What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-07-26 compared with 2024-04-26 · 181 added, 105 removed, 582 unchanged (33% of the section changed)

7 unchanged sentences

Accounts receivable:

Trade, net of allowance for credit losses of $ 366 and $ 361 , respectively

Trade, net of allowance for credit losses of $ 523 and $ 361 , as of June 30, 2024 and December 31, 2023, respectively

Income taxes receivable

28 unchanged sentences

Common stock -- $ 0.01 par value, 50,000,000 authorized, 34,082,186 and 33,260,011 issued;

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

33,370,955 and 32,548,780 outstanding at June 30, 2024 and December 31, 2023, respectively

Treasury stock, 711,231 shares, at cost, as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

(In Thousands, Except Share and Per Share Information)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Contract revenues

3 unchanged sentences

Gain on disposal of assets, net

Operating loss

Operating (loss) income

Other (expense) income:

3 unchanged sentences

Loss before income taxes

Income tax (benefit) expense

Income tax expense (benefit)

Basic loss per share

12 unchanged sentences

Balance, March 31, 2024

Share-based compensation

Exercise of stock options

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for share-based compensation

Balance, June 30, 2024

Balance, December 31, 2022

4 unchanged sentences

Balance, March 31, 2023

Share-based compensation

Issuance of restricted stock

Forfeiture of restricted stock

Payments related to tax withholding for share-based compensation

Balance, June 30, 2023

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

3 unchanged sentences

(in Thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of ROU finance leases

Write-off of debt issuance costs upon debt modification

Amortization of deferred debt issuance costs

17 unchanged sentences

Purchase of property and equipment

Net cash used in investing activities

Net cash (used in) provided by 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 Credit Agreement and prior credit facility

2 unchanged sentences

Exercise of stock options

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

1 unchanged sentence

Cash, cash equivalents and restricted cash at end of period

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash shown above

Supplemental disclosures of cash flow information:

Cash paid during the period for:

37 unchanged sentences

Such adjustments are of a normal recurring nature.

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.

Interim results of operations for the three and six months ended June 30, 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.

6 unchanged sentences

Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.

The assessment of the liquidity and going concern requires the Company to make estimates of future activity and judgments about whether the Company 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, 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

45 unchanged sentences

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

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

Cash equivalents at June 30, 2024 and December 31, 2023 consisted primarily of overnight bank deposits.

Risk Concentrations

6 unchanged sentences

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

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

The Company had significant investments in billed and unbilled receivables as of June 30, 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 both March 31, 2024 and December 31, 2023, the Company had recorded an allowance for credit losses of $ 0.4 million.

As of June 30, 2024 and December 31, 2023, the Company had recorded an allowance for credit losses of $ 0.5 million and $ 0.4 million, respectively.

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

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 June 30, 2024 totaled $ 36.4 million, of which $ 5.6 million is expected to be collected beyond June 30, 2025.

Retainage at December 31, 2023 totaled $ 42.0 million.

10 unchanged sentences

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

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

The Company did not recognize any environmental liabilities as of June 30, 2024 or December 31, 2023.

Fair Value Measurements

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.

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.

27 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.

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

There were no assets classified as held for sale as of June 30, 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.

18 unchanged sentences

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.

GAAP, which requires the recognition of income tax expense for the amount of taxes payable or

refundable for the current period and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns.

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

30 unchanged sentences

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 $ 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.

The total accrual for insurance claims liabilities was $ 5.2 million and $ 7.5 million at June 30, 2024 and December 31, 2023, respectively, reflected as a component of accrued liabilities in the consolidated balance sheet.

Recent Accounting Pronouncements

2 unchanged sentences

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.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

11 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Marine Segment

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 March 31, 2024 and December 31, 2023, respectively:

March 31, 2024

The table below presents the concentrations of current receivables (trade and retainage) at June 30, 2024 and December 31, 2023, respectively:

June 30, 2024

December 31, 2023

6 unchanged sentences

Net receivables

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,

At June 30, 2024, the United States Navy, which is included in the Federal Government category, accounted for 27.2 % of total current receivables.

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

Additionally, the table below represents concentrations of contract revenue by type of customer for the three and six months ended June 30, 2024 and 2023, respectively:

Three months ended June 30,

Six months ended June 30,

Federal Government

3 unchanged sentences

Total contract revenues

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.

For the three months ended June 30, 2024, the United States Navy, which is included in the Federal Government category, accounted for 28.9 % of total contract revenues.

For the three months ended June 30, 2023, the United States Navy, which is included in the Federal Government category, accounted for 14.0 % of total contract revenues.

For the six months ended June 30, 2024, the United States Navy, which is included in the Federal Government category, accounted for 26.5 % of total contract revenues.

For the six months ended June 30, 2023, no single customer accounted for more than 10.0% 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.

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 and six months ended June 30, 2024, the Company’s revenue related to the joint venture subcontract was approximately $ 90.5 million, $ 55.5 million and $ 93.5 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 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.

Contract revenues generated outside the United States totaled 8.6 % and 4.0 % of total revenues for the three months ended June 30, 2024 and 2023, respectively, and 7.4 % and 2.9 % for the six months ended June 30, 2024 and 2023, respectively, and were primarily located in the Caribbean Basin.

Contracts in Progress

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

Contracts in progress are as follows at June 30, 2024 and December 31, 2023:

Costs incurred on uncompleted contracts

6 unchanged sentences

Contract liabilities

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.

Included in contract assets is approximately $ 13.5 million and $ 13.0 million at June 30, 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 March 31, 2024, the aggregate amount of the remaining performance obligations was approximately $ 756.6 million.

As of June 30, 2024, the aggregate amount of the remaining performance obligations was approximately $ 758.4 million.

Of this amount, the current expectation of the Company is that it will recognize $ 629.4 million, or 83 %, in the next 12 months and the remaining balance thereafter.

Property and Equipment

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

The following is a summary of property and equipment at June 30, 2024 and December 31, 2023:

Automobiles and trucks

6 unchanged sentences

Construction in progress

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

For the three months ended June 30, 2024 and 2023, depreciation expense was $ 4.1 million and $ 4.4 million, respectively.

For the six months ended June 30, 2024 and 2023, depreciation expense was $ 8.3 million and $ 9.0 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 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.

9 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 March 31, 2024 and December 31, 2023:

Fair Value Measurements

Carrying Value

March 31, 2024

June 30, 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 March 31, 2024.

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

1 unchanged sentence

Other Fair Value Measurements

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.

The fair value of the Company’s debt at June 30, 2024 and December 31, 2023 approximated its carrying value of $ 64.7 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.

Accrued Liabilities

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

March 31, 2024

Accrued liabilities at June 30, 2024 and December 31, 2023 consisted of the following:

June 30, 2024

December 31, 2023

11 unchanged sentences

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.

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.

3 unchanged sentences

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 %.

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

On June 28, 2024, the Company executed Amendment No.

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

This amendment, among other things, (i) revised the Minimum Liquidity covenant to require that the Loan Parties and Subsidiaries cause Liquidity to not fall below the following amounts for more than three consecutive Business Days or as of the close of business on Friday of each week:

From the Third Amendment Effective Date through July 26, 2024 - $ 8.0 million, provided that Liquidity may be less than $ 8.0 million but no less than $ 5.0 million on the close of business of one Friday during such period and during the week (ending Sunday) that includes such Friday;

From July 27, 2024 through September 30, 2024 - $ 10.0 million;

From October 1, 2024 through the Maturity Date - $ 15.0 million, (ii) revised the Specified Prepayment provision to replace the prior $ 10.0 million prepayment due June 30, 2024 with the following prepayments:

July 26, 2024 - $ 2.0 million;

August 30, 2024 - $ 4.0 million;

September 30, 2024 - $ 4.0 million and October 31, 2024 - $ 5.0 million;

provided, however, that if the sale of the East and West Jones Property is consummated prior to September 30, 2024, then the amounts due following the consummation of such sale are not required and instead, the Borrowers shall make a mandatory prepayment on the Term Loans of the net proceeds of the sale within three Business Days of receipt of such proceeds in an amount equal to $ 15.0 million less the amount of the prepayments already made as of such date;

and (iii) revised the Specified Post-Closing Liquidity Transactions provision to be fulfilled by September 30, 2024.

On July 26, 2024, the Company executed Amendment No.

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

See Note 18 for more information regarding Amendment No.

The quarterly weighted average interest rate for the Credit Agreement, as of June 30, 2024 was 12.07 %.

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

March 31, 2024

June 30, 2024

December 31, 2023

12 unchanged sentences

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.

As of June 30, 2024, the Company had $ 22.7 million in borrowings under the Revolver.

The Company’s borrowing availability under the Revolver at June 30, 2024 was approximately $ 16.6 million.

During the six months ended June 30, 2024, the Company borrowed $ 29.2 million on the Revolver.

During the six months ended June 30, 2024, the Company repaid $ 6.5 million outstanding on the Revolver.

Financial covenants

Restrictive financial covenants under the Credit Agreement include:

Restrictive financial covenants under the amended Credit Agreement include:

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

- 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.

- Trailing Four Quarter Test Period Ending June 30, 2024 to not be less than 1.00 to 1.00.

- Trailing Four Quarter Test Period Ending September 30, 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 March 31, 2024 and each Fiscal Quarter thereafter, to not be less than 2.50 to 1.00.

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

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

- Fiscal Quarter Ending 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.

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

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

- Trailing Four Quarter Test Period Ended September 30, 2024 - $ 33,260,000 .

- Trailing Four Quarter Test Period ended December 31, 2024 - $ 37,188,000 .

- Trailing Four Quarter Test Period ended March 31, 2025 - $ 35,032,000 .

- Trailing Four Quarter Test Period ending June 30, 2025 - $ 31,691,000 .

● The Company shall not permit Liquidity (as defined in the Credit Agreement) of to fall below the following during each noted period (i) for more than three (3) consecutive Business Days (as defined in the Credit Agreement) nor (i) as of the close of business on Friday of each week:

From April 24, 2024 through July 26, 2024

$ 8,000,000 ;

provided that Liquidity may be less than $ 8,000,000 but no less than $ 5,000,000 on the close of business of one Friday during such period and during the week (ending Sunday) that includes such Friday

From July 27, 2024 October 31, 2024

From November 1, 2024 through November 30, 2024

From December 1, 2024 through December 31, 2024

From January 1, 2025 through the Maturity Date

provided that if the 2024 Liquidity Transactions (as defined in the Amendment) occur on or prior to September 30, 2024, minimum liquidity requirement shall be set to $ 20,000,000 .

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.

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 was in compliance with all financial covenants under the amended agreement as of June 30, 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 March 31, 2024 and December 31, 2023, the carrying value of this debt was $ 1.8 million and $ 1.9 million, respectively.

As of June 30, 2024 and December 31, 2023, the carrying value of this debt was $ 1.7 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 both March 31, 2024 and December 31, 2023, the carrying value of this debt was $ 2.4 million.

As of both June 30, 2024 and December 31, 2023, the carrying value of this debt was $ 2.4 million.

Other Long-Term Liabilities

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

March 31, 2024

Other long-term liabilities at June 30, 2024 and December 31, 2023 consisted of the following:

June 30, 2024

December 31, 2023

19 unchanged sentences

Three months ended

Income tax (benefit) expense

Six months ended

Income tax expense (benefit)

Effective tax rate

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's effective tax rate is typically based on expected income for the calendar year, statutory rates and tax planning opportunities available.

This estimated annual effective tax rate is then applied to year-to-date operations.

The Company expects near break-even operations for the full year ended December 31, 2024, such that a small change in the year-to-date operations could result in a large change to the estimated annual effective tax rate.

Therefore, the Company’s effective tax rate for the period ending June 30, 2024, is based off actual year-to-date operations.

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

1 unchanged sentence

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

For the period ended March 31, 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.

For the period ended June 30, 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 June 30, 2024 remains appropriate.

The Company expects the unrecognized tax benefits as of June 30, 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.

2 unchanged sentences

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

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

For the three months ended June 30, 2024 and 2023, the Company had 181,025 and 247,945 securities, respectively, that were potentially dilutive in earnings per share calculations.

For the six months ended June 30, 2024 and 2023, the Company had 201,550 and 264,204 securities, respectively, that were potentially dilutive in earnings per share calculations.

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

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

The exercise price for certain stock options awarded by the Company exceeded the average market price of the Company’s common stock for the three and six months ended June 30, 2024 and 2023.

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

2 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Weighted average shares outstanding

4 unchanged sentences

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.

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

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

In the three months ended March 31, 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.

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 amended in May of 2024 and authorizes 3,735,000 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 and performance-based awards 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.

In the three months ended June 30, 2024 and 2023, compensation expense related to share-based awards outstanding was $ 1.6 million and $ 0.9 million, respectively.

In the six months ended June 30, 2024 and 2023, compensation expense related to share-based awards outstanding was $ 1.9 million and $ 1.5 million, respectively.

In the three months ended June 30, 2024 and 2023, payments related to tax withholding for share-based compensation for certain officers of the Company were less than $ 0.1 million in both periods.

In the six months ended June 30, 2024 and 2023, payments related to tax withholding for share-based compensation for certain officers of the Company were less than $ 0.1 million and $ 0.2 million, respectively.

On March 4, 2024, an employee 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.

3 unchanged sentences

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.

On May 16, 2024, the Company’s six independent directors were awarded an aggregate of 64,170 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 $ 9.35 .

On May 17, 2024, the Company granted certain employees a total of 443,258 shares of restricted common stock with a vesting period of three years and a fair value of $ 9.37 per share.

On June 24, 2024, an employee of the Company was awarded a total of 1,482 shares of restricted common stock with a vesting period of three years and a fair value of $ 8.77 per share.

In the three months ended June 30, 2024, there were 10,246 options exercised generating proceeds to the Company of $ 0.1 million.

In the six months ended June 30, 2024, there were 56,568 options exercised

generating proceeds to the Company of $ 0.4 million.

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

At June 30, 2024, total unrecognized compensation expense related to unvested stock was approximately $ 9.1 million, which is expected to be recognized over a period of approximately 2.5 years.

Commitments and Contingencies

8 unchanged sentences

Three months ended

Six months ended

Contract revenues

Operating loss

Operating (loss) income

Depreciation and amortization expense

4 unchanged sentences

Property and equipment, net

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.

There were $ 1.1 million and none in intersegment revenues between the Company’s two reportable segments for the three months ended June 30, 2024 and 2023, respectively.

There were $ 1.7 million and less than $ 0.1 million in intersegment revenues between the Company’s two reportable segments for the six months ended June 30, 2024 and 2023, respectively.

The marine segment had foreign revenues of $ 16.5 million and $ 7.3 million for the three months ended June 30, 2024 and 2023, respectively.

The marine segment has foreign revenues of $ 26.0 million and $ 10.0 million for the six months ended June 30, 2024 and 2023, respectively.

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

7 unchanged sentences

Total liabilities

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 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.

(1) Operating lease right-of-use assets are recorded net of accumulated amortization of $ 20.5 million and $ 15.6 million as of June 30, 2024 and December 31, 2023, respectively.

(2) Financing lease right-of-use assets are recorded net of accumulated amortization of $ 13.8 million and $ 10.2 million as of June 30, 2024 and December 31, 2023, respectively.

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

6 unchanged sentences

The components of lease expense are as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease costs:

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Three Months Ended March 31,

Six Months Ended June 30,

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

9 unchanged sentences

Year ending December 31,

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

2024 (excluding the six months ended June 30, 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 months ended

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

For the three months ended June 30, 2024 and 2023, the Company’s revenue related to the joint venture subcontract was approximately

$ 55.5 million and $ 25.5 million, respectively.

For the six months ended June 30, 2024 and 2023, the Company’s revenue related to the joint venture subcontract was approximately $ 93.5 million and $ 25.5 million, respectively.

Subsequent Event

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.

On July 26, 2024, the Company executed Amendment No.

5 to the Loan Agreement with White Oak Commercial Finance, LLC and the Lenders party thereto.

This amendment, among other things, (i) replaces the minimum FCCR covenant with a minimum EBITDA covenant for the next four quarters, (ii) modifies the minimum liquidity requirements through January 1, 2025, (iii) replaces the requirement to raise $ 45.0 million through asset sales by September 30, 2024, with certain milestones requiring the Company to raise $ 25.0 million (the “2024 Liquidity Transactions”) by September 30, 2024, and (iv) further modifies the timing and amounts of term loan prepayments.

Under the terms of Amendment No.

5, the Company must make the following term loan prepayments:

July 26, 2024 – $ 2.0 million, August 30, 2024 - $ 4.0 million and September 30, 2024 - $ 4.0 million.

The Company must also make a prepayment of $ 5.0 million upon the close of the sale of the East-West Jones property.

If the East-West Jones property does not close on or before September 30, 2024, the Company must make the following term loan prepayments:

October 31, 2024 - $ 1.67 million, November 29, 2024 - $ 1.67 million and December 31, 2024 - $ 1.67 million.

In the event the 2024 Liquidity Transactions do not occur on or prior to September 30, 2024, the following will occur:

(i) margin will be increased by 50 basis-points on October 1 , 2024 and every seven day period thereafter (but in any event not in excess of 200 basis-points) and the pricing grid level for the revolving facility shall be set to Level III, (ii) accounts constituting Eligible Surety Bond Accounts shall be phased out of the Borrowing Base and shall no longer constitute Eligible Surety Bond Accounts pursuant to a schedule to be determined by the Administrative Agent in its sole discretion and which may be reduced to zero, and (iii) the following additional prepayments will be required:

January 31, 2025 - $ 1.67 million, February 28, 2025 - $ 1.67 million and March 31, 2025- $ 1.67 million.

Amendment No.

5 also includes other administrative and definitional changes, including changes to the EBITDA requirements used to compute the interest rate margin applicable to the revolving credit facility.

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