Page 5 - Q1 2022 RNR

Financial Reporting Fiscal 2022 1st Quarter - R N R Construction, Inc. - 4 - remaining underbilling’s are directly related to closing change order and payment
administration as seen on the percent complete of the contracts.
Turning the attention to “Billings in Excess of Costs ,” a much higher number at $ 1,602,135, we deem all these contracts conservative based on status and upcoming contract closures. In fact, an important note to the NVIDIA contract is due, which is entirely closed except for on- going legal costs. Setting aside these legal costs and even with the debacle of the project design, this contract would have yielded over $850,000 (13%). We have sustained $250,000 in legal costs and have reduced projected yield in expectancy of these 2nd quarter legal costs, thus generating a significant overbilling.
There is not a single contract behind schedule, over budget or facing significant risk, except typical construction events. Numerous contracts above 90% will entirely close in the 2nd quarter providing revealing results. R N R will be turning a major contract corner in its
2nd quarter with the completion of significant FY2020 and FY2021 work.
Based on ASC-606, the above “Costs in Excess of Billings” and “Billings in Excess of Costs” have disappeared and so has “Receivable – Retention.” This quarter, Retention Receivable would have recorded as $ 2,403,249. For the pleasure of in-depth analysis of all these entries, all converted to “Contract Assets” and “Contract Liabilities,” we submit a reconciliation on Schedule E of the Supplemental Notes on a contract-by-contract basis.
In either case, R N R’s “Contract Liabilities” are $ 665,008 which is less than the defunct “Billings more than Costs.” “Contract Assets are $ 2,223,395 which is far more than the defunct “Costs in Excess of Billings“ because of retention absorption.
As can be seen from its earlier completed contract margin summary, R N R remains vigilant, cautious, and safeguards its margin progress based on bid estimates until a contract is very near completion. This is especially the case for design-build contracts which recoveries against the Owner are significantly difficult.
For the first time, this 1st quarter margin is not affected by our depreciation account and there is no purchased equipment in the first quarter. This is a true blessed record and equipment purchases are not planned in FY2022.
R N R’s backlog has grown $9,081,184 in the first quarter and the year’s revenue will easily reach over $ 40 million. R N R expects Government payment for the Note Receivable which is the Employee Retention Tax Credit. As well, R N R still has near $250,000 in claim’s payment from Caltrans on the i5 Sacramento Contract and over $3.5MM for its NVIDIA Design Claim, both progressing significantly well.