Granite(GVA) - 2023 Q1 - Quarterly Report

EXPLANATORY NOTE Restatement and Recast Background Unaudited Q1-Q3 2022 financial information was restated for deferred tax errors and reclassified Water and Mineral Services businesses - Restatement of unaudited quarterly financial information for the first three quarters of 2022 was necessary to correct errors related to deferred taxes and income tax expense from the Inliner business sale and other immaterial errors[9] - Financial information for Q1 2022 includes adjustments to retrospectively reclassify Water and Mineral Services businesses from discontinued to continuing operations[10] PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS (Unaudited) This section provides unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements, with explanatory notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------- | :------------- | :---------------- | | Total assets | $2,077,387 | $2,167,933 | | Total liabilities | $972,411 | $985,145 | | Total equity | $925,457 | $953,016 | - Total assets decreased by $90.5 million from December 31, 2022, to March 31, 2023[14] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands) | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated and Recast) | | :--------------- | :-------------------------------- | :------------------------------------------------------- | | Total revenue | $560,068 | $653,886 | | Gross profit | $32,359 | $60,092 | | Operating loss | $(43,249) | $(15,709) | | Net loss attributable to Granite Construction Incorporated | $(23,023) | $(26,733) | | Basic net loss per share | $(0.53) | $(0.58) | - Total revenue decreased by $93.8 million (14.3%) year-over-year (YoY)[16] - Gross profit decreased by $27.7 million (46.1%) YoY[16] - Operating loss widened by $27.5 million YoY[16] - Net loss attributable to Granite Construction Incorporated improved by $3.7 million YoY[16] Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated) | | :--------------- | :-------------------------------- | :---------------------------------------------- | | Net loss | $(25,772) | $(25,095) | | Other comprehensive income (loss), net of tax | $(135) | $4,932 | | Comprehensive loss attributable to Granite Construction Incorporated, net of tax | $(23,158) | $(21,801) | - Other comprehensive income shifted from a gain of $4.9 million in Q1 2022 to a loss of $0.1 million in Q1 2023[19] Condensed Consolidated Statements of Shareholders' Equity Condensed Consolidated Statements of Shareholders' Equity (in thousands) | (in thousands) | March 31, 2023 | December 31, 2022 | | :--------------- | :------------- | :---------------- | | Total Granite Shareholders' Equity | $925,457 | $953,016 | | Non-controlling Interests | $46,954 | $32,129 | | Total Equity | $972,411 | $985,145 | - Total equity decreased by $12.7 million from December 31, 2022, to March 31, 2023[22] - Common stock repurchases for employee tax withholding amounted to $3.5 million in Q1 2023, compared to $20.2 million in Q1 2022 (which included share repurchase program activity)[22][23] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated) | | :--------------- | :-------------------------------- | :---------------------------------------------- | | Net cash used in operating activities | $(76,688) | $(50,180) | | Net cash used in investing activities | $(24,336) | $89,396 | | Net cash provided by (used in) financing activities | $6,784 | $(82,904) | | Net decrease in cash, cash equivalents and restricted cash | $(94,240) | $(43,688) | - Cash used in operating activities increased by $26.5 million YoY[26] - Investing activities shifted from providing $89.4 million cash in Q1 2022 to using $24.3 million in Q1 2023, primarily due to proceeds from the Inliner business sale in 2022[26] - Financing activities shifted from using $82.9 million cash in Q1 2022 to providing $6.8 million in Q1 2023, mainly due to decreased debt principal repayments and common stock repurchases[26] Notes to the Condensed Consolidated Financial Statements Note 1. General - The financial statements are unaudited and prepared in accordance with SEC rules, condensing or omitting certain GAAP disclosures[30] - Operations are typically affected by weather conditions in Q1 and Q4, leading to variability in revenues and profitability, thus Q1 results are not indicative of the full year[31] - On April 24, 2023, the company acquired Coast Mountain Resources (2020) Ltd. for approximately $27 million, an acquisition not expected to materially impact results[32] Note 2. Recently Issued and Adopted Accounting Pronouncements - No recently issued accounting pronouncements are expected to have a material impact, and no new pronouncements adopted in Q1 2023 had a material impact[33] Note 3. Restatement and Recast - Restatement of Q1-Q3 2022 financial information was due to errors in deferred taxes and income tax expense related to the Inliner sale, and other immaterial errors[36] - The Water and Mineral Services (WMS) businesses, previously classified as held for sale, were reclassified to continuing operations in Q1 2022, impacting the condensed consolidated statement of operations[37] Impact of Restatement and Recast on Q1 2022 Operations (in thousands) | Metric | As Previously Reported | Restatement Impacts | As Restated | Discontinued Operations Reclassification Impacts | As Restated and Recast | | :----- | :--------------------- | :------------------ | :---------- | :--------------------------------------------- | :--------------------- | | Total revenue | $547,586 | $1,893 | $549,479 | $104,407 | $653,886 | | Gross profit | $49,775 | $(4,126) | $45,649 | $14,443 | $60,092 | | Net loss | $(9,821) | $(15,274) | $(25,095) | $- | $(25,095) | | Basic loss per share | $(0.29) | $(0.29) | $(0.58) | $- | $(0.58) | Note 4. Revisions in Estimates - Profit recognition on construction contracts is based on estimates, which can vary, and revisions are accounted for using the cumulative catch-up method[43][44] Downward Revisions in Estimates (Q1 2023) | Metric | Three Months Ended March 31, 2023 | | :----- | :-------------------------------- | | Number of projects with downward estimate changes | 2 | | Range of reduction in gross profit from each project, net | $6.2 - $11.4 million | | Decrease to project profitability, net | $17.6 million | | Decrease to net income/increase to net loss attributable to Granite Construction Incorporated | $7.5 million | | Decrease to net income/increase to net loss per diluted share | $0.17 | - Decreases in Q1 2023 were due to additional costs from changes in project duration, increased labor and materials costs, lower productivity, and unfavorable weather[46] Note 5. Disaggregation of Revenue Disaggregated Revenue by Operating Group (in thousands) | Operating Group | Q1 2023 Construction | Q1 2023 Materials | Q1 2023 Total | Q1 2022 Construction (As Restated and Recast) | Q1 2022 Materials (As Restated and Recast) | Q1 2022 Total (As Restated and Recast) | | :-------------- | :------------------- | :---------------- | :------------ | :-------------------------------------------- | :----------------------------------------- | :------------------------------------- | | California | $148,947 | $30,138 | $179,085 | $146,309 | $45,687 | $191,996 | | Central | $171,002 | $11,556 | $182,558 | $219,894 | $10,362 | $230,256 | | Mountain | $183,467 | $14,958 | $198,425 | $212,063 | $19,571 | $231,634 | | Total | $503,416 | $56,652 | $560,068 | $578,266 | $75,620 | $653,886 | - Total revenue decreased by $93.8 million (14.3%) YoY, with Construction revenue down 12.9% and Materials revenue down 25.1%[16][107][108] Note 6. Unearned Revenue Unearned Revenue (in thousands) | Operating Group | March 31, 2023 | December 31, 2022 | | :-------------- | :------------- | :---------------- | | California | $1,011,489 | $945,971 | | Central | $1,437,759 | $1,444,983 | | Mountain | $714,320 | $486,524 | | Total | $3,163,568 | $2,877,478 | - Total unearned revenue increased by $286.1 million (9.9%) from December 31, 2022, to March 31, 2023, with approximately $2.1 billion expected to be recognized within the next twelve months[50] Note 7. Contract Assets and Liabilities - Revenue recognized from changes in contract transaction price was $44.2 million in Q1 2023 and $35.2 million in Q1 2022[51] Contract Assets (in thousands) | Component | March 31, 2023 | December 31, 2022 | | :-------- | :------------- | :---------------- | | Costs in excess of billings and estimated earnings | $125,918 | $80,357 | | Contract retention | $162,228 | $161,559 | | Total contract assets | $288,146 | $241,916 | Contract Liabilities (in thousands) | Component | March 31, 2023 | December 31, 2022 | | :-------- | :------------- | :---------------- | | Billings in excess of costs and estimated earnings, net of retention | $141,702 | $152,294 | | Provisions for losses | $18,543 | $20,992 | | Total contract liabilities | $160,245 | $173,286 | Note 8. Receivables, net Receivables, net (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Contracts completed and in progress (Billed) | $190,635 | $220,809 | | Contracts completed and in progress (Unbilled) | $108,931 | $120,348 | | Materials sales | $31,955 | $52,182 | | Other | $66,807 | $71,790 | | Less: allowance for credit losses | $1,097 | $1,142 | | Total net receivables | $397,231 | $463,987 | - Total net receivables decreased by $66.8 million (14.4%) from December 31, 2022, to March 31, 2023[54] Note 9. Fair Value Measurement Fair Value Measurement of Assets and Liabilities (March 31, 2023, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :------- | :------ | :------ | :------ | :---- | | Cash equivalents (Money market funds) | $42,821 | $— | $— | $42,821 | | Accrued and other current liabilities (Diesel collars) | $— | $934 | $— | $934 | | Accrued and other current liabilities (Commodity swaps) | $— | $138 | $— | $138 | - The company held commodity swaps for crude oil with a notional amount of $14.0 million as of March 31, 2023, all maturing by October 31, 2023[56] - Entered into diesel collar contracts in Q1 2023, resulting in an unrealized loss of $0.9 million, treated as mark-to-market derivatives[57] Note 10. Construction Joint Ventures - At March 31, 2023, the company was engaged in eleven active Consolidated Construction Joint Ventures (CCJVs) with a combined total contract value of $1.7 billion, of which Granite's share was $1.0 billion[63] - Total revenue from CCJVs was $61.3 million in Q1 2023, down from $104.3 million in Q1 2022[63] - At March 31, 2023, the company was engaged in seven active unconsolidated joint venture projects with a combined total contract value of $7.9 billion, of which Granite's share was $2.3 billion[65] Granite's Interest in Unconsolidated Construction Joint Ventures (in thousands) | Metric | Q1 2023 | Q1 2022 | | :----- | :------ | :------ | | Revenue (Granite's interest) | $14,845 | $49,655 | | Cost of revenue (Granite's interest) | $13,967 | $53,269 | | Gross profit (loss) (Granite's interest) | $878 | $(3,614) | | Net income (loss) (Granite's interest) | $911 | $(3,627) | Note 11. Investments in Affiliates Investments in Affiliates (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Foreign | $61,919 | $58,579 | | Real estate | $8,022 | $8,517 | | Asphalt terminal | $13,394 | $13,629 | | Total investments in affiliates | $83,335 | $80,725 | - Total investments in affiliates increased by $2.6 million (3.2%) from December 31, 2022, to March 31, 2023[72] Note 12. Property and Equipment, net Property and Equipment, net (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Equipment and vehicles | $1,016,327 | $994,602 | | Quarry property | $226,682 | $219,843 | | Land and land improvements | $107,816 | $105,733 | | Buildings and leasehold improvements | $105,190 | $103,658 | | Office furniture and equipment | $83,860 | $82,465 | | Property and equipment, net | $531,457 | $509,210 | - Net property and equipment increased by $22.2 million (4.4%) from December 31, 2022, to March 31, 2023[75] Note 13. Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Accrued insurance | $84,156 | $78,427 | | Deficits in unconsolidated construction joint ventures | $14,496 | $13,989 | | Payroll and related employee benefits | $63,072 | $80,910 | | Performance guarantees | $58,190 | $64,703 | | Short-term lease liabilities | $17,552 | $18,662 | | Other | $29,075 | $31,778 | | Total | $266,541 | $288,469 | - Total accrued expenses and other current liabilities decreased by $21.9 million (7.6%) from December 31, 2022, to March 31, 2023[76] - The decrease in performance guarantees is due to receiving customer acceptance on two unconsolidated construction joint ventures[76] Note 14. Long-Term Debt and Credit Arrangements Long-Term Debt (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | 2.75% Convertible Notes | $230,000 | $230,000 | | Credit Agreement - revolver | $50,000 | $50,000 | | Other, net of debt issuance costs | $8,456 | $8,381 | | Total debt | $288,456 | $288,381 | | Less current maturities | $1,456 | $1,447 | | Total long-term debt | $287,000 | $286,934 | - As of March 31, 2023, unused availability under the Credit Agreement was $269.5 million, with $50.0 million drawn[79] - The company was in compliance with financial covenants: Consolidated Leverage Ratio of 1.4 (max 3.25) and Consolidated Interest Coverage Ratio of 15.7 (min 3.00)[80] Note 15. Weighted Average Shares Outstanding and Net Loss Per Share Weighted Average Shares Outstanding and Net Loss Per Share (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated) | | :----- | :-------------------------------- | :---------------------------------------------- | | Net loss attributable to common shareholders | $(23,023) | $(26,733) | | Weighted average common shares outstanding, basic | 43,764 | 45,730 | | Weighted average common shares outstanding, diluted | 43,764 | 45,730 | | Net loss per share, basic | $(0.53) | $(0.58) | | Net loss per share, diluted | $(0.53) | $(0.58) | - Restricted Stock Units (RSUs) (583,000 shares in Q1 2023) and potential dilution from 2.75% Convertible Notes (7,309,000 shares) were excluded from diluted EPS calculation due to the antidilutive effect from net losses[84] Note 16. Income Taxes Provision for (Benefit from) Income Taxes (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated and Recast) | | :----- | :-------------------------------- | :------------------------------------------------------- | | Provision for (benefit from) income taxes | $(9,469) | $6,352 | | Effective tax rate | 26.9% | (33.9%) | - The effective tax rate for Q1 2023 was 26.9%, compared to (33.9%) in Q1 2022, primarily due to non-deductible goodwill associated with the Inliner sale in Q1 2022[85] Note 17. Contingencies - Legal Proceedings - Total liabilities recorded for legal proceedings as of March 31, 2023, and December 31, 2022, were immaterial[87] - The company's subsidiary, Layne Christensen Company, is involved in a lawsuit and arbitration related to allegedly defective work on the Salesforce Tower foundation, seeking damages up to approximately $100 million[91] - Layne intends to vigorously defend against the claims and prosecute counterclaims, not believing a material loss is probable, but acknowledging a possible loss up to $100 million[91] Note 18. Reportable Segment Information - Reportable segments are Construction and Materials, aligned with how the Chief Operating Decision Maker (CODM) reviews financial information[92] Segment Revenue and Gross Profit (in thousands) | Segment | Q1 2023 Revenue | Q1 2023 Gross Profit | Q1 2022 Revenue (As Restated and Recast) | Q1 2022 Gross Profit (As Restated and Recast) | | :------ | :-------------- | :------------------- | :--------------------------------------- | :-------------------------------------------- | | Construction | $503,416 | $36,705 | $578,266 | $58,479 | | Materials | $56,652 | $(4,346) | $75,620 | $1,613 | | Total | $560,068 | $32,359 | $653,886 | $60,092 | - Construction gross profit decreased by $21.8 million (37.2%) YoY, primarily due to increased negative net impact from revisions in estimates and higher depreciation[113] - Materials gross profit decreased by $6.0 million YoY, driven by lower sales volumes due to inclement weather[114] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operating results, economic drivers, and liquidity, including the impact of the IIJA and Salesforce Tower litigation - The company delivers infrastructure solutions primarily in the U.S., with public sector work accounting for approximately 65% of revenue[96][107] - The $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) is expected to increase project lettings in 2023 and more significantly in 2024 and beyond, improving programming visibility for state and local governments[98] - Committed and Awarded Projects (CAP) stood strong at $5.1 billion at the end of Q1 2023, an increase of $618.8 million from December 31, 2022[101][111] Overview - Granite is a diversified infrastructure company in the U.S., serving public and private clients with projects including roads, highways, mass transit, airports, bridges, and site preparation[96] - Business is driven by U.S. economy health, public funding levels, population growth, aging infrastructure needs, and commodity pricing[97] Current Economic Environment and Outlook - Public work funding, accounting for approximately 65% of work, is supported by federal (IIJA) and state/local measures (e.g., California's SB-1)[98][99] - The company is mitigating inflation, supply chain, and labor constraints through proactive measures like fixed forward purchase contracts and energy surcharges[100] - Committed and Awarded Projects (CAP) reached $5.1 billion at the end of Q1 2023, indicating strong future opportunities[101] Subsequent Event - On April 24, 2023, the company acquired Coast Mountain Resources (2020) Ltd., a Canadian construction aggregate producer, for approximately $27 million, with no material impact expected on operations[102] Litigation Matter - Layne Christensen Company, a subsidiary, faces a lawsuit and arbitration seeking approximately $100 million for allegedly defective work on the Salesforce Tower foundation[103] Results of Operations Financial Summary (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 (As Restated and Recast) | | :----- | :-------------------------------- | :------------------------------------------------------- | | Total revenue | $560,068 | $653,886 | | Gross profit | $32,359 | $60,092 | | Selling, general and administrative expenses | $73,122 | $70,120 | | Operating loss | $(43,249) | $(15,709) | | Net loss attributable to Granite Construction Incorporated | $(23,023) | $(26,733) | - Total revenue decreased by $93.8 million (14.3%) YoY, with Construction revenue down 12.9% and Materials revenue down 25.1%[106][107][108] - Gross profit decreased by $27.7 million (46.1%) YoY, primarily due to increased negative net impact from revisions in estimates in the Central operating group and lower Materials sales volumes due to inclement weather[113][114] - Selling, general and administrative expenses increased by $3.0 million (4.3%) YoY, driven by higher stock-based compensation and changes in deferred compensation plan liability, partially offset by the Inliner sale[115][116][117] - The effective tax rate for Q1 2023 was 26.9%, compared to (33.9%) in Q1 2022, mainly due to non-deductible goodwill from the Inliner sale[118] - Amount attributable to non-controlling interests increased by $4.4 million YoY, primarily due to the negative impact from revisions in estimates on one project[119] Committed and Awarded Projects (CAP) - CAP includes unearned revenue (future revenue on executed contracts) and other awards (CM/GC contracts, unexercised options/task orders)[109][110] Committed and Awarded Projects (CAP) (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Unearned revenue | $3,163,568 | $2,877,478 | | Other awards | $1,940,385 | $1,607,661 | | Total CAP | $5,103,953 | $4,485,139 | - CAP increased by $618.8 million (13.8%) from December 31, 2022, to March 31, 2023, with significant additions from broadband infrastructure, Guam construction, and highway projects[111] Liquidity and Capital Resources - Primary liquidity sources are cash, investments, available borrowing capacity, and cash from operations[121][123] Cash, Cash Equivalents and Marketable Securities (in thousands) | Category | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Cash and cash equivalents excluding CCJVs | $87,411 | $191,444 | | CCJV cash and cash equivalents | $112,340 | $102,547 | | Short-term and long-term marketable securities | $56,329 | $65,943 | | Total cash, cash equivalents and marketable securities | $256,080 | $359,934 | - Total cash, cash equivalents, and marketable securities decreased by $103.9 million (28.9%) from December 31, 2022, to March 31, 2023[126] - Capital expenditures for Q1 2023 were $40.5 million, up from $31.3 million in Q1 2022, primarily due to acquisitions of materials reserves[129] - Anticipated 2023 capital expenditures are $100 million to $120 million[129] - Cash used in operating activities increased by $26.5 million YoY, mainly due to timing of working capital receipts and payments[130] - Investing activities shifted from providing $89.4 million to using $24.3 million YoY, primarily due to the Inliner sale proceeds in 2022[132] - Financing activities shifted from using $82.9 million to providing $6.8 million YoY, driven by decreased debt repayments and stock repurchases[133][134] - The company maintains bonding capacity for $2.6 billion of its $5.1 billion Committed and Awarded Projects (CAP), requiring satisfactory cash and working capital balances[137] - The company was in compliance with all financial covenants under its Credit Agreement as of March 31, 2023[140] - As of March 31, 2023, $231.5 million remained available under the $300.0 million share repurchase authorization[141] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section reports no material changes in the company's market risk exposure since the last Annual Report - No material change in market risk exposure from what was previously disclosed in the Annual Report[144] Item 4. Controls and Procedures Disclosure controls were ineffective due to a material weakness, though financial statements are fairly presented, with remediation efforts focused on income tax controls - Disclosure controls and procedures were not effective as of March 31, 2023, due to a material weakness in internal control over financial reporting[145] - Despite the material weakness, management concluded that the financial statements in this Form 10-Q fairly present the company's financial position, results of operations, and cash flows[145] - Remediation plan includes enhancing income tax controls for significant transactions and adding reviews for quarterly effective tax rate calculations[146][153] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section incorporates legal proceedings from Note 17, confirming no new material developments - The description of legal proceedings from Note 17 of the financial statements is incorporated by reference[148] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the last Annual Report - No material changes in the risk factors previously disclosed in the Annual Report[149] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details Q1 2023 common stock repurchases for employee tax withholding and remaining share repurchase authorization Common Stock Repurchases (Q1 2023) | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased | | :----- | :------------------------------- | :--------------------------- | :--------------------------------------------------------- | | January 1, 2023 through January 31, 2023 | 85 | $35.20 | $231,535,405 | | February 1, 2023 through February 28, 2023 | 386 | $41.70 | $231,535,405 | | March 1, 2023 through March 31, 2023 | 86,789 | $40.38 | $231,535,405 | | Total | 87,260 | $40.38 | $231,535,405 | - Shares purchased were in connection with employee tax withholding for restricted stock units vested under equity incentive plans[150] - As of March 31, 2023, $231.5 million of the $300.0 million share repurchase authorization remained available[151] Item 4. Mine Safety Disclosures Mine safety disclosures and regulatory matters are referenced in Exhibit 95 as required by the Dodd-Frank Act - Information concerning mine safety violations or other regulatory matters is included in Exhibit 95[154] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications, mine safety disclosures, and XBRL documents - The report includes various exhibits such as certifications (31.1, 31.2, 32), Mine Safety Disclosure (95), and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[155] SIGNATURES Signature The report is signed by Elizabeth L. Curtis, Executive Vice President and Chief Financial Officer, on May 2, 2023 - The report was signed by Elizabeth L. Curtis, Executive Vice President and Chief Financial Officer, on May 2, 2023[158]