What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-31 · 48 added, 124 removed, 112 unchanged (61% of the section changed)

8 unchanged sentences

We have based these forward-looking statements on our current expectations and assumptions about future events.

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

These and other important factors, including those described under “Risk Factors” in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 may cause our actual results, performance- or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

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

September 30, 2024

June 30, 2024

March 31, 2025

1 unchanged sentence

September 30, 2024

June 30, 2024

March 31, 2024

Marine segment

Concrete segment

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $753 million of quoted bids outstanding at quarter end, of which over $116 million were awarded but not fully contracted as of or awarded subsequent to September 30, 2024.

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $1.3 billion of quoted bids outstanding at quarter end, of which over $51 million were awarded but not fully contracted as of or awarded subsequent to March 31, 2025.

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

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Income Statement Comparisons

Three months ended September 30, 2024 compared with three months ended September 30, 2023.

Three months ended September 30,

Three months ended March 31, 2025 compared with three months ended March 31, 2024.

Three months ended March 31,

(dollar amounts in thousands)

2 unchanged sentences

Selling, general and administrative expenses

Amortization of intangible assets

Gain on disposal of assets, net

Operating income

Operating income (loss)

Other (expense) income:

2 unchanged sentences

Other expense, net

Income (loss) before income taxes

Loss before income taxes

Income tax expense (benefit)

Net income (loss)

Contract Revenues.

Contract revenues for the three months ended September 30, 2024 of $226.7 million increased $58.2 million or 34.5% as compared to $168.5 million in the prior year period.

The increase was primarily due to an increase in Marine segment revenue related to the Pearl Harbor drydock project, partially

offset by lower Concrete segment revenue due to our deliberate efforts to adhere to disciplined bidding standards to win quality work at attractive margins.

Contract revenues for the three months ended March 31, 2025 of $188.7 million increased $28.0 million or 17.4% as compared to $160.7 million in the prior year period.

The increase was primarily due to an increase in revenue from large marine construction contracts and new concrete projects.

Gross Profit.

Gross profit was $27.1 million for the three months ended September 30, 2024 compared to $19.1 million in the prior year period, an increase of $8.0 million, or 41.9%.

Gross profit was $23.0 million for the three months ended March 31, 2025 compared to $15.5 million in the prior year period, an increase of $7.5 million, or 48.1%.

Gross profit in the quarter was 12.2% of total contract revenues as compared to 9.7% in the prior year period.

The increase in gross profit dollars and margin was primarily driven by i mproved pricing of projects in both segments stemming from higher quality projects and improved execution.

The increases in gross profit dollars and

margin were primarily driven by an improvement in indirect expenses in the marine segment as a result of a higher volume of work, partially offset by lower margins in the concrete segment which were primarily driven by normal seasonally lower productivity.

Selling, General and Administrative Expense.

Selling, general and administrative (“SG&A”) expenses were $20.8 million for the three months ended September 30, 2024 compared to $17.1 million in the prior year period, an increase of $3.7 million or 21.7%.

As a percentage of total contract revenues, SG&A expenses decreased from 10.2% to 9.2%.

The increase in SG&A dollars reflected an increase in compensation expense, business development spending and legal expenses.

Selling, general and administrative (“SG&A”) expenses were $22.5 million for the three months ended March 31, 2025 compared to $19.0 million in the prior year period, an increase of $3.5 million or 18.7%.

As a percentage of total contract revenues, SG&A expenses increased to 12.0% from 11.8%.

The increases in SG&A dollars and percentage reflect an increase in compensation expense and operating lease expense.

Gain on Disposal of Assets, net.

During the three months ended September 30, 2024 and 2023 we realized $1.6 million and $0.7 million, respectively, of net gains on disposal of assets.

During the three months ended March 31, 2025 and 2024 we realized $0.4 million and $0.3 million, respectively, of net gains on disposal of assets.

Other Income, net of Expense.

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Income Tax Expense (Benefit).

We recorded tax expense of $0.1 million in the three months ended September 30, 2024, compared to tax benefit of $0.1 million in the prior year period.

We expect 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, our effective tax rate for the period ending September 30, 2024, is based off actual year-to-date operations.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023.

Nine months ended September 30,

(dollar amounts in thousands)

Contract revenues

Cost of contract revenues

Selling, general and administrative expenses

Amortization of intangible assets

Gain on disposal of assets, net

Operating income (loss)

Other (expense) income:

Interest income

Interest expense

Other expense, net

Loss before income taxes

Income tax expense

Contract Revenues.

Contract revenues for the nine months ended September 30, 2024 of $579.5 million increased $69.3 million or 13.6% as compared to $510.2 million in the prior year period.

The increase was primar ily due to an increase in marine segment revenue related to the Pearl Harbor drydock project, partially offset by lower concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.

Gross Profit.

Gross profit was $60.9 million for the nine months ended September 30, 2024 compared to $38.7 million in the prior year period, an increase of $22.2 million or 57.3%.

Gross profit in the nine months ended September 30, 2024 was 10.5% of total contract revenues as compared to 7.6% in the prior year period.

The increase in gross profit dollars and margin was primarily driven by improved pricing of projects in both segments stemming from higher quality projects and improved execution.

Selling, General and Administrative Expense.

SG&A expenses were $61.0 million for the nine months ended September 30, 2024 compared to $52.3 million in the prior year period, an increase of $8.7 million or 16.7%.

As a percentage of total contract revenues, SG&A expenses increased from 10.3% to 10.5%.

The increase in SG&A dollars and percentage reflecting an increase in IT, compensation, business development spending, and higher legal costs related to pursuing project-related claims.

Gain on Disposal of Assets, net.

During the nine months ended September 30, 2024 and 2023 we realized $2.0 million and $7.9 million, respectively, of net gains on disposal of assets.

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

Other Income, net of Expense.

Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses.

Income Tax Expense.

We recorded tax expense of $0.3 million in the nine months ended September 30, 2024, compared to tax expense of $0.5 million in the prior year period.

We recorded tax expense of $0.1 million in the three months ended March 31, 2025, compared to tax benefit of $0.4 million in the prior year period.

We expect near break-even operations for the full year ended December 31, 2025, 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, our effective tax rate for the period ending September 30, 2024, is based off actual year-to-date operations.

Therefore, our effective tax rate for the period ending March 31, 2025, is based off actual year-to-date operations.

Segment Results

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

Three months ended September 30, 2024 compared with three months ended September 30, 2023.

Three months ended September 30,

(dollar amounts in thousands)

Contract revenues

Marine segment

Public sector

Private sector

Marine segment total

Concrete segment

Public sector

Private sector

Concrete segment total

Operating income

Marine segment

Concrete segment

Marine Segment

Revenues for our marine segment for the three months ended September 30, 2024 were $140.0 million compared to $80.9 million for the three months ended September 30, 2023, an increase of $59.1 million, or 73.0%.

The increase was primarily related to the Pearl Harbor Project.

Operating income for our marine segment for the three months ended September 30, 2024 was $5.5 million, compared to $2.0 million for the three months ended September 30, 2023, an increase of $3.5 million.

The increase in operating income was primarily related to the Pearl Harbor Project.

Concrete Segment

Revenues for our concrete segment for the three months ended September 30, 2024 were $86.7 million compared to $87.6 million for the three months ended September 30, 2023, a decrease of $0.9 million, or 1.0%.

This decrease was primarily due to disciplined bidding standards to win quality work at attractive margins.

Operating income for our concrete segment for the three months ended September 30, 2024 was $2.3 million, compared to $0.6 million for the three months ended September 30, 2023, an increase of $1.7 million.

This increase was primarily due to reduction of lower margin work, winning higher margin jobs due to disciplined bidding standards and improved execution.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023.

Nine months ended September 30,

Three months ended March 31, 2025 compared with three months ended March 31, 2024.

Three months ended March 31,

(dollar amounts in thousands)

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Concrete segment total

Operating (loss) income

Operating income (loss)

Marine segment

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Marine Segment

Revenues for our marine segment for the nine months ended September 30, 2024 were $377.3 million compared to $260.8 million for the nine months ended September 30, 2023, an increase of $116.5 million, or 44.7%.

The increase was primarily related to the Pearl Harbor Project.

Operating loss for our marine segment for the nine months ended September 30, 2024 was $4.8 million, compared to $0.6 million for the nine months ended September 30, 2023, an increase in operating loss of $4.2 million.

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

This $1.0 million decrease in operating loss was primarily due to margin improvements stemming from higher quality projects and improved execution.

Revenues for our marine segment for the three months ended March 31, 2025 were $127.2 million compared to $106.3 million for the three months ended March 31, 2024, an increase of $20.9 million, or 19.6%.

The increase was primarily due to an increase in revenue from large marine construction contracts.

Operating income for our marine segment for the three months ended March 31, 2025 was $4.8 million, compared to operating loss of $4.9 million for the three months ended March 31, 2024, an increase of $9.7 million.

The increase in operating income was primarily related to an improvement in indirect expenses and more disciplined execution and bidding standards to exclude lower margin contracts.

Concrete Segment

Revenues for our concrete segment for the nine months ended September 30, 2024 were $202.2 million compared to $249.4 million for the nine months ended September 30, 2023, a decrease of $47.2 million, or 18.9%.

This decrease was primarily due to disciplined bidding standards to win quality work at attractive margins.

Operating income for our concrete segment for the nine months ended September 30, 2024 was $6.7 million, compared to an operating loss of $5.5 million for the nine months ended September 30, 2023, an increase of $12.2 million.

This increase was primarily due to a reduction of lower margin work, winning higher margin jobs due to disciplined bidding standards and improved execution.

Revenues for our concrete segment for the three months ended March 31, 2025 were $61.5 million compared to $54.3 million for the three months ended March 31, 2024, an increase of $7.2 million, or 13.1%.

This increase was primarily due to new projects.

Operating loss for our concrete segment for the three months ended March 31, 2025 was $3.9 million, compared to operating income of $1.7 million for the three months ended March 31, 2024, a decrease of $5.6 million.

This decrease was primarily driven by lower margins which were primarily driven by normal seasonally lower productivity.

Liquidity and Capital Resources

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

At September 30, 2024, our working capital was $72.2 million, as compared to $55.9 million at December 31, 2023.

As of September 30, 2024, we had unrestricted cash on hand of $28.3 million.

Our borrowing availability under our revolving portion of our Credit Agreement at September 30, 2024 was approximately $46.1 million.

At March 31, 2025, our working capital was $73.4 million, as compared to $78.2 million at December 31, 2024.

As of March 31, 2025, we had unrestricted cash on hand of $13.0 million.

Our borrowing availability under our revolving portion of our Credit Agreement at March 31, 2025 was approximately $40.7 million.

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

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

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

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

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

Recent Developments

On September 12, 2024, we completed the sale of 5,589,000 shares of common stock, including 729,000 shares of common stock pursuant to an option granted to the underwriters, in an underwritten public offering.

We received net proceeds of approximately $26.5 million, after deducting underwriting discounts and other estimated offering expenses payable by us.

The net proceeds were used for working capital and for general corporate purposes, including repayment of borrowings under the Credit Agreement.

The following table provides information regarding our cash flows and our capital expenditures for the three and nine months ended September 30, 2024 and 2023:

As of March 31, 2025, management believes the Company will have adequate liquidity for its operations for at least the next 12 months.

The following table provides information regarding our cash flows and our capital expenditures for the three months ended March 31, 2025 and 2024:

Three months ended

Nine months ended

September 30,

Net income (loss)

Adjustments to remove non-cash and non-operating items

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Change in operating assets and liabilities (working capital)

Cash flows provided by (used in) operating activities

Cash flows (used in) provided by investing activities

Cash flows (used in) provided by financing activities

Cash flows used in operating activities

Cash flows used in investing activities

Cash flows used in financing activities

Capital expenditures (included in investing activities above)

Operating Activities.

During the three months ended September 30, 2024, we generated approximately $35.2 million in cash from our operating activities.

The net cash inflow was comprised of $22.5 million of inflows related to changes in net working capital and $12.6 million of cash inflows from net income, after adjusting for non-cash items.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $11.5 million cash inflow related to an increase in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, $9.4 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period, and a $4.2 million inflow related to a decrease in prepaid expenses and other, partially offset by a $2.1 million decrease in operating lease liabilities and $0.5 million of other outflows.

During the nine months ended September 30, 2024, we used approximately $0.7 million in cash in our operating activities.

During the three months ended March 31, 2025 we used approximately $3.4 million of cash in our operating activities.

The net cash outflow was comprised of $11.3 million of outflows related to changes in net working capital, partially offset by $7.9 million of cash inflows from net income, after adjusting for non-cash items.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $21.1 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, a $6.6 million decrease in operating lease liabilities and $0.7 million of other outflows, partially offset by a $4.9 million inflow related to a decrease in prepaid expenses and $3.3 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period.

The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $27.7 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period and a $1.2 million decrease in operating lease liabilities, partially offset by $16.2 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period, a $1.3 million inflow related to a decrease in prepaid expenses and other, and $0.1 million of other inflows.

Investing Activities.

Capital asset additions and betterments to our fleet were $4.2 million and $2.4 million in the three months ended September 30, 2024 and 2023, respectively.

Proceeds from the sale of property and equipment were $1.6 million in the three months ended September 30, 2024, as compared with $0.7 million in the three months ended September 30, 2023.

Capital asset additions and betterments to our fleet were $10.6 million and $6.7 million in the nine months ended September 30, 2024 and 2023, respectively.

Proceeds from the sale of property and equipment were $1.9 million in the nine months ended September 30, 2024, as compared with $12.1 million in the nine months ended

September 30, 2023.

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

During the three months ended March 31, 2025, we used approximately $8.7 million of cash in our investing activities.

Capital asset additions and betterments to our fleet were $9.0 million and $1.9 million in the three months ended March 31, 2025 and 2024, respectively.

Proceeds from the sale of property and equipment were $0.3 million in both the three months ended March 31, 2025 and March 31, 2024.

Financing Activities.

During the three months ended September 30, 2024, we had proceeds from an offering of common stock of $27.2 million, borrowings of $10.1 million and repayments of $32.8 million on the White Oak revolving credit line, repayments of $10.0 million on the White Oak term loan, payments on finance lease liabilities of $2.3 million, payments made on failed sale-leaseback arrangements of $0.9 million, $0.4 million of payments related to tax withholding for share-based compensation and repayments of $0.1 million on other debt.

During the nine months ended September 30, 2024, we had proceeds from an offering of common stock of $27.2 million, borrowings and repayments of $39.3 million on the White Oak revolving credit line, repayments of $10.0 million on the White Oak term loan, payments on finance lease liabilities of $6.5 million, payments made on failed sale-leaseback arrangements of $3.2 million, $0.4 million of payments related to tax withholding for share-based compensation, repayments of $0.4 million on other debt, loan costs of $0.4 million and a cash inflow of $0.4 million for proceeds from the exercise of stock options.

During the three months ended March 31, 2025, we used approximately $3.2 million of cash in our financing activities.

During the three months ended March 31, 2025, we had borrowings and repayments of $3.0 million on the White Oak revolving credit line, payments on finance lease liabilities of $2.5 million, payments made on failed sale-leaseback arrangements of $0.7 million, loan costs of $0.3 million and repayments of $0.1 million on other debt, partially offset by inflows of $0.3 million from proceeds from issuance of common stock under the employee stock purchase plan and $0.1 million from proceeds from stock option exercises.

Sources of Capital

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Please see “Note 9 – Debt” in our unaudited condensed consolidated financial statements for a more detailed description of the Credit Facility.

We were in compliance with all financial covenants under the amended agreement as of September 30, 2024.

We were in compliance with all financial covenants under the amended agreement as of March 31, 2025.

Bonding Capacity

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

At September 30, 2024, the capacity under our current bonding arrangement was at least $950 million, with approximately $550 million of projects being bonded.

At March 31, 2025, the capacity under our current bonding arrangement was at least $1.1 billion, with approximately $535 million of projects being bonded.

While we believe that our current bonding capacity is sufficient to satisfy current demand for our services, any new major project opportunities may require us to seek additional bonding capacity in the future.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis