0001558370-18-009358.txt : 20181114 0001558370-18-009358.hdr.sgml : 20181114 20181114165436 ACCESSION NUMBER: 0001558370-18-009358 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181114 DATE AS OF CHANGE: 20181114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Williams Industrial Services Group Inc. CENTRAL INDEX KEY: 0001136294 STANDARD INDUSTRIAL CLASSIFICATION: HEAVY CONSTRUCTION OTHER THAN BUILDING CONST - CONTRACTORS [1600] IRS NUMBER: 731541378 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16501 FILM NUMBER: 181184832 BUSINESS ADDRESS: STREET 1: 100 CRESCENT CENTRE PARKWAY STREET 2: SUITE 1240 CITY: TUCKER STATE: GA ZIP: 30084 BUSINESS PHONE: 770-879-4400 MAIL ADDRESS: STREET 1: 100 CRESCENT CENTRE PARKWAY STREET 2: SUITE 1240 CITY: TUCKER STATE: GA ZIP: 30084 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL POWER EQUIPMENT GROUP INC. DATE OF NAME CHANGE: 20100730 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL POWER EQUIPMENT GROUP INC/ DATE OF NAME CHANGE: 20010309 FORMER COMPANY: FORMER CONFORMED NAME: GEEG INC DATE OF NAME CHANGE: 20010306 10-Q 1 wlms-20180930x10q.htm 10-Q wlms-current folio_10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q


 

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

 

For the quarterly period ended September 30, 2018

 

or

 

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. 001-16501

C:\Users\lbpayne\Desktop\Williams-Logo_color_500x358.jpg

Williams Industrial Services Group Inc.

(Exact name of registrant as specified in its charter)

 


 

 

 

 

Delaware

 

73-1541378

(State or other jurisdiction of
incorporation or organization)

 

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

 

100 Crescent Centre Parkway, Suite 1240

Tucker, GA 30084

(Address of principal executive offices) (Zip code)

 

(770) 879-4400

(Registrant’s telephone number, including area code)

 

Global Power Equipment Group Inc.

400 E. Las Colinas Blvd., Suite 400

Irving, TX 75039

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

 


 

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.    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).    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

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

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  ☐    No  ☒

 

As of November 9, 2018, there were 18,514,945 shares of common stock of Williams Industrial Services Group Inc. outstanding.

 

 

 


 

 

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

Table of Contents

 

 

Part I—FINANCIAL INFORMATION 

3

 

 

Item 1. Financial Statements 

3

 

 

Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017 (unaudited) 

3

 

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017 (unaudited) 

4

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2018 and 2017 (unaudited) 

5

 

 

Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2018 (unaudited) 

6

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 (unaudited) 

7

 

 

Notes to Condensed Consolidated Financial Statements (unaudited) 

8

 

 

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

24

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk 

31

 

 

Item 4. Controls and Procedures 

31

 

 

Part II—OTHER INFORMATION 

 

 

 

Item 1. Legal Proceedings 

31

 

 

Item 1A. Risk Factors 

31

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

32

 

 

Item 3. Defaults Upon Senior Securities 

32

 

 

Item 4. Mine Safety Disclosures 

32

 

 

Item 5. Other Information 

32

 

 

Item 6. Exhibits 

32

 

 

SIGNATURES 

34

 

 


 

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, 2018

  

December 31, 2017

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents 

 

$

4,393

 

$

4,594

Restricted cash 

 

 

5,916

 

 

11,562

Accounts receivable, net of allowance of $493 and $1,568, respectively

 

 

29,010

 

 

26,060

Contract assets

 

 

9,151

 

 

11,487

Other current assets 

 

 

1,553

 

 

4,006

Current assets of discontinued operations

 

 

229

 

 

27,922

Total current assets 

 

 

50,252

 

 

85,631

 

 

 

 

 

 

 

Property, plant and equipment, net 

 

 

972

 

 

1,712

Goodwill 

 

 

35,400

 

 

35,400

Intangible assets

 

 

12,500

 

 

12,500

Other long-term assets 

 

 

1,398

 

 

573

Total assets 

 

$

100,522

 

$

135,816

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable 

 

$

7,101

 

$

5,080

Accrued compensation and benefits 

 

 

13,136

 

 

7,481

Contract liabilities

 

 

2,788

 

 

7,049

Long-term debt, current

 

 

438

 

 

 —

Other current liabilities 

 

 

5,963

 

 

5,552

Current liabilities of discontinued operations

 

 

2,515

 

 

28,802

Total current liabilities 

 

 

31,941

 

 

53,964

Long-term debt, net

 

 

33,058

 

 

24,304

Deferred tax liabilities

 

 

10,529

 

 

9,921

Other long-term liabilities 

 

 

1,491

 

 

2,390

Long-term liabilities of discontinued operations

 

 

5,192

 

 

3,110

Total liabilities 

 

 

82,211

 

 

93,689

Commitments and contingencies (Notes 8 and 10)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value, 170,000,000 shares authorized and 19,715,605 and 19,360,026 shares issued, respectively, and 18,514,945 and 17,946,386 shares outstanding, respectively 

 

 

197

 

 

193

Paid-in capital 

 

 

80,046

 

 

78,910

Retained earnings (deficit)

 

 

(61,920)

 

 

(36,962)

Treasury stock, at par (1,200,660 and 1,413,640 common shares, respectively)

 

 

(12)

 

 

(14)

Total stockholders’ equity 

 

 

18,311

 

 

42,127

Total liabilities and stockholders’ equity 

 

$

100,522

 

$

135,816

 

See accompanying notes to condensed consolidated financial statements.

3


 

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)

  

 

2018

   

 

2017

 

2018

 

2017

Revenue

 

$

53,467

 

$

39,040

 

$

144,563

 

$

142,653

Cost of revenue

 

 

43,255

 

 

34,280

 

 

121,154

 

 

132,694

 

 

 

 

 

 

 

 

 

 

 

 

 

 Gross profit

 

 

10,212

 

 

4,760

 

 

23,409

 

 

9,959

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

397

 

 

470

 

 

1,299

 

 

1,754

General and administrative expenses

 

 

7,529

 

 

9,650

 

 

21,645

 

 

27,788

Restructuring charges

 

 

1,436

 

 

 —

 

 

3,661

 

 

 —

Depreciation and amortization expense

 

 

192

 

 

484

 

 

633

 

 

1,148

Total operating expenses

 

 

9,554

 

 

10,604

 

 

27,238

 

 

30,690

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

658

 

 

(5,844)

 

 

(3,829)

 

 

(20,731)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

3,622

 

 

3,640

 

 

7,397

 

 

7,584

Gain on sale of business and net assets held for sale

 

 

 —

 

 

 —

 

 

 —

 

 

(239)

Other (income) expense, net

 

 

(339)

 

 

(9)

 

 

(844)

 

 

(9)

Total other (income) expenses, net

 

 

3,283

 

 

3,631

 

 

6,553

 

 

7,336

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income tax expense (benefit)

 

 

(2,625)

 

 

(9,475)

 

 

(10,382)

 

 

(28,067)

Income tax expense (benefit)

 

 

215

 

 

312

 

 

720

 

 

(1,226)

Loss from continuing operations

 

 

(2,840)

 

 

(9,787)

 

 

(11,102)

 

 

(26,841)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations before income tax expense (benefit)

 

 

(10,619)

 

 

(8,052)

 

 

(14,522)

 

 

(16,819)

Income tax expense (benefit)

 

 

17

 

 

(687)

 

 

(666)

 

 

533

Loss from discontinued operations

 

 

(10,636)

 

 

(7,365)

 

 

(13,856)

 

 

(17,352)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(13,476)

 

$

(17,152)

 

$

(24,958)

 

$

(44,193)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share  

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.16)

 

$

(0.55)

 

$

(0.61)

 

$

(1.53)

Loss from discontinued operations

 

 

(0.58)

 

 

(0.42)

 

 

(0.76)

 

 

(0.99)

Basic loss per common share  

 

$

(0.74)

 

$

(0.97)

 

$

(1.37)

 

$

(2.52)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted loss per common share

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations

 

$

(0.16)

 

$

(0.55)

 

$

(0.61)

 

$

(1.53)

Loss from discontinued operations

 

 

(0.58)

 

 

(0.42)

 

 

(0.76)

 

 

(0.99)

Diluted loss per common share

 

$

(0.74)

 

$

(0.97)

 

$

(1.37)

 

$

(2.52)

 

 

See accompanying notes to condensed consolidated financial statements.

4


 

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

 

 

2018

  

 

2017

  

 

2018

  

 

2017

Net loss

 

$

(13,476)

 

$

(17,152)

 

$

(24,958)

 

$

(44,193)

Foreign currency translation adjustment

 

 

 —

 

 

791

 

 

 —

 

 

2,887

Comprehensive loss

 

$

(13,476)

 

$

(16,361)

 

$

(24,958)

 

$

(41,306)

 

See accompanying notes to condensed consolidated financial statements.

5


 

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

$0.01 Per Share

 

 

Paid-in

 

 

Earnings  

 

Treasury Shares

 

 

 

(in thousands, except share data)

  

Shares

  

 

Amount

  

 

Capital

  

 

(Deficit)

  

Shares

  

 

Amount

  

 

Total

Balance, December 31, 2017

 

19,360,026

 

$

193

 

$

78,910

 

$

(36,962)

 

(1,413,640)

 

$

(14)

 

$

42,127

Issuance of restricted stock units

 

355,579

 

 

 4

 

 

 

 

 

 —

 

347,131

 

 

 4

 

 

 8

Tax withholding on restricted stock units

 

 —

 

 

 —

 

 

(357)

 

 

 —

 

(134,151)

 

 

(2)

 

 

(359)

Stock-based compensation

 

 —

 

 

 —

 

 

1,493

 

 

 —

 

 —

 

 

 —

 

 

1,493

Net loss

 

 —

 

 

 —

 

 

 —

 

 

(24,958)

 

 —

 

 

 —

 

 

(24,958)

Balance, September 30, 2018

 

19,715,605

 

$

197

 

$

80,046

 

$

(61,920)

 

(1,200,660)

 

$

(12)

 

$

18,311

 

See accompanying notes to condensed consolidated financial statements.

6


 

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

(in thousands)

  

2018

  

2017

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(24,958)

 

$

(44,193)

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

 

 

 

 

 

 

Net loss from discontinued operations

 

 

13,856

 

 

17,352

Deferred income tax expense (benefit)

 

 

608

 

 

(400)

Depreciation and amortization on plant, property and equipment and intangible assets

 

 

633

 

 

1,147

Amortization of deferred financing costs

 

 

1,475

 

 

526

Loss on disposals of property, plant and equipment

 

 

210

 

 

30

Gain on sale of business and net assets held for sale

 

 

 —

 

 

(239)

Bad debt expense

 

 

(90)

 

 

190

Stock-based compensation

 

 

697

 

 

1,855

Payable-in-kind interest

 

 

1,964

 

 

2,004

Restructuring charges

 

 

3,661

 

 

 —

Changes in operating assets and liabilities, net of business sold:

 

 

 

 

 

 

Accounts receivable

 

 

(2,860)

 

 

(11,089)

Contract assets

 

 

2,336

 

 

11,454

Other current assets

 

 

2,453

 

 

3,370

Other assets

 

 

(1,400)

 

 

3,521

Accounts payable

 

 

2,021

 

 

470

Accrued and other liabilities

 

 

3,643

 

 

(11,223)

Contract liabilities

 

 

(4,261)

 

 

2,820

Net cash provided by (used in) operating activities, continuing operations

 

 

(12)

 

 

(22,405)

Net cash provided by (used in) operating activities, discontinued operations

 

 

(6,685)

 

 

3,438

Net cash provided by (used in) operating activities

 

 

(6,697)

 

 

(18,967)

Investing activities:

 

 

 

 

 

 

Proceeds from sale of business, net of restricted cash and transaction costs

 

 

 —

 

 

20,206

Purchase of property, plant and equipment

 

 

(123)

 

 

(11)

Other investing activities

 

 

 —

 

 

3,286

Net cash provided by (used in) investing activities, continuing operations

 

 

(123)

 

 

23,481

Net cash provided by (used in) investing activities, discontinued operations

 

 

319

 

 

(264)

Net cash provided by (used in) investing activities

 

 

196

 

 

23,217

Financing activities:

 

 

 

 

 

 

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

 

 

(351)

 

 

(463)

Debt issuance costs

 

 

(1,520)

 

 

(1,872)

Dividends paid

 

 

 —

 

 

(9)

Proceeds from long-term debt

 

 

33,679

 

 

171,599

Payments of long-term debt

 

 

(31,154)

 

 

(165,515)

Net cash provided by (used in) financing activities, continuing operations

 

 

654

 

 

3,740

Net cash provided by (used in) financing activities, discontinued operations

 

 

 —

 

 

 —

Net cash provided by (used in) financing activities

 

 

654

 

 

3,740

Effect of exchange rate change on cash, continuing operations

 

 

 —

 

 

19

Effect of exchange rate change on cash, discontinued operations

 

 

 —

 

 

694

Effect of exchange rate change on cash

 

 

 —

 

 

713

Net change in cash, cash equivalents and restricted cash

 

 

(5,847)

 

 

8,703

Cash, cash equivalents and restricted cash, beginning of period

 

 

16,156

 

 

11,570

Cash, cash equivalents and restricted cash, end of period

 

$

10,309

 

$

20,273

 

 

 

 

 

 

 

Supplemental Disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

3,555

 

$

4,736

Cash paid for income taxes, net of refunds

 

$

16

 

$

1,259

Noncash amendment fee related to term loan

 

$

4,000

 

$

 —

Noncash repayment of revolving credit facility

 

$

 —

 

$

(36,224)

Noncash upfront fee related to senior secured term loan facility

 

$

 —

 

$

4,550

 

See accompanying notes to condensed consolidated financial statements.

7


 

 WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—BUSINESS AND BASIS OF PRESENTATION

Business

Effective June 29, 2018, Global Power Equipment Group Inc. changed its name to Williams Industrial Services Group Inc. (“Williams,” the “Company,” “we,” “us” or “our”) to better align its name with the Williams business, and the Company’s stock now trades on the OTC Pink® Marketplace under the ticker symbol “WLMS.” Williams has been safely helping plant owners and operators enhance asset value for more than 50 years. The Company provides a broad range of general and specialty construction, maintenance and modification, and plant management support services to the nuclear, hydro and fossil power generation, pulp and paper, refining, petrochemical and other process and manufacturing industries. 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 (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended December 31, 2017, filed by the Company with the United States (the “U.S.”) Securities and Exchange Commission (“SEC”) on April 16, 2018 (the “2017 Report”), and include all normal recurring adjustments necessary to present fairly the unaudited condensed consolidated balance sheets and statements of operations, comprehensive loss, stockholders’ equity and cash flows for the periods indicated. All significant intercompany transactions have been eliminated. These notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the 2017 Report. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and nine month periods are not necessarily indicative of the results to be expected for the full year.

The Company reports on a fiscal quarter basis utilizing a “modified” 4-4-5 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:

 

 

 

 

 

Reporting Interim Period

 

Fiscal Interim Period

 

 

2018

 

2017

Three Months Ended March 31

 

January 1, 2018 to April 1, 2018

 

January 1, 2017 to April 2, 2017

Three Months Ended June 30

 

April 2, 2018 to July 1, 2018

 

April 3, 2017 to July 2, 2017

Three Months Ended September 30

 

July 2, 2018 to September 30, 2018

 

July 3, 2017 to October 1, 2017

 

 

NOTE 2—LIQUIDITY

The Company’s condensed consolidated financial statements have been prepared on a going concern basis, which assumes 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, 2018 (this “Form 10-Q”). 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.

In the 2017 Report and the Form 10-Q reports for the first and second quarters of 2018, 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 periods following the issuance of those reports:

·

For the past several years, the Company has incurred both net losses and negative cash flows from operations.

·

Since December 31, 2017, Koontz-Wagner Custom Controls Holdings LLC (“Koontz-Wagner”), a wholly owned subsidiary of the Company and the sole component of the Electrical Solutions segment, was presented as a discontinued operation. However, Koontz-Wagner continued to incur operating losses, which resulted in its bankruptcy filing in July 2018. Please refer to “Note 4–Changes in Business” for additional discussion on the bankruptcy filing.

8


 

·

The Company’s liquidity had been very constrained. The Company’s lack of access to readily available capital resources and unexpected delays in collecting projected cash receipts could create significant liquidity problems.

·

The Fourth Amendment to the Centre Lane Facility (as defined below) required prepayment of all outstanding amounts due and payable on the earlier of (i) May 31, 2019, (ii) the date Williams Industrial Services Group, LLC and its subsidiaries are sold or (iii) the date of acceleration of the loans pursuant to an additional event of default.

Management believes the following actions, which were completed after the August 14, 2018 filing of the Company’s Form 10-Q for the second quarter of 2018, have alleviated the factors that previously caused the substantial doubt about the Company’s ability to continue as a going concern:

·

On October 18, 2018, restricted cash of $5.4 million that was held as collateral on letters of credit was released to the Company, net of $0.9 million in fees owed to the collateral agent.

·

On October 11, 2018, the Company entered into a three-year, $15.0 million Credit Agreement (as defined below). The Credit Agreement is a secured asset-based revolving credit facility that provides borrowing availability against 85% of eligible accounts receivable and 80% of eligible costs and estimated earnings in excess of billings, after certain customary exclusions and reserves, and allows for up to $6.0 million of non-cash collateralized letters of credit. On the date the Company entered into the Credit Agreement, its eligible borrowing base supported $13.4 million of available borrowings under the Credit Agreement. The Company can, if necessary, make daily borrowings under the Credit Agreement with same day funding. Please refer to “Note 12–Subsequent Event” for additional discussion of the Credit Agreement.

·

As of September 30, 2018, the Company had formally closed its Irving, Texas corporate headquarters and implemented employee reductions in accordance with its plans.

·

On September 18, 2018, the Company refinanced and replaced its existing Centre Lane Facility with a four-year, $35.0 million senior secured credit agreement with an affiliate of Centre Lane as Administrative Agent and Collateral Agent, and the other lenders from time to time party thereto (the “New Centre Lane Facility”). After payment of the amounts outstanding under the prior Centre Lane Facility and fees associated with the New Centre Lane Facility, net cash proceeds were $1.0 million. Additionally, under the New Centre Lane Facility, there is no longer any payable-in-kind (“PIK”) interest charge. Please refer to “Note 8–Debt” for additional discussion of the New Centre Lane Facility.

While management believes the implementation of its mitigation plans have alleviated the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the risk factors described in our 2017 Report under the heading “Item 1A. Risk Factors,” are still relevant to our operations.

NOTE 3—RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In the first quarter of 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-18, “Restricted Cash (a consensus of the FASB Emerging Issues Task Force).” ASU 2016-18 requires an entity to include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. The Company adopted ASU 2016-18 on a retrospective basis, and net transfers of restricted cash of $5.6 million and $3.3 million have been presented in net change in cash and cash equivalents in the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017, respectively.

In the first quarter of 2018, the Company adopted ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 requires an entity to classify distributions received from equity method investees in the statement of cash flows using either the cumulative earnings approach or the nature of distribution approach. The Company adopted ASU 2016-15 on a retrospective basis and elected to classify distributions received from its equity method investees using the cumulative earnings approach. The adoption of ASC 2016-15 did not have an impact on the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017, respectively.

9


 

In the first quarter of 2018, the Company adopted ASU 2014-09 (ASC Topic 606), “Revenue from Contracts with Customers,” and the related ASUs, which provided new guidance for revenue recognized from contracts with customers and replaced the previously existing revenue recognition guidance. ASU 2014-09 requires that revenue be recognized at an amount the Company is entitled to upon transferring control of goods or services to customers, as opposed to when risks and rewards transfer to a customer. The Company adopted ASC Topic 606 using the modified retrospective method, and accordingly, the new guidance was applied retrospectively to contracts that were not completed as of December 31, 2017. Results for operating periods beginning after January 1, 2018 are presented under ASC Topic 606, while comparative information for prior periods has not been restated and continues to be reported in accordance with the accounting standards in effect for those periods. The adoption of ASC Topic 606 did not result in changes to the method or timing of revenue recognized and did not have a material impact on the Company’s financial position, results of operations and cash flows as of and for the three and nine months ended September 30, 2018.

There was no material difference in the Company’s results for the three and nine months ended September 30, 2018 with application of ASC Topic 606 on its contracts and what results would have been if such contracts had been reported using accounting standards previously in effect for such contracts. The Company elected to utilize the modified retrospective transition practical expedient that allows the Company to evaluate the impact of contract modifications as of January 1, 2018 rather than evaluating the impact of the modifications at the time they occurred. There was no material impact associated with the election of this practical expedient.

The Company also elected to utilize the practical expedient to recognize revenue in the amount to which it has a right to invoice for services performed when it has a right to consideration from a customer in an amount that corresponds directly with the value of its performance completed to date.

Please refer to “Note 5–Revenue” for additional discussion of the Company’s revenue recognition accounting policies and expanded disclosures required by ASC Topic 606.

Recently Issued Accounting Pronouncements Not Yet Adopted 

In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC Topic 718, “Compensation–Stock Compensation” and applies to all share-based payment transactions to nonemployees in which a grantor acquires goods and services to be used or consumed in a grantor’s own operations by issuing share-based awards. Upon adoption of ASU 2018-07, an entity should only re-measure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. ASU 2018-07 is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of ASU 2018-07 to have a material impact on its financial position, results of operations and cash flows.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify the tax effects stranded in accumulated other comprehensive income as a result of the enactment of comprehensive tax legislation in December 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. ASU 2018-02 is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of ASU 2018-02 to have a material impact on its financial position, results of operations and cash flows.

In February 2016, the FASB issued ASU 2016-02, “Leases.” The primary difference between the current requirement under GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. ASU 2016-02 requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases), while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. ASU 2016-02 must be adopted using a modified retrospective transition, and provides for certain practical expedients. The Company has not determined the potential impact of the adoption of ASU 2016-02 on its financial position, results of operations and cash flows.

10


 

 

NOTE 4—CHANGES IN BUSINESS

Restructuring Charges

In 2018, the Company made the decision to relocate its corporate headquarters to Tucker, Georgia and vacated its leased office space in Irving, Texas on September 30, 2018. Presently, the Company is seeking to sublease the office space; however, it may attempt to pay a termination fee and terminate the lease. The Company expects to complete its exit activities related to this office space by November 2019, when the lease expires. The Company recorded exit costs related to the leased office space and the termination of certain personnel, which were included in restructuring charges in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018.

The following table shows exit costs included in other current liabilities on the Company’s condensed consolidated balance sheet:

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2018

(in thousands)

 

 

Lease

 

 

Severance

 

 

Total

Balance, December 31, 2017

 

$

 —

 

$

 —

 

$

 —

Restructuring charges

 

 

418

 

 

3,243

 

 

3,661

Payments for restructuring

 

 

 —

 

 

(660)

 

 

(660)

Balance, September 30, 2018

 

$

418

 

$

2,583

 

$

3,001

 

The following table presents the major classes of items constituting restructuring expenses on the Company’s condensed consolidated statement of operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

  

2018

 

2017

 

2018

  

2017

Lease

 

 

418

 

 

 —

 

 

418

 

 

 —

Severance

 

 

1,018

 

 

 —

 

 

3,243

 

 

 —

Total

 

$

1,436

 

$

 —

 

$

3,661

 

$

 —

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, 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. In connection with the Company’s decision to sell the Electrical Solutions segment, the Company performed an impairment analysis on this segment’s finite- and indefinite-lived intangible assets (customer relationships and trade names, respectively) and determined that their carrying value exceeded their fair value. As a result, in the fourth quarter of 2017, the Company recorded an impairment charge of $9.7 million related to these intangible assets. After the impairment charge, the fair value of this segment’s intangible assets was zero at December 31, 2017. Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs. There were no other non-recurring fair value re-measurements related to the Electrical Solutions segment during the year ended December 31, 2017 or three and nine months ended September 30, 2018.

In spite of the Company’s efforts, which included retaining financial advisors to sell all or part of Koontz-Wagner’s operations, inside or outside of a federal bankruptcy or state court proceeding (including Chapter 11 of Title 11 of the U.S. Bankruptcy Code (the “Code”)), the proposed disposition did not progress as planned due, primarily, to the absence of viable bids in the sale process, the inability of Koontz-Wagner to fund its ongoing operations or obtain financing to do so, and Koontz-Wagner’s deteriorating financial performance. As a result, on July 11, 2018, Koontz-Wagner filed a voluntary petition for relief under Chapter 7 of Title 11 of the 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.

11


 

As a result of the July 11, 2018 bankruptcy of Koontz-Wagner, the Company recorded $11.4 million of exit costs, which were included in loss from discontinued operations in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018. These charges consisted of a $4.0 million Centre Lane Facility Fifth Amendment fee, a pension withdrawal liability of $2.9 million related to Koontz-Wagner’s International Brotherhood of Electrical Workers Local Union 1392 multi-employer pension plan, a $1.8 million negotiated settlement of the Company’s guarantee of Koontz-Wagner’s Houston facility lease agreement and a $2.7 million liability as a result of the Company providing affected Koontz-Wagner employees with 60 days of salary continuation, as well as the difference between each employee’s cost of health care at the time of their employment termination and the cost of continued benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The Company expects to satisfy the liability related to the lease guarantee settlement and substantially all of the salary and benefit continuation liability through cash payments by the end of 2018. The pension liability is expected to be satisfied by annual cash payments of $0.3 million each, paid in quarterly installments, over the next twenty years.

As a result of the bankruptcy of Koontz-Wagner, the Company wrote off the related assets and liabilities on the Company’s consolidated balance sheet and recorded a loss of $9.3 million, which was reflected in loss from discontinued operations in the condensed consolidated statements of operations for the three and nine months ended September 30, 2018.

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 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. The Mechanical Solutions and the Electrical Solutions segments were the only components of the business that qualified for discontinued operations for all periods presented.

On October 11, 2017, the Company sold substantially all of the operating assets and liabilities of its Mechanical Solutions segment for $43.0 million and used a portion of the proceeds to pay down $34.0 million of the Company’s outstanding debt and related fees, including full repayment of the First-Out Loan (as defined below). Additionally, on October 31, 2017, the Company completed the sale of its manufacturing facility in Mexico and auctioned the remaining production equipment and other assets for net proceeds of $3.6 million, of which $1.9 million was used to reduce the principal amount of the Initial Centre Lane Facility. The remainder was used to fund working capital requirements. In the fourth quarter of 2017, the Company recorded a total gain of $6.3 million related to these sales.

The Company excluded an asset and liability from the sale of the Mechanical Solutions segment, which were comprised of the Company’s office building located in Heerlen, Netherlands and its liability for uncertain tax positions. The liability was included in long-term liabilities of discontinued operations in the September 30, 2018 and December 31, 2017 condensed consolidated balance sheets. The asset was included in current assets of discontinued operations in the December 31, 2017 condensed consolidated balance sheet. At the time the Heerlen office building met the “asset held for sale” criteria, its carrying value was $0.5 million; however, the Company subsequently determined that the building’s carrying value exceeded its fair value and, consequently, it recorded an impairment charge of $0.2 million during the fourth quarter of 2017. The impairment charge was included in loss from discontinued operations before income tax expense (benefit) in the consolidated statement of operations for the year ended December 31, 2017. After the impairment charge, the fair value of the Heerlen building was $0.3 million at December 31, 2017. Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs. There were no other non-recurring fair value re-measurements related to the Mechanical Solutions segment during the year ended December 31, 2017.

On March 21, 2018, the Company closed on the sale of its office building in Heerlen, Netherlands for $0.3 million, resulting in an immaterial gain on sale, which was reflected in loss from discontinued operations before income tax expense (benefit) in the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2018.

In connection with the sale of its Mechanical Solutions segment, the Company entered into a transition services agreement with the purchaser to provide certain accounting and administrative services for an initial period of nine months. For each of the three and nine months ended September 30, 2018, the Company provided less than $0.1 million and $0.3 million, respectively, in services for the purchaser, which was included in general and administrative expenses from continuing operations in the condensed consolidated statement of operations.

12


 

The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of Electrical and Mechanical Solutions’ discontinued operations:

 

 

 

 

 

 

 

(in thousands)

  

September 30, 2018

 

December 31, 2017

Assets:

 

 

 

 

 

 

Accounts receivable

 

$

 —

 

$

12,296

Inventories, net

 

 

 —

 

 

178

Contract assets

 

 

26

 

 

11,325

Other current assets

 

 

203

 

 

493

Property, plant and equipment, net

 

 

 —

 

 

3,630

Current assets of discontinued operations*

 

$

229

 

$

27,922

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

 9

 

$

7,004

Accrued compensation and benefits 

 

 

 —

 

 

1,191

Contract liabilities

 

 

 —

 

 

948

Accrued warranties

 

 

 —

 

 

1,166

Other current liabilities

 

 

2,506

 

 

18,493

Current liabilities of discontinued operations

 

 

2,515

 

 

28,802

Liability for uncertain tax positions

 

 

2,393

 

 

3,110

Liability for pension obligation

 

 

2,799

 

 

 —

Long-term liabilities of discontinued operations

 

 

5,192

 

 

3,110

Total liabilities of discontinued operations

 

$

7,707

 

$

31,912

* The total assets of discontinued operations were classified as current on the September 30, 2018 and December 31, 2017 condensed consolidated balance sheets because it was probable that a sale would occur and proceeds would be collected within one year.

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)

  

2018

  

2017

  

2018

  

2017

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Electrical Solutions

 

$

3,218

 

$

11,590

 

$

22,259

 

$

35,669

Mechanical Solutions

 

 

 —

 

 

16,262

 

 

 —

 

 

50,841

Total revenue

 

 

3,218

 

 

27,852

 

 

22,259

 

 

86,510

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Electrical Solutions

 

 

4,290

 

 

17,475

 

 

24,613

 

 

45,205

Mechanical Solutions

 

 

 —

 

 

13,087

 

 

 —

 

 

41,580

Total cost of revenue

 

 

4,290

 

 

30,562

 

 

24,613

 

 

86,785

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

34

 

 

1,215

 

 

207

 

 

3,625

General and administrative expenses

 

 

268

 

 

3,729

 

 

2,634

 

 

12,192

Other (income) expense

 

 

(29)

 

 

398

 

 

(38)

 

 

727

Loss from discontinued operations before income taxes

 

 

(1,345)

 

 

(8,052)

 

 

(5,157)

 

 

(16,819)

Loss on disposal - Electrical Solutions

 

 

9,274

 

 

 —

 

 

9,274

 

 

 —

Loss on disposal - Mechanical Solutions

 

 

 —

 

 

 —

 

 

91

 

 

 —

Total loss from discontinued operations before income taxes

 

 

(10,619)

 

 

(8,052)

 

 

(14,522)

 

 

(16,819)

Income tax expense (benefit)

 

 

17

 

 

(687)

 

 

(666)

 

 

533

Loss from discontinued operations 

 

$

(10,636)

 

$

(7,365)

 

$

(13,856)

 

$

(17,352)

Disposition of Hetsco

In June 2016, the Company engaged a financial advisor to assist with the sale of its wholly owned subsidiary, Hetsco, Inc. (“Hetsco”), in order to pay down debt. Hetsco was previously included in the Services segment. In connection with the

13


 

Company’s decision to sell Hetsco, the net assets were adjusted to estimated fair value less estimated selling expenses, which resulted in a write-down of $8.3 million in 2016.

On January 13, 2017, the Company sold the stock of Hetsco for $23.2 million in cash, inclusive of working capital adjustments. After transaction costs and an escrow withholding of $1.5 million, the net proceeds of $20.2 million were used to reduce debt. In connection with the Company’s decision to sell Hetsco, the net assets were adjusted to estimated fair value less estimated selling expenses, which resulted in a write-down of $8.3 million in 2016. In the first quarter of 2017, the Company recorded a $0.2 million adjustment, which reduced the $8.3 million loss recorded in 2016.

A summary of Hetsco’s income before income taxes for the three and nine months ended September 30, 2018 and 2017 was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands)

  

2018

  

2017

  

2018

  

2017

Income before income taxes

 

$

 —

 

$

 —

 

$

 —

 

$

489

 

 

NOTE 5—REVENUE

The Company provides a comprehensive range of maintenance, modification and construction support services for nuclear power plants and a wide range of utility and industrial customers in the fossil fuel, industrial gas, natural gas and petrochemical industries, as well as other industrial operations. The Company provides these services in the U.S. both on a constant presence basis and for discrete projects. The services the Company provides are designed to improve or sustain operating efficiencies and extend the useful lives of process equipment.

The Company’s contracts are awarded on a competitively bid and negotiated basis and the timing of revenue recognition is impacted by the terms of such contracts. The Company enters into a variety of contract structures, including cost plus reimbursement contracts and fixed-price contracts. The determination of contract structure is based on the scope of work, complexity and project length, and customer preference of contract terms. Cost plus contracts represent the majority of the Company’s contracts. There were no direct and incremental costs to the acquisition of a new contract that required a deferral of costs.

Performance Obligations

A performance obligation is a contractual promise to transfer a distinct good or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. 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. In addition, certain contracts may be combined and deemed to be a single performance obligation.

The majority of the Company’s contracts are in the form of master service agreements, basic ordering agreements and other similar agreements, and related subsequent purchase orders, contract work authorizations and other similar agreements. The Company’s purchase orders, contract work authorizations and other similar agreements are generally deemed to be single performance obligations, and its contracts with multiple performance obligations were not material during the three and nine months ended September 30, 2018. The Company’s performance obligations are satisfied over time because the services provided create or enhance a customer-controlled asset. Therefore, the Company recognizes revenue in the same period the services are performed. For cost-plus reimbursement contracts, revenue is recognized when services are performed and contractually billable based on an agreed-upon price for the completed services or based on the agreed-upon 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. 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.

14


 

Variable Consideration

The Company’s contracts may include several types of variable consideration, including unapproved change orders and 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 or expects to incur. 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 largely 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.

The Company generally provides a limited warranty for a term of two years or less following completion of services performed under its contracts. Historically, warranty claims have not resulted in material costs incurred.

Disaggregation of Revenue

Disaggregated revenue by type of contract was as follows.  

 

 

 

 

 

 

 

 

(in thousands)

 

Three Months Ended September 30, 2018

 

 

Nine Months Ended September 30, 2018

Cost-plus reimbursement contracts

 

$

45,506

 

 

$

118,614

Fixed-price contracts

 

 

7,961

 

 

 

25,949

Total

 

$

53,467

 

 

$

144,563

 

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 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 condensed consolidated balance sheet 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 condensed consolidated balance sheet as contract liabilities. At any point in time, each project in process could have either costs and estimated earnings in excess of billings or billings in excess of costs and estimated earnings.

The following table provides information about contract assets and contract liabilities from contracts with customers. The table also includes changes in the contract assets and the contract liabilities balances during the period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2018

 

December 31, 2017 (1)

(in thousands)

 

Asset

 

Liability

 

Asset

 

Liability

Costs and estimated earnings on contracts in progress

 

$

51,590

 

$

(360)

 

$

22,274

 

$

(422)

Billings on contracts in progress

 

 

(42,439)

 

 

(2,428)

 

 

(10,787)

 

 

(6,627)

Contracts in progress, net

 

$

9,151

 

$

(2,788)

 

$

11,487

 

$

(7,049)

 

(1)

Prior period amounts have not been adjusted for the adoption of ASC Topic 606 under the modified retrospective method.

For the three and nine months ended September 30, 2018, the Company recognized revenue of approximately $3.4 million and $6.6 million, respectively, that was included in the corresponding contracts in progress liability balance at December 31, 2017.

Transaction Price Allocated to the Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period.

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

2019

 

2020

 

Thereafter

Total

Fixed-price contracts

 

$

6,500

 

$

6,500

 

$

12,644

 

$

25,644

 

15


 

NOTE 6—EARNINGS (LOSS) PER SHARE

As of September 30, 2018, the Company’s 18,514,945 shares outstanding included 193,589 shares of contingently issued but unvested restricted stock. As of September 30, 2017, the Company’s 17,801,095 shares outstanding included 15,279 shares 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 (loss) per common share are calculated by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted earnings (loss) 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.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

(in thousands, except per share data)

  

2018

 

2017

  

2018

 

2017

Loss from continuing operations

 

$

(2,840)

 

$

(9,787)

 

$

(11,102)

 

$

(26,841)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

18,315,180

 

 

17,707,459

 

 

18,164,141

 

 

17,577,358

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share

 

$

(0.16)

 

$

(0.55)

 

$

(0.61)

 

$

(1.53)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

18,315,180

 

 

17,707,459

 

 

18,164,141

 

 

17,577,358

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted effect:

 

 

 

 

 

 

 

 

 

 

 

 

Unvested portion of restricted stock units and awards

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Weighted average diluted common shares outstanding