REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS
|9 Months Ended|
Sep. 30, 2021
|Revenue From Contract With Customer [Abstract]|
|REVENUE, CONTRACT ASSETS AND LIABILITIES AND OTHER CONTRACT MATTERS||
As discussed in Note 1, we recognize revenue from our contracts in accordance with Topic 606. Summarized below are required disclosures under Topic 606 and other relevant guidance.
Disaggregation of Revenue
The following tables summarize revenue for each of our operating segments, disaggregated by contract type, for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Future Performance Obligations Required Under Contracts
The following table summarizes our remaining performance obligations by operating segment at September 30, 2021 (in thousands):
Contracts Assets and Liabilities
Revenue recognition and customer invoicing for our fixed-price and unit-rate contracts may occur at different times. Revenue recognition is based upon our estimated percentage-of-completion as discussed in Note 1; however, customer invoicing is generally dependent upon contractual billing terms, which could provide for customer payments in advance of performing the work, milestone billings based on the completion of certain phases of the work, or billings when services are provided. Revenue recognized in excess of amounts billed is reflected as contract assets on our Balance Sheet. Amounts billed in excess of revenue recognized, and accrued contract losses, are reflected as contract liabilities on our Balance Sheet. Information with respect to contracts that were incomplete at September 30, 2021 and December 31, 2020, is as follows (in thousands):
Allowance for Doubtful Accounts
Our provision for bad debts is included in other (income) expense, net on our Statement of Operations. Our provision for bad debts for the nine months ended September 30, 2021 and 2020, and our allowance for doubtful accounts at September 30, 2021 and December 31, 2020, were not significant.
For the three and nine months ended September 30, 2021 and 2020, we had no material amounts in revenue related to unapproved change orders, claims or incentives. However, at September 30, 2021 and December 31, 2020, certain projects reflected a reduction to our estimated contract price for liquidated damages of $1.2 million and $0.6 million, respectively.
Changes in Project Estimates
We determine the impact of changes in estimated margins on projects for a given period by calculating the amount of revenue recognized in the period that would have been recognized in a prior period had such estimated margins been forecasted in the prior period. The total impact of changes in estimated margins for a project as disclosed on a quarterly basis may be different from the applicable year-to-date impact due to the application of the percentage-of-completion method and the changing progress of the project at each period end. Such impacts may also be different when a project is commenced and completed within the applicable year-to-date period but spans multiple quarters.
Changes in Estimates for 2021 – For the three and nine months ended September 30, 2021, significant changes in estimated margins on projects positively impacted operating results for our Fabrication & Services Division by $1.1 million and $3.7 million, respectively, and negatively impacted operating results for our Shipyard Division by $1.3 million and $3.0 million, respectively. The changes in estimates were associated with the following:
Fabrication & Services Division
Changes in Estimates for 2020 – For the three and nine months ended September 30, 2020, significant changes in estimated margins on projects positively impacted operating results for our Fabrication & Services Division by $0.6 million and $2.6 million, respectively, and for the nine months ended September 30, 2020, negatively impacted operating results for our Shipyard Division by $1.3 million. The changes in estimates were associated with the following:
Fabrication & Services Division
Other Operating and Project Matters
Hurricane Ida – On August 29, 2021, Hurricane Ida made landfall near Houma, Louisiana as a high-end Category 4 hurricane, with high winds, heavy rains and storm surge causing significant damage and power outages throughout the region. Our F&S Facility did not experience significant flood damage; however, the high winds and heavy rain damaged multiple buildings and equipment and resulted in significant debris throughout the facility. As a result of the power outages, damage to buildings and debris, the operations at our F&S Facility were temporarily suspended and we immediately commenced cleanup and restoration efforts. While cleanup and restoration efforts are ongoing, we recommenced our operations before the end of the third quarter 2021.
As a result of the storm, certain buildings and equipment were damaged and were determined to be complete losses. Accordingly, during both the three and nine months ended September 30, 2021, we recorded impairments of $0.5 million associated with the damaged assets. The impairments were offset by corresponding insurance recoveries, as we have determined it is probable that we will receive insurance proceeds to replace the damaged assets up to the amount of impairments recognized. In addition, multiple other buildings and equipment were partially damaged by the storm. We expect to incur future repair costs in excess of our deductibles for such assets; however, we believe that recovery of insurance proceeds for such costs is probable, and accordingly, we have not recorded any repair costs related to the partially damaged assets at September 30, 2021. We are working with our insurance providers and advisors to assess the full extent of damage to buildings and equipment and applicable insurance coverage amounts, which will be subject to deductibles associated with our insurance coverages that range from $2.0 million to $3.0 million. During the three and nine months ended September 30, 2021, we also incurred costs of $0.9 million associated with clean-up and expediting activities to enable us to restart operations. We have recorded insurance recoveries up to the amount of costs recognized as we believe such costs are covered under our insurance policies and we have determined recovery of such amounts is probable. The insurance receivable amounts associated with the aforementioned are reflected within prepaid expenses and other assets on our Balance Sheet at September 30, 2021.
In addition to damage to our F&S Facility, the storm resulted in damage to our second forty-vehicle ferry, the MPSVs (and associated equipment) that are in our possession and subject to dispute, and certain bulkheads where the vessels were moored. We have retained advisors to evaluate the extent to which any damage was the result of third-party vessels that broke free from their mooring during the storm and struck the ferry, MPSVs and bulkheads. During both the three and nine-months ended September 30, 2021, we recorded charges of $0.4 million related to actual costs incurred and anticipated contract costs associated with our insurance coverages, without giving consideration to potential recoveries from the third-parties associated with damage caused by their vessels, as we expect these deductibles to be met absent such recoveries. The charges are included in other (income) expense, net on our Statement of Operations. We are working with our insurance providers and advisors to assess the full extent of damage to the MPSVs and bulkheads and applicable insurance coverage amounts, which will be subject to deductibles associated with our insurance coverages that range from $1.0 million to $1.5 million. See Note 6 for further discussion of our MPSV dispute.
While our evaluation of damage caused by Hurricane Ida is ongoing, we are currently not aware of damage to buildings, equipment or vessels that would result in material repair or replacement costs to us in excess of our deductible amounts. However, we may incur additional costs beyond such amounts if damages are determined to be in excess of insurance coverage amounts or if costs we believed to be covered by our insurance coverages are ultimately not covered.
Hurricane Laura – On August 27, 2020, Hurricane Laura made landfall near Lake Charles, Louisiana as high-end Category 4 hurricane, with high winds and flooding causing significant damage throughout the region. At our Lake Charles Facility, the storm damaged drydocks, warehouses, bulkheads and our ninth harbor tug project which was nearing completion and subsequently completed in the fourth quarter 2020. As a result of the storm, during both the three and nine months ended September 30, 2020, we recorded charges of $1.2 million (of which $0.5 million was reflected within discontinued operations) related to deductibles associated with our insurance coverages, and our preliminary estimates of cost associated with uninsurable damage, primarily for bulkheads. The charges are included in other (income) expense, net on our Statement of Operations.
The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef