Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes beginning on page F-1 of this Annual Report on Form 10-K. Certain statements made in our discussion may be forward-looking. Forward-looking statements involve risks and uncertainties and a number of other factors that could cause actual results or outcomes to differ materially from our expectations. See “Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K for additional discussion of some of these risks and uncertainties. Unless the context requires otherwise, when we refer to the “Company,” “we,” “us” and “our,” we are describing Orion Group Holdings, Inc. and its consolidated subsidiaries and affiliates.
Overview
We are a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through our marine segment and our concrete segment.
Our marine segment provides construction and dredging services, including marine transportation facility construction, marine pipeline construction, construction of marine environmental structures, dredging of waterways, channels, and ports, environmental dredging, engineering and design, and specialty services related to marine construction, fabrication, and dredging.
Our concrete segment provides turnkey concrete construction services, including concrete placement and finishing, site preparation, layout, forming, and rebar placement for large commercial, structural, and other concrete projects.
Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors. Our bidding activity and strategies are affected by factors such as our backlog, current utilization of equipment and other resources, job location, our ability to obtain necessary surety bonds and competitive considerations. The timing and location of awarded contracts may result in unpredictable fluctuations in the results of our operations.
Most of our revenue is derived from fixed-price contracts. We record revenue on construction contracts over time, measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. There are a number of factors that can create variability in contract performance and therefore impact the results of our operations.
The most significant of these include the following:
● completeness and accuracy of the original bid;
● increases in commodity prices such as concrete, steel and fuel;
● subcontractor performance;
● unforeseen site conditions;
● availability and skill level of workers; and
● a change in availability and proximity of equipment and materials.
All of these factors can have a negative impact on our contract performance, which can adversely affect the timing of revenue recognition and ultimate contract profitability. We plan our operations and bidding activity with these factors in mind and they generally have not had a material adverse impact on the results of our operations in the past.
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Recent Developments
JEM Acquisition
On February 3, 2026, we entered into a Securities Purchase Agreement (the “JEM Purchase Agreement”) and completed an acquisition (the “JEM Acquisition”) of all of the capital stock of J.E. McAmis, Inc., a California corporation, and all of the membership interests in JEM Marine Leasing, LLC, a Washington limited liability company (collectively, “JEM”).
The purchase price consisted of: (a) $50.0 million in cash, subject to adjustments pursuant to the purchase agreement; a $12.0 million unsecured subordinated promissory note issued to the sellers; and 182,392 shares of Orion’s common stock, and (b) contingent post-closing cash payments dependent upon project profit realized from contracts of JEM under backlog identified in the JEM Purchase Agreement. The cash consideration and related expenses was funded with cash on hand and borrowings of approximately $46.9 million under the UMB Credit Agreement (as defined below).
JEM is engaged in the business of providing dredging, jetty and breakwater construction, environmental restoration and rehabilitation, and dam and spillway construction.
UMB Credit Agreement
On December 23, 2025, we entered into a five-year $120.0 million Credit Agreement (the “UMB Credit Agreement”) with certain financial institutions from time-to-time party thereto, as lenders, and UMB Bank, N.A., as administrative agent and issuing bank. The UMB Credit Agreement consists of a $60.0 million revolving loan, a $20.0 million equipment term loan, and a $40.0 million acquisition term loan.
2025 Recap and 2026 Outlook
In 2025, we recorded revenues of $852 million, an increase of 7% as compared with 2024. $545 million of total revenue was attributable to our marine segment and the remaining $307 million to our concrete segment. Our net income was $2.5 million, as compared with net loss of $1.6 million in the prior year. In addition, we ended 2025 with a consolidated backlog of $640 million.
Looking to 2026, we will continue to execute our strategic plan focused on developing opportunities across the infrastructure, industrial, and building sectors.
Marine segment
Demand for our marine construction services remains strong, supported by our differentiated capabilities, specialized equipment fleet, and diversified service offerings within the marine construction industry. We continue to pursue opportunities that support the maintenance, repair, and expansion of infrastructure that facilitates the movement of goods and people across waterways. Long-term demand is driven by the expansion of the Panama Canal, the continued increase in the size of global shipping fleets, and the resulting need for U.S. ports and private marine infrastructure owners to deepen channels, strengthen wharves, and modernize marine structures to accommodate larger vessels.
In addition to port and navigation-related work, demand for marine construction services continues to be supported by public-sector infrastructure investment, coastal restoration initiatives, and energy-related marine construction. We believe our current equipment fleet and operating capabilities position us well to compete for and execute projects across both public and private end markets.
Over the long term, we expect favorable demand trends for our marine segment, driven by:
● Continued investment in U.S. Navy and other federal marine infrastructure;
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Concrete segment
Demand for our concrete segment’s services remains steady, although the timing of certain project releases may be affected by inflationary pressures, interest rate uncertainty, labor availability, supply chain constraints, and broader macroeconomic conditions. We continue to see favorable long-term demand fundamentals for our concrete construction services, supported by population growth, business expansion, and infrastructure investment across our core and expanding markets.
In Texas, major metropolitan areas and surrounding suburban corridors continue to experience strong population and commercial growth, supporting demand for warehouse and distribution facilities, education and institutional projects, office and retail development, grocery stores, multi-family housing, and structural concrete work for business, residential, and mixed-use developments. Texas also continues to see growth in data center construction, supported by the availability of developable land and access to power and fiber infrastructure. In addition, we are seeing increasing opportunities in other high-growth markets, including Florida, which supports our strategy to selectively expand our geographic footprint and diversify our revenue base.
Over the long term, we expect favorable demand trends for our concrete segment, driven by:
Beginning in the first quarter of fiscal 2026,we will update our reportable segments to better align with how management evaluates performance and allocates resources. Specifically, we will no longer allocate our corporate expenses to our operating segments. Rather, corporate expenses will be reported as a separate non-operating segment.
Consolidated results of operations
Backlog information
Our contract backlog represents our estimate of the revenues we expect to realize under the portion of contracts remaining to be performed. Given the typical duration of our contracts, which is generally less than a year, our backlog at any point in time usually represents only a portion of the revenue that we expect to realize during a twelve-month period. We have
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not been adversely affected by contract cancellations or modifications in the past; however, we may be in the future, especially in periods of economic uncertainty.
Backlog as of the periods ended below are as follows (in millions):
Backlog is not necessarily indicative of future results. In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending award at any given time.
Income statement comparisons
Year Ended December 31,
Amount Amount Amount
(dollar amounts in thousands)
Amortization of intangible assets — — 427
Gain on disposal of assets, net (2,468) (2,898) (8,455)
Intangible asset impairment loss — — 6,890
Other (expense) income:
Loss on extinguishment of debt (3,777)
Year ended December 31, 2025 compared with year ended December 31, 2024
Contract revenues. Contract revenues for the year ended December 31, 2025 of $852.3 million increased $55.9 million or 7% as compared to $796.4 million in the prior year period. The increase was primarily due to new awards and higher volume across the business.
Gross profit. Gross profit was $105.6 million for the year ended December 31, 2025 compared to $91.2 million in the prior year period, an increase of $14.4 million or 16%. Gross profit in the year ended December 31, 2025 was 12% of total contract revenues as compared to 11% in the prior year period. The increase was primarily driven by strong project execution and increased utilization.
Selling, general and administrative expense.Selling, General and Administrative (“SG&A”) expenses were $93.5 million for the year ended December 31, 2025 compared to $82.5 million in the prior year period, an increase of $11.0 million or 13%. As a percentage of total contract revenues, SG&A expenses increased from 10% to 11%. The increase in SG&A expense was primarily driven by spending to support business growth.
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Gain on disposal of assets, net. During the year ended December 31, 2025 and 2024 we realized $2.5 million and $2.9 million, respectively, of net gains on disposal of assets.
Other income, net of expense. Other expense primarily reflects interest on our borrowings and expenses related to the extinguishment of debt, partially offset by interest income and non-operating gains or losses.
Income tax expense. We recorded tax expense of $0.4 and $0.3 million in the years ending December 31, 2025 and 2024, respectively.
Year ended December 31, 2024 compared with year ended December 31, 2023
Contract revenues. Contract revenues for the year ended December 31, 2024 of $796.4 million increased $84.6 million or 11.9% as compared to $711.8 million in the prior year period. The increase was primarily due to an increase in marine segment revenue related to the Pearl Harbor drydock project, partially offset by lower concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.
Gross profit. Gross profit was $91.2 million for the year ended December 31, 2024 compared to $61.7 million in the prior year period, an increase of $29.5 million or 47.8%. Gross profit in the year ended December 31, 2024 was 11.4% of total contract revenues as compared to 8.7% in the prior year period. The increase in gross profit dollars and margin was primarily driven by improved pricing of projects in both segments stemming from higher quality projects and improved execution.
Selling, general and administrative expense.SG&A expenses were $82.5 million for the year ended December 31, 2024 compared to $69.4 million in the prior year period, an increase of $13.1 million or 18.9%. As a percentage of total contract revenues, SG&A expenses increased from 9.8% to 10.4%. The increase in SG&A dollars and percentage reflect an increase in IT, compensation, business development spending, and higher legal costs related to pursuing project-related claims.
Gain on disposal of assets, net. During the year ended December 31, 2024 and 2023 we realized $2.9 million and $8.5 million, respectively, of net gains on disposal of assets. The year ended December 31, 2023 included a gain of $5.2 million related to the sale-leaseback of our Port Lavaca South Yard property in Texas.
Other expense, net. Other expense primarily reflects interest on our borrowings of $13.4 million and $11.7 million in the years ended December 31, 2024 and 2023, respectively, partially offset by interest income and non-operating gains or losses.
Income tax expense. We recorded tax expense of $0.3 million in both the year ended December 31, 2024 and in the prior year period. Our effective tax rate for the year ended December 31, 2024 was (26.9)%, which differs from the federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, the statue expiration of an uncertain tax position, state income taxes and the non-deductibility of other permanent items.
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Segment results
The following table sets forth, for the periods indicated, statements of operations data by segment, segment revenues as a percentage of consolidated revenues and segment operating income (loss) as a percentage of segment revenues.
Year ended December 31,
Amount Amount Amount
(dollar amounts in thousands)
Contract revenues
Marine segment
Concrete segment
Operating income (loss)
Year ended December 31, 2025 compared with year ended December 31, 2024
Marine Segment
Revenues for our marine segment for the year ended December 31, 2025 were $544.8 million compared to $521.3 million for the year ended December 31, 2024, an increase of $23.5 million, or 5%. The increase was primarily due to new awards and higher volume on our marine construction contracts.
Operating income for our marine segment for the year ended December 31, 2025 was $29.9 million, compared to $2.3 million for the year ended December 31, 2024, an increase in operating income of $27.6 million. This increase in operating income was primarily driven by increased revenue, strong project execution, and favorable utilization.
Concrete Segment
Revenues for our concrete segment for the year ended December 31, 2025 were $307.4 million compared to $275.1 million for the year ended December 31, 2024, an increase of $32.3 million, or 12%. The increase was primarily due to new awards and higher volume on our concrete contracts.
Operating loss for our concrete segment for the year ended December 31, 2025 was $15.3 million, compared to an operating income of $9.2 million for the year ended December 31, 2024, a decrease of $24.5 million. The decrease was primarily driven by seasonal weather delays and favorable concrete project close-outs in 2024 that did not reoccur in 2025.
Year ended December 31, 2024 compared with year ended December 31, 2023
Marine Segment
Revenues for our marine segment for the year ended December 31, 2024 were $521.3 million compared to $395.9 million for the year ended December 31, 2023, an increase of $125.4 million, or 31.7%. The increase was primarily related to the Pearl Harbor Project.
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Operating income for our marine segment for the year ended December 31, 2024 was $2.3 million, compared to $3.7 million for the year ended December 31, 2023, a decrease in operating income of $1.4 million. Excluding the gain on the Port Lavaca South Yard property sale-leaseback in Texas that occurred during the year ended December 31, 2023, operating loss for the year ended December 31, 2023 was $1.5 million. This $3.8 million increase in operating income was primarily due to margin improvements stemming from higher quality projects and improved execution.
Concrete Segment
Revenues for our concrete segment for the year ended December 31, 2024 were $275.1 million compared to $315.9 million for the year ended December 31, 2023, a decrease of $40.8 million, or 12.9%. This decrease was primarily due to disciplined bidding standards to win quality work at attractive margins.
Operating income for our concrete segment for the year ended December 31, 2024 was $9.2 million, compared to an operating loss of $10.3 million for the year ended December 31, 2023, an increase of $19.5 million. This increase was primarily due to winning higher margin jobs due to disciplined bidding standards and improved execution.
Liquidity and capital resources
Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects. At December 31, 2025, our working capital was $74.3 million, as compared to $78.2 million at December 31, 2024. As of December 31, 2025, we had unrestricted cash on hand of $1.6 million. Our borrowing availability under our revolving portion of our UMB Credit Agreement at December 31, 2025 was approximately $60.0 million.
Our primary liquidity needs are to finance our working capital and fund capital expenditures. Historically, our sources of liquidity have been cash provided by our operating activities, sale of underutilized assets, borrowings under our credit facilities, and equity issuances. The assessment of our liquidity requires us to make estimates of future activity and judgments about whether we are compliant with financial covenant calculations under our debt and other agreements and have adequate liquidity to operate. Significant assumptions used in our forecasted model of liquidity include forecasted sales, costs, and capital expenditures, as well as expected timing and proceeds of planned asset sale transactions. As of December 31, 2025, management believes the Company will have adequate liquidity for its operations for at least the next 12 months.
In connection with the JEM Acquisition, we borrowed $46.9 million under the UMB Credit Agreement and issued a $12.0 million promissory note to the sellers. The promissory note bears interest at an annual rate of 6.0%, with five equal payments of principal and interest on each anniversary of the closing of the Purchase Agreement.
The following table provides information regarding our cash flows and our capital expenditures for the years ending December 31, 2025, 2024 and 2023:
Year ended
December 31,
Cash flows provided by operating activities $ 28,066 $ 12,676 $ 17,178
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Operating activities.
During 2025, we generated approximately $28.1 million from cash in our operating activities. The net cash inflow is comprised of $43.9 million of cash inflows from net income, after adjusting for non-cash items, partially offset by $15.8 million of outflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Consolidated Statements of Cash Flows, were primarily driven by a $67.1 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, a $7.3 million decrease in operating lease liabilities, and a $3.7 million cash outflow related to an increase in prepaid expenses, partially offset by $55.1 million of cash inflows pursuant to the relative timing and significance of project progression and billings during the period and a $6.5 million inflow from landlord lease incentives received, primarily related to our corporate office consolidation.
During 2024, we generated approximately $12.7 million from cash in our operating activities. The net cash inflow is comprised of $34.4 million of cash inflows from net income, after adjusting for non-cash items and $21.7 million of cash outflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Consolidated Statements of Cash Flows, were primarily driven by $19.6 million of cash outflows pursuant to the relative timing and significance of project progression and billings during the period, a $8.7 million decrease in operating lease liabilities and $0.4 million of other outflows, partially offset by a $7.0 million cash inflow related to an increase in our net position of accounts receivable and accounts payable plus accrued liabilities during the period.
During 2023, we generated approximately $17.2 million in cash from our operating activities. The net cash inflow is comprised of $14.8 million of cash inflows from net income, after adjusting for non-cash items and $2.4 million of cash inflows related to changes in net working capital. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Consolidated Statements of Cash Flows, were primarily driven by a $21.4 million inflow related to an increase in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, partially offset by a $11.3 million outflow pursuant to the relative timing and significance of project progression and billings during the period, a $6.8 million decrease in operating lease liabilities during the period, and $0.9 million of other cash outflows.
Investing activities.
During the year ended December 31, 2025, we used approximately $13.7 million of cash in our investing activities. Capital asset additions and betterments to our fleet were $38.9 million in 2025, as compared with $14.1 million and $8.9 million in 2024 and 2023, respectively. Proceeds from the sale of property and equipment were $25.2 million in 2025, as compared with $2.6 million and $11.1 million in 2024 and 2023, respectively.
Financing activities.
During the year ended December 31, 2025, we used approximately $39.4 million of cash in our financing activities. We had borrowings and repayments of $185.5 million on the White Oak revolving credit line, repayments of $23.0 million on the White Oak term loan, payments on finance lease liabilities of $10.4 million, payments made on deemed financing obligations of $8.2 million, a $1.1 million make-whole payment on debt extinguishment and $1.6 million outflow related to loan costs related to the new UMB Credit Agreement. These amounts were partially offset by an inflow of $4.5 million of proceeds from deemed financing obligation for build-to-suit equipment to be placed in service in 2026.
During the year ended December 31, 2024, we had proceeds from an offering of common stock of $26.4 million, borrowings and repayments of $72.6 million on the White Oak revolving credit line, repayments of $15.0 million on the White Oak term loan, payments on finance lease liabilities of $8.9 million, payments made on failed sale-leaseback arrangements of $5.8 million, $0.5 million of payments related to tax withholding for share-based compensation, repayments of $0.5 million on other debt, loan costs of $0.4 million and a cash inflow of $0.9 million for proceeds from the exercise of stock options.
During the year ended December 31, 2023, we had borrowings of $5.0 million from our prior credit agreement, $38.0 million from the term loan portion of our new Credit Agreement and borrowings of $64.0 million on the revolving credit line under our new Credit Agreement, repayments of $40.0 million on our prior credit agreement, repayments of $64.0
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million on the revolving credit line under our new Credit Agreement, proceeds from failed sales-leasebacks of $14.7 million, proceeds of $2.4 million related to the Port Lavaca land sale-leaseback financing, loan costs of $6.5 million, payments on finance lease liabilities of $4.8 million and a cash outflow of $0.5 million for payments related to tax withholdings for share-based compensation.
Sources of capital
On December 23, 2025, we entered into the five-year $120 million UMB Credit Agreement, which includes a $60.0 million asset based revolving credit line, a $20.0 million equipment term loan, and a $40 million acquisition term loan. The UMB Credit Agreement replaced our $103.0 million Credit Agreement with White Oak, which was a $65.0 million asset based revolving credit line and a $38.0 million fixed asset term loan.
Please see Note 9 of the Notes to the Consolidated Financial Statements for further discussion.
Effect of inflation
We are subject to the effects of inflation through increases in the cost of raw materials, and other items such as fuel, concrete and steel. Due to the relatively short-term duration of our projects, we are generally able to include anticipated cost increases in the pricing of our bids.
Off balance sheet arrangements
Currently our only off-balance sheet arrangements are related to providing surety bonds on certain government and private sector contracts and those which arise in the normal course of business. These arrangements are not reasonably likely to have an effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Critical accounting estimates
The consolidated financial statements contained in this report were prepared in accordance with U.S. GAAP. The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect both the Company’s carrying values of its assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Although our significant accounting policies are described in more detail in Note 2 of the Notes to Consolidated Financial Statements; we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements:
● Revenue Recognition from Construction Contracts;
● Long Lived Assets; and
● Income Taxes.
Revenue recognition
Our revenue is derived from contracts to provide marine construction, dredging, turnkey concrete services, and other specialty services. Our projects are typically short in duration and usually span a period of less than one year. We determine the appropriate accounting treatment for each contract before work begins and record revenue on contracts over time.
Performance obligations are promises in a contract to transfer distinct goods or services to the customer and are the unit of account under Topic 606. Our contracts and related change orders typically represent a single performance obligation because individual goods and services are not separately identifiable and we provide a significantly integrated service. Revenue is recognized over time because control is continuously transferred to the customer. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the stand-alone selling price of each distinct good or service. Progress is measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. This method is used because management considers contract costs incurred to be the best available measure of progress on these contracts. These estimates are subject to uncertainties and require judgment. Estimates of contract costs include all direct costs, such as material and
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labor, and those indirect costs incurred that are related to contract performance such as payroll taxes and insurance. General and administrative costs are charged to expense as incurred. Upfront costs, such as incurring costs to mobilize personnel and equipment prior to satisfying a performance obligation are capitalized and amortized over the contract performance period.
These estimates consider historical performance, the complexity of the work to be performed, the estimated time to complete the project, and other economic factors such as inflation and market rates. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and reported revenue and are recognized in the period in which the revisions are determined. The effect of changes in estimates of contract revenue or contract costs is recognized as an adjustment to recognized revenue on a cumulative catch-up basis. When losses on uncompleted contracts are anticipated, the entire loss is recognized in the period in which such losses are determined. Revenue is recorded net of any sales taxes collected and paid on behalf of the customer, if applicable.
Contract revenue is derived from the original contract price as modified by agreed-upon change orders and estimates of variable consideration related to incentive fees and change orders or claims for which price has not yet been agreed by the customer. We estimate variable consideration based on our assessment of the most likely amount to which we expect to be entitled. Variable consideration is included in the estimated recognition of revenue to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur. A determination that the collection of a claim is probable is based upon our evaluation of its compliance with the terms of the contract and the extent to which we performed in accordance therewith but does not guarantee collection in full.
Long-lived assets
Our long-lived assets consist primarily of equipment used in our operations. Fixed assets are carried at cost and are depreciated over their estimated useful lives, ranging from one to 30 years, using the straight-line method for financial reporting purposes and accelerated methods for tax reporting purposes. The carrying value of our long-lived assets is evaluated periodically based on utilization of the asset and physical condition of the asset, as well as the useful life of the asset to determine if adjustment to the depreciation period or the carrying value is warranted. If events and circumstances such as poor utilization or deteriorated physical condition indicate that the asset(s) should be reviewed for possible impairment, we use projections to assess whether future cash flows, including disposition, on a non-discounted basis related to the tested assets are likely to exceed the recorded carrying amount of those assets to determine if an impairment exists. If we identify a potential impairment, we will estimate the fair value of the asset through known market transactions of similar equipment and other valuation techniques, which could include the use of similar projections on a discounted cash flow basis. We will report a loss to the extent that the carrying value of the impaired assets exceeds their fair values.
Income taxes
We determine our consolidated income tax provision using the asset and liability method prescribed by U.S. GAAP, which requires the recognition of income tax expense for the amount of taxes payable or refundable for the current period and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. We must make significant assumptions, judgments and estimates to determine our current provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance to be recorded against any deferred tax asset. The current provision for income tax is based upon the current tax laws and our interpretation of these laws, as well as the probable outcomes of any tax audits. The value of any net deferred tax asset depends upon estimates of the amount and category of future taxable income reduced by the amount of any tax benefits that we do not expect to realize. The factors used to assess the likelihood of realization include our forecast of future taxable income exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences and available tax planning strategies that could be implemented to realize the net deferred tax assets.
We consider both positive and negative evidence when evaluating the need for a valuation allowance on our deferred tax assets in accordance with Accounting Standards Codification (“ASC”) 740. Available evidence includes historical financial information supplemented by currently available information about future years. Generally, historical financial information is more objectively verifiable than projections of future income and is therefore given more weight in our assessment. We consider cumulative losses in the most recent twelve quarters to be significant negative evidence that is difficult to overcome in considering whether a valuation allowance is required. Conversely, we consider a cumulative
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income position over the most resent twelve quarters, to be significant positive evidence that a valuation allowance may not be required.
Actual operating results and the underlying amount and category of income in future years could render current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate, thus impacting our financial position and results of operations. We compute deferred income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
We account for uncertain tax positions in accordance with the provisions of the Financial Accounting Standards Board’s ASC 740-10, which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on our consolidated tax return. We evaluate and record any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon ultimate settlement with the tax authorities in the tax jurisdictions in which we operate.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, our results of operations are subject to risks related to fluctuations in commodity prices and fluctuations in interest rates. Historically, our exposure to foreign currency fluctuations has not been material and has been limited to temporary field accounts located in foreign countries where we perform work. Foreign currency fluctuations were immaterial in this reporting period.
Commodity price risk
We are subject to fluctuations in commodity prices for concrete, steel products and fuel. Although we routinely attempt to secure firm quotes from our suppliers, we generally do not hedge against increases in prices for commodity products. Commodity price risks may have an impact on our results of operations due to the fixed-price nature of many of our contracts, although the short-term duration of our projects may allow us to include cost increases to the pricing of our bids.
Interest rate risk
At December 31, 2025, we had no outstanding borrowings under our Credit Agreement.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is submitted as a separate section beginning on page F-1 of this Annual Report on Form 10-K and is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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Based on management’s evaluation with the participation of our principal executive officer and principal financial officer, as of the end of the period covered by this Annual Report on Form 10-K, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025.
Changes in internal control over financial reporting
During the year ended December 31, 2025, we implemented new reporting systems and made changes to related internal controls. There have been no other changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States. Our system of internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of our management; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
Management, under the oversight of our principal executive officer and principal financial officer, and Audit Committee, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal control - An Integrated Framework (“2013 Framework”). Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2025 at the reasonable assurances level.
Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this annual report, has audited the effectiveness of our internal control over financial reporting as of December 31, 2025. KPMG LLP’s report appears on page F-4 of this Annual Report on Form 10-K.
Item 9B. OTHER INFORMATION
Director and Officer Trading Arrangements.
During the quarter ended December 31, 2025, no director or officer of Orion adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K.
Item 9C. DISCLOSURE CONCERNING CERTAIN FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors, Executive Officers, Promoters and Control Persons
The information under the heading “Information about our executive officers” in this Annual Report on Form 10-K is incorporated by reference into this section. The information required by Paragraphs (c) through (g) of Item 401 of
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Regulation S-K and Item 405 of Regulation S-K is hereby incorporated by reference from our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A no later than April 30, 2026 (the “Proxy Statement”).
Code of Ethics
We have adopted a code of ethics for our chief executive, chief financial and principal accounting officers; a code of business conduct and ethics for members of our Board of Directors; and corporate governance guidelines. The full texts of the codes of ethics and corporate governance guidelines are available at our website www.oriongroupholdingsinc.com. Although we have never done so, in the event we make any amendment to, or grant any waiver from, a provision of the code of ethics that applies to the principal executive officer, principal financial officer or principal accounting officer that requires disclosure under applicable SEC rules, we will disclose such amendment or waiver and the reasons therefore on our website. We will provide any person without charge a copy of any of the aforementioned codes of ethics upon receipt of a written request. Requests should be addressed to: Orion Group Holdings, Inc. 2940 Riverby Road, Suite 400, Houston, Texas 77020, Attention: Corporate Secretary.
Corporate governance
The information required by Items 407(c)(3), (d)(4) and (d)(5) and 408(b) of Regulation S-K is hereby incorporated by reference from our Proxy Statement.
Item 11. EXECUTIVE COMPENSATION
The information required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K is hereby incorporated by reference from our Proxy Statement.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Items 201(d) and 403 of Regulation S-K is hereby incorporated by reference from our Proxy Statement.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Items 404 and 407(a) of Regulation S-K is hereby incorporated by reference from our Proxy Statement.
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 9(e) of Schedule 14A is hereby incorporated by reference from our Proxy Statement.
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Report:
1.Financial Statements
The Company’s Consolidated Financial Statements at December 31, 2025 and 2024 and for each of the three years in the period ended December 31, 2025 and the notes thereto, together with the Report of the Independent Registered Public Accounting Firm on those Consolidated Financial Statements are hereby filed as part of this Report, beginning on page F-1.
2.Financial Statement Schedule
The following financial statement schedule of the Company for each of the three years in the period ended December 31, 2025 is filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of the Company.
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Schedule II – Schedule of Valuation and Qualifying Accounts
3. Exhibits
ExhibitNumber Description
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ExhibitNumber Description
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ExhibitNumber Description
* 21 .1 List of Subsidiaries.
* 23 .1 Consent of Independent Registered Public Accounting Firm -KPMG, LLP.
* 31 .1 Certification of CEO pursuant to Section 302.
* 31 .2 Certification of CFO pursuant to Section 302.
* 32 .1 Certification of CEO and CFO pursuant to Section 906.
*101.INS XBRL Instance Document.
*101.SCH XBRL Taxonomy Extension Schema Document.
*101.CAL XBRL Extension Calculation Linkbase Document.
*101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
*101.LAB XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
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ExhibitNumber Description
* Filed herewith
† Management contract or compensatory plan or arrangement
Item 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ORION GROUP HOLDINGS, INC.
March 4, 2026 By: /s/ Travis J. Boone
Travis J. BoonePresident, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Travis J. Boone President, Chief Executive Officer and March 4, 2026
Travis J. Boone Director (Principal Executive Officer)
Alison G. Vasquez Officer and Principal Accounting Officer)
/s/ Austin J. Shanfelter Chairman of the Board March 4, 2026
Austin J. Shanfelter
/s/ Thomas N. Amonett Director March 4, 2026
Thomas N. Amonett
/s/ Michael J. Caliel Director March 4, 2026
Michael J. Caliel
/s/ Margaret M. Foran Director March 4, 2026
Margaret M. Foran
/s/ Robert S. Ledford Director March 4, 2026
Robert S. Ledford
/s/ Quentin P. Smith, Jr. Director March 4, 2026
Quentin P. Smith, Jr.
/s/ Mary E. Sullivan Director March 4, 2026
Mary E. Sullivan
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ORION GROUP HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
Reports of Independent Registered Public Accounting Firm (PCAOB ID 185) F-2
Consolidated Balance Sheets at December 31, 2025 and 2024 F-5
Notes to Consolidated Financial Statements F-9
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Orion Group Holdings, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Orion Group Holdings, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 4, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Evaluation of estimated costs at completion and variable consideration for certain long-term, fixed-priced construction contracts
As discussed in Notes 3 and 5 to the consolidated financial statements, contract revenue is recognized over time because control of the promised goods and services is continually transferred to the customer. Progress is measured by the percentage of actual costs incurred to date to the total estimated costs at completion. Contract costs include all direct costs, such as material and labor, and those indirect costs incurred that are related to contract performance. The Company estimates variable consideration related to claims and unapproved change orders based on the most likely amount to which it expects to be entitled. The Company reported contract revenues of $852.3 million for the year ended December 31, 2025, which included revenue related to long-term, fixed price construction contracts.
We identified the evaluation of estimated costs at completion and variable consideration for certain long-term, fixed-priced construction contracts in the Marine segment as a critical audit matter. Evaluating the Company’s estimated costs at completion for contracts in progress involved subjective auditor judgement given the variability and estimation uncertainty associated with costs of material and labor to be incurred over a long-term contract period. Additionally, evaluating the estimates of variable consideration involved subjective auditor judgement given the uncertainty in determining the costs the Company is entitled to recover under the contract.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue process, including controls over the estimation of costs to complete and variable consideration for certain long-term, fixed-priced construction contracts. We evaluated the Company’s ability to estimate these amounts by comparing the Company’s previous estimates to actual results. We evaluated estimated costs at completion for certain in-progress contracts by:
● inspecting contractual documents with customers
We evaluated variable consideration for certain contracts by:
/s/ KPMG LLP
We have served as the Company’s auditor since 2017.
Houston, Texas
March 4, 2026
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Orion Group Holdings, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Orion Group Holdings, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 4, 2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate
/s/ KPMG LLP
Houston, Texas
March 4, 2026
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Orion Group Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Information)
December 31, December 31,
ASSETS
Current assets:
Cash and cash equivalents $ 1,588 $ 28,316
Restricted cash 1,697 —
Accounts receivable:
Income taxes receivable 256 483
Property and equipment, net of accumulated depreciation 88,210 86,098
Deferred income tax asset 17 17
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt, net of debt issuance costs $ 1,789 $ 426
Accounts payable:
Income taxes payable 197 507
Current portion of operating lease liabilities 4,418 7,546
Current portion of financing lease liabilities 7,517 10,580
Long-term debt, net of debt issuance costs 6,085 22,751
Financing lease liabilities 5,878 11,346
Deferred income tax liability 80 28
Stockholders’ equity:
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued — —
Total liabilities and stockholders’ equity $ 414,652 $ 417,317
The accompanying notes are an integral part of these consolidated financial statements
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Orion Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Information)
Year ended December 31,
Amortization of intangible assets — — 427
Gain on disposal of assets, net (2,468) (2,898) (8,455)
Intangible asset impairment loss — — 6,890
Other (expense) income:
Loss on extinguishment of debt (3,777) — —
Basic income (loss) per share $ 0.06 $ (0.05) $ (0.55)
Diluted income (loss) per share $ 0.06 $ (0.05) $ (0.55)
Shares used to compute income (loss) per share
The accompanying notes are an integral part of these consolidated financial statements
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Orion Group Holdings, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Equity
(In Thousands, Except Share Information)
Common Treasury Additional
Stock Stock Paid-In Retained
Shares Amount Shares Amount Capital Loss Total
Share-based compensation — — — — 2,042 — 2,042
Exercise of stock options — — — — — — —
Issuance of restricted stock 1,031,853 10 — — (10) — —
Forfeiture of restricted stock (390,886) (4) — — 4 — —
Net loss — — — — — (17,875) (17,875)
Share-based compensation — — — — 4,009 — 4,009
Exercise of stock options 136,549 1 — — 896 — 897
Issuance of restricted stock 830,059 8 — — (8) — —
Forfeiture of restricted stock (69,497) (1) — — 1 — —
Net loss — — — — — (1,644) (1,644)
Stock-based compensation — — — — 5,450 — 5,450
Exercise of stock options 15,000 — — — 108 — 108
Issuance of restricted stock 1,119,434 11 — — (11) — —
Employee share purchase plan 154,006 2 — — 728 — 730
Forfeiture of restricted stock (297,591) (3) — — 3 — —
Net income — — — — — 2,488 2,488
The accompanying notes are an integral part of these consolidated financial statements
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Orion Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
Cash flows from operating activities:
Operating activities:
Amortization of ROU operating leases 8,259 9,960 6,763
Amortization of ROU finance leases 8,582 7,220 5,034
Loss on extinguishment of debt 3,777 — —
Write-off of debt issuance costs upon debt modification — — 119
Amortization of deferred debt issuance costs 1,176 2,015 1,616
Deferred income taxes 52 (27) (103)
Gain on disposal of assets, net (2,468) (2,898) (8,455)
Intangible asset impairment loss — — 6,890
Change in operating assets and liabilities:
Prepaid expenses and other (3,724) 41 (55)
Operating lease liabilities (7,272) (8,662) (6,807)
Landlord lease inventive received 6,530 — —
Income tax payable (310) (63) 48
Cash flows from investing activities:
Cash flows from financing activities:
Payments made on term loan (23,000) (15,000) —
Payment of make-whole on debt extinguishment (1,056) — —
Proceeds from deemed financing obligation 4,456 — 17,099
Principal payments on deemed financing obligation (8,157) (5,855)
Loan costs related to credit facilities (1,643) (393) (6,537)
Payments of finance lease liabilities (10,409) (8,929) (4,791)
Proceeds from issuance of common stock — 26,421 —
Employee stock plans, net activity 415 418 (492)
Net cash (used in) provided by financing activities (39,394) (3,816) 7,806
Restricted cash 1,697 — —
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Noncash financing activity:
Noncash financing activity:
The accompanying notes are an integral part of these consolidated financial statements
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Orion Group Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2025, 2024 and 2023
(Tabular Amounts in thousands, Except Share and per Share Amounts)
1.Description of Business and Basis of Presentation
Description of business
Orion Group Holdings, Inc. and its subsidiaries (hereafter collectively referred to as the “Company”), is a leading specialty construction company serving the infrastructure, industrial, and building sectors, providing services both on and off the water in the continental United States, Alaska, Hawaii, Canada and the Caribbean Basin through our marine and concrete segments. We are headquartered in Houston, Texas.
Basis of presentation
These consolidated financial statements include the accounts of the parent company, Orion Group Holdings, Inc. and its wholly-owned subsidiaries and have been prepared in accordance with U.S. GAAP on the going concern basis of accounting, which assumes the Company will continue to operate as a going concern and which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. For the periods presented, there were no items of other comprehensive income, and therefore comprehensive loss is equal to net loss. All intercompany balances and transactions have been eliminated in consolidation.
2.Summary of Significant Accounting Policies
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates, judgments and assumptions are continually evaluated based on available information and experience; however, actual amounts could differ from those estimates.
On an ongoing basis, the Company evaluates the significant accounting policies used to prepare its consolidated financial statements, including, but not limited to, those related to:
● Revenue recognition from construction contracts;
● The recording of accounts receivable and allowance for credit losses;
● The carrying value of property, plant and equipment;
● Leases;
● Share-based compensation;
● Income taxes; and
● Self-insurance.
Revenue recognition
The Company’s revenue is derived from contracts to provide marine construction, dredging, turnkey concrete services, and other specialty services. The Company’s projects are typically brief in duration, but occasionally, span a period of over one year. The Company determines the appropriate accounting treatment for each contract before work begins and, subject to qualifications discussed in the next paragraph, records contract revenue over time.
Performance obligations are promises in a contract to transfer distinct goods or services to the customer and are the unit of account under Topic 606. Each of the Company’s contracts and related change orders typically represent a single performance obligation because the Company provides an integrated service and individual goods and services are not separately identifiable. Revenue is recognized over time because control of the promised goods and services are continuously transferred to the customer over the life of the contract. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the stand-alone selling price of each distinct good or service. Progress is measured by the percentage of actual contract costs incurred to date to total estimated costs for each contract. This method is used because management considers contract costs incurred to be the best available measure of progress on these contracts. Contract costs include all direct costs, such as
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material and labor, and those indirect costs incurred that are related to contract performance such as payroll taxes and insurance. General and administrative costs are charged to expense as incurred. Upfront costs, such as costs to mobilize personnel and equipment prior to satisfying a performance obligation are capitalized and amortized over the contract performance period.
Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and reported revenue and are recognized in the period in which the revisions are determined. The effect of changes in estimates of contract revenue or contract costs is recognized as an adjustment to recognized revenue on a cumulative catch-up basis to match contract progress with revenue recognition. When the Company anticipates a loss on a contract that is not yet complete, it recognizes the entire loss in the period in which such losses are determined. Revenue is recorded net of any sales taxes collected and paid on behalf of the customer, if applicable.
Contract revenue is derived from the original contract price as modified by agreed-upon change orders and estimates of variable consideration related to incentive fees and change orders or claims for which price has not yet been agreed by the customer. The Company estimates variable consideration based on its assessment of the most likely amount to which it expects to be entitled. Variable consideration is included in the estimated recognition of revenue to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur. A determination that the collection of a claim is probable is based upon the Company’s evaluation of its compliance with the terms of the contract and the extent to which the Company performed in accordance therewith but does not guarantee collection in full.
Assets and liabilities derived from contracts with customers include the following:
Classification of current assets and liabilities
The Company includes in current assets and liabilities amounts realizable and payable in the next twelve months.
Cash and cash equivalents and restricted cash
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At times, cash held by financial institutions may exceed federally insured limits. The Company has not historically sustained losses on its cash balances in excess of federally insured limits. Cash equivalents at December 31, 2025 and December 31, 2024 consisted primarily of overnight bank deposits.
Restricted cash represents cash that is not available for general corporate purposes. At December 31, 2025, restricted cash of $1.7 million consisted of cash held at White Oak to collateralize outstanding letters of credit. There was no restricted cash at December 31, 2024. Restricted cash is classified on the consolidated balance sheets based on the expected timing of release.
Risk concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of accounts receivable.
A significant portion of the Company’s revenue base depends on its ability to continue to obtain federal, state and local governmental contracts, and indirectly, on the amount of funding available to these agencies for new and current governmental projects. Therefore, a portion of the Company’s operations is dependent upon the level and timing of
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government funding. Statutory mechanics’ liens provide the Company high priority in the event of lien foreclosures following financial difficulties of private owners, thus minimizing credit risk with private customers.
Accounts receivable
Accounts receivable are stated at the historical carrying value, net of allowances for credit losses. The Company had significant investments in billed and unbilled receivables as of December 31, 2025 and December 31, 2024. Billed receivables represent amounts billed upon the completion of small contracts and progress billings on large contracts in accordance with contract terms and milestone achievements. Unbilled receivables on contracts represent recoverable costs and accrued profits that are not yet capable of being billed under the terms of the applicable contracts. Revenue associated with these billings is recorded net of any sales tax, if applicable.
In establishing an allowance for credit losses, the Company evaluates its contract receivables and contract assets and thoroughly reviews historical collection experience, the financial condition of its customers, billing disputes and other factors. The Company writes off potentially uncollectible accounts receivable against the allowance for credit losses if the Company determines that the amounts will not be collected or if a settlement with respect to a disputed receivable is reached for an amount that is less than its carrying value. As of December 31, 2025 and December 31, 2024, the Company had recorded an allowance for credit losses of $3.5 million and $0.6 million, respectively.
Balances billed to customers but not paid pursuant to retainage provisions in construction contracts generally become payable upon contract completion and acceptance by the owner. Retainage at December 31, 2025 totaled $49.2 million, of which $2.2 million is expected to be collected beyond December 31, 2026. Retainage at December 31, 2024 totaled $35.6 million.
From time to time, the Company negotiates change orders and claims with its customers. Unsuccessful negotiations of claims could result in a change to contract revenue that is less than amounts previously recorded, which could result in the recording of a loss in the amount of the shortfall. Successful claims negotiations could result in the recovery of previously recorded losses. Significant losses on receivables could adversely affect the Company’s financial position, results of operations and overall liquidity.
Advertising costs
The Company primarily obtains contracts through the open bid process, and therefore advertising costs are not a significant component of expense. Advertising costs are expensed as incurred.
Environmental costs
Costs related to environmental remediation are charged to expense. Other environmental costs are also charged to expense unless they increase the value of the property and/or provide future economic benefits, in which event the costs are capitalized. Environmental liabilities, if any, are recognized when the liability is considered probable and the amount can be reasonably estimated. The Company did not recognize any environmental liabilities as of December 31, 2025 or December 31, 2024.
Fair value measurements
The Company evaluates and presents certain amounts included in the accompanying consolidated financial statements at “fair value” in accordance with U.S. GAAP, which requires the Company to base its estimates on assumptions that market participants, in an orderly transaction, would use to price an asset or liability, and to establish a hierarchy that prioritizes the information used to determine fair value. Refer to Note 7 for more information regarding fair value determination.
The Company generally applies fair value valuation techniques on a non-recurring basis associated with (1) valuing assets and liabilities acquired in connection with business combinations and other transactions; (2) valuing potential impairment loss related to long-lived assets; and (3) valuing potential impairment loss related to goodwill and indefinite-lived intangible assets.
Inventory
Current inventory consists of parts and small equipment held for use in the ordinary course of business and is valued at the lower of cost (using historical average cost) or net realizable value and is relieved as utilized. Where shipping and
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handling costs are incurred by the Company, these charges are included in inventory and charged to cost of contract revenue upon use. Non-current inventory consists of spare parts (including engines, cutters and gears) that require special order or long-lead times for manufacture or fabrication but must be kept on hand to reduce downtime and is valued at the lower of cost (using historical average cost) or net realizable value.
Property and equipment
Property and equipment are recorded at cost. Ordinary maintenance and repairs that do not improve or extend the useful life of the asset are expensed as incurred. Major renewals and betterments of equipment are capitalized and depreciated generally over three to ten years until the next scheduled maintenance.
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in results of operations for the respective period.
Depreciation is computed using the straight-line method over the estimated useful lives of the related assets for financial statement purposes, as follows:
Automobiles and trucks 3 to 10 years
Buildings and improvements 10 to 30 years
Construction equipment 3 to 10 years
Vessels and other equipment 3 to 40 years
Office equipment 3 to 5 years