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Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
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

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Levels

 

Assets

 

 

Liabilities

 

 

Assets

 

 

Liabilities

 

Derivatives designated as cash flow hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuel hedge contracts

 

2

 

$

—

 

 

$

454

 

 

$

—

 

 

$

1,065

 

Interest rate swaps

 

2

 

 

—

 

 

 

109

 

 

 

217

 

 

 

—

 

Total derivatives

 

 

 

$

—

 

 

$

563

 

 

$

217

 

 

$

1,065

 

 

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 90% of the eligible fuel requirements for work in dredging backlog.

As of June 30, 2025, 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 December 2026. As of June 30, 2025, there were 15.8 million gallons remaining on these contracts representing forecasted domestic fuel purchases through December 2026. Under these swap agreements, the Company will pay fixed prices ranging from $2.03 to $2.66 per gallon.

At June 30, 2025 and December 31, 2024, the fair value liabilities of the fuel hedge contracts were estimated to be $0.5 million and $1.1 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 six months ended June 30, 2025 were $0.6 million. The remaining gains and losses included in accumulated other comprehensive loss at June 30, 2025 will be reclassified into earnings over the next eighteen 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 U.S. Dollar could have an adverse impact on cash flows associated with its equipment builds.

The Company did not have any foreign currency exchange hedge contracts as of June 30, 2025 or December 31, 2024. The Company was party to various foreign exchange forward contract arrangements to hedge the purchase of materials through November 2024. Under these hedge contracts, the Company paid fixed prices ranging from $1.01 to $1.13 per Euro.

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 six months ended June 30, 2024 were $42. 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 June 30, 2025, 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 3.87% 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 11.62%.

As of June 30, 2025 the fair value liability of the Company’s interest rate swaps was $109 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 six months ended June 30, 2025 were $132. The remaining gains and losses included in accumulated other comprehensive loss at June 30, 2025 will be reclassified into earnings over the next fourteen 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

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Fuel Hedge Contracts

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of derivative losses (gains) to earnings—net of tax

 

$

522

 

 

$

359

 

 

$

642

 

 

$

238

 

Change in fair value of derivatives—net of tax

 

 

(637

)

 

 

(310

)

 

 

(186

)

 

 

1,700

 

Net change in cash flow derivative fuel hedges—net of tax

 

$

(115

)

 

$

49

 

 

$

456

 

 

$

1,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Exchange Hedge Contracts

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of derivative losses to earnings—net of tax

 

$

—

 

 

$

6

 

 

$

—

 

 

$

42

 

Change in fair value of derivatives—net of tax

 

 

—

 

 

 

(5

)

 

 

—

 

 

 

(642

)

Net change in cash flow derivative foreign currency hedges—net of tax

 

$

—

 

 

$

1

 

 

$

—

 

 

$

(600

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Swaps

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification of derivative gains to earnings—net of tax

 

$

(64

)

 

$

—

 

 

$

(132

)

 

$

—

 

Change in fair value of derivatives—net of tax

 

 

29

 

 

 

—

 

 

 

(112

)

 

 

—

 

Net change in cash flow derivative foreign currency hedges—net of tax

 

$

(35

)

 

$

—

 

 

$

(244

)

 

$

—

 

Total net change in cash flow derivative hedges - net of tax

 

$

(150

)

 

$

50

 

 

$

212

 

 

$

1,338

 

 

Adjustments reclassified from accumulated balances of other comprehensive income (loss) to earnings are as follows:

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

June 30,

 

 

 

Statement of Operations Location

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuel hedge contracts

 

Costs of contract revenues

 

$

698

 

 

$

482

 

 

$

859

 

 

$

319

 

Foreign currency exchange hedge contracts

 

Other income (expense)

 

 

—

 

 

 

7

 

 

 

—

 

 

 

56

 

Interest rate swaps

 

Interest expense—net

 

 

(86

)

 

 

—

 

 

 

(177

)

 

 

—

 

 

Income tax benefit

 

 

154

 

 

 

124

 

 

 

172

 

 

 

95

 

 

 

 

$

458

 

 

$

365

 

 

$

510

 

 

$

280

 

 

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 Credit Agreement and Second Lien Credit Agreement approximate fair value at June 30, 2025. In May 2021, the Company sold $325.0 million of the 2029 Notes, which were outstanding at June 30, 2025 (see Note 5, Long-term debt). The fair value of the 2029 Notes was $312.3 million at June 30, 2025, 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.