Note 3 - Discontinued Operations

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3.  Discontinued Operations

During the fourth quarter of 2021, our Board of Directors approved a plan to sell the businesses in WMS within the next twelve months. This includes: our trenchless and pipe rehabilitation services business (“Inliner”); our water supply, treatment, delivery and maintenance business (“Water Resources”); and our mineral exploration drilling business (“Mineral Services”). After consideration of the relevant facts, we concluded the assets and liabilities of our WMS businesses met the criteria for classification as held for sale. We concluded the proposed disposal activities represented a strategic shift that would have a major effect on our operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (“ASC”) Topic 205-20, Presentation of financial statements - Discontinued operations. Accordingly, the financial results of these businesses are presented in the condensed consolidated statement of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not sold as of the balance sheet date are presented in the condensed consolidated balance sheets as assets and liabilities held for sale for all periods presented.

On March 16, 2022, we completed the sale of Inliner to Inland Pipe Rehabilitation LLC (“IPR”) and 1000097155 Ontario Inc. (“Ontario” and together with IPR, the “Purchasers”), investment affiliates of J.F. Lehman & Company, for a purchase price of $159.7 million, subject to certain adjustments. As a result of the sale, we received cash proceeds of $142.6 million based on preliminary post-closing adjustments and we recognized a gain of $6.2 million. The gain on sale was included in the net income from discontinued operations in the condensed consolidated statements of operations during the three months ended March 31, 2022. The Water Resources and Mineral Services businesses continued to meet the criteria for classification as held-for-sale and the financial results remain in discontinued operations as of March 31, 2022 and are expected to be sold within the next 12 months.

The following table presents summarized balance sheet information of assets and liabilities held-for-sale:

(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021
Cash and cash equivalents	$	7,544	$	16,496	$	12,095
Receivables, net		54,652		102,208		81,877
Contract assets		16,700		41,340		40,440
Inventories		11,954		19,625		20,635
Other current assets		1,270		1,781		4,347
Property and equipment, net		40,490		70,912		101,220
Investments in affiliates		50,453		48,675		47,399
Goodwill		19,982		63,063		63,092
Right of use assets		4,839		12,365		8,362
Other noncurrent assets		3,890		16,176		24,857
Total assets classified as held-for-sale	$	211,774	$	392,641	$	404,324
Accounts payable	$	16,682	$	37,997	$	37,337
Contract liabilities		3,447		7,129		6,516
Other current liabilities		15,808		27,764		24,625
Long-term lease liabilities		2,641		8,352		6,167
Other long-term liabilities		1,668		2,166		4,558
Total liabilities classified as held-for-sale	$	40,246	$	83,408	$	79,203

The following table represents summarized statements of operations information of discontinued operations (in thousands):

Three Months Ended March 31,	2022			2021
Revenue	$	102,961		$	103,581
Cost of revenue		88,727			93,975
Gross profit		14,234			9,606
Selling, general and administrative expenses		11,618			14,568
Other costs		1,343			1,526
Gain on sale of discontinued operations		(6,234	)		—
Gain on sales of property and equipment, net		(266	)		(310	)
Operating income (loss)		7,773			(6,178	)
Other income, net		(1,608	)		(2,558	)
Income (loss) from discontinued operations before provision for (benefit from) income taxes		9,381			(3,620	)
Provision for (benefit from) income taxes		3,285			(698	)
Net income (loss) from discontinued operations	$	6,096		$	(2,922	)

As required per ASC Topic 205-20, Presentation of financial statements - Discontinued operation, components included in the condensed consolidated statement of cash flows for the discontinued operations are as follows (in thousands):

Three Months Ended March 31,	2022		2021
Depreciation, depletion and amortization (1)	$	—	$	10,059
Gain on sale of discontinued operations	$	6,234	$	—
Purchases of property and equipment	$	3,376	$	3,307
Proceeds from sale of discontinued operations	$	142,571	$	—

(1) - In accordance with ASC Topic 360, Property, Plant, and Equipment, we ceased recording  depreciation and amortization for WMS property, plant and equipment, finite-lived tangible assets and right-of-use lease assets as of December 31, 2021.