What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-26 compared with 2023-10-27 · 178 added, 261 removed, 509 unchanged (46% of the section changed)

4 unchanged sentences

(In Thousands, Except Share and Per Share Information)

September 30,

Current assets:

11 unchanged sentences

Inventory, non-current

Intangible assets, net of amortization

Deferred income tax asset

19 unchanged sentences

Common stock -- $ 0.01 par value, 50,000,000 authorized, 33,575,345 and 33,260,011 issued;

32,342,110 and 32,059,319 outstanding at September 30, 2023 and December 31, 2022, respectively

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

32,864,114 and 32,548,780 outstanding at March 31, 2024 and December 31, 2023, respectively

Treasury stock, 711,231 shares, at cost, as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

(In Thousands, Except Share and Per Share Information)

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Contract revenues

3 unchanged sentences

Gain on disposal of assets, net

Operating income (loss)

Operating loss

Other (expense) income:

4 unchanged sentences

Income tax (benefit) expense

Net (loss) income

Basic (loss) income per share

Diluted( loss) income 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 condensed consolidated financial statements

4 unchanged sentences

Balance, December 31, 2023

Stock-based compensation

Share-based compensation

Exercise of stock options

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, March 31, 2024

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, June 30, 2023

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for share-based compensation

Balance, September 30, 2023

Balance, December 31, 2022

Stock-based compensation

Share-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Payments related to tax withholding for share-based compensation

Balance, March 31, 2023

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, June 30, 2022

Stock-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for stock-based compensation

Balance, September 30, 2022

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

3 unchanged sentences

(in Thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

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:

2 unchanged sentences

Amortization of ROU finance leases

Write-off of debt issuance costs upon debt modification

Amortization of deferred debt issuance costs

Deferred income taxes

Stock-based compensation

Share-based compensation

Gain on disposal of assets, net

10 unchanged sentences

Contract liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

1 unchanged sentence

Purchase of property and equipment

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

Payments made on borrowings on credit

Proceeds from failed sale-leaseback arrangement

Proceeds from sale-leaseback financing

Loan costs from borrowings on credit

Loan costs from Credit Agreement and prior credit facility

Payments of finance lease liabilities

Payments related to tax withholding for share-based compensation

Exercise of stock options

Net cash provided by (used in) financing activities

2 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

Supplemental disclosures of cash flow information:

Cash paid during the period for:

7 unchanged sentences

Description of Business

Orion Group Holdings, Inc., its subsidiaries and affiliates (hereafter collectively referred to as the “Company”), provide a broad range of specialty construction services in the infrastructure, industrial, and building sectors, provides services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through its marine segment and its concrete segment.

The Company’s marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design and specialty services.

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

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

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

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.

20 unchanged sentences

Such adjustments are of a normal recurring nature.

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

Interim results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results realizable for the year ending December 31, 2024.

In connection with preparing consolidated financial statements for each annual and interim reporting period, the Company is required to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

7 unchanged sentences

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 and expected timing and proceeds of planned real estate transactions.

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

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

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 11 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.

Significant assumptions used in the Company's forecasted model of liquidity include forecasted sales, costs, our ability to manage spending on capital expenditures, our ability to complete certain asset sales, collect claims and unapproved change order revenue and improve working capital.

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

Therefore, management’s conclusion is that substantial doubt is not raised as to the Company’s ability to continue as a going concern.

Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in conformity with U.S.

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

1 unchanged sentence

however, actual amounts could differ from those estimates.

On an ongoing basis, the Company evaluates the significant accounting policies used to prepare its condensed consolidated financial statements, including, but not limited to, those related to:

On an ongoing basis, the Company evaluates the significant accounting policies used to prepare its consolidated financial statements, including, but not limited to, those related to:

● Revenue recognition from construction contracts;

1 unchanged sentence

● The carrying value of property, plant and equipment;

● Finite and infinite-lived intangible assets, testing for indicators of impairment;

● Stock-based compensation;

● Share-based compensation;

● Income taxes;

3 unchanged sentences

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.

7 unchanged sentences

Upfront costs, such as costs to mobilize personnel and equipment prior to satisfying a performance obligation are capitalized and amortized over the contract performance period.

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.

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 to match contract progress with revenue recognition.

18 unchanged sentences

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

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

Cash equivalents at March 31, 2024 and December 31, 2023 consisted primarily of overnight bank deposits.

Risk Concentrations

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

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.

and current governmental projects.

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

2 unchanged sentences

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

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

The Company had significant investments in billed and unbilled receivables as of March 31, 2024 and December 31, 2023.

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

3 unchanged sentences

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

As of September 30, 2023 and December 31, 2022, the Company had recorded an allowance for credit losses of $ 0.5 million and $ 0.6 million, respectively.

As of both March 31, 2024 and December 31, 2023, the Company had recorded an allowance for credit losses of $ 0.4 million.

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

Retainage at September 30, 2023 totaled $ 55.1 million, of which $ 4.8 million is expected to be collected beyond September 30, 2024.

Retainage at March 31, 2024 totaled $ 37.4 million, of which $ 5.0 million is expected to be collected beyond March 31, 2025.

Retainage at December 31, 2023 totaled $ 42.0 million.

1 unchanged sentence

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

Successful claims negotiations could

result in the recovery of previously recorded losses.

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

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

6 unchanged sentences

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

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

The Company did not recognize any environmental liabilities as of March 31, 2024 or December 31, 2023.

Fair Value Measurements

The Company evaluates and presents certain amounts included in the accompanying condensed consolidated financial statements at “fair value” in accordance with U.S.

GAAP, which requires the Company to base its estimates on assumptions that market participants, in an orderly transaction, would use to price an asset or liability, and to establish a hierarchy that prioritizes the information used to determine fair value.

The Company evaluates and presents certain amounts included in the accompanying consolidated financial statements at “fair value” in accordance with U.S.

GAAP, which requires the Company to base its estimates on assumptions that market participants, in an orderly transaction, would use to price an asset or liability, and to

establish a hierarchy that prioritizes the information used to determine fair value.

Refer to Note 7 for more information regarding fair value determination.

2 unchanged sentences

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.

22 unchanged sentences

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

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.

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 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 both September 30, 2023 and December 31, 2022 included in prepaid expenses and other in the Company’s condensed consolidated balance sheets.

There were no assets classified as held for sale as of March 31, 2024 or December 31, 2023.

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

9 unchanged sentences

See Note 16 for more information regarding leases.

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.

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.

Once a supportable royalty rate is determined, the rate is then applied to the projected revenues over the expected remaining life of the intangible assets to estimate the royalty savings.

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.

Stock-Based Compensation

Share-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.

1 unchanged sentence

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

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

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

The Company estimates forfeitures at the date of grant based on historical experience and future expectations.

This assessment is updated on a periodic basis.

See Note 15 for further discussion of the Company’s stock-based compensation plan.

See Note 13 for further discussion of the Company’s share-based compensation plan.

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.

events that have been recognized in an entity’s financial statements or tax returns.

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

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

The value of any net deferred tax asset depends

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

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

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

23 unchanged sentences

Actual claims may vary from estimates.

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

The Company’s concrete segment employee health care

is provided through two policies.

Any adjustments to such reserves are included in the Consolidated Statements of Operations in the period in which they become known.

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

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

The self-funded plan is funded to the maximum exposure and, as a result, is expected to receive a partial refund after the policy expiration.

The total accrual for insurance claims liabilities was $ 4.3 million and $ 5.8 million at September 30, 2023 and December 31, 2022, respectively, reflected as a component of accrued liabilities in the condensed consolidated balance sheets.

The total accrual for insurance claims liabilities was $ 5.5 million and $ 7.5 million at March 31, 2024 and December 31, 2023, respectively, reflected as a component of accrued liabilities in the consolidated balance sheet.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issues accounting standards and updates (each, an "ASU") from time to time to its Accounting Standards Codification (‘ASC’), which is the primary source of U.S.

The Company regularly monitors ASUs as they are issued and considers applicability to its business.

All ASUs are adopted by their respective due dates and in the manner prescribed by the FASB.

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments are intended to increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact that this guidance will have on the disclosures within its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments require disclosure of specific categories in the rate reconciliation and provides additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions.

The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that this guidance will have on the disclosures within its consolidated financial statements.

Contract revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table represents a disaggregation of the Company’s contract revenues by service line for the marine and concrete segments:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Marine Segment

22 unchanged sentences

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

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

September 30, 2023

The table below presents the concentrations of current receivables (trade and retainage) at March 31, 2024 and December 31, 2023, respectively:

March 31, 2024

December 31, 2023

6 unchanged sentences

Net receivables

At both September 30, 2023 and December 31, 2022, no single customer accounted for more than 10.0% of total current receivables.

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

Three months ended September 30,

Nine months ended September 30,

At March 31, 2024 and December 31, 2023, a customer in the Private Companies category accounted for 14.9 % and 19.9 % of total current receivables, respectively.

Additionally, the table below represents concentrations of contract revenue by type of customer for the three months ended March 31, 2024 and 2023, respectively:

Three months ended March 31,

Federal Government

State Governments

Local Governments

Local Government

Private Companies

Total contract revenues

In the three months ended September 30, 2023, one customer in the Federal Government category accounted for 10.2 % of total contract revenues.

In the nine months ended September 30, 2023, no single customer accounted for more than 10.0% of total contract revenues.

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

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

For the three months ended March 31, 2024, the United States Navy, which is included in the Federal Government category, accounted for 23.7 % of total contract revenues.

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

With the exception of the Unites States Navy, 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 besides the United States Navy sustains such a large portion of receivables or contract revenue over time.

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

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

For the fiscal year ended December 31, 2023 and the three months ended March 31, 2024, the Company’s revenue related to the joint venture subcontract was approximately $ 90.5 million and $ 38.0 million, respectively.

The concrete segment primarily purchases concrete from select suppliers.

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

Contract revenues generated outside the United States totaled 2.7 % and 1.4 % of total revenues for the three months ended September 30, 2023 and 2022, respectively, and 2.8 % and 0.9 % for the nine months ended September 30, 2023 and 2022, respectively, and were primarily located in the Caribbean Basin.

Contract revenues generated outside the United States totaled 6.0 % and 1.7 % of total revenues for the three months ended March 31, 2024 and 2023, respectively, and were primarily located in the Caribbean Basin.

Contracts in Progress

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

September 30,

Contracts in progress are as follows at March 31, 2024 and December 31, 2023:

Costs incurred on uncompleted contracts

3 unchanged sentences

( 1,553,704 )

Included in the accompanying Condensed Consolidated Balance Sheets under the following captions:

Included in the accompanying Consolidated Balance Sheets under the following captions:

Contract assets

Contract liabilities

Included in contract assets is approximately $ 14.1 million and $ 13.4 million at September 30, 2023 and December 31, 2022, respectively, related to claims and unapproved change orders.

Included in contract assets is approximately $ 13.7 million and $ 13.0 million at March 31, 2024 and December 31, 2023, respectively, related to claims and unapproved change orders.

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

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

As of September 30, 2023, the aggregate amount of the remaining performance obligations was approximately $ 877.5 million.

As of March 31, 2024, the aggregate amount of the remaining performance obligations was approximately $ 756.6 million.

Of this amount, the current expectation of the Company is that it will recognize $ 691.9 million, or 91 %, in the next 12 months and the remaining balance thereafter.

Property and Equipment

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

September 30,

The following is a summary of property and equipment at March 31, 2024 and December 31, 2023:

Automobiles and trucks

6 unchanged sentences

Construction in progress

For the three months ended September 30, 2023 and 2022, depreciation expense was $ 4.5 million and $ 4.9 million, respectively.

For the nine months ended September 30, 2023 and 2022, depreciation expense was $ 13.5 million and $ 15.1 million, respectively.

For the three months ended March 31, 2024 and 2023, depreciation expense was $ 4.2 million and $ 4.6 million, respectively.

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

Substantially all of the assets of the Company are pledged as collateral under the Company’s Credit Agreement (as defined in Note 9 ).

In the three and nine months ended September 30, 2023, the Company sold property and equipment.

The book value of the assets and related accumulated depreciation were removed from the balance sheet and the Company recognized a net gain on the sales of $ 0.4 million and $ 7.0 million, respectively.

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

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

In the three months ended March 31, 2024 and 2023, the Company sold property and equipment.

The book value of the assets and related accumulated depreciation were removed from the balance sheet and the Company recognized a net gain on the sales of $ 0.3 million in both the three months ended March 31, 2024 and 2023.

Substantially all of the Company’s long-lived assets are located in the United States.

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

Other Current Accounts Receivable

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

September 30, 2023

December 31, 2022

Accident loss receivables

Purchase incentive receivable

Bond premium dividend receivable

Vendor receivables

Other current accounts receivable

Total other current accounts receivable

Recurring Fair Value Measurements

7 unchanged sentences

The Company’s assessment of the significance of a particular input to the fair value requires judgment and may affect the placement of assets and liabilities within the fair value hierarchy levels.

The following table sets forth by level within the fair value hierarchy the Company’s recurring financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:

Fair Value Measurements

Carrying Value

September 30, 2023

March 31, 2024

Cash surrender value of life insurance policy

1 unchanged sentence

Cash surrender value of life insurance policy

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

Our concrete segment had life insurance policies with a combined face value of $ 11.1 million as of March 31, 2024.

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 Condensed Consolidated Balance Sheets.

Non-Recurring Fair Value Measurements

The Company generally applies fair value valuation techniques on a non-recurring basis associated with (1) valuing assets and liabilities acquired in connection with business combinations and other transactions;

(2) valuing potential impairment loss related to long-lived assets;

and (3) valuing potential impairment loss related to the infinite-lived intangible asset.

These assets are included in the "Other noncurrent" asset section in the Company’s Condensed Consolidated Balance Sheets.

Other Fair Value Measurements

The fair value of the Company’s debt at September 30, 2023 and December 31, 2022 approximated its carrying value of $ 56.0 million and $ 36.0 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 March 31, 2024 and December 31, 2023 approximated its carrying value of $ 42.2 million and $ 42.3 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

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

September 30,

Finite-lived intangible assets, beginning of period

Total finite-lived intangible assets, end of period

Accumulated amortization, beginning of period

Current year amortization

Total accumulated amortization

Net finite-lived intangible assets, end of period

Infinite-lived intangible assets

Total net intangible assets

Remaining net finite-lived intangible assets were acquired as part of the purchase of TAS during 2015 and TBC during 2017 and included customer relationships.

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

For the three months ended September 30, 2023 and 2022, $ 0.1 million and $ 0.3 million, respectively, of amortization expense was recognized for these assets.

For the nine months ended September 30, 2023 and 2022, $ 0.4 million and $ 0.9 million, respectively, of amortization expense was recognized for these assets.

The remaining future amortization expense will be amortized through fiscal year 2024.

The most recent annual impairment test of the Company’s indefinite-lived intangible asset concluded that the fair value of the trade name was in excess of the carrying value, therefore no impairment was recorded.

Accrued Liabilities

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

September 30, 2023

Accrued liabilities at March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024

December 31, 2023

Accrued salaries, wages and benefits

Sale-leaseback arrangements

Accrued liabilities expected to be covered by insurance

Property taxes

Sale-leaseback arrangement

Accounting and audit fees

2 unchanged sentences

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

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

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

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, 2027.

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.

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

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

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

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

The quarterly weighted average interest rate for the Credit Facility, inclusive of the Company’s prior credit facility as of September 30, 2023 was 13.06 %.

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 bore 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 %.

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 %.

The quarterly weighted average interest rate for the Credit Agreement, as of March 31, 2024 was 13.09 %.

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

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Debt Issuance

Revolving line of credit

Term loan - current

Total current debt

Revolving line of credit

Revolving line of credit - long-term

Term loan - long-term

2 unchanged sentences

Provisions of the revolving line of credit

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

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.

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

The revolving line of credit termination date is the earlier of the Credit 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 Facility.

As of September 30, 2023, the Company had $ 13.5 million of borrowings under the revolving line of credit.

The Company’s borrowing availability under its revolving credit facility at September 30, 2023 was approximately $ 31.7 million.

During the nine months ended September 30, 2023, the Company borrowed $ 46.5 million on the revolving line of credit.

During the nine months ended September 30, 2023, the Company repaid $ 33.0 million outstanding on the revolving line of credit.

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, 2027, or the date the outstanding balance is permanently reduced to zero, in accordance with the terms of the Credit Agreement.

As of March 31, 2024, the Company had less than $ 0.1 million in borrowings under the Revolver.

The Company’s borrowing availability under the Revolver at March 31, 2024 was approximately $ 28.1 million.

During the three months ended March 31, 2024, the Company borrowed $ 1.6 million on the Revolver.

During the three months ended March 31, 2024, the Company repaid $ 1.6 million outstanding on the Revolver.

Financial covenants

1 unchanged sentence

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

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

- Fiscal Quarter Ending March 31, 2024 and each Fiscal Quarter thereafter, to not be less than 1.00 to 1.00 through the quarter ended December 31, 2024.

- Fiscal Quarter Ending March 31, 2025 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 September 30, 2023 and each Fiscal Quarter thereafter, to not be less than 2.50 to 1.00.

- Fiscal Quarter Ending March 31, 2024 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 September 30, 2023 and each Fiscal Quarter thereafter, to not be more than 60 % .

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

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

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

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

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

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

- Fiscal Quarter Ending March 31, 2024 and each Fiscal Quarter thereafter, to not be more than 60 % .

● 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;

3 unchanged sentences

and, events constituting a change of control.

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

On April 24, 2024, the Company executed Amendment No.

3 to the Loan Agreement with White Oak Commercial Finance, LLC.

This amendment, among other things, (i) replaces the Consolidated EBITDA covenant with a Consolidated Fixed Charge Coverage Ratio (FCCR) for the quarter ended March 31, 2024, (ii) lowers the FCCR covenant threshold from 1.10 :1.00 to 1.00 :1.00 through the quarter ended December 31, 2024, (iii) lowers the $ 15 million prepayment due June 30, 2024 to $ 10 million, (iv) extends the maturity of the Loan Agreement by one year to May 15, 2027, and (v) resets the make-whole provision to align with the extension.

The Company was in compliance with all financial covenants under the amended agreement as of March 31, 2024.

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 September 30, 2023 and December 31, 2022, the carrying value of this debt was $ 2.1 million and $ 1.0 million, respectively.

As of March 31, 2024 and December 31, 2023, the carrying value of this debt was $ 1.8 million and $ 1.9 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.

1 unchanged sentence

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

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

As of both March 31, 2024 and December 31, 2023, the carrying value of this debt was $ 2.4 million.

Other Long-Term Liabilities

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

September 30, 2023

Other long-term liabilities at March 31, 2024 and December 31, 2023 consisted of the following:

March 31, 2024

December 31, 2023

Sale-leaseback arrangements

Sale-leaseback arrangement

Deferred compensation

2 unchanged sentences

Sale-Leaseback Arrangements

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

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.

1 unchanged sentence

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 portion of the above transaction 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 for a purchase price of $ 19.1 million.

7 unchanged sentences

Three months ended

Nine months ended

September 30,

Income tax (benefit) expense

Effective tax rate

The effective rate for the three and nine months ended September 30, 2023 differed from the Company’s statutory federal rate of 21 % primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

The effective rate for the three months ended March 31, 2024 differed from the Company’s statutory federal rate of 21 % primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

The Company assessed the realizability of its deferred tax assets and determined that it was more likely than not that some portion or all the deferred tax assets would not be realized and therefore recorded a valuation allowance on the net deferred tax assets.

1 unchanged sentence

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

For the period ended September 30, 2023 the Company evaluated

all positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized.

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

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

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

The Company’s uncertain tax benefits, if recognized, would affect the Company’s effective tax rate.

For the period ended March 31, 2024 the Company evaluated all

positive and negative evidence in determining the amount of deferred tax assets more likely than not to be realized.

Based on the review of available evidence, management believes that a valuation allowance on the net deferred tax assets at March 31, 2024 remains appropriate.

The Company expects the unrecognized tax benefits as of March 31, 2024 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.

Earnings Per Share

1 unchanged sentence

Diluted earnings per share is based on the weighted average number of common shares outstanding as well as the effect of all dilutive common stock equivalents during each period net income is generated.

For the three months ended September 30, 2023 and 2022, the Company had 240,241 and 322,637 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the nine months ended September 30, 2023 and 2022, the Company had 256,128 and 553,813 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the three months ended March 31, 2024 and 2023, the Company had 222,075 and 280,644 securities, respectively, that were potentially dilutive in earnings per share calculations.

Such dilution is dependent on the excess of the market price of our stock over the exercise price and other components of the treasury stock method.

The exercise price for certain stock options awarded by the Company exceeded the average market price of the Company’s common stock for the three and nine months ended September 30, 2023 and 2022.

The exercise price for certain stock options awarded by the Company exceeded the average market price of the Company’s common stock for the three months ended March 31, 2024 and 2023.

Such stock options are antidilutive and are not included in the computation of earnings per share for those periods.

The Company reported a net loss for all periods presented;

therefore, all potentially dilutive securities are antidilutive and are excluded from the computation of diluted loss per share for such periods.

The following table reconciles the denominators used in the computations of both basic and diluted earnings per share:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Weighted average shares outstanding

3 unchanged sentences

Total weighted average shares outstanding assuming dilution

Stock-Based Compensation

Share-Based Compensation

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

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

on the date of grant.

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

1 unchanged sentence

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

In the three months ended September 30, 2023 and 2022, compensation expense related to stock-based awards outstanding was $ 0.4 million and $ 1.0 million, respectively.

In the nine months ended September 30, 2023 and 2022, compensation expense related to stock-based awards outstanding was $ 1.8 million and $ 2.1 million, respectively.

In the three months ended September 30, 2023 and 2022, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.3 million and $ 0.3 million, respectively.

In the nine months ended September 30, 2023 and 2022, payments related to tax withholding for stock-based compensation for certain officers of the Company was $ 0.5 million and $ 0.4 million, respectively.

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

In March 2023, the Company granted certain executives a total of 335,851 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.

In the three months ended March 31, 2024 and 2023, compensation expense related to share-based awards outstanding was $ 0.4 million and $ 0.5 million, respectively.

In the three months ended March 31, 2024 and 2023, payments related to tax withholding for share-based compensation for certain officers of the Company were none and $ 0.2 million, respectively.

On March 4, 2024, an executive of the Company was awarded a total of 2,197 shares of restricted common stock with a vesting period of three years and a fair value of $ 6.83 per share.

On March 20, 2024, the Company granted certain executives a total of 109,503 shares of restricted common stock with a vesting period of three years and a fair value of $ 8.36 per share.

On March 20, 2024, the Company granted certain executives a total of 205,322 performance-based units.

The performance-based units will potentially vest 100 % if the target is met, with 50 % 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 and 50 % of the units to be earned based on the achievement of an objective, tiered return on relative total shareholder return, measured over a three-year performance period.

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

The fair value of all grants awarded in 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 the three and nine months ended September 30, 2023 and 2022, there were no options exercised.

At September 30, 2023, total unrecognized compensation expense related to unvested stock was approximately $ 2.4 million, which is expected to be recognized over a period of approximately 2.0 years.

The fair value of the grants awarded related to the return on invested capital was $ 8.36 per share and the fair value of the grants awarded related to the relative total shareholder return will be valued using a Monte Carlo simulation.

In the three months ended March 31, 2024, there were 46,322 options exercised generating proceeds to the Company of $ 0.3 million.

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

At March 31, 2024, total unrecognized compensation expense related to unvested stock was approximately $ 5.3 million, which is expected to be recognized over a period of approximately 2.4 years.

Commitments and Contingencies

8 unchanged sentences

Three months ended

Nine months ended

September 30,

Contract revenues

Operating income (loss)

Operating loss

Depreciation and amortization expense

4 unchanged sentences

Property and equipment, net

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

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

The marine segment had foreign revenues of $ 4.5 million and $ 2.5 million for the three months ended September 30, 2023 and 2022, respectively.

The marine segment had foreign revenues of $ 14.5 million and $ 5.1 million for the nine months ended September 30, 2023 and 2022, respectively.

There were $ 0.6 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the three months ended March 31, 2024 and 2023, respectively.

The marine segment had foreign revenues of $ 9.6 million and $ 2.8 million for the three months ended March 31, 2024 and 2023, respectively.

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

2 unchanged sentences

Leases recorded on the balance sheet consists of the following:

September 30,

Operating lease right-of-use assets, net (1)

3 unchanged sentences

Total liabilities

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 13.3 million and $ 10.5 million as of September 30, 2023 and December 31, 2022, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 7.5 million and $ 5.1 million as of September 30, 2023 and December 31, 2022, respectively.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 18.0 million and $ 15.6 million as of March 31, 2024 and December 31, 2023, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 12.0 million and $ 10.2 million as of March 31, 2024 and December 31, 2023, respectively.

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

September 30,

Weighted Average Remaining Lease Term (in years)

5 unchanged sentences

The components of lease expense are as follows:

Three months ended September 30,

Nine months ended September 30,

Three Months Ended March 31,

Operating lease costs:

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Nine months ended September 30,

Three Months Ended March 31,

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

9 unchanged sentences

Year ending December 31,

2023 (excluding the nine months ended September 30, 2023)

2024 (excluding the three months ended March 31, 2024)

Total future minimum lease payments

6 unchanged sentences

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

For the three and nine months

ended September 30, 2023 the Company’s revenue related to the joint venture subcontract was approximately $ 17.3 million and $ 42.8 million, respectively.

For the three months ended

March 31, 2024 the Company’s revenue related to the joint venture subcontract was approximately $ 38.0 million.

Subsequent Event

On October 25, 2023 the Company reached an agreement with White Oak to amend the Credit Agreement to extend the date of the mandatory $ 15 million term loan pre-payment to the earlier of three days after the sale of the East West Jones Placement Area or June 30, 2024;

to accelerate the change in financial covenant test from minimum EBITDA to minimum FCCR to Q2 2024;

and to modify certain other non-financial covenants.

On April 24, 2024, the Company executed Amendment No.

3 to the Loan Agreement with White Oak Commercial Finance, LLC.

The Company was in compliance with all financial covenants under the amended agreement as of March 31, 2024.

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

What changed 10-Q

Item 1. Financial Statements