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REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 3 Months Ended
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Mar. 31, 2023
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 for 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 and duration, for the three months ended March 31, 2023 and 2022 (in thousands):
|  | Three Months Ended March 31, 2023 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 172 |  |  | $ | 12,189 |  |  | $ | 1,347 |  |  | $ | (8 | ) |  | $ | 13,700 |
T&M and cost-reimbursable |  |  | 20,542 |  |  |  | 27,473 |  |  |  | — |  |  |  | — |  |  |  | 48,015 |
Other |  |  | 873 |  |  |  | — |  |  |  | — |  |  |  | (420 | ) |  |  | 453 |
Total |  | $ | 21,587 |  |  | $ | 39,662 |  |  | $ | 1,347 |  |  | $ | (428 | ) |  | $ | 62,168 |
Long-term |  | $ | 172 |  |  | $ | 38,708 |  |  | $ | 1,347 |  |  | $ | (8 | ) |  | $ | 40,219 |
Short-term |  |  | 21,415 |  |  |  | 954 |  |  |  | — |  |  |  | (420 | ) |  |  | 21,949 |
Total |  | $ | 21,587 |  |  | $ | 39,662 |  |  | $ | 1,347 |  |  | $ | (428 | ) |  | $ | 62,168 |
|  | Three Months Ended March 31, 2022 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 1,609 |  |  | $ | 5,044 |  |  | $ | 2,497 |  |  | $ | (1 | ) |  | $ | 9,149 |
T&M and cost-reimbursable |  |  | 18,463 |  |  |  | 573 |  |  |  | — |  |  |  | — |  |  |  | 19,036 |
Other |  |  | 592 |  |  |  | — |  |  |  | — |  |  |  | (91 | ) |  |  | 501 |
Total |  | $ | 20,664 |  |  | $ | 5,617 |  |  | $ | 2,497 |  |  | $ | (92 | ) |  | $ | 28,686 |
Long-term |  | $ | 1,609 |  |  | $ | 5,044 |  |  | $ | 2,497 |  |  | $ | (1 | ) |  | $ | 9,149 |
Short-term |  |  | 19,055 |  |  |  | 573 |  |  |  | — |  |  |  | (91 | ) |  |  | 19,537 |
Total |  | $ | 20,664 |  |  | $ | 5,617 |  |  | $ | 2,497 |  |  | $ | (92 | ) |  | $ | 28,686 |
Future Performance Obligations The following table summarizes our remaining performance obligations, disaggregated by operating segment and contract type, at March 31, 2023 (in thousands):
|  | March 31, 2023 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Total |
Fixed-price and unit-rate |  | $ | 1,207 |  |  | $ | 10,948 |  |  | $ | 1,803 |  |  | $ | 13,958 |
T&M and cost-reimbursable(1) |  |  | — |  |  |  | 76,383 |  |  |  | — |  |  |  | 76,383 |
Total(2) |  | $ | 1,207 |  |  | $ | 87,331 |  |  | $ | 1,803 |  |  | $ | 90,341 |
(1) In February 2023, we received direction from our customer to suspend all activities on our offshore jackets project for our Fabrication Division. No duration of the suspension or timing of potential recommencement of the project has been provided. See “Other Operating and Project Matters” below for further discussion of the impacts of the suspension. (2) We expect to recognize revenue of $14.4 million for the remainder of 2023 associated with our performance obligations at March 31, 2023 based on our current estimates. Such estimates exclude potential revenue of $75.9 million associated with our performance obligations for our offshore jackets project given the uncertainty with respect to when such amounts will be recognized, if at all. Certain factors and circumstances, including the suspension, could result in changes in the timing of recognition of our performance obligations as revenue and the amounts ultimately recognized. Contracts Assets and Liabilities The timing of customer invoicing and recognition of revenue using the POC method may occur at different times. Customer invoicing is 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 billings when services are provided. Revenue recognized in excess of amounts billed is reflected as contract assets on our Balance Sheet, or to the extent we have an unconditional right to the consideration, is reflected as contract receivables 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, 2023 and December 31, 2022, is as follows (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Contract assets(1), (2) |  | $ | 5,538 |  |  | $ | 4,839 |
Contract liabilities(3), (4), (5) |  |  | (4,388 | ) |  |  | (8,196 | )
Contracts in progress, net |  | $ | 1,150 |  |  | $ | (3,357 | )
(1) The increase in contract assets compared to December 31, 2022, was primarily due to increased unbilled positions on various projects for our Fabrication Division, offset partially by, decreased unbilled positions for our forty-vehicle ferry projects for our Shipyard Division. (2) Contract assets at March 31, 2023 and December 31, 2022, excluded $3.6 million and $3.6 million, respectively, associated with revenue recognized in excess of amounts billed for which we have an unconditional right to the consideration. Such amounts are reflected within contract receivables. (3) The decrease in contract liabilities compared to December 31, 2022, was primarily due to a decrease in advance billings on our offshore jackets project for our Fabrication Division and accrued contract losses on our forty-vehicle ferry projects for our Shipyard Division. (4) Revenue recognized during the three months ended March 31, 2023 and 2022, related to amounts included in our contract liabilities balance at December 31, 2022 and 2021 was $6.0 million and $2.1 million, respectively. (5) Contract liabilities at March 31, 2023 and December 31, 2022, includes accrued contract losses of $1.0 million and $1.6 million, respectively. See “Changes in Project Estimates” below for further discussion of our accrued contract losses. Allowance for Doubtful Accounts and Credit Losses Our provision for bad debts and credit losses is included in other (income) expense, net on our Statement of Operations, and for the three months ended March 31, 2023 and 2022, was not significant. Our allowance for doubtful accounts and credit losses at March 31, 2023 was $0.6 million, and it was not significant at December 31, 2022. W e recorded a $0.6 million increase to beginning accumulated deficit as of January 1, 2023, in connection with our adoption of ASU 2016-13. We had no significant write-offs or recoveries of previously recorded bad debts during the three months ended March 31, 2023 or 2022. See “New Accounting Standards” in Note 1 for further discussion of our adoption of ASU 2016-13. Variable Consideration For the three months ended March 31, 2023 and 2022, we had no material amounts in revenue related to unapproved change orders, claims or incentives. However, at March 31, 2023 and December 31, 2022, certain active projects within our Shipyard Division reflected a reduction to our estimated contract price for liquidated damages of $1.5 million and $1.4 million, respectively. Changes in Project Estimates We determine the impact of changes in estimated margins on projects for a given period by calculating the amount of revenue recognized in the period that would have been recognized in a prior period had such estimated margins been forecasted in the prior period. The total impact of changes in estimated margins for a project as disclosed on a quarterly basis may be different from the applicable year-to-date impact due to the application of the POC method and the changing progress of the project at each period end. Such impacts may also be different when a project is commenced and completed within the applicable year-to-date period but spans multiple quarters. For the three months ended March 31, 2023 and 2022, individual projects with significant changes in estimated margins did not have a material net impact on our operating results. The status of our projects in backlog at March 31, 2023, which have previously experienced changes in estimates, is as follows: Shipyard Division • Seventy-Vehicle Ferry Project – As discussed in our 2022 Financial Statements, the U.S. Coast Guard determined that the wood consoles (contractually specified by the customer) for our seventy-vehicle ferry project must be replaced or modified with metal consoles, resulting in previous forecast cost increases and liquidated damages and an extension of schedule. During the first quarter 2023, we commenced with the necessary modifications to the consoles. At March 31, 2023, the project was approximately 98% complete and is forecast to be completed in the second quarter 2023. The project was in a loss position at March 31, 2023 and our reserve for estimated losses was $0.1 million. If future subcontractor availability or costs differ from our current estimates or we are unable to achieve our progress estimates, our schedule is further extended or we incur additional schedule liquidated damages, we experience challenges during sea trials, commissioning or delivery of the vessel, or we incur additional costs or delays associated with the console modifications, the project would experience further delays and losses. • Forty-Vehicle Ferry Projects – During the first quarter 2023, we received conditional customer acceptance of one of our two forty-vehicle ferries that were under construction; however, final acceptance has been delayed as we work with the customer to address an equipment issue associated with vessel design deficiencies (discussed further below). As discussed in our 2022 Financial Statements, we have experienced rework, construction and commissioning challenges on the two ferries, resulting in previous forecast cost increases and liquidated damages and the need to fabricate a new hull for the vessel that is still under construction. Accordingly, during 2021 we submitted claims to our customer, and subsequently filed a lawsuit, to extend our project schedules and recover the cost impacts of the design deficiencies. The customer denied all liability. Further, during the fourth quarter 2022 and early 2023, we received correspondence from our customer indicating that the new hull for the remaining ferry under construction is exhibiting deformation issues that are potentially beyond the customer’s desired tolerance levels. Our subsequent evaluation does not support the customer’s conclusions and we are continuing construction of the vessel as designed. At March 31, 2023, the remaining project under construction was approximately 92% complete and is forecast to be completed in the second quarter 2023. The project was in a loss position at March 31, 2023 and our reserve for estimated losses wa s $0.8 million. Our forecast costs and scheduled completion date for the remaining vessel are based on the current vessel design and reflect our best estimates; however, such estimates may be impacted by any future challenges with the vessel design deficiencies, including the final resolution of the aforementioned design and deformation issues in dispute. If future craft labor productivity or subcontractor availability or costs differ from our current estimates or we are unable to achieve our progress estimates, our schedule is further extended or we incur additional schedule liquidated damages, we experience challenges during sea trials, commissioning or delivery of the remaining vessel, or other challenges associated with the design deficiencies, including unanticipated warranty costs for either vessel, and are unable to recover associated costs from our customer, or the customer rejects delivery and/or final acceptance of either vessel due to the design dispute, the projects would experience further delays and losses. Our forecasts at March 31, 2023 do not reflect potential future benefits, if any, from the favorable resolution of the aforementioned lawsuit and we can provide no assurance that we will be successful recovering previously incurred costs. Other Operating and Project Matters Hurricane Ida – On August 29, 2021, Hurricane Ida made landfall near Houma, Louisiana as a high-end Category 4 hurricane, with high winds and heavy rains causing damage to buildings and equipment at our Houma Facilities and resulting in significant debris throughout the facility. Our insurance coverages in effect at the time of the storm generally specify coverage amounts for each of our buildings (including contents) and major equipment. During the three months ended March 31, 2023, we received insurance payments of $0.7 million from our insurance carriers associated with interruptions to our operations and damage to buildings and equipment. In addition, we have received payments from our insurance carriers during other periods subsequent to the storm associated with interruptions to our operations and damage to buildings and equipment. Such payments are nonrefundable, and with respect to our buildings, represent the insurance carriers’ estimate of the damage to each building based on the estimated depreciated value of such buildings plus repair costs incurred by us in excess of such estimates for certain buildings. To the extent we incur further repair costs for a building in excess of the amounts received, we may receive additional insurance proceeds up to the limits of our insurance coverage for such building. The classification of insurance proceeds within our Statement of Cash Flows is based on our use or intended use of the proceeds. Proceeds used or intended to be used for repairs that are not deemed to be capital in nature, and proceeds associated with interruptions to our operations, are reflected within operating activities. Proceeds used or intended to be used for repairs that are deemed capital in nature, or proceeds in excess of anticipated repair costs, are reflected within investing activities. The timing of payments from our insurance carriers have, and may continue to, differ from when we incur the applicable repair and cleanup costs, and accordingly, we have accounted for such differences in timing as follows: • To the extent we incurred repair costs in excess of insurance proceeds received to date, we recorded an insurance receivable when we believe such amounts are probable of recovery under our insurance policies. • To the extent we determined that damage to an asset resulted in a complete loss, we recorded an insurance receivable up to the impairments recognized when we believe such amounts are probable of recovery under our insurance policies. • To the extent proceeds received exceeded repair costs incurred to date, we recorded an insurance gain as we do not have an obligation to perform further repair activities. Charges will be recorded in future periods to the extent such proceeds received are used for future repair activities that are not deemed to be capital in nature. • Insurance deductibles, clean-up costs and uninsured losses have been expensed. Based on the above, during the three months ended March 31, 2023 and 2022, we recorded gains of $0.2 million (including $0.2 million related to interruptions to our operations) and charges of $0.3 million, respectively, related to the net impact of insurance recoveries and costs associated with damage previously caused by Hurricane Ida. The gains and charges are included in other (income) expense, net on our Statement of Operations and are reflected within our Fabrication Division. I n addition, at March 31, 2023, we had total insurance receivables on our Balance Sheet of $1.3 million. We are continuing to assess our restoration plans and repair efforts are ongoing. We expect to incur future repair costs of approximately $0.5 million to $1.5 million associated with previously received insurance payments for certain buildings and equipment. Further, we expect to incur future repair costs in excess of previously received insurance payments for certain buildings and equipment; however, we believe that recovery of insurance proceeds for such costs is probable. In addition to damage to our Houma Facilities, the storm resulted in damage to one of our forty-vehicle ferry projects, the multi-purpose supply vessels (“MPSVs”) and associated equipment that are in our possession and subject to our MPSV Litigation, and certain bulkheads where the vessels were moored. We are continuing to assess the extent of the storm damage and are evaluating the extent to which any damage was the result of third-party vessels that broke free from their mooring during the storm and struck the ferry, MPSVs and bulkheads. During both the three months ended March 31, 2023 and 2022, we recorded charges of $0.1 million related to the impact of damage previously caused by Hurricane Ida. See Note 4 for further discussion of our MPSV Litigation. Offshore Jackets Project – As discussed above, in February 2023, we received direction from our customer to suspend all activities on our offshore jackets project for our Fabrication Division. At March 31, 2023, we had $15.5 million of accounts receivable on our Balance Sheet related to the project, primarily associated with obligations incurred by us for procurement activities. Subsequent to March 31, 2023, we received payments of $3.1 million related to such accounts receivable and we have received a payment guarantee bond as security for a substantial portion of the remaining accounts receivable amounts. Although such amounts are not in dispute, we have received indications from the customer that we may not receive material additional payments until the third quarter 2023.

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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 https://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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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