XML 19 R8.htm IDEA: XBRL DOCUMENT
v3.20.2

REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 9 Months Ended
--- | ---
Sep. 30, 2020
Revenue From Contract With Customer [Abstract] |
REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 2. REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS As discussed in Note 1, we recognize revenue from our contracts in accordance with Topic 606. Summarized below are required disclosures under Topic 606 and other relevant guidance. Disaggregation of Revenue The following tables summarize revenue for each of our operating segments, disaggregated by contract type, for the three and nine months ended September 30, 2020 and 2019 (in thousands):
|  | Three Months Ended September 30, 2020 |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 36,962 |  |  | $ | 10,464 |  |  | $ | (20 | ) |  | $ | 47,406 |
T&M(2) |  |  | 116 |  |  |  | 5,800 |  |  |  | — |  |  |  | 5,916 |
Other |  |  | — |  |  |  | 1,973 |  |  |  | (426 | ) |  |  | 1,547 |
Total |  | $ | 37,078 |  |  | $ | 18,237 |  |  | $ | (446 | ) |  | $ | 54,869 |
|  | Nine Months Ended September 30, 2020 |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 114,777 |  |  | $ | 55,874 |  |  | $ | (344 | ) |  | $ | 170,307 |
T&M(2) |  |  | 1,748 |  |  |  | 17,180 |  |  |  | — |  |  |  | 18,928 |
Other |  |  | — |  |  |  | 5,232 |  |  |  | (1,069 | ) |  |  | 4,163 |
Total |  | $ | 116,525 |  |  | $ | 78,286 |  |  | $ | (1,413 | ) |  | $ | 193,398 |
|  | Three Months Ended September 30, 2019(3) |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 42,015 |  |  | $ | 21,993 |  |  | $ | 299 |  |  | $ | 64,307 |
T&M(2) |  |  | 1,308 |  |  |  | 9,442 |  |  |  | — |  |  |  | 10,750 |
Other |  |  | — |  |  |  | 1,246 |  |  |  | (501 | ) |  |  | 745 |
Total |  | $ | 43,323 |  |  | $ | 32,681 |  |  | $ | (202 | ) |  | $ | 75,802 |
|  | Nine Months Ended September 30, 2019(3) |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 115,558 |  |  | $ | 66,806 |  |  | $ | (277 | ) |  | $ | 182,087 |
T&M(2) |  |  | 5,229 |  |  |  | 30,403 |  |  |  | — |  |  |  | 35,632 |
Other |  |  | — |  |  |  | 6,717 |  |  |  | (573 | ) |  |  | 6,144 |
Total |  | $ | 120,787 |  |  | $ | 103,926 |  |  | $ | (850 | ) |  | $ | 223,863 |
| (1) | Revenue is recognized as the contract is progressed over time.
| (2) | Revenue is recognized at contracted rates when the work is performed and costs are incurred.
| (3) | See Note 7 for discussion of our realigned operating divisions.
Future Performance Obligations Required Under Contracts The following table summarizes our remaining performance obligations by operating segment at September 30, 2020 (in thousands):
Segment |  | Performance Obligations |
Shipyard(1) |  | $ | 381,018 |
Fabrication & Services |  |  | 26,161 |
Total |  | $ | 407,179 |
| (1) | Amount excludes approximately $21.9 million of remaining performance obligations related to contracts for the construction of two MPSVs that are subject to dispute pursuant to termination notices from our customer. See Note 5 for further discussion of these contracts. |
We expect to recognize revenue for our remaining performance obligations at September 30, 2020, in the following periods (in thousands):
Year |  | Performance Obligations |
Remainder of 2020 |  | $ | 46,619 |
2021 |  |  | 215,161 |
2022 |  |  | 121,848 |
Thereafter |  |  | 23,551 |
Total |  | $ | 407,179 |
Contracts Assets and Liabilities Revenue recognition and customer invoicing for our fixed-price and unit-rate contracts may occur at different times. Revenue recognition is based upon our estimated percentage-of-completion as discussed in Note 1; however, customer invoicing is generally dependent upon contractual billing terms, which could provide for customer payments in advance of performing the work, milestone billings based on the completion of certain phases of the work, or when services are provided. Revenue recognized in excess of amounts billed is reflected as contract assets on our Balance Sheet. Amounts billed in excess of revenue recognized, and accrued contract losses, are reflected as contract liabilities on our Balance Sheet. Information with respect to uncompleted contracts at September 30, 2020 and December 31, 2019 is as follows (in thousands):
|  | September 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
Contract assets(1) |  | $ | 72,359 |  |  | $ | 52,128 |
Contract liabilities(1), (2), (3) |  |  | (20,177 | ) |  |  | (26,271 | )
Contracts in progress, net |  | $ | 52,182 |  |  | $ | 25,857 |
| (1) | The increase in contract assets compared to December 31, 2019, was primarily due to increased unbilled positions for four projects in our Shipyard Division and one project in our Fabrication & Services Division. The decrease in contract liabilities compared to December 31, 2019, was primarily due to the unwind of advance payments on a project in our Shipyard Division and two projects in our Fabrication & Services Division, offset partially by advance payments on two projects in our Shipyard Division.
| (2) | Revenue recognized during the three months ended September 30, 2020 and 2019, related to amounts included in our contract liabilities balance at June 30, 2020 and 2019, was $11.4 million and $8.5 million, respectively. Revenue recognized during the nine months ended September 30, 2020 and 2019, related to amounts included in our contract liabilities balance at December 31, 2019 and 2018, was $19.7 million and $14.3 million, respectively.
| (3) | Contract liabilities at September 30, 2020 and December 31, 2019, includes accrued contract losses of $5.4 million and $6.4 million, respectively. See "Changes in Project Estimates" below for further discussion of our accrued contract losses.
Allowance for Doubtful Accounts Our provision for bad debts is included in other (income) expense, net on our Statement of Operations. Our provision for bad debts for the three and nine months ended September 30, 2020 and 2019, and our allowance for doubtful accounts at September 30, 2020 and December 31, 2019, were not significant. Variable Consideration For the three and nine months ended September 30, 2020 and 2019, we had no material amounts in revenue related to unapproved change orders, claims or incentives. However, at September 30, 2020 and December 31, 2019, certain projects reflected a reduction to our estimated contract price for liquidated damages of $11.6 million and $12.9 million, respectively, of which $11.2 million was recorded during 2017. The decrease from December 31, 2019 was due to projects completed during the nine months ended September 30, 2020. Changes in Project Estimates Changes in Estimates for 2020 – For the three and nine months ended September 30, 2020, significant changes in estimated margins on projects negatively impacted operating results for our Shipyard Division by $6.7 million and $8.7 million, respectively, and positively impacted operating results for our Fabrication & Services Division by $0.6 million and $2.6 million, respectively. The changes in estimates were associated with the following: Shipyard Division
| • | Towing, Salvage and Rescue Ship Projects – Negative impact from increased forecast costs of $6.7 million for both the three and nine months ended September 30, 2020 for our five towing, salvage and rescue ship projects, primarily associated with increased craft labor and subcontracted services costs and extensions of schedules. The impacts were primarily due to lower than anticipated craft labor productivity and progress on the projects and higher cost estimates for subcontracted services resulting from the current and forecasted impacts of the COVID-19 pandemic associated primarily with engineering delays, increased employee and contractor absenteeism and turnover, challenges recruiting and hiring craft labor, physical distancing measures, and disruption and inefficiencies related to the aforementioned and the need to re-sequence construction activities. The impacts were also due to additional anticipated craft labor associated with more complex piping activities identified as we achieved further completion of production engineering. We are submitting a request for equitable adjustment to our customer, the U.S. Navy, to extend our project schedules and recover the increased forecast costs associated with the impacts of the COVID-19 pandemic; however, we can provide no assurances that we will be successful recovering these costs. Our forecasts at September 30, 2020 do not reflect potential future benefits, if any, from the favorable resolution of the request for equitable adjustment. Our forecasts reflect minimal craft labor productivity improvements from the first vessel to each follow-on vessel. At September 30, 2020, the projects were at varying stages of completion ranging from approximately 5% to 55% and are forecast to be completed at varying dates from 2022 through 2023, subject to the potential schedule impacts referenced above. The first three vessels were in a loss position at September 30, 2020 and our reserve for estimated losses was $3.1 million. The last two vessels were approximately break-even. If future craft labor productivity and subcontractor costs differ from our current estimates, piping activities are determined to be more complex than anticipated upon finalization of production engineering, we are unable to achieve our progress estimates or our schedules are further extended, the projects would experience further losses.
| • | Harbor Tug Projects – Negative impact from increased forecast costs of $0.6 million for the nine months ended September 30, 2020 for our final two harbor tug projects in our Jennings Yard, primarily associated with increased craft labor and subcontracted services costs and extensions of schedules. The impacts occurred primarily in the second quarter 2020 and were primarily due to lower than anticipated craft labor productivity and progress on the projects resulting from the wind down of the Jennings Yard in connection with its anticipated closure in the fourth quarter 2020 and the impacts of COVID-19 associated primarily with physical distancing measures. The ninth vessel was completed in October 2020. At September 30, 2020, the final vessel was approximately 90% complete and is forecast to be completed in the fourth quarter 2020. The project was in a loss position at September 30, 2020 and our reserve for estimated losses was $0.3 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates or our schedule is further extended, the project would experience further losses.
| • | Forty-Vehicle Ferry Projects – Negative impact from increased forecast costs and forecast liquidated damages of $1.3 million for the nine months ended September 30, 2020 for our two, forty-vehicle ferry projects, primarily associated with increased craft labor and material costs and extensions of schedules. The impacts occurred primarily in the first quarter 2020 and were primarily due to construction rework for the first vessel, including reconstruction of previously completed portions of the vessel, resulting from the determination that portions of the vessel structure were outside of acceptable tolerance levels. The previous construction activities were performed by our former Fabrication Division prior to transferring management and project execution responsibility of the vessels to our Shipyard Division in the first quarter 2020 as discussed further in Note 7.
During the third quarter 2020, our first vessel was damaged by an overhead crane, which disengaged from its tracks, and landed on the hull that was under construction. As a result of this damage to the hull, coupled with prior rework on the vessel, and associated concerns regarding the acceptable tolerance levels of the hull, in October 2020 our customer issued a rejection letter indicating that they would not accept a reconstructed hull, and requested the fabrication of a new hull. Accordingly, we have ceased construction activities on the vessel and are working with the customer to evaluate our options, including remediation actions that could potentially be taken in lieu of fabricating a new hull. We are also working with our insurer regarding the impacts of the crane incident and the coverage that would apply to any cost increases for remediation actions or the fabrication of a new hull. Based on our preliminary estimates, we currently believe the incremental forecast costs resulting from the aforementioned may range from $1.0 million to $4.0 million (before consideration of insurance coverage), with such range of cost being highly dependent on the course of action ultimately taken with respect to the hull, which could range from remediation actions to reconstruct the hull to the fabrication of a new hull. Further, the ultimate cost to us will be dependent upon any insurance proceeds we may receive in connection with the crane incident. Due to the uncertainty with respect to the corrective actions that may be taken regarding the hull and any insurance coverage that would apply, we are unable to estimate the amount we will likely incur from the crane incident. Accordingly, at September 30, 2020, we have accrued our deductible of $0.1 million associated with our insurance coverage, representing the minimum amount we will incur for the crane incident. The expense is included in other (income) expense, net on our Statement of Operations. At September 30, 2020, the second vessel was approximately 75% complete and is forecast to be completed in the first quarter 2021. The completion status and date of the first vessel is currently uncertain due to the aforementioned crane incident and related customer rejection letter. The projects were in a loss position at September 30, 2020 and our reserve for estimated losses was $2.0 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur additional schedule liquidated damages, the projects would experience further losses. We would also experience further losses if we were to incur incremental costs on the first vessel associated with the crane incident as discussed above. Fabrication & Services Division
| • | Jacket and Deck Project – Positive impact from reduced forecast costs and increased contract price of $0.6 million and $1.1 million for the three and nine months ended September 30, 2020, respectively, for our jacket and deck project, primarily associated with reduced subcontracted services costs, approved change orders and incentives. The impacts occurred in the third quarter 2020 and second quarter 2020 and were primarily due to favorable resolution of customer and subcontractor change orders and realization of project incentives. At September 30, 2020, the project was complete.
| • | Paddlewheel Riverboat and Subsea Components Projects – Positive impact from reduced forecast costs and increased contract price of $1.5 million for the nine months ended September 30, 2020, for our paddlewheel riverboat and subsea components projects, primarily associated with reduced craft labor and subcontracted services costs and approved change orders. The impacts occurred primarily in the first six months of 2020 and were primarily due to better than anticipated labor productivity and favorable resolution of customer and subcontractor change orders. At September 30, 2020, both projects were complete.
Changes in Estimates for 2019 – For the three and nine months ended September 30, 2019, significant changes in estimated margins on projects negatively impacted operating results for our Shipyard Division by $2.4 million and $4.4 million, respectively, and negatively impacted operating results for our Fabrication & Services Division by $1.5 million and $1.4 million, respectively. The changes in estimates were associated with the following. Shipyard Division
| • | Harbor Tug Projects – Negative impact from increased forecast costs and forecast liquidated damages of $1.9 million and $3.1 million for the three and nine months ended September 30, 2019, respectively, for our harbor tug projects in our Jennings Yard, primarily associated with increased craft labor, subcontracted services costs and extensions of schedule. The impacts for the third quarter 2019 were primarily due to the need to supplement and re-perform work for an under-performing paint subcontractor, higher cost estimates from our electrical and instrumentation subcontractor, and our inability to achieve previously anticipated labor productivity improvements on our uncompleted vessels. The impacts for the first half of 2019 were primarily due lower than anticipated craft labor productivity and progress on the projects, resulting from limitations in craft labor availability and the required use of contract labor in lieu of direct hire labor. The projects were in a loss position at September 30, 2019 and our reserve for estimated losses on the projects was $1.9 million. See “Changes in Estimates for 2020” above for further discussion of the status of these projects.
| • | Ice-breaker Tug Project – Negative impact from increased forecast costs of $0.5 million and $1.3 million for the three and nine months ended September 30, 2019, respectively, for our ice-breaker tug project, primarily associated with increased craft labor, subcontracted services costs and an extension of schedule. The impacts were primarily due to construction rework and disruption and lower than anticipated craft labor productivity and progress on the project, resulting from incomplete and deficient subcontracted production engineering. The project was in a loss position at September 30, 2019 and our reserve for estimated losses on the project was $0.1 million. At September 30, 2020, the project was complete.
Fabrication & Services Division
| • | Subsea Components Project – Negative impact from increased forecast costs and forecast liquidated damages of $1.5 million and $1.4 million for the three and nine months ended September 30, 2019, respectively, for our subsea components projects, primarily associated with increased craft labor, materials and subcontracted services costs and an extension of schedule. The impacts were primarily due to lower craft labor productivity and increased subcontracted services support,
|  | resulting from stringent welding procedure requirements and customer specifications. The project was in a loss position at September 30, 2019 and our reserve for estimated losses was $0.6 million. At September 30, 2020, the project was complete.
Other Project Matters Research Vessel Projects – As previously disclosed, construction activities for our three research vessel projects have been delayed until production engineering achieves a satisfactory level of completion to limit impacts on construction, including disruption and rework. These construction delays are expected to continue in the near term due to production engineering delays experienced by our customer’s engineering subcontractor as a result of COVID-19. We are working with the customer to collectively assess the execution and schedule impacts to the projects due to these production engineering delays. Hurricane Laura – In August 2020, Hurricane Laura made landfall as a high-end Category 4 hurricane in Lake Charles, Louisiana, where its high winds and flooding caused significant damage throughout the region. At our Lake Charles Yard, Hurricane Laura primarily damaged drydocks, warehouses, bulkheads and our ninth harbor tug project which was nearing completion (and subsequently was completed in October 2020). As a result, during both the three and nine months ended September 30, 2020, we recorded charges totaling $1.2 million related to deductibles associated with our builder’s risk, equipment, property and marine liability insurance coverages, and our preliminary estimates of cost associated with uninsurable damage, primarily for bulkheads. The charges are included in other (income) expense, net on our Statement of Operations. Project Tariffs – Certain imported materials used, or forecast to be used, for our projects are currently subject to existing, new or increased tariffs or duties. We believe such amounts, if incurred, are recoverable from our customers under the contractual provisions of our contracts; however, we can provide no assurances that we will successfully recover such amounts.

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration