P3Y5P3Y0001402829--12-312020FYfalseP3Y0.3330.3330.33310001402829us-gaap:AllowanceForCreditLossMember2020-01-012020-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2020-01-012020-12-310001402829us-gaap:AllowanceForCreditLossMember2019-01-012019-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2019-01-012019-12-310001402829us-gaap:AllowanceForCreditLossMember2018-01-012018-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2018-01-012018-12-310001402829us-gaap:AllowanceForCreditLossMember2020-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2020-12-310001402829us-gaap:AllowanceForCreditLossMember2019-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2019-12-310001402829us-gaap:AllowanceForCreditLossMember2018-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2018-12-310001402829us-gaap:AllowanceForCreditLossMember2017-12-310001402829orn:ReserveForLossesOnUncompletedContractsMember2017-12-310001402829orn:CostsAndEstimatedEarningsInExcessOfBillingsOnUncompletedContractsMember2020-12-310001402829orn:CostsAndEstimatedEarningsInExcessOfBillingsOnUncompletedContractsMember2019-12-310001402829us-gaap:CommonStockMember2020-01-012020-12-310001402829us-gaap:CommonStockMember2019-01-012019-12-310001402829us-gaap:CommonStockMember2018-01-012018-12-310001402829us-gaap:TreasuryStockMember2020-12-310001402829us-gaap:RetainedEarningsMember2020-12-310001402829us-gaap:AdditionalPaidInCapitalMember2020-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001402829us-gaap:TreasuryStockMember2019-12-310001402829us-gaap:RetainedEarningsMember2019-12-310001402829us-gaap:AdditionalPaidInCapitalMember2019-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001402829us-gaap:TreasuryStockMember2018-12-310001402829us-gaap:RetainedEarningsMember2018-12-310001402829us-gaap:AdditionalPaidInCapitalMember2018-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001402829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate201409Memberus-gaap:RetainedEarningsMember2017-12-310001402829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccountingStandardsUpdate201409Member2017-12-310001402829us-gaap:TreasuryStockMember2017-12-310001402829us-gaap:RetainedEarningsMember2017-12-310001402829us-gaap:AdditionalPaidInCapitalMember2017-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-3100014028292017-05-310001402829us-gaap:StockOptionMember2018-01-012018-12-310001402829us-gaap:EmployeeStockOptionMember2017-05-012017-05-310001402829us-gaap:RestrictedStockMember2020-12-310001402829us-gaap:RestrictedStockMember2019-12-310001402829us-gaap:RestrictedStockMember2018-12-310001402829us-gaap:RestrictedStockMember2017-12-310001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2020-02-012020-02-290001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2019-03-012019-03-310001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2018-07-012018-07-310001402829us-gaap:RestrictedStockMember2019-01-012019-12-310001402829us-gaap:RestrictedStockMember2018-01-012018-12-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheThreeMember2020-08-012020-08-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-08-012020-08-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2020-05-012020-05-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-05-012020-05-310001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2019-09-012019-09-300001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2019-06-302019-06-300001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2019-05-012019-05-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2019-05-012019-05-310001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2019-03-312019-03-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2020-12-012020-12-310001402829orn:CertainExecutivesMemberus-gaap:RestrictedStockMember2020-09-012020-09-300001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2020-05-012020-05-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2020-03-012020-03-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2019-12-012019-12-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2019-07-012019-07-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2019-05-012019-05-310001402829orn:OfficersAndExecutivesMemberus-gaap:RestrictedStockMember2018-05-012018-05-310001402829orn:OfficersAndExecutivesMember2018-01-012018-12-310001402829srt:MinimumMemberus-gaap:EmployeeStockOptionMember2017-05-012017-05-310001402829srt:MaximumMemberus-gaap:EmployeeStockOptionMember2017-05-012017-05-310001402829us-gaap:SalesRevenueNetMember2020-01-012020-12-310001402829orn:TradeAndContractRetainageReceivablesMember2020-01-012020-12-3100014028292021-01-012020-12-310001402829us-gaap:NonUsMemberorn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829us-gaap:ConstructionMemberorn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829orn:StructuralMemberorn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829orn:SpecialtyServicesMemberorn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829orn:OtherProductMemberorn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829orn:MexicoAndCaribbeanMemberorn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829orn:LightCommercialMemberorn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829orn:DredgingMemberorn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829us-gaap:IntersegmentEliminationMember2020-01-012020-12-310001402829us-gaap:NonUsMemberorn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829us-gaap:ConstructionMemberorn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829orn:StructuralMemberorn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829orn:SpecialtyServicesMemberorn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829orn:OtherProductMemberorn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829orn:MexicoAndCaribbeanMemberorn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829orn:LightCommercialMemberorn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829orn:DredgingMemberorn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829us-gaap:IntersegmentEliminationMember2019-01-012019-12-310001402829orn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829orn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829us-gaap:ConstructionMemberorn:HeavyCivilMarineConstructionSegmentMember2018-01-012018-12-310001402829orn:StructuralMemberorn:CommercialConcreteSegmentMember2018-01-012018-12-310001402829orn:SpecialtyServicesMemberorn:HeavyCivilMarineConstructionSegmentMember2018-01-012018-12-310001402829orn:OtherProductMemberorn:CommercialConcreteSegmentMember2018-01-012018-12-310001402829orn:LightCommercialMemberorn:CommercialConcreteSegmentMember2018-01-012018-12-310001402829orn:DredgingMemberorn:HeavyCivilMarineConstructionSegmentMember2018-01-012018-12-310001402829orn:HeavyCivilMarineConstructionSegmentMember2018-01-012018-12-310001402829orn:CommercialConcreteSegmentMember2018-01-012018-12-310001402829orn:Covid19PandemicMember2020-01-012020-12-310001402829srt:MinimumMemberus-gaap:VehiclesMember2020-01-012020-12-310001402829srt:MinimumMemberus-gaap:OfficeEquipmentMember2020-01-012020-12-310001402829srt:MinimumMemberus-gaap:MarineServicesEquipmentMember2020-01-012020-12-310001402829srt:MinimumMemberus-gaap:BuildingAndBuildingImprovementsMember2020-01-012020-12-310001402829srt:MinimumMemberorn:EquipmentImprovementMember2020-01-012020-12-310001402829srt:MinimumMemberorn:DryDockingCapitalizedCostsMember2020-01-012020-12-310001402829srt:MinimumMemberorn:ConstructionEquipmentMember2020-01-012020-12-310001402829srt:MaximumMemberus-gaap:VehiclesMember2020-01-012020-12-310001402829srt:MaximumMemberus-gaap:OfficeEquipmentMember2020-01-012020-12-310001402829srt:MaximumMemberus-gaap:MarineServicesEquipmentMember2020-01-012020-12-310001402829srt:MaximumMemberus-gaap:BuildingAndBuildingImprovementsMember2020-01-012020-12-310001402829srt:MaximumMemberorn:EquipmentImprovementMember2020-01-012020-12-310001402829srt:MaximumMemberorn:DryDockingCapitalizedCostsMember2020-01-012020-12-310001402829srt:MaximumMemberorn:ConstructionEquipmentMember2020-01-012020-12-310001402829us-gaap:VehiclesMember2020-12-310001402829us-gaap:OfficeEquipmentMember2020-12-310001402829us-gaap:MarineServicesEquipmentMember2020-12-310001402829us-gaap:LandMember2020-12-310001402829us-gaap:ConstructionInProgressMember2020-12-310001402829us-gaap:BuildingAndBuildingImprovementsMember2020-12-310001402829orn:ConstructionEquipmentMember2020-12-310001402829us-gaap:VehiclesMember2019-12-310001402829us-gaap:OfficeEquipmentMember2019-12-310001402829us-gaap:MarineServicesEquipmentMember2019-12-310001402829us-gaap:LandMember2019-12-310001402829us-gaap:ConstructionInProgressMember2019-12-310001402829us-gaap:BuildingAndBuildingImprovementsMember2019-12-310001402829orn:ConstructionEquipmentMember2019-12-310001402829srt:MaximumMember2019-01-012019-12-310001402829us-gaap:SettledLitigationMember2018-01-012018-03-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310001402829us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-12-310001402829us-gaap:StateAndLocalJurisdictionMember2020-12-310001402829us-gaap:DomesticCountryMember2020-12-310001402829srt:RestatementAdjustmentMemberus-gaap:AccountingStandardsUpdate201602Member2019-01-010001402829us-gaap:SettledLitigationMember2020-12-310001402829us-gaap:RetainedEarningsMember2020-01-012020-12-310001402829us-gaap:RetainedEarningsMember2019-01-012019-12-310001402829us-gaap:RetainedEarningsMember2018-01-012018-12-310001402829orn:InternationalUnionOfOperatingEngineersEmployersConstructionIndustryRetirementPlanMember2018-01-012018-12-310001402829orn:CarpentersRetirementPlanOfWesternWashingtonMember2018-01-012018-12-310001402829orn:AlaskaLaborersTrustFundMember2018-01-012018-12-310001402829orn:AlaskaCarpentersTrustFundMember2018-01-012018-12-310001402829orn:WesternConferenceOfTeamstersPensionTrustFundMember2020-01-012020-12-310001402829orn:WashingtonLaborersMember2020-01-012020-12-310001402829orn:WashingtonIdahoMontanaCarpentersEmployersRetirementTrustFundMember2020-01-012020-12-310001402829orn:InternationalUnionOfOperatingEngineersEmployersConstructionIndustryRetirementPlanMember2020-01-012020-12-310001402829orn:EngineersAgcRetirementTrustOfInlandEmpireMember2020-01-012020-12-310001402829orn:CementMasonsPlasterersTrustFundsMember2020-01-012020-12-310001402829orn:CarpentersRetirementPlanOfWesternWashingtonMember2020-01-012020-12-310001402829orn:AlaskaLaborersTrustFundMember2020-01-012020-12-310001402829orn:AlaskaCarpentersTrustFundMember2020-01-012020-12-310001402829orn:WesternConferenceOfTeamstersPensionTrustFundMember2019-01-012019-12-310001402829orn:WashingtonLaborersMember2019-01-012019-12-310001402829orn:WashingtonIdahoMontanaCarpentersEmployersRetirementTrustFundMember2019-01-012019-12-310001402829orn:InternationalUnionOfOperatingEngineersEmployersConstructionIndustryRetirementPlanMember2019-01-012019-12-310001402829orn:EngineersAgcRetirementTrustOfInlandEmpireMember2019-01-012019-12-310001402829orn:CementMasonsPlasterersTrustFundsMember2019-01-012019-12-310001402829orn:CarpentersRetirementPlanOfWesternWashingtonMember2019-01-012019-12-310001402829orn:AlaskaLaborersTrustFundMember2019-01-012019-12-310001402829orn:AlaskaCarpentersTrustFundMember2019-01-012019-12-310001402829orn:RevolvingCreditFacility364DayMemberus-gaap:LineOfCreditMember2020-12-310001402829orn:RevolvingCreditFacility364DayMemberus-gaap:LineOfCreditMember2020-06-300001402829us-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMember2020-12-310001402829us-gaap:TradeNamesMember2020-01-012020-12-310001402829orn:HeavyCivilMarineConstructionSegmentMember2018-10-012018-12-310001402829orn:CommercialConcreteSegmentMember2018-10-012018-12-3100014028292018-10-012018-12-3100014028292020-10-012020-12-3100014028292020-07-012020-09-3000014028292020-04-012020-06-3000014028292020-01-012020-03-3100014028292019-10-012019-12-3100014028292019-07-012019-09-3000014028292019-04-012019-06-3000014028292019-01-012019-03-310001402829orn:SixthSwapMember2020-07-310001402829us-gaap:SwapMember2015-09-160001402829srt:MaximumMember2018-01-012018-12-310001402829us-gaap:OperatingSegmentsMemberorn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829us-gaap:OperatingSegmentsMemberorn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829us-gaap:OperatingSegmentsMemberorn:HeavyCivilMarineConstructionSegmentMember2019-01-012019-12-310001402829us-gaap:OperatingSegmentsMemberorn:CommercialConcreteSegmentMember2019-01-012019-12-310001402829orn:RangeTwoMember2020-01-012020-12-310001402829orn:RangeOneMember2020-01-012020-12-310001402829orn:AGCSouthwestChapters401kRetirementPlanMember2019-01-012019-12-310001402829orn:AGCSouthwestChapters401kRetirementPlanMember2018-01-012018-12-310001402829orn:FourthFifthAndSixthAmendmentsToCreditAgreementMember2020-12-310001402829us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMemberus-gaap:BaseRateMember2020-12-310001402829us-gaap:LineOfCreditMember2020-12-310001402829orn:RevolvingCreditFacility364DayMemberus-gaap:LineOfCreditMember2020-06-012020-06-300001402829us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2019-05-012019-05-310001402829orn:SixthAmendmentToCreditAgreementMemberus-gaap:LineOfCreditMember2019-05-012019-05-310001402829orn:FifthAmendmentToCreditAgreementMemberus-gaap:LineOfCreditMember2019-03-012019-03-310001402829orn:FourthAmendmentToCreditAgreementMemberus-gaap:LineOfCreditMember2018-07-012018-07-310001402829orn:RevolvingCreditFacility364DayMemberus-gaap:LineOfCreditMember2020-06-082020-06-080001402829orn:TermLoanMemberus-gaap:LineOfCreditMemberus-gaap:LondonInterbankOfferedRateLIBORMember2020-12-310001402829us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2020-01-012020-12-310001402829us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310001402829us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310001402829orn:CustomerTypeLocalMemberorn:CustomerOneMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypeStateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypePrivateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypePrivateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypeLocalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypeFederalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypeFederalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:CustomerTypeStateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeStateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypePrivateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypePrivateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeLocalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeLocalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeFederalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeFederalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:CustomerTypeStateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001402829orn:CustomerTypePrivateMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001402829orn:CustomerTypeLocalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001402829orn:CustomerTypeFederalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001402829us-gaap:CommonStockMember2020-12-310001402829us-gaap:CommonStockMember2019-12-310001402829us-gaap:CommonStockMember2018-12-310001402829us-gaap:CommonStockMember2017-12-310001402829us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001402829us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001402829us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001402829us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001402829us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001402829us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001402829us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001402829us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-3100014028292017-12-310001402829us-gaap:CustomerRelationshipsMember2017-12-310001402829us-gaap:OperatingSegmentsMemberorn:HeavyCivilMarineConstructionSegmentMember2020-12-310001402829us-gaap:OperatingSegmentsMemberorn:CommercialConcreteSegmentMember2020-12-310001402829us-gaap:OperatingSegmentsMemberorn:HeavyCivilMarineConstructionSegmentMember2019-12-310001402829us-gaap:OperatingSegmentsMemberorn:CommercialConcreteSegmentMember2019-12-310001402829us-gaap:CustomerRelationshipsMember2020-01-012020-12-310001402829us-gaap:SettledLitigationMember2018-07-012018-09-300001402829us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001402829us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001402829us-gaap:AdditionalPaidInCapitalMember2018-01-012018-12-310001402829us-gaap:CustomerRelationshipsMember2015-01-012017-12-310001402829orn:CustomerTypePrivateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-12-310001402829orn:CustomerTypeLocalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-12-310001402829orn:CustomerTypeFederalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-12-310001402829orn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-12-310001402829orn:CustomerTypeStateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-12-310001402829orn:CustomerTypePrivateMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-12-310001402829orn:CustomerTypeLocalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-12-310001402829orn:CustomerTypeFederalMemberorn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-12-310001402829orn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-12-310001402829orn:CertainOfficersMember2020-01-012020-12-310001402829us-gaap:RestrictedStockMember2020-01-012020-12-310001402829us-gaap:EmployeeStockOptionMember2020-01-012020-12-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMember2020-08-012020-08-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMember2020-05-012020-05-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMember2019-05-012019-05-310001402829orn:CertainExecutivesMemberus-gaap:PerformanceSharesMember2018-05-012018-05-3100014028292021-01-012020-01-012020-12-310001402829orn:WatercraftPollutionPolicyMemberorn:HeavyCivilMarineConstructionSegmentMember2020-12-310001402829orn:OtherLiabilityPoliciesMemberorn:HeavyCivilMarineConstructionSegmentMember2020-12-310001402829orn:OtherLiabilityPoliciesMemberorn:CommercialConcreteSegmentMember2020-12-310001402829orn:MaritimeEmployersLiabilityMemberorn:HeavyCivilMarineConstructionSegmentMember2020-12-310001402829orn:IndependentDirectorsMemberus-gaap:RestrictedStockMember2020-05-012020-05-310001402829orn:IndependentDirectorsMemberus-gaap:RestrictedStockMember2019-10-012019-10-310001402829orn:IndependentDirectorsMemberus-gaap:RestrictedStockMember2019-05-012019-05-310001402829orn:IndependentDirectorsMemberus-gaap:RestrictedStockMember2019-01-012019-01-310001402829orn:IndependentDirectorsMemberus-gaap:RestrictedStockMember2018-05-012018-05-310001402829orn:CustomerTypeLocalMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829orn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001402829us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829orn:TradeAndContractRetainageReceivablesMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001402829us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001402829orn:WaymonLBoydDredgeFireMember2018-08-212018-08-210001402829orn:WaymonLBoydDredgeFireMemberus-gaap:PendingLitigationMember2020-01-012020-12-310001402829us-gaap:BridgeLoanMemberus-gaap:LineOfCreditMember2020-12-310001402829orn:RevolvingCreditFacility364DayMemberus-gaap:LineOfCreditMember2020-06-080001402829orn:HeavyCivilMarineConstructionSegmentMember2020-01-012020-12-310001402829orn:CommercialConcreteSegmentMember2020-01-012020-12-310001402829orn:FailedSaleLeasebackMember2019-09-272019-09-270001402829orn:TermLoanMemberus-gaap:LineOfCreditMember2020-01-012020-12-3100014028292019-09-272019-09-2700014028292015-09-160001402829orn:AGCSouthwestChapters401kRetirementPlanMember2020-01-012020-12-3100014028292018-12-3100014028292019-01-012019-12-3100014028292018-01-012018-12-310001402829us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2020-12-310001402829us-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2019-12-310001402829orn:TermLoanMemberus-gaap:LineOfCreditMember2020-12-310001402829orn:TermLoanMemberus-gaap:LineOfCreditMember2019-12-310001402829orn:ForeignMember2020-01-012020-12-310001402829orn:ForeignMember2019-01-012019-12-310001402829orn:ForeignMember2018-01-012018-12-310001402829orn:HeavyCivilMarineConstructionSegmentMember2020-12-310001402829orn:CommercialConcreteSegmentMember2020-12-3100014028292020-12-3100014028292019-12-3100014028292020-06-3000014028292021-02-1900014028292020-01-012020-12-31orn:Assetorn:policyorn:lawsuitorn:directororn:contractorn:segmentxbrli:sharesiso4217:USDxbrli:pureiso4217:USDxbrli:sharesorn:Optionsorn:itemorn:claimorn:customerutr:gal

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 1-33891

ORION GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

State of Incorporation

26-0097459

IRS Employer Identification Number

12000 Aerospace Avenue, Suite 300

Houston, Texas  77034

Address of Principal Executive Office

(713) 852-6500

Registrant’s telephone number (including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading Symbol(s)

    

Name of Each Exchange on Which Registered

Common stock, $0.01 par value per share

ORN

The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:   Yes No

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:    Yes No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:    Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted  pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files:

Yes  No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer”, "accelerated filer", "small reporting" company and "emerging growth" company in Rule 12b-2 of the Exchange Act (Check One):

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated filer

Smaller reporting company 

Emerging growth company 

If an emerging growth company, initiate by check mark if the registrant has elected not to use the extended transition period for complying with any, new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report. Yes  No

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes  No

There were 30,460,573 shares of common stock outstanding as of February 19, 2021. The aggregate market value of the Registrant’s common equity held by non-affiliates was approximately $95.3 million as of June 30, 2020, the last business day of the Registrant’s most recently completed second fiscal quarter, based upon the last reported sales price on the New York Stock Exchange on that date.

DOCUMENTS INCORPORATED BY REFERENCE

Part III – Portions of the Registrant’s definitive Proxy Statement to be issued in connection with the 2021 Annual Meeting of Stockholders to be filed on or about April 1, 2021, are incorporated by reference in Part III of this Annual Report on Form 10-K.

Table of Contents

ORION GROUP HOLDINGS, INC.

2020 Annual Report on Form 10-K

Table of Contents

PART I

3

Item 1.

Business

3

Item 1A.

Risk Factors

13

Item 1B.

Unresolved Staff Comments

24

Item 2.

Properties

24

Item 3.

Legal Proceedings

24

Item 4.

Mine Safety Disclosure (not applicable)

24

PART II

24

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

24

Item 6.

Selected Financial Data

26

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

41

Item 8.

Financial Statements and Supplementary Data

41

Item 9.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

42

Item 9A.

Controls and Procedures

42

Item 9B.

Other Information

43

PART III

43

Item 10.

Directors, Executive Officers and Corporate Governance

43

Item 11.

Executive Compensation

44

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

44

Item 13.

Certain Relationships and Related Transactions, and Director Independence

44

Item 14.

Principal Accounting Fees and Services

44

PART IV

44

Item 15.

Exhibits and Financial Statement Schedules

44

SIGNATURES

49

2

Table of Contents

PART I

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-K and the documents incorporated by reference herein may contain forward-looking statements that are not based on historical fact. When used in this report, words such as “expects”, “anticipates”, “believes”, “seeks”, “estimates”, “plans”, “intends” and similar words identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Although such statements are based on management’s current estimates and expectations and currently available competitive, financial and economic data, forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause our actual results to differ materially from what may be inferred from the forward-looking statements. Some of the factors that could cause or contribute to such differences are listed and discussed in Item 1A “Risk Factors” below and elsewhere in this Annual Report on Form 10-K. We undertake no obligation to release publicly any revisions or updates to any forward-looking statements that are contained in this document. We encourage you to read carefully the risk factors described in other documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”).

Item 1.            BUSINESS

General background

Orion Group Holdings, Inc., is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing services both on and off the water in the continental United States, Alaska, Canada and the Caribbean Basin through its marine segment and its concrete segment. Our marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Our concrete segment provides turnkey concrete construction services including pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial, structural and other associated business areas. We are headquartered in Houston, Texas with regional offices throughout our operating areas.

Orion Group Holdings, Inc. is a Delaware corporation. The common stock of Orion Group Holdings, Inc. is listed on the New York Stock Exchange under the symbol ORN. Unless the context otherwise requires, all references herein to “Orion”, the “Company”, the “Registrant”, “we”, “us” or “our” refer to Orion Group Holdings, Inc. and its consolidated subsidiaries and affiliates.

History and growth

Orion Group Holdings, Inc. was founded in 1994 as a marine construction project management business. Since then, we have expanded our reach both through organic growth and acquisitions. We have successfully acquired and fully integrated several companies into our operations, including the acquisition of T.A.S. Commercial Concrete Construction, LLC ("TAS") during 2015, and Tony Bagliore Concrete, Inc. ("TBC") during 2017. The TAS acquisition added another segment to our business, provided diversification of end market drivers and a diversified customer base. The TBC acquisition expanded the Company’s current service offerings to an additional geographic market within its concrete segment. These strategic acquisitions have also enhanced our operational capabilities, provided us with a larger geographic base, and added to our equipment fleet. Today we are focused on becoming the leading specialty construction company in the building, industrial, and infrastructure sectors and will continue to seek growth opportunities through greenfield expansion, acquisitions, vertical integration, and diversification.

Our operating principles and guiding beliefs include:

Safety - We believe work place safety and accident prevention is our moral obligation as well as a good business practice. By identifying and concentrating resources to address job site hazards, we continually strive to reduce our incident rates and the severity of the incidents.
Quality - We believe in the importance of performing high quality work.
Production - We believe in the importance of performing tasks safely, efficiently, and timely.
Integrity – We believe that integrity is the foundation upon which all other operating principles and guiding beliefs rest and it is achieved through maintaining high ethical standards through an established code of conduct and an effective company-wide compliance program.

3

Table of Contents

Sustainability – We are committed to sustainability, which encompasses many aspects of how we conduct ourselves and practice our core values. We believe sustainability is important to our customers, employees, shareholders, and communities, and is also a long-term business driver. By focusing on specific initiatives that address social, environmental, governance and economic challenges, we can minimize risk and increase our competitive advantage

Our Business Strategy

We employ the following key business strategies:

Continue to add construction capabilities - We continue to seek to add capabilities that will augment our core contracting and construction competencies, improve our gross margins, and allow us to compete more effectively for contracts that might not otherwise be available to us.
Expand into new markets and complementary service offerings and selectively pursue strategic acquisitions - We seek to identify attractive new markets and strategic opportunities to expand our service offering through greenfield expansions, diversification, or selective acquisitions.
Continue to capitalize on favorable long-term industry trends - We seek to capitalize on infrastructure capital investments across the markets we serve including port and marine infrastructure, government funded projects, transportation, oil and gas facilities, recreational waterside industry infrastructure expansion and environmental restoration markets. We seek to capitalize on privately and government funded projects across the commercial concrete markets we serve including industrial, institutional, commercial real estate, and recreational developments.
Diversification - To mitigate the risks inherent in the construction business as the result of general economic factors, we pursue projects in both the public and private sectors for a wide range of customers within each sector (from the federal government to small municipalities and from large corporations to small property owners and developers and in diverse geographic markets).
Continue to reinvest in our core operations - We pursue technically complex projects where our people, specialized services and equipment differentiate us from our competitors. We intend to enhance the types, numbers and capabilities of our equipment so we can provide turnkey construction services to our customers. This is intended to assure that when we are called on for business, we have the right people, skills, and equipment readily available for multiple projects.
Continue to attract, retain and develop our employees - We believe our employees are integral to the success of our project execution, and we continue to allocate resources to attract and retain talented managers, supervisors and field personnel.
Ownership of equipment - We own a large, versatile fleet of well-maintained construction equipment. The ownership of this equipment enables us to compete more effectively by ensuring availability of equipment at a favorable cost.

Services Provided

Marine Construction Services

Marine construction services include construction, restoration, dredging, maintenance and repair of marine transportation facilities, marine pipelines, bridges and causeways, and marine environmental structures. We have the capability of providing design-build services and typically serve as the prime contractor for these types of projects.

Marine transportation facility projects include building or rehabilitating public port facilities for container ship loading and unloading; cruise ship port facilities; private terminals; special-use Navy terminals; recreational use marinas and docks; and other marine-based facilities. These projects typically require the positioning and installation of steel or concrete fabrication dock or mooring structures designed for durability and longevity, and involve driving piles of concrete, pipe or sheet pile to provide a foundation for the port facility structure that we subsequently construct on the piles. We also provide on-going maintenance and repair, inspection services, emergency repair, and demolition and salvage services to such facilities.

4

Table of Contents

Our marine pipeline service projects generally include the installation and removal of underwater buried pipeline transmission lines; installation of pipeline intakes and outfalls for industrial facilities; construction of pipeline outfalls for wastewater and industrial discharges; river crossing and directional drilling; creation of hot taps and tie-ins; and inspection, maintenance and repair services.

Our bridge and causeway projects include the construction, repair and maintenance of all types of overwater bridges and causeways, as well as the development of fendering systems in marine environments. We serve as the prime contractor for many of these projects, and some of these are design-build contracts. These projects involve fabricating steel or concrete structures designed for durability and longevity, and involve driving concrete, pipe or sheet pile into the subsurface to create support for the concrete deck roadways that we subsequently construct on the piles. These piles can exceed four feet in diameter, can range up to 170 feet in overall length, and are often driven 90 feet into the sea or river floor. We do not control the funding of bridge and causeway work, which has not been consistently available

Marine environmental structure projects may include the installation of concrete mattresses to promote erosion protection; construction of levees to contain environmental mitigation projects, and the installation of geotubes for wetlands and island creation. Such structures are used for erosion control, wetlands creation and environmental remediation.

Dredging generally enhances or preserves the navigability of waterways or the protection of shorelines through the removal or replenishment of soil, sand or rock.  Dredging involves the removal of mud and silt from the channel floor by means of a mechanical backhoe, crane and bucket or cutter suction dredge and pipeline systems. Dredging is integral to marine capital and maintenance projects, including: maintenance for previously deepened waterways and harbors to remove silt, sand and other accumulated sediments; construction of breakwaters, jetties, canals and other marine structures; deepening ship channels and wharves to accommodate larger and deeper draft ships; containing erosion of wetlands and coastal marshes; land reclamation; and beach nourishment and creation of wildlife refuges. Maintenance dredging projects are a source of recurring revenue as active channels typically require routine dredging due to natural sedimentation. The frequency of maintenance dredging may be accelerated by heavy rainfall or major weather events such as hurricanes. Areas where no natural deep water ports exist, such as the Texas Gulf Coast, require substantial dredging. We maintain multiple specialty dredges of various sizes and specifications to meet customer needs. Our dredging services are typically combined with our marine construction services to provide a turn-key solution for our customers.

Our specialty services include design, salvage, demolition, surveying, towing, diving and underwater inspection, excavation and repair. Our diving services are largely performed in shallow water and include inspections, salvage and pile restoration and encapsulation. Our survey services include surveying pipelines and performing hydrographic surveys which determine the configuration of the floors of bodies of water and detect and identify wrecks and other obstructions. Most of these specialty services support our other services or provide an introductory opportunity to other customers.

Concrete Construction Services

The concrete segment has earned the reputation as being one of the area’s most recognizable and reputable concrete contractors. Our success has been achieved by maintaining a focus on our clients and addressing their problems. The commercial construction arena has been our focus and we have completed thousands of successful commercial projects – both simple and complex in the broader Texas market including Houston, Dallas, Fort Worth, Austin and San Antonio. Our portfolio of commercial projects includes warehouse and distribution, medical, retail, education, office buildings, multi-family, religious, industrial and community projects – nearly the full spectrum of commercial construction projects. We are a turnkey subcontractor that performs the vast majority of all our work with our own labor forces.

Warehouse and distribution projects include large, intermediate and small facilities serving needs in nearly every commercial, private and public industry. Typically, the developer and builders construction method of choice for these projects are concrete tilt-wall structures ranging in size from a few thousand square feet to over one million square feet. Speed, efficiency and quality are keys to meeting our clients’ needs to deliver projects on or ahead of schedule. We have received awards for many of these projects.

Medical/healthcare projects always come with stringent requirements. We have the knowledge and experience to meet these high expectations. From hospitals to laboratories, including high rises and their garages we know how to carry out construction activities in densely occupied areas with minimal disturbance to critical facilities daily operations.

5

Table of Contents

Office buildings, whether in downtown metropolitan cities or in business districts serving neighboring communities we apply our concrete experience to a variety of office project types, including low, mid-rise and high-rise concrete structures. We utilize different technologies for elevated concrete structures.

Multi-family projects, whether it be podium structures, mid-rise, high-rise and luxury projects, we have the abundant knowledge of the extensive formwork systems, cranes and equipment needed to successfully deliver projects – typically in tight spaces. We have earned the reputation for successfully managing and delivering multi-family projects with aggressive schedules.

We bring a breadth of knowledge and a diverse portfolio of education projects. We have completed over 18 million square feet of education projects including libraries, higher education, research facilities, athletic facilities, stadiums, elementary, middle and high schools. We have also applied our skills to state of the art performing arts facilities and studios.

Retail centers play an important role for serving our neighborhoods. They address a variety of community needs and we have had the opportunity to build large regional shopping malls, national chain stores, power centers, small strip centers and corner retail shops.

We also have had the great privilege of teaming with church leaders and church builders to create worship areas for people from all walks of life. With more than 4.7 million square feet of worship and fellowship facilities, our religious portfolio includes projects ranging from 2,000 square feet to more than 200,000 square feet.

Industry and Market Overview

Marine Segment

We provide our services to similar customers, or in some cases, the same customers, across the markets served by our business. Our marine segment customers may be in diverse end markets, including port expansion and maintenance, bridges, causeways and other marine infrastructure, the recreational waterside industry, the U.S. Department of Defense, the energy industry, coastal protection and reclamation, along with hurricane restoration and repair and environmental remediation. We believe that this broad customer base enables us to lessen the negative effects during a downturn in a specific end market and respond quickly to the needs of expanding end markets. The following includes an overview of our diverse markets in the marine construction industry:

Port Expansion and Maintenance

Expected increases in cargo volume and future demands from larger ships transiting the expanded Panama Canal will require ports, especially along the Gulf Coast and Atlantic Seaboard, to expand their dock capacity and port infrastructure to accommodate larger container ships and increased cargo volumes, as well as perform additional dredging services to deepen and maintain their channels. We provide customers in this sector turnkey services to meet all their port expansion and maintenance work.

Bridges and Causeways

According to the American Society of Civil Engineers, as of their most recent report, one in eleven of the nation’s bridges are structurally deficient, and the average age of the nation’s bridges is 43 years old. We are able to construct or restore overwater bridges, and design, repair, or replace, fendering systems for customers.

Marine Infrastructure

The U.S. Marine Transportation System (“MTS”) consists of waterways, ports and their intermodal connections, vessels, vehicles, and system users, as well as shipyards and repair facilities crucial to maritime activity. The MTS is primarily owned and operated through an aggregation of federal, state, and local governmental authorities, as well as privately owned facilities and private companies. U.S. inland and intracoastal waterways require continuous maintenance and improvement. While waterway usage is increasing, the facilities and supporting systems are aging. In addition, channels and waterways must maintain certain depths to accommodate ship and barge traffic. Natural sedimentation in these channels and waterways require routine maintenance dredging to maintain navigability.

Our full business complement, including design, dredging, marine construction, and specialty services, such as diving, survey, and inspections, are fully utilized by our customers to meet all their marine infrastructure project needs.

6

Table of Contents

Recreational Waterside Industry

An increase in the number and size of cruise ships has generated a need for substantial port infrastructure development, including planning and construction of new terminals and facilities, as well as on-going maintenance and repair services. These larger vessels require the development of new mooring structures as well as additional dredging services to accommodate deeper drafts. Our service area includes, among others, the ports of Miami, Galveston, Tampa, New Orleans, Canaveral, Juneau, Tacoma, Seattle and the Caribbean Basin, which includes numerous cruise facilities and is the most popular cruise destination in the North American market.

The Department of Defense and Homeland Security

The U.S. Navy has the responsibility for the maintenance of 40 facilities in the United States, which includes a significant amount of marine infrastructure. We believe the U.S. Navy will continue to maintain strategic facilities, including required maintenance and upgrades to its marine facility infrastructure.

The U.S. Coast Guard maintains more than 50,000 federal aids to navigation, which include buoys, lighthouses, day beacons, and radio-navigation signals. Additionally, it has oversight responsibility for approximately 20,000 highway and railroad bridges that span navigable waterways throughout the country. As part of the Department of Homeland Security, we anticipate that the U.S. Coast Guard’s needs for varied marine construction services, including those listed above, will provide opportunities for us in the future.

Energy Industry

We design, construct, repair and remove underwater pipelines, and provide marine construction, dredging, and on-going  maintenance services for private refineries, terminal facilities and docks, and other critical areas near shore oil and gas infrastructure.

U.S. Coastal and Wetland Restoration and Reclamation

We are hopeful that increases in coastal population density and demographic trends will lead to an increase in the number of coastal restoration and reclamation projects, and as the value of waterside assets rises from a residential and recreational standpoint, the private sector, government agencies and municipalities will increase spending on restoration and reclamation projects.

Hurricane Restoration and Repair

Hurricanes are often very destructive to the existing marine infrastructure and natural protection barriers of the prime storm areas of the Gulf Coast, the Atlantic Seaboard, and the Caribbean Basin, including bridges, ports, underwater channels and sensitive coastal areas. Typically, restoration and repair opportunities continue for several years after a major hurricane event. These events provide incremental projects to our industry that contribute to a favorable bidding environment and high capacity utilization in our markets during such times.

Environmental Remediation

We believe there will be additional funding for the protection of natural habitats, environmental preservation, wetlands creation and remediation for high priority projects in Louisiana and other areas in the markets we serve that will protect and restore sensitive marine and coastal areas, advance ocean science and research, and ensure sustainable use of ocean resources.

Concrete Segment

We provide our services to different customers across the markets served by our business. Our customers in the concrete segment are in diverse end markets such as industrial, institutional, commercial real estate, and recreational developments.

Our concrete segment depends on continued growth in population to support residential and nonresidential construction, specifically in the metropolitan areas of Texas. The latest estimates from the U.S. Census Bureau indicate that the metropolitan areas of Texas, specifically Dallas, Houston, San Antonio and Austin, are among the U.S. top 10 in population growth based on the most recent survey results. These markets show substantial growth in multi-family housing, medical facilities, and commercial, office, retail, and industrial buildings.

7

Table of Contents

We believe that this broad customer base enables us to lessen the negative effects during a downturn in a specific end market and respond quickly to the needs of expanding end markets. The following includes an overview of our diverse markets in the concrete industry:

Industrial developments

Our industrial markets include manufacturing plants, industrial warehousing, distribution centers, waste water treatment facilities and facilities supporting the petrochemical industry. An expected increase in distribution has generated a need for substantial industrial park developments.

Institutional developments and expansions

Our institutional markets include educational facilities, medical facilities, museums, and religious developments. Due to significant population growth in the metropolitan areas of Texas, there has been great demand for institutional development and expansion. Additionally, as population and suburban areas grow, so does the continued need for medical and educational facilities.

Structural developments

Our structural markets include mid- and high-rise multi-family living, single and multi-story office buildings, parking garages, shopping malls, and other multi-story buildings. Continued growth in business expansions and relocations to Texas are driving an increase in the need for office space and apartment complexes.

Retail developments

As population continues to grow, so does the need for retail developments, such as grocery stores, shopping malls, restaurants, free standing retail outlets, and other entertainment venues.

Recreational developments

Our recreational markets include a wide-range of hotels, sports venues, and stadiums. The increase in new businesses and new educational facilities has sparked the need for additional hotels and stadiums across the metropolitan areas of Texas.

Customers

Our customers in the marine segment include federal, state and local governmental agencies as well as private commercial and industrial enterprises in the United States and the Caribbean Basin. Customers in our concrete segment include general contractors along with owners and developers of medical facilities, religious developments, sports complexes and stadiums, school districts and developers, owners of industrial, commercial and residential buildings, and some governmental agencies across the metropolitan areas of Texas. Most projects are competitively bid, with the award typically going to the lowest qualified bidder. Our customer base shifts from time to time depending on the types of projects we bid, and ultimately are successful on obtaining.

The following table represents concentrations of contract revenue by type of customer for the years ended December 31, 2020, 2019, and 2018.

    

2020

    

%

    

2019

    

%

    

2018

    

%

 

Federal Government

$

51,793

 

7

%  

$

46,425

 

6

%  

$

42,143

 

8

%

State Governments

 

27,574

 

4

%  

 

47,831

 

7

%  

 

30,470

 

6

%

Local Governments

 

202,839

 

29

%  

 

212,958

 

30

%  

 

107,478

 

21

%

Private Companies

 

427,736

 

60

%  

 

401,176

 

57

%  

 

340,803

 

65

%

Total contract revenues

$

709,942

 

100

%  

$

708,390

 

100

%  

$

520,894

 

100

%

We do not believe that the loss of any one customer would have a material adverse effect on our operations since no single customer sustains a large portion of our contract revenue over time.

Fluctuations in Quarterly Results

Our quarterly revenues and results of operations may fluctuate significantly depending upon the mix, size, scope, and progress schedules of our projects under contract, permitting, weather or other delays, the productivity of our labor force and the utilization of our equipment. These factors, as well as others, affect the rate at which revenue is recognized as projects are completed.

8

Table of Contents

Competition

In our marine segment, we compete with several regional marine construction services companies and a few national marine construction services companies. From time to time, we compete with certain national land-based heavy civil contractors. In our concrete segment, we compete mostly in the private sector and our competitors range from small, local construction companies to large regional and national construction companies.

Both of our segments are highly fragmented with competitors generally varying within the markets we serve and with few competitors competing in all of the markets we serve or for all of the services that we provide. We believe that our turnkey capability, expertise, experience and reputation for providing safe and timely quality services, safety record and programs, versatile equipment fleet, financial strength, surety bonding capacity, knowledge of local markets and conditions, and project management and estimating abilities allow us to compete effectively. We believe significant barriers to entry exist in the markets in which we operate, including the ability to bond large projects, maritime law constraints, specialized marine equipment and technical experience; however, a U.S. company that has adequate financial resources, access to technical expertise, and specialized equipment may become a competitor.

Insurance and Bonding

We maintain general and excess liability, construction equipment, workers’ compensation and other forms of insurance; all in amounts adequate for our operating needs and consistent with industry practice.

In connection with both segments of the business, we often are required to provide various types of surety bonds that provide security for our performance under certain public and private sector contracts. Our ability to obtain surety bonds depends upon our capitalization, adequate working capital, past performance, management expertise, and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of our backlog that we have currently bonded and their own current underwriting standards, which may change from time to time. The capacity of the surety market is subject to market-driven fluctuations driven primarily by the level of surety industry losses and the degree of surety market consolidation. Although we do not believe that fluctuations in surety market capacity have significantly affected our ability to grow our business, there is no assurance that it will not significantly affect our ability to obtain new contracts in the future. The bonds we provide typically are for the contract amount of the project. At December 31, 2020, the capacity under our current bonding arrangement was at least $500 million, with approximately $150 million of projects being bonded. We believe our strong balance sheet and working capital position will allow us to continue to access our bonding capacity.

Trade Names

We operate under a number of trade names. We consolidate our operations under the brand name "Orion Group Holdings, Inc."  We may be known as Orion Marine Group, Orion Marine Construction, Orion Marine Contractors, Orion Construction, East and West Jones Placement Area, Schneider E&C, Orion Industrial Construction, Orion Concrete Construction, T.A.S. Commercial Concrete Construction, T.A.S. Commercial Concrete Solutions, T.A.S. Proco, or Houston Industrial Tool Services, as well as our former names of King Fisher Marine Service, F. Miller Construction, T. W. LaQuay Dredging, Misener Marine Construction, Misener Diving & Salvage, Northwest Marine Construction and West Construction. We do not generally register our trademarks with the U.S. Patent & Trademark Office, but instead rely on state and common law protections. While we consider our trade names to be valuable assets, we do not consider any single trademark or trade name to be of such material importance that its absence would cause a material disruption of our business.

Equipment

We operate and maintain a large and diverse equipment fleet in our marine and concrete segments, substantially all of which we own, that includes the following:

Barges - spud barges, material barges, deck barges, anchor barges, hopper barges, and fuel barges. These vessels are used to provide work platforms for cranes and other equipment, to transport materials to the project site and to provide support for the project at the project site.
Dayboats - small pushboats, dredge tenders and skiffs are used to shift barges at the project site, to move personnel and to provide general support to the project site.

9

Table of Contents

Tugs - larger pushboats and tug boats are used to transport barges and other support equipment to and from the project site.
Dredges - 24” cutter head suction dredges (diesel), 20” cutter head suction dredge (diesel/electric), 20” cutter head suction dredges (diesel), 16” cutter head suction dredges, and 12” portable cutter head suction dredges are used to provide dredging services at project sites.
Cranes - crawler lattice boom cranes with lift capability from 50 tons to 400 tons and hydraulic rough terrain cranes with lift capability from 15 tons to 60 tons are used to provide lifting and pile driving capabilities on project sites, and to provide bucket work, including mechanical dredging and dragline work, to project sites.
Tower Cranes - Capable of being assembled to reach heights of 600 feet and have a capacity of 44,000 pounds with a maximum of 242 foot working radius.
Pump Trucks - concrete pump trucks are large, diesel-powered trucks mounted with a powerful pump, and an extendable, sectioned hose or cylinder to help facilitate the placement of concrete for construction projects.
Laser Screeds - laser screeds are self-propelled four wheel drive, four wheel steer units that encompass a 20’ telescoping boom with a 12’ wide placement head. The screed head itself consists of 3 parts: the plow, the auger, and the vibrator. The plow disperses the concrete evenly, the auger removes the excess material to finished grade, and the vibrator smooths the surface. The screed has an on board computer system able to determine the correct elevation height and provide commands for elevation control.

As a general rule, we believe that ownership of certain equipment is generally preferable to leased or rented equipment in some cases because it ensures the equipment is available as needed and normally results in lower costs. We continually monitor and adjust our fleet size so that it is consistent with the size of the business, considering both existing backlog and expected future work. We believe that our equipment is well maintained and suitable for our current operations. We have the ability to extend the useful life of our equipment through capital refurbishment at periodic intervals. Most of our fleet is serviced by our own mechanics who work at various maintenance sites and facilities. We are also capable of building, and have built, much of our highly specialized equipment. Our strategy is to deploy our fleet from project to project as required. The assets (including equipment) are pledged as collateral under the Credit Facility.

Equipment Certification

In our marine segment, some of our equipment requires certification by the U.S. Coast Guard. All equipment which requires certification has obtained such certification and is maintained in good standing thereunder. In addition, where required, our vessels’ permissible loading capacities require certification by the American Bureau of Shipping (“ABS”). The ABS is an independent classification society which certifies that certain of our larger, seagoing vessels are “in-class,” signifying that the vessels have been built and maintained in accordance with ABS standards and applicable U.S. Coast Guard rules and regulations. All of our vessels that are required to be certified by the ABS have been certified as “in-class.” These certifications indicate that the vessels are structurally capable of operating in open waters, which enhances the mobility of our fleet.

Government Regulations

We are required to comply with the macro regulatory requirements of federal, state and local governmental agencies and authorities including the following:

regulations concerning workplace safety, labor relations and disadvantaged businesses;
licensing requirements applicable to shipping and dredging; and
permitting and inspection requirements applicable to marine construction projects.

In our marine segment, we are also subject to government regulations pursuant to the Dredging Act, the Merchant Marine Act of 1920, commonly referred to as the "Jones Act", the Shipping Act and the Vessel Documentation Act. These statutes require vessels engaged in the transport of merchandise or passengers between two points in the United States or dredging in the navigable waters of the U.S. to be documented with a coastwise endorsement, to be owned and controlled by U.S. citizens, to be manned by U.S. crews, and to be built in the U.S. The U.S. citizenship ownership and control standards

10

Table of Contents

require the vessel-owning entity to be at least 75% U.S. citizen owned, and prohibit the demise or bareboat chartering of the vessel to any entity that does not meet the 75% U.S. citizen ownership test. These statutes, together with similar requirements for other sectors of the maritime industry, are collectively referred to as “cabotage” laws.

In both our marine and concrete segments, we are subject to the requirements of OSHA and certain regulations for the EPA.

We believe that we are in material compliance with applicable regulatory requirements and have all material licenses required to conduct our operations.

Environmental Matters

General

Our activities, including concrete construction, infrastructure construction, salvage, demolition, dredging and dredge material disposal activities are subject to stringent and complex federal, state, and local laws and regulations governing environmental protection, including air emissions, water quality, solid waste management, marine and bird species and their habitats, and wetlands. A portion of our construction contracts are entered into with public authorities and frequently impose additional governmental requirements, including those related to environmental concerns.

Such laws and regulations may require that both segments and their customers obtain, and comply with, various environmental permits, registrations, licenses and other approvals. These laws and regulations also can restrict or impact the business activities in many ways, such as delaying the appropriation and performance of particular projects; restricting the way we handle or dispose of wastes; requiring remedial action to mitigate pollution conditions that may be caused by our operations or that are attributable to others; and enjoining some or all of our operations deemed in non-compliance with environmental laws and regulations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and/or criminal penalties, the imposition of remedial obligations and the issuance of orders enjoining future operations.

We believe that compliance with existing federal, state and local environmental laws and regulations will not have a material adverse effect on our business, results of operations, or financial condition. In addition, we could be affected by future laws or regulations. As a result, there can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate. The following is a discussion of the environmental laws and regulations that could have a material effect on our marine and concrete construction services.

Waste Management

Our operations could be subject to the federal Resource Conservation and Recovery Act (“RCRA”) and comparable state laws, which impose detailed requirements for the handling, storage, treatment and disposal of hazardous and non-hazardous solid wastes. Under the auspices of the EPA, the individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent, requirements. Generators of hazardous wastes must comply with certain standards for the accumulation and storage of hazardous wastes, as well as recordkeeping and reporting requirements applicable to hazardous waste storage and disposal activities.

Site Remediation

The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), also known as “Superfund,” and comparable state laws and regulations impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons responsible for the release of hazardous substances into the environment. Such classes of persons include the current and past owners or operators of sites where a hazardous substance was released, and companies that disposed or arranged for the disposal of hazardous substances at offsite locations, such as landfills. CERCLA authorizes the EPA, and in some cases third parties, to take actions in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. Under CERCLA, such persons may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. In addition,

11

Table of Contents

neighboring landowners and other third parties often file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.

We currently own or lease properties that have been used by other industries for a number of years. Although we typically have used operating and disposal practices that were standard in the industry at the time, wastes may have been disposed of or released on or under the properties owned or leased by us, on or under other locations where such substances have been taken for disposal, or on or under project sites where we perform work. In addition, some of the properties may have been operated by third parties or by previous owners whose treatment and disposal or release of wastes was not under our control. These properties and the substances disposed or released on them may be subject to CERCLA, RCRA and analogous state laws. Under such laws, we could be required to remove or remediate previously disposed wastes or property contamination, or to perform remedial activities to prevent future contamination.

Water Discharges

The Federal Water Pollution Control Act, also known as the Clean Water Act (“CWA”), and analogous state laws impose strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the United States, including wetlands. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA also regulates the discharge of dredged or fill material into waters of the U.S., and activities that result in such discharge generally require permits issued by the Corps of Engineers. Moreover, above ground storage of petroleum products is strictly regulated under the CWA. Under the CWA, federal and state regulatory agencies may impose administrative, civil and/or criminal penalties for non-compliance with discharge permits or other requirements of the CWA and analogous state laws and regulations.

The Oil Pollution Act of 1990 (“OPA”), which amends and augments the CWA, establishes strict liability for owners and operators of facilities that are sites of releases of oil into waters of the U.S. OPA and its associated regulations impose a variety of requirements on responsible parties related to the prevention of oil spills and liability for damages resulting from such spills. For instance, OPA requires vessel owners and operators to establish and maintain evidence of financial responsibility sufficient to cover liabilities related to an oil spill for which such parties are statutorily responsible. We believe we are in compliance with all applicable OPA financial responsibility obligations and equipment requirements.

In 2009, regulations promulgated by the EPA covering certain previously exempt discharges to water from certain marine vessels became effective. The regulations provide for a general permit to cover such discharges and impose on marine vessel operators, including us, certain discharge, permitting, record keeping, reporting, monitoring, maintenance, and operating restrictions and requirements with respect to materials that are or may be discharged from certain vessels. Applicability of these restrictions and requirements is based on size and type of vessel, and they apply only to a minority of our vessels. We, nevertheless, are implementing such restrictions and requirements with respect to our vessels which are subject thereto, and we do not anticipate that such regulations or the associated permit terms, restrictions and requirements will adversely impact our business and results of operations.

Air Emissions

The Clean Air Act (“CAA”) and comparable state laws restrict the emission of air pollutants from many sources, including paint booths, and may require pre-approval for the construction or modification of certain facilities expected to produce air emissions, impose stringent air permit requirements, or require the utilization of specific equipment or technologies to control emissions. We believe that our operations are in substantial compliance with the CAA.

Climate Change

The U.S. Congress may consider legislation to reduce emissions of greenhouse gases in response to climate change concerns. In addition, several states have declined to wait on Congress to develop and implement climate control legislation and have already taken legal measures to reduce emissions of greenhouse gases. Passage of climate control legislation or other regulatory initiatives by Congress or various states, or the adoption of regulations by the EPA and analogous state agencies that restrict emissions of greenhouse gases in areas in which we conduct business could have an adverse effect on our operations and demand for our services.

12

Table of Contents

Endangered Species

The Endangered Species Act (“ESA”) restricts activities that may affect endangered species or their habitats. We conduct activities in or near areas that may be designated as habitat for endangered or threatened species. For instance, seasonal observation of endangered or threatened West Indian Manatees adjacent to work areas may impact construction operations in Florida during the winter months. Additionally, our dredging operations in Florida are impacted by limitations for placement of dredge spoil materials on designated spoil disposal islands, from April through August of each year, when the islands are inhabited by nesting colonies of protected bird species. Further, restrictions on work during the Whooping Crane nesting period in the Aransas Pass National Wildlife Refuge from October 1 through April 15 each year and during the non-dormant grass season for sea grass in the Laguna Madre from March 1 through November 30 each year impact our construction operations in the Texas Gulf Coast area. We plan our operations and bidding activity with these restrictions and limitations in mind, and they have not materially hindered our business in the past. However, these and other restrictions may affect our ability to obtain work or to complete our projects on time in the future. In addition, while we believe that we are in material compliance with the ESA, the discovery of previously unidentified endangered species could cause us to incur additional costs or become subject to operating restrictions or bans in the affected area.

Human Capital Management

At December 31, 2020, our marine segment had  923 employees, 279 of whom were full-time salaried personnel and most of the remainder of whom were hourly personnel. Our concrete segment had 1,374 employees, 271 of whom were full-time salaried personnel and most of the remainder of whom were hourly personnel.

From time to time, we hire additional employees for certain large projects and, subject to local market conditions, additional crew members are generally available for hire on relatively short notice. We believe our employees are our most valuable resource, and our workforce possesses a strong dedication to and pride in our company. Our employees are not currently represented by labor unions, except certain employees in our marine segment located in the Pacific Northwest and Alaska, in respect of which collective bargaining agreements are in place. Certain employees are represented by collective bargaining agreements in our concrete segment. Employees represented by collective bargaining agreements represent approximately 4.5% of our total workforce.

Financial Information About Geographic Areas

We are a project-driven marine and concrete contractor, and our operations represent two reportable segments for financial reporting. Our business is primarily conducted along the coastal regions of the United States for our marine segment and in the metropolitan areas of Texas for our concrete segment. Revenues generated from our marine segment outside the United States, primarily in the Caribbean Basin and Mexico, totaled 1.8%, 1.6%, and 2.3% of total revenues for the years ended December 31, 2020, 2019 and 2018, respectively. Our long-lived assets are substantially located in the United States.

Access to the Company’s Filings

We maintain a website at www.oriongroupholdingsinc.com on which we make available, free of charge, access to the various reports we file with, or furnish to, the SEC. The website is made available for information purposes only. It should not be relied upon for investment purposes, and none of the information on our website is incorporated into this Annual Report on Form 10-K by reference. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Item 1A.         RISK FACTORS

We operate in a changing environment that involves numerous known and unknown risks and uncertainties that could materially adversely affect our business, financial condition, and results of operations. The risks described below highlight some of the factors that have affected and could affect us in the future. We may also be affected by unknown risks or risks that we currently think are immaterial. If any such events actually occur, our business, financial condition, and results of operations could be materially adversely affected.

13

Table of Contents

Risk Factors Relating to Our Business

We rely on highly competitive and highly regulated government contracts.

Government funding for public works projects is limited, thus creating a highly competitive environment for the limited number of public projects available. Reduced levels of, or delays in, government funding cause delays in project lettings and result in intense competition and pricing pressure for such projects. In addition, government contracts are subject to specific procurement regulations, contract provisions and a variety of regulatory requirements relating to their formation, administration, performance and accounting. Many of these contracts include express or implied certifications of compliance with applicable laws and contract provisions. Any violations of these regulations could bring about litigation, including the possibility of qui tam (“whistleblower”) litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, and could cause termination of other existing government contracts and result in the loss of future government contracts. Due to the significant competition in the marketplace and the level of regulations on government contracts, we could suffer reductions in new projects and see lower revenues and profit margins on those projects, which could have a material adverse effect on the business, operating results and financial condition.

Our operations are susceptible to a variety of adverse conditions including weather conditions, natural disasters, health epidemics or pandemics or other contagious outbreaks and terrorist attacks that could negatively impact the markets in which we operate.

Our business, operating results and financial condition could be materially and adversely affected by severe weather and other natural disasters, such as earthquakes or hurricanes, particularly along the Gulf Coast, the West Coast, the Atlantic Seaboard, and the Caribbean Basin. Repercussions of severe weather conditions could cause significant interruption of projects in process and have safety implications to personnel at those sites.

Our business, operating results and financial condition could be materially and adversely affected if a public health epidemic or pandemic or other contagious outbreak, such as the recent coronavirus (“COVID-19”) pandemic  (as discussed in greater detail below), interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business.

Terrorist attacks, targeted at ports, marine facilities, shipping or metropolitan areas could affect the markets in which we operate our business and our expectations. Increased armed hostilities, terrorist attacks or responses from the United States may lead to further acts of terrorism and civil disturbances in the United States or elsewhere, which may further contribute to economic instability in the United States. These attacks or armed conflicts may affect our operations or those of our customers or suppliers and could impact our revenues, our production capability and our ability to complete contracts in a timely manner.

The current COVID-19 pandemic has affected and may continue to adversely affect our business and results of operations  and financial condition.

In March of 2020,  outbreak a pandemic, and the President of the United States declared the outbreak a national emergency. In response to the COVID-19 pandemic, federal, provincial, state, county and local governments and public health organizations and authorities around the world implemented a variety of measures intended to control the spread of the virus, including quarantines, “shelter-in-place,” “stay-at-home” and similar orders, travel restrictions, school closures, business curtailments and closures, social distancing and hygiene requirements, and other measures.


We provide a broad range of specialty construction services in the infrastructure, industrial and building sectors of the continental United States, Alaska, Canada and the Caribbean Basin, which are generally considered essential services exempt from many of the above measures. Since March 2020, when the World Health Organization declared the COVID-19 to be a global pandemic, we have continued to provide these services to our customers, but with added focused attention on the safety and health of our employees. However, the COVID-19 pandemic and related governmental and business responses has had and will continue to have an adverse effect on our operations. For example, as a result of the pandemic

14

Table of Contents

and various governmental orders, a significant number of our corporate employees have been working from home, and we have altered our operations to allow for appropriate social distancing and hygiene, which has led to decreased efficiency and productivity in our workforce and our operations. In addition, management is focused on mitigating the effects of the COVID-19 pandemic, which has required and will continue to require a substantial investment of time, energy, resources and focus.


The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that are uncertain and that we are not able to predict, including: the severity of the virus; the duration and scope of the pandemic; the impact of the vaccines, including the speed at which they are approved and disseminated and their effectiveness against COVID-19 and its evolving strains; governmental, business, individual and other actions taken in response to the pandemic; the effect on our suppliers and disruptions to the global supply chain; the impact on economic activity; the extent and duration of the impact on consumer and business confidence and spending; the effect on our end-user customers; the effect of any closures or other changes in operations of our and our suppliers’, distributors’ and end-user customers’ facilities; the health of and the effect on our employees and our ability to meet staffing needs in our construction and other critical functions, particularly if employees become ill, are quarantined as a result of exposure, or are reluctant to show up for work; our ability to provide services, including as a result of travel restrictions, work from home requirements and arrangements, and other restrictions or changes in behavior or preferences for interactions; the effect on employee healthcare costs; restrictions or disruptions to transportation, including reduced availability of ground, sea or air transport; the ability of our end-user customers to pay for our services; the potential effects on our internal controls, including those over financial reporting, as a result of changes in working arrangements that are applicable to our employees and business partners; and the effect on our ability to access capital on favorable terms and continue to meet our liquidity needs, all of which are highly uncertain and cannot be predicted. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur in the future.

We depend on continued growth in population in our geographic market areas in Texas to support residential and nonresidential construction for our concrete construction segment.

Our concrete segment depends on continued growth in population in our geographic market areas in Texas to support residential and nonresidential construction. A growing population generates economic growth and expansion in construction for retail, office buildings, etc. If the population decreases or slows in growth, it often times adversely affects economic growth, which ultimately limits the need for residential and nonresidential construction services in the areas we currently perform services.

The timing of new contracts may result in volatility in our cash flow and profitability. These factors as well as others that may cause our actual financial results to vary from any publicly disclosed earnings guidance and forecasts are outside of our control.

Our revenues are generated from project-based work. It is generally very difficult to predict the timing and source of awarded contracts. The selection of, timing of, or failure to obtain projects, delays in awards of projects, the rebidding or termination of projects due to budget overruns, or the cancellations of projects or delays in completion of contracts could result in the under-utilization of our assets and reduce our cash flows and profitability. Even if we are awarded contracts, we face additional risks that could affect whether, or when, work will begin. For example, some of our contracts are subject to financing and other contingencies that may delay or result in termination of projects. This may make it difficult to match workforce size and equipment location with contract needs. In some cases, we may be required to bear the cost of a readily available workforce and fleet of equipment that is larger than needed at the time, resulting in unpredictability in our cash flow, expenses and profitability. If an expected contract award or the related notice to proceed is delayed or not received, we could incur substantial costs without receipt of any corresponding revenues. Delays by our customers in obtaining required approvals and permits for their infrastructure projects may delay their awarding contracts for those projects and, once awarded, the ability to commence construction under those contracts. Moreover, construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant payments by a customer and may expose us to potential credit risk if such customer should encounter financial difficulties. Such expenditures could reduce our cash flows and necessitate increased borrowings under our credit facility. Finally, the winding down or completion of work on significant projects that were active in previous periods will reduce our revenue and earnings if

15

Table of Contents

such significant projects have not been replaced in the current period. From time to time we may publicly provide earnings or other forms of guidance, which reflect our predictions about future revenue, operating costs and capital structure, among other factors. Any such predictions may be impacted by these factors as well as others that are beyond our control and might not turn out to be accurate.

Fluctuations in commodity prices may affect our customers’ investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards. Additionally, fluctuations in commodity prices can negatively affect our project costs.

Commodity prices can affect our customers in a number of ways. For example, for those customers that produce commodity products such as oil, gas, concrete, steel products, fluctuations in price can have a direct effect on their profitability and cash flow and, therefore, their willingness to continue to invest or make new capital investments. To the extent commodity prices decline or fluctuate and our customers defer new investments or cancel or delay existing projects, the demand for our services decreases, which may have a material adverse impact on the business, financial condition, and results of operations.

Commodity prices can also strongly affect the costs of projects. We use concrete and steel as well as  diesel fuel and other petroleum-based products to operate our equipment used in our construction contracts. Fluctuations in supplies relative to demand and other factors can cause unanticipated increases in their cost. Rising commodity prices can negatively impact the potential returns on projects that are planned, as well as those in progress, and result in customers deferring new investments or canceling or delaying existing projects. The short-term nature of the majority of our projects typically protects us from these potential price increases, however, if we are unable to procure commodities for completion of our projects at estimated prices due to rising commodity prices, our margins may erode on certain in progress or future projects.

We may be unable to obtain sufficient bonding capacity for our contracts and the need for performance and surety bonds may adversely affect our business.

As more fully described in “Insurance and Bonding” under “Item 1. Business,” we are generally required to post bonds in connection with government and certain private sector contracts to ensure job completion. We have entered into a bonding agreement with a large multinational surety which acts as surety, issues bid bonds, performance bonds and payment bonds, and obligates itself upon other contracts of guaranty required by us in the day-to-day operations of our business. However, our surety is not obligated under the bonding agreement to issue bonds for us and bonding decisions are made on a case-by-case basis. We may not be able to maintain a sufficient level of bonding capacity in the future, which could preclude us from being able to bid for certain contracts and successfully contract with certain customers, or cause us to have to increase our letter of credit utilization in lieu of bonds, thereby reducing available borrowing capacity under our credit facility. In addition, the conditions of the bonding market may change, increasing our costs of bonding or restricting our ability to get new bonding which could have a material adverse effect on our business, operating results and financial condition.

Our business depends on good customer relationships and our reputation in both the marine and concrete infrastructure markets, which is developed and maintained by our executives and key project managers. Loss of any of our relationships, reputation or executives or key project managers could materially reduce our revenues and profits.

Our contracts are typically entered into on a project-by-project basis, so we generally do not have continuing contractual commitments with our customers beyond the terms of the current contract. We benefit from key customer relationships built over time and with both public and private entities. We also benefit from our reputation in the marine and concrete construction markets developed over years of successfully performing on projects. Both of these aspects of our business were developed and are maintained through our executives and key project managers. Our inability to retain our executives and key project managers or inability to complete projects timely and successfully resulting in customer satisfaction could have a material adverse effect on our current customer relationships and reputation. The inability to maintain relationships with our customers in general or obtain new customers based on our reputation could have a material adverse effect on our business, operating results and financial condition.

16

Table of Contents

We may not be able to fully realize the revenue value reported in our backlog.

As of December 31, 2020, we had a backlog of work to be completed on contracts totaling approximately $236.9 million in our concrete segment and approximately $202.6 million in our marine segment. Backlog develops as a result of new awards, which represent the potential revenue value realizable pursuant to new project commitments received by us during a given period.

Backlog consists of awarded projects which have either (a) not yet been started or (b) are in progress but are not yet complete. In the latter case, the revenue value reported in backlog is the remaining value related to work that has not yet been completed. We cannot guarantee that the revenue projected in our backlog will be realized, or if realized, will result in earnings. From time-to-time, projects are cancelled that appeared to have a high certainty of going forward at the time they were recorded as new awards. In the event of a project cancellation, we may be reimbursed for certain costs but typically have no contractual right to recover the total revenue reflected in our backlog. In addition to being unable to recover certain direct costs, cancelled projects may also result in additional unrecoverable costs due to the resulting under-utilization of our assets or labor force.

We could suffer contract losses if we fail to accurately estimate our costs or fail to execute within our cost estimates on fixed-price, lump-sum contracts.

Much of our revenue is derived from fixed-price, lump-sum contracts. Under these contracts, we perform our services and execute our projects at a fixed price and where, as a result, we could benefit from cost savings, but we may be unable to recover any cost overruns. Fixed-price contracts carry inherent risks, including risks of losses from underestimating costs, operational difficulties and other factors that may occur over the contract period. If our cost estimates for a contract are inaccurate, or if we do not execute the contract within our cost estimates, we may incur losses or the project may not be as profitable as we expected. In addition, we are sometimes required to incur costs in connection with modifications to a contract (change orders) that may not be approved by the customer as to scope and/or price, or to incur unanticipated costs, including costs for customer-caused delays, errors in specifications or designs, or contract suspension or termination that we may not be able to recover. These, in turn, could have a material adverse effect on our business, operating results and financial condition. The revenue, cost and gross profit realized on such contracts can vary, sometimes substantially, from the original projections due to changes in a variety of factors, such as:

failure to properly estimate costs of engineering, design, material, equipment or labor;
unanticipated technical problems with the structures or services being supplied by us, which may require that we spend our own funds to remedy the problem;
project modifications creating unanticipated costs;
differing site conditions;
changes in the costs of equipment, materials, labor or subcontractors;
our suppliers’ or subcontractors’ failure to perform;
difficulties in our customers obtaining required governmental permits or approvals;
changes in local laws and regulations;
changes in ad valorem and other tariffs;
delays caused by local weather conditions; and
exacerbation of any one or more of these factors as projects grow in size and complexity.

These risks may increase if the project is of a long-term duration because of the elevated risk that the circumstances upon which we based our original bid will change in a manner that increases costs. In addition, we sometimes bear the risk of delays caused by unexpected conditions or events.

We could suffer penalties on our contracts for late completion.

In many instances, including in our fixed-price contracts, we guarantee that we will complete a project by a scheduled date. If we subsequently fail to complete the project as scheduled, without sufficient justification, we may be liable for any customer losses resulting from such delay, generally in the form of contractually agreed-upon liquidated damages. In addition, failure to maintain a required schedule could cause us to default on our government contracts, giving rise to a

17

Table of Contents

variety of potential damages. To the extent that these events occur, the total costs of the project could exceed our original estimates, and we could experience reduced profits or, in some cases, a loss for that project.

Our projects could be hindered due to our dependence on third parties to complete many of our contracts.

A portion of the work performed under our contracts is performed by third-party subcontractors we hire. We also rely on third-party equipment manufacturers or suppliers to provide much of the materials used for projects. If we are unable to hire qualified subcontractors or find qualified equipment manufacturers or suppliers, our ability to successfully complete a project could be impaired. If we are not able to locate qualified third-party subcontractors or the amount we are required to pay for subcontractors or equipment and supplies exceeds what we have estimated, especially in a lump-sum or a fixed-price contract, we may suffer losses on these contracts. If a subcontractor, supplier, or manufacturer fails to provide services, supplies or equipment as required under a contract for any reason, we may be required to source these services, equipment or supplies to other third parties on a delayed basis or on less favorable terms, which could impact contract profitability. There is a risk that we may have disputes with our subcontractors relating to, among other things, the quality and timeliness of work performed, customer concerns about the subcontractor, or our failure to extend existing task orders or issue new task orders under a contract. In addition, faulty workmanship, equipment or materials could impact the overall project, resulting in claims against us for failure to meet required project specifications.

In the current economic environment, third parties may find it difficult to obtain sufficient financing to help fund their operations. The inability to obtain financing could adversely affect a third party’s ability to provide materials, equipment or services which could have a material adverse impact on our business, financial condition, and results of operations. In addition, a failure by a third party subcontractor, supplier or manufacturer to comply with applicable laws, regulations or client requirements could negatively impact our business and, for government clients, could result in fines, penalties, suspension or even debarment being imposed on us, which could have a material adverse impact on our business, financial condition, and results of operations.

We may incur higher costs to acquire, manufacture and maintain equipment necessary for our operations.

We have traditionally owned the majority of the equipment used in our projects, and we do not bid on contracts for which we do not have, or cannot quickly procure, whether through construction, acquisition or lease, the necessary equipment to complete projects. We are capable of building much of the specialized equipment used in our projects, including dayboats, tenders and dredges. To the extent that we are unable to buy or build equipment necessary for our needs, either due to a lack of available funding or equipment shortages in the marketplace, we may be forced to rent equipment on a short-term basis, which could increase the costs of completing contracts, thereby reducing contract profitability. In addition, our equipment requires continuous maintenance, which we primarily provide through our own repair facilities, as well as certification by the U.S. Coast Guard for certain marine segment assets. If we are unable to continue to maintain the equipment in our fleet or are unable to obtain the requisite certifications, we may be forced to obtain third-party repair services, be unable to use our uncertified equipment or be unable to bid on contracts, which could have a material adverse effect on our business, operating results and financial condition.

In addition, our vessels in the marine segment may be subject to arrest or seizure by claimants as security for maritime torts committed by the vessel or us or the failure by us to pay for necessities, including fuel and repair services, which were furnished to the vessel. Such arrest or seizure could preclude the vessel from working, thereby causing delays in marine segment projects.

We may be subject to unionization, work stoppages, slowdowns or increased labor costs.

Only a small percentage of our marine segment workforce, located in the Pacific Northwest and Alaska, is currently unionized. If at any time, a majority of our employees unionized, it could limit the flexibility of the workforce and could result in demands that might increase our operating expenses and adversely affect our profitability. Each of our different employee groups could unionize at any time and would require separate collective bargaining agreements. If any group of our employees were to unionize and we were unable to agree on the terms of their collective bargaining agreement or we were to experience widespread employee dissatisfaction, we could be subject to work slowdowns or stoppages. In addition, we may be subject to disruptions by organized labor groups protesting our non-union status. Any of these events would be

18

Table of Contents

disruptive to our operations and could have a material adverse effect on the business, operating results and financial condition.

Our business is subject to significant operating risks and hazards that could result in damage or destruction to property, injuries or loss of life, which could result in losses or liabilities to us.

Construction and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, or other construction or worksite hazards. On most sites, we are responsible for safety and  are contractually obligated to implement safety procedures. Our safety record is an important consideration for us and for our customers. If serious accidents or fatalities occur or our safety record was to deteriorate, we may be excluded from bidding for on certain work, expose ourselves to possible lawsuits, and existing service arrangements could be terminated, thus having a material adverse impact on our financial position, results of operations, cash flows and liquidity. Further, regulatory changes implemented by OSHA or the U.S. Coast Guard could impose additional costs on us. Adverse experience with hazards and claims could have a negative effect on our reputation with our existing or potential new customers and our prospects for future work.

The businesses of marine infrastructure construction, port maintenance, dredging and salvage are generally subject to a number of risks and hazards, including environmental hazards, industrial accidents, hurricanes, adverse weather conditions, collisions with fixed objects, cave-ins, encountering unusual or unexpected geological formations, disruption of transportation services and flooding. These risks could result in damage to or destruction of, dredges, transportation vessels, other maritime structures and buildings, and could also result in personal injury or death, environmental damage, performance delays, monetary losses or legal liability.

In the concrete segment, our workers are subject to the usual hazards associated with providing construction and related services on construction sites including environmental hazards, industrial accidents, hurricanes, adverse weather conditions, and flooding. Operating hazards can cause personal injury or death, damage to or destruction of property, plant and equipment, environmental damage, performance delays, monetary losses or legal liability.

Our current insurance coverage may not be adequate, and we may not be able to obtain insurance at acceptable rates, or at all.

We maintain various insurance policies, including general liability and workers’ compensation. We are partially self-insured under some of our policies, and our insurance does not cover all types or amounts of liabilities. We are not required to, and do not, specifically set aside funds for our self-insurance programs.

At any given time, we are subject to multiple workers’ compensation and personal injury claims. We maintain substantial loss accruals for workers’ compensation claims, and, until recently, our workers’ compensation and insurance costs have been rising for several years notwithstanding our emphasis on safety. Our insurance policies may not be adequate to protect us from liabilities that we incur in our business. In addition, some of the projects that we bid on require us to maintain high levels of builder’s risk insurance. We may not be able to obtain similar levels of insurance on reasonable terms, or at all. Our inability to obtain such insurance coverage at acceptable rates or at all could have a material adverse effect on our business, operating results and financial condition.

Furthermore, due to a variety of factors such as increases in claims and projected significant increases in medical costs, our insurance premiums may increase in the future and we may not be able to obtain similar levels of insurance on reasonable terms, or at all. Any such inadequacy of, or inability to obtain, insurance coverage at acceptable rates, or at all, could have a material adverse effect on our business, operating results and financial condition.

Insurance liabilities are difficult to assess and quantify due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety program. If we were to experience insurance claims or costs above our estimates, we might be required to use working capital to satisfy these costs rather than to maintain or expand our operations. To the extent that we experience a material increase in the frequency or severity of accidents or workers’ compensation and health claims, or unfavorable developments on existing claims, our operating results and financial condition could be materially and adversely affected.

19

Table of Contents

Our employees in the marine segment are covered by federal laws that provide seagoing employees remedies for job-related claims in addition to those provided by state laws.

Many of our marine segment employees are covered by federal maritime law, including provisions of the Jones Act, the Longshore and Harbor Workers Act, (“USL&H”) and the Seaman’s Wage Act. Jones Act laws typically operate to make liability limits established by USL&H and state workers’ compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue litigation against employers for job-related injuries. Because in some cases we are not protected by the limits imposed by state workers’ compensation statutes, we have greater exposure for claims made by these employees as compared to employers whose employees are not covered by these provisions.

For example, in the normal course of business, we are a defendant in various personal injury lawsuits. We maintain insurance to cover claims that arise from injuries to our workforce subject to a deductible. During 2020, we recorded approximately $0.9 million of expense for our self-insured portion of these liabilities. We believe our recorded self-insurance reserves represent our best estimate of the outcomes of these claims. Should negative trends persist; we could continue to be negatively impacted in the future.

Our operations are subject to environmental laws and regulations that may expose us to significant costs and liabilities.

Our marine infrastructure construction, salvage, demolition, dredging and dredge material disposal activities are subject to stringent and complex federal, state and local environmental laws and regulations, including those concerning air emissions, water quality, solid waste management, and protection of certain marine and bird species, their habitats, and wetlands. We may incur substantial costs in order to conduct our operations in compliance with these laws and regulations. For instance, we may be required to obtain, maintain and comply with permits and other approvals (as well as those obtained for projects by our customers) issued by various federal, state and local governmental authorities; limit or prevent releases of materials from our operations in accordance with these permits and approvals; and install pollution control equipment. In addition, compliance with environmental laws and regulations can delay or prevent our performance of a particular project and increase related project costs. Moreover, new, stricter environmental laws, regulations or enforcement policies, including those imposed in response to climate change, could be implemented that significantly increase our compliance costs, or require us to adopt more costly methods of operation.

Failure to comply with environmental laws and regulations, or the permits issued under them, may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance of injunctions limiting or preventing some or all of our operations. In addition, strict joint and several liability may be imposed under certain environmental laws, which could cause us to become liable for the investigation or remediation of environmental contamination that resulted from the conduct of others or from our own actions that were in compliance with all applicable laws at the time those actions were taken. Further, it is possible that we may be exposed to liability due to releases of pollutants, or other environmental impacts that may arise in the course of our operations. For instance, some of the work we perform is in underground and water environments, and if the field location maps or waterway charts supplied to us are not accurate, or if objects are present in the soil or water that are not indicated on the field location maps or waterway charts, our underground and underwater work could strike objects in the soil or the waterway bottom containing pollutants and result in a rupture and discharge of pollutants. In addition, we sometimes perform directional drilling operations below certain environmentally sensitive terrains and water bodies, and due to the inconsistent nature of the terrain and water bodies, it is possible that such directional drilling may cause a surface fracture releasing subsurface materials. These releases may contain contaminants in excess of amounts permitted by law, may expose us to remediation costs and fines and legal actions by private parties seeking damages for non-compliance with environmental laws and regulations or for personal injury or property damage. We may not be able to recover some or any of these costs through insurance or increased revenues, which may have a material adverse effect on our business, operating results and financial condition. See “Business - Environmental Matters” for more information.

Our concrete segment is subject to extensive and complex regulations that affect land development and building construction, including zoning, density restrictions, building design and building standards. These regulations often provide broad discretion to the administering governmental authorities as to the conditions we must meet prior to development or construction being approved, if approved at all. We are subject to determinations by these authorities as to the adequacy of water or sewage facilities. New building developments may also be subject to various assessments for

20

Table of Contents

schools and other public improvements. In addition, in many markets government authorities have implemented no growth or growth control initiatives. Any of these can limit, delay or increase the costs of development and construction.

The anticipated investment in port and marine infrastructure may not be as large as expected, which may result in periods of low demand for our marine construction services.

The demand for port construction, maintenance infrastructure services and dredging may be vulnerable to downturns in the economy generally and in the marine transportation industry specifically. The amount of capital expenditures on port facilities and marine infrastructure in our markets is affected by the actual and anticipated shipping and vessel needs of the economy in general and in our geographic markets in particular. If the general level of economic activity deteriorates, our customers may delay or cancel expansions, upgrades, maintenance and repairs to their infrastructure. A number of other factors, including the financial condition of the shipping industry, could adversely affect our customers and their ability or willingness to fund capital expenditures in the future. During downturns in the U.S. or world economies, the anticipated port usage in our geographic markets may decline, resulting in less port construction, upgrading and maintenance. As a result, demand for our services could substantially decline for extended periods.

Restrictions on foreign ownership of our vessels could limit our ability to sell off any portion of our marine construction segment or result in the forfeiture of our vessels or in our inability to continue our operations in United States navigable waters.

The Dredging Act, the Jones Act, the Shipping Act and the Vessel Documentation Act require vessels engaged in the transport of merchandise or passengers between two points in the United States or dredging in the navigable waters of the United States to be owned and controlled by United States citizens. The United States citizen ownership and control standards require the vessel-owning entity to be at least 75% U.S. citizen-owned, thus restricting foreign ownership interests in the entities that directly or indirectly own the vessels which we operate. If we were to seek to sell any portion of our marine segment that owns any of these vessels, we may have fewer potential purchasers, since some potential purchasers might be unable or unwilling to satisfy the foreign ownership restrictions described above; additionally, any sales of certain of our larger vessels to foreign buyers would be subject to approval by the U.S. Maritime Administration. As a result, the sales price for that portion of our marine segment may not attain the amount that could be obtained in an unregulated market.

Risk Factors Relating to Our Employees

We may be subject to unionization, work stoppages, slowdowns or increased labor costs.

Only a small percentage of our marine segment workforce, located in the Pacific Northwest and Alaska, is currently unionized. If at any time, a majority of our employees unionized, it could limit the flexibility of the workforce and could result in demands that might increase our operating expenses and adversely affect our profitability. Each of our different employee groups could unionize at any time and would require separate collective bargaining agreements. If any group of our employees were to unionize and we were unable to agree on the terms of their collective bargaining agreement or we were to experience widespread employee dissatisfaction, we could be subject to work slowdowns or stoppages. In addition, we may be subject to disruptions by organized labor groups protesting our non-union status. Any of these events would be disruptive to our operations and could have a material adverse effect on the business, operating results and financial condition.

Our employees in the marine segment are covered by federal laws that provide seagoing employees remedies for job-related claims in addition to those provided by state laws.

Many of our marine segment employees are covered by federal maritime law, including provisions of the Jones Act, the Longshore and Harbor Workers Act, (“USL&H”) and the Seaman’s Wage Act. Jones Act laws typically operate to make liability limits established by USL&H and state workers’ compensation laws inapplicable to these employees and to permit these employees and their representatives to pursue litigation against employers for job-related injuries. Because in some cases we are not protected by the limits imposed by state workers’ compensation statutes, we have greater exposure for claims made by these employees as compared to employers whose employees are not covered by these provisions.

21

Table of Contents

For example, in the normal course of business, we are a defendant in various personal injury lawsuits. We maintain insurance to cover claims that arise from injuries to our workforce subject to a deductible. During 2020, we recorded approximately $0.9 million of expense for our self-insured portion of these liabilities. We believe our recorded self-insurance reserves represent our best estimate of the outcomes of these claims. Should negative trends persist; we could continue to be negatively impacted in the future.

General Risk Factors

Our strategy of growing through strategic acquisitions may not be successful.

We may pursue growth through the acquisition of companies or assets that will enable us to broaden the types of projects we execute and also expand into new markets. We have completed several acquisitions and plan to consider strategic acquisitions in the future. We may be unable to implement this growth strategy if we cannot identify suitable companies or assets or reach agreement on potential strategic acquisitions on acceptable terms. Moreover, an acquisition involves certain risks, including:

difficulties in the integration of operations, systems, policies and procedures;
enhancements in our controls and procedures including those necessary for a public company may make it more difficult to integrate operations and systems;
failure to implement proper overall business controls, including those required to support our growth, resulting in inconsistent operating and financial practices at companies we acquire or have acquired;
termination of relationships with the key personnel and customers of an acquired company;
additional financial and accounting challenges and complexities in areas such as tax planning, treasury management, financial reporting and internal controls;
the incurrence of environmental and other liabilities, including liabilities arising from the operation of an acquired business or asset prior to our acquisition for which we are not indemnified or for which the indemnity is inadequate;
disruption of or receipt of insufficient management attention to our ongoing business; and
inability to realize the cost savings or other financial benefits that we anticipate.

Future acquisitions may require us to obtain additional equity or debt financing, which may not be available on attractive terms. Moreover, to the extent an acquisition transaction financed by non-equity consideration results in additional goodwill, it will reduce our tangible net worth, which might have an adverse effect on our credit and bonding capacity.

Systems and information technology interruption or failure and data security breaches could adversely impact our ability to operate or expose us to significant financial losses and reputational harm.

We rely heavily on computer, information, and communications technology and related systems in order to properly operate our business. From time to time, we experience occasional system interruptions and delays. In the event we are unable to regularly deploy software and hardware, effectively upgrade our systems and network infrastructure, and take other steps to maintain or improve the efficiency and efficacy of our systems, the operation of such systems could be interrupted or result in the loss, corruption, or release of data. In addition, our computer and communication systems and operations could be damaged or interrupted by natural disasters, telecommunications failures, power loss, acts of war or terrorism, computer viruses, malicious code, physical or electronic security breaches, intentional or inadvertent user misuse or error, or similar events or disruptions. Any of these or other events could cause interruptions, delays, loss of critical and/or sensitive data or similar effects, which could have a material adverse impact on our business, financial condition, protection of intellectual property, and results of operations, as well as those of our clients.

In addition, we face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions, including possible unauthorized access to and disclosure of our and our clients’ proprietary or classified information. We rely on industry accepted security measures and technology to securely maintain all confidential and proprietary information on our computer systems, but they may still be vulnerable to these threats. As a result, we may be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. Any of these events could damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.

22

Table of Contents

Risk Factors Relating to Our Indebtedness and Financing Plans

Our bonding requirements may limit our ability to incur indebtedness.

We generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain government and private sector contracts. Our ability to obtain surety bonds depends upon various factors including our capitalization, working capital and amount of our indebtedness. In order to help ensure that we can obtain required bonds, we may be limited in our ability to incur additional indebtedness that may be needed for potential acquisitions and operations. Our inability to incur additional indebtedness could have a material adverse effect on our business, operating results and financial condition.

Our indebtedness requires significant debt service payments that could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness.

At December 31, 2020, our total indebtedness under the Credit Agreement was approximately $35.1 million. Per the Credit Agreement, the Term Loan Facility requires quarterly installment payments which increase throughout the life of the loan and have a date of maturity of July 31, 2023. We must also comply with various affirmative and negative covenants contained in our Credit Agreement, some of which may restrict the way in which we would like to conduct our business. Among other things, our requirements under out debt instruments could potentially limit our ability to:

incur additional indebtedness or liens;
make payments in respect of or redeem or acquire any debt or equity issued by us;
sell assets;
make loans or investments;
make guarantees;
enter into any hedging agreement for speculative purposes;
acquire or be acquired by other companies; or
amend some of our contracts.

The restrictions under our indebtedness may prevent us from engaging in certain transactions which might otherwise be considered beneficial to us, for example, they could:

increase our vulnerability to general adverse economic and industry conditions;
limit our ability to fund future working capital and capital expenditures, to engage in future acquisitions, to enter into new construction or development activities, or to otherwise fully realize the value of our assets and opportunities because of the need to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness or to comply with any restrictive terms of our indebtedness;
limit our flexibility in planning for, or reacting to, changes in our businesses and the industries in which we operate; and
place us at a competitive disadvantage as compared to our competitors that have less debt.

We may incur additional indebtedness in the future under our existing Credit Agreement, by issuing debt instruments, under new credit agreements, under joint venture credit agreements, under capital leases or synthetic leases, on a project-finance or other basis or a combination of these. If we incur additional indebtedness in the future, it likely would be under our existing Credit Agreement or under arrangements that may have terms and conditions at least as restrictive as those contained in our existing Credit Agreement. At December 31, 2020, available capacity to borrow on the revolving lines of credit was $63.3 million. Failure to comply with the terms and conditions of any existing or future indebtedness would constitute an event of default. If an event of default occurs, the lenders will have the right to accelerate the maturity of such indebtedness and foreclose upon the collateral, if any, securing that indebtedness.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Credit Facility allow for loans at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and operating cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.

23

Table of Contents

We have entered into a series of receive-variable, pay-fixed interest rate swaps. We use interest rate swap agreements to hedge market risks relating to possible adverse changes in interest rates with the intent of reducing volatility in our cash flows due to fluctuations in interest rates. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks, including risks discussed in "Risks Related to Our Business" above. In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligations under the applicable derivative instrument.

Item 1B.         UNRESOLVED STAFF COMMENTS

None

Item 2.            PROPERTIES

Our corporate headquarters is located at 12000 Aerospace Avenue, Suite 300, Houston, Texas 77034, with 24,746 square feet of office space that we lease, with a current term expiring April 30, 2022 and with two five-year extensions at our option. Our executive, legal, finance, and some accounting offices are located at this facility. We lease office space in Alaska, Louisiana, Florida, Texas and Washington for our operations, including office and yard space for our concrete segment. We own property for our waterfront maintenance and dock facilities, including equipment yards in Texas and Florida, which total approximately 53.8 acres. We also own approximately 340 acres of land in the upper Houston Ship Channel used as a Dredge Material Placement Area ("DMPA"). We may lease smaller project related offices throughout our operating areas when the need arises.

We believe that our existing facilities are adequate for our operations. We do not believe that any single facility is material to our operations and, if necessary, we could readily obtain a replacement facility. Some of our real estate assets are pledged to secure our credit facility.

Item 3.            LEGAL PROCEEDINGS

Please refer to Note 17-Commitments and Contingencies of the Notes to the Financial Statements (Part IV, Item 15 of this Form  10-K for a discussion of legal proceedings.

Item 4.            MINE SAFETY DISCLOSURES

Not applicable

PART II

Item 5.            MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the New York Stock Exchange (“NYSE”) and trades under the symbol “ORN”.

Holders

As of February 19, 2021, we had approximately 6,340 stockholders of record including beneficial holders.

Issuer Repurchase of Equity Securities

None

24

Table of Contents

Performance Graph*

The following graph shows the changes in the value of $100 invested in (1) the common stock of Orion Group Holdings, Inc., (2) the Standard & Poor’s 500 Stock Index and (3) the Dow Jones Heavy Construction Group Index. The values of each investment are based on share price appreciation, with reinvestment of all dividends, assuming any were paid. For each graph, the investments are assumed to have occurred at the beginning of each period.

Graphic

    

2015

    

2016

    

2017

    

2018

    

2019

    

2020

Orion Group Holdings, Inc.

 

100.00

 

238.61

187.77

102.88

 

124.46

118.94

S&P 500

 

100.00

 

109.54

130.81

122.65

 

158.07

183.77

Dow Jones US Heavy Civil Construction

 

100.00

 

122.45

127.96

93.88

 

125.04

150.92

*   This table and the information therein is being furnished but not filed.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by Item 201(d) of Regulation S-K is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2021.

25

Table of Contents

Item 6.            SELECTED FINANCIAL DATA

The following table presents selected financial data for each of the last five fiscal years. This selected financial data should be read in conjunction with the Consolidated Financial Statements and related notes beginning on page F-1 of this Annual Report on Form 10-K and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These historical results are not necessarily indicative of the results of operations to be expected for any future period.

The table below includes the non-U.S. GAAP operating performance measures of EBITDA and Adjusted EBITDA. For a definition of EBITDA and Adjusted EBITDA and a reconciliation to net income calculated and presented in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), please see “Non-U.S. GAAP Financial Measures” immediately below.

Amounts in thousands, except share and per share information

    

2020

    

2019

    

2018

    

2017

    

2016

Contract revenues (1)

$

709,942

$

708,390

$

520,894

$

578,553

$

578,236

Gross profit

 

84,703

 

64,041

 

16,776

 

62,240

 

67,482

Selling, general and administrative expenses

 

65,091

 

61,012

 

53,197

 

56,640

 

64,987

Other expense, net

 

(4,390)

 

(5,684)

 

(6,115)

 

(5,679)

 

(6,113)

Net income (loss)

 

20,220

 

(5,359)

 

(94,422)

 

400

 

(3,620)

Net income (loss) per share:

 

 

  

 

  

 

  

 

  

Basic

$

0.67

$

(0.18)

$

(3.31)

$

0.01

$

(0.13)

Diluted

$

0.67

$

(0.18)

$

(3.31)

$

0.01

$

(0.13)

Weighted average shares outstanding:

 

 

  

 

  

 

  

 

  

Basic

 

30,122,362

 

29,322,054

 

28,518,353

 

28,029,936

 

27,536,967

Diluted

 

30,122,362

 

29,322,054

 

28,518,353

 

28,354,280

 

27,536,967

Other Financial Data

 

 

  

 

  

 

  

 

  

EBITDA

$

54,150

$

31,371

$

(67,049)

$

31,070

$

38,295

Adjusted EBITDA

$

54,423

$

39,550

$

26,274

$

33,373

$

40,575

Capital expenditures

 

14,694

 

17,199

 

17,714

 

10,729

 

18,715

Cash interest expense

 

3,187

 

6,311

 

4,819

 

4,413

 

5,031

Depreciation and amortization

 

27,217

 

28,407

 

31,799

 

29,491

 

34,162

Net cash provided by (used in):

 

 

  

 

  

 

  

 

  

Operating activities

 

46,032

 

(716)

 

21,931

 

34,133

 

23,149

Investing activities

 

(3,129)

 

(13,331)

 

(13,300)

 

(10,080)

 

(17,686)

Financing activities

 

(42,400)

 

6,449

 

(9,033)

 

(15,272)

 

(6,503)

(1)ASU 2014-09, Revenue from Contracts with Customers (Topic 606), adopted on January 1, 2018, using the modified retrospective method. Prior years have not been recast.

(in thousands)

    

2020

    

2019

    

2018

    

2017

    

2016

Balance Sheet Data:

 

  

 

  

 

  

 

  

 

  

Cash, cash equivalents and restricted cash

$

1,589

$

1,086

$

8,684

$

9,086

$

305

Working capital

 

54,789

 

62,213

 

50,750

 

69,797

 

77,588

Total assets

 

414,189

 

394,844

 

312,870

 

433,285

 

447,676

Total debt, net of debt issuance costs

 

33,867

 

71,697

 

79,065

 

85,941

 

101,265

Total stockholders’ equity

 

159,494

 

138,021

 

141,585

 

231,266

 

226,204

Non-U.S. GAAP Financial Measures

We include in this Annual Report on Form 10-K the non-U.S. GAAP financial measures of EBITDA and Adjusted EBITDA. We define EBITDA as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for certain non-recurring project adjustments and expenses, changes in accounts receivable reserves and goodwill impairment charges. EBITDA and Adjusted EBITDA are used as

26

Table of Contents

supplemental operating performance measures by our management and by external users of our financial statements such as investors, commercial banks and others, to assess:

the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure; and
the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

EBITDA and Adjusted EBITDA are not presentations made in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, operating income, cash flows from operating activities or any other measure of performance presented in accordance with U.S. GAAP as measures of operating performance. Because EBITDA and Adjusted EBITDA excludes some, but not all, items that affect net income and is defined differently by different companies in our industry, our definition of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. EBITDA and Adjusted EBITDA have important limitations as analytical tools, and you should not consider them in isolation.

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to our net income for the periods indicated as calculated and presented in accordance with U.S. GAAP:

    

2020

    

2019

    

2018

    

2017

    

2016

Net income (loss)

$

20,220

$

(5,359)

$

(94,422)

$

400

$

(3,620)

Income tax expense (benefit)

 

1,976

 

1,868

 

(12,233)

 

(4,541)

 

1,581

Interest expense, net

 

4,737

 

6,455

 

7,807

 

5,720

 

6,172

Depreciation and amortization

 

27,217

 

28,407

 

31,799

 

29,491

 

34,162

EBITDA

 

54,150

 

31,371

 

(67,049)

 

31,070

 

38,295

Stock-based compensation

1,998

2,753

2,238

2,303

2,280

ERP implementation

1,488

ISG initiative

369

4,781

Severance

175

645

Gain on involuntary disposition of assets, net

(2,859)

Changes in cost estimates

 

 

 

22,770

 

 

(Recovery) reserve on accounts receivable

 

(898)

 

 

4,280

 

 

Goodwill impairment charges

 

 

 

69,483

 

 

Legal settlement

 

 

 

(5,448)

 

 

Adjusted EBITDA

$

54,423

$

39,550

$

26,274

$

33,373

$

40,575

27

Table of Contents

Item  7.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes beginning on page F-1 of this Annual Report on Form 10-K. Certain statements made in our discussion may be forward-looking. Forward-looking statements involve risks and uncertainties and a number of other factors that could cause actual results or outcomes to differ materially from our expectations. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K for additional discussion of some of these risks and uncertainties. Unless the context requires otherwise, when we refer to “we”, “us” and “our”, we are describing Orion Group Holdings, Inc. and its consolidated subsidiaries.

Overview

Orion Group Holdings, Inc., its subsidiaries and affiliates (hereafter collectively referred to as the “Company”), provides a broad range of specialty construction services in the infrastructure, industrial and building sectors of the continental United States, Alaska, and the Caribbean Basin. The Company’s marine segment services the infrastructure sector through marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Its concrete segment services the building sector by providing turnkey concrete construction services including pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial structural and other associated business areas. The Company is headquartered in Houston, Texas with offices throughout its operating areas.

Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors. Our bidding activity and strategies are affected by such factors as our backlog, current utilization of equipment and other resources, job location, our ability to obtain necessary surety bonds and competitive considerations. The timing and location of awarded contracts may result in unpredictable fluctuations in the results of our operations.

Most of our revenue is derived from fixed-price contracts. We generally record revenue on construction contracts over time, measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. There are a number of factors that can create variability in contract performance and therefore impact the results of our operations. The most significant of these include the following:

completeness and accuracy of the original bid;
increases in commodity prices such as concrete, steel and fuel;
customer delays, work stoppages, and other costs due to weather and environmental restrictions;
availability and skill level of workers; and
a change in availability and proximity of equipment and materials.

All of these factors can have a negative impact on our contract performance, which can adversely affect the timing of revenue recognition and ultimate contract profitability. We plan our operations and bidding activity with these factors in mind and they generally have not had a material adverse impact on the results of our operations in the past.

2020 Recap and 2021 Outlook

In 2020, we recorded revenues of $709.9 million, of which $388.2 million was attributable to our marine segment and the remaining $321.7 million to our concrete segment. In addition, we ended 2020 with a consolidated backlog of $439.5 million. Our revenues in 2020 increased by 0.2% as compared with 2019 and we recorded net income of $20.2 million, as compared with a net loss of $5.4 million in the prior year.

Looking toward 2021, the Company continues to focus on developing opportunities across the infrastructure, industrial, and building sectors through organic growth, greenfield expansion, and strategic acquisition opportunities.

28

Table of Contents

The spread of COVID-19 has impacted the global economy, leaving supply chains disrupted. As the world uses tactics like “social distancing” and “stay at home orders” to slow and stop the spread of COVID-19, demand destruction has led to increased unemployment and to the weakening of consumer confidence. Although to date the Company hasn’t experienced materially negative impacts from COVID-19, such as widespread project stoppage/cancelations or a slowdown/stoppage of accounts receivables collections, any delays in the timing of future awards could create gaps in the Company’s project delivery schedule across quarterly periods.

Federal and State governments have increased spending as part of efforts to mitigate the impact of COVID-19 on the economy.  The amount and timing of such spending will be directly impacted by the duration of required efforts to contain COVID-19 and the severity of the negative impacts created by the virus and its effect on the economy.   Although little progress has been made to date and on a federal infrastructure bill, the Company will continue to track and monitor any developments on a federal infrastructure bill which could potentially create bid opportunities for the Company. 

Marine Segment

Demand for our marine construction services continues, given our differentiated capabilities and service offering within the space. We continue to see bid opportunities to help maintain and expand the infrastructure that facilitates the movement of goods and people on or over waterways. However, we have some concerns about the short term outlook for and are closely monitoring the short and long-term cruise line capital expenditures as their current demand has been severely impacted by COVID-19. Further, while we currently see bid opportunities from our private sector energy-related customers as they expand their marine facilities related to the storage, transportation and refining of domestically produced energy, we recognize that the timing of project awards may be impacted as a result of volatility of oil prices due to COIVD-19 related uncertainties. Over the long-term, we expect to see bid opportunities in this sector from petrochemical-related businesses, energy exporters, and liquefied natural gas facilities. Opportunities from local port authorities will also remain over the long-term, many of which are related to the widened Panama Canal. Additionally, bid opportunities related to coastal restoration funded through the Resource and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of the Gulf Coast States Act (the “RESTORE Act”) may arise into 2021. We believe our current equipment fleet will allow us to better meet market demand for projects from both our public and private customers.

In the long-term, we see positive trends in demand for our services in our end markets, including:

Continuing need to repair and improve degrading U. S. marine infrastructure;
Long-term demand from downstream energy-related companies will be driven by larger capital projects, as well as maintenance call-out work;
Expected increases in cargo volume and future demands from larger ships transiting the Panama Canal will require ports along the Gulf Coast and Atlantic Seaboard to expand port infrastructure as well as perform additional dredging services;
Possible work opportunities generated by the Water Resources Reform and Development Act (the “WRRDA Act”) authorizing expenditures for the conservation and development of the nation’s waterways as well as addressing funding deficiencies within the Harbor Maintenance Trust Fund;
Renewed focus on coastal rehabilitation along the Gulf Coast, particularly through the use of RESTORE Act funds based on fines collected related to the 2010 Gulf of Mexico oil spill;
Funding for highways and transportation under successor Acts to the FAST Act;
Nearly $7 billion of federal funding provided by the USACE in connection with disaster recovery in Texas; and,
Potential opportunities related to the impending federal infrastructure bill.

29

Table of Contents

Concrete Segment

Demand for our concrete segment’s services continues, although timing of certain new project releases could be delayed as a result of COVID-19 related macroeconomic impacts. We currently see long-term demand for our concrete construction services in the Texas building sector as Texas’ four major metropolitan areas, and expanding suburbs, continuously retain their positions as leading destinations for population and business growth. Population growth throughout our markets continues to drive new distribution centers, education facilities, office expansion, retail and grocery establishments, new multi-family housing units, and structural towers for business, residential or mixed-use purposes.  The diversified Texas economy provides us with multiple sources of bid opportunities. Additional demand for concrete services in our markets could be provided by work as part of a federal infrastructure bill.

In the long-term, we see positive trends in demands for our services in our end markets, including: 

 

Population growth in the state of Texas driven by corporate relocations; 

Continued investment in warehouse/distribution space in the Dallas-Fort Worth region; 

COVID-19 driven shift of populous moving from the inner cities to suburban areas; 

Nearly $7 billion of federal funding provided by the USACE in connection with disaster recovery in Texas; and,

 

Potential opportunities related to the impending federal infrastructure bill. 

Consolidated Results of Operations

Backlog Information

Our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed. Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve-month period. We have not been adversely affected by contract cancellations or modifications in the past, we may be in the future, especially in economically uncertain periods.

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

December 31, 2020

    

September 30, 2020

    

June 30, 2020

    

March 31, 2020

    

December 31, 2019

Marine segment

$

202.6

$

241.7

$

312.2

$

344.6

$

326.9

Concrete segment

 

236.9

 

187.1

 

216.2

 

247.3

 

231.6

Consolidated

$

439.5

$

428.8

$

528.4

$

591.9

$

558.5

Previously reported backlog amounts have been adjusted in the accompanying table to correct for an inadvertent clerical error in the underlying calculation file, as to which steps have been taken to prevent a recurrence. Accordingly, reported backlog has been reduced by $17.6 million and $13.8 million for the periods ended March 31, 2020 and December 31, 2019, respectively. The recent trend of declining backlog is due in significant part to headwinds created by the COVID-19 pandemic in certain end market sectors.  We, however, remain optimistic in our end-markets and in the opportunities that are emerging across our various market places as evidenced by the slight increase in backlog during the quarter ended December 31, 2020, and by the $1.6 billion of quoted bids outstanding at year end, of which $96 million we are the apparent low bidder on or have been awarded contracts subsequent to the end of fiscal 2020.

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. Backlog is not necessarily indicative of future results. In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending award at any given time.

30

Table of Contents

Income Statement Comparisons

Year ended December 31, 

 

    

2020

    

2019

    

2018

 

    

Amount

    

Percent

    

Amount

    

Percent

    

Amount

    

Percent

 

(dollar amounts in thousands)

Contract revenues

$

709,942

 

100.0

%  

$

708,390

 

100.0

%  

$

520,894

 

100.0

%

Cost of contract revenues

 

625,239

 

88.1

%  

 

644,349

 

91.0

%  

 

504,118

 

96.8

%

Gross profit

 

84,703

 

11.9

%  

 

64,041

 

9.0

%  

 

16,776

 

3.2

%

Selling, general and administrative expenses

 

65,091

 

9.3

%  

 

61,012

 

8.7

%  

 

53,197

 

10.1

%

Amortization of intangible assets

2,070

0.3

%  

2,640

0.4

%  

3,390

0.7

%

Gain on disposal of assets, net

(9,044)

(1.4)

(1,804)

(0.3)

(3,306)

(0.6)

%

Goodwill impairment charges

69,483

13.3

%

Other gain from continuing operations

 

 

%  

 

 

%  

 

(5,448)

 

(1.0)

%

Operating income

 

26,586

 

3.7

%  

 

2,193

 

0.3

%  

 

(100,540)

 

(19.3)

%

Other (expense) income:

 

  

 

  

 

  

 

  

 

  

 

  

Other income

 

347

 

%  

 

771

 

0.1

%  

 

1,692

 

0.3

%

Interest income

 

183

 

%  

 

353

 

%  

 

136

 

%

Interest expense

 

(4,920)

 

(0.6)

%  

 

(6,808)

 

(0.9)

%  

 

(7,943)

 

(1.5)

%

Other expense, net

 

(4,390)

 

(0.6)

%  

 

(5,684)

 

(0.8)

%  

 

(6,115)

 

(1.2)

%

Income before income tax expense

 

22,196

 

3.1

%  

 

(3,491)

 

(0.5)

%  

 

(106,655)

 

(20.5)

%

Income tax expense

 

1,976

 

0.3

%  

 

1,868

 

0.3

%  

 

(12,233)

 

(2.4)

%

Net income

$

20,220

 

2.8

%  

$

(5,359)

 

(0.8)

%  

$

(94,422)

 

(18.1)

%

Year ended December 31, 2020 compared with year ended December 31, 2019

Contract Revenues. Contract revenues for the year ended December 31, 2020 of $709.9 million increased approximately 0.2% as compared to $708.4 million in the prior year period.

Gross Profit.  Gross profit was $84.7 million for the year ended December 31, 2020, compared to $64.0 million in the prior year period, an increase of $20.7 million or 32.3%. Gross profit for the year ended December 31, 2020 was 11.9% of total contract revenues as compared to 9.0% in the prior year period. The increase in gross profit dollars and percentage were primarily driven by margin improvement on projects and efficiencies in labor and equipment  utilization.

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses were $65.1 million for the year ended December 31, 2020 compared to $61.0 million in the prior year period, an increase of $4.1 million, or 6.4%. As a percentage of total contract revenues, SG&A expenses increased from 8.7% to 9.3%. The increase in both dollars and percentage was primarily attributable to the increased accrual of the annual incentive compensation plan during the current year period as compared to the prior year period.

Gain on Disposal of Assets, net. During the year ended December 31, 2020, we realized $6.2 million of net gains on sales of assets and $2.9 million of net gains on insurance recoveries from involuntary dispositions of assets. This compared to realizing $1.8 million of net gains on the assets we sold during the 2019 comparative period.

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 $2.0 million for the year ended December 31, 2020, compared to tax expense of $1.9 million in the prior year period. Our effective tax rate for the year ended December 31, 2020 was 8.9%, which differs from the federal statutory rate of 21% primarily due to the movement in the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

31

Table of Contents

Year ended December 31, 2019 compared with year ended December 31, 2018

Contract Revenues. Contract revenues for the year ended December 31, 2019 of $708.4 million increased approximately 36.0% as compared to $520.9 million in the prior year period. The increase was primarily attributable to the execution on the larger volume of work in our backlog in the marine segment as well as increased cubic yard production in the concrete segment in the current year period as compared to the prior year period. While overall revenues increased, we did experience a shift in the component mix of our marine segment revenue from the private sector to the public sector when comparing the 2019 period to 2018. In particular, the 2019 period included a large project in the public sector that did not contribute to 2018 results. By contrast, the 2018 period included a large project in our private sector that was not replicated in the 2019 period.

Gross Profit.  Gross profit was $64.0 million for the year ended December 31, 2019, compared to $16.8 million in the prior year period, an increase of $47.2 million. Gross margin in 2019 was 9.0% of total contract revenues as compared to 3.2% in the prior year period. The increase in gross profit dollars and percentage were primarily driven by an improvement in labor efficiency resulting from application of activities from the Invest, Scale, Growth or ISG process and improved utilization rates in our marine segment, along with improved man hours per cubic yards placed in our concrete segment. Comparatively, 2018 included unfavorable changes in cost estimates and the unfavorable impact of project disruptions due to unanticipated delays in commencing work caused by customer schedules in the marine segment and unfavorable weather patterns in the concrete segment that impacted the second half of the year.

Selling, General and Administrative Expense. Selling, general and administrative ("SG&A") expenses were $61.0 million for the year ended December 31, 2019 compared to $53.2 million in the prior year period, an increase of $7.8 million, or 14.7%. As a percentage of total contract revenues, SG&A expenses decreased as compared with the prior year, from 10.1% to 8.7%.  The increase in SG&A dollars was primarily attributable to expenses related to the ISG initiative.

Other Income, net of Expense. Other expense primarily reflects interest on our borrowings, partially offset by interest income and non-operating gains or losses. During 2019, we recognized $0.5 million of other income related to previously accrued contingent consideration from the purchase of TBC that was never achieved. Interest expense for 2019 also included a $0.4 million charge related to recognizing unamortized debt issuance costs as a result of the Sixth Amendment to the Credit Facility. During 2018, we recognized $1.6 million of other income on the sale of easement rights for one of our properties in the Houston area. Interest expense for 2018 included a $2.2 million charge related to recognizing unamortized debt issuance costs on early extinguishment of debt.

Income Tax Expense (Benefit). We recorded tax expense of $1.9 million in 2019, compared to tax benefit of $12.2 million in 2018. Our effective tax rate in 2019 was (53.5)%, which differs from the statutory rate of 21% primarily due to the recording of an additional valuation allowance to offset net operating loss carryforwards and foreign tax credits generated during the period, foreign taxes, state income taxes and the non-deductibility of certain permanent items.

32

Table of Contents

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 (loss) income as a percentage of segment revenues:

Segment Comparison

Year ended December 31, 

 

2020

2019

2018

 

    

    

Amount

    

Percent

    

Amount

    

Percent

    

Amount

    

Percent

 

(dollar amounts in thousands)

 

Contract revenues

Marine segment

Public sector

$

240,353

61.9

%  

$

258,039

69.9

%  

$

124,208

50.9

%  

Private sector

147,820

38.1

%  

111,099

30.1

%  

119,675

49.1

%  

Marine segment total

$

388,173

100.0

%  

$

369,138

100.0

%  

$

243,883

100.0

%  

Concrete segment

 

 

 

Public sector

$

41,853

13.0

%  

$

49,175

14.5

%  

$

55,883

20.2

%  

Private sector

279,916

87.0

%  

290,077

85.5

%  

221,128

79.8

%  

Concrete segment total

$

321,769

100.0

%  

$

339,252

100.0

%  

$

277,011

100.0

%  

Total

$

709,942

 

$

708,390

 

$

520,894

 

Operating income

 

  

 

  

 

  

 

  

 

  

 

  

Marine segment

$

16,935

 

4.4

%  

$

1,057

 

0.3

%  

$

(61,012)

 

(25.0)

%  

Concrete segment

 

9,651

 

3.0

%  

 

1,136

 

0.3

%  

 

(39,528)

 

(14.3)

%  

Total

$

26,586

$

2,193

$

(100,540)

Year ended December 31, 2020 compared with year ended December 31, 2019

Marine Segment

Revenues for our marine segment for the year ended December 31, 2020 were $388.2 million compared to $369.1 million for the year ended December 31, 2019, an increase of $19.1 million, or 5.2%.

Operating income for our marine segment for the year ended December 31, 2020 was $16.9 million, compared to operating income of $1.1 million for the year ended December 31, 2019, an increase of $15.8 million. This increase in operating income included $7.2 million of net gains on disposal of assets. Excluding the increase in net gains on disposal of assets, net operating income for our marine segment for the year ended December 31, 2020 was $8.4 million compared to an operating loss of $0.2 million for the year ended December 31, 2019, an increase of $8.6 million. This increase in operating income was primarily due to project execution related margin improvement and non-direct cost recovery compared to the prior year period.

Concrete Segment

Revenues for our concrete segment for the year ended December 31, 2020 were $321.8 million compared to $339.3 million for the year ended December 31, 2019, a decrease of $17.5 million, or 5.2%.

Operating income for our concrete segment for the year ended December 31, 2020 was $9.7 million, compared to operating income of $1.1 million for the year ended December 31, 2019, an increase of $8.6 million. This increase in operating income was primarily due to the improvement  in project margins.

33

Table of Contents

Year ended December 31, 2019 compared with year ended December 31, 2018

Marine Segment

Revenues for our marine segment for the year ended December 31, 2019 were $369.1 million compared to $243.9 million for the year ended December 31, 2018, an increase of $125.2 million, or 51.4%. This increase is primarily attributable to the execution on the larger volume of work in our backlog in 2019 as compared to 2018 where we experienced $22.8 million of unfavorable changes in cost estimates on certain projects as well as unanticipated delays in commencing certain work due to customer schedules in the second half of 2018.

Operating income for our marine segment for the year ended December 31, 2019 was $1.1 million, compared to an operating loss of $61.0 million for the year ended December 31, 2018, an increase of $62.1 million. This increase in operating income was primarily due to  the prior year full impairment of goodwill in the marine segment of $33.8 million, certain projects in the prior year where we experienced unfavorable changes in cost estimates and unanticipated delays in commencing certain work due to customer schedules in the second half of 2018. As a percentage of total contract revenues, operating income for our marine segment was 0.3% for the year ended December 31, 2019, compared to operating loss of 25.0% for the year ended December 31, 2018. The prior year period included $33.8 million of goodwill impairment charges, $22.8 million of unfavorable changes in cost estimates and a $4.3 million reserve on disputed accounts receivable, partially offset by the recognition of a $5.4 million gain on the settlement of a legal matter which did not repeat in the current period.  The current year included $3.0 million of ISG expenses compared to none in the prior year.  After allowing for the comparative $52.4 million of non-recurring items between the periods, marine segment operating income (loss) improved by $9.7 million.

Concrete Segment

Revenues for our concrete segment for the year ended December 31, 2019 were $339.3 million compared to $277.0 million for the year ended December 31, 2018, an increase of $62.3 million, or 22.5%. This increase in revenue was primarily due to an overall increase in cubic yard production on our projects.

Operating income for our concrete segment for the year ended December 31, 2019 was $1.1 million, compared to operating loss of $39.5 million for the year ended December 31, 2018, an increase of $40.6 million. This increase in operating income was primarily due to the prior year full impairment of goodwill in the concrete segment of $35.7 million and production delays resulting from unfavorable weather patterns experienced during the first and third quarters of 2018. As a percentage of revenues, operating income for our concrete segment was 0.3% for the year ended December 31, 2019, compared to operating loss of 14.3% for the year ended December 31, 2018. The prior year period included $35.7 million of goodwill impairment charges. The current year included $2.3 million of ISG expenses compared to none in the prior period.  After allowing for the comparative $33.4 million of non-recurring items between the periods, concrete segment operating income improved by $7.2 million. The increase was primarily driven by production efficiencies in man hours per cubic yard in our markets.

Critical Accounting Estimates

The consolidated financial statements contained in this report were prepared in accordance with U.S. GAAP. The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect both the Company’s carrying values of its assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Although our significant accounting policies are described in more detail in Note 2 of the Notes to Consolidated Financial Statements; we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements:

Revenue Recognition from Construction Contracts;
Long Lived Assets;
Income Taxes;
Insurance Coverage, Litigation, Claims and Contingencies.

34

Table of Contents

Revenue Recognition

We adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), on January 1, 2018, using the modified retrospective method. We recognized the cumulative effect of initially adopting Topic 606 guidance as an adjustment to the beginning balance of retained earnings. Contracts with customers that were not substantially complete in both our marine and concrete segments were evaluated in order to determine the impact as of the date of adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Our revenue is derived from contracts to provide marine construction, dredging, turnkey concrete services, and other specialty services. Our projects are typically short in duration and usually span a period of less than one year. We determine the appropriate accounting treatment for each contract before work begins and generally record revenue on contracts over time.

Performance obligations are promises in a contract to transfer distinct goods or services to the customer and are the unit of account under Topic 606. Our contracts and related change orders typically represent a single performance obligation because individual goods and services are not separately identifiable and we provide a significantly integrated service. Revenue is recognized over time because control is continuously transferred to the customer. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the stand-alone selling price of each distinct good or service. Progress is measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. This method is used because management considers contract costs incurred to be the best available measure of progress on these contracts. Contract costs include all direct costs, such as material and labor, and those indirect costs incurred that are related to contract performance such as payroll taxes and insurance. General and administrative costs are charged to expense as incurred. Upfront costs, such as incurring costs to mobilize personnel and equipment prior to satisfying a performance obligation are capitalized and amortized over the contract performance period.

Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and reported revenue and are recognized in the period in which the revisions are determined. The effect of changes in estimates of contract revenue or contract costs is recognized as an adjustment to recognized revenue on a cumulative catch-up basis. When losses on uncompleted contracts are anticipated, the entire loss is recognized in the period in which such losses are determined. Revenue is recorded net of any sales taxes collected and paid on behalf of the customer, if applicable.

Long-Lived Assets

Our long-lived assets consist primarily of equipment used in our operations. Fixed assets are carried at cost and are depreciated over their estimated useful lives, ranging from one to 30 years, using the straight-line method for financial reporting purposes and accelerated methods for tax reporting purposes. The carrying value of our long-lived assets is evaluated periodically based on utilization of the asset and physical condition of the asset, as well as the useful life of the asset to determine if adjustment to the depreciation period or the carrying value is warranted. If events and circumstances such as poor utilization or deteriorated physical condition indicate that the asset(s) should be reviewed for possible impairment, we use projections to assess whether future cash flows, including disposition, on a non-discounted basis related to the tested assets are likely to exceed the recorded carrying amount of those assets to determine if an impairment exists. If we identify a potential impairment, we will estimate the fair value of the asset through known market transactions of similar equipment and other valuation techniques, which could include the use of similar projections on a discounted cash flow basis. We will report a loss to the extent that the carrying value of the impaired assets exceeds their fair values.

Income Taxes

We determine our consolidated income tax provision using the asset and liability method prescribed by U.S. GAAP, which requires the recognition of income tax expense for the amount of taxes payable or refundable for the current period and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. We must make significant assumptions, judgments and estimates to determine our current provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance to be recorded against any deferred tax asset. The current provision for income tax is based upon the current tax laws and our interpretation of these laws, as well as the probable outcomes of any tax audits. The value of any net deferred tax asset depends upon estimates of the amount and category of future taxable income reduced by the amount of any tax benefits that we do not expect to realize. The factors used to assess the likelihood of realization include our forecast of future taxable income

35

Table of Contents

exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences and available tax planning strategies that could be implemented to realize the net deferred tax assets.

We consider both positive and negative evidence when evaluating the need for a valuation allowance on our deferred tax assets in accordance with ASC 740. Available evidence includes historical financial information supplemented by currently available information about future years. Generally, historical financial information is more objectively verifiable than projections of future income and is therefore given more weight in our assessment.  We consider cumulative losses in the most recent twelve quarters to be significant negative evidence that is difficult to overcome in considering whether a valuation allowance is required. Conversely, we consider a cumulative income position over the most resent twelve quarters, to be significant positive evidence that a valuation allowance may not be required.

Actual operating results and the underlying amount and category of income in future years could render current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate, thus impacting our financial position and results of operations. We compute deferred income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We account for uncertain tax positions in accordance with the provisions of the FASB’s ASC 740-10, which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on our consolidated tax return. We evaluate and record any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon ultimate settlement with the tax authorities in the tax jurisdictions in which we operate.

Insurance Coverage, Litigation, Claims and Contingencies

We maintain insurance coverage for our business and operations. Insurance related to property, equipment, automobile, general liability and a portion of workers’ compensation is provided through traditional policies, subject to a deductible or deductibles. A portion of our workers’ compensation exposure is covered through a mutual association, which is subject to supplemental calls.

The marine segment maintains five levels of excess loss insurance coverage, totaling $200 million in excess of primary coverage. This excess loss coverage responds to most of its liability policies when a primary limit of $1 million has been exhausted; provided that the primary limit for Contingent Maritime Employer’s Liability is $10 million and the Watercraft Pollution Policy primary limit is $5 million. The concrete segment maintains five levels of excess loss insurance coverage, totaling $200 million in excess of primary coverage. This excess loss coverage responds to most of its liability policies when a primary limit of $1 million has been exhausted.

Separately, our marine segment employee health care is provided through a trust administered by a third party. Funding of the trust is based on current claims. The administrator has purchased appropriate stop-loss coverage. Losses on these policies up to the deductible amounts are accrued based upon known claims incurred and an estimate of claims incurred but not reported. The accruals are derived from known facts, historical trends and industry averages to determine the best estimate of the ultimate expected loss.  Actual claims may vary from estimates. Any adjustments to such reserves are included in the consolidated results of operations in the period in which they become known. Our concrete segment employee health care is provided through two policies. A fully funded policy is offered primarily to salaried employees and their dependents while a partially self-funded plan with an appropriate stop-loss is offered primarily to hourly employees and their dependents. The self-funded plan is funded to the maximum exposure and, as a result, expects to receive a partial refund after the policy expiration.

Liquidity and Capital Resources

Our primary liquidity needs are to finance our working capital, fund capital expenditures, and pursue strategic acquisitions. Historically, our source of liquidity has been cash provided by our operating activities and borrowings under our credit facilities.

36

Table of Contents

Changes in working capital are normal within our business given the varying mix in size, scope and timing of delivery of our projects. At December 31, 2020, our working capital was $54.8 million, as compared with $62.2 million at December 31, 2019. As of December 31, 2020, we had unrestricted cash on hand of $1.6 million. Our borrowing capacity at December 31, 2020 was approximately $63.3 million.

We expect to meet our future internal liquidity and working capital needs and maintain or replace our equipment fleet through capital expenditure purchases, leases and major repairs, from funds generated by our operating activities for at least the next 12 months. We believe our cash position is adequate for our general business requirements discussed above and to service our debt.

The following table provides information regarding our cash flows and our capital expenditures for the years ending December 31, 2020, 2019 and 2018:

2020

2019

2018

Net income (loss)

    

$

20,220

    

$

(5,359)

    

$

(94,422)

Adjustments to remove non-cash and non-operating items

26,338

35,457

88,741

Cash flow from net income after adjusting for non-cash and non-operating items

46,558

30,098

(5,681)

Change in operating assets and liabilities (working capital)

(526)

(30,814)

27,612

Cash flows provided by (used in) operating activities

$

46,032

$

(716)

$

21,931

Cash flows used in investing activities

$

(3,129)

$

(13,331)

$

(13,300)

Cash flows (used in) provided by financing activities

$

(42,400)

$

6,449

$

(9,033)

Capital expenditures (included in investing activities above)

$

(14,694)

$

(17,199)

$

(17,714)

Operating Activities. During 2020, we generated approximately $46.0 million in cash from our operating activities. The net cash inflow is comprised of $46.5 million of cash inflows from net income, after adjusting for non-cash items, partially offset by $0.5 million of cash outflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Consolidated Statements of Cash Flows, were primarily driven by a $6.5 million outflow pursuant to the relative timing and significance of project progression and billings during the period, a $5.4 million decrease in operating lease liabilities during the period and $1.3 million of other outflows , partially offset by a $12.7 million inflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period.

During 2019, we used approximately $0.7 million in cash from our operating activities. The net cash outflow is comprised of $30.1 million of cash inflows from net income, after adjusting for non-cash items and $30.8 million of cash outflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Consolidated Statements of Cash Flows, were primarily driven by a $22.9 million increase in our net position of accounts receivable and accounts payable. The increases in accounts receivable and accounts payable were consistent with our increased project activity year over year.  The year over year increase in accounts receivable is more pronounced than accounts payable due to the longer cycle times on the accounts receivable, which also include retainage whereas accounts payable typically turn in 30 days. The changes in net working capital also included a net outflow of $5.2 million from the net change in costs and estimated earnings in excess of billings on uncompleted contracts, offset by the change in billings in excess of costs and estimated earnings on uncompleted contracts. These changes were driven by the timing and execution of the underlying projects.

During 2018, our operations provided approximately $21.9 million in net cash inflows. The net cash inflow is comprised of inflows of $27.6 million related to changes in working capital, partially offset by $5.7 million of net loss after adjusting for non-cash items. The changes in net working capital were primarily driven by a net inflow of $24.6 million of cash from the net change in costs and estimated earnings in excess of billings on uncompleted contracts, offset by the change in billings in excess of costs and estimated earnings on uncompleted contracts. These changes were driven by the timing and execution of the underlying projects.

37

Table of Contents

Investing Activities. Capital asset additions and betterments to our fleet were $14.7 million in 2020, as compared with $17.2 million and $17.7 million in 2019 and 2018, respectively. The changes are primarily a result of the timing of purchase of capital assets.

Financing Activities. During 2020, we drew down $10.0 million from our revolving line of credit. Additionally, we repaid $41.0 million on our revolving line of credit, as well as made the regularly scheduled debt payment on the term loan of $3.8 million and an additional principal paydown of $3.4 million with proceeds from the sale of equipment.

During 2019, we drew down $63.0 million from our revolving line of credit. Additionally, we repaid $49.0 million on this draw, as well as made regularly scheduled debt payments on the term loan of $3.0 million and an additional principal paydown of $18.2 million with proceeds from a sale-leaseback arrangement.

During 2018, we drew down $39.9 million from our revolving line of credit. Additionally, we repaid $27.9 million on this draw, as well as made debt payments on the term loan of $20.2 for a total of $48.1 million in debt payments.

Sources of Capital

We entered into an amended syndicated credit agreement (the “Credit Agreement” also known as the “Fourth Amendment”) on July 31, 2018, with Regions Bank, as administrative agent and collateral agent, and the following co-syndication agents:  Bank of America, N.A., BOKF, NA dba Bank of Texas, KeyBank National Association, NBH Bank, IBERIABANK, Trustmark National Bank, First Tennessee Bank NA, and Branch Baking and Trust Company. The primary purpose of the Credit Agreement was to provide the Company with greater flexibility as it provides for the calculation of Adjusted EBITDA that adds back various project specific costs. Additionally, we executed the Fifth Amendment during March 2019, which was made effective as of December 31, 2018, executed the Sixth Amendment during May 2019, executed the Seventh Amendment during June 2020 and executed the Eighth Amendment during October 2020.

The Credit Agreement, which may be amended from time to time, provides for borrowings under a revolving line of credit and a term loan (together, the “Credit Facility”). The Credit Facility is guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and may be used to finance general corporate and working capital purposes, to finance capital expenditures, to refinance existing indebtedness, to finance permitted acquisitions and associated fees, and to pay for all related expenses to the Credit Facility. Interest is computed based on the designation of the loan, with the option of a Base Rate Loan (the base rate plus the Applicable Margin), or an Adjusted LIBOR Rate Loan (the adjusted LIBOR rate plus the Applicable Margin). Interest is due on the last day of each quarter end for Base Rate Loans and at the end of the LIBOR rate period for Adjusted LIBOR Rate Loans. Principal balances drawn under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. Amounts repaid under the revolving line of credit may be re-borrowed. The Credit Facility matures on July 31, 2023.

We entered into a new syndicated credit agreement (the “364-Day Revolving Credit Facility”) on June 8, 2020 with Regions Bank, as administrative agent and collateral agent, and the following co-syndication agents:  Bank of America, N.A. and BOKF, NA dba Bank of Texas. Concurrent with this the Company executed an amendment to the Credit Agreement with its existing lenders (“also known as the “Seventh Amendment”) for the sole intent and outcome of executing the 364-Day Revolving Credit Facility.

The Company has a maximum borrowing availability under the 364-Day Revolving Credit Facility of $20.0 million. Borrowings may be designated as Base Rate Loan or Adjusted LIBOR Rate Loans, at the Company’s request, and must be drawn in an aggregate minimum amount of $1.0 million and integral multiples of $250,000 in excess of that amount. The Company may convert, change, or modify rate designations from time to time. 

The Company is subject to a commitment fee for the unused portion of the maximum borrowing availability under the 364-Day Revolving Credit Facility. The commitment fee, which is due quarterly in arrears, is equal to the Applicable Margin of the actual daily amount by which the Aggregate Revolving Commitments exceeds the Total Revolving Outstanding. We have not made any borrowings under 364-Day Revolving Credit Facility.

Effective, October 9, 2020, the Company entered into an amendment (the "Eighth Amendment") to its syndicated credit agreement (the "Credit Agreement" , with Regions Bank, as Administrative Agent and Collateral Agent and Bank of

38

Table of Contents

America, N.A., BOKF, NA dba Bank of Texas, Iberiabank, NBH Bank, Truist Bank, and Trustmark National Bank, as Lenders. The Eighth Amendment provides for administrative revisions to the Credit Agreement, including changes to repayment requirements for involuntary asset dispositions and changes to the timing of repayment for voluntary asset dispositions.

See Note 11 in the Notes to the Financial Statements (Part IV, Item 15 of this Form 10-K) for further discussion on the Company’s Debt.

Financial covenants

Restrictive financial covenants under the Credit Facility include:

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

-Fiscal Quarter Ending December 31, 2019 and each Fiscal Quarter thereafter, to not be less than 1.25 to 1.00.

A consolidated Leverage Ratio to not exceed the following during each noted period:

-Fiscal Quarter Ending March 31, 2020 and each Fiscal Quarter thereafter, to not exceed 3.00 to 1.00.

In addition, the Credit Facility contains events of default that are usual and customary for similar arrangements, including non-payment of principal, interest or fees; breaches of representations and warranties that are not timely cured; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

The Company expects to meet its future internal liquidity and working capital needs and maintain or replace its equipment fleet through capital expenditure purchases, leases and major repairs, from funds generated by its operating activities for at least the next 12 months. The Company believes that its cash position and available borrowings together with cash flow from its operations is adequate for general business requirements and to service its debt. The Company was in compliance with all financial covenants as of December 31, 2020.

Derivative Financial Instruments

On September 16, 2015, the Company entered into a series of receive-variable, pay-fixed interest rate swaps to hedge the variability in the interest payments on 50% of the aggregate principal amount of the Regions Term Loan outstanding, beginning with a notional amount of $67.5 million. There was a total of five sequential interest rate swaps to achieve the hedged position and each year on August 31, with the exception of the final swap, the existing interest rate swap was scheduled to expire and be immediately replaced with a new interest rate swap until the expiration of the final swap on July 31, 2020. On December 6, 2018, the Company entered into a sixth receive-variable, pay-fixed interest rate swap to hedge the variability of interest payments. The sixth swap began with a notional amount of $27.0 million on July 31, 2020 and hedges the variability in the interest payments on the aggregate scheduled principal amount of the Regions Term Loan outstanding. The sixth swap is scheduled to expire on July 31, 2023. At inception, these interest rate swaps were designated as cash flow hedges for hedge accounting, and as such, the effective portion of unrealized changes in market value are recorded in other comprehensive income (loss) and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Gains and losses from hedge ineffectiveness are recognized in current earnings. The change in fair market value of the swaps for the comparative periods ended December 31, 2020, December 31, 2019, and December 31, 2018, as reflected in accumulated other comprehensive loss in the Consolidated Statements of Stockholders’ Equity, is approximately $0.6 million, $1.0 million and less than $0.1 million. The fair market value of the swaps as of December 31, 2020 is reflected as a liability of $1.6 million on the Consolidated Balance Sheets. See Note 8 for more information regarding the fair value of the Company’s derivative instruments.

Sale-Leaseback Arrangement

On September 27, 2019, the Company entered into a purchase and sale agreement (the “Purchase and Sale Agreement”). Pursuant to the terms of the Purchase and Sale Agreement, the Company sold its 17300 & 17140 Market Street location in Channelview, Texas (the “Property”) for a purchase price of $19.1 million. Concurrent with the sale of the Property, the Company entered into a fifteen-year lease agreement (the “Lease Agreement”), whereby the Company will lease back the Property at an annual rental rate of approximately $1.5 million, subject to annual rent increases of 2.0%. Under the Lease Agreement, the Company has two consecutive options to extend the term of the Lease by ten years for each such

39

Table of Contents

option. This transaction was recorded as a failed sale-leaseback. The Company recorded a liability for the amounts received, will continue to depreciate the non-land portion of the asset, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining assets will be zero at the end of the initial lease term. Concurrently with the sale, the Company paid $18.2 million as an additional principal payment towards the Term loan portion of the Company’s Credit Facility, consistent with terms of the Sixth Amendment.

Bonding Capacity

We are often required to provide various types of surety bonds that provide additional security to our customers for our performance under certain government and private sector contracts. 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 December 31, 2020, the capacity under our current bonding arrangement was at least $500 million, with approximately $150 million of projects being bonded. We believe our strong balance sheet and working capital position will allow us to continue to access our bonding capacity.

Effect of Inflation

We are subject to the effects of inflation through increases in the cost of raw materials, and other items such as fuel, concrete and steel. Due to the relative short-term duration of our projects, we are generally able to include anticipated price increases in the cost of our bids.

Off Balance Sheet Arrangements

Currently our only off balance sheet arrangements are those discussed above under “Bonding Capacity” and those which arise in the normal course of business. These arrangements are not reasonably likely to have an effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. See Note 17 – Commitments and Contingencies of Notes to Consolidated Financial Statements beginning on page F-1 of this Annual Report on Form 10-K.

Contractual Obligations

The following table sets forth information about our contractual obligations and commercial commitments as of December 31, 2020:

Payment Due by Period

    

Total

    

< 1 year

    

1-3 years

    

3-5 years

    

> 5 years

(in thousands)

Debt obligations

$

35,086

$

4,500

$

30,586

$

$

Lease obligations

 

36,044

$

10,719

 

10,845

 

7,350

7,130

Sale-leaseback arrangement (1)

17,388

676

1,674

1,971

13,067

Purchase obligations (2)

 

 

 

 

 

Total

$

88,518

$

15,895

$

43,105

$

9,321

$

20,197

(1)See Note 12 in the Notes to the Financial Statements (Part IV, Item 15 of this Form 10-K) for further discussion on the Company’s Sale-leaseback arrangement.
(2)Commitments pursuant to open purchase orders and subcontracts related to construction contracts are not included since such amounts are expected to be funded under contract billings.

To manage risks of changes in the material prices and subcontracting costs used in tendering bids for construction contracts, we routinely obtain firm quotations from our suppliers and subcontractors before submitting a bid. These quotations do not include any quantity guarantees, and we have no obligation for materials or subcontract services beyond those required to complete the contracts that we are awarded for which quotations have been provided.

40

Table of Contents

A summary of debt and other contractual obligations as of December 31, 2020 and December 31, 2019 is as follows: