Orion (ORN) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Orion Group Holdings, Inc Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements of Orion Group Holdings, Inc. for the periods ended September 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of September 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets (September 30, 2022 vs. December 31, 2021) | ASSETS (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $2,737 | $12,293 | | Total current assets | $199,028 | $197,934 | | Total assets | $348,156 | $351,750 | | LIABILITIES (In Thousands) | | | | Total current liabilities | $164,338 | $161,737 | | Total liabilities | $205,990 | $203,652 | | Total stockholders' equity | $142,166 | $148,098 | - Cash and cash equivalents decreased significantly from $12.293 million at December 31, 2021, to $2.737 million at September 30, 2022[10] - Total assets slightly decreased from $351.750 million to $348.156 million, while total liabilities increased from $203.652 million to $205.990 million[10] Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net income or loss for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Operations (Three Months Ended September 30) | (In Thousands, Except Per Share) | 2022 | 2021 | | :------------------------------- | :----------- | :----------- | | Contract revenues | $182,621 | $139,907 | | Gross profit | $13,432 | $6,578 | | Operating income (loss) | $1,131 | $(8,743) | | Net income (loss) | $247 | $(10,195) | | Basic income (loss) per share | $0.01 | $(0.33) | Condensed Consolidated Statements of Operations (Nine Months Ended September 30) | (In Thousands, Except Per Share) | 2022 | 2021 | | :------------------------------- | :----------- | :----------- | | Contract revenues | $552,127 | $439,091 | | Gross profit | $40,579 | $34,334 | | Operating income (loss) | $(4,572) | $(1,122) | | Net income (loss) | $(7,663) | $(5,737) | | Basic income (loss) per share | $(0.25) | $(0.19) | - For the three months ended September 30, 2022, contract revenues increased by 30.5% YoY to $182.6 million, and the company reported a net income of $0.2 million, a significant improvement from a net loss of $10.2 million in the prior year period[13][171] - For the nine months ended September 30, 2022, contract revenues increased by 25.7% YoY to $552.1 million, but the company reported a net loss of $7.7 million, compared to a net loss of $5.7 million in the prior year period[13][178] Condensed Consolidated Statements of Comprehensive Income (Loss) Reports the company's net income or loss and other comprehensive income or loss for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended September 30) | (In Thousands) | 2022 | 2021 | | :------------- | :--- | :--- | | Net income (loss) | $247 | $(10,195) | | Total comprehensive income (loss) | $247 | $(10,195) | Condensed Consolidated Statements of Comprehensive Income (Loss) (Nine Months Ended September 30) | (In Thousands) | 2022 | 2021 | | :------------- | :--- | :--- | | Net income (loss) | $(7,663) | $(5,737) | | Change in fair value of cash flow hedge, net of tax | — | $1,234 | | Total comprehensive income (loss) | $(7,663) | $(4,503) | Condensed Consolidated Statements of Stockholders' Equity Outlines changes in the company's stockholders' equity for the nine months ended September 30, 2022, including net loss and stock transactions Condensed Consolidated Statements of Stockholders' Equity (Nine Months Ended September 30, 2022) | (In Thousands, Except Shares) | Common Stock Shares | Common Stock Amount | Treasury Stock Amount | Additional Paid-In Capital | Retained Earnings (Loss) | Total | | :---------------------------- | :------------------ | :------------------ | :-------------------- | :------------------------- | :----------------------- | :---- | | Balance, Dec 31, 2021 | 31,712,457 | $317 | $(6,540) | $185,881 | $(31,560) | $148,098 | | Net loss | — | — | — | — | $(7,663) | $(7,663) | | Balance, Sep 30, 2022 | 32,766,116 | $328 | $(6,540) | $187,601 | $(39,223) | $142,166 | - Total stockholders' equity decreased from $148.098 million at December 31, 2021, to $142.166 million at September 30, 2022, primarily due to a net loss of $7.663 million[15] Condensed Consolidated Statements of Cash Flows Provides a breakdown of cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30) | (In Thousands) | 2022 | 2021 | | :------------- | :----------- | :----------- | | Net cash provided by operating activities | $9,101 | $4,240 | | Net cash (used in) provided by investing activities | $(6,155) | $14,489 | | Net cash used in financing activities | $(12,502) | $(19,425) | | Net change in cash and cash equivalents | $(9,556) | $(696) | | Cash and cash equivalents at end of period | $2,737 | $893 | - Net cash provided by operating activities increased to $9.1 million in 2022 from $4.2 million in 2021[16] - Net cash used in investing activities was $6.2 million in 2022, a significant change from $14.5 million provided by investing activities in 2021, primarily due to lower proceeds from asset sales[16][209] - Net cash used in financing activities decreased to $12.5 million in 2022 from $19.4 million in 2021[16] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Description of Business and Basis of Presentation Describes Orion Group Holdings' specialty construction services and the basis for presenting its financial statements - Orion Group Holdings, Inc. provides specialty construction services in infrastructure, industrial, and building sectors across the continental U.S., Alaska, Canada, and the Caribbean Basin[18] - The company operates in two reportable segments: Marine (under the Orion brand) focusing on marine transportation, pipeline, environmental structures, and dredging; and Concrete (under the TAS Commercial Concrete brand) providing turnkey concrete construction services[18][19] - Management believes the company has adequate liquidity for operations for at least the next 12 months, concluding that substantial doubt about its ability to continue as a going concern is not raised[27] 2. Summary of Significant Accounting Policies Outlines the key accounting principles and methods used in preparing the company's financial statements - Revenue from construction contracts is generally recognized over time, measured by the percentage of actual contract costs incurred to total estimated costs[31] - The allowance for credit losses for accounts receivable was $0.5 million at September 30, 2022, up from $0.3 million at December 31, 2021[43] - Property and equipment are depreciated using the straight-line method over estimated useful lives ranging from 3 to 40 years, with dry-docking costs capitalized and amortized over 3 to 7 years[53][54] - The total accrual for insurance claims liabilities was $4.0 million at September 30, 2022, a significant decrease from $19.8 million at December 31, 2021[73] 3. Revenue Details the company's contract revenues, broken down by Marine and Concrete segments, for the reported periods Contract Revenues by Segment (Three Months Ended September 30) | Segment (In Thousands) | 2022 | 2021 | | :--------------------- | :----------- | :----------- | | Marine Segment | $76,098 | $54,739 | | Concrete Segment | $106,523 | $85,168 | | Total contract revenues | $182,621 | $139,907 | Contract Revenues by Segment (Nine Months Ended September 30) | Segment (In Thousands) | 2022 | 2021 | | :--------------------- | :----------- | :----------- | | Marine Segment | $242,897 | $190,827 | | Concrete Segment | $309,230 | $248,264 | | Total contract revenues | $552,127 | $439,091 | - Marine segment revenues increased by 39.1% for the three months ended September 30, 2022, and by 27.3% for the nine months ended September 30, 2022, driven by large job starts and recognized claims[75][187][195] - Concrete segment revenues increased by 25.1% for the three months ended September 30, 2022, and by 24.6% for the nine months ended September 30, 2022, primarily due to increased cubic yard production in light commercial projects[75][191][197] 4. Concentration of Risk and Enterprise-Wide Disclosures Discusses customer concentrations in receivables and revenues, highlighting the distribution across government and private sectors Concentrations of Current Receivables (September 30, 2022 vs. December 31, 2021) | Customer Type | Sep 30, 2022 | % | Dec 31, 2021 | % | | :------------ | :----------- | :--- | :----------- | :--- | | Federal Government | $5,220 | 3% | $6,563 | 5% | | State Governments | $711 | -% | $61 | -% | | Local Governments | $19,118 | 13% | $11,923 | 9% | | Private Companies | $126,589 | 84% | $111,328 | 86% | | Gross receivables | $151,638 | 100% | $129,875 | 100% | Concentrations of Contract Revenue by Customer Type (Three Months Ended September 30) | Customer Type | 2022 | % | 2021 | % | | :------------ | :----------- | :--- | :----------- | :--- | | Federal Government | $15,394 | 8% | $14,716 | 11% | | State Governments | $17,836 | 10% | $400 | -% | | Local Governments | $31,609 | 17% | $22,765 | 16% | | Private Companies | $117,782 | 65% | $102,026 | 73% | | Total contract revenues | $182,621 | 100% | $139,907 | 100% | - Private companies consistently represent the largest portion of both current receivables (84% in Q3 2022) and contract revenues (65% in Q3 2022)[79][80] - No single customer accounted for more than 10.0% of total current receivables or contract revenues in the reported periods[79][80] 5. Contracts in Progress Provides information on the status of uncompleted contracts, including costs incurred, estimated earnings, and remaining performance obligations Contracts in Progress (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Costs incurred on uncompleted contracts | $1,176,065 | $1,138,298 | | Estimated earnings | $163,038 | $168,861 | | Less: Billings to date | $(1,328,904) | $(1,305,628) | | Net contracts in progress | $10,199 | $1,531 | - Net contracts in progress increased significantly from $1.5 million at December 31, 2021, to $10.2 million at September 30, 2022[83] - Remaining performance obligations totaled approximately $548.6 million as of September 30, 2022, with 83% ($456.0 million) expected to be recognized in the next 12 months[84] 6. Property and Equipment Details the company's property and equipment, net of accumulated depreciation, and reports on gains from asset disposals Property and Equipment, Net (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Total property and equipment | $263,383 | $263,804 | | Accumulated depreciation | $(197,330) | $(191,542) | | Net book value of depreciable assets | $66,053 | $72,262 | | Total property and equipment, net | $101,774 | $106,654 | - Net property and equipment decreased from $106.654 million at December 31, 2021, to $101.774 million at September 30, 2022[85] - The company recognized net gains on disposal of assets of $3.4 million for the three months and $4.6 million for the nine months ended September 30, 2022, from selling underutilized equipment[87] 7. Other Current Accounts Receivable Breaks down other current accounts receivable, including insurance claims and accident loss receivables Other Current Accounts Receivable (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Insurance claims receivable | $88 | $13,273 | | Accident loss receivables | $1,240 | $3,760 | | Other current receivables | $1,584 | $552 | | Total other current accounts receivable | $2,912 | $17,585 | - Total other current accounts receivable significantly decreased from $17.585 million at December 31, 2021, to $2.912 million at September 30, 2022, primarily due to a large reduction in insurance claims receivable[90] 8. Fair Value Discusses the fair value measurements of the company's financial instruments, including cash surrender value of life insurance and debt - The fair value of financial instruments like accounts receivable, accounts payable, and other current liabilities approximates their carrying value due to their short-term nature[91] - The cash surrender value of life insurance policies, measured using Level 2 inputs, was $2.140 million at September 30, 2022, down from $2.813 million at December 31, 2021[96] - The fair value of the company's debt approximated its carrying value of $31.1 million at September 30, 2022, and $39.4 million at December 31, 2021, classified as Level 2 in the fair value hierarchy[98] 9. Intangible Assets Presents the net book value of finite-lived and indefinite-lived intangible assets and related amortization expenses Net Intangible Assets (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Net finite-lived intangible assets | $735 | $1,664 | | Infinite-lived intangible assets | $6,892 | $6,892 | | Total net intangible assets | $7,627 | $8,556 | - Net finite-lived intangible assets decreased due to amortization, with $0.3 million and $0.9 million amortization expense recognized for the three and nine months ended September 30, 2022, respectively[99] - The company's indefinite-lived intangible asset (trade name) was tested for impairment, and its fair value exceeded the carrying value, resulting in no impairment recorded[100] 10. Accrued Liabilities Details the company's accrued liabilities, including salaries, insurance-covered liabilities, and taxes Accrued Liabilities (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Accrued salaries, wages and benefits | $12,545 | $9,879 | | Accrued liabilities expected to be covered by insurance | $3,970 | $19,818 | | Sales taxes | $2,321 | $5,113 | | Property taxes | $1,723 | $1,047 | | Total accrued liabilities | $23,257 | $38,594 | - Total accrued liabilities decreased from $38.594 million at December 31, 2021, to $23.257 million at September 30, 2022, primarily due to a significant reduction in accrued liabilities expected to be covered by insurance[101] - The company deferred $7.6 million in Social Security taxes under the CARES Act, with $3.8 million paid in December 2021 and the remaining $3.8 million due in December 2022[102] 11. Debt Provides information on the company's debt, including revolving line of credit and other borrowings, and compliance with covenants Total Debt (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Revolving line of credit | $29,626 | $39,000 | | Other debt | $1,053 | $400 | | Total debt | $30,679 | $39,400 | - Total debt decreased from $39.4 million at December 31, 2021, to $30.7 million at September 30, 2022, primarily due to a reduction in revolving line of credit borrowings[107] - The company entered into the Ninth Amendment to its Credit Agreement in March 2022, which reduced the revolving line of credit commitment to $42.5 million and instituted temporary covenant requirements[105] - As of September 30, 2022, borrowings under the revolving line of credit were $30.0 million, with $10.8 million of maximum borrowing availability remaining[112] 12. Other Long-Term Liabilities Details other long-term liabilities, such as sale-leaseback arrangements and deferred compensation Other Long-Term Liabilities (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Sale-leaseback arrangement | $15,369 | $15,969 | | Deferred compensation | $1,763 | $2,759 | | Accrued liabilities expected to be covered by insurance | $295 | $214 | | Total other long-term liabilities | $17,427 | $18,942 | - Total other long-term liabilities decreased from $18.942 million at December 31, 2021, to $17.427 million at September 30, 2022[117] - The company has a failed sale-leaseback arrangement for a property in Channelview, Texas, with a 15-year lease agreement and annual rent of approximately $1.5 million[118] 13. Income Taxes Reports the company's income tax benefit or expense and explains the effective tax rate for the reported periods Income Tax (Benefit) Expense (Three and Nine Months Ended September 30) | (In Thousands) | Three Months 2022 | Three Months 2021 | Nine Months 2022 | Nine Months 2021 | | :------------- | :---------------- | :---------------- | :--------------- | :--------------- | | Income tax (benefit) expense | $(247) | $1,001 | $396 | $341 | | Effective tax rate | N/M % | (10.9)% | (5.4)% | (6.3)% | - The company recorded an income tax benefit of $0.2 million for the three months ended September 30, 2022, compared to an expense of $1.0 million in the prior year[120] - The effective tax rate for both periods differed from the federal statutory rate of 21% primarily due to the valuation allowance for current year activity, state income taxes, and non-deductibility of other permanent items[120][121] 14. Earnings Per Share Presents basic and diluted earnings per share and the weighted average shares outstanding for the reported periods Weighted Average Shares Outstanding (Three and Nine Months Ended September 30) | Shares Used to Compute EPS | Three Months 2022 | Three Months 2021 | Nine Months 2022 | Nine Months 2021 | | :------------------------- | :---------------- | :---------------- | :--------------- | :--------------- | | Basic | 31,613,519 | 30,979,207 | 31,180,417 | 30,707,426 | | Diluted | 31,613,519 | 30,979,207 | 31,180,417 | 30,707,426 | - Basic and diluted earnings per share were $0.01 for the three months ended September 30, 2022, compared to $(0.33) in the prior year[13] - For the nine months ended September 30, 2022, basic and diluted EPS were $(0.25), compared to $(0.19) in the prior year[13] 15. Stock-Based Compensation Details stock-based compensation expense, share grants, and unrecognized compensation expense for the period - Stock-based compensation expense was $1.0 million for the three months ended September 30, 2022 (up from $0.5 million in 2021) and $2.1 million for the nine months ended September 30, 2022 (down from $2.2 million in 2021)[127] - The company granted 623,655 shares of restricted common stock in May 2022, including immediately vested shares for independent directors and time-vested restricted stock units for the Executive Chairman[129][130][131] - Total unrecognized compensation expense related to unvested stock was approximately $3.7 million at September 30, 2022, expected to be recognized over approximately 2.4 years[135] 16. Commitments and Contingencies Discusses significant commitments and contingencies, including liabilities and insurance reimbursements related to the 2020 dredge incident - The company recognized $206.4 million in total liabilities related to the August 2020 Waymon L. Boyd dredge incident, including $206.1 million paid for settlements and wreck removal costs[137][138] - Insurance carriers have reimbursed the company $205.3 million to date for the dredge incident, and all claims have been settled within insurance coverage limits[138] 17. Segment Information Provides financial performance data, including operating income or loss, for the Marine and Concrete segments Segment Operating Income (Loss) (Three Months Ended September 30) | Segment (In Thousands) | 2022 | % of Revenue | 2021 | % of Revenue | | :--------------------- | :----------- | :----------- | :----------- | :----------- | | Marine segment | $5,197 | 6.8% | $(4,965) | (9.1)% | | Concrete segment | $(4,066) | (3.8)% | $(3,778) | (4.4)% | | Total | $1,131 | | $(8,743) | | Segment Operating Income (Loss) (Nine Months Ended September 30) | Segment (In Thousands) | 2022 | % of Revenue | 2021 | % of Revenue | | :--------------------- | :----------- | :----------- | :----------- | :----------- | | Marine segment | $9,553 | 3.9% | $6,489 | 3.4% | | Concrete segment | $(14,125) | (4.6)% | $(7,611) | (3.1)% | | Total | $(4,572) | | $(1,122) | | - Marine segment operating income significantly improved to $5.2 million in Q3 2022 from a $5.0 million loss in Q3 2021, driven by increased revenue, recognized claims, asset disposal gains, and project bonuses[140][190] - Concrete segment operating loss increased to $4.1 million in Q3 2022 from $3.8 million in Q3 2021, primarily due to project write-downs and unabsorbed indirect expenses[140][192] 18. Leases Details the company's operating and financing lease assets and liabilities, including weighted average remaining lease terms Lease Assets and Liabilities (September 30, 2022 vs. December 31, 2021) | (In Thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Operating lease right-of-use assets, net | $15,358 | $14,686 | | Financing lease right-of-use assets, net | $16,240 | $14,561 | | Total assets | $31,598 | $29,247 | | Total liabilities | $31,707 | $29,808 | - Total lease assets increased to $31.6 million at September 30, 2022, from $29.2 million at December 31, 2021, while total lease liabilities increased to $31.7 million from $29.8 million[142] - The weighted average remaining lease term for operating leases was 4.12 years (down from 4.90 years) and for financing leases was 4.32 years (down from 4.70 years) at September 30, 2022[144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three and nine months ended September 30, 2022, compared to the corresponding periods in 2021 Overview Introduces Orion Group Holdings' specialty construction services and the factors influencing contract performance and profitability - Orion Group Holdings, Inc. provides specialty construction services in marine infrastructure and concrete building sectors across the U.S., Alaska, and the Caribbean Basin[153] - Most revenue is derived from fixed-price contracts, with revenue recognized over time based on the percentage of actual contract costs incurred[155] - Factors that can impact contract performance and profitability include * Completeness and accuracy of the original bid * Increases in commodity prices (concrete, steel, fuel) * Customer delays, work stoppages due to weather/environmental restrictions * Availability and skill level of workers * Change in availability and proximity of equipment and materials[158] Third Quarter 2022 Recap and 2022 Outlook Summarizes the company's third-quarter performance and outlines long-term demand trends for its Marine and Concrete segments - In Q3 2022, revenues reached $182.6 million, with $76.1 million from marine and $106.5 million from concrete segments, representing a 30.5% increase YoY[156] - The company recorded a net income of $0.2 million in Q3 2022, a significant improvement from a net loss of $10.2 million in Q3 2021[156] - The company continues to focus on organic growth, greenfield expansion, and strategic acquisitions across infrastructure, industrial, and building sectors[157] - Long-term demand trends for the Marine segment include * Need to repair and improve degrading U.S. marine infrastructure * Demand from downstream energy-related companies for capital projects and maintenance * Increased cargo volume and larger ships requiring port infrastructure expansion and dredging * Potential opportunities from the Water Resources Reform and Development Act (WRRDA Act) and RESTORE Act funds * Federal funding for disaster recovery and the federal infrastructure bill[162] - Long-term demand trends for the Concrete segment include * Population growth in Texas driven by corporate relocations * Continued investment in warehouse/distribution space in Dallas-Fort Worth * Shift of people from inner cities to suburban areas * Federal funding for disaster recovery in Texas * Potential opportunities related to the federal infrastructure bill[168] Consolidated Results of Operations Analyzes the company's consolidated financial performance, including backlog, gross profit, and SG&A expenses Consolidated Backlog (In Millions) | Period | Marine segment | Concrete segment | Consolidated | | :----------------- | :------------- | :--------------- | :----------- | | Sep 30, 2022 | $280.2 | $268.4 | $548.6 | | Dec 31, 2021 | $376.9 | $213.1 | $590.0 | | Sep 30, 2021 | $379.9 | $192.9 | $572.8 | - Consolidated backlog decreased sequentially to $548.6 million at September 30, 2022, from $590.0 million at December 31, 2021, primarily due to a lower book-to-bill ratio in the concrete segment[166] - Gross profit for the three months ended September 30, 2022, increased by 104.5% to $13.4 million (7.4% margin) from $6.6 million (4.7% margin) in the prior year, driven by recognized claims, project bonuses, and increased dredging[172] - For the nine months ended September 30, 2022, gross profit increased by 18.2% to $40.6 million, but the gross profit margin decreased to 7.3% from 7.8% in the prior year, mainly due to additional costs in the concrete segment[179] - SG&A expenses decreased by 2.2% for the three months ended September 30, 2022, to $15.4 million, and as a percentage of revenue, decreased from 11.2% to 8.5% due to higher revenues[173] Segment Results Provides a detailed analysis of the financial performance and key drivers for both the Marine and Concrete segments - Marine segment revenues increased by 39.1% to $76.1 million in Q3 2022, leading to an operating income of $5.2 million, a significant improvement from a $5.0 million operating loss in Q3 2021[187][190] - Concrete segment revenues increased by 25.1% to $106.5 million in Q3 2022, but the operating loss widened to $4.1 million from $3.8 million in Q3 2021, primarily due to project write-downs[191][192] - For the nine months ended September 30, 2022, Marine segment operating income increased to $9.6 million from $6.5 million in 2021, while Concrete segment operating loss increased to $14.1 million from $7.6 million[193][196][198] Liquidity and Capital Resources Discusses the company's cash position, working capital, capital expenditures, and compliance with financial covenants - The company's primary liquidity needs are for working capital, capital expenditures, and strategic acquisitions, historically funded by operating activities, asset sales, and credit facilities[199] - Working capital was $34.7 million at September 30, 2022, down from $36.2 million at December 31, 2021[200] - Unrestricted cash on hand was $2.7 million, and borrowing capacity on the revolving line of credit was $10.8 million at September 30, 2022[200][212] - Net cash provided by operating activities for the nine months ended September 30, 2022, was $9.1 million, an increase from $4.2 million in the prior year[205] - Capital expenditures were $10.6 million for the nine months ended September 30, 2022, compared to $11.6 million in the prior year[207] - The company was in compliance with all financial covenants as of September 30, 2022, with a consolidated leverage ratio of 2.88 to 1.00 (maximum 3.00 to 1.00)[116][214] - Bonding capacity under the current arrangement was at least $750 million at September 30, 2022, with approximately $210 million of projects bonded[215] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to market risks, primarily related to fluctuations in commodity prices and interest rates - The company is exposed to commodity price risk for materials like concrete, steel, and fuel, but generally includes anticipated price increases in bids due to the short-term nature of projects[218] - Interest rate risk exists due to variable-rate borrowings under the credit facility; a 100 basis-point increase in LIBOR would increase annual interest expense by approximately $0.3 million based on September 30, 2022, outstanding amounts[219] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and any changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[220] - There were no material changes to internal control over financial reporting during the quarter ended September 30, 2022[221] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings This section refers to Note 16 of the financial statements for information regarding legal proceedings, specifically the August 2020 dredge incident - Information on legal proceedings, including the August 2020 dredge incident, is incorporated by reference from Note 16 to the condensed consolidated financial statements[222] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's 2021 Form 10-K - No material changes to the risk factors previously disclosed in the company's 2021 Form 10-K were reported[223] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that there were no unregistered sales of equity securities during the period - There were no sales of equity securities in the period ended September 30, 2022[224] Item 3. Defaults upon Senior Securities This section indicates that there were no defaults upon senior securities - No defaults upon senior securities were reported[225] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[226] Item 5. Other Information This section indicates that there is no other information to report - No other information was reported[227] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, employment agreements, certifications, and XBRL data files - Key exhibits include * Amended and Restated Certificate of Incorporation (Exhibit 3.1) * Amended and Restated Bylaws (Exhibit 3.2) * Employment Letter Agreements (Exhibits 10.1, 10.2) * Certifications of CEO and CFO (Exhibits 31.1, 31.2, 32.1) * XBRL Instance Document and Taxonomy Extension Documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) * Cover Page Interactive Data File (Exhibit 104)[228][229][231] SIGNATURES Provides the official signatures of the company's principal executive and financial officers, certifying the report - The report was signed by Travis J. Boone, President and Chief Executive Officer, and Scott Thanisch, Executive Vice President and Chief Financial Officer, on October 28, 2022[235]