Orion (ORN) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This part provides the unaudited condensed consolidated financial statements and related notes for Orion Group Holdings, Inc. for Q1 2023 and 2022 ITEM 1. FINANCIAL STATEMENTS This section details the unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, cash flows, and comprehensive notes Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific quarter-end dates | Metric | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :----------------------------- | :-------------------------- | :-------------------------- | :----------------- | | Total Assets | $344,187 | $367,155 | $(22,968) | | Total Liabilities | $218,630 | $229,355 | $(10,725) | | Total Stockholders' Equity | $125,557 | $137,800 | $(12,243) | | Cash and Cash Equivalents | $2,845 | $3,784 | $(939) | | Total Current Assets | $202,156 | $220,337 | $(18,181) | | Total Current Liabilities | $180,387 | $189,236 | $(8,849) | Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including revenues, costs, and net loss for the reported periods | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | Change (%) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :----------------- | :--------- | | Contract Revenues | $159,174 | $174,931 | $(15,757) | -9.0% | | Costs of Contract Revenues | $153,334 | $162,115 | $(8,781) | -5.4% | | Gross Profit | $5,840 | $12,816 | $(6,976) | -54.4% | | Selling, General and Administrative Expenses | $17,017 | $16,170 | $847 | 5.2% | | Operating Loss | $(10,643) | $(2,855) | $(7,788) | 272.8% | | Net Loss | $(12,595) | $(4,856) | $(7,739) | 159.4% | | Basic Loss Per Share | $(0.39) | $(0.16) | $(0.23) | 143.8% | | Diluted Loss Per Share | $(0.39) | $(0.16) | $(0.23) | 143.8% | Condensed Consolidated Statements of Stockholders' Equity This section details changes in stockholders' equity, including retained earnings and additional paid-in capital, over the reporting period | Metric | December 31, 2022 (Thousands) | March 31, 2023 (Thousands) | Change (Thousands) | | :-------------------------- | :-------------------------- | :------------------------- | :----------------- | | Total Stockholders' Equity | $137,800 | $125,557 | $(12,243) | | Retained Loss | $(44,172) | $(56,767) | $(12,595) | | Additional Paid-In Capital | $188,184 | $188,535 | $351 | - Stock-based compensation for the three months ended March 31, 2023, was $524 thousand[12] Condensed Consolidated Statements of Cash Flows This section reports cash inflows and outflows from operating, investing, and financing activities for the specified periods | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :----------------- | | Net Cash (Used in) Provided by Operating Activities | $(3,033) | $10,060 | $(13,093) | | Net Cash Used in Investing Activities | $(1,300) | $(2,810) | $1,510 | | Net Cash Provided by (Used in) Financing Activities | $3,394 | $(12,817) | $16,211 | | Net Change in Cash, Cash Equivalents and Restricted Cash | $(939) | $(5,567) | $4,628 | | Cash, Cash Equivalents and Restricted Cash at End of Period | $2,845 | $6,726 | $(3,881) | - Cash paid for interest increased significantly from $154 thousand in Q1 2022 to $1,576 thousand in Q1 2023[13] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Description of Business and Basis of Presentation This note describes the company's business operations and the accounting principles used in preparing the 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[14] - The Company operates through two reportable segments: Marine (under the Orion brand) and Concrete (under the TAS Commercial Concrete brand)[15] - Management concluded that conditions previously raising substantial doubt about the Company's ability to continue as a going concern have been resolved due to a new $103.0 million senior secured credit facility entered into on May 15, 2023[25][26] 2. Summary of Significant Accounting Policies This note outlines the key accounting policies and methods applied in the preparation of the condensed consolidated financial statements - Revenue is primarily derived from construction contracts, recognized over time based on the percentage of actual contract costs incurred to total estimated costs[28][30] - The Company records an allowance for credit losses against accounts receivable, which was $0.5 million at March 31, 2023, and $0.6 million at December 31, 2022[39] - 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 three to seven years[52][53] - The Company maintains various insurance coverages, including excess loss insurance for both marine and concrete segments, totaling $200 million in excess of primary coverage[70][71] 3. Revenue This note provides a detailed breakdown of contract revenues by segment and service line for the reporting periods | Segment/Service Line | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | Change (%) | | :------------------- | :------------------------------------ | :------------------------------------ | :----------------- | :--------- | | Marine Segment | | | | | | Construction | $54,012 | $59,152 | $(5,140) | -8.7% | | Dredging | $20,730 | $22,166 | $(1,436) | -6.5% | | Specialty Services | $4,556 | $3,162 | $1,394 | 44.1% | | Marine segment total | $79,298 | $84,480 | $(5,182) | -6.1% | | Concrete Segment | | | | | | Structural | $15,744 | $13,676 | $2,068 | 15.1% | | Light Commercial | $64,132 | $76,775 | $(12,643) | -16.5% | | Other | $0 | $0 | $0 | 0.0% | | Concrete segment total | $79,876 | $90,451 | $(10,575) | -11.7% | | Total contract revenues | $159,174 | $174,931 | $(15,757) | -9.0% | - Total contract revenues decreased by 9.0% year-over-year, primarily driven by a decline in the Concrete segment's Light Commercial services and the Marine segment's Construction and Dredging services[77] 4. Concentration of Risk and Enterprise-Wide Disclosures This note discloses significant concentrations of risk, including customer and geographic revenue concentrations | Customer Type | March 31, 2023 (Gross Receivables) | % of Total | December 31, 2022 (Gross Receivables) | % of Total | | :---------------- | :--------------------------------- | :--------- | :--------------------------------- | :--------- | | Federal Government | $11,006 | 7% | $4,612 | 3% | | State Governments | $3,862 | 2% | $3,111 | 2% | | Local Governments | $11,721 | 8% | $16,197 | 10% | | Private Companies | $126,408 | 83% | $134,317 | 85% | | Total Gross Receivables | $152,997 | 100% | $158,237 | 100% | | Customer Type | Three months ended March 31, 2023 (Contract Revenues) | % of Total | Three months ended March 31, 2022 (Contract Revenues) | % of Total | | :---------------- | :------------------------------------------ | :--------- | :------------------------------------------ | :--------- | | Federal Government | $23,056 | 14% | $22,695 | 13% | | State Governments | $18,328 | 12% | $7,704 | 4% | | Local Governments | $20,688 | 13% | $32,402 | 19% | | Private Companies | $97,102 | 61% | $112,130 | 64% | | Total Contract Revenues | $159,174 | 100% | $174,931 | 100% | - One private customer accounted for 10.9% of total current receivables and 10.9% of total contract revenues for the three months ended March 31, 2023[81][82] - Foreign revenues, primarily from the Caribbean Basin, increased from 0.4% of total revenues in Q1 2022 to 1.7% in Q1 2023[84] 5. Contracts in Progress This note details the status of uncompleted contracts, including costs incurred, estimated earnings, and billings to date | Metric | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Costs incurred on uncompleted contracts | $1,317,066 | $1,251,853 | | Estimated earnings | $187,445 | $180,705 | | Billings to date | $(1,511,064) | $(1,426,375) | | Net Contracts in Progress | $(6,553) | $6,183 | - Remaining performance obligations totaled approximately $467.4 million as of March 31, 2023, with 94% expected to be recognized in the next 12 months[86] - Contract assets include $12.6 million related to claims and unapproved change orders at March 31, 2023[85] 6. Property and Equipment This note provides a breakdown of property and equipment, net of accumulated depreciation, by asset category | Asset Category | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :----------------------- | :-------------------------- | :-------------------------- | :----------------- | | Automobiles and trucks | $2,243 | $2,232 | $11 | | Building and improvements | $36,953 | $36,952 | $1 | | Construction equipment | $129,883 | $130,660 | $(777) | | Vessels and other equipment | $89,946 | $91,495 | $(1,549) | | Office equipment | $6,885 | $6,885 | $0 | | Total Gross Property and Equipment | $265,910 | $268,224 | $(2,314) | | Less: Accumulated depreciation | $(198,058) | $(195,948) | $(2,110) | | Net Book Value of Depreciable Assets | $67,852 | $72,276 | $(4,424) | | Construction in progress | $1,570 | $816 | $754 | | Land | $27,885 | $27,885 | $0 | | Total Property and Equipment, Net | $97,307 | $100,977 | $(3,670) | - Depreciation expense for the three months ended March 31, 2023, was $4.6 million, down from $5.2 million in the prior year[87] 7. Other Current Accounts Receivable This note details various other current accounts receivable, including accident loss, vendor, and purchase incentive receivables | Category | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :----------------- | | Accident loss receivables | $1,296 | $1,328 | $(32) | | Vendor receivables | $729 | $807 | $(78) | | Purchase incentive receivable | $965 | $695 | $270 | | Bond premium dividend receivable | $431 | $391 | $40 | | Other current accounts receivable | $409 | $305 | $104 | | Total other current accounts receivable | $3,830 | $3,526 | $304 | 8. Fair Value This note discusses the fair value measurements of the company's financial instruments and assets - The Company's financial instruments like accounts receivable, other current assets, accounts payable, and other current liabilities approximate their fair values due to their short-term nature[90] | Asset | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | | Cash surrender value of life insurance policy | $1,895 | $1,811 | - The fair value of the Company's debt approximated its carrying value of $40.0 million at March 31, 2023, and $35.7 million at December 31, 2022, classified as Level 2 in the fair value hierarchy[95] 9. Intangible Assets This note provides information on the company's finite-lived and indefinite-lived intangible assets and their amortization | Metric | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------ | :-------------------------- | :-------------------------- | :----------------- | | Finite-lived intangible assets, end of period | $35,240 | $35,240 | $0 | | Total accumulated amortization | $(34,977) | $(34,815) | $(162) | | Net finite-lived intangible assets, end of period | $263 | $425 | $(162) | | Infinite-lived intangible assets | $6,892 | $6,892 | $0 | | Total net intangible assets | $7,155 | $7,317 | $(162) | - Amortization expense for finite-lived intangible assets was $0.2 million for the three months ended March 31, 2023, down from $0.3 million in the prior year[96] - The most recent annual impairment test of the indefinite-lived intangible asset (trade name) concluded no impairment was recorded[97] 10. Accrued Liabilities This note details the various accrued liabilities, including salaries, insurance-covered liabilities, and taxes | Category | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :----------------- | | Accrued salaries, wages and benefits | $9,718 | $7,605 | $2,113 | | Accrued liabilities expected to be covered by insurance | $4,968 | $5,757 | $(789) | | Sales taxes | $2,155 | $1,737 | $418 | | Property taxes | $561 | $522 | $39 | | Sale-leaseback arrangement | $830 | $813 | $17 | | Accounting and audit fees | $547 | $222 | $325 | | Interest | $93 | $60 | $33 | | Other accrued expenses | $1,967 | $1,750 | $217 | | Total accrued liabilities | $20,839 | $18,466 | $2,373 | 11. Debt This note provides a breakdown of the company's debt, including revolving credit facilities and other current and long-term obligations | Debt Type | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :---------------------- | :-------------------------- | :-------------------------- | :----------------- | | Revolving line of credit | $39,836 | $34,673 | $5,163 | | Other current debt | $286 | $283 | $3 | | Total Current Debt | $40,122 | $34,956 | $5,166 | | Long-term debt | $(93) | $716 | $(809) | | Total Debt | $40,029 | $35,672 | $4,357 | - The Credit Facility had a maturity date of July 31, 2023, and the Company had $40.0 million outstanding under the revolving line of credit as of March 31, 2023[100][110] - The quarterly weighted average interest rate for the Credit Facility was 10.22% as of March 31, 2023[104] - Post-quarter end, on May 15, 2023, the Company entered into a new three-year $103.0 million senior secured credit facility with White Oak, replacing the previous facility[115][141] 12. Other Long-Term Liabilities This note details other long-term liabilities, such as sale-leaseback arrangements and deferred compensation | Category | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :----------------- | | Sale-leaseback arrangement | $14,941 | $15,156 | $(215) | | Deferred compensation | $1,325 | $1,639 | $(314) | | Accrued liabilities expected to be covered by insurance | $311 | $277 | $34 | | Total other long-term liabilities | $16,577 | $17,072 | $(495) | - The sale-leaseback arrangement for the Channelview, Texas property, recorded as a failed sale-leaseback, had a liability of $14.9 million at March 31, 2023[117] 13. Income Taxes This note explains the company's income tax expense, effective tax rate, and valuation allowance on deferred tax assets | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | | :----------------- | :------------------------------------ | :------------------------------------ | | Income tax expense | $640 | $1,324 | | Effective tax rate | (5.4)% | (37.5)% | - The effective tax rate for Q1 2023 was (5.4)%, differing from the statutory federal rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, state income taxes, and non-deductibility of permanent items[119] - The Company maintains a valuation allowance on net deferred tax assets, believing it is more likely than not that some portion or all deferred tax assets will not be realized[120] 14. Earnings Per Share This note presents the basic and diluted loss per share calculations and the weighted average shares outstanding | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic Loss Per Share | $(0.39) | $(0.16) | | Diluted Loss Per Share | $(0.39) | $(0.16) | | Weighted average shares outstanding (Basic) | 32,180,274 | 30,971,379 | | Weighted average shares outstanding (Diluted) | 32,180,274 | 30,971,379 | - The Company had 280,644 potentially dilutive securities in Q1 2023, but these were anti-dilutive and not included in EPS computation due to the net loss[122][123] 15. Stock-Based Compensation This note details the compensation expense related to stock-based awards and the terms of recent grants - Compensation expense related to stock-based awards was $0.5 million for the three months ended March 31, 2023, up from $0.4 million in the prior year[126] - In January 2023, 180,333 shares of restricted common stock were awarded to officers and executives, vesting over three years with a fair value of $3.00 per share[127] - In March 2023, 335,851 performance-based units were granted to executives, vesting based on a three-year return on invested capital target, with a fair value of $2.65 per unit[128] - Total unrecognized compensation expense related to unvested stock was approximately $3.1 million at March 31, 2023, expected to be recognized over approximately 2.4 years[129][130] 16. Commitments and Contingencies This note discusses the company's involvement in legal proceedings and other commitments and contingencies - The Company is involved in various legal and other proceedings, but management believes none will have a material effect on financial condition, results of operations, or cash flows, having recorded adequate accrued liabilities and insurance coverage[132] 17. Segment Information This note provides financial data broken down by the company's Marine and Concrete operating segments | Segment | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | Change (%) | | :-------- | :-------------------------- | :------------------------------------ | :------------------------------------ | :----------------- | :--------- | | Marine | Contract revenues | $79,298 | $84,480 | $(5,182) | -6.1% | | | Operating (loss) income | $(6,080) | $1,840 | $(7,920) | -430.4% | | | Depreciation and amortization expense | $(3,835) | $(4,323) | $488 | -11.3% | | | Total assets | $231,851 | $173,577 | $58,274 | 33.6% | | | Property and equipment, net | $88,957 | $92,725 | $(3,768) | -4.1% | | Concrete | Contract revenues | $79,876 | $90,451 | $(10,575) | -11.7% | | | Operating loss | $(4,563) | $(4,695) | $132 | -2.8% | | | Depreciation and amortization expense | $(1,611) | $(1,940) | $329 | -17.0% | | | Total assets | $112,336 | $167,299 | $(54,963) | -32.8% | | | Property and equipment, net | $8,350 | $12,249 | $(3,899) | -31.8% | - The Marine segment's operating income decreased significantly by $7.9 million, moving from a profit to a loss, primarily due to decreased revenue, write-downs on low-margin projects, and lower utilization[133][167] - The Concrete segment's operating loss slightly decreased by $0.1 million, attributed to lower indirect costs from winding down the central Texas region, partially offset by project write-downs[133][169] 18. Leases This note details the company's operating and financing lease assets and liabilities, along with lease costs and cash flows | Lease Type | March 31, 2023 (Thousands) | December 31, 2022 (Thousands) | Change (Thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------------- | | Operating lease right-of-use assets, net | $14,765 | $14,978 | $(213) | | Financing lease right-of-use assets, net | $15,202 | $15,839 | $(637) | | Total Lease Assets | $29,967 | $30,817 | $(850) | | Current Operating Lease Liabilities | $4,936 | $4,738 | $198 | | Current Financing Lease Liabilities | $3,486 | $4,031 | $(545) | | Noncurrent Operating Lease Liabilities | $10,609 | $11,018 | $(409) | | Noncurrent Financing Lease Liabilities | $10,882 | $11,102 | $(220) | | Total Lease Liabilities | $29,913 | $30,889 | $(976) | | Metric | Three Months Ended March 31, 2023 (Thousands) | Three Months Ended March 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :----------------- | | Total lease cost | $2,951 | $2,560 | $391 | | Operating cash flows for operating leases | $1,391 | $1,325 | $66 | | Financing cash flows for finance leases | $779 | $637 | $142 | - The weighted average remaining lease term for operating leases was 3.70 years (down from 3.90 years) and for financing leases was 4.02 years (down from 4.36 years) as of March 31, 2023[136] 19. Subsequent Events This note discloses significant events that occurred after the balance sheet date, including land sales and new credit facilities - On April 26, 2023, the Company entered into a Land Sale Contract to sell two parcels of land in Harris County, Texas, for approximately $36.0 million, with closing anticipated by September 29, 2023[139] - On May 15, 2023, the Company secured a new three-year $103.0 million senior secured credit facility with White Oak, comprising a $65.0 million asset-based revolving credit facility and a $38.0 million fixed asset term loan, replacing the previous facility[141][142] - Concurrently with the new credit facility, the Company entered into a $13.0 million sale-leaseback of certain concrete segment equipment with Gordon Brothers[141][142] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section analyzes the company's financial condition and operational results for Q1 2023, highlighting revenue declines, increased losses, and liquidity management Overview This section provides a general description of the company's business, contract types, and factors influencing performance - Orion Group Holdings, Inc. provides specialty construction services in infrastructure, industrial, and building sectors across the continental U.S., Alaska, and the Caribbean Basin, operating through marine and concrete segments[148][150] - The Company's contracts are primarily obtained through competitive bidding and negotiation, with most revenue derived from fixed-price contracts recognized over time based on the percentage of costs incurred[151][152] - Factors like bid accuracy, commodity price increases, customer delays, weather, labor availability, and equipment/material proximity can impact contract performance and profitability[152] Consolidated Results of Operations This section analyzes the company's overall financial performance, including revenue, gross profit, operating loss, and SG&A expenses | Metric | March 31, 2023 (Millions) | December 31, 2022 (Millions) | September 30, 2022 (Millions) | June 30, 2022 (Millions) | March 31, 2022 (Millions) | | :-------------- | :------------------------ | :--------------------------- | :---------------------------- | :----------------------- | :------------------------ | | Marine segment | $187.0 | $216.7 | $280.2 | $281.0 | $317.4 | | Concrete segment | $280.4 | $232.1 | $268.4 | $322.2 | $286.7 | | Consolidated | $467.4 | $448.8 | $548.6 | $603.2 | $604.1 | - Consolidated backlog increased to $467.4 million at March 31, 2023, from $448.8 million at December 31, 2022, but was lower than previous quarters in 2022[154] - Contract revenues decreased by 9.0% to $159.2 million, and gross profit decreased by 54.4% to $5.8 million, with gross profit margin falling from 7.3% to 3.7% year-over-year[156][157] - Operating loss significantly widened to $(10.6) million from $(2.9) million in the prior year, primarily due to lower revenues, weather impacts in Texas, and write-downs on low-margin projects[156][158] - Selling, general and administrative (SG&A) expenses increased by 5.2% to $17.0 million, and as a percentage of revenues, rose from 9.1% to 10.8% due to lower revenues[159] Segment Results This section provides a detailed analysis of the financial performance for the Marine and Concrete operating segments | Segment | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | Change (%) | | :-------- | :-------------------------- | :------------------------------------ | :------------------------------------ | :----------------- | :--------- | | Marine | Contract revenues | $79,298 | $84,480 | $(5,182) | -6.1% | | | Operating (loss) income | $(6,080) | $1,840 | $(7,920) | -430.4% | | Concrete | Contract revenues | $79,876 | $90,451 | $(10,575) | -11.7% | | | Operating loss | $(4,563) | $(4,695) | $132 | -2.8% | - Marine segment revenues decreased by 6.1% due to weather and customer delays, leading to an operating loss of $6.1 million compared to an operating income of $1.8 million in the prior year[166][167] - Concrete segment revenues decreased by 11.7% due to weather, customer delays, and a reduction in central Texas revenue, resulting in a slight decrease in operating loss from $4.7 million to $4.6 million[168][169] Liquidity and Capital Resources This section discusses the company's working capital, cash flows, and capital expenditures, and their impact on liquidity | Metric | Three months ended March 31, 2023 (Thousands) | Three months ended March 31, 2022 (Thousands) | Change (Thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :----------------- | | Working Capital | $21,800 | N/A | N/A | | Unrestricted Cash on Hand | $2,800 | N/A | N/A | | Borrowing Capacity (Revolving Credit Facility) | $1,000 | N/A | N/A | | Net Cash (Used in) Provided by Operating Activities | $(3,033) | $10,060 | $(13,093) | | Net Cash Used in Investing Activities | $(1,300) | $(2,810) | $1,510 | | Net Cash Provided by (Used in) Financing Activities | $3,394 | $(12,817) | $16,211 | | Capital Expenditures | $(1,876) | $(3,523) | $1,647 | - Working capital decreased from $31.1 million at December 31, 2022, to $21.8 million at March 31, 2023[171] - The Company used $3.0 million in cash from operating activities in Q1 2023, a significant shift from $10.1 million provided in Q1 2022, primarily due to cash outflows from net income and changes in working capital[173] - Capital expenditures decreased to $1.9 million in Q1 2023 from $3.5 million in Q1 2022[174] Sources of Capital This section outlines the company's capital sources, including credit facilities and recent financing activities - The Company obtained an extension of consent from Credit Facility lenders regarding its annual financial statements and certain leverage and fixed charge coverage ratios for Q1 2023[176] - On May 15, 2023, the Company secured a new three-year $103.0 million senior secured credit facility with White Oak, including a $65.0 million asset-based revolving credit facility and a $38.0 million fixed asset term loan[176] Bonding Capacity This section details the company's available bonding capacity and its current utilization for projects - As of March 31, 2023, the Company had a bonding capacity of at least $750 million, with approximately $210 million of projects currently bonded[178] - Management believes its balance sheet and working capital position will allow continued access to its bonding capacity[178] Effect of Inflation This section addresses the impact of inflation on the company's costs and its strategies for mitigation - The Company is subject to inflation risks from increases in raw material costs (e.g., fuel, concrete, steel) but generally mitigates this by including anticipated price increases in bids due to the short-term duration of projects[179][181] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details the company's exposure to market risks, including commodity price fluctuations and interest rate changes on variable-rate debt - The Company is exposed to commodity price risk for concrete, steel products, and fuel, but generally includes anticipated price increases in bids due to the short-term nature of its fixed-price contracts[181] - As of March 31, 2023, with $40.0 million in outstanding borrowings under its credit facility at a 10.20% weighted average interest rate, a 100 basis-point increase in LIBOR (or successor rate) would increase annual interest expense by approximately $0.4 million[182] - Foreign currency fluctuation exposure has been immaterial and limited to temporary field accounts[180] ITEM 4. CONTROLS AND PROCEDURES Management assessed the effectiveness of disclosure controls and procedures as of March 31, 2023, finding them effective with no material changes - The Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023[183] - No material changes to internal control over financial reporting occurred during the quarter ended March 31, 2023[184] PART II. OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other required information ITEM 1. LEGAL PROCEEDINGS Legal proceedings information is incorporated by reference from Note 16, indicating no material adverse effect on the company is expected - Information on legal proceedings is incorporated by reference from Note 16, which indicates no material effect on the Company's financial condition, results of operations, or cash flows is expected[185][132] ITEM 1A. RISK FACTORS No material changes to the risk factors previously disclosed in the Company's 2022 Form 10-K were reported - No material changes to the risk factors previously disclosed in the 2022 Form 10-K were reported[186] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No sales of equity securities occurred in the period ended March 31, 2023 - No sales of equity securities occurred in the period ended March 31, 2023[187] ITEM 3. DEFAULTS UPON SENIOR SECURITIES No defaults upon senior securities were reported - No defaults upon senior securities were reported[188] ITEM 4. MINE SAFETY DISCLOSURES Mine Safety Disclosures are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[189] ITEM 5. OTHER INFORMATION No other information was reported - No other information was reported[190] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, recent contracts, and required certifications - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws[192] - Recent contracts filed as exhibits include a Land Sale Contract (April 26, 2023), a Consent Letter (May 5, 2023), and a Loan Agreement (May 15, 2023) for the new credit facility[192] - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included[192] SIGNATURES This section contains 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 May 15, 2023[198]