Who we are
Our strength lies in our people united as an integrated team with one mission that sets us apart from the competition.
Marine
We provide one-source solutions for projects above and below, on and off the water.
Concrete
Achieving high customer satisfaction, repeat business through consistent project management, quality work, and cost-effective completion.
Engineering
Schneider Engineering & Consulting excels in marine and civil engineering, delivering unparalleled solutions for diverse projects.
26 Feb 2020 / 06:10 PM EST
HOUSTON--(BUSINESS WIRE)--Feb. 26, 2020-- Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported a net income of $0.2 million ($0.01 diluted earnings per share) for the fourth quarter ended December 31, 2019. Fourth quarter highlights are discussed below. For full year results please refer to the financial statements starting on page 7.
Fourth Quarter 2019 Highlights
“Our fourth quarter was a solid finish to a year of significant progress for Orion,” stated Mark Stauffer, Orion Group Holding’s President and Chief Executive Officer. “We doubled the top-line compared to the prior year fourth quarter and posted our highest revenue quarter in company history, despite the seasonal factors that affect our final months of the year. Our strong revenue generation, along with the benefits of our Invest, Scale & Grow (ISG) initiative and improved weather patterns led to substantially improved performance year-over-year.”
“With respect to our segment performance, our concrete business generated significant year-over-year improvement facilitated by increased productivity as measured by greater cubic yard production and improved man hours per cubic yard. Even with the impact of customer scheduling delays, marine revenues and operating profit were up sharply in the fourth quarter of 2019, driven by execution on large construction projects in backlog. Also contributing to marine’s year-over-year growth was increased dredging work, which led to higher fleet utilization and increased absorption of fixed costs.”
“Our year-end backlog was up by 30% relative to the end of last year, reflecting our favorable end market positioning, and the high level of expansion activity in our markets. We currently see a robust bid market and pipeline of projects that we are pursuing. We see the Industrial end market as a particularly compelling opportunity for Orion and have been encouraged by our initial success in penetrating this space. Additionally, over the course of 2020, we will be focused on bidding and winning select larger and longer jobs that can produce greater visibility and stronger profit potential for our operations, and we feel confident that we have the infrastructure and people in place to be successful in this regard. ”
Mr. Stauffer concluded, “We are looking forward to building on our success from the second half of 2019 throughout 2020. Our ISG initiatives in equipment and labor management are yielding results and we plan to continue to drive operational efficiencies in 2020. The continued progress of our operational improvement initiatives, coupled with our sizeable backlog and strong bidding environment, make us optimistic for our growth prospects for the year. More specifically, we expect these positive dynamics to enable us to generate adjusted EBITDA in the low to mid $40 million range for the full year of 2020.”
Consolidated Results for Fourth Quarter 2019 Compared to Fourth Quarter 2018
Backlog
Backlog of work under contract as of December 31, 2019 was $572.3 million, which compares with backlog under contract at December 31, 2018 of $440.3 million, an increase of 30.0%. The fourth quarter 2019 ending backlog was comprised of $340.7 million for the marine segment, and a record $231.6 million for the concrete segment. Currently, the Company has approximately $1 billion worth of bids outstanding, including approximately $154 million on which it is the apparent low bidder, or has been awarded contracts subsequent to the end of the fourth quarter of 2019, of which approximately $71 million pertains to the marine segment and approximately $83 million to the concrete segment.
“During the fourth quarter, we bid on approximately $1 billion of work and were successful on approximately $142 million of these bids,” stated Robert Tabb, Orion Group Holding's Vice President and Chief Financial Officer. “This resulted in a 0.71 times book-to-bill ratio and a win rate of 14.6%. In the marine segment, we bid on approximately $200 million during the fourth quarter 2019 and were successful on approximately $48 million, representing a win rate of 24.0% and a book-to-bill ratio of 0.43 times. In the concrete segment we bid on approximately $773 million of work and were awarded approximately $94 million, representing a win rate of 12.2% and a book-to-bill ratio of 1.06 times."
Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and not yet complete, and the Company cannot guarantee that the revenue projected in its backlog will be realized, or, if realized, will result in earnings. Backlog can fluctuate from period to period due to the timing and execution of contracts. Given the typical duration of the Company's projects, which generally range from three to nine months, the Company's backlog at any point in time usually represents only a portion of the revenue it expects to realize during a twelve-month period.
Conference Call Details
Orion Group Holdings will host a conference call to discuss results for the fourth quarter 2019 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, February 27, 2020. To listen to a live webcast of the conference call, or access the replay, visit the Calendar of Events page of the Investor Relations section of the website at www.oriongroupholdingsinc.com. To participate in the call, please dial (201) 493-6739 and ask for the Orion Group Holdings Conference Call.
About Orion Group Holdings
Orion Group Holdings, Inc., a leading specialty construction company serving the infrastructure, industrial and building sectors, provides services both on and off the water in the continental United States, Alaska, Canada and the Caribbean Basin through its marine segment and its concrete segment. The Company’s marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Its concrete segment provides turnkey concrete construction services including pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas.
Non-GAAP Financial Measures
This press release includes the financial measures “adjusted net income,” “adjusted earnings per share,” “EBITDA,” "Adjusted EBITDA" and “Adjusted EBITDA margin." These measurements are “non-GAAP financial measures” under rules of the Securities and Exchange Commission, including Regulation G. The non-GAAP financial information may be determined or calculated differently by other companies. By reporting such non-GAAP financial information, the Company does not intend to give such information greater prominence than comparable and other GAAP financial information, which information is of equal or greater importance.
Adjusted net income and adjusted earnings per share are not an alternative to net income or earnings per share. Adjusted net income and adjusted earnings per share exclude certain items that management believes impairs a meaningful comparison of operating results. The company believes these adjusted financial measures are a useful adjunct to earnings calculated in accordance with GAAP because management uses adjusted net income available to common stockholders to evaluate the company's operational trends and performance relative to other companies. Generally, items excluded, are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.
Orion Group Holdings defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by adjusting EBITDA for certain items that management believes impairs a meaningful comparison of operating results. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for the period by contract revenues for the period. The GAAP financial measure that is most directly comparable to EBITDA and Adjusted EBITDA is net income, while the GAAP financial measure that is most directly comparable to Adjusted EBITDA margin is operating margin, which represents operating income divided by contract revenues. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are used internally to evaluate current operating expense, operating efficiency, and operating profitability on a variable cost basis, by excluding the depreciation and amortization expenses, primarily related to capital expenditures and acquisitions, and net interest and tax expenses. Additionally, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information regarding the Company's ability to meet future debt service and working capital requirements while providing an overall evaluation of the Company's financial condition. In addition, EBITDA is used internally for incentive compensation purposes. The Company includes EBITDA, Adjusted EBITDA and Adjusted EBITDA margin to provide transparency to investors as they are commonly used by investors and others in assessing performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have certain limitations as analytical tools and should not be used as a substitute for operating margin, net income, cash flows, or other data prepared in accordance with generally accepted accounting principles in the United States, or as a measure of the Company's profitability or liquidity.
Forward-Looking Statements
The matters discussed in this press release may constitute or include projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of which the Company is availing itself. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'seeks', 'approximately', 'intends', 'plans', 'estimates', or 'anticipates', or the negative thereof or other comparable terminology, or by discussions of strategy, plans, objectives, intentions, estimates, forecasts, outlook, assumptions, or goals. In particular, statements regarding future operations or results, including those set forth in this press release (including those under “Update on Scale and Growth Initiative” above), and any other statement, express or implied, concerning future operating results or the future generation of or ability to generate revenues, income, net income, gross profit, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, or cash flow, including to service debt, and including any estimates, forecasts or assumptions regarding future revenues or revenue growth, are forward-looking statements. Forward looking statements also include estimated project start date, anticipated revenues, and contract options which may or may not be awarded in the future. Forward looking statements involve risks, including those associated with the Company's fixed price contracts that impacts profits, unforeseen productivity delays that may alter the final profitability of the contract, cancellation of the contract by the customer for unforeseen reasons, delays or decreases in funding by the customer, levels and predictability of government funding or other governmental budgetary constraints and any potential contract options which may or may not be awarded in the future, and are at the sole discretion of award by the customer. Past performance is not necessarily an indicator of future results. In light of these and other uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that the Company's plans, estimates, forecasts, goals, intentions, or objectives will be achieved or realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update information contained in this press release whether as a result of new developments or otherwise.
Please refer to the Company's Annual Report on Form 10-K, filed on March 27, 2019, which is available on its website at www.oriongroupholdingsinc.com or at the SEC's website at www.sec.gov, for additional and more detailed discussion of risk factors that could cause actual results to differ materially from our current expectations, estimates or forecasts.
Orion Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Information)
(Unaudited)
Three months ended
Twelve months ended
December 31,
2019
2018
Contract revenues
199,793
99,211
708,390
520,894
Costs of contract revenues
180,704
121,419
644,349
504,118
Gross profit
19,089
(22,208
)
64,041
16,776
Selling, general and administrative expenses
16,335
13,034
61,012
53,197
Amortization of intangible assets
660
849
2,640
3,390
Gain from sale of assets, net
(607
(779
(1,804
(3,306
Goodwill impairment charges
—
69,483
Other gain from continuing operations
(5,448
Operating income (loss)
2,701
(104,795
2,193
(100,540
Other (expense) income:
Other income
197
75
771
1,692
Interest income
36
37
353
136
Interest expense
(1,827
(2,044
(6,808
(7,943
Other expense, net
(1,594
(1,932
(5,684
(6,115
Income (loss) before income taxes
1,107
(106,727
(3,491
(106,655
Income tax expense (benefit)
948
(12,311
1,868
(12,233
Net income (loss)
$
159
(94,416
(5,359
(94,422
Basic income (loss) per share
0.01
(3.32
(0.18
(3.31
Diluted income (loss) per share
Shares used to compute income (loss) per share:
Basic
29,562,635
28,448,426
29,322,054
28,518,353
Diluted
29,574,145
Selected Results of Operations
Three months ended December 31,
Amount
Percent
(dollar amounts in thousands)
Marine segment
Public sector
77,349
69.5
%
25,486
69.0
Private sector
33,875
30.5
11,430
31.0
Marine segment total
111,224
100.0
36,916
Concrete segment
8,624
9.7
12,190
19.6
79,945
90.3
50,105
80.4
Concrete segment total
88,569
62,295
Total
2,641
2.4
(65,361)
(177.1)
60
0.1
(39,434)
(63.3)
(104,795)
Twelve months ended December 31,
257,836
69.8
124,208
50.9
111,302
30.2
119,675
49.1
369,138
243,883
49,175
14.5
55,883
20.2
290,077
85.5
221,128
79.8
339,252
277,011
1,057
0.3
(61,012)
(25.0)
1,136
(39,528)
(14.3)
(100,540)
Reconciliation of Adjusted Net Income (Loss)
(In thousands except per share information)
One-time charges and the tax effects:
ISG initiative
919
4,781
Severance
162
645
Unamortized debt issuance costs on debt extinguishment
399
2,164
Legal settlement
Change in cost estimates
22,770
Reserve on disputed accounts receivables
4,280
Tax rate of 23% applied to one-time charges (1)
(250
(21,044
(1,340
(20,328
Total one-time charges and the tax effects
831
75,489
4,485
72,921
Federal and state tax valuation allowances
465
10,977
916
Adjusted net income (loss)
1,455
(7,950
42
(10,524
Adjusted EPS
0.05
(0.28
(0.37
(1)
Items are taxed discretely using the Company's blended tax rate.
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations
(In Thousands, Except Margin Data)
Year ended
(94,416)
(5,359)
(94,422)
(12,311)
(12,233)
Interest expense, net
1,791
2,007
6,455
7,807
Depreciation and amortization
7,065
10,665
28,407
31,799
EBITDA (1)
9,963
(94,055)
31,371
(67,049)
(5,448)
Adjusted EBITDA(2)
11,044
2,478
36,797
24,036
Operating income (loss) margin (3)
1.4
(85.9)
0.4
(18.2)
Impact of depreciation and amortization
3.5
8.7
4.0
5.8
Impact of ISG initiative
0.5
0.7
Impact of severance
Impact of change in cost estimates
18.7
4.2
Impact of reserve on disputed accounts receivables
0.8
Impact of goodwill impairment charges
57.0
12.8
Impact of legal settlement
(1.0)
Adjusted EBITDA margin(2)
5.5
2.0
5.2
4.4
__________________________
EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.
(2)
Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for the ISG initiative, severance, change in cost estimates, reserve on disputed accounts receivable, goodwill impairment charges and legal settlement. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.
(3)
Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment
Other income (expense), net (1)
3,214
2,251
(3,018)
(2,176)
4,914
7,885
2,152
2,780
EBITDA (2)
10,769
(55,225)
(806)
(38,830)
781
138
126
Reserve on disputed accounts receivable
33,811
35,672
Adjusted EBITDA(3)
11,676
5,636
(632)
(3,158)
Operating income (loss) margin (4)
5.3
(105.7)
(3.3)
(66.9)
13.2
4.5
0.2
38.1
Impact of reserve on disputed accounts receivable
7.2
56.6
57.3
Adjusted EBITDA margin (3)
10.5
9.4
(0.7)
(5.1)
11,976
11,155
(11,206)
(9,463)
19,889
22,657
8,519
9,142
32,922
(27,200)
(1,551)
(39,849)
2,491
2,290
609
36,022
28,213
775
(4,177)
Operating(loss) income margin (4)
(18.7)
(3.0)
(17.7)
5.4
8.5
2.5
3.3
1.6
12.7
12.9
(2.0)
9.8
10.6
(1.5)
Primarily consists of corporate overhead costs recorded to the marine segment as part of operating income(loss) and allocated from the marine segment to the concrete segment in other income (expense) line. Allocated amounts net to zero on a consolidated basis.
(4)
Consolidated Statements of Cash Flows
(In Thousands)
Year ended December 31,
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
26,096
Amortization of ROU operating leases
5,177
Amortization of ROU finance leases
2,312
Unamortized debt issuance costs upon debt modification
Amortization of deferred debt issuance costs
453
725
Deferred income taxes
71
(13,194
Stock-based compensation
2,753
2,238
Gain on sale of property and equipment
Allowance for doubtful accounts
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
(51,709
10,936
Income tax receivable
(495
(128
Inventory
503
647
Prepaid expenses and other
131
1,671
Costs and estimated earnings in excess of billings on uncompleted contracts
(32,172
36,789
Accounts payable
28,894
(4,584
Accrued liabilities
1,334
(5,301
Operating lease liabilities
(5,843
Income tax payable
1,523
(256
Billings in excess of costs and estimated earnings on uncompleted contracts
27,020
(12,162
Net cash (used in) provided by operating activities
(716
21,931
Cash flows from investing activities:
Proceeds from sale of property and equipment
2,015
3,234
Purchase of property and equipment
(17,199
(17,714
Contributions to CSV life insurance
(721
(260
Proceeds from return of investment
94
Insurance claim proceeds related to property and equipment
2,574
1,346
Net cash used in investing activities
(13,331
(13,300
Cash flows from financing activities:
Borrowings from Credit Facility
63,000
39,861
Payments made on borrowings from Credit Facility
(70,210
(48,111
Proceeds from sale-leaseback arrangement
18,210
Loan costs from Credit Facility
(1,680
(861
Capital lease liability
(2,737
Payments of finance lease liabilities
(2,906
Exercise of stock options
35
2,815
Net cash provided by (used in) financing activities
6,449
(9,033
Net change in cash, cash equivalents and restricted cash
(7,598
(402
Cash, cash equivalents and restricted cash at beginning of period
8,684
9,086
Cash, cash equivalents and restricted cash at end of period
1,086
Consolidated Statements of Cash Flows Summary
Cash flows provided by (used in) operating activities
1,181
27,170
Cash flows used in investing activities
(3,683
(1,593
Cash flows provided by (used in) financing activities
(19,487
Capital expenditures (included in investing activities above)
(4,164
(2,671
Consolidated Balance Sheets
ASSETS
Current assets:
Cash and cash equivalents
128
Restricted cash
958
Accounts receivable:
Trade, net of allowance of $2,600 and $4,280, respectively
116,540
77,641
Retainage
42,547
30,734
Other current
2,680
4,257
Income taxes receivable
962
467
1,114
1,056
41,389
9,217
5,647
5,000
Total current assets
211,965
137,056
Property and equipment, net of depreciation
132,348
148,003
Operating lease right-of-use assets, net of amortization
17,997
Financing lease right-of-use assets, net of amortization
7,896
Inventory, non-current
7,037
7,598
Intangible assets, net of amortization
12,147
14,787
Deferred income tax asset
85
Other non-current
5,369
5,426
Total assets
394,844
312,870
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt, net of issuance costs
3,668
2,946
Accounts payable:
Trade
70,421
42,023
562
736
16,966
18,840
Income taxes payable
48,781
21,761
Current portion of operating lease liabilities
5,043
Current portion of financing lease liabilities
2,788
Total current liabilities
149,752
86,306
Long-term debt, net of debt issuance costs
68,029
76,119
13,596
Financing lease liabilities
3,760
Other long-term liabilities
20,436
8,759
Deferred income tax liability
205
49
Interest rate swap liability
1,045
52
Total liabilities
256,823
171,285
Stockholders’ equity:
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued
Common stock -- $0.01 par value, 50,000,000 authorized, 30,303,395 and 29,611,989 issued; 29,592,164 and 28,900,758 outstanding at December 31, 2019 and December 31, 2018, respectively
303
296
Treasury stock, 711,231 and 711,231 shares, at cost December 31, 2018 and December 31, 2017 respectively
(6,540
Other comprehensive loss
(1,045
(52
Additional paid-in capital
182,523
179,742
Retained loss
(37,220
(31,861
Total stockholders’ equity
138,021
141,585
Total liabilities and stockholders’ equity
View source version on businesswire.com: https://www.businesswire.com/news/home/20200226006025/en/
Orion Group Holdings Inc.Robert Tabb, Vice President & CFO (713) 852-6500 www.oriongroupholdingsinc.com
-OR-
INVESTOR RELATIONS COUNSEL: The Equity Group Inc.Fred Buonocore, CFA (212) 836-9607 Mike Gaudreau (212) 836-9620
Source: Orion Group Holdings, Inc.
Orion Group Holdings Inc. Robert Tabb, Vice President & CFO (713) 852-6500 www.oriongroupholdingsinc.com
INVESTOR RELATIONS COUNSEL: The Equity Group Inc. Fred Buonocore, CFA (212) 836-9607 Mike Gaudreau (212) 836-9620
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