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REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS | 9 Months Ended
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Sep. 30, 2024
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 and duration, for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|  | Three Months Ended September 30, 2024 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 74 |  |  | $ | 10,235 |  |  | $ | 490 |  |  | $ | (3 | ) |  | $ | 10,796 |
T&M and cost-reimbursable |  |  | 19,403 |  |  |  | 6,875 |  |  |  | — |  |  |  | — |  |  |  | 26,278 |
Other |  |  | 768 |  |  |  | — |  |  |  | — |  |  |  | (202 | ) |  |  | 566 |
Total |  | $ | 20,245 |  |  | $ | 17,110 |  |  | $ | 490 |  |  | $ | (205 | ) |  | $ | 37,640 |
Long-term |  | $ | 74 |  |  | $ | 15,786 |  |  | $ | 490 |  |  | $ | (3 | ) |  | $ | 16,347 |
Short-term |  |  | 20,171 |  |  |  | 1,324 |  |  |  | — |  |  |  | (202 | ) |  |  | 21,293 |
Total |  | $ | 20,245 |  |  | $ | 17,110 |  |  | $ | 490 |  |  | $ | (205 | ) |  | $ | 37,640 |
|  | Three Months Ended September 30, 2023 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 557 |  |  | $ | 12,185 |  |  | $ | (32,702 | ) |  | $ | (20 | ) |  | $ | (19,980 | )
T&M and cost-reimbursable |  |  | 21,086 |  |  |  | 2,794 |  |  |  | — |  |  |  | — |  |  |  | 23,880 |
Other |  |  | 1,333 |  |  |  | — |  |  |  | — |  |  |  | (210 | ) |  |  | 1,123 |
Total |  | $ | 22,976 |  |  | $ | 14,979 |  |  | $ | (32,702 | ) |  | $ | (230 | ) |  | $ | 5,023 |
Long-term |  | $ | 557 |  |  | $ | 13,043 |  |  | $ | (32,702 | ) |  | $ | (20 | ) |  | $ | (19,122 | )
Short-term |  |  | 22,419 |  |  |  | 1,936 |  |  |  | — |  |  |  | (210 | ) |  |  | 24,145 |
Total |  | $ | 22,976 |  |  | $ | 14,979 |  |  | $ | (32,702 | ) |  | $ | (230 | ) |  | $ | 5,023 |
|  | Nine Months Ended September 30, 2024 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 837 |  |  | $ | 42,792 |  |  | $ | 935 |  |  | $ | (6 | ) |  | $ | 44,558 |
T&M and cost-reimbursable |  |  | 65,719 |  |  |  | 10,183 |  |  |  | — |  |  |  | — |  |  |  | 75,902 |
Other |  |  | 1,990 |  |  |  | — |  |  |  | — |  |  |  | (667 | ) |  |  | 1,323 |
Total |  | $ | 68,546 |  |  | $ | 52,975 |  |  | $ | 935 |  |  | $ | (673 | ) |  | $ | 121,783 |
Long-term |  | $ | 837 |  |  | $ | 49,400 |  |  | $ | 935 |  |  | $ | (6 | ) |  | $ | 51,166 |
Short-term |  |  | 67,709 |  |  |  | 3,575 |  |  |  | — |  |  |  | (667 | ) |  |  | 70,617 |
Total |  | $ | 68,546 |  |  | $ | 52,975 |  |  | $ | 935 |  |  | $ | (673 | ) |  | $ | 121,783 |
|  | Nine Months Ended September 30, 2023 |
|  | Services |  |  | Fabrication |  |  | Shipyard |  |  | Eliminations |  |  | Total |
Fixed-price and unit-rate |  | $ | 1,356 |  |  | $ | 37,773 |  |  | $ | (30,973 | ) |  | $ | (30 | ) |  | $ | 8,126 |
T&M and cost-reimbursable |  |  | 64,456 |  |  |  | 31,609 |  |  |  | — |  |  |  | — |  |  |  | 96,065 |
Other |  |  | 3,221 |  |  |  | — |  |  |  | — |  |  |  | (895 | ) |  |  | 2,326 |
Total |  | $ | 69,033 |  |  | $ | 69,382 |  |  | $ | (30,973 | ) |  | $ | (925 | ) |  | $ | 106,517 |
Long-term |  | $ | 1,356 |  |  | $ | 65,259 |  |  | $ | (30,973 | ) |  | $ | (30 | ) |  | $ | 35,612 |
Short-term |  |  | 67,677 |  |  |  | 4,123 |  |  |  | — |  |  |  | (895 | ) |  |  | 70,905 |
Total |  | $ | 69,033 |  |  | $ | 69,382 |  |  | $ | (30,973 | ) |  | $ | (925 | ) |  | $ | 106,517 |
Future Performance Obligations The following table summarizes our remaining performance obligations, disaggregated by operating segment and contract type, at September 30, 2024 (in thousands):
|  | September 30, 2024 |
|  | Services |  |  | Fabrication |  |  | Shipyard(1) |  |  | Total |
Fixed-price and unit-rate |  | $ | 22 |  |  | $ | 6,233 |  |  | $ | 126 |  |  | $ | 6,381 |
T&M and cost-reimbursable |  |  | — |  |  |  | 5,315 |  |  |  | — |  |  |  | 5,315 |
Total(2) |  | $ | 22 |  |  | $ | 11,548 |  |  | $ | 126 |  |  | $ | 11,696 |
(1) Future performance obligations for our Shipyard Division relate to potential repairs and rework during the warranty periods for our Ferry Projects. See “Changes in Project Estimates” below for further discussion of the warranty periods for our Ferry Projects. (2) We expect all of our performance obligations at September 30, 2024, to be recognized as revenue during 2024. Certain factors and circumstances 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 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 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 September 30, 2024 and December 31, 2023, is as follows (in thousands):
|  | September 30, |  |  | December 31, |
|  | 2024 |  |  | 2023 |
Contract assets(1), (2) |  | $ | 5,815 |  |  | $ | 2,739 |
Contract liabilities(3), (4), (5) |  |  | (1,479 | ) |  |  | (5,470 | )
Contracts in progress, net |  | $ | 4,336 |  |  | $ | (2,731 | )
(1) The increase in contract assets from December 31, 2023 to September 30, 2024, was primarily due to higher unbilled positions on various projects for our Fabrication Division. (2) Contract assets at September 30, 2024 and December 31, 2023, excluded $3.3 million and $6.0 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. The decrease from December 31, 2023 to September 30, 2024, was primarily due to lower unbilled positions on various projects for our Services Division. (3) The decrease in contract liabilities from December 31, 2023 to September 30, 2024, was primarily due to lower advance billings on various projects for our Fabrication Division. (4) Revenue recognized during the three months ended September 30, 2024 and 2023, from amounts included in our contract liabilities balance at June 30, 2024 and 2023, was $3.0 million and $1.1 million, respectively. Revenue recognized during the nine months ended September 30, 2024 and 2023, from amounts included in our contract liabilities balance at December 31, 2023 and 2022, was $4.8 million and $6.2 million, respectively. (5) Contract liabilities at September 30, 2024 and December 31, 2023, includes accrued contract losses of $0.2 million and $0.4 million, respectively, primarily related to our Ferry Projects for our Shipyard Division. 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 and nine months ended September 30, 2024, was not significant. For the three and nine months ended September 30, 2023, we recognized income of $0.2 million and $0.4 million, respectively, associated with revisions to our allowance for doubtful accounts and credit losses. Our allowance for doubtful accounts and credit losses at September 30, 2024 and December 31, 2023, was $0.2 million and $0.2 million, respectively. We had no significant write-offs or recoveries of previously recorded bad debts during the three or nine months ended September 30, 2024 and 2023. See “New Accounting Standards” in Note 1 for discussion of our adoption of ASU 2016-13. Variable Consideration For the three and nine months ended September 30, 2024 and 2023, we had no material amounts in revenue related to unapproved change orders, claims or incentives, other than the amounts related to the resolution of our previous MPSV Litigation discussed further below. However, at December 31, 2023, certain projects for our Shipyard Division reflected a reduction to our estimated contract price for liquidated damages of $1.4 million. 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. Changes in Estimates for 2024 – For the three and nine months ended September 30, 2024, individual projects with significant changes in estimated margins did not have a material net impact on our operating results. The status of projects in backlog at September 30, 2024, which have previously experienced material changes in estimates, is as follows: • Seventy-Vehicle Ferry Project – As discussed in our 2023 Financial Statements, as of December 31, 2023, we had completed, delivered and received final customer acceptance of our seventy-vehicle ferry. The warranty period for the vessel ended in the third quarter 2024. • Forty-Vehicle Ferry Projects – As discussed in our 2023 Financial Statements, as of December 31, 2023, we had completed, delivered and received final customer acceptance of the first of two forty-vehicle ferries, and had substantially completed and delivered our second forty-vehicle ferry. During the first quarter 2024, we received final customer acceptance of the second ferry. The warranty period for the first vessel ended in the second quarter 2024 and the warranty period for the second vessel ends in the first quarter 2025. The second project would experience further losses if we incur unanticipated warranty costs on the second vessel. As discussed in our 2023 Financial Statements, as a result of design deficiencies, we experienced rework, construction and commissioning challenges on the two ferries, resulting in previous cost increases and liquidated damages, and the previous need to fabricate a new hull for one of the vessels. Accordingly, during 2021, we submitted claims to our customer to recover the cost impacts of the design deficiencies. In accordance with contract requirements and North Carolina state law, in July 2024, we submitted our finalized claim to the customer for these cost and schedule impacts. In October 2024, the customer denied our claim, which cleared the way for us to litigate our claim. Accordingly, we have filed a lawsuit in North Carolina state court to have the claim decided before a judge. Our forecasts at September 30, 2024 do not reflect potential future benefits, if any, from the favorable resolution of the claim and we can provide no assurance that we will be successful in recovering previously incurred costs. Changes in Estimates for 2023 – As a result of the resolution of our previous MPSV Litigation for our Shipyard Division, we recorded a charge of $32.5 million during each of the three and nine months ended September 30, 2023. See Note 4 for further discussion of the resolution of our MPSV Litigation. In addition, for each of the three and nine months ended September 30, 2023, significant changes in estimated margins on projects positively impacted operating results for our Fabrication Division by $0.7 million, and negatively impacted operating results for our Shipyard Division by $1.5 million and $2.3 million, respectively. The changes in estimates were associated with the following: Fabrication Division • Various Projects – For each of the three and nine months ended September 30, 2023, our operating results were positively impacted by $0.7 million on projects, resulting primarily from increases in contract price due to favorable resolution of customer change orders. Shipyard Division • Seventy-Vehicle Ferry Project – For the three and nine months ended September 30, 2023, our operating results were negatively impacted by $1.2 million and $1.8 million, respectively, from changes in estimates on our seventy-vehicle ferry project, associated primarily with increased materials and subcontracted services costs, duration related costs due to extensions of schedule and net reductions to contract price. The cost impacts were primarily due to delays in the receipt of certain equipment that required replacement and subcontractor delays. The contract price impacts were primarily due to a price reduction resulting from the required replacement of the vessel’s propeller blades (discussed further below), offset partially by price increases due to favorable resolution of customer change orders and the customer’s agreement to forego a portion of previously forecasted liquidated damages. In connection with the delivery and commissioning of the vessel in the second quarter 2023, corrosion on the propeller blades was identified and the customer determined that replacement of the propeller blades will be required. The customer agreed to directly procure the new propeller blades and take responsibility for future installation of the blades once received. Further, the customer agreed to bear a portion of the cost of the new propeller blades, with the remainder borne by us through the aforementioned contract price reduction. • Forty-Vehicle Ferry Projects – For the three and nine months ended September 30, 2023, our operating results were negatively impacted by $0.3 million and $0.5 million, respectively, from changes in estimates on one of our forty-vehicle ferry projects, associated primarily with increased subcontracted services and duration related costs due to extensions of schedule, including forecast liquidated damages. The impacts were primarily due to delays in the receipt of certain equipment that required replacement and subcontractor delays. Other Operating and Project Matters During 2021, our operations were impacted by Hurricane Ida, which made landfall near Houma, Louisiana as a high-end Category 4 hurricane, causing debris and damage to our buildings and equipment at our Houma Facilities. Fabrication Division Impacts – As of December 31, 2023, we had finalized all claims associated with our property and equipment insurance coverages, and at December 31, 2023, we had total insurance receivables on our Balance Sheet of $2.0 million. During the nine months ended September 30, 2024 and 2023, we received insurance payments of $2.0 million and $2.2 million, respectively, from our insurance carriers associated with interruptions to our operations and damage to buildings and equipment. 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 repair costs, are reflected within investing activities. During the three and nine months ended September 30, 2023, we recorded gains of $0.3 million (all related to our business interruption coverage) and $0.5 million (including $0.6 million related to our business interruption coverage), respectively, related to the net impact of insurance recoveries and costs associated with damage previously caused by Hurricane Ida. The gains are included in other (income) expense, net on our Statement of Operations and are reflected within our Fabrication Division. Shipyard Division Impacts – 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 (“MPSV(s)”) and associated equipment that were previously in our possession and subject to our previous MPSV Litigation, and certain bulkheads where the vessels were moored. During the three and nine months ended September 30, 2023, we recorded charges of $0.1 million and $0.4 million, respectively, related to costs associated with damage previously caused by Hurricane Ida. The charges are included in other (income) expense, net on our Statement of Operations and are reflected within our Shipyard Division. See Note 4 for further discussion of the resolution of our MPSV Litigation.

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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 -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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