Great Lakes Dredge & Dock Corporation
Great Lakes Dredge & Dock CORP (Form: 10-Q, Received: 05/03/2017 16:06:16)

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2017

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: 001-33225

Great Lakes Dredge & Dock Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-5336063

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

2122 York Road, Oak Brook, IL

 

60523

(Address of principal executive offices)

 

(Zip Code)

(630) 574-3000

(Registrant’s telephone number, including area code)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

 

Accelerated Filer

 

Non-Accelerated Filer

 

  (Do not check if a smaller reporting company)

 

Smaller reporting company

 

Emerging Growth Company

 

 

 

 

 

 

If an emerging growth company, indicate 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

As of April 28, 2017, 61,272,199 shares of the Registrant’s Common Stock, par value $.0001 per share, were outstanding.

 

 

 

 


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarterly Period ended March 31, 2017

INDEX

 

 

 

 

 

Page

 

 

 

 

 

 

 

Part I Financial Information (Unaudited)

 

3

 

 

 

 

 

Item 1

 

Financial Statements

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2017 and December 31, 2016

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2017 and 2016

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three Months ended March 31, 2017 and 2016

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2017 and 2016

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

 

Item 2

 

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

 

26

 

 

 

 

 

Item 3

 

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

Item 4

 

Controls and Procedures

 

36

 

 

 

 

 

 

 

Part II Other Information

 

37

 

 

 

 

 

Item 1

 

Legal Proceedings

 

37

 

 

 

 

 

Item 1A

 

Risk Factors

 

37

 

 

 

 

 

Item 2

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

37

 

 

 

 

 

Item 3

 

Defaults Upon Senior Securities

 

37

 

 

 

 

 

Item 4

 

Mine Safety Disclosures

 

37

 

 

 

 

 

Item 5

 

Other Information

 

37

 

 

 

 

 

Item 6

 

Exhibits

 

38

 

 

 

 

 

 

 

Signature

 

39

 

 

 

 

 

 

 

Exhibit Index

 

40

 

 

 

2


 

P ART I — Financial Information

Item 1.

Financial Statements.

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except per share amounts)  

 

 

 

March 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,895

 

 

$

11,167

 

Accounts receivable—net

 

 

91,385

 

 

 

88,091

 

Contract revenues in excess of billings

 

 

75,696

 

 

 

95,012

 

Inventories

 

 

38,307

 

 

 

37,137

 

Prepaid expenses and other current assets

 

 

79,838

 

 

 

75,819

 

Total current assets

 

 

292,121

 

 

 

307,226

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT—Net

 

 

419,268

 

 

 

413,008

 

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

 

 

84,927

 

 

 

85,075

 

INVENTORIES—Noncurrent

 

 

51,995

 

 

 

52,602

 

INVESTMENTS IN JOINT VENTURES

 

 

5,756

 

 

 

4,734

 

ASSETS HELD FOR SALE—Noncurrent

 

 

9,118

 

 

 

9,299

 

OTHER

 

 

14,442

 

 

 

21,644

 

TOTAL

 

$

877,627

 

 

$

893,588

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable

 

$

87,640

 

 

$

103,185

 

Accrued expenses

 

 

80,781

 

 

 

69,043

 

Billings in excess of contract revenues

 

 

8,893

 

 

 

5,141

 

Current portion of long term debt

 

 

2,439

 

 

 

2,465

 

Total current liabilities

 

 

179,753

 

 

 

179,834

 

 

 

 

 

 

 

 

 

 

7 3/8% SENIOR NOTES

 

 

273,248

 

 

 

272,998

 

REVOLVING CREDIT FACILITY

 

 

115,500

 

 

 

104,111

 

NOTES PAYABLE

 

 

12,995

 

 

 

13,293

 

DEFERRED INCOME TAXES

 

 

57,831

 

 

 

68,449

 

OTHER

 

 

6,772

 

 

 

7,013

 

Total liabilities

 

 

646,099

 

 

 

645,698

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 8)

 

 

 

 

 

 

 

 

EQUITY:

 

 

 

 

 

 

 

 

Common stock—$.0001 par value; 90,000 authorized, 61,550 and 61,240 shares issued; 61,272 and 60,962 shares outstanding at March 31, 2017 and December 31, 2016, respectively.

 

 

6

 

 

 

6

 

Treasury stock, at cost

 

 

(1,433

)

 

 

(1,433

)

Additional paid-in capital

 

 

287,491

 

 

 

286,303

 

Accumulated deficit

 

 

(52,629

)

 

 

(35,841

)

Accumulated other comprehensive loss

 

 

(1,907

)

 

 

(1,145

)

Total equity

 

 

231,528

 

 

 

247,890

 

TOTAL

 

$

877,627

 

 

$

893,588

 

 

See notes to unaudited condensed consolidated financial statements.

3


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

Contract revenues

 

$

170,586

 

 

$

163,119

 

Costs of contract revenues

 

 

154,404

 

 

 

143,129

 

Gross profit

 

 

16,182

 

 

 

19,990

 

General and administrative expenses

 

 

16,795

 

 

 

20,089

 

(Gain) loss on sale of assets—net

 

 

11

 

 

 

(10

)

Operating loss

 

 

(624

)

 

 

(89

)

Interest expense—net

 

 

(5,582

)

 

 

(5,721

)

Equity in earnings (loss) of joint ventures

 

 

1

 

 

 

(115

)

Other income (expense)

 

 

208

 

 

 

(763

)

Loss from continuing operations before income taxes

 

 

(5,997

)

 

 

(6,688

)

Income tax benefit

 

 

2,274

 

 

 

2,653

 

Loss from continuing operations

 

 

(3,723

)

 

 

(4,035

)

Loss from discontinued operations, net of income taxes

 

 

(13,065

)

 

 

 

Net loss

 

$

(16,788

)

 

$

(4,035

)

 

 

 

 

 

 

 

 

 

Basic loss per share attributable to continuing operations

 

$

(0.06

)

 

$

(0.07

)

Basic loss per share attributable to discontinued operations, net of tax

 

 

(0.21

)

 

 

 

Basic loss per share

 

$

(0.27

)

 

$

(0.07

)

Basic weighted average shares

 

 

61,065

 

 

 

60,507

 

 

 

 

 

 

 

 

 

 

Diluted loss per share attributable to continuing operations

 

$

(0.06

)

 

$

(0.07

)

Diluted loss per share attributable to discontinued operations, net of tax

 

 

(0.21

)

 

 

 

Diluted loss per share

 

$

(0.27

)

 

$

(0.07

)

Diluted weighted average shares

 

 

61,065

 

 

 

60,507

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

4


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(16,788

)

 

$

(4,035

)

Currency translation adjustment—net of tax (1)

 

 

(28

)

 

 

409

 

Net unrealized gain on derivatives—net of tax (2)

 

 

(734

)

 

 

 

Other comprehensive income (loss)—net of tax

 

 

(762

)

 

 

409

 

Comprehensive loss

 

$

(17,550

)

 

$

(3,626

)

 

(1)

Net of income tax (provision) benefit of $39 and $(271) for the three months ended March 31, 2017 and 2016, respectively.

(2)

Net of income tax provision of $479 for the three months ended March 31, 2017.

See notes to unaudited condensed consolidated financial statements.

 

 

5


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Equity

(Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares   of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2017

 

 

61,240

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

286,303

 

 

$

(35,841

)

 

$

(1,145

)

 

$

247,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

918

 

 

 

 

 

 

 

 

 

918

 

Vesting of restricted stock units, including impact of shares withheld for taxes

 

 

69

 

 

 

 

 

 

 

 

 

 

 

 

(164

)

 

 

 

 

 

 

 

 

(164

)

Exercise of options and purchases from employee stock plans

 

 

132

 

 

 

 

 

 

 

 

 

 

 

 

434

 

 

 

 

 

 

 

 

 

434

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,788

)

 

 

 

 

 

(16,788

)

Other comprehensive loss—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(762

)

 

 

(762

)

BALANCE—March 31, 2017

 

 

61,550

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

287,491

 

 

$

(52,629

)

 

$

(1,907

)

 

$

231,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Shares of

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

Common

 

 

Common

 

 

Treasury

 

 

Treasury

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE—January 1, 2016

 

 

60,709

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

283,247

 

 

$

(27,664

)

 

$

(1,983

)

 

$

252,173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

81

 

 

 

 

 

 

 

 

 

 

 

 

927

 

 

 

 

 

 

 

 

 

927

 

Exercise of options and purchases from employee stock plans

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

415

 

 

 

 

 

 

 

 

 

415

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,035

)

 

 

 

 

 

(4,035

)

Other comprehensive income—net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

409

 

 

 

409

 

BALANCE—March 31, 2016

 

 

60,934

 

 

$

6

 

 

 

(278

)

 

$

(1,433

)

 

$

284,589

 

 

$

(31,699

)

 

$

(1,574

)

 

$

249,889

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

6


 

Great Lakes Dredge & Dock Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(16,788

)

 

$

(4,035

)

Loss from discontinued operations, net of income taxes

 

 

(13,065

)

 

 

 

Loss from continuing operations

 

$

(3,723

)

 

$

(4,035

)

Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

14,571

 

 

 

13,928

 

Equity in earnings of joint ventures

 

 

(3,067

)

 

 

(419

)

Cash distributions from joint ventures

 

 

2,046

 

 

 

 

Deferred income taxes

 

 

(2,306

)

 

 

(2,108

)

(Gain) loss on sale of assets

 

 

11

 

 

 

(10

)

Amortization of deferred financing fees

 

 

825

 

 

 

623

 

Unrealized net (gain) loss from mark-to-market valuations of derivatives

 

 

1,548

 

 

 

(1,332

)

Unrealized foreign currency gain

 

 

(76

)

 

 

(77

)

Share-based compensation expense

 

 

918

 

 

 

927

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(3,234

)

 

 

29,748

 

Contract revenues in excess of billings

 

 

19,362

 

 

 

6,748

 

Inventories

 

 

(609

)

 

 

(2,603

)

Prepaid expenses and other current assets

 

 

(7,392

)

 

 

(3,418

)

Accounts payable and accrued expenses

 

 

(27,610

)

 

 

(33,322

)

Billings in excess of contract revenues

 

 

3,931

 

 

 

(910

)

Other noncurrent assets and liabilities

 

 

(255

)

 

 

(780

)

Cash provided by (used in) operating activities

 

 

(5,060

)

 

 

2,960

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(17,452

)

 

 

(14,917

)

Proceeds from dispositions of property and equipment

 

 

265

 

 

 

25

 

Changes in restricted cash

 

 

7,035

 

 

 

 

Cash used in investing activities

 

 

(10,152

)

 

 

(14,892

)

 

7


 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Deferred financing fees

 

 

(58

)

 

 

 

Repayments of long term note payable

 

 

(283

)

 

 

(265

)

Taxes paid on settlement of vested share awards

 

 

(164

)

 

 

 

Repayments of term loan facility

 

 

 

 

 

(1,250

)

Repayments of equipment debt

 

 

(376

)

 

 

(367

)

Exercise of options and purchases from employee stock plans

 

 

434

 

 

 

415

 

Borrowings under revolving loans

 

 

28,112

 

 

 

38,000

 

Repayments of revolving loans

 

 

(16,723

)

 

 

(23,000

)

Cash provided by financing activities

 

 

10,942

 

 

 

13,533

 

Effect of foreign currency exchange rates on cash and cash equivalents

 

 

(2

)

 

 

109

 

Net increase (decrease) in cash and cash equivalents

 

 

(4,272

)

 

 

1,710

 

Cash and cash equivalents at beginning of period

 

 

11,167

 

 

 

14,184

 

Cash and cash equivalents at end of period

 

$

6,895

 

 

$

15,894

 

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

11,473

 

 

$

11,276

 

Cash paid (refunded) for income taxes

 

$

89

 

 

$

(1

)

 

 

 

 

 

 

 

 

 

Non-cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Property and equipment purchased but not yet paid

 

$

2,187

 

 

$

10,003

 

 

See notes to unaudited condensed consolidated financial statements.

 

 

8


 

GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollar amounts in thousands, except per share amounts or as otherwise noted)

 

 

1.

Basis of presentation

The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Great Lakes Dredge & Dock Corporation and Subsidiaries (the “Company” or “Great Lakes”) and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of March 31, 2017, and its results of operations for the three months ended March 31, 2017 and 2016 and cash flows for the three months ended March 31, 2017 and 2016 have been included.

The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor is generally hired on a project-by-project basis. Costs of contract revenues vary significantly depending on the type and location of work performed and assets utilized.

The Company’s cost structure includes significant annual equipment-related costs, including depreciation, maintenance, insurance and long-term rentals. These costs have averaged approximately 23% of total costs of contract revenues over the prior three years. During the year, both equipment utilization and the timing of fixed cost expenditures fluctuate significantly. Accordingly, the Company allocates these fixed equipment costs to interim periods in proportion to revenues recognized over the year, to better match revenues and expenses. Specifically, at each interim reporting date the Company compares actual revenues earned to date on its dredging contracts to expected annual revenues and recognizes equipment costs on the same proportionate basis. In the fourth quarter, any over or under allocated equipment costs are recognized such that the expense for the year equals actual equipment costs incurred during the year.

The Company has two operating segments: dredging and environmental & infrastructure, which are also the Company’s two reportable segments. The Company has determined that dredging, Terra Contracting Services, LLC (“Terra”) and Great Lakes Environmental & Infrastructure, LLC (“GLEI”) are the Company’s three reporting units.

The Company performed its most recent annual test of impairment as of July 1, 2016 with no indication of impairment as of the test date. The Company will perform its next scheduled annual test of goodwill in the third quarter of 2017 should no triggering events occur which would require a test prior to the next annual test.

The condensed consolidated results of operations and comprehensive income for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.

9


 

Recent Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2017-04 (“ASU 2017-04”), Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The amendment removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. The guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2017-04 on its consolidated financial statements.

In November 2016, the FASB issued Accounting Standard Update No. 2016-18 (“ASU 2016-18”), Statement of Cashflows (Topic 230): Restricted Cash . The amendments require that the statement of cash flows explain the changes during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.  Therefore amounts generally described as restricted cash or restricted cash equivalents should be included with the cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.  The guidance is effective for fiscal years beginning after December 15, 2017.  The Company is currently evaluating the impact of ASU 2016-18 on its consolidated financial statements.

In August 2016, the FASB issued Accounting Standard Update No. 2016-15 (“ASU 2016-15”),  Classification of Certain Cash Receipts and Cash Payments,   which amends FASB’s standards for reporting cash flows in general-purpose financial statements. The amendments address the diversity in practice related to the classification of certain cash receipts and payments.  The guidance is effective for fiscal years beginning after December 15, 2017.  The Company is currently evaluating the impact of ASU 2016-15 on its consolidated financial statements.

In February 2016, the FASB issued Accounting Standard Update No. 2016-02 (“ASU 2016-02”),  Leases (Topic 842) . The FASB issued this update to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) , and subsequently issued other Accounting Standard Updates related to Accounting Standards Codification Topic 606 (collectively, “ASC 606”), which supersede the existing revenue recognition requirements. ASC 606 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 has been deferred to be effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, which will be our first quarter of fiscal 2018. Early adoption is permitted in fiscal 2017. The Company currently expects to adopt ASC 606 as of January 1, 2018, under the modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company’s evaluation of ASC 606 is ongoing and not complete. The Company is currently evaluating the overall impacts that ASC 606 will have on the methods currently used to measure progress toward completion (which affect the timing of recognition of revenue) and the changes necessitated on our financial systems, existing internal controls and processes to comply with the guidance. The FASB has issued and may issue in the future, interpretative guidance, which may cause the Company’s evaluation to change in future periods prior to adoption. In addition, the ongoing assessment may be impacted by implementation guidance specific to the construction industry. Accordingly, the Company is still evaluating the effect of the adoption of ASC 606 on its consolidated financial statements.

 

 

2.

Earnings per share

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similarly to basic earnings per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. For the three months ended March 31, 2017 and 2016, the dilutive effect of 678 thousand and 359 thousand stock options and restricted stock units, respectively, were excluded from the diluted weighted-average common shares outstanding as the Company incurred a loss during these periods. For the three months ended March 31, 2017 and 2016, 1,580 thousand and 1,812 thousand stock options and restricted stock units, respectively, were excluded from the calculation of diluted earnings per share based on the application of the treasury stock method, as such stock options and restricted stock units were determined to be anti-dilutive.

10


 

The computations for basic and diluted loss per share are as follows:

 

 

 

Three Months Ended

 

(shares in thousands)

 

March 31,

 

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(3,723

)

 

$

(4,035

)

Loss from discontinued operations, net of income taxes

 

 

(13,065

)

 

 

 

Net loss

 

 

(16,788

)

 

 

(4,035

)

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding — basic

 

 

61,065

 

 

 

60,507

 

Effect of stock options and restricted stock units

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding — diluted

 

 

61,065

 

 

 

60,507

 

 

 

 

 

 

 

 

 

 

Loss per share from continuing operations — basic

 

$

(0.06

)

 

$

(0.07

)

Loss per share from continuing operations — diluted

 

$

(0.06

)

 

$

(0.07

)

 

 

 

3.

Accounts receivable and contracts in progress

Accounts receivable at March 31, 2017 and December 31, 2016 are as follows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Completed contracts

 

$

21,547

 

 

$

18,727

 

Contracts in progress

 

 

57,039

 

 

 

53,137

 

Retainage

 

 

18,021

 

 

 

21,399

 

 

 

 

96,607

 

 

 

93,263

 

Allowance for doubtful accounts

 

 

(747

)

 

 

(747

)

 

 

 

 

 

 

 

 

 

Total accounts receivable—net

 

$

95,860

 

 

$

92,516

 

 

 

 

 

 

 

 

 

 

Current portion of accounts receivable—net

 

$

91,385

 

 

$

88,091

 

Long-term accounts receivable and retainage

 

 

4,475

 

 

 

4,425

 

Total accounts receivable—net

 

$

95,860

 

 

$

92,516

 

 

The components of contracts in progress at March 31, 2017 and December 31, 2016 are as follows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Costs and earnings in excess of billings:

 

 

 

 

 

 

 

 

Costs and earnings for contracts in progress

 

$

553,027

 

 

$

587,371

 

Amounts billed

 

 

(499,249

)

 

 

(511,548

)

Costs and earnings in excess of billings for contracts in progress

 

 

53,778

 

 

 

75,823

 

Costs and earnings in excess of billings for completed contracts

 

 

21,918

 

 

 

19,189

 

Total contract revenues in excess of billings

 

$

75,696

 

 

$

95,012

 

 

 

 

 

 

 

 

 

 

Billings in excess of costs and earnings: