UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 29, 2022,
Great Lakes Dredge & Dock Corporation and Subsidiaries
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period ended March 31, 2022
INDEX
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3 |
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Item 1 |
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3 |
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Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021 |
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Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2022 and 2021 |
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5 |
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Condensed Consolidated Statements of Equity for the Three Months ended March 31, 2022 and 2021 |
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6 |
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 |
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8 |
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Item 2 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 |
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22 |
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Item 4 |
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22 |
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23 |
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Item 1 |
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23 |
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Item 1A |
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23 |
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Item 2 |
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Item 3 |
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Item 4 |
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Item 5 |
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23 |
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Item 6 |
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24 |
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25 |
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2
PART I — Financial Information
Item 1. |
Financial Statements. |
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except per share amounts)
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March 31, |
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December 31, |
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2022 |
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2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable—net |
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Contract revenues in excess of billings |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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PROPERTY AND EQUIPMENT—Net |
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OPERATING LEASE ASSETS |
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GOODWILL |
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INVENTORIES—Noncurrent |
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OTHER |
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TOTAL |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Operating lease liabilities |
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Billings in excess of contract revenues |
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Total current liabilities |
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LONG-TERM DEBT |
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OPERATING LEASE LIABILITIES—Noncurrent |
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DEFERRED INCOME TAXES |
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OTHER |
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Total liabilities |
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COMMITMENTS AND CONTINGENCIES (Note 8) |
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EQUITY: |
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Common stock—$ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total equity |
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TOTAL |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
3
Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share amounts)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Contract revenues |
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$ |
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$ |
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Costs of contract revenues |
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Gross profit |
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General and administrative expenses |
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(Gain) loss on sale of assets—net |
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( |
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Operating income |
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Interest expense—net |
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( |
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Other income (expense) |
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( |
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Income before income taxes |
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Income tax provision |
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( |
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Net income |
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$ |
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$ |
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Basic earnings per share |
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$ |
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$ |
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Basic weighted average shares |
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Diluted earnings per share |
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$ |
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$ |
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Diluted weighted average shares |
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See notes to unaudited condensed consolidated financial statements.
4
Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Net change in cash flow derivative hedges—net of tax (1) |
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Comprehensive income |
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$ |
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$ |
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(1) |
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See notes to unaudited condensed consolidated financial statements.
5
Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Equity
(Unaudited)
(in thousands)
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Accumulated |
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Shares of |
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Additional |
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Other |
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Common |
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Common |
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Paid-In |
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Retained |
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Comprehensive |
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Stock |
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Stock |
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Capital |
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Earnings |
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Income |
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Total |
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BALANCE—January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Share-based compensation |
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— |
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— |
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— |
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Vesting of restricted stock units and impact of shares withheld for taxes |
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— |
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( |
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— |
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— |
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( |
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Exercise of options and purchases from employee stock plans |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss—net of tax |
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— |
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— |
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— |
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— |
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BALANCE—March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Accumulated |
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Shares of |
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Additional |
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Other |
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Common |
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Common |
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Paid-In |
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Retained |
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Comprehensive |
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Stock |
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Stock |
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Capital |
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Earnings |
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Income |
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Total |
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BALANCE—January 1, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Share-based compensation |
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— |
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— |
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— |
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Vesting of restricted stock units and impact of shares withheld for taxes |
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— |
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( |
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— |
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— |
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Exercise of options and purchases from employee stock plans |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive income—net of tax |
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— |
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— |
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— |
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— |
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BALANCE—March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
6
Great Lakes Dredge & Dock Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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OPERATING ACTIVITIES: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash flows provided by operating activities: |
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Depreciation and amortization |
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Deferred income taxes |
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(Gain) loss on sale of assets |
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( |
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Amortization of deferred financing fees |
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Share-based compensation expense |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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Contract revenues in excess of billings |
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( |
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Inventories |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable and accrued expenses |
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( |
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Billings in excess of contract revenues |
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( |
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Other noncurrent assets and liabilities |
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Cash (used in) provided by operating activities |
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( |
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INVESTING ACTIVITIES: |
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Purchases of property and equipment |
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( |
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( |
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Proceeds from dispositions of property and equipment |
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— |
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Cash used in investing activities |
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( |
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( |
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FINANCING ACTIVITIES: |
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Taxes paid on settlement of vested share awards |
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( |
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( |
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Exercise of options and purchases from employee stock plans |
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Cash used in financing activities |
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( |
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( |
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Net (decrease) increase in cash, cash equivalents and restricted cash |
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( |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash included in other long-term assets |
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— |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental Cash Flow Information |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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Non-cash Investing and Financing Activities |
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Property and equipment purchased but not yet paid |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
7
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(dollar amounts in thousands, except per share amounts or as otherwise noted)
1. |
Basis of presentation |
The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Great Lakes Dredge & Dock Corporation and Subsidiaries (the “Company” or “Great Lakes”) and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of March 31, 2022 and December 31, 2021, and its results of operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021 have been included.
The components of costs of contract revenues include labor, equipment (including depreciation, maintenance, insurance and long-term rentals), subcontracts, fuel, supplies, short-term rentals and project overhead. Hourly labor is generally hired on a project-by-project basis. Costs of contract revenues vary significantly depending on the type and location of work performed and assets utilized.
The Company has
The condensed consolidated results of operations and comprehensive income for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.
2. |
Earnings per share |
Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is computed similar to basic earnings per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.
The computations for basic and diluted earnings per share are as follows:
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Three Months Ended |
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` |
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March 31, |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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Weighted-average common shares outstanding — basic |
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Effect of stock options and restricted stock units |
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Weighted-average common shares outstanding — diluted |
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Earnings per share — basic |
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$ |
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$ |
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Earnings per share — diluted |
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$ |
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$ |
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8
3. |
Accrued expenses |
Accrued expenses at March 31, 2022 and December 31, 2021 were as follows:
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March 31, |
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December 31, |
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2022 |
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2021 |
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Insurance |
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$ |
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$ |
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Payroll and employee benefits |
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Interest |
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Other |
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Income and other taxes |
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Contract reserves |
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Total accrued expenses |
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$ |
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$ |
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4. |
Long-term debt |
Credit agreement
As of March 31, 2022 and December 31, 2021, the Company had
Senior Notes and subsidiary guarantors
In May 2021, the Company sold $
The Company’s obligations under these 2029 Notes are guaranteed by each of the Company’s existing and future
5. |
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.
9
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. The Company does not hold or issue derivatives for speculative or trading purposes.
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Fair Value Measurements at Reporting Date Using |
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Description |
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At March 31, 2022 |
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Quoted Prices in Active Markets for Identical Assets (Level 1) |
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Significant Other Observable Inputs (Level 2) |
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Significant Unobservable Inputs (Level 3) |
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Fuel hedge contracts |
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$ |
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$ |
- |
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$ |
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$ |
- |
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Fair Value Measurements at Reporting Date Using |
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Description |
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At December 31, 2021 |
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Quoted Prices in Active Markets for Identical Assets (Level 1) |
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Significant Other Observable Inputs (Level 2) |
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Significant Unobservable Inputs (Level 3) |
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Fuel hedge contracts |
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$ |
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$ |
- |
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$ |
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$ |
- |
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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 typical goal is to hedge approximately
As of March 31, 2022, the Company was party to various swap arrangements to hedge a portion of the price of its diesel fuel purchase requirements for work in its backlog to be performed through March 2023. As of March 31, 2022, there were
At March 31, 2022 and December 31, 2021, the fair value asset of the fuel hedge contracts were estimated to be $
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 fair value of the fuel hedge contracts outstanding as of March 31, 2022 and December 31, 2021 is as follows:
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Fair Value at |
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March 31, |
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December 31, |
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Balance Sheet Location |
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2022 |
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2021 |
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Asset derivatives: |
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Derivatives designated as hedging instruments |
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Fuel hedge contracts |
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Prepaid expenses and other current assets |
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$ |
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$ |
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10
Accumulated other comprehensive income (loss)
Changes in the components of the accumulated balances of other comprehensive income (loss) are as follows:
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Derivatives: |
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Reclassification of derivative gains to earnings—net of tax |
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( |
) |
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( |
) |
Change in fair value of derivatives—net of tax |
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Net change in cash flow derivative hedges—net of tax |
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$ |
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$ |
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Adjustments reclassified from accumulated balances of other comprehensive income (loss) to earnings are as follows:
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Three Months Ended |
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March 31, |
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Statement of Operations Location |
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2022 |
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2021 |
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Derivatives: |
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Fuel hedge contracts |
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Costs of contract revenues |
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$ |
( |
) |
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$ |
( |
) |
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Income tax provision |
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( |
) |
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( |
) |
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$ |
( |
) |
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$ |
( |
) |
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 value of our revolving credit agreement approximates fair value. In May 2021, the Company sold $