in write-downs and lower labor and equipment utilization.

Revenues for our marine segment for the nine months ended September 30, 2023 were $260.8 million compared to $242.9 million for the nine months ended September 30, 2022, an increase of $17.9 million, or 7.4%.

The increase was primarily related to the Pearl Harbor Project.

Operating loss for our marine segment for the nine months ended September 30, 2023 was $0.6 million, compared to operating income of $9.6 million for the nine months ended September 30, 2022, a decrease in operating income of $10.2 million.

Adjusted for the gain on the Port Lavaca South Yard property sale-leaseback in Texas operating loss for the nine months ended September 30, 2023 was $5.8 million or a decrease of $15.4 million.

This decrease in operating income was primarily due to the mixture of contributing projects in backlog, lower equipment utilization, and higher SG&A in the current year.

Concrete Segment

Revenues for our concrete segment for the six months ended June 30, 2023 were $161.9 million compared to $202.7 million for the six months ended June 30, 2022, a decrease of $40.8 million, or 20.1%.

Revenues for our concrete segment for the nine months ended September 30, 2023 were $249.4 million compared to $309.2 million for the nine months ended September 30, 2022, a decrease of $59.8 million, or 19.3%.

This decrease was primarily due to a reduction of revenue in central Texas.

Operating loss for our concrete segment for the six months ended June 30, 2023 was $6.0 million, compared to $10.1 million for the six months ended June 30, 2022, a decrease in operating loss of $4.1 million.

Operating loss for our concrete segment for the nine months ended September 30, 2023 was $5.5 million, compared to $14.1 million for the nine months ended September 30, 2022, a decrease in operating loss of $8.6 million.

This decrease in operating loss was primarily due to lower indirect costs due to the exit of the central Texas region.

Liquidity and Capital Resources

Changes in working capital are normal within our business given the varying mix in size, scope and timing of delivery of our projects.

At June 30, 2023, our working capital was $60.8 million, as compared with $31.1

million at December 31, 2022.

As of June 30, 2023, we had unrestricted cash on hand of $8.9 million.

Our borrowing availability under our revolving credit facility at June 30, 2023 was approximately $51.2 million.

Our primary liquidity needs are to finance our working capital, fund capital expenditures, and pursue strategic acquisitions.

Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects.

At September 30, 2023, our working capital was $67.9 million, as

compared with $31.1 million at December 31, 2022.

As of September 30, 2023, we had unrestricted cash on hand of $3.9 million.

Our borrowing availability under our revolving Credit Facility at September 30, 2023 was approximately $31.7 million.

Our primary liquidity needs are to finance our working capital and fund capital expenditures.

Historically, our source of liquidity has been cash provided by our operating activities, sale of underutilized assets, and borrowings under our credit facilities.

The assessment of the liquidity and going concern requires us to make estimates of future activity and judgments about whether we are compliant with financial covenant calculations under our debt and other agreements and have adequate liquidity to operate.

Significant assumptions used in our forecasted model of liquidity include forecasted sales, costs, and capital expenditures;

expected timing and proceeds of planned real estate transactions.

The following table provides information regarding our cash flows and our capital expenditures for the three and six months ended June 30, 2023 and 2022:

The assessment of our liquidity requires us to make estimates of future activity and judgments about whether we are compliant with financial covenant calculations under our debt and other agreements and have adequate liquidity to operate.

Significant assumptions used in our forecasted model of liquidity include forecasted sales, costs, and capital expenditures, as well as expected timing and proceeds of planned real estate transactions.

The following table provides information regarding our cash flows and our capital expenditures for the three and nine months ended September 30, 2023 and 2022:

Three months ended

Six months ended

Nine months ended

September 30,

Net (loss) income

Adjustments to remove non-cash and non-operating items

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Cash flows (used in) provided by operating activities

Cash flows provided by (used in) investing activities

Cash flows (used in) provided by investing activities

Cash flows provided by (used in) financing activities

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Operating Activities.

During the three months ended June 30, 2023, we used approximately $8.9 million in cash from our operating activities.

The net cash outflow is comprised of $1.3 million of cash inflows from net income, after adjusting for non-cash items, partially offset by $10.2 million of outflows related to changes in net working capital.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $11.4 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, a $1.3 million decrease in operating lease liabilities, $0.6 million of cash outflows pursuant to the relative timing and significance of project progression and billings during the period and $1.1 million of other outflows, partially offset by $4.2 million cash inflow from the decrease in prepaid expenses.

During the six months ended June 30, 2023, we used approximately $12.0 million in cash from our operating activities.

The net cash outflow is comprised of $4.7 million of cash outflows from net loss, after adjusting for non-cash items and by $7.3 million of outflows related to changes in net working capital.

$12.1 million cash inflows pursuant to the relative timing and significance of project progression and billings during the period and $2.8 million of cash inflows from the decrease in prepaid expenses.

During the three months ended September 30, 2023, we used approximately $16.5 million in cash in our operating activities.

The net cash outflow is comprised of $24.1 million of outflows related to changes in net working capital, partially offset by $7.6 million of cash inflows from net income, after adjusting for non-cash items.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $19.2 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, $2.9 million of cash outflows pursuant to the relative timing and significance of project progression and billings during the period and a $2.1 million decrease in operating lease liabilities, partially offset by $0.1 million of other cash inflows.

During the nine months ended September 30, 2023, we used approximately $28.5 million in cash in our operating activities.

The net cash outflow is comprised of $31.4 million of outflows related to changes in net working capital, partially offset by $2.9 million of cash inflows from net income, after adjusting for non-cash items.

partially offset by $9.2 million cash inflows pursuant to the relative timing and significance of project progression and billings during the period and $3.1 million of cash inflows from the decrease in prepaid expenses.

Investing Activities.

Capital asset additions and betterments to our fleet were $2.4 million in the three months ended June 30, 2023, as compared with $4.5 million in the three months ended June 30, 2022.

Proceeds from the sale of property and equipment were $10.8 million in the three months ended June 30, 2023, as compared with $0.3 million in the three months ended June 30, 2022.

Included in the three months ended June 30, 2023 is $8.1 million of proceeds related to the sale-leaseback of the Port Lavaca South Yard property in Texas.

Capital asset additions and betterments to our fleet were $4.3 million in the six months ended June 30, 2023, as compared with $8.0 million in the six months ended June 30, 2022.

Proceeds from the sale of property and equipment were $11.3 million in the six months ended June 30, 2023, as compared with $1.0 million in the six months ended June 30, 2022.

Included in the six months ended June 30, 2023 is $8.1 million of proceeds related to the sale-leaseback of the Port Lavaca South Yard property in Texas.

Capital asset additions and betterments to our fleet were $2.4 million in the three months ended September 30, 2023, as compared with $2.6 million in the three months ended September 30, 2022.

Proceeds from the sale of property and equipment were $0.7 million in the three months ended September 30, 2023, as compared with $3.4 million in the three months ended September 30, 2022.

Capital asset additions and betterments to our fleet were $6.7 million in the nine months ended September 30, 2023, as compared with $10.6 million in the nine months ended September 30, 2022.

Proceeds from the sale of property and equipment were $12.1 million in the nine months ended September 30, 2023, as compared with $4.5 million in the nine months ended September 30, 2022.

Included in the nine months ended September 30, 2023 is $8.1 million of proceeds related to the sale-leaseback of the Port Lavaca South Yard property in Texas.

Financing Activities.

During the three months ended June 30, 2023, we had borrowings of $38.0 million on the White Oak term loan and borrowings of $14.8 million on the White Oak revolver and had repayments of $40.0 million on our prior credit agreement and repayments of $14.8 million on the White Oak revolver, had proceeds from failed sales-leasebacks of $24.3 million, had proceeds of $2.4 million related to the Port Lavaca land sale-leaseback financing, loan costs of $5.4 million, payments on finance lease liabilities of $0.8 million and a cash outflow of less than $0.1 million for payments related to tax withholdings for share-based compensation.

During the six months ended June 30, 2023, we had borrowings of $5.0 million on our prior credit agreement, $38.0 million on the White Oak term loan and borrowings of $14.8 million on the White Oak revolver and had repayments of $40.0 million on our prior credit agreement and repayments of $14.8 million on the White Oak revolver, had proceeds from failed sales-leasebacks of $24.3 million, had proceeds of $2.4 million related to the Port Lavaca land sale-leaseback financing, loan costs of $6.0 million, payments on finance lease liabilities of $1.6 million and a cash outflow of $0.2 million for payments related to tax withholdings for share-based compensation.

During the three months ended September 30, 2023, we had borrowings of $31.7 million from the White Oak revolving credit line and had repayments of $18.2 million on the White Oak revolving credit line, loan costs of $0.6 million, payments on finance lease liabilities of $0.9 million and a cash outflow of $0.3 million for payments related to tax withholdings for share-based compensation.

During the nine months ended September 30, 2023, we had borrowings of $5.0 million from our prior credit agreement, $38.0 million from the White Oak term loan and borrowings of $46.5 million on the White Oak revolving credit line and had repayments of $40.0 million on our prior credit agreement and repayments of $33.0 million on the White Oak revolving credit line, had proceeds from failed sales-leasebacks of $24.3 million, had proceeds of $2.4 million related to the Port Lavaca land sale-leaseback financing, loan costs of $6.5 million, payments on finance lease liabilities of $2.5 million and a cash outflow of $0.5 million for payments related to tax withholdings for share-based compensation.

Sources of Capital

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

Please see “Note 11 – Debt” in our unaudited condensed consolidated financial statements for a more detailed description of the Credit Agreement.

On May 15, 2023, we entered into a new three-year $103.0 million Credit Agreement with White Oak which includes a $65.0 million asset based revolving credit line and a $38.0 million fixed asset term loan.

Please see “Note 11 – Debt” in our unaudited condensed consolidated financial statements for a more detailed description of the Credit Facility.

Bonding Capacity

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Our ability to obtain surety bonds depends on our capitalization, working capital, past performance and external factors, including the capacity of the overall surety market.

At June 30, 2023, the capacity under our current bonding arrangement was at least $750 million, with approximately $475 million of projects being bonded.

At September 30, 2023, the capacity under our current bonding arrangement was at least $750 million, with approximately $450 million of projects being bonded.

We believe our balance sheet and working capital position will allow us to continue to access our bonding capacity.

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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 2. Management’s Discussion and Analysis