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Williams Industrial Services Group Inc. – ‘10-Q’ for 9/30/22

On:  Monday, 11/14/22, at 4:52pm ET   ·   For:  9/30/22   ·   Accession #:  1558370-22-17821   ·   File #:  1-16501

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/14/22  Williams Industrial Svcs Gp Inc.  10-Q        9/30/22   67:7.9M                                   Toppan Merrill Bridge/FA

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML   1.83M 
 2: EX-10.3     Material Contract                                   HTML    116K 
 3: EX-31.1     Certification -- §302 - SOA'02                      HTML     23K 
 4: EX-31.2     Certification -- §302 - SOA'02                      HTML     23K 
 5: EX-32.1     Certification -- §906 - SOA'02                      HTML     21K 
 6: EX-32.2     Certification -- §906 - SOA'02                      HTML     21K 
12: R1          Document and Entity Information                     HTML     72K 
13: R2          Condensed Consolidated Balance Sheets               HTML    136K 
14: R3          Condensed Consolidated Balance Sheets               HTML     32K 
                (Parenthetical)                                                  
15: R4          Condensed Consolidated Statements of Operations     HTML    134K 
16: R5          Condensed Consolidated Statements of Comprehensive  HTML     38K 
                Income (Loss)                                                    
17: R6          Condensed Consolidated Statements of Stockholders'  HTML     87K 
                Equity                                                           
18: R7          Condensed Consolidated Statements of Cash Flows     HTML    114K 
19: R8          Business and Basis of Presentation                  HTML     35K 
20: R9          Liquidity                                           HTML     32K 
21: R10         Recent Accounting Pronouncements                    HTML     31K 
22: R11         Leases                                              HTML    101K 
23: R12         Changes in Business                                 HTML     67K 
24: R13         Revenue                                             HTML    110K 
25: R14         Earnings (Loss) Per Share                           HTML     86K 
26: R15         Income Taxes                                        HTML     40K 
27: R16         Debt                                                HTML    102K 
28: R17         Financial Instruments                               HTML     22K 
29: R18         Commitments and Contingencies                       HTML     27K 
30: R19         Stock-Based Compensation Plans                      HTML     30K 
31: R20         Other Supplemental Information                      HTML     78K 
32: R21         Subsequent Events                                   HTML     22K 
33: R22         Business and Basis of Presentation (Policies)       HTML     35K 
34: R23         Business and Basis of Presentation (Tables)         HTML     29K 
35: R24         Leases (Tables)                                     HTML    124K 
36: R25         Changes in Business (Tables)                        HTML     66K 
37: R26         Revenue (Tables)                                    HTML    105K 
38: R27         Earnings (Loss) Per Share (Tables)                  HTML     86K 
39: R28         Income Taxes (Tables)                               HTML     30K 
40: R29         Debt (Tables)                                       HTML     77K 
41: R30         Other Supplemental Information (Tables)             HTML     82K 
42: R31         Liquidity (Details)                                 HTML     41K 
43: R32         Leases (Details)                                    HTML     35K 
44: R33         Leases - Lease Cost (Details)                       HTML     28K 
45: R34         LEASES - Right-of use Assets and Lease Liabilities  HTML     36K 
                (Details)                                                        
46: R35         LEASES - Supplemental Information (Details)         HTML     33K 
47: R36         LEASES - Remaining Lease Payments (Details)         HTML     49K 
48: R37         CHANGES IN BUSINESS - Discontinued Operation and    HTML     84K 
                Disposition (Details)                                            
49: R38         REVENUE - Disaggregation of revenue (Details)       HTML     37K 
50: R39         REVENUE - Contract assets and the contract          HTML     36K 
                liabilities (Details)                                            
51: R40         REVENUE - Remaining Performance Obligations         HTML     33K 
                (Details)                                                        
52: R41         Earnings (Loss) Per Share (Details)                 HTML     59K 
53: R42         Earnings (LOSS) PER SHARE - Antidilutive (Details)  HTML     24K 
54: R43         Income Taxes (Details)                              HTML     69K 
55: R44         Debt (Details)                                      HTML    192K 
56: R45         Commitments and Contingencies (Details)             HTML     26K 
57: R46         Stock-Based Compensation Plans (Details)            HTML    118K 
58: R47         OTHER SUPPLEMENTAL INFORMATION - Other current      HTML     32K 
                assets (Details)                                                 
59: R48         OTHER SUPPLEMENTAL INFORMATION - Other current      HTML     36K 
                liabilities (Details)                                            
60: R49         OTHER SUPPLEMENTAL INFORMATION - Other long-term    HTML     30K 
                assets (Details)                                                 
61: R50         OTHER SUPPLEMENTAL INFORMATION - Other long-term    HTML     26K 
                liabilities (Details)                                            
62: R51         Subsequent Events (Details)                         HTML     31K 
65: XML         IDEA XML File -- Filing Summary                      XML    116K 
63: XML         XBRL Instance -- wlms-20220930x10q_htm               XML   1.96M 
64: EXCEL       IDEA Workbook of Financial Reports                  XLSX    126K 
 8: EX-101.CAL  XBRL Calculations -- wlms-20220930_cal               XML    206K 
 9: EX-101.DEF  XBRL Definitions -- wlms-20220930_def                XML    588K 
10: EX-101.LAB  XBRL Labels -- wlms-20220930_lab                     XML   1.20M 
11: EX-101.PRE  XBRL Presentations -- wlms-20220930_pre              XML    818K 
 7: EX-101.SCH  XBRL Schema -- wlms-20220930                         XSD    166K 
66: JSON        XBRL Instance as JSON Data -- MetaLinks              349±   530K 
67: ZIP         XBRL Zipped Folder -- 0001558370-22-017821-xbrl      Zip    343K 


‘10-Q’   —   Quarterly Report

Document Table of Contents

Page (sequential)   (alphabetic) Top
 
11st Page  –  Filing Submission
"Table of Contents
"Part I-FINANCIAL INFORMATION
"Item 1. Financial Statements
"Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)
"Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
"Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
"Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
"Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)
"Notes to Condensed Consolidated Financial Statements (unaudited)
"Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
"Item 3. Quantitative and Qualitative Disclosures about Market Risk
"Item 4. Controls and Procedures
"Part II-OTHER INFORMATION
"Item 1. Legal Proceedings
"Item 1A. Risk Factors
"Item 6. Exhibits
"Signatures

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM  i 10-Q

 i 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  i September 30, 2022

or

 i 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File No.  i 001-16501

Graphic

 i Williams Industrial Services Group Inc.

(Exact name of registrant as specified in its charter)

 i Delaware

 i 73-1541378

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

 i 200 Ashford Center North,  i Suite 425

 i Atlanta,  i GA  i 30338

(Address of principal executive offices) (Zip code)

( i 770)  i 879-4400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

 i Common Stock, par value $0.01 per share

 i WLMS

 i NYSE American

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.     i Yes      No  

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).     i Yes   No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

Large accelerated filer

 i Accelerated filer

Non-accelerated filer

Smaller reporting company

 i 

Emerging growth company

 i 

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   i     No  

As of November 7, 2022, there were  i 26,422,761 shares of common stock of Williams Industrial Services Group Inc. outstanding.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

Table of Contents

Part I—FINANCIAL INFORMATION

2

Item 1. Financial Statements

2

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)

2

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

3

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

4

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)

5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)

6

Notes to Condensed Consolidated Financial Statements (unaudited)

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3. Quantitative and Qualitative Disclosures about Market Risk

34

Item 4. Controls and Procedures

35

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

36

Item 1A. Risk Factors

36

Item 6. Exhibits

37

SIGNATURES

38

1

Table of Contents

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements.

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share data)

September 30, 2022

  

December 31, 2021

ASSETS

  

  

Current assets:

Cash and cash equivalents

$

 i 1,013

$

 i 2,482

Restricted cash

 

 i 468

 

 i 468

Accounts receivable, net of allowance of $ i 318 and $ i 427, respectively

 

 i 37,339

 

 i 35,204

Contract assets

 

 i 10,076

 

 i 12,683

Other current assets

 

 i 10,675

 

 i 11,049

Total current assets

 

 i 59,571

 

 i 61,886

Property, plant, and equipment, net

 

 i 1,016

 

 i 653

Goodwill

 

 i 35,400

 

 i 35,400

Intangible assets

 

 i 12,500

 

 i 12,500

Other long-term assets

 

 i 7,732

 

 i 5,712

Total assets

$

 i 116,219

$

 i 116,151

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

 i 11,732

$

 i 12,168

Accrued compensation and benefits

 

 i 14,312

 

 i 12,388

Contract liabilities

 

 i 3,440

 

 i 3,412

Short-term borrowings

 i 14,525

 i 676

Current portion of long-term debt

 i 1,050

 i 1,050

Other current liabilities

 

 i 4,630

 

 i 11,017

Current liabilities of discontinued operations

 i 106

 i 316

Total current liabilities

 

 i 49,795

 

 i 41,027

Long-term debt, net (Note 9)

 

 i 21,809

 

 i 30,328

Deferred tax liabilities

 i 2,263

 i 2,442

Other long-term liabilities

 

 i 4,440

 

 i 1,647

Long-term liabilities of discontinued operations

 i 3,513

 i 4,250

Total liabilities

 

 i 81,820

 

 i 79,694

Commitments and contingencies (Note 11)

Stockholders’ equity:

Common stock, $ i  i 0.01 /  par value,  i  i 170,000,000 /  shares authorized and  i 26,865,064 and  i 26,408,789 shares issued, respectively, and  i 26,422,761 and  i 25,939,621 shares outstanding, respectively

 

 i 264

 

 i 261

Paid-in capital

 

 i 93,705

 

 i 92,227

Accumulated other comprehensive loss

 

( i 440)

 

( i 95)

Accumulated deficit

 

( i 59,124)

 

( i 55,930)

Treasury stock, at par ( i 442,303 and  i 469,168 common shares, respectively)

 

( i 6)

 

( i 6)

Total stockholders’ equity

 

 i 34,399

 

 i 36,457

Total liabilities and stockholders’ equity

$

 i 116,219

$

 i 116,151

See accompanying notes to condensed consolidated financial statements.

2

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share data)

  

2022

  

2021

2022

  

2021

Revenue

$

 i 56,685

$

 i 73,351

$

 i 182,303

$

 i 225,773

Cost of revenue

 i 55,936

 i 66,590

 i 173,564

 i 203,561

 Gross profit

 i 749

 i 6,761

 i 8,739

 i 22,212

Selling and marketing expenses

 i 322

 i 267

 i 1,054

 i 709

General and administrative expenses

 i 6,657

 i 4,248

 i 19,022

 i 16,931

Depreciation and amortization expense

 i 61

 i 50

 i 173

 i 137

Total operating expenses

 i 7,040

 i 4,565

 i 20,249

 i 17,777

Operating income (loss)

( i 6,291)

 i 2,196

( i 11,510)

 i 4,435

Interest expense, net

 i 1,485

 i 1,227

 i 3,965

 i 3,733

Other (income) expense, net

( i 11,114)

 i 181

( i 11,533)

( i 1,411)

Total other (income) expense, net

( i 9,629)

 i 1,408

( i 7,568)

 i 2,322

Income (loss) from continuing operations before income tax

 i 3,338

 i 788

( i 3,942)

 i 2,113

Income tax expense (benefit)

( i 272)

( i 6)

( i 214)

 i 256

Income (loss) from continuing operations

 i 3,610

 i 794

( i 3,728)

 i 1,857

Income (loss) from discontinued operations before income tax

( i 45)

( i 34)

( i 92)

 i 130

Income tax expense (benefit)

( i 3)

 i 22

( i 626)

 i 59

Income (loss) from discontinued operations

( i 42)

( i 56)

 i 534

 i 71

Net income (loss)

$

 i 3,568

$

 i 738

$

( i 3,194)

$

 i 1,928

Basic income (loss) per common share

Income (loss) from continuing operations

$

 i 0.14

$

 i 0.03

$

( i 0.14)

$

 i 0.07

Income (loss) from discontinued operations

( i 0.00)

 i 0.02

 i 0.00

Basic income (loss) per common share

$

 i 0.14

$

 i 0.03

$

( i 0.12)

$

 i 0.07

Diluted income (loss) per common share

Income (loss) from continuing operations

$

 i 0.14

$

 i 0.03

$

( i 0.14)

$

 i 0.07

Income (loss) from discontinued operations

( i 0.01)

( i 0.00)

 i 0.02

 i 0.00

Diluted income (loss) per common share

$

 i 0.13

$

 i 0.03

$

( i 0.12)

$

 i 0.07

See accompanying notes to condensed consolidated financial statements.

3

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

  

2021

2022

  

2021

Net income (loss)

$

 i 3,568

$

 i 738

$

( i 3,194)

$

 i 1,928

Foreign currency translation adjustment

 

( i 318)

 

( i 98)

 

( i 345)

 

( i 64)

Comprehensive income (loss)

$

 i 3,250

$

 i 640

$

( i 3,539)

$

 i 1,864

See accompanying notes to condensed consolidated financial statements.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

Accumulated

Common Shares

Other

$ i 0.01 Per Share

Paid-in

Comprehensive

Accumulated

Treasury Shares

(in thousands, except share data)

  

Shares

  

Amount

  

Capital

  

Income (Loss)

  

Deficit

  

Shares

  

Amount

  

Total

Balance, December 31, 2020

 i 25,926,333

$

 i 256

$

 i 90,292

$

 i 28

$

( i 58,673)

( i 589,891)

$

( i 8)

$

 i 31,895

Restricted stock awards granted

 i 164,388

Restricted stock units vested

 i 274,448

 i 4

 i 120,723

 i 2

 i 6

Tax withholding on restricted stock units

( i 545)

( i 545)

Stock-based compensation

 i 625

 i 625

Foreign currency translation

 i 4

 i 4

Net loss

( i 1,681)

( i 1,681)

Balance, March 31, 2021

 i 26,365,169

$

 i 260

$

 i 90,372

$

 i 32

$

( i 60,354)

( i 469,168)

$

( i 6)

$

 i 30,304

Restricted stock units vested

 i 19,501

Tax withholding on restricted stock units

 i 40

 i 40

Stock-based compensation

 i 424

 i 424

Foreign currency translation

 i 30

 i 30

Net income

 i 2,871

 i 2,871

Balance, June 30, 2021

 i 26,384,670

$

 i 260

$

 i 90,836

$

 i 62

$

( i 57,483)

( i 469,168)

$

( i 6)

$

 i 33,669

Stock-based compensation

 i 834

 i 834

Foreign currency translation

( i 98)

( i 98)

Net income

 i 738

 i 738

Balance, September 30, 2021

 i 26,384,670

$

 i 260

$

 i 91,670

$

( i 36)

$

( i 56,745)

( i 469,168)

$

( i 6)

$

 i 35,143

Accumulated

Common Shares

Other

$ i 0.01 Per Share

Paid-in

Comprehensive

Accumulated

Treasury Shares

(in thousands, except share data)

  

Shares

  

Amount

  

Capital

  

Income (Loss)

  

Deficit

  

Shares

  

Amount

  

Total

Balance, December 31, 2021

 i 26,408,789

$

 i 261

$

 i 92,227

$

( i 95)

$

( i 55,930)

( i 469,168)

$

( i 6)

$

 i 36,457

Restricted stock awards granted

 i 291,894

Stock-based compensation

( i 147)

( i 147)

Foreign currency translation

 i 142

 i 142

Net loss

( i 2,044)

( i 2,044)

Balance, March 31, 2022

 i 26,700,683

$

 i 261

$

 i 92,080

$

 i 47

$

( i 57,974)

( i 469,168)

$

( i 6)

$

 i 34,408

Restricted stock units vested

 i 169,255

 i 26,865

Tax withholding on restricted stock units

 i 2

( i 165)

( i 163)

Stock-based compensation

 i 1,293

 i 1,293

Foreign currency translation

( i 169)

( i 169)

Net loss

( i 4,718)

( i 4,718)

Balance, June 30, 2022

 i 26,869,938

$

 i 263

$

 i 93,208

$

( i 122)

$

( i 62,692)

( i 442,303)

$

( i 6)

$

 i 30,651

Restricted stock units forfeited

( i 4,874)

Tax withholding on restricted stock units

 i 1

 i 3

 i 4

Stock-based compensation

 i 494

 i 494

Foreign currency translation

( i 318)

( i 318)

Net income

 i 3,568

 i 3,568

Balance, September 30, 2022

 i 26,865,064

$

 i 264

$

 i 93,705

$

( i 440)

$

( i 59,124)

( i 442,303)

$

( i 6)

$

 i 34,399

See accompanying notes to condensed consolidated financial statements.

5

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended September 30,

(in thousands)

2022

  

2021

Operating activities:

Net income (loss)

$

( i 3,194)

$

 i 1,928

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Net income from discontinued operations

( i 534)

( i 71)

Deferred income tax benefit

( i 178)

( i 304)

Depreciation and amortization on plant, property, and equipment

 i 173

 i 137

Amortization of deferred financing costs

 i 636

 i 623

Amortization of debt discount

 i 150

 i 150

Bad debt expense

( i 26)

( i 123)

Stock-based compensation

 i 1,120

 i 2,579

Changes in operating assets and liabilities:

Accounts receivable

( i 2,551)

( i 11,896)

Contract assets

 i 2,547

( i 4,824)

Other current assets

 i 2

( i 5,113)

Other assets

( i 2,202)

( i 214)

Accounts payable

( i 331)

 i 2,121

Accrued and other liabilities

( i 692)

 i 6,628

Contract liabilities

 i 29

( i 39)

Net cash used in operating activities, continuing operations

( i 5,051)

( i 8,418)

Net cash used in operating activities, discontinued operations

( i 413)

( i 348)

Net cash used in operating activities

( i 5,464)

( i 8,766)

Investing activities:

Purchase of property, plant, and equipment

( i 536)

( i 537)

Net cash used in investing activities

( i 536)

( i 537)

Financing activities:

Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation

( i 159)

( i 501)

Debt issuance costs

( i 175)

Proceeds from short-term borrowings

 i 211,875

 i 208,421

Repayments of short-term borrowings

( i 198,026)

( i 204,101)

Repayments of long-term debt

( i 8,844)

( i 788)

Net cash provided by financing activities

 i 4,671

 i 3,031

Effect of exchange rate change on cash

( i 140)

 i 112

Net change in cash, cash equivalents and restricted cash

( i 1,469)

( i 6,160)

Cash, cash equivalents and restricted cash, beginning of period

 i 2,950

 i 9,184

Cash, cash equivalents and restricted cash, end of period

$

 i 1,481

$

 i 3,024

Supplemental Disclosures:

Cash paid for interest

$

 i 2,778

$

 i 2,781

Cash paid for income taxes, net of refunds

$

$

 i 1,841

See accompanying notes to condensed consolidated financial statements.

6

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 i 

NOTE 1—BUSINESS AND BASIS OF PRESENTATION

 i 

Business

Williams Industrial Services Group Inc. (together with its wholly owned subsidiaries, “Williams,” the “Company,” “we,” “us” or “our,” unless the context indicates otherwise) was initially formed in 1998 as GEEG Inc., a Delaware corporation, and in 2001 changed its name to “Global Power Equipment Group Inc.,” and, as part of a reorganization, became the successor to GEEG Holdings, L.L.C., a Delaware limited liability company. Effective June 29, 2018, the Company changed its name to Williams Industrial Services Group Inc. to better align its name with the Williams business, and the Company’s stock trades on the NYSE American LLC under the ticker symbol “WLMS.” Williams has been safely helping power plant owners and operators enhance asset value for more than 50 years. It provides a broad range of construction, maintenance, and support services to infrastructure customers in energy, power, and industrial end markets. The Company’s mission is to be the preferred provider of construction, maintenance, and specialty services through commitment to superior safety performance, focus on innovation, and dedication to delivering unsurpassed value to its customers.

Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended December 31, 2021, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 16, 2022 (the “2021 Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, including all normal recurring adjustments, necessary to present fairly the unaudited condensed consolidated balance sheets and statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the periods indicated. All significant intercompany transactions have been eliminated. The December 31, 2021 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed consolidated interim financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the 2021 Report. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for any interim period are not necessarily indicative of operations to be expected for the full year.

The Company reports on a fiscal quarter basis utilizing a “modified” 5-4-4 calendar (modified in that the fiscal year always begins on January 1 and ends on December 31). However, the Company has continued to label its quarterly information using a calendar convention. The effects of this practice are modest and only exist when comparing interim period results. The reporting periods and corresponding fiscal interim periods are as follows:

 i 

Reporting Interim Period

Fiscal Interim Period

  

2022

  

2021

Three Months Ended March 31

January 1, 2022 to April 3, 2022

January 1, 2021 to April 4, 2021

Three Months Ended June 30

April 4, 2022 to July 3, 2022

April 5, 2021 to July 4, 2021

Three Months Ended September 30

July 4, 2022 to October 2, 2022

July 5, 2021 to October 3, 2021

 / 
 / 

7

Table of Contents

 i 

NOTE 2—LIQUIDITY

As noted above, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and on a basis consistent with the 2021 Report, which contemplates that the Company will continue to operate as a going concern, which means that it will be able to meet its obligations and continue its operations during the twelve-month period following the issuance of this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022 (this “Form 10-Q”).  Therefore, these financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

The Company had negative cash flows from operations during the nine months ended September 30, 2022.  These negative cash flows were primarily a consequence of the four factors described in the paragraph below.  

In connection with the preparation of the accompanying unaudited condensed consolidated financial statements, management assessed the Company’s financial condition and concluded that the following primary factors, taken in the aggregate, raised substantial doubt regarding the Company’s ability to continue as a going concern for the twelve-month period following the issuance of this Form 10-Q.

Significant losses incurred on a number of fixed price contracts in our Florida water business, which have been the subject of prior disclosures.
Start-up costs related to the Company’s entry into the transmission and distribution market, which have utilized cash resources and, while ultimately anticipated to benefit the Company’s business, have negatively impacted liquidity.
Failure to convert pipeline opportunities into revenue, which have had the effect of delaying the Company’s receipt of cash from such opportunities.
Delays in collecting cash receipts from customers.

To address the negative cash flows in the Company’s business, the Company has developed a liquidity plan, the implementation of which management believes will alleviate the substantial doubt about the Company’s ability to continue as a going concern during the twelve-month period following the issuance of this Form 10-Q.  The liquidity plan, which will continue to be refined as circumstances dictate, contemplates the following key elements, in which the Company will:

Take steps to enhance profitability of non-performing businesses;
Lower the cost of services by removing nonbillable expenses that cannot be recovered;
Aggressively reduce operating expenses; and
Shorten the collection cycle time on the Company’s accounts receivable and lengthen the payment cycle time on its accounts payable.

On August 3, 2022, as a result of the Company being unable to comply with its debt covenants as of June 30, 2022, the Company amended its existing Revolving Credit Agreement and the Term Loan Agreement (as defined below), which among other things, amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), and Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a former executive and his employer (in each case, subject to certain specified dollar limits), as well as to amend and increase the Total Leverage Ratio (as defined in the Term Loan Agreement) applicable to the Company for certain periods. For additional information regarding the amendments, see “Note 9—Debt.”

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Table of Contents

While the above-mentioned factors have negatively affected the Company’s liquidity, there were  i two developments in the third and fourth quarter of 2022 that resulted in material cash receipts by the Company.  Specifically, the Company settled  i two legal claims.  The first such settlement involved a cash collection in the third quarter of 2022 of approximately $ i 8.1 million related to an arbitration proceeding initiated by the Company against a third party in connection with the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period.  The second matter, settled in the fourth quarter of 2022, involved litigation against a former executive and his employer that resulted in the employer of the former executive agreeing to pay a cash settlement of $ i 2.7 million.  The Company recognized both settlements as other income during the third quarter of 2022. The $ i 8.1 million settlement proceeds were used to prepay part of the Company’s Term Loan and the $ i 2.7 million settlement, which was collected on October 13, 2022, was used to repay a portion of the Revolving Credit Facility.  As a result, the full amount of these settlement receipts could not be used for general working capital purposes and did not materially affect the Company’s liquidity.  For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

In the first nine months of 2022, the Company’s principal sources of liquidity were borrowings under the Revolving Credit Facility and efforts to effectively manage its working capital.  The Company anticipates that this will continue to be the case in the fourth quarter of 2022, subject to the anticipated benefits of the liquidity plan outlined above.  The Company continues to monitor its liquidity and capital resources closely. If market conditions were to change, and revenue is reduced or operating costs either increased or could not be reduced as contemplated by the Company’s liquidity plan, cash flows and liquidity could be materially negatively impacted.

While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be able to implement its liquidity plan successfully or, even if successfully implemented, that the plan will ultimately result in the Company continuing as a going concern. In addition, the Company could be unable to meet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the Company’s lenders, it would result in an event of default under such indebtedness and the potential acceleration of outstanding indebtedness thereunder and the potential foreclosure on the collateral securing such debt, and would likely cause a cross-default under the Company’s other outstanding indebtedness. If the liquidity plan does not have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

 i 

NOTE 3—RECENT ACCOUNTING PRONOUNCEMENTS

 i 

Recently Adopted Accounting Pronouncements

The Company did not implement any new accounting pronouncements during the first nine months of 2022. However, the Company is currently evaluating the impact of future disclosures that may arise under recent SEC proposals.

 / 

 i 

NOTE 4—LEASES

The Company primarily leases office space and related equipment, as well as equipment, modular units and vehicles directly used in providing services to its customers. The Company’s leases have remaining lease terms of one to  i ten years. Most leases contain  i renewal options for varying periods, which are at the Company’s sole discretion and included in the expected lease term if they are reasonably certain of being exercised. In accordance with ASU 2016-02, the Company accounts for lease components, such as fixed payments including rent, real estate taxes, and insurance costs, separately from the non-lease components, such as common area maintenance costs.

In accordance with ASU 2016-02, for leases with terms greater than twelve months, the Company records the related right-of-use assets and lease liabilities at the present value of the fixed lease payments over the lease term at the lease commencement date. The Company uses its incremental borrowing rate to determine the present value of the lease as the rate implicit in the lease is typically not readily determinable.

 / 

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Table of Contents

Short-term leases (leases with an initial term of twelve months or less or leases that are cancelable by the lessee and lessor without significant penalties) are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used in delivering services to its customers. These leases are entered into at agreed upon hourly, daily, weekly, or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

On September 2, 2021, the Company made the decision to relocate its corporate headquarters to Atlanta, Georgia and entered into a  i ten-year lease agreement. The Company completed its relocation in March 2022. The lease is presented as a right-of-use asset and lease liability and the lease liability amounts to $ i 3.3 million with a present value of $ i 2.2 million over a  i ten-year term. If the Company defaults, the landlord has the right to use the security deposit for rent or other payments due to other damages, injury, expense or liability as defined in the lease agreement. Although the security deposit shall be deemed the property of the landlord, any remaining balance of the security deposit shall be returned by the landlord to the Company after termination of the lease as the Company’s obligations under the lease have been fulfilled. The Company subleased a portion of its former office space and collected $ i 44,000 of sublease income during the nine months ended September 30, 2022.

The components of lease expense were as follows:

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

Lease Cost/(Sublease Income) (in thousands)

2022

2021

2022

2021

Operating lease cost

$

 i 549

$

 i 619

$

 i 1,668

$

 i 1,711

Short-term lease cost

 i 2,125

 i 1,051

 i 5,353

 i 2,484

Sublease income

( i 14)

( i 5)

( i 44)

( i 5)

Total lease cost

$

 i 2,660

$

 i 1,665

$

 i 6,977

$

 i 4,190

 / 

Lease cost related to finance leases was not significant for the three and nine months ended September 30, 2022 and 2021.

Information related to the Company’s right-of-use assets and lease liabilities were as follows:

 i 

Lease Assets/Liabilities (in thousands)

Balance Sheet Classification

September 30, 2022

December 31, 2021

Lease Assets

Right-of-use assets

Other long-term assets

$

 i 3,738

$

 i 1,527

Lease Liabilities

Short-term lease liabilities

Other current liabilities

$

 i 1,572

$

 i 1,606

Long-term lease liabilities

Other long-term liabilities

 i 2,582

 i 511

Total lease liabilities

$

 i 4,154

$

 i 2,117

 / 

Supplemental information related to the Company’s leases were as follows:

 i 

Nine Months Ended September 30,

(dollars in thousands)

2022

2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash used by operating leases

$

 i 1,810

$

 i 1,810

Right-of-use assets obtained in exchange for new operating lease liabilities

 i 3,669

 i 1,549

Weighted-average remaining lease term - operating leases

 i 5.34 years

 i 1.47 years

Weighted-average remaining lease term - finance leases

 i 1.48 years

 i 2.48 years

Weighted-average discount rate - operating leases

 i 9%

 i 9%

Weighted-average discount rate - finance leases

 i 9%

 i 9%

 / 

10

Table of Contents

 i 

Total remaining lease payments under the Company’s operating and finance leases were as follows:

 i 

Operating Leases

Finance Leases

Nine Months Ended September 30,

(in thousands)

Remainder of 2022

$

 i 557

$

 i 1

2023

 i 1,490

 i 6

2024

 i 653

 i 1

2025

 i 375

-

2026

 i 381

-

Thereafter

 i 1,873

-

Total lease payments

$

 i 5,329

$

 i 8

Less: interest

( i 1,183)

-

Present value of lease liabilities

$

 i 4,146

$

 i 8

 / 
 / 

 i 

NOTE 5—CHANGES IN BUSINESS

Discontinued Operations

Electrical Solutions

During the fourth quarter of 2017, the Company made the decision to exit and sell its Electrical Solutions segment (which was comprised solely of Koontz-Wagner Custom Controls Holdings LLC (“Koontz-Wagner”), a wholly owned subsidiary of the Company) in an effort to reduce the Company’s outstanding term debt. The Company determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment has been presented as a discontinued operation for all periods presented.

On July 11, 2018, Koontz-Wagner filed a voluntary petition for relief under Chapter 7 of Title 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of Texas. The filing was for Koontz-Wagner only, not for the Company as a whole, and was completely separate and distinct from the Williams business and operations. As a result of the July 11, 2018 bankruptcy of Koontz-Wagner, the Company recorded a pension withdrawal liability of $ i 2.9 million related to Koontz-Wagner’s International Brotherhood of Electrical Workers Local Union 1392 (“IBEW”) multi-employer pension plan.

After an arbitration process, on May 12, 2021, an arbitrator concluded that the IBEW used an incorrect per hour contribution rate in calculating the Company’s pension withdrawal liability, which resulted in the Company overpaying. The arbitrator directed IBEW to refund all overpayments, with interest, to the Company and to redetermine the Company’s payments going forward using the proper contribution rate. Accordingly, the Company’s overall pension withdrawal liability decreased by approximately $ i 0.3 million. The pension liability is expected to be satisfied by annual cash payments of $ i 0.3 million each, paid in quarterly installments, through 2038. The Company recorded a gain on disposal of approximately $ i 0.2 million during the first nine months of 2021 to reduce its previously recorded estimated withdrawal liability.

Mechanical Solutions

During the third quarter of 2017, the Company made the decision to exit and sell substantially all of the operating assets and liabilities of its Mechanical Solutions segment and determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment has been presented as a discontinued operation for all periods presented.

 / 

11

Table of Contents

As of September 30, 2022 and December 31, 2021, the Company did  i  i no / t have any assets related to its Electrical Solutions’ and Mechanical Solutions’ discontinued operations. The following table presents a reconciliation of the carrying amounts of major classes of liabilities of Electrical Solutions’ and Mechanical Solutions’ discontinued operations:

 i 

(in thousands)

  

September 30, 2022

December 31, 2021

Liabilities:

Current liabilities of discontinued operations

$

 i 106

$

 i 316

Liability for pension obligation

 i 2,307

 i 2,368

Liability for uncertain tax positions

 i 1,206

 i 1,882

Long-term liabilities of discontinued operations

 i 3,513

 i 4,250

Total liabilities of discontinued operations

$

 i 3,619

$

 i 4,566

 / 

The following table presents a reconciliation of the major classes of line items constituting the net income (loss) from discontinued operations. In accordance with GAAP, the amounts in the table below do not include an allocation of corporate overhead.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

  

2022

  

2021

  

2022

  

2021

General and administrative expenses

$

$

 i 5

$

$

 i 39

Loss (gain) on disposal - Electrical Solutions

( i 17)

 i 17

( i 245)

Interest expense

 i 45

 i 46

 i 75

 i 76

Income (loss) from discontinued operations before income tax

( i 45)

( i 34)

( i 92)

 i 130

Income tax expense (benefit)

( i 3)

 i 22

( i 626)

 i 59

Income (loss) from discontinued operations

$

( i 42)

$

( i 56)

$

 i 534

$

 i 71

 i 

NOTE 6—REVENUE

Disaggregation of Revenue

The Company’s contracts generally include a single performance obligation for which revenue is recognized over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. For cost-plus contracts, the Company recognizes revenue when services are performed and contractually billable based upon the hours incurred and agreed-upon hourly rates. Revenue on fixed-price contracts is recognized and invoiced over time using the cost-to-cost percentage-of-completion method. To the extent a contract is deemed to have multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The Company does not adjust the price of the contract for the effects of a significant financing component. Change orders are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. The Company believes these methods of revenue recognition most accurately reflect the economics of the transactions with its customers.

The Company’s contracts may include several types of variable consideration, including change orders, rate true-up provisions, retainage, claims, incentives, penalties, and liquidated damages. The Company estimates the amount of revenue to be recognized on variable consideration using estimation methods that best predict the amount of consideration to which the Company expects to be entitled. The Company includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of its anticipated performance and all information (historical, current, and forecasted) that is reasonably available. The Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis. In circumstances where the Company cannot reasonably determine the outcome of a contract, it recognizes revenue over time as the work is performed, but only to the extent of recoverable costs incurred (i.e. zero margin). A loss provision is recorded for the amount of any estimated unrecoverable costs in excess of total estimated revenue on a contract as soon as the Company becomes aware. The Company generally provides a limited warranty for a term of  i two years or less following completion of services performed under its contracts. Historically, warranty claims have not resulted in material costs incurred.

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 i 

Disaggregated revenue by type of contract was as follows:  

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

2021

Cost-plus reimbursement contracts

$

 i 44,237

$

 i 63,363

$

 i 138,263

$

 i 201,027

Fixed-price contracts

 i 12,448

 i 9,988

 i 44,040

 i 24,746

Total

$

 i 56,685

$

 i 73,351

$

 i 182,303

$

 i 225,773

Disaggregated revenue by the geographic area where the work was performed was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

2021

United States

$

 i 56,685

$

 i 64,379

$

 i 176,801

$

 i 197,287

Canada

-

 i 8,972

 i 5,502

 i 28,486

Total

$

 i 56,685

$

 i 73,351

$

 i 182,303

$

 i 225,773

 / 

Contract Balances

The Company enters into contracts that allow for periodic billings over the contract term that are dependent upon specific advance billing terms, as services are provided, or as milestone billings based on completion of certain phases of work. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported in the Company’s unaudited condensed consolidated balance sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported in the Company’s unaudited condensed consolidated balance sheets as contract liabilities. At any point in time, each project in process could have either contract assets or contract liabilities.

The following table provides information about contract assets and contract liabilities from contracts with customers:

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

  

2021

Costs incurred on uncompleted contracts

$

 i 55,936

$

 i 66,590

$

 i 173,564

$

 i 203,561

Earnings recognized on uncompleted contracts

 i 749

 i 6,761

 

 i 8,739

 

 i 22,212

Total

 i 56,685

 i 73,351

 i 182,303

 

 i 225,773

Less—billings to date

( i 50,049)

( i 63,034)

( i 175,667)

 

( i 215,456)

Net

$

 i 6,636

$

 i 10,317

$

 i 6,636

$

 i 10,317

Contract assets

$

 i 10,076

$

 i 12,811

$

 i 10,076

$

 i 12,811

Contract liabilities

( i 3,440)

( i 2,494)

( i 3,440)

 

( i 2,494)

Net

$

 i 6,636

$

 i 10,317

$

 i 6,636

$

 i 10,317

 / 

For the three and nine months ended September 30, 2022, the Company recognized revenue of approximately $ i 0.1 million and $ i 2.2 million, respectively, on approximately $ i 3.4 million that was included in the corresponding contract liability balance on December 31, 2021.

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2022:

 i 

(in thousands)

Remainder of 2022

2023

2024

Thereafter

Total

Remaining performance obligations

$

 i 64,529

$

 i 122,093

$

 i 61,135

$

 i 104,966

$

 i 352,723

 / 

 i 

NOTE 7—EARNINGS (LOSS) PER SHARE

As of September 30, 2022, the Company’s  i 26,422,761 shares outstanding included  i 321,142 shares of contingently issued but unvested restricted stock. As of September 30, 2021, the Company’s  i 25,915,502 shares outstanding included  i 215,956 shares

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of contingently issued but unvested restricted stock. Restricted stock is excluded from the calculation of basic weighted average shares outstanding, but its impact, if dilutive, is included in the calculation of diluted weighted average shares outstanding.

Basic earnings per common share are calculated by dividing net income by the weighted average common shares outstanding during the period. Diluted earnings per common share are based on the weighted average common shares outstanding during the period, adjusted for the potential dilutive effect of common shares that would be issued upon the vesting and release of restricted stock awards and units and stock options, if any.

Basic and diluted earnings per common share from continuing operations were calculated as follows:

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except share data)

  

2022

2021

2022

  

2021

Income (loss) from continuing operations

$

 i 3,610

$

 i 794

$

( i 3,728)

$

 i 1,857

Basic income (loss) per common share:

Weighted average common shares outstanding

 i 26,102,308

 i 25,699,545

 i 26,009,465

 i 25,306,130

Basic income (loss) per common share

$

 i 0.14

$

 i 0.03

$

( i 0.14)

$

 i 0.07

Diluted income (loss) per common share:

Weighted average common shares outstanding

 i 26,102,308

 i 25,699,545

 i 26,009,465

 i 25,306,130

Diluted effect:

 

Unvested portion of restricted stock units and awards

 i 335,373

 i 807,030

 i 791,570

Weighted average diluted common shares outstanding

 i 26,437,681

 i 26,506,575

 

 i 26,009,465

 i 26,097,700

Diluted income (loss) per common share

$

 i 0.14

$

 i 0.03

$

( i 0.14)

$

 i 0.07

 / 

The weighted average number of shares outstanding used in the computation of basic and diluted earnings per common share does not include the effect of the following potential outstanding common stock. The effects of the potentially outstanding service-based restricted stock and restricted stock unit awards were not included in the calculation of diluted earnings per common share because the effect would have been anti-dilutive. The effects of the potentially outstanding performance- and market-based restricted stock unit awards were not included in the calculation of diluted earnings per common share because the performance and/or market conditions had not been satisfied as of September 30, 2022 and 2021.

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

2022

  

2021

Unvested service-based restricted stock and restricted stock unit awards

 i 573,517

 i 16,666

 i 229,102

Unvested performance- and market-based restricted stock unit awards

 i 887,559

 i 833,111

 i 887,559

 i 833,111

 / 

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 i 

NOTE 8—INCOME TAXES

The effective income tax expense rate for continuing operations for the three and nine months ended September 30, 2022 and 2021 was as follows:

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

    

2022

2021

2022

    

2021

Effective income tax rate for continuing operations

( i 8.2)%

( i 0.8)%

 i 5.4%

 i 12.1%

 / 

The effective income tax rate differs from the statutory federal income tax rate of  i 21% primarily because of the partial valuation allowances recorded on the Company’s deferred tax assets and the Canadian income tax provision.  

For the three months ended September 30, 2022, the Company recorded income tax benefit from continuing operations of $ i 0.3 million, or ( i 8.2)% of pretax income from continuing operations, compared with income tax benefit from continuing operations of $ i 0.01 million, or ( i 0.8)% of pretax income from continuing operations, in the corresponding period of 2021. For the nine months ended September 30, 2022, the Company recorded income tax benefit from continuing operations of $ i 0.2 million, or  i 5.4% of pretax loss from continuing operations, compared with income tax expense from continuing operations of $ i 0.3 million, or  i 12.1% of pretax income from continuing operations, in the corresponding period of 2021. The $ i 0.3 million decrease in income tax provision from continuing operations for the three months ended September 30, 2022, compared with the corresponding period in 2021, was primarily related to a $ i 0.6 million decrease in the Canadian income tax provision, partially offset by a $ i 0.3 million decrease in the U.S. income tax benefit related to the indefinite lived deferred tax assets. The $ i 0.5 million decrease in income tax provision from continuing operations for the nine months ended September 30, 2022, compared with the corresponding period in 2021, was primarily related to a $ i 0.7 million decrease in the Canadian income tax provision, partially offset by a $ i 0.2 million decrease in the U.S. income tax benefit related to the indefinite lived deferred tax assets.

The Company’s net deferred balance was primarily composed of indefinite lived deferred tax liabilities attributable to goodwill and trade names, and the indefinite lived deferred tax assets related to the post 2017 net operating losses and Section 163(j) interest addback. A full valuation allowance was applied to most of the remaining deferred balances. The indefinite lived deferred tax assets enabled the release of the valuation allowance to the extent that it can offset the indefinite lived deferred tax liabilities. Because all indefinite lived deferred tax liabilities are part of continued operations, and the release of valuation allowance is attributable to the future taxable income related to these deferred tax liabilities, the entire valuation allowance released was recorded in continuing operations according to ASC 740-20-45-3. As of September 30, 2022, the Company had $ i 2.3 million net deferred tax liabilities, mainly composed of $ i 12.4 million indefinite lived deferred tax liabilities attributable to goodwill and trade names, partially offset by $ i 6.8 million indefinite lived deferred tax assets attributable to post 2017 net operating losses, $ i 3.4 million indefinite lived deferred tax assets attributable to Section 163(j) interest addback, $ i 0.2 million deferred tax assets accrued for the current period as a result of the Canadian net operating loss, plus $ i 0.3 million deferred tax liability accrued with respect to the Company’s outside basis difference in its investment in Canada.

As of September 30, 2022, and 2021, the Company would have needed to generate approximately $ i 287.2 million and $ i 270.4 million, respectively, of future taxable income in order to realize its deferred tax assets.

The Company’s foreign subsidiaries may generate earnings that are not subject to U.S. income taxes so long as they are permanently reinvested in its operations outside of the U.S. Pursuant to ASC 740-30, undistributed earnings of foreign subsidiaries that are no longer permanently reinvested would become subject to deferred income taxes.

As of September 30, 2022, the Company projects that its Canadian subsidiary will have generated approximately $ i 5.1 million undistributed earnings by the end of 2022. The Company’s management expects that all of the undistributed earnings will be repatriated back to the United States within the next 12 months. The Company formed the Canadian subsidiary in 2018 without significant capital investment, and the majority of the undistributed earnings was expected to be repatriated as dividends to the United States at the United States-Canada treaty rate of  i 5%. As a result, the Company accrued a deferred tax liability of $ i 0.3 million related to its investment in Canada for its outside basis difference as of September 30, 2022.

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As of September 30, 2022 and 2021, the Company provided for a total liability of $ i 2.3 million and $ i 3.0 million, respectively, for uncertain income tax positions, which include the unrecognized tax benefits related to various federal, foreign and state income tax matters, and the accrual of interest, penalties, and foreign currency adjustments that can potentially arise from these positions. For the period ended September 30, 2022, the $ i 2.3 million reserved for uncertain income tax positions was included in long-term liabilities of discontinued operations and other long-term liabilities, of which $ i 1.2 million was related to discontinued operations, compared to $ i 1.9 million for the corresponding period in 2021. If the unrecognized tax benefit is recognized, the reduction in the liability would be recorded as a tax benefit and reduce the effective tax rate. Of the $ i 2.3 million reserved for uncertain income tax positions as of September 30, 2022, approximately $ i 1.1 million was accrued for potential payment of interest and penalties, of which, $ i 0.5 million was related to discontinued operations.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. The Company has incorporated the impact of the CARES Act to the tax provision. In addition, the Company deferred payments of federal employer payroll taxes of approximately $ i 4.9 million, as permitted by the CARES Act. The first half of the deferred amounts were paid in December 2021, and the second half will be paid by December 2022.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. While these tax law changes have no immediate effect and are not expected to have a material adverse effect on the Company’s results of operations going forward, the Company will continue to evaluate the IRA’s impact as further information becomes available.

 i 

NOTE 9—DEBT

The following table provides information about the Company’s debt, net of unamortized deferred financing costs:

 i 

(in thousands)

  

September 30, 2022

  

December 31, 2021

Short-term borrowings

$

 i 14,525

$

 i 676

Term loan, current portion of long-term debt

 i 1,050

 i 1,050

Current debt

$

 i 15,575

$

 i 1,726

Term loan, noncurrent portion of long-term debt

$

 i 24,056

$

 i 32,900

Debt discount

( i 641)

( i 791)

Unamortized deferred financing costs

( i 1,606)

( i 1,781)

Long-term debt, net

$

 i 21,809

$

 i 30,328

Total debt, net

$

 i 37,384

$

 i 32,054

 / 

Debt Refinancing

On December 16, 2020 (the “Closing Date”), the Company and certain of its subsidiaries refinanced and replaced its prior revolving credit facility and term loan facility and entered into (i) the Term Loan Agreement (as defined below), which provided for senior secured term loan facilities in an aggregate principal amount of up to $ i 50.0 million (collectively, the “Term Loan”), consisting of a $ i 35.0 million closing date term loan facility (the “Closing Date Term Loan”) and up to $ i 15.0 million of borrowings under a delayed draw facility (the “Delayed Draw Term Loan Facility”) with EICF Agent LLC, as agent, and CION Investment Corporation,  as a lender and a co-lead arranger, and the other lenders party thereto; and (ii) a senior secured asset-based revolving line of credit of up to $ i 30.0 million (the “Revolving Credit Facility”) with PNC Bank, National Association (“PNC”). In connection with the refinancing, the Company repaid the outstanding balance of the prior facilities and all interest in full.

As of September 30, 2022, the Company had $ i 14.5 million outstanding debt under the Revolving Credit Facility and $ i 25.1 million outstanding (including both the noncurrent and current portion of the Term Loan) under the Term Loan. Total liquidity (the sum of unrestricted cash and availability under the Revolving Credit Facility) was $ i 7.3 million at the end of the third quarter of 2022. As of September 30, 2022, the Company was in compliance with all debt covenants, as amended.

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Effective as of August 23, 2022, the Company entered into a confidential settlement agreement and general release (the “Settlement Agreement”), dated August 22, 2022, that resolved a pending arbitration proceeding initiated by the Company against a third-party respondent in May 2020. The claims made by the Company against the respondent relate to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period. The Company received net proceeds (after payment of attorney’s fees and third-party funding costs) of approximately $ i 8.1 million, which was recorded as other income on the income statement during the third quarter of 2022. In the third quarter of 2022, the Company used the $ i 8.1 million of net proceeds received under the Settlement Agreement to repay part of the Term Loan. As of September 30, 2022, the Company reduced the Term Loan to $ i 25.1 million compared to $ i 34.0 million on December 31, 2021 (including both the noncurrent and current portion of the Term Loan).

The Revolving Credit Facility

On the Closing Date, the Company and certain of its subsidiaries (the “Revolving Loan Borrowers”) entered into the Revolving Credit and Security Agreement with PNC, as agent for the lenders, and the lenders party thereto (the “Revolving Credit Agreement”), which provides for the Revolving Credit Facility. As part of the Revolving Credit Facility, the Company may access a letter of credit sublimit in an amount up to $ i 2.0 million, a swing loan sublimit in an aggregate principal amount of up to $ i 3.0 million, and a Canadian dollar sublimit in an aggregate principal amount of up to $ i 5.0 million. The Revolving Credit Agreement matures on December 16, 2025.

As of September 30, 2022, borrowings under the Revolving Credit Facility bore interest, at the Company’s election, at either (1) the base commercial lending rate of PNC, as publicly announced, plus  i 1.25%, payable in cash on a monthly basis, (2) the Term SOFR Rate (as defined in the Revolving Credit Agreement, as amended,) based on the secured overnight financing rate (“SOFR”) rate, subject to a minimum SOFR floor of  i 1.00%, plus  i 2.25%, payable in cash on the last day of each interest period, or (3) with respect to Canadian dollar loans, the Canadian Dollar Offered Rate (“CDOR”), subject to a minimum CDOR rate of  i 1.00%, plus  i 2.25%, payable in cash on a monthly basis. In addition, upon the occurrence of an event of default, and for so long as such event of default continues, default interest equal to  i 2.00% per year in excess of the rate otherwise applicable will be payable.

The Revolving Loan Borrowers’ Obligations (as defined in the Revolving Credit Agreement) are guaranteed by certain of the Company’s material, wholly owned subsidiaries, subject to customary exceptions (the “Revolving Loan Guarantors” and, together with the Revolving Loan Borrowers, the “Revolving Loan Credit Parties”). The Revolving Loan Credit Parties’ obligations are secured by first-priority security interests on substantially all of the Revolving Loan Credit Parties’ accounts receivable and a second-priority security interest in substantially all other assets of the Revolving Loan Credit Parties, subject to the terms of the Intercreditor Agreement between PNC and EICF Agent LLC, as the Revolving Loan Agent and the Term Loan Agent, respectively (as each such term is defined in the Intercreditor Agreement), as described below (the “Intercreditor Agreement”).  

The Revolving Loan Borrowers may from time to time voluntarily prepay outstanding amounts, plus any accrued but unpaid interest on the aggregate amount being prepaid, under the Revolving Credit Facility, in whole or in part. There is  i no required minimum prepayment amount. If at any time the amount outstanding under the Revolving Credit Agreement exceeds the borrowing base, or any sublimit, in effect at such time, the excess amount will be immediately due and payable. Subject to the Intercreditor Agreement, the Revolving Credit Agreement also requires mandatory prepayment of outstanding amounts in the event the Revolving Loan Borrowers receive proceeds from certain events and activities, including, among others, certain asset sales and casualty events, the issuance of indebtedness and equity interests, and the recovery of any proceeds from certain specified arbitration proceedings.

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The Revolving Credit Agreement provides for (1) a closing fee of $ i 0.2 million, which was paid on the Closing Date, (2) a customary unused line fee equal to  i 0.25% per year on the unused portion of the Revolving Credit Facility, which is payable on a quarterly basis, and (3) a collateral monitoring fee of $ i 2,500, which is payable on a monthly basis. The Revolving Credit Agreement also provides for an early termination fee (the “Early Termination Fee”), payable to the revolving lenders thereunder upon (1) any acceleration of the Obligations and termination of the Revolving Credit Agreement and the obligation of the revolving lenders to make advances thereunder following the occurrence of an Event of Default (as defined in the Revolving Credit Agreement), or (2) any other termination of the Revolving Credit Agreement and the obligation of revolving lenders to make advances thereunder for any reason (the “Early Termination Date”). The Early Termination Fee is calculated as follows: if the Early Termination Date occurred on or prior to the first anniversary of the Closing Date, the Early Termination Fee would have been  i 2.00% of the Revolving Credit Facility; and if prepayment occurs after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, the Early Termination Fee will be  i 1.00% of the Revolving Credit Facility. While any letter of credit is outstanding under the Revolving Credit Facility, the Revolving Loan Borrowers must pay a letter of credit fronting fee at a rate equal to  i 0.25% per year, payable quarterly, in addition to any other customary fees required by the issuer of the letter of credit.

The Revolving Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, in each case, with certain exceptions, limitations and qualifications. The Revolving Credit Agreement also requires the Revolving Loan Borrowers to regularly provide certain financial information to the lenders thereunder, maintain a springing minimum fixed charge coverage ratio, and comply with certain limitations on capital expenditures.

Events of default under the Revolving Credit Agreement include, but are not limited to, a breach of certain covenants or any representations or warranties, failure to timely pay any amounts due and owing, the commencement of any bankruptcy or other insolvency proceeding, judgments in excess of certain acceptable amounts, the occurrence of a change in control, certain events related to ERISA matters, impairment of security interests in collateral or invalidity of guarantees or security documents, or a default or event of default under the Term Loan Agreement or the Intercreditor Agreement, in each case, with customary exceptions, limitations, grace periods and qualifications. If an event of default occurs, the revolving lenders may, among other things, declare all Obligations outstanding under the Revolving Credit Facility to be immediately due and payable, together with accrued interest and fees, and exercise remedies under the collateral documents relating to the Revolving Credit Agreement.

On August 3, 2022, the Company entered into an Amendment to the Revolving Credit Agreement (the “Revolving Credit Amendment”) that, among other things, (i) amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), effective as of June 30, 2022, to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits), (ii) permitted advances against certain eligible receivables of one of the Company’s joint ventures (also subject to specified dollar limits), (iii) included provisions that replace the London Interbank Offered Rate (LIBOR) interest rate with customary provisions based on SOFR, and (iv) provided for the payment of a $ i 25,000 amendment fee, plus applicable fees and expenses. The $ i 25,000 amendment fee will be expensed as incurred.

EICF Agent LLC, as the Term Loan Agent, and PNC, as the Revolving Loan Agent, entered into an Intercreditor Agreement, dated as of the Closing Date, to which the Term Loan Credit Parties (as defined below) and Revolving Loan Credit Parties consented. The Intercreditor Agreement, among other things, specifies the relative lien priorities of the Term Loan Agent and Revolving Loan Agent in the relevant collateral, and contains customary provisions regarding, among other things, the rights of the Term Loan Agent and Revolving Loan Agent to take enforcement actions against the relevant collateral and certain limitations on amending the documentation governing each of the Term Loan and Revolving Credit Facility.

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The Term Loan

On the Closing Date, the Company and certain of its subsidiaries (the “Term Loan Borrowers”) entered into the Term Loan, Guarantee and Security Agreement with EICF Agent LLC, as agent for the lenders, CION Investment Corporation, as a lender and co-lead arranger, and the other lenders party thereto (the “Term Loan Agreement”), which provides for the Term Loan. The Closing Date Term Loan was fully drawn on the Closing Date, while the Delayed Draw Term Loan Facility was available upon the satisfaction of certain conditions precedent for up to 18 months following the Closing Date and expired in June 2022. The Term Loan Agreement matures on December 16, 2025.

Borrowings under the Term Loan Agreement bear interest at SOFR, plus a margin of  i 8.50% (if the Total Leverage Ratio (as defined in the Term Loan Agreement) is less than  i 2.50:1) or  i 9.00% per year (if the Total Leverage Ratio is greater than or equal to  i 2.50:1), subject to a minimum SOFR floor of  i 1.00%, payable in cash on a quarterly basis. In addition, upon the occurrence of an event of default, and for so long as such event of default continues, default interest equal to  i 2.00% per year in excess of the rate otherwise applicable will be payable.

The Term Loan Borrowers’ Obligations (as defined in the Term Loan Agreement) are guaranteed by certain of the Company’s material, wholly owned subsidiaries, subject to customary exceptions (the “Term Loan Guarantors” and, together with the Term Loan Borrowers, the “Term Loan Credit Parties”). The Term Loan Credit Parties’ obligations are secured by first-priority security interests on substantially all of the Term Loan Credit Parties’ assets, as well as a second-priority security interest on the Term Loan Credit Parties’ accounts receivable and inventory, subject to the Intercreditor Agreement.

Subject to certain conditions, the Term Loan Borrowers may voluntarily prepay the Term Loan on any Payment Date (as defined in the Term Loan Agreement), in whole or in part, in a minimum amount of $ i 1.0 million of the outstanding principal amount, plus a prepayment fee. The prepayment fee was amended effective June 30, 2022, as described below.

Subject to certain exceptions, within 120 days of the end of each calendar year, beginning with the year ended December 31, 2021, the Term Loan Borrowers must prepay the Obligations in an amount equal to (1) (i) if the Total Leverage Ratio is greater than  i 3:00:1:00,  i 50.0% of Excess Cash Flow (as defined in the Term Loan Agreement) or (ii) if the Total Leverage Ratio is equal to or less than  i 3:00:1:00 and greater than  i 2:00:1:00,  i 25.0% of Excess Cash Flow, less (2) all voluntary prepayments made on the Term Loan during such calendar year; provided that, so long as no default or event of default has occurred and is continuing or would result therefrom, no such prepayment will be required unless Excess Cash Flow for such calendar year equals or exceeds $ i 0.5 million. The Company was not required to prepay any Obligations for the year ended December 31, 2021. The Term Loan Agreement also requires mandatory prepayment of certain amounts in the event the Term Loan Borrowers receive proceeds from certain events and activities, including, among others, certain asset sales and casualty events, the issuance of indebtedness and equity interests, and the receipt of extraordinary receipts (with certain exclusions), plus, in certain instances, the applicable prepayment fee.

The Term Loan Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, in each case, with certain exceptions, limitations and qualifications. The Term Loan Agreement also requires the Term Loan Borrowers to regularly provide certain financial information to the lenders thereunder, maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio, and comply with certain limitations on capital expenditures.

Events of default under the Term Loan Agreement include, but are not limited to, a breach of certain covenants or any representations or warranties, failure to timely pay any amounts due and owing, the commencement of any bankruptcy or other insolvency proceeding, judgments in excess of certain acceptable amounts, the occurrence of a change in control, certain events related to ERISA matters, impairment of security interests in collateral or invalidity of guarantees or security documents, or a default or event of default under the Revolving Credit Agreement or the Intercreditor Agreement, in each case, with customary exceptions, limitations, grace periods and qualifications. If an event of default occurs, the Term Loan lenders may, among other things, declare all Obligations to be immediately due and payable, together with accrued interest and fees, and exercise remedies under the collateral documents relating to the Term Loan Agreement.

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On August 3, 2022 (the “Signing Date”), effective as of June 30, 2022, the Company entered into an Amendment to the Term Loan Agreement (the “Term Loan Amendment”) that, among other things, (i) amended and increased the Total Leverage Ratio (as defined in the Term Loan Agreement) applicable to the Company for certain periods, (ii) amended the calculation of Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits), (iii) provided for a fee of  i 1% of the then-outstanding principal balance due upon maturity of the term loan without duplication of fees paid in connection with the Company’s prepayment fee structure, (iv) extended the Company’s existing prepayment fee structure to require upon repayment (a) prior to the first anniversary of the Signing Date, a fee of  i 3% of the principal amount being repaid, (b) on or after the first anniversary of the Signing Date and prior to the second anniversary of the Signing Date, a fee of  i 2% of the principal amount being repaid, and (c) on or after the second anniversary of the Signing Date, a fee of  i 1% of the principal amount being repaid, and (v) provided for the payment of a $ i 0.2 million amendment fee, plus applicable fees and expenses.  The Company’s expense related to the Term Loan Amendment was $ i 0.2 million and will be recognized as interest expense over the remaining term of the modified Term Loan Agreement.

Effective as of August 23, 2022, the Company entered into a Settlement Agreement, which resolved a pending arbitration proceeding related to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period. The Company received net proceeds of $ i 8.1 million (after payment of attorney’s fees and third-party funding costs), and used these net proceeds to prepay a substantial amount of the Term Loan. The $ i 8.1 million net proceeds, coupled with $ i 0.3 million scheduled principal payments, reduced the Term Loan by a total of $ i 8.4 million to $ i 25.1 million as of September 30, 2022 (including both the noncurrent and current portion of the Term Loan).

Letters of Credit and Bonds

In line with industry practice, the Company is often required to provide letters of credit and payment and performance surety bonds to customers. These letters of credit and bonds provide credit support and security for the customer if the Company fails to perform its obligations under the applicable contract with such customer.

The Revolving Credit Facility provides for a letter of credit sublimit in an amount up to $ i 2.0 million. As of September 30, 2022, the Company had $ i 0.5 million letters of credit outstanding under this sublimit and $ i 0.4 million cash collateralized standby letters of credit outstanding pursuant to its prior revolving credit facility with Wells Fargo Bank, National Association. There were  i no amounts drawn upon these letters of credit as of September 30, 2022.

In addition, as of September 30, 2022 and December 31, 2021, the Company had outstanding payment and performance surety bonds of $ i 65.6 million and $ i 67.6 million, respectively.

Deferred Financing Costs and Debt Discount:

Deferred financing costs and debt discount is amortized over the terms of the related debt facilities using the straight-line method. The following table summarizes the amortization of deferred financing costs and debt discount related to the Company's debt facilities and recognized in interest expense on the unaudited condensed consolidated statements of operations:

 i 

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

2021

Term loan

$

 i 125

$

 i 113

$

 i 350

$

 i 338

Debt discount on term loan

 i 50

 i 50

 i 150

 i 150

Revolving credit facility

 i 96

 i 96

 i 286

 i 286

Total

$

 i 271

$

 i 259

$

 i 786

$

 i 774

 / 

The following table summarizes unamortized deferred financing costs and debt discount included on the Company's unaudited condensed consolidated balance sheets:

 i 

(in thousands)

    

Location

    

September 30, 2022

December 31, 2021

Term loan

Long-term debt, net

$

 i 1,606

$

 i 1,781

Debt discount on term loan

Long-term debt, net

 i 641

 i 791

Revolving credit facility

Other long-term assets

 i 1,223

 i 1,509

Total

$

 i 3,470

$

 i 4,081

 / 

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 i 

NOTE 10FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

ASC 820–Fair Value Measurement defines fair value as the exit price, which is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in the active markets for identical assets and liabilities and the lowest priority to unobservable inputs.

The Company’s financial instruments as of September 30, 2022 and December 31, 2021 consisted primarily of cash and cash equivalents, restricted cash, receivables, payables, and debt instruments. The carrying values of these financial instruments approximate their respective fair values, as they are either short-term in nature or carry interest rates that are periodically adjusted to market rates.

 i 

NOTE 11—COMMITMENTS AND CONTINGENCIES

Litigation and Claims

The Company is from time-to-time party to various lawsuits, including personal injury claims and other proceedings that arise in the ordinary course of its business. With respect to all such lawsuits, claims and proceedings, the Company records a reserve when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that the resolution of any currently pending lawsuits, claims and proceedings, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations or liquidity. However, the outcomes of any currently pending lawsuits, claims and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.

The Company completed a bankruptcy filing of its Koontz-Wagner subsidiary on July 11, 2018. This could require the Company to incur legal fees and other expenses related to liabilities from this bankruptcy filing. While the Company does not anticipate these liabilities will have a material adverse effect on its results of operations, cash flows and financial position, and although the statute of limitations has run on certain claims that the Chapter 7 Trustee for the Koontz-Wagner estate might assert, there can be no assurance of the outcome. The filing was for Koontz-Wagner only, not for the Company as a whole, and was completely separate and distinct from the Williams business and operations. For additional information, please refer to “Note 5—Changes in Business” to the unaudited condensed consolidated financial statements.

The acquiror of certain assets from a former operating unit of the Company has been named as a defendant in an asbestos personal injury lawsuit and has submitted a claim for indemnification and tendered defense of the matter to the Company. The Company has assumed defense of the matter subject to a reservation of rights and objection to the claim for indemnification. Neither the Company nor its predecessors ever mined, manufactured, produced, or distributed asbestos fiber, the material that allegedly caused the injury underlying this action. The Company does not expect that this claim will have a material adverse effect on its financial position, results of operations or liquidity. Moreover, during 2012, the Company secured insurance coverage that will help to reimburse the defense costs and potential indemnity obligations of its former operating unit relating to these claims. The Company intends to vigorously defend all currently active actions, and it does not anticipate that this action will have a material adverse effect on its financial position, results of operations or liquidity. However, the outcomes of any legal action cannot be predicted and, therefore, there can be no assurance that this will be the case.

Insurance

The Company maintains insurance coverage for most insurable aspects of its business and operations. The Company’s insurance programs, including, but not limited to, health, general liability, and workers’ compensation, have varying coverage limits depending upon the type of insurance. For the three and nine months ended September 30, 2022, insurance expense, including insurance premiums related to the excess claim coverage and claims incurred for continuing operations, was $ i 1.6 million and $ i 4.7 million, respectively.

 / 

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The Company’s unaudited condensed consolidated balance sheets include amounts representing its probable estimated liability related to insurance-related claims that are known and have been asserted against the Company, and for insurance-related claims that are believed to have been incurred but had not yet been reported as of September 30, 2022. As of September 30, 2022, the Company provided $ i 0.9 million in letters of credit and $ i 1.5 million of non-depleting cash collateral as security for possible general liability and workers’ compensation claims.

Executive Severance

As of September 30, 2022, the Company had outstanding severance arrangements with senior executives. The Company’s maximum commitment under all such arrangements, which would apply if the employees covered by these arrangements were each terminated without cause, was $ i 6.4 million on September 30, 2022. The Company did not accrue executive severance expenses as of September 30, 2022.

 i 

NOTE 12—STOCK-BASED COMPENSATION PLANS

During the first nine months of 2022, the Company granted  i 291,894 service-based restricted stock awards under the 2015 Equity Incentive Plan (as amended and restated, the “2015 Plan”), at a grant date fair value of $ i 1.85 per share, to its non-employee directors, which vest in full on February 3, 2023.

During the first nine months of 2022, the Company granted  i 362,356 service-based restricted stock units to its employees under the 2022 long-term incentive (“LTI”) program and the 2015 Plan at a grant date fair value of $ i 1.99 per share. These service-based restricted stock units can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors and shall vest in equal annual installments over a period of three years.

During the first nine months of 2022, the Company also granted  i 724,726 performance-based restricted stock units to its employees under the 2022 LTI program and the 2015 Plan at a grant date fair value of $ i 1.99 per share. The 2022 performance-based restricted stock units have three annual performance periods (fiscal years 2022, 2023 and 2024), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at  i 50% of the target opportunity and maximum performance resulting in awards earned at  i 200% of the target. The annual achievement levels are accumulated over the  i three-year performance period and the earned amounts, if any, will vest on March 31, 2025. The  i three-year average payout level for each performance objective replaces the actual payout level for any fiscal year where the actual payout is less than the  i three-year average. These performance-based restricted stock units can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.

During the first nine months of 2021, the Company granted  i 307,616 service-based restricted stock units under the 2021 LTI program and the 2015 Plan at a grant date fair value of $ i 3.48 per share. These service-based restricted stock units can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors and shall vest in full on March 31, 2024.  

Additionally on June 15, 2021, the Company granted an employee  i 41,666 service-based restricted stock units under the 2015 Plan at a grant date fair value of $ i 6.27 per share. The service-based restricted stock units vested with respect to  i 25,000 shares of common stock on the date of grant (June 15, 2021), while  i 8,333 vested on March 31, 2022 and the remaining  i 8,333 will vest on March 31, 2023. These awards may be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.

During the first nine months of 2021, the Company also granted performance-based restricted stock units under the 2021 LTI program and the 2015 Plan with an aggregate cash value of approximately $ i 2.2 million, which could be paid in cash or shares at the election of the Compensation Committee of the Board of Directors. The 2021 performance-based restricted stock units have three annual performance periods (fiscal years 2021, 2022 and 2023), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at  i 50% of the target opportunity and maximum performance resulting in awards earned at  i 200% of the target. The annual achievement levels are accumulated over the  i three-year performance period and the earned amounts, if any, vest on March 31, 2024. The three-year average payout level for each performance objective replaces the actual payout level for any fiscal year where the actual payout is less than the three-year average. These are cash-based awards that were included in other current liabilities on the consolidated balance sheet beginning in April 2021.

 / 

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Additionally on May 17, 2021, the Company granted an employee  i 37,500 performance-based restricted stock units as an inducement award outside of the 2015 Plan at a grant date fair value of $ i 5.00 per share. The performance-based restricted stock units, if any, vest on March 31, 2024. The performance-based awards have three annual performance periods (fiscal years 2021, 2022 and 2023), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at  i 50% of the target opportunity and maximum performance resulting in awards earned at  i 200% of the target. These awards may be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.

The Company previously granted (i) performance-based restricted stock units under the 2016 LTI program, which were scheduled to vest if the Company achieved a per share stock price of $ i 5.50 for  i 30 consecutive trading days prior to August 5, 2021, (ii) performance-based restricted stock units under the 2017 LTI program, which were scheduled to vest if the Company achieved a per share stock price of $ i 6.00 for  i 30 consecutive trading days prior to March 31, 2021 (pursuant to an extension from the initial vesting date of March 31, 2020, which extension was approved by the Compensation Committee in February 2020), and (iii) performance-based restricted stock units under the 2018 LTI program, which were scheduled to vest if the Company achieved a per share stock price of at least $ i 5.00 for any period of  i 30 consecutive trading days prior to June 30, 2021 (collectively, the “LTI Performance Awards”). On March 5, 2021, the Compensation Committee of the Board of Directors extended the performance period for each of the LTI Performance Awards to December 31, 2022. In accordance with ASC Topic 718, “Compensation—Stock Compensation” (“ASC 718”), the Company conducted a lattice valuation model in order to revalue the market price for the LTI Performance Awards at the March 5, 2021 modification date. The 2018 LTI program met the market objective by achieving a per share stock price of $ i 5.00 for  i 30 consecutive days, and approximately  i 189,640 shares will vest for recipients remaining employed through December 31, 2022.

During the first nine months of 2021, the Compensation Committee of the Board of Directors approved modifying the 2020 and 2019 performance-based restricted stock units granted in 2020 and 2019. The 2020 and 2019 performance-based restricted stock units did not achieve the 2021 performance objectives. The 2019 performance-based restricted stock units expired because their final performance period was 2021.

On April 13, 2022, the Company’s management analyzed the probability of achieving the 2022 performance objectives for the 2021 and 2020 performance-based restricted stock units granted in 2021 and 2020 and determined that, after comparing the actual year-to-date results to the forecasted results, it is unlikely the Company will achieve the minimum performance metric for the 2022 performance period. This resulted in a $ i 0.3 million adjustment for the 2021 performance-based restricted stock units and an entire reversal of $ i 0.5 million for the 2020 performance-based restricted stock units within the first three months of 2022. The 2020 performance-based restricted stock units will expire after the 2022 performance period and the 2021 performance-based restricted stock units were adjusted to vest at  i 55% of their original cash value and as of September 30, 2022, will be expensed by approximately $ i 0.5 million until the end of the service requisite period of March 31, 2024.

While the majority of  restricted stock units and awards were granted as equity, in accordance with ASC 718, the Company has  i one cash-based plan that is classified as a liability. Stock-based compensation expense for the three months ended September 30, 2022 and 2021 was $ i 0.5 million and $ i 1.1 million, respectively, and for the nine months ended September 30, 2022 and 2021 was $ i 1.1 million and $ i 2.6 million, respectively, and was included in general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations.

 i 

NOTE 13—OTHER SUPPLEMENTARY INFORMATION

The following table summarizes other current assets included on the Company's unaudited condensed consolidated balance sheets:

 i 

(in thousands)

    

September 30, 2022

    

December 31, 2021

Unamortized commercial insurance premiums

$

 i 3,674

$

 i 2,389

Litigation settlement receivable

 i 2,675

Security deposits - real estate

 i 1,978

 i 1,978

Prepaid expenses

 i 1,826

 i 1,136

Sales tax receivable - Canada

 i 6

 i 4,866

Other current assets

 i 516

 i 680

Total

$

 i 10,675

$

 i 11,049

 / 

 / 

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The following table summarizes other current liabilities included on the Company's unaudited condensed consolidated balance sheets:

 i 

(in thousands)

    

September 30, 2022

    

December 31, 2021

Short-term lease liability

$

 i 1,572

$

 i 1,606

Accrued job cost

 i 1,318

 i 2,433

Cloud computing software liability

 i 692

-

Stock Compensation

 i 418

 i 938

Legal fees

 i 245

 i 113

Sales tax payable - Canada

-

 i 5,135

Other current liabilities

 i 385

 i 792

Total

$

 i 4,630

$

 i 11,017

 / 

The following table summarizes other long-term assets included on the Company's unaudited condensed consolidated balance sheets:

 i 

(in thousands)

September 30, 2022

    

December 31, 2021

Right-of-use lease assets

$

 i 3,738

$

 i 1,527

Equity method investment in RCC

 i 1,848

 i 2,521

Unamortized Debt Issuance Cost

 i 1,223

 i 1,509

Unamortized cloud computing software

 i 757

Other long-term assets

 i 166

 i 155

Total

$

 i 7,732

$

 i 5,712

 / 

The following table summarizes other long-term liabilities included on the Company's unaudited condensed consolidated balance sheets:

 i 

(in thousands)

    

September 30, 2022

    

December 31, 2021

Long-term lease liability

$

 i 2,582

$

 i 511

Liability for uncertain tax positions

 i 1,102

 i 1,136

Other long-term liabilities

 i 756

-

Total

$

 i 4,440

$

 i 1,647

 / 

 i 

NOTE 14—SUBSEQUENT EVENTS

The Company settled a legal dispute related to the loss of a multi-year contract against a former Company executive and current competitor. The former Company executive was hired by the competitor and breached a non-compete agreement. The legal settlement resulted in $ i 2.7 million and was included on the income statement as other income for the third quarter of 2022. The Company collected the $ i 2.7 million in cash related to the settlement on October 13, 2022. The $ i 2.7 million settlement was used to pay a portion of the Revolving Credit Facility in the fourth quarter of 2022.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q and its exhibits contain or incorporate by reference various forward-looking statements that express a belief, expectation or intention or are otherwise not statements of historical fact. Forward-looking statements generally use forward-looking words, such as “may,” “will,” “could,” “should,” “would,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other words that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. Investors should not place undue reliance on any of these forward-looking statements. Except as required by law, we undertake no obligation to further update any such statements, or the risk factors described in our 2021 Report under the heading “Part I—Item 1A. Risk Factors,” to reflect new information, the occurrence of future events or circumstances or otherwise. The forward-looking statements in this Form 10-Q do not constitute guarantees or promises of future performance. Forward-looking statements may include information concerning the following, among other items:

implementation of our liquidity plan and our ability to continue as a going concern;
our ability to make interest and principal payments on our debt and satisfy the amended financial and other covenants contained in our debt facilities, as well as our ability to engage in certain transactions and activities due to limitations and covenants contained in such facilities;
our ability to generate sufficient cash resources to continue funding operations, including investments in working capital required to support growth-related commitments that we make to our customers, and the possibility that we may be unable to obtain any additional funding as needed or incur losses from operations in the future;
exposure to market risks from changes in interest rates, including changes to or replacement of the LIBOR;
our ability to obtain adequate surety bonding and letters of credit;
our ability to maintain effective internal control over financial reporting and disclosure controls and procedures;
our ability to attract and retain qualified personnel, skilled workers, and key officers;
failure to successfully implement or realize our business strategies, plans and objectives of management, and liquidity, operating and growth initiatives and opportunities, including any expansion into new markets, and our ability to identify potential candidates for, and consummate, acquisition, disposition, or investment transactions;
the loss of one or more of our significant customers;
our competitive position;
market outlook and trends in our industry, including the possibility of reduced investment in, or increased regulation of, nuclear power plants and declines in public infrastructure construction and reductions in government funding, including funding by state and local agencies;
costs exceeding estimates we use to set fixed-price contracts;
harm to our reputation or profitability due to, among other things, internal operational issues, poor subcontractor performances or subcontractor insolvency;
potential insolvency or financial distress of third parties, including our customers and suppliers;
our contract backlog and related amounts to be recognized as revenue;
our ability to maintain our safety record, the risks of potential liability and adequacy of insurance;
adverse changes in our relationships with suppliers, vendors, and subcontractors, including increases in cost, disruption of supply or shortage of labor, freight, equipment or supplies, including as a result of the COVID-19 pandemic, geopolitical conditions and other economic factors;
compliance with environmental, health, safety and other related laws and regulations, including those related to climate change;
limitations or modifications to indemnification regulations of the U.S.;
our expected financial condition, future cash flows, results of operations and future capital and other expenditures;
the impact of unstable market and economic conditions on our business, financial condition and stock price, including inflationary cost pressures, supply chain disruptions and constraints, labor shortages, the effects of the Ukraine-Russia conflict and a possible recession;
our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results;
the impact of the COVID-19 pandemic on our business, results of operations, financial condition, and cash flows, including global supply chain disruptions and the potential for additional COVID-19 cases to occur at our active or future job sites, which potentially could impact cost and labor availability;
information technology vulnerabilities and cyberattacks on our networks;

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our failure to comply with applicable laws and regulations, including, but not limited to, those relating to privacy and anti-bribery;
our ability to successfully implement our new enterprise resource planning (ERP) system;
our participation in multiemployer pension plans;
the impact of any disruptions resulting from the expiration of collective bargaining agreements;
the impact of natural disasters, which may worsen or increase due to the effects of climate change and other severe catastrophic events;
the impact of corporate citizenship and environmental, social and governance matters;
the impact of changes in tax regulations and laws, including future income tax payments and utilization of net operating loss and foreign tax credit carryforwards;
volatility of the market price for our common stock;
our ability to maintain our stock exchange listing;
the effects of anti-takeover provisions in our organizational documents and Delaware law;
the impact of future offerings or sales of our common stock on the market price of such stock;
the potential impact of activist stockholder actions;
expected outcomes of legal or regulatory proceedings (whether claims made by or against us) and their anticipated effects on our results of operations; and
any other statements regarding future growth, future cash needs, future operations, business plans and future financial results.

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors, including unpredictable or unanticipated factors that we have not discussed in this Form 10-Q. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. Investors should consider the areas of risk and uncertainty described above, as well as those discussed in the 2021 Report under the heading “Part I—Item 1A. Risk Factors.” Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we caution investors not to rely upon them unduly.

The following discussion provides an analysis of the results of continuing operations, an overview of our liquidity and capital resources and other items related to our business. Unless otherwise specified, the financial information and discussion in this Form 10-Q are as of and for the three and nine months ended September 30, 2022 and are based on our continuing operations; they exclude any results of our discontinued operations. Please refer to “Note 5—Changes in Business” to the unaudited condensed consolidated financial statements included in this Form 10-Q for additional information on our discontinued operations.

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Form 10-Q and our audited consolidated financial statements and notes thereto included in the 2021 Report.

Backlog

The services we provide are typically carried out under construction contracts, long-term maintenance contracts and master service agreements. Total backlog represents the dollar amount of revenue expected to be recorded in the future for work performed under awarded contracts.

Revenue estimates included in our backlog can be subject to change as a result of project accelerations, cancellations or delays due to various factors, including, but not limited to, the customer’s budgetary constraints and adverse weather. These factors can also cause revenue amounts to be recognized in different periods and at levels other than those originally projected. Additional work that is not identified under the original contract is added to our estimated backlog when we reach an agreement with the customer as to the scope and pricing of that additional work. Backlog is reduced as work is performed and revenue is recognized, or upon cancellation.

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Backlog is not a measure defined by GAAP, and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. Backlog may not be indicative of future operating results and projects in our backlog may be cancelled, modified, or otherwise altered by our customers. We utilize our calculation of backlog to assist in measuring aggregate awards under existing contractual relationships with our customers. We believe our backlog disclosures will assist investors in better understanding this estimate of the services to be performed pursuant to awards by our customers under existing contractual relationships.

The following tables summarize our backlog:

(in thousands)

September 30, 2022

December 31, 2021

Cost plus

$

313,022

$

559,417

Lump sum

39,701

72,276

Total

$

352,723

$

631,693

(in thousands)

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Backlog - beginning of period

$

234,303

$

631,693

New awards

158,960

214,480

Adjustments and cancellations, net

16,145

(311,147)

Revenue recognized

(56,685)

(182,303)

Backlog - end of period

$

352,723

$

352,723

Total backlog as of September 30, 2022 was $352.7 million, compared with $631.7 million on December 31, 2021, a decrease of $279.0 million, which was primarily driven by the loss of a multi-year contract within the nuclear decommissioning market in February 2022, contributing to a loss of approximately $374.6 million in backlog for the years 2022 through 2029. We estimate that $168.2 million, or 47.7% of total backlog on September 30, 2022, will be converted to revenue within the next twelve months and $64.5 million, or 18.3% of total backlog, will be converted to revenue within the remainder of the fiscal year. As of December 31, 2021, we estimated that approximately $157.2 million of our year-end backlog, as adjusted for the loss of the multi-year contract in February 2022, would be converted to revenue during 2022. Please refer to Item 1, Business under “Backlog” and “Note 17—Subsequent Events” included in the 2021 Report for additional information.

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Results of Operations

The following summary and discussion of our results of operations is based on our continuing operations and excludes any results of our discontinued operations:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

  

2021

Revenue

$

56,685

$

73,351

$

182,303

$

225,773

Cost of revenue

55,936

66,590

173,564

203,561

 Gross profit

749

6,761

8,739

22,212

Selling and marketing expenses

322

267

1,054

709

General and administrative expenses

6,657

4,248

19,022

16,931

Depreciation and amortization expense

61

50

173

137

Total operating expenses

7,040

4,565

20,249

17,777

Operating income (loss)

(6,291)

2,196

(11,510)

4,435

Interest expense, net

1,485

1,227

3,965

3,733

Other (income) expense, net

(11,114)

181

(11,533)

(1,411)

Income (loss) from continuing operations before income tax

3,338

788

(3,942)

2,113

Income tax expense (benefit)

(272)

(6)

(214)

256

Income (loss) from continuing operations

$

3,610

$

794

$

(3,728)

$

1,857

Revenue for the three months ended September 30, 2022 decreased $16.7 million, or 22.7%, compared with the corresponding period in 2021. This decrease was primarily related to lost nuclear decommissioning projects, resulting in a $13.5 million reduction in revenue, the Company exiting the Canadian nuclear market, contributing to a $9.0 million reduction in revenue and a reduction in volume related to our United States nuclear market of $4.0 million compared to the corresponding period in 2021. These declines were partially offset by increased volume in the Company’s transmission and distribution businesses by $4.1 million, water business by $2.1 million, chemical business by $2.1 million and fossil business by $1.2 million.

Revenue for the nine months ended September 30, 2022 decreased $43.5 million, or 19.3%, compared with the corresponding period in 2021. This decrease was primarily related to lost nuclear decommissioning projects, resulting in a $29.0 million reduction, the Company exiting the Canadian nuclear market, contributing to a $23.0 million reduction and a $22.7 million reduction largely driven by the timing of a nuclear outage compared to the corresponding period in 2021. These declines were partially offset by a $5.1 million year-over-year increase with several key customers in our nuclear market, a $4.8 million increase in our chemical market, a $13.0 million increase in our water business and growth in our transmission and distribution businesses contributing to $5.3 million.

Gross profit for the three months ended September 30, 2022 decreased by $6.0 million, or 88.9%, compared with the corresponding period in 2021, while gross margin declined to 1.3% from 9.2%. The decrease in gross profit reflects start-up costs relating to our transmission and distribution markets and the impact of additional losses on certain lump sum projects in our Florida water markets. We anticipate that these projects will continue to generate revenues with no associated profits until completion in the third quarter of 2023. Excluding the impact relating to start-up costs in the transmission and distribution markets and the lump sum projects in the water market for which losses were incurred, the Company would have realized a gross margin of 9.7% rather than 1.3%.

Gross profit for the nine months ended September 30, 2022 decreased by $13.5 million, or 60.7%, compared with the corresponding period in 2021, while gross margin declined to 4.8% from 9.8%. The decrease in gross profit reflects start-up costs relating to our entry into the transmission and distribution markets and the impact of additional losses on certain lump sum projects in our Florida water markets. We anticipate that these projects will continue to generate revenues with no associated profits until completion in the third quarter of 2023. Excluding the impact relating to start-up costs in the transmission and distribution markets and the lump sum projects in the water market for which losses were incurred, the Company would have realized a gross margin of 10.9% rather than 4.8%.

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The following table reconciles our adjusted gross margin to our actual gross margin by deducting the energy transmission and distribution projects that are incurring start-up costs and lump sum projects in the water markets that are generating a loss. We believe this information is meaningful as it isolates the impact that our start-up costs and the non-profitable lump sum projects have on our gross margin. Because adjusted gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as substitute for, or superior to, financial measures prepared in accordance with GAAP.

(in thousands)

Three Months Ended September 30, 2022

Nine Months Ended September 30, 2022

Revenue

$

56,685

$

182,303

Cost of revenue

55,936

173,564

Gross profit

749

8,739

Gross margin

1.3%

4.8%

Minus: revenue from transmission and distribution start-up business

(2,900)

(5,440)

Minus: revenue from Florida lump sum water projects

(3,322)

(16,995)

Minus: total revenue deducted

(6,222)

(22,435)

Minus: cost of revenue from transmission and distribution start-up business

(3,622)

(8,947)

Minus: cost of revenue from the Florida lump sum water projects

(6,759)

(22,178)

Minus: total cost of revenue deducted

(10,381)

(31,125)

Adjusted revenue

50,463

159,868

Adjusted cost of revenue

45,555

142,439

Adjusted gross profit

$

4,908

$

17,429

Adjusted gross profit margin

9.7%

10.9%

The Company recorded an operating loss for the three months ended September 30, 2022 of $6.3 million compared to operating income of $2.2 million for the corresponding period in 2021. This operating loss was primarily related to the decrease of gross profits due to the start-up costs in the energy transmission and distribution markets and the non-profitable lump sum projects in our water market. These losses were coupled with operating costs related to general and administrative expenses (see below).

The Company recorded an operating loss for the nine months ended September 30, 2022 of $11.5 million compared to operating income of $4.4 million for the corresponding period in 2021. This operating loss was primarily due to the decrease in gross profits due to the start-up costs in the energy transmission and distribution markets and the non-profitable lump sum projects in our water market. These losses were coupled with operating costs related to general and administrative expenses (see below).

General and Administrative Expenses

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

  

2021

Employee-related expenses

$

2,740

$

1,946

$

8,469

$

8,916

Stock-based compensation expense

543

1,119

1,120

2,579

Professional fees

1,499

(10)

4,443

1,876

Other expenses

1,875

1,193

4,990

3,560

Total

$

6,657

$

4,248

$

19,022

$

16,931

Total general and administrative expenses for the three months ended September 30, 2022 increased $2.4 million, or 56.7%, compared with the corresponding period in 2021. The increase was largely driven by a $1.4 million increase in professional fees involving legal expenses, a $1.0 million increase largely driven by the reversal of short-term incentives not achieving targets in 2021 and a $0.6 million increase in other expenses related to computer software and subscription costs. These increased costs were partially offset by a $0.6 million decrease in stock-based compensation involving forfeitures of previously-granted equity awards and adjustments related to performance objectives.

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Total general and administrative expenses for the nine months ended September 30, 2022 increased $2.1 million, or 12.4% compared with the corresponding period in 2021. The increase was largely driven by a $2.6 million increase in professional fees involving legal expenses and a $1.4 million increase in other expenses related to software and subscriptions costs. These increased costs were partially offset by a $1.5 million decrease in stock-based compensation involving forfeitures and adjustments related to performance objectives and a $0.4 million reduction in employee-related costs for salaries.

Total Other (Income) Expense, Net

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

  

2021

Interest expense, net

$

1,485

$

1,227

$

3,965

$

3,733

Other (income) expense, net

(11,114)

181

(11,533)

(1,411)

Total

$

(9,629)

$

1,408

$

(7,568)

$

2,322

Total other income, net, for the three months ended September 30, 2022 increased $11.0 million compared with the corresponding period in 2021. The increase was primarily driven by an $8.1 million settlement of an arbitration proceeding related to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period, coupled with a $2.7 million settlement related to a former executive and his employer. Additionally, the Company had $0.7 million decrease in other expenses related to a lease impairment and other small miscellaneous expenses compared with the corresponding period in 2021. The increase was partially offset by a $0.3 million increase in interest expense related to interest rate increases on our borrowings and a $0.2 million reduction in joint venture earnings due to lower volume as construction activities for Plant Vogtle move closer to completion.

Total other income, net, for the nine months ended September 30, 2022 increased $9.9 million compared with the corresponding period in 2021. The increase was primarily driven by an $8.1 million settlement of an arbitration proceeding related to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period, coupled with a $2.7 million settlement related to a former executive and his employer. These awards were partially offset by a $0.2 million increase in interest expense related to interest rate increases on our borrowings and a $0.6 million reduction in joint venture earnings due to lower volume as construction activities for Plant Vogtle move closer to completion.

For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

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Income Tax Expense

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2022

2021

2022

  

2021

Income tax expense (benefit)

$

(272)

$

(6)

$

(214)

$

256

Income tax expense for the interim periods is based on estimates of the effective tax rate for the entire fiscal year. The effective income tax rate is based upon the estimated income during the calendar year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods for settlements of tax audits or assessments and the resolution or identification of tax position uncertainties.

For the three months ended September 30, 2022, the Company recorded income tax benefit from continuing operations of $0.3 million, or (8.2)% of pretax income from continuing operations, compared with income tax benefit from continuing operations of $0.01 million, or (0.8)% of pretax income from continuing operations, in the corresponding period of 2021. For the nine months ended September 30, 2022, the Company recorded income tax benefit from continuing operations of $0.2 million, or 5.4% of pretax loss from continuing operations, compared with income tax expense from continuing operations of $0.3 million, or 12.1% of pretax income from continuing operations, in the corresponding period of 2021.

The $0.3 million decrease in income tax provision from continuing operations for the three months ended September 30, 2022 compared with the corresponding period in 2021 was primarily related to a $0.6 million decrease in the Canadian income tax provision, partially offset by a $0.3 million decrease in the U.S. income tax benefit related to the indefinite lived deferred tax assets. The $0.5 million decrease in income tax provision from continuing operations for the nine months ended September 30, 2022, compared with the corresponding period in 2021, was primarily related to a $0.7 million decrease in the Canadian income tax provision, partially offset by a $0.2 million decrease in the U.S. income tax benefit related to the indefinite lived deferred tax assets.

Discontinued Operations

See “Note 5—Changes in Business” to the unaudited condensed consolidated financial statements included in this Form 10-Q for information regarding discontinued operations.

Liquidity and Capital Resources

During the nine months ended September 30, 2022, our principal sources of liquidity were borrowings under the Revolving Credit Facility and effective management of our working capital. Our principal uses of cash were to pay for customer contract-related material, labor and subcontract labor, operating expenses, principal payments on the Term Loan and interest expense on the Term Loan and the Revolving Credit Facility. See discussion in “Note 9—Debt” to the unaudited condensed consolidated financial statements included in this Form 10-Q for additional information about the Term Loan and the Revolving Credit Facility.

Net Cash Flows

Our net consolidated cash flows, including cash flows related to discontinued operations, consisted of the following:

Nine Months Ended September 30,

(in thousands)

2022

  

2021

Cash flows provided by (used in):

Operating activities

$

(5,464)

$

(8,766)

Investing activities

 

(536)

 

(537)

Financing activities

 

4,671

 

3,031

Effect of exchange rate changes on cash

 

(140)

 

112

Net change in cash, cash equivalents and restricted cash

$

(1,469)

$

(6,160)

Cash and Cash Equivalents

As of September 30, 2022, our operating unrestricted cash and cash equivalents decreased $1.5 million to $1.0 million from $2.5 million as of December 31, 2021. As of September 30, 2022, $0.4 million of operating cash was held in U.S. bank accounts and $0.6 million was held in Canada. Total liquidity (the sum of unrestricted cash and availability under the Revolving Credit Facility) was $7.3 million at the end of the third quarter of 2022.

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Operating Activities

Cash flows from operating activities result primarily from earnings sources and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances related to our projects. For the nine months ended September 30, 2022, cash used in operating activities totaled $5.5 million, a decrease in cash used of $3.4 million compared to the corresponding period in 2021. The cash used in operating activities was primarily due to a $3.2 million net loss, $2.6 million increase to accounts receivable, a $1.0 million decrease to accounts payable and a $2.2 million increase to other assets, partially offset by a $2.6 million decrease to contract assets and a $1.1 million increase to stock-compensation costs for the nine months ended September 30, 2022.

Investing Activities

Cash flows from investing activities were insignificant for the nine months ended September 30, 2022, consistent with the corresponding period in 2021.

Financing Activities

For the nine months ended September 30, 2022, net cash provided by financing activities of $4.7 million was primarily composed of cash provided by our borrowings exceeding our repayments under the Revolving Credit Facility by $13.9 million, partially offset by an $8.8 million payment on our Term Loan, a $0.2 million payment related to the amendment of our Term Loan and Revolving Credit Facility and approximately $0.2 million for payment of statutory taxes related to stock-based compensation. The $8.8 million principal payment included an $8.1 million prepayment related to cash awarded to the Company from settlement of an arbitration proceeding.  

During the first nine months ended September 30, 2021, net cash provided by financing activities of $3.0 million was primarily due to cash provided by our borrowings under the Revolving Credit Facility exceeding our repayments from customer cash receipts by $4.3 million, which was partially offset by cash used in connection with our stock-based awards for payments of statutory taxes of $0.5 million and a $0.8 million principal payment we made on the Term Loan.

For additional information about the settlement of the arbitration and amendment fee, please refer to “Note 9—Debt” to the unaudited condensed consolidated financial statements included in this Form 10-Q

Effect of Exchange Rate Changes on Cash

For both the nine months ended September 30, 2022 and 2021, the effect of Canadian foreign exchange rate changes on our cash balances was not material.

Dividends

We do not currently anticipate declaring dividends in the near future. As of September 30, 2022, the terms of the Term Loan and Revolving Credit Facility restricted our ability to pay dividends. In addition, the timing and amounts of any dividends would be subject to determination and approval by our Board of Directors.

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Liquidity Outlook

The accompanying financial statement have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We anticipate we will continue to experience periodic constraints on our liquidity as a result of the cash flow requirements of specific projects through the third quarter 2023, and we are taking steps expected to strengthen operating results in order to improve our liquidity. Such constraints on our liquidity negatively affected our ability to remain in compliance with our debt covenants, and, accordingly, in August 2022, we entered the Term Loan Amendment and the Revolving Credit Amendment to revise certain terms contained in the Term Loan Agreement and the Revolving Credit Agreement, respectively, including, among other things, certain relevant financial covenants. Effective as of June 30, 2022, the Term Loan Amendment, among other things, amended and increased the Total Leverage Ratio (as defined in the Term Loan Agreement) for certain periods and amended the calculation of Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits). The Revolving Credit Amendment, among other things, amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), effective as of June 30, 2022, to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits) and permitted advances against certain eligible receivables of one of the Company’s joint ventures (also subject to specified dollar limits). We expect to maintain sufficient liquidity by managing our expenses and borrowing and repayments of our Revolving Credit Facility, as well as through implementing our liquidity plan. For additional information about our liquidity plan, please refer to “Note 2—Liquidity” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

During the third and fourth quarter of 2022, the Company settled two legal claims that impacted liquidity. The first involved a cash collection in the third quarter of 2022 of an approximately $8.1 million settlement related to an arbitration proceeding against a third party in connection with the restatement of our financial statement in 2017 for the 2012 to 2014 period, which was used to partially prepay our Term Loan. The second, settled in the fourth quarter of 2022, involved litigation against a former executive and his employer that resulted with the former executive and his employer agreeing to a cash settlement of $2.7 million. The Company recognized the settlement as other income during the third quarter of 2022 and collected the $2.7 million cash settlement on October 13, 2022. The $2.7 million settlement was used to pay a portion of the Revolving Credit Facility in the fourth quarter of 2022. For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

Our continuation as a going concern is dependent upon the Company’s ability to successfully implement its liquidity plan and obtain necessary debt or equity financing to continue operations until we return to generating positive cash flow. A high percentage of our cost of service comes from weekly craft labor payrolls, and the lag between incurrence of those payrolls and the subsequent collection of customer billings results in negative cash flows for that time period. Although we utilize the Revolving Credit Facility to address those time period negative cash flows, contract terms restricting customer invoicing frequency, delays in customer payments, and underlying surety bonds negatively impact our available borrowing base. Although these factors, among others, raise substantial doubt about our ability to continue as a going concern, we believe that we have sufficient resources to satisfy our working capital requirements through the next 12 months and our long-term liquidity needs and foreseeable material cash requirements, as we strategically use our $30.0 million borrowing availability under our Revolving Credit Facility and implement our liquidity plan. A variety of factors can affect our short- and long-term liquidity, which impact could be material, including, but not limited to: cash for operations; matters relating to our contracts, including contracts billed based on milestones that may require us to incur significant expenditures prior to collections from our customers and others that allow for significant upfront billing at the beginning of a project, which temporarily increases liquidity in the near term; the outcome of potential contract disputes, which may be significant; payment collection issues, including those caused by economic slowdowns or other factors which can lead to credit deterioration of our customers; required payments on the Term Loan and the Revolving Credit Facility and on our operating and finance leases; pension obligations requiring annual contributions to multiemployer pension plans; insurance coverage for contracts that require us to indemnify third parties; and issuances of letters of credit. We believe that, in conjunction with executing our liquidity plan, we have adequate sources of liquidity to meet our long-term liquidity needs of developing key management and craft personnel, enhancing our services to meet new opportunities and obtaining the amount of capital needed to drive our long-term growth initiatives of attracting new customers and expanding our market reach. In the event that we are unable to address any potential liquidity shortfalls that may arise in the future, management will need to seek additional funding, which may not be available on reasonable terms, if at all.

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While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be able to implement its liquidity plan successfully or, even if successfully implemented, that the plan will ultimately result in the Company continuing as a going concern. In addition, the Company could be unable to meet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the Company’s lenders, it would result in an event of default under such indebtedness and the potential acceleration of outstanding indebtedness thereunder and the potential foreclosure on the collateral securing such debt, and would likely cause a cross-default under the Company’s other outstanding indebtedness. If the liquidity plan does not have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

While we do not expect the COVID-19 pandemic to materially adversely affect us, we currently cannot predict the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows, or on our customers, as such impact is dependent on future developments, including the duration and severity of the pandemic and the related length of its impact on the global economy. Management will continue to closely monitor conditions using the data available and will draw on the expertise of health officials. Any recovery from the COVID-19 pandemic and related economic impact may be slowed or reversed by a number of factors, including the continued sporadic outbreaks of COVID-19 cases, the ongoing spread of new COVID-19 variants and the impact of COVID-19 vaccines and treatments, and even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of the pandemic’s global economic impact.

Off-Balance Sheet Transactions

Our liquidity is currently not dependent on the use of off-balance sheet transactions but, in line with industry practice, we are often required to provide payment and performance surety bonds to customers and may be required to provide letters of credit. If performance assurances are extended to customers, generally our maximum potential exposure is limited in the contract with our customers. We frequently obtain similar performance assurances from third-party vendors and subcontractors for work performed in the ordinary course of contract execution. However, the total costs of a project could exceed our original cost estimates, and we could experience reduced gross profit or possibly a loss for a given project. In some cases, if we fail to meet certain performance standards, we may be subject to contractual liquidated damages.

As of September 30, 2022, we had a contingent liability for issued and outstanding standby letters of credit, generally issued to secure performance on customer contracts. As of September 30, 2022, we had $0.5 million outstanding letters of credit under the Revolving Credit Facility sublimit and $0.4 million of outstanding cash collateralized standby letters of credit pursuant to a prior revolving credit facility with Wells Fargo Bank, National Association, and there were no amounts drawn upon these letters of credit. In addition, as of September 30, 2022, we had outstanding surety bonds of $65.6 million. Our subsidiaries also provide financial guarantees for certain contractual obligations in the ordinary course of business.

Critical Accounting Policies and Use of Estimates

There have been no material changes to our critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2021 Report.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information required under this item.

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Item 4.     Controls and Procedures.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s management, under the supervision of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Solely as a result of the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2022, our disclosure controls and procedures were not effective. However, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the identified material weaknesses in our internal control over financial reporting, the financial statements in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.  As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting. We have determined that we did not design and maintain effective user access controls to adequately restrict user access and the ability to modify financial data within certain financial applications, including ensuring appropriate segregation of duties relating to the preparation and review of journal entries in these financial applications. As part of closing our books for the second quarter of 2022, we identified immaterial errors that indicated an additional deficiency existed in the Company’s internal control over financial reporting. Specifically, we did not have controls designed effectively for the secondary review and approval of certain expenses. The foregoing control deficiencies did not result in a misstatement of the Company’s annual or interim consolidated financial statements. However, these control deficiencies could have resulted in misstatements of interim or annual consolidated financial statements and disclosures that may have been material. Therefore, management has concluded that: (1) each of the above control deficiencies constitutes a material weakness; and (2) in turn, the Company did not maintain effective internal control over financial reporting as of September 30, 2022.

Management’s Plan to Remediate the Material Weakness

Management has evaluated the user access controls material weakness described above and is in the process of updating its design and implementation of internal control over financial reporting to remediate that material weakness and enhance the Company’s internal control environment. However, the implemented and enhanced controls have not operated for a sufficient period of time to demonstrate that the material weakness was remediated as of September 30, 2022. Having identified the material weakness relating to the secondary review and approval of certain expenses described above, we will promptly be initiating a review and process to remediate such deficiency. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures.

Changes in Internal Control over Financial Reporting

Under the applicable SEC rules, management is required to evaluate any changes in internal control over financial reporting that occurred during each fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than the changes described above regarding enhancements associated with ongoing remediation efforts, there were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition, we are engaged in a transformation project to upgrade our ERP system to a cloud-based platform to increase efficiency, provide additional process capabilities and enhance information security.

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Part II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information included under “Litigation and Claims” in “Note 11—Commitments and Contingencies” to the unaudited condensed consolidated financial statements in this Form 10-Q is incorporated by reference into this Item.

Item 1A.

Risk Factors.

Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition, and results of operations, and you should carefully consider them. There have not been any material changes to our risk factors from those reported in our 2021 Report, except as set forth below.

Our ability to continue to operate as a going concern depends on our ability to successfully implement our liquidity plan and, if necessary, raise additional capital in the future.

Our ability to continue as a going concern is dependent on our ability to successfully implement our liquidity plan, as further described in “Note 2—Liquidity” to the unaudited condensed consolidated financial statements included in this Form 10-Q. While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be able to implement its liquidity plan successfully or, even if successfully implemented, that the plan will ultimately result in the Company continuing as a going concern. In addition, the Company could be unable to meet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the Company’s lenders, it would result in an event of default under such indebtedness and the potential acceleration of outstanding indebtedness thereunder and the potential foreclosure on the collateral securing such debt, and would likely cause a cross-default under the Company’s other outstanding indebtedness.

If the liquidity plan does not have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

To the extent we cannot alleviate the substantial doubt about our ability to continue as a going concern, it may also have the effect of heightening many of the other risks set forth in Item 1A “Risk Factors” 2021 Report.

36

Table of Contents

Item 6.

Exhibits.

Exhibit

   

Description

10.1

First Amendment to Term Loan, Guarantee and Security Agreement, dated as of June 30, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., and Construction & Maintenance Professionals, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd., and WISG Electrical Ltd., as guarantors, and EICF Agent LLC, as agent, and the lenders party thereto (filed as Exhibit 10.2 to our Form 10-Q filed with the SEC on August 11, 2022 and incorporated herein by reference).

10.2*

First Amendment to Revolving Credit and Security Agreement, dated as of August 3, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., and Construction & Maintenance Professionals, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd. and WISG Electrical Ltd., as guarantors, and PNC Bank, National Association, as agent, and the lenders party thereto (filed as Exhibit 10.3 to our Form 10-Q filed with the SEC on August 11, 2022 and incorporated herein by reference).

10.3*

Second Amendment, Joinder and Waiver to Revolving Credit and Security Agreement, dated as of October 7, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., Construction & Maintenance Professionals, LLC, and WISG Electrical, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd. and WISG Electrical Ltd., as guarantors, and PNC Bank, National Association, as agent, and the lenders party thereto.♦

31.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.♦

31.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.♦

32.1

Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 

101

The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended  September 30, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Stockholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.♦

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).♦

Filed herewith.

* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Registration S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the SEC upon request.

37

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WILLIAMS INDUSTRIAL SERVICES GROUP INC.

Date: November 14, 2022

By:

/s/ Damien A. Vassall

Damien A. Vassall

Vice President, Chief Financial Officer
(Duly authorized officer and principal financial and accounting officer of the registrant)

38


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
12/16/25
3/31/25
3/31/24
3/31/23
2/3/23
12/31/22
Filed on:11/14/228-K
11/7/22
10/13/22
10/2/22
For Period end:9/30/22
8/23/228-K
8/22/228-K
8/16/22
8/3/228-K
7/4/22
7/3/22
6/30/2210-Q
4/13/22
4/4/224
4/3/22
3/31/2210-Q,  4
3/16/2210-K,  8-K
1/1/22
12/31/2110-K
10/3/21
9/30/2110-Q
9/2/21
8/5/21
7/5/21
7/4/21
6/30/2110-Q
6/15/218-K,  DEF 14A
5/17/21S-8
5/12/21
4/5/21
4/4/21
3/31/2110-K,  10-Q,  4,  8-K
3/5/214
1/1/21
12/31/2010-K
12/16/208-K
3/31/2010-Q,  4,  8-K
3/27/2010-K
7/11/188-K
6/29/188-K
 List all Filings 


2 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 5/01/23  Williams Industrial Svcs Gp Inc.  10-K/A     12/31/22   12:605K                                   Toppan Merrill/FA
 3/31/23  Williams Industrial Svcs Gp Inc.  10-K       12/31/22  101:21M                                    Toppan Merrill Bridge/FA


1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/11/22  Williams Industrial Svcs Gp Inc.  10-Q        6/30/22   66:9.4M                                   Toppan Merrill Bridge/FA
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