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Item 9A. Controls and Procedures

2024-03-01 compared with 2023-03-16 · 215 added, 278 removed, 916 unchanged (35% of the section changed)

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Based on management’s evaluation with the participation of our principal executive officer and principal financial officer, as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2023.

Our management, including our principal executive officer and principal financial officer, believes that the audited consolidated financial statements contained in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the years presented in conformity with U.S.

generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

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Management, under the oversight of our principal executive officer and principal financial officer, and Audit Committee, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal control - An Integrated Framework (“2013 Framework”).

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance U.S.

generally accepted accounting principles.

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2023 at the reasonable assurances level.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this annual report, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023.

KPMG LLP’s report appears on page F-4 of this annual report on Form 10-K.

Inherent Limitations on Effectiveness of Controls

Our management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud.

A control system, no matter how well-designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

OTHER INFORMATION

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Directors, Executive Officers, Promoters and Control Persons

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.

Position with the Company

Year Joined the Registrant

Chairman of the Board

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

The information under the heading “Information about our Executive Officers” in this Form 10-K is incorporated by reference into this section.

Code of Ethics

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Corporate Governance

The information required by Items 407(c)(3), (d)(4) and (d)(5) 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 information required by Items 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is hereby incorporated by reference from our Proxy Statement.

EXECUTIVE COMPENSATION

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.

The information required by Items 402, 407(e)(4) and 407(e)(5) is hereby incorporated by reference from our Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 403 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 information required by Items 201(d) and 403 of Regulation S-K is hereby incorporated by reference from our Proxy Statement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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.

The information required by this Item is hereby incorporated by reference from our Proxy Statement.

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.

The information required by this Item is hereby incorporated by reference from our Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Employment Agreement dated January 1, 2015 between Orion Marine Group, Inc.

Stauffer (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 2, 2015)(File No.

First Amendment, effective January 1, 2017, to Employment Agreement by and between Orion Group Holdings, Inc.

and Mark Stauffer dated January 1, 2015 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 20, 2017 (File No.

Second Amendment, effective June 5, 2018, to Employment Agreement by and between Orion Group Holdings, Inc.

and Mark Stauffer dated January 1, 2015 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 8, 2018 (File No.

Third Amendment, effective June 19, 2019, to Employment Agreement by and between Orion Group Holdings, Inc.

Fourth Amendment to Employment Agreement by and between Orion Group Holdings, Inc.

Stauffer, effective June 30, 2021.

(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 2, 2021 (File No.

Employment Agreement dated January 1, 2015 between Orion Marine Group, Inc.

Buchler (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 2, 2015) (File No.

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(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 2, 2021 (File No.

Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, The Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-Syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the Securities and Exchange Commission on August 7, 2015 (File No.

First Amendment, effective March 31, 2016, to the Credit Agreement dated as of August 5, 2015, among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time To Time, as Guarantors, The Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-Syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,2016, filed with the Securities and Exchange Commission on May 6, 2016 (File No.

Second amendment, effective June 30, 2017, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed with the Securities and Exchange Commission on August 3, 2017 (File No.

Third amendment, effective September 30, 2017, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the Securities and Exchange Commission on November 9, 2017 (File No.

Fourth amendment, effective July 31, 2018, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed with the Securities and Exchange Commission on August 3, 2018 (File No.

Fifth amendment, effective March 21, 2019, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, as Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein 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 26, 2019 (File No.

Sixth Amendment, effective May 7, 2019, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA DBA Bank of Texas, and Branch Banking and Trust Company, Co-syndication Agents, Regions Capital Markets, a division of Regions Bank, as Lead Arranger and Book Manager (incorporated herein 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 9, 2019 (File No.

Seventh amendment, effective June 8, 2020, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

as Borrower, Certain Subsidiaries of the Borrower Party Hereto From Time to Time, as Guarantors, the Lenders Party Hereto, Regions Bank, as Administrative Agent and Collateral Agent, and Bank of America, N.A., BOKF, NA dba Bank of Texas, Iberia Bank, Trust Bank, and Trustmark National Bank, as Lenders (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 June 10, 2020 (File No.

Eighth amendment, effective October 9, 2020, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

(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 October 13, 2020 (File No.

Ninth amendment, effective March 1, 2022, to the Credit Agreement dated as of August 5, 2015 among Orion Marine Group, Inc.

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.

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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.

Land Sale Contract, dated February 20, 2024, by and between a subsidiary of Orion Group Holdings, Inc.

and Brixx Technologies LLC (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 February 20, 2024 (File No.

Loan Agreement dated as of May 15, 2023 among Orion Group Holdings, Inc.

and certain of its subsidiaries from time to time party hereto as borrowers, the entities from time to time party hereto,

as Lenders, White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent.

(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 15, 2023 (File No.

Amendment No.

1, dated December 1, 2023 to the Loan Agreement dated as of May 15, 2023 among Orion Group Holdings, Inc.

and certain of its subsidiaries from time to time party hereto as borrowers, the entities from time to time party hereto, as Lenders, White Oak Commercial Finance, LLC, as Administrative Agent and Collateral Agent.

Amendment No.

2, dated February 27, 2024 to the Loan Agreement dated as of May 15, 2023 among Orion Group Holdings, Inc.

Letter Agreement, dated July 31, 2023, by and between Peter R.

Buchler and Orion Group Holdings, Inc.

(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 4, 2023 (File No.

Land Sale-Leaseback Contract, dated June 21, 2023, by and between Orion Marine Construction, Inc., a Florida corporation, and Pelican Marine Services, LLC, a Louisiana limited liability company.

(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 June 26, 2023 (File No.

Land Sale-Leaseback Contract, dated June 5, 2023, by and between Orion Marine Construction, Inc., a Florida corporation, and Store Capital Acquisitions, LLC, a Delaware limited liability company.

(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 June 26, 2023 (File No.

Employment Agreement by and between Orion Group Holdings, Inc.

and Travis J.

Boone, effective September 27, 2023.

(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 September 28 2023 (File No.

Employment Agreement by and between Orion Group Holdings, Inc.

and Scott Thanisch, effective September 27, 2023.

(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 September 28 2023 (File No.

Employment Offer Letter dated November 20, 2023 between Orion Group Holdings, Inc.

Chipman Earle

List of Subsidiaries.

Consent of Independent Registered Public Accounting Firm -KPMG, LLP.

Power of Attorney (included on signature page of this filing).

Certification of CEO pursuant to Section 302.

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Certification of CEO and CFO pursuant to Section 906.

Orion Group Holdings, Inc.

Executive Compensation Clawback Policy

XBRL Instance Document.

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Consolidated Statements of Operations for the Years Ended December 31, 2 023 , 2 022 and 2 021

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2 023 , 2 022 and 2 021

Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2 023 , 2 022 and 2 021

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We have audited the accompanying consolidated balance sheets of Orion Group Holdings, Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

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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, 2023, 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 1, 2024 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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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.

As discussed in Notes 3 and 5 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.

Progress is measured by the percentage of actual costs incurred to date to the total estimated costs at completion.

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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.

Evaluating the Company’s estimated costs at completion for contracts in progress involved subjective auditor judgement 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 judgement 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.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 16, 2023 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 1, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Gain on disposal of assets, net

Operating (loss) income

Intangible asset impairment loss

Operating loss

Other (expense) income:

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Other expense, net

(Loss) income before income taxes

Loss before income taxes

Income tax expense

Net (loss) income

Basic (loss) earnings per share

Diluted (loss) earnings per share

Shares used to compute (loss) income per share:

Basic loss per share

Diluted loss per share

Shares used to compute loss per share:

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

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and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

(In Thousands)

Year ended December 31,

Net (loss) income

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

Change in fair value of cash flow hedge, net of tax expense of $ 368 for the year ended December 31, 2021

Total comprehensive loss

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

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Stock-based compensation

Exercise of stock options

Issuance of restricted stock

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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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Cash flows from operating activities:

Net (loss) income

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

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

Operating activities:

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Gain on disposal of assets, net

Gain on involuntary disposition of assets, net

Intangible asset impairment loss

Allowance for credit losses

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Purchase of property and equipment

Contributions to CSV life insurance

Insurance claim proceeds related to property and equipment

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Payments made on borrowings on credit

Proceeds from sale-leaseback arrangement

Loan costs from Credit Facility

Proceeds from failed sale-leaseback arrangement

Proceeds from sale-leaseback financing

Loan costs from Credit Agreement and prior credit facility

Payments of finance lease liabilities

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Exercise of stock options

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Net change in cash, cash equivalents and restricted cash

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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.

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.

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.

Orion Group Holdings, Inc.

and subsidiaries, (hereafter collectively referred to as the “Company”), is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing 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.

Our marine segment provides construction and dredging services including marine transportation facility construction, marine pipeline construction, marine environmental structures construction, dredging of waterways, channels and ports, environmental dredging, design, and specialty services related to marine construction, fabrication, and dredging.

Our concrete segment provides turnkey concrete construction services including concrete surface place and finish, site preparation, layout, forming, and rebar placement for large commercial, structural and other associated business areas.

We are headquartered in Houston, Texas with regional offices throughout our 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 and concrete, which operate under the Orion brand and logo.

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

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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 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.

Significant assumptions used in the Company's forecasted model of liquidity include forecasted sales, costs, and capital expenditures and expected timing and proceeds of planned real estate transactions.

The Company has sustained operating losses for the years ended December 31, 2023, 2022 and 2021.

Also as described in Note 10, the Company had $ 35.0 million of outstanding indebtedness under its prior credit facility as of December 31, 2022 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.

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

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.

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 10 for more information regarding the debt refinancing.

Based on an assessment of the completion of the debt refinancing process and the other factors above, 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 the conditions that previously raised substantial doubt have been resolved and substantial doubt is no longer raised as to the Company’s ability to continue as a going concern.

Summary of Significant Accounting Policies

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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.

The Company determines the appropriate accounting treatment for each contract before work begins and, subject to qualifications discussed in the next paragraph, 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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Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and reported revenue and are recognized in the period in which the revisions are determined.

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

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

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

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Variable consideration is included in the estimated recognition of revenue to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur.

A determination that the collection of a claim is probable is based upon compliance with the terms of the contract and the extent to which the Company performed in accordance therewith but does not guarantee collection in full.

A determination that the collection of a claim is probable is based upon the Company’s evaluation of its compliance with the terms of the contract and the extent to which the Company performed in accordance therewith but does not guarantee collection in full.

Assets and liabilities derived from contracts with customers include the following:

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Classification of Current Assets and Liabilities

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

Cash and Cash Equivalents

The Company includes in current assets and liabilities amounts realizable and payable in the next twelve months.

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.

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Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of accounts receivable.

The Company depends on its ability to continue to obtain federal, state and local governmental contracts, and indirectly, on the amount of funding available to these agencies for new and current governmental projects.

A significant portion of the Company’s revenue base depends on its ability to continue to obtain federal, state and local governmental contracts, and indirectly, on the amount of funding available to these agencies for new and current governmental projects.

Therefore, a portion of the Company’s operations is dependent upon the level and timing of government funding.

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Revenue associated with these billings is recorded net of any sales tax, if applicable.

Past due balances over 90 days and other higher risk receivables identified by management are reviewed individually for collectability.

In establishing an allowance for credit losses, the Company evaluates its contract receivables and contract assets and thoroughly reviews historical collection experience, the financial condition of its customers, billing disputes and other factors.

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, 2023 and December 31, 2022, the Company had recorded an allowance for credit losses of $ 0.4 million and $ 0.6 million, respectively.

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and (3) valuing potential impairment loss related to goodwill and indefinite-lived intangible assets.

Current inventory consists of parts and small equipment held for use in the ordinary course of business and is valued at the lower of cost (using historical average cost) or net realizable value.

Current inventory consists of parts and small equipment held for use in the ordinary course of business and is valued at the lower of cost (using historical average cost) or net realizable value and is relieved as utilized.

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.

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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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Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

If the carrying amount of an asset exceeds its estimated future cash flows, an impairment loss is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or the fair value, less the costs to sell, and are no longer depreciated.

There 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.

There were no assets classified as held for sale as of December 31, 2023.

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

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

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Intangible Assets

Intangible assets that have finite lives are amortized.

In addition, the Company evaluates the remaining useful life of intangible assets in each reporting period to determine whether events and circumstances warrant a revision of the remaining period of amortization.

If the estimate of an intangible asset’s remaining life is changed, the remaining carrying value of such asset is amortized prospectively over that revised remaining useful life.

Intangible assets that have infinite lives are not amortized, but are subject to impairment testing at least annually or more frequently if events or circumstances indicate that the asset may be impaired.

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

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

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

Intangible assets that have finite lives were amortized.

In addition, the Company evaluated the remaining useful life of intangible assets in each reporting period to determine whether events and circumstances warrant a revision of the remaining period of amortization.

Intangible assets that had infinite lives were not amortized, but were subject to impairment testing at least annually or more frequently if events or circumstances indicated that the asset may be impaired.

The Company had one infinite-lived intangible asset, a trade name, which it tested for impairment annually on October 31, or whenever events or circumstances indicated that the carrying amount of the trade name may not be recoverable.

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

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

This method assumes that if a company owns intellectual property, it does not have to “rent” the asset and is, therefore, “relieved” from paying a royalty.

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

See Note 9 for additional discussion of intangible assets and trade name impairment testing.

This one infinite-lived intangible asset was fully impaired as of December 31, 2023 due to the rebranding of the Company’s concrete segment in the fourth quarter of 2023.

See Note 8 for additional discussion of intangible assets.

Stock-Based Compensation

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 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.

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

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

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.

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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 $ 7.5 million and $ 5.8 million at December 31, 2023 and December 31, 2022, respectively, reflected as a component of accrued liabilities in the consolidated balance sheet.

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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Net receivables

At December 31, 2022 and 2021, no single customer accounted for more than 10.0% of total current receivables.

At December 31, 2023, a customer in the Private Companies category accounted for 19.9 % 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 years ended December 31, 2023, 2022 and 2021.

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Total contract revenues

In the year ended December 31, 2020 one customer in the Local Governments category accounted for 11.4 % of total contract revenues.

In the years ended December 31, 2022 and 2021, no single customer exceeded 10.0% of total contract revenues.

In the year ended December 31, 2023, a customer in the Federal Government category accounted for 12.7 % of total contract revenue.

For the years ended December 31, 2022 and 2021, no single customer exceeded 10.0% of total contract revenues.

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

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

Contract revenues generated outside the United States totaled 0.9 %, 0.5 % and 1.8 % of total revenues for the years ended December 31, 2022, 2021 and 2020, respectively, and were primarily located in the Caribbean Basin and Mexico.

Contract revenues generated outside the United States totaled 5.1 %, 0.9 % and 0.5 % of total revenues for the years ended December 31, 2023, 2022 and 2021, respectively, and were primarily located in the Caribbean Basin.

Contracts in Progress

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Construction in progress

During the year ended December 31, 2021 the Company sold its land, building and improvements located in Tampa, Florida.

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

For the years ended December 31, 2022, 2021 and 2020, depreciation expense was $ 19.7 million, $ 21.1 .

million and $ 21.8 .

million, respectively.

For the years ended December 31, 2023 and 2022, depreciation expense was $ 18.4 million and $ 19.7 million, respectively.

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

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See Note 2 to the Company’s consolidated financial statements for further discussion of property and equipment.

Other Current Accounts Receivable

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

December 31, 2022

December 31, 2021

Insurance claims receivable

Accident loss receivables

Vendor receivables

Purchase incentive receivable

Bond premium dividend receivable

Other current accounts receivable

Total other current accounts receivable

Recurring Fair Value Measurements

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Cash surrender value of life insurance policy

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

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

See Note 11 for additional information on the Company’s derivative instrument.

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

These assets are included in the "Other noncurrent"

asset section in the Company’s Consolidated Balance Sheets.

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

These assets are included in the “Other non-current” asset section in the Company’s Consolidated Balance Sheets.

Non-Recurring Fair Value Measurements

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Other Fair Value Measurements

The fair value of the Company’s debt at December 31, 2022 and 2021 approximated its carrying value of $ 35.7 .

million and $ 39.4 million, respectively, as interest is based on current market interest rates for debt with similar risk and maturity.

The fair value of the Company’s debt at December 31, 2023 and 2022 approximated its carrying value of $ 42.3 million and $ 35.7 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.

Intangible Assets

Intangible assets

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

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

For the years ended December 31, 2022, 2021 and 2020, $ 1.2 million, $ 1.5 million and $ 2.1 million, respectively, of amortization expense was recognized for these assets.

In 2022 and 2021, the Company evaluated the useful lives of these finite-lived intangible assets and no change was needed.

Future expense remaining of approximately $ 0.4 million will be amortized as follows:

The annual impairment test for both 2022 and 2021 concluded that the fair value of the Company’s infinite-lived trade name was in excess of the carrying value, therefore no impairment was recorded in each respective year.

For the years ended December 31, 2023 and 2022, $ 0.4 million and $ 1.2 million, respectively, of amortization expense was recognized for these assets.

As of December 31, 2023 all finite-lived intangible assets acquired as part of the purchase of TAS were fully amortized.

The Company evaluated the infinite-lived intangible assets which consisted of the TAS Concrete Construction tradename and as a result of the Company’s strategic decision to rebrand its concrete segment under the Orion banner the Company determined that the estimated fair value of the TAS Concrete Construction tradename is less than the carrying amount and an impairment loss of $ 6.9 million was recognized under ASC 350.

As of December 31, 2023 all of the Company’s intangible assets are fully amortized or impaired.

Accrued Liabilities

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Total accrued liabilities

Long-term Debt and Line of Credit

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 matures on July 31, 2023.

The Credit Agreement, which may be amended from time to time, provides for borrowings under a revolving line of credit and a term loan (together, the “Credit Facility”).

The Credit Facility is guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and may be 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 is due and is 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 is 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 may be prepaid at any time, in whole or in part, without premium or penalty.

Amounts repaid under the revolving line of credit may 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 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 %.

On May 15, 2023, the Company entered into the Credit Agreement .

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 under the effective interest method.

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

The Company used the proceeds of the 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.

On December 1, 2023, the Company entered into Amendment No, 1 to the Credit Agreement which extended the maturity date for the $ 15.0 million pre-payment to the earlier of June 30, 2024 and the date that is three business days after receipt of net proceeds in respect of the East and West Jones Sale.

The Credit Agreement 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, capital expenditures, and permitted acquisitions and associated fees, to refinance existing indebtedness, and to pay for all expenses related to the Credit Agreement.

Amounts repaid under the Revolver 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 yearly weighted average interest rate for the Credit Agreement, as of December 31, 2023 was 12.00 %.

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

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Revolving line of credit

Term loan - current

Total current debt

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 Ninth Amendment to the Credit Agreement.

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

Provisions of the revolving line of credit

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

The Company has a maximum borrowing capacity under the Revolver 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.

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

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

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

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

As of 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, 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.

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

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

As of December 31, 2023, the Company had no borrowings under the Revolver.

The Company’s borrowing availability under the Revolver at December 31, 2023 was approximately $ 47.7 million.

During the year ended December 31, 2023, the Company borrowed $ 64.0 million on the Revolver.

During the year ended December 31, 2023, the Company repaid $ 64.0 million outstanding on the Revolver.

Financial covenants

Restrictive financial covenants under the Credit Facility include:

• 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;

Restrictive financial covenants under the Credit Agreement include:

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

- Fiscal Quarter Ending June 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 December 31, 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 December 31, 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:

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

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

● The Company shall maintain Liquidity (as defined in the Credit Agreement) of greater than $ 15.0 million at all times.

In addition, the Credit Agreement 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;

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and, events constituting a change of control.

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.

The Company was in compliance with all financial covenants as of December 31, 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 December 31, 2023 and December 31, 2022, the carrying value of this debt was $ 1.9 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.

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 December 31, 2023, the carrying value of this debt was $ 2.4 million.

Other Long-Term Liabilities

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Total other long-term liabilities

Sale-Leaseback Arrangement

Sale-Leaseback Arrangements

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

The transaction above was recorded as a failed sale-leaseback.

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 (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 % .

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.

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

The transaction above was recorded as a failed sale-leaseback.

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 following table presents the components of our consolidated income tax expense for the years ended December 31, 2023, 2022 and 2021:

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In the year ended 2023, 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 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.

Deferred Taxes

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Additionally, the Company has foreign tax credits of $ 3.4 million that can be carried forward for up to ten years .

The Company has foreign tax credits that will expire next year.

The Company has foreign tax credits that will expire in 2026.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets.

The Company considers the scheduled reversal of deferred tax liabilities, available carryback periods, and tax-planning strategies in making this assessment.

According to ASC subtopic 740-10, the Company’s history of losses is a significant piece of objective evidence.

This objective evidence is weighed more heavily than the Company’s subjective positive evidence such as our estimated future taxable income and growth.

According to ASC subtopic 740-10, the Company’s history of losses is a significant piece of negative evidence.

This negative evidence is weighed more heavily than the Company’s subjective positive evidence such as our estimated future taxable income and growth.

Therefore, as of December 31, 2023, the Company continues to maintain a valuation allowance of $ 20.8 million.

This valuation allowance increased by $ 2.2 million during the year ended December 31, 2022 primarily to offset net operating losses generated during the current period.

This valuation allowance increased by $ 3.2 million during the year ended December 31, 2023 primarily to offset deferred tax assets generated during the period.

Uncertain Tax Benefits

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With few exceptions, the Company remains subject to federal and state income tax examinations for the years of 2013-2022.

As of December 31, 2022, the Company has recorded unrecognized tax benefits of $ 1.6 million for any uncertain tax positions.

The Company does not expect that unrecognized tax benefits as of December 31, 2022 for certain federal income tax matters will significantly change over the next 12 months.

As of December 31, 2023, the Company has recorded unrecognized tax benefits of $ 1.6 million for uncertain tax positions.

The Company expects the unrecognized tax benefits as of December 31, 2023 for certain federal income tax matters will significantly change over the next 12 months due to a lapse of the statute of limitations.

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

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Any accruals for tax contingencies are provided for in accordance with U.S.

The Company does not believe that its tax positions will significantly change due to any settlement and/or expiration of statutes of limitations prior to December 31, 2023.

The Company’s statute of limitations on the tax position will expire prior to December 31, 2024.

Earnings Per Share

26 unchanged sentences

Nonvested at December 31, 2023

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.

In March 2023, the Company formalized the performance measures related to the August 2022 and September 2022 grants of 328,909 performance units to two executives .

As a result, the previous grants were replaced with 335,851 performance units, an incremental increase of 6,942 performance units accounted for as a modification.

The performance-based units will potentially vest 100 % if an objective, tiered return on invested capital, measured over a three-year performance period, is achieved.

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

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

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 July 2023, the Company granted an executive of the Company 12,862 shares of restricted common stock with a vesting period of three years and a fair value of $ 3.11 per share.

In October 2023, certain officers and executives of the Company were awarded a total of 152,000 shares of restricted common stock with a vesting period of three years and a fair value of $ 4.95 per share.

In November 2023, the Company granted an executive of the Company 61,602 shares of restricted common stock with a vesting period of three years .

In addition, the executive was awarded a total of 41,068 performance-based units.

performance-based units will potentially vest 100 % if an objective, tiered return on invested capital, measured over a three-year performance period, is achieved.

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

The fair value of all grants awarded in November 2023 was $ 4.87 per share or unit.

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

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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 performance-based units will potentially vest 100 % if an objective, tiered return on invested capital, measured over a three-year performance period, is achieved.

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

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

The performance-based units will potentially vest 100 % if an objective, tiered return on invested capital, measured over a three-year performance period, is achieved.

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

8 unchanged sentences

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

The performance-based units will potentially vest 100 % if an objective, tiered return on invested capital, measured over a three-year performance period, is achieved.

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 2023, the Company determined the performance-based units awarded in May 2021 will in all likelihood not vest due to the objective, tiered return on invested capital, measured over a three-year performance period not being met.

As a result, the Company made the determination that the remaining outstanding shares under the grant will be forfeited.

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.

In February 2020, the Company granted an executive of the Company 15,121 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 $ 4.96 per share.

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 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.

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 $ 2.26 per unit.

In August 2021, the Company determined the performance-based units awarded in May 2020 vested near the outperformance level established above the target set based on the achievement of an objective, tiered return on invested capital, measured over a one-year performance period ending June 30, 2021.

As a result, the executives earned an additional 259,565 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 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

9 unchanged sentences

For the years ended December 31, 2023, 2022 and 2021, payments related to tax withholding for share-based compensation for certain officers of the Company were approximately $ 0.5 million, $ 0.4 million and $ 0.9 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 years ended December 31, 2023 and December 31, 2022, no stock options were exercised.

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

As of December 31, 2023, total unrecognized compensation expense related to unvested stock was approximately $ 3.2 million, which is expected to be recognized over a period of approximately 2.2 years.

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Employee Benefits

All of the Company’s marine segment employees except the Associate Divers, the Associate Tugmasters, and union employees in the Pacific Northwest, are eligible to participate in the Company’s 401(k) Retirement Plan after completing six months of service.

Each participant may contribute between 1 % and 80 % of eligible compensation on a pre-tax basis, up to the annual IRS limit.

All of the Company’s employees except independent contractors, Associate Divers, the Associate Tugmasters, residents of Puerto Rico, and employees covered by a collective bargaining agreement, unless the agreement requires the employee to be included under the plan, are eligible to participate in the Company’s 401(k) Retirement Plan on the first day of any month following their date of hire.

Each participant may contribute between 1 % and 80 % of eligible compensation on a pre-tax basis, Roth after-tax or a combination of pre-tax and Roth, up to the annual IRS limit.

The Company matches 100 % on the first 3 % of eligible compensation contributed to the Plan and 50 % on the next 2 % of eligible compensation contributed to the Plan.

Participants’ contributions are fully vested at all times.

Employer matching contributions vest over a four-year period.

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

During the years ended December 31, 2022, 2021 and 2020 the Company contributed $ 1.4 million, $ 1.4 million and $ 1.2 million, respectively to the Plan.

All of the Company’s concrete segment employees except Leads, Helpers, Laborers, Finishers, Formsetters, Carpenters, Rodbusters, Patchmen, Equipment Operators, Field Engineering Trainees and certain Highly Compensated Employees are eligible to participate in the AGC Southwest Chapters 401(k) Retirement Plan, a multiple employer plan, after completing three months of service.

Each participant may contribute up to the annual IRS limit.

The Company matches 50 % on the first 6 % of eligible compensation contributed to the Plan.

Participants’ contributions are fully vested at all times.

Employer matching contributions vest over a five-year period.

Because the Plan is a Safe Harbor Plan, the money Orion contributes to employees’ accounts in the form of a match and any related earnings become theirs immediately upon receipt.

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.

During the years ended December 31, 2023, 2022 and 2021 the Company contributed $ 2.7 million, $ 1.4 million and $ 1.4 million, respectively, in matching contributions.

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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Pension Protection

Act ("PPA")

Certified Zone Status

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Western Conference of Teamsters Pension Trust Fund

Alaska Carpenters Trust Fund

Alaska Laborers Trust Fund

Hawaii Operating Engineers Local 3 Trust Funds

Hawaii Regional Council of Carpenters

(1) The most recent PPA zone status available in 2023 and 2022 is for the plan’s year end during 2022 and 2021, respectively.

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Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the orange zone are less than 80 percent funded and have an Accumulated Funding Deficiency in the current year or projected into the next six years, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded.

(2) The FIP/RP Status P/I column indicates plans for which a financial improvement plan ("FIP") or a rehabilitation plan ("RP") is either pending ("P"), or implemented ("I").

(2) The FIP/RP Status P/I column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending (“P”), or implemented (“I”).

There are currently no plans to withdraw from any of the multi-employer plans in which the Company participates.

17 unchanged sentences

Property and equipment, net

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.

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

million, respectively, for the years ended December 31, 2022 and 2021.

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

There was less than $ 0.1 million, $ 0.2 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the years ended December 31, 2023, 2022 and 2021, respectively.

The marine segment had foreign revenues of $ 36.1 million, $ 6.7 million and $ 2.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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

There was no foreign revenue for the concrete segment.

43 unchanged sentences

Long-term lease obligations

Subsequent Events

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 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 .

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

For the year ended December 31, 2023 the Company’s revenue related to the joint venture subcontract was approximately $ 90.5 million.

Subsequent Events

On February 20, 2024, the Company entered into a Land Sale Contract with Brixx Technologies LLC, a Texas limited liability company, who, subject to customary due diligence and closing conditions, has agreed to purchase two parcels of land in Harris County, Texas (approximately 341.3 acres) known as the East and West Jones property, which was previously used by the Company as dredge placement areas.

The purchase price is approximately $ 34 million, and closing is anticipated to occur on or before June 14, 2024.

On February 27, 2024, the Company entered into Amendment No.

2 to the Credit Agreement, which lowered the interest rate for the Revolver by 50 basis points to 30-day SOFR plus 5.0 % and the Term Loan by 100 basis points to 30-day SOFR plus 7.0 %, subject to a SOFR floor of 4.0 %.

ORION GROUP HOLDINGS, INC.

17 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures