Category Archives: Construction

Sterling Infrastructure CFO to retire in 2024

Ron Ballschmiede, the CFO of Sterling Infrastructure, has announced he plans to retire sometime in 2024. No replacement has yet been named.

The company has its head office in The Woodlands. It is involved in the construction of infrastructure (eastern US), transportation (western US) and residential and commercial buildings (Texas and Phoenix). The company has a market capitalization of $2.6 billion.

Mr. Ballschmiede, 68, joined the company as CFO in November 2015. Prior to that, he was the CFO at Chicago Bridge and Iron Company (later taken over by McDermott International).

Since he joined, the company has tripled revenues to almost $2 billion and doubled its employees to 3,200. The stock has increased over ten-fold.

In the company’s press release, Joe Cutillo, the CEO of Sterling, said “We have a succession plan in place. Ron will stay on as CFO until his successor is named and will continue thereafter to ensure a smooth transition.” (AJ comment – If you have a succession plan in place, why didn’t you announce his successor?)

SEC filing – 8-K Sterling CFO to retire


Steel framing manufacturer raises $10 million in IPO

Inno Holdings, based in Brookshire, has completed its Initial Public Offering (IPO). The company raised $10 million by offering 2.5 million shares at $4, the low end of the range.

Inno primarily produces cold-formed steel framing products. The company argues that using steel instead of wood allows buildings to be constructed in a modular or off-site manner. Inno generates revenue from the sale of metal studs, tracks and wall panels as well as engineering services and on-site structure framing work.

CEO DK Liu formed Inno in 2019. His family has been involved in industrial machinery production for three generations. Since moving to the US in 2012 he has been involved in real estate development.

CFO Solomon Li was appointed in July 2023 and is based in the company’s office in Diamond Bar, California. Prior to that, he worked for  JP Morgan Chase. The previous CFO was Wes Twigg, based in Oregon. He joined in January 2023 but resigned in July.

For the nine months ended June 30, revenues were only $502k, down from $3.5 million in the corresponding period in 2022. The big revenue drop was due to a decline in construction activity and the size of contracts. However, the company estimates it has $15 million to $20 million in backlog as of June 30, 2023.

If the lack of revenue to June 2023 wasn’t bad enough, the company incurred bad debt expenses of $1.3 million. The collection issues were with multiple customers and for a variety of reasons. Losses before taxes were $3 million in the nine months to June 2023, compared to a loss of $556k in the prior corresponding period.

The stock of Inno will trade under the ticker INHD.

S-1 filing – Inno Holdings



Baytown woman admits to embezzling $3m from employer

Judy M. Green, of Baytown, admitted embezzling over $3 million from her employer over a 10 year period. She pleaded guilty to wire fraud and will be sentenced in August. Ms. Green faces up to 20 years in prison as well as a $250,000 fine.

Her employer, Liqua Tech services commercial properties and focused on roofing, siding and building maintenance for those properties. Ms. Green was hired in 1994 and served as the primary and often only manager of accounts payable for the company.

As part of her duties, Ms. Green received and entered invoices and presented them to the owner for her signature or approval for payment. She would then produce the physical checks for the owner to sign as Ms. Green did not have signature authority.

Beginning in December 2011 and continuing until July 2022, Ms. Green devised a scheme to divert funds for her own personal use. She began to create fake invoices in the name of legitimate vendors. Once she got those invoices approved by the owner, she would change the payee name in the accounting system to one of her or her children’s credit card companies.  She would then physically print the check, forge the owner’s signature and mail the check to the credit card company to cover her personal debts. Ms. Green would then go back in the system and change the payee back to the original listed vendor.

The scheme was uncovered In the summer of 2022 when the owner noticed a large payment to an unknown credit card company.

CFO resigns at marine construction company

Luca Paciolo – circa 1500 – “The Father of Accounting”

Robert Tabb, the CFO at Orion Group Holdings, has resigned to take a position with an unnamed private company. The company is conducting a formal CFO search. In the interim, senior management and the finance department will share his duties.

Orion is a specialty construction company involved in marine construction management including dredging and turnkey concrete construction services. The company is based in SE Houston near Ellington Field and has a market capitalization of $157 million.

Mr. Tabb joined the company in 2014 and became the interim CFO in November 2018. The company removed the interim tag the following March.

At the time he was appointed, the company was in a big hole. In 2018, the company wrote off $69 million in goodwill impairment and a further $23 million in cost overruns on two marine projects. The company had $80 million of debt.

Fast forward to the present time and the company debt was down to $6 million at the end of June. This is the result of increased revenues, especially from Gulf Coast port projects, improved discipline on contract bidding and sale of surplus assets. The company completed a sale-and-leaseback transaction in 2019 that raised $18 million.

Last week, Scott Kornblau was appointed the CFO at Great Lakes Dredge & Dock, another Houston company in a similar business to Orion.




Former Diamond Offshore CFO lands new role

Scott Kornblau, who recently left his CFO role at Diamond Offshore, has been appointed CFO at Great Lakes Dredge & Dock Corporation (GLDD), which has its head office in the Memorial City area of Houston.

GLDD is the nation’s largest provider of dredging services. The company was founded in 1890. It changed its name in 1905 and performed marine construction and landfill projects along the Chicago lakefront and in the surrounding Great Lakes region. In recent years, it has been expanding into the East and Gulf Coasts of the US.

GLDD has revenues of $700 million and a market capitalization of $1 billion.

Lasse Petterson was appointed the new CEO in May 2017. He joined the company from Houston-based CB&I (now part of McDermott) where he was COO. Prior to that, he worked in Houston at AMEC Inc, Americas and Aker Maritime. GLDD moved its head office to Houston one year ago.

Current CFO Mark Marinko, who has been in that position since 2014, will remain in the Chicago area. He will receive a severance of 1.5 times base salary of $401,000 plus 1.5 times annual incentive. In addition his restricted stock will vest. In total, Mr. Marinko will receive a severance package worth $2.5 million.

Mr. Kornblau will receive a base salary of $435,000. He will also a one-time restricted stock award of 15,000 units (currently worth about $225,000) that will vest over three years.

SEC filing – GLDD CFO appointment


Foster Wheeler agrees to pay $177 million to resolve Brazil bribery allegations

Foster Wheeler, now part of the Wood Group, has agreed to pay $177 million to resolve criminal charges stemming from a scheme to pay bribes to officials of Petrobras in exchange for a $190 million contract to design a gas-to-chemicals complex.

The scheme occurred in 2012. At the time, Foster Wheeler was an independent company with its headquarters in Switzerland. In 2014 Amec acquired the company for £1.9 billion. The combined company was later acquired by UK-based John Wood Group plc in 2017 for £2.2 billion. All three companies had large presences in the Houston area.

The Scheme

In 2011 Foster Wheeler hired a Country Manager for Brazil to identify opportunities in the country. The Country Manager reported to the Houston office.

Later that year, an Italian agent learned from a Brazilian agent (an ex-Petrobras employee) that Petrobras were seeking bids on the design of a gas-to-chemical fertilizer plant. Both the Italian agent and the then-Chairman of Foster Wheeler were regular customers of a high-end men’s clothing store in New York. The Store sales manager introduced the two. After the meeting, the chairman forwarded details to the acting CEO, without vouching for the legitimacy of the agent.

In turn, the CEO forwarded the information to the Brazil Country Manager, who responded that the company should not use the Italian agent as ‘we would send a wrong message in the market here’.

The Italian agent was affiliated with a Unaoil, a Monaco company heavily involved in bribery. See my blog post from October 2019 here. When Foster Wheeler did its due diligence on Unaoil, they declined to use it because of its possible violations of US and UK sanctions laws. Despite that, the CEO and COO offered the agent a 2% commission.

Foster Wheeler later agreed a 2% commission with the Brazilian agent. As a result, the company won the front-end engineering and design contract in late 2012. In total, Foster Wheeler ended up paying over $1.1 million in bribes.

In 2014, Petrobras elected not to proceed with the construction phase of the project.

The Settlement

Wood Group issued a press release stating it will pay $177 million over the next three years to resolve all allegations. This covers payments to the UK, US, and Brazil, though the company did not disclose the exact split.

Foster Wheeler is paying the Department of Justice $18.4 million. It is also paying the SEC $22.7 million for FCPA and book-keeping violations (if you are going to bribe someone, you must record it as a bribe). Both will be reduced by penalties paid to Brazil and the UK. The US will receive a net number of $17.8 million.

McDermott CEO steps down after overseeing disastrous acquisition

David Dickson, the CEO of McDermott International, has resigned with immediate effect. Non-executive director, Lee McIntire becomes the interim CEO. Mr. McIntire joined the Board in July 2020 and was the CEO of CH2M Hill, a global engineering services company from 2006 to 2014.

Mr. Dickson had been the CEO since December 2013. He presided over the disastrous acquisition of CB&I in May 2018 for $4.1 billion. Cost overruns on some major projects led to a $2.1 billion write down in goodwill 7 months after acquisition. McDermott filed for bankruptcy in January 2020 and exited 6 months later, having eliminated $4.6 billion of debt.

In April 2021, a judge in the Southern District allowed a class action lawsuit against McDermott and Mr. Dickson to continue. The plaintiffs allege that CB&I hid $1 billion of cost overruns at the time of acquisition though Mr. Dickson told investors that McDermott had performed significant due diligence and priced in potential risks. You can read the judge’s opinion here.

Bonuses for Mr. Dickson

The company is now private so it does not have to disclose the terms of Mr. Dickson’s departure. When the company exited Chapter 11, it was obliged to negotiate a new severance and change-of-control agreement with the executive management team. Mr Dickson’s old contract would have paid 250% of his base salary of $1.1 million and target bonus.

When the company filed for bankruptcy in January 2020, the company filed an employee retention plan that suggested a target bonus for Mr. Dickson of $6.3 million in 2020 (max bonus could have been $12.6 million). Again as the company is private, we don’t know how much Mr. Dickson was paid. 3 months prior to filing, Mr Dickson was awarded $3.375 million in cash bonuses.

Executive management turnover

Most of the executive management team that was at the company when it exited Chapter 11 have now left;

  • Chris Krummel, appointed CFO in Nov 2019 – replaced by Dennis Kelleher in March 2021.
  • John Freeman, Chief Legal Officer – replaced by Rachel Clingman (ex Noble) in April 2021.
  • Brian McLaughlin, Chief Commercial Officer.
  • Tosha Perkins, HR – duties absorbed by Gentry Brann (Senior VP, People, Culture & Communications).
  • Linh Austin, VP Middle East & North Africa – duties absorbed by Tareq Kawash.
  • Ian Prescott, VP Asia Pacific – replaced by Mahesh Swaminathan in April 2021.

CFO promoted to CEO at ENGlobal Corporation

Mark Hess has been appointed as the new CEO at ENGlobal Corporation. The company is an Engineering and Construction business with its head office in north Houston. It has a market capitalization of $142 million.

Mr. Hess replaces Bill Coskey, who is stepping down as CEO, effective March 12. Mr. Coskey co-founded the company in 1985 and has been the CEO on-and-off since that time. He will continue as the Chairman of the Board.  The last person, other than Mr Coskey, to be in the CEO role, held it for just over two years between May 2010 and July 2012.

Mr. Hess joined the company in July 2011 as its Corporate Controller and was promoted to the CFO position in September 2012.

Replacing Mr. Hess as CFO is Darren Spriggs, the current Corporate Controller. He joined the company in June 2019. Prior to that, he served as the Director of Accounting for ABM Industries.

Roger Westerlind, the President of the company’s US subsidiary since December 2000, was also promoted to Company President.

No new compensation details were disclosed.

SEC filing – ENGlobal CEO

CEO steps down at Electrical Contractor

Gary Matthews has resigned as the CEO of IES Holdings, Inc. He was in the role for 18 months. He has also resigned from the Board of Directors. Jeff Gendell, Chairman of the Board, and effectively the majority shareholder, has been appointed interim CEO.

IES has its head office in the Galleria area. It provides electrical contracting and other infrastructure services to a variety of end markets. It has approximately 5,400 employees.

The company is doing reasonably well currently. For its most recent quarter, it had revenues of $291 million and an operating profit of $9.2 million. It had record backlog and most importantly, a net cash balance of $15 million.

Resigned or pushed out?

It is not clear whether Mr Matthews resigned or was pushed out. The company issued a press release quoting Mr Gendell as saying ‘As we planned for the future, Gary determined that this was the appropriate time for a leadership transition’.  Mr Matthews left the company on July 31 and the company appointed an interim CEO, so it’s not a planned leadership transition! I guess Mr Matthews fell out with the Chairman.


The company didn’t state whether Mr Matthews would get a severance or what would happen to his outstanding stock awards. In fact the most recent proxy statement didn’t include a table listing potential payments in the event of a departure of an executive. Previous proxy statements filed by IES have.

The previous CEO, Robert Lewey, who stepped down in March 2019,  got a cash severance payment of $875,000 that comprised of one years salary ($523,000) and a pro-rated bonus for the year.

Mr Matthews, who joined the company from Morgan Stanley Capital Partners, had a base salary of $650,000. As of September 2019, he had about $1.6 million in equity that had not vested.

SEC filing — IES CEO transition


Houston Engineering Company pays $1.6 million to settle campaign finance violations

Dannenbaum Engineering, a major civil engineering contractor, has agreed to pay a $1.6 million fine for its involvement in campaign finance violations.

The company built parts of the Sam Houston Tollway, the Hardy Toll Road and taxiways at both Houston airports.

CEO recently stepped down

The former CEO of Dannenbaum, 80-year-old James Dannenbaum, has been separately charged for his role in the scheme. Mr Dannenbaum is a former Regent of the University of Texas (appointed by Rick Perry). He also serves on the boards of MD Anderson Cancer Center and until recently, the Greater Houston Partnership.

Also heavily involved was Louis H Jones, the Director of Dannenbaum’s South Texas region. Mr Jones lived in McAllen.  He died by suicide in October 2018.

The Scheme

The company admitted to making $323,300 in illegal contributions between 2015 and 2017

The scheme involved employees of the company making campaign contributions in their own name and then, secretly, being reimbursed by the company. The individuals and the campaigns involved are not named in the Information document filed in court in early November. However, searches of the database of the Federal Election Commission reveal the true recipients.

  • Kevin Brady (R) – House Representative for the 8th District of Texas (which covers the Woodlands and Huntsville). In February 2017, Brady’s campaign committee received a total of $10,000 from Jones and three employees (one based in Houston, the other two in South Texas).
  • John Cornyn (R) – Senior Senator for Texas. Cornyn’s campaign committee also received  total of $10,000 from the same individuals in February 2017.
  • Filemon Vela (D) – House Representative for the 34th District of Texas (which covers the Gulf Coast between Brownsville and Corpus Christi). Jones donated $2,500 to Vela’s campaign.

The company reimbursed Jones for the total amounts paid. In the company books, these were disguised as marketing advances. In turn, Jones issued personal checks to the three employees involved.

It’s interesting that the amounts involved quickly snowballed from the $22,500 disclosed in the Information document filed in early November to the $323,300 disclosed in the settlement agreement. The company has a new CEO, Michael Maksoud, who has vowed to restructure its board and stop all politically-related payments to its employees.

Perry and McCarthy big beneficiaries

A breakdown of the $323,300 has not been made public. While politicians from both parties appeared to receive donations, the two biggest recipients according to the FEC records were Rick Perry’s Super PAC (at least $90,000) and Kevin McCarthy’s committees (at least $38,500).

In the same period James Dannenbaum made almost $0.5 million in legal contributions to various candidates. They were mostly Republican including the Cruz, Perry and Rubio Presidential campaigns. However he also donated to Houston Democrats such as Al Green and Sheila Jackson Lee.