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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2024
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 6. Fair value measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy has been established by GAAP that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The accounting guidance describes three levels of inputs that may be used to measure fair value: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company is exposed to counterparty credit risk associated with non-performance of its various derivative instruments. The Company’s risk would be limited to any unrealized gains on current positions. To help mitigate this risk, the Company transacts only with counterparties that are rated as investment grade or higher. In addition, all counterparties are monitored on a continuous basis. The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. At times, the Company holds certain derivative contracts that it uses to manage commodity price risk, foreign currency risk or interest rate risk. The Company does not hold or issue derivatives for speculative or trading purposes. The fair values of these financial instruments are summarized as follows:
|  |  |  | Fair Value at |
|  | Fair Value Hierarchy Levels |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | September 30, 2024 |  |  | December 31, 2023 |
|  |  |  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
Derivatives designated as cash flow hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fuel hedge contracts |  | 2 |  | $ | — |  |  | $ | 3,467 |  |  | $ | — |  |  | $ | 2,918 |
Foreign currency exchange hedge contracts |  | 2 |  |  | 2 |  |  |  | 21 |  |  |  | 358 |  |  |  | — |
Interest rate swaps |  | 2 |  |  | — |  |  |  | 536 |  |  |  | — |  |  |  | — |
Total derivatives |  |  |  | $ | 2 |  |  | $ | 4,024 |  |  | $ | 358 |  |  | $ | 2,918 |
Fuel hedge contracts The Company is exposed to certain market risks, primarily commodity price risk as it relates to diesel fuel purchase requirements, which occur in the normal course of business. The Company enters into heating oil commodity swap contracts to hedge the risk that fluctuations in diesel fuel prices could have an adverse impact on cash flows associated with its domestic dredging contracts. The Company’s goal is to hedge approximately 80% of the eligible fuel requirements for work in dredging backlog. As of September 30, 2024, the Company was party to various swap arrangements to hedge the price of a portion of its diesel fuel purchase requirements for work in its backlog to be performed through February 2026. As of September 30, 2024, there were 9.1 million gallons remaining on these contracts representing forecasted domestic fuel purchases through February 2026. Under these swap agreements, the Company will pay fixed prices ranging from $2.35 to $2.90 per gallon. At September 30, 2024 and December 31, 2023, the fair value liabilities of the fuel hedge contracts were estimated to be $3.5 million and $2.9 million, respectively, and are recorded in accrued expenses in the condensed consolidated balance sheets. For fuel hedge contracts considered to be highly effective, the losses reclassified to earnings from changes in fair value of derivatives, net of cash settlements and taxes, for the nine months ended September 30, 2024 were $882. The remaining gains and losses included in accumulated other comprehensive loss at September 30, 2024 will be reclassified into earnings over the next seventeen months, corresponding to the period during which the hedged fuel is expected to be utilized. Changes in the fair value of fuel hedge contracts not considered highly effective are recorded as cost of contract revenues in the condensed consolidated statements of operations. The fair values of fuel hedges are corroborated using inputs that are readily observable in public markets; therefore, the Company determines fair value of these fuel hedges using Level 2 inputs. Foreign currency exchange hedge contracts The Company is exposed to certain market risks, including foreign currency exchange rate risks related to the purchase of new vessel build materials in Europe. The Company sometimes enters into foreign currency exchange forward contracts to hedge the risk that fluctuations in the Euro in relation to the US Dollar could have an adverse impact on cash flows associated with its equipment builds. As of September 30, 2024, the Company was party to various foreign exchange forward contract arrangements to hedge the purchase of materials through November 2024. As of September 30, 2024, there were 2.9 million Euro of payments remaining on these hedge contracts. Under these hedge contracts, the Company will pay fixed prices ranging from $1.11 to $1.13 per Euro. As of September 30, 2024, the fair value liability of foreign currency exchange hedge contracts was $21 and is recorded in accrued expenses in the condensed consolidated balance sheets. As of December 31, 2023, the fair value asset of foreign currency exchange hedge contracts was $358 and is recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets. For foreign currency exchange hedge contracts considered to be highly effective, the losses reclassified to earnings from changes in fair value of derivatives, net of cash settlements and taxes, for the nine months ended September 30, 2024 were $42. The remaining gains and losses included in accumulated other comprehensive loss at September 30, 2024 will be reclassified into earnings over the next two months, corresponding to the period during which the hedged currency is expected to be utilized. Changes in the fair value of foreign currency exchange hedge contracts not considered highly effective are recorded as other expenses in the condensed consolidated statements of operations. The fair values of foreign currency exchange hedges are corroborated using inputs that are readily observable in public markets; therefore, the Company determines the fair value of these foreign currency exchange hedges using Level 2 inputs. Interest rate swaps The Company is exposed to certain market risks, including interest rate risks related to the floating interest rates on its variable rate debt. The Company has entered into interest rate swaps to convert a portion of its variable rate debt into fixed-rate debt and hedge the risk that fluctuations in interest rates could have an adverse impact on net interest expense. As of September 30, 2024, the Company was party to two interest rate swaps with a total notional value of $75 million effective August 5, 2024 and a maturity date of August 24, 2026. Under these interest rate swaps, the Company will pay a weighted average fixed rate of 3.873% on the notional amount and receive payments from the counterparty based on the 30-day SOFR rate, effectively modifying the Company’s exposure to interest rate risk by converting a portion of its floating-rate debt to a weighted average fixed interest rate of 11.623%. As of September 30, 2024 the fair value liability of the Company’s interest rate swaps was $536 and is recorded in accrued expenses in the condensed consolidated balance sheets. For interest rate swaps considered to be highly effective, the gains reclassified to earnings from changes in fair value of derivatives, net of cash settlements and taxes, for the nine months ended September 30, 2024 were $112. The remaining gains and losses included in accumulated other comprehensive loss at September 30, 2024 will be reclassified into earnings over the next twenty three months, corresponding to the period during which the interest rate swap is expected to be utilized. Changes in the fair value of interest rate swaps not considered highly effective are recorded as interest expense in the condensed consolidated statements of operations. The fair values of interest rate swaps are corroborated using inputs that are readily observable in public markets; therefore, the Company determines the fair value of these interest rate swaps using Level 2 inputs. Accumulated other comprehensive income (loss) Changes in the components of the accumulated balances of other comprehensive income (loss) are as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |
Fuel Hedge Contracts |  |  |  |  |  |  |  |  |  |  |  |
Reclassification of derivative losses (gains) to earnings—net of tax |  | $ | 644 |  |  | $ | (297 | ) |  | $ | 882 |  |  | $ | 1,507 |
Change in fair value of derivatives—net of tax |  |  | (2,993 | ) |  |  | 3,271 |  |  |  | (1,293 | ) |  |  | 1,113 |
Net change in cash flow derivative fuel hedges—net of tax |  | $ | (2,349 | ) |  | $ | 2,974 |  |  | $ | (411 | ) |  | $ | 2,620 |
Foreign Currency Exchange Hedge Contracts |  |  |  |  |  |  |  |  |  |  |  |
Reclassification of derivative losses (gains) to earnings—net of tax |  | $ | — |  |  | $ | (198 | ) |  | $ | 42 |  |  | $ | (519 | )
Change in fair value of derivatives—net of tax |  |  | 89 |  |  |  | (621 | ) |  |  | (553 | ) |  |  | (377 | )
Net change in cash flow derivative foreign currency hedges—net of tax |  | $ | 89 |  |  | $ | (819 | ) |  | $ | (511 | ) |  | $ | (896 | )
Interest Rate Swaps |  |  |  |  |  |  |  |  |  |  |  |
Reclassification of derivative gains to earnings—net of tax |  | $ | (112 | ) |  | $ | — |  |  | $ | (112 | ) |  | $ | — |
Change in fair value of derivatives—net of tax |  |  | (289 | ) |  |  | — |  |  |  | (289 | ) |  |  | — |
Net change in cash flow derivative foreign currency hedges—net of tax |  | $ | (401 | ) |  | $ | — |  |  | $ | (401 | ) |  | $ | — |
Total net change in cash flow derivative hedges - net of tax |  | $ | (2,661 | ) |  | $ | 2,155 |  |  | $ | (1,323 | ) |  | $ | 1,724 |
Adjustments reclassified from accumulated balances of other comprehensive income (loss) to earnings are as follows:
|  |  |  | Three Months Ended |  |  | Nine Months Ended |
|  |  |  | September 30, |  |  | September 30, |
|  | Statement of Operations Location |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fuel hedge contracts |  | Costs of contract revenues |  | $ | 861 |  |  | $ | (649 | ) |  | $ | 1,180 |  |  | $ | 1,425 |
Foreign currency exchange hedge contracts |  | Other income (expense) |  |  | — |  |  |  | (13 | ) |  |  | 56 |  |  |  | (437 | )
Interest rate swaps |  | Interest expense—net |  |  | (149 | ) |  |  | — |  |  |  | (149 | ) |  |  | — |
|  | Income tax (provision) benefit |  |  | 180 |  |  |  | (167 | ) |  |  | 275 |  |  |  | — |
|  |  |  | $ | 532 |  |  | $ | (495 | ) |  | $ | 812 |  |  | $ | 988 |
Other financial instruments The carrying value of financial instruments included in current assets and current liabilities approximates fair value due to the short-term maturities of these instruments. Based on timing of the cash flows and comparison to current market interest rates, the carrying values of the ABL Amendment and Second Lien Credit Agreement approximate fair value at September 30, 2024. In May 2021, the Company sold $325.0 million of the 2029 Notes, which were outstanding at September 30, 2024 (see Note 5, Long-term debt). The fair value of the 2029 Notes was $302.1 million at September 30, 2024, which is a Level 1 fair value measurement as the senior notes’ value was obtained using quoted prices in active markets. It is impracticable to determine the fair value of outstanding letters of credit or performance, bid and payment bonds due to uncertainties as to the amount and timing of future obligations, if any.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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