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REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 3 Months Ended
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Mar. 31, 2021
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 months ended March 31, 2021 and 2020 (in thousands):
|  | Three Months Ended March 31, 2021 |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 39,778 |  |  | $ | 11,157 |  |  | $ | (8 | ) |  | $ | 50,927 |
T&M(2) |  |  | 518 |  |  |  | 6,269 |  |  |  | — |  |  |  | 6,787 |
Other |  |  | — |  |  |  | 1,634 |  |  |  | (397 | ) |  |  | 1,237 |
Total |  | $ | 40,296 |  |  | $ | 19,060 |  |  | $ | (405 | ) |  | $ | 58,951 |
|  | Three Months Ended March 31, 2020 |
Contract Type |  | Shipyard |  |  | F&S |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate(1) |  | $ | 44,302 |  |  | $ | 24,557 |  |  | $ | (85 | ) |  | $ | 68,774 |
T&M(2) |  |  | 1,257 |  |  |  | 6,925 |  |  |  | — |  |  |  | 8,182 |
Other |  |  | — |  |  |  | 1,961 |  |  |  | (362 | ) |  |  | 1,599 |
Total |  | $ | 45,559 |  |  | $ | 33,443 |  |  | $ | (447 | ) |  | $ | 78,555 |
| (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.
Future Performance Obligations Required Under Contracts The following table summarizes our remaining performance obligations by operating segment at March 31, 2021 (in thousands):
Segment |  | Performance Obligations |
Shipyard(1) |  | $ | 327,355 |
Fabrication & Services |  |  | 12,273 |
Total |  | $ | 339,628 |
| (1) | In connection with the Shipyard Transaction, performance obligations associated with the Divested Shipyard Contracts totaling $309.5 million at March 31, 2021, were sold. Approximately $5.0 million to $10.0 million of performance obligations associated with the Divested Shipyard Contracts is expected to be recognized as revenue subsequent to March 31, 2021 through the Shipyard Transaction closing date. Excluding the performance obligations associated with the Divested Shipyard Contracts, we expect to recognize revenue of approximately $27.2 million and $2.9 million for the remainder of 2021 and thereafter, respectively, associated with our remaining performance obligations at March 31, 2021. See Note 8 for further discussion of the Shipyard Transaction.
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 contracts that were incomplete at March 31, 2021 and December 31, 2020 is as follows (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Contract assets(1) |  | $ | 71,372 |  |  | $ | 67,521 |
Contract liabilities(2), (3), (4) |  |  | (11,812 | ) |  |  | (15,129 | )
Contracts in progress, net |  | $ | 59,560 |  |  | $ | 52,392 |
| (1) | The increase in contract assets compared to December 31, 2020, was primarily due to increased unbilled positions on our research vessel projects and towing, salvage and rescue ship projects within our Shipyard Division, offset partially by decreased unbilled positions for a completed project within our Shipyard Division.
| (2) | The decrease in contract liabilities compared to December 31, 2020, was primarily due to a decrease in accrued contract losses on our towing, salvage and rescue ship projects within our Shipyard Division attributable to a change order entered into in the first quarter 2021. See “Changes in Project Estimates” below for further discussion of the change order.
| (3) | Revenue recognized during the three months ended March 31, 2021 and 2020, related to amounts included in our contract liabilities balance at December 31, 2020 and 2019, was $3.5 million and $17.0 million, respectively.
| (4) | Contract liabilities at March 31, 2021 and December 31, 2020, includes accrued contract losses of $5.1 million and $8.6 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 months ended March 31, 2021 and 2020, and our allowance for doubtful accounts at March 31, 2021 and December 31, 2020, were not significant. Variable Consideration For the three months ended March 31, 2021 and 2020, we had no material amounts in revenue related to unapproved change orders, claims or incentives. However, at March 31, 2021 and December 31, 2020, certain projects reflected a reduction to our estimated contract price for liquidated damages of $0.9 million and $0.6 million, respectively. Changes in Project Estimates Changes in Estimates for 2021 – For the three months ended March 31, 2021, significant changes in estimated margins on projects positively impacted operating results for our Shipyard Division by $7.7 million and positively impacted operating results for our Fabrication & Services Division by $0.6 million. The changes in estimates were associated with the following: Shipyard Division
| • | Towing, Salvage and Rescue Ship Projects – Positive impact for 2021 of $8.4 million for our towing, salvage and rescue ship projects, resulting from increased contract price primarily associated with an approved change order ($9.2 million impact), offset partially by increased forecast costs primarily associated with increased craft labor costs ($0.8 million impact). The impacts were primarily due to the items described further below:
| – | Contract Price Increase – The increase in contract price was attributable to a change order of $13.1 million entered into in the first quarter 2021 to facilitate the transfer to our customer, the U.S. Navy, the technology, plans and know-how associated with the existing vessels under construction. The majority of the change order amount was included within contract price for our existing vessel projects, resulting in the recognition of additional gross profit of $9.2 million during the three months ended March 31, 2021 due to the cumulative effect impact from the percentage-of-completion of the projects as of March 31, 2021. The remaining change order amount will be recognized as revenue as we facilitate the transfer of the technology, plans and know-how to the customer. In connection with the change order, we received a payment of $8.8 million during the three months ended March 31, 2021.
| – | Forecast Costs Increase – The increase in craft labor costs were primarily due to lower than anticipated craft labor productivity and progress on the projects resulting from ongoing craft labor absenteeism and turnover and challenges recruiting and hiring craft labor, due in part to COVID-19.
At March 31, 2021, the projects were at varying stages of completion ranging from approximately 15% to 65% and are forecast to be completed at varying dates from 2022 through 2024. The projects were approximately break-even at March 31, 2021, inclusive of the increase in contract price attributable to the aforementioned change order. The projects were sold in connection with the Shipyard Transaction. See Note 8 for further discussion of the Shipyard Transaction.
| • | Seventy-Vehicle Ferry Project – Negative impact for 2021 of $0.7 million for our seventy-vehicle ferry project, resulting from increased forecast costs and forecast liquidated damages, primarily associated with extensions of schedule and associated duration related costs, including supervision and subcontracted services costs. The impacts were primarily due to engineering delays and lower than anticipated progress on the project. At March 31, 2021, the vessel was approximately 65% complete and is forecast to be completed in the first quarter 2022. The project was in a loss position at March 31, 2021 and our reserve for estimated losses was $0.6 million. If future craft labor productivity and subcontractor costs differ from our current estimates, piping or other construction activities are determined to be more complex than anticipated upon finalization of production engineering, we are unable to achieve our progress estimates, our schedule is further extended or we incur additional schedule liquidated damages, the project would experience further losses.
Fabrication & Services Division
| • | Offshore Facility Modules Project – Positive impact for 2021 of $0.6 million for our offshore modules project, resulting from reduced forecast costs, primarily associated with reduced craft labor and subcontracted services costs and contingency associated with schedule related liquidated damages. The impacts were primarily due to better than anticipated labor productivity and favorable resolution of change orders with the customer associated with schedule related liquidated damages. The project was completed in April 2021.
Changes in Estimates for 2020 – For the three months ended March 31, 2020, significant changes in estimated margins on projects negatively impacted operating results for our Shipyard Division by $1.2 million and positively impacted operating results for our Fabrication & Services Division by $0.9 million. The changes in estimates were associated with the following. Shipyard Division
| • | Forty-Vehicle Ferry Projects – Negative impact for 2020 of $1.2 million for our two forty-vehicle ferry projects, resulting from increased forecast costs and forecast liquidated damages, primarily associated with increased craft labor and material costs and extensions of schedule. The impacts were primarily due to anticipated rework for the first vessel, including potential reconstruction of previously completed portions of the vessel, resulting from the determination that portions of the vessel structure were outside of acceptable tolerance levels.
Fabrication & Services Division
| • | Paddle Wheel Riverboat and Subsea Components Projects – Positive impact for 2020 of $0.9 million for our paddle wheel riverboat and subsea components projects, resulting from reduced forecast costs and increased contract price, primarily associated with reduced craft labor and subcontracted services costs and change orders. The benefits were primarily due to better than anticipated labor productivity and favorable resolution of change orders with subcontractors and the customers. At March 31, 2021, the projects were both complete.

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- 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
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