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.
28 Oct 2020 / 04:05 PM EST
HOUSTON--(BUSINESS WIRE)--Oct. 28, 2020-- Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported net income of $11.8 million ($0.39 diluted earnings per share) for the third quarter ended September 30, 2020. Third quarter highlights are discussed below.
Third Quarter 2020 Highlights
During the third quarter an explosion and fire occurred in the Port of Corpus Christi Ship Channel while the Company’s dredge Waymon Boyd was working near a pipeline, which resulted in the deaths of five crewmen and injuries, some severe, to several other crewmen. “Our primary concern remains the well-being of our crew members and their families involved in this incident,” said Mark Stauffer, Orion’s President and Chief Executive Officer. “Safety is an integral part of our Guiding Beliefs at Orion and we remain deeply committed to our Target Zero program to support our vision of an incident free workplace. Our support, thoughts, and prayers remain with the crew of the Waymon Boyd and their families.”
As a result of this incident, third quarter results include a net $2.9 million gain on the disposal of assets related to insurance recoveries as a result of the loss of the dredge Waymon Boyd and associated vessels. The Company is currently evaluating the best dredging asset alternatives to reinvest this capital. In the meantime, the Company is confident that it has the equipment and personnel to perform dredging on all existing contracts involving dredging services. The cause of this incident remains under investigation, led by the National Transportation Safety Board, and the Company continues to fully cooperate with the NTSB and other governmental agencies.
“Turning to our financial results, year over year consolidated bottom line growth was driven by continued improved operating performance in both segments. Our concrete segment saw significantly improved operating performance despite revenues being down year over year due to tropical weather in Texas impacting production at the end of the current year quarter. Despite the challenges faced during the quarter, our marine segment saw sequential improvement in operating performance and EBITDA margin,” continued Mr. Stauffer.
“We continue to see bidding activity in both our segments being driven by end markets that are continuing to operate during the COVID-19 pandemic. We continue to focus our efforts on targeting the end markets and projects we expect to have the best opportunities to be successful and profitable moving forward. A key element of our growth strategy is the wide array of end markets we serve, which enables us to pursue the most attractive bid opportunities in the end markets that are performing the best at any given point in time and this strategy serves us well in this challenging and uncertain environment.”
Mr. Stauffer concluded, “We remain confident in our ability to efficiently and profitably execute our projects in backlog, and in our ability to maintain and grow our backlog level by targeting and winning new bid opportunities. Our liquidity position remains strong and provides us with more than sufficient financial flexibility to continue to pursue new awards and execute existing backlog. Our team is focused on continuing to perform well despite the macroeconomic challenges. With our diverse end markets, broad range of construction capabilities and assets, and our highly experienced and professional personnel, we are confident in our ability to deliver increasing levels of profitability and free cash flow in the quarters and years to come, particularly in a post-pandemic environment.”
Consolidated Results for Third Quarter 2020 Compared to Third Quarter 2019
Backlog
Backlog of work under contract as of September 30, 2020 was $428.8 million, which compares with backlog under contract at September 30, 2019 of $620.5 million, a decrease of 30.9%. The prior period backlog number reflects the booking of a large project during the second quarter of 2019 with a contract value of $160 million that has progressed significantly towards completion. The third quarter 2020 ending backlog was comprised of $241.7 million for the marine segment, and $187.1 million for the concrete segment. Currently, the Company has approximately $1.1 billion worth of bids outstanding, including approximately $108 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the third quarter of 2020, of which approximately $49 million pertains to the marine segment and approximately $59 million to the concrete segment.
“During the third quarter, we bid on approximately $734 million of work and were successful on approximately $90 million of these bids,” stated Robert Tabb, Orion Group Holding's Vice President and Chief Financial Officer. “This resulted in a 0.47 times book-to-bill ratio and a win rate of 12.2%. In the marine segment, we bid on approximately $232 million during the third quarter 2020 and were successful on approximately $42 million, representing a win rate of 18.3% and a book-to-bill ratio of 0.38 times. In the concrete segment we bid on approximately $502 million of work and were awarded approximately $47 million, representing a win rate of 9.4% and a book-to-bill ratio of 0.62 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 third quarter 2020 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, October 29, 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.
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 February 28, 2020, 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
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Information)
(Unaudited)
Three months ended
Nine months ended
September 30,
2020
2019
Contract revenues
189,433
199,507
539,766
508,597
Costs of contract revenues
166,932
178,614
476,763
463,645
Gross profit
22,501
20,893
63,003
44,952
Selling, general and administrative expenses
15,270
14,590
47,651
44,677
Amortization of intangible assets
519
662
1,552
1,980
Gain on disposal of assets, net
(6,373)
(451)
(7,734)
(1,197)
Operating income (loss)
13,085
6,092
21,534
(508)
Other (expense) income:
Other income
115
17
251
574
Interest income
57
75
151
317
Interest expense
(1,151)
(1,678)
(3,722)
(4,981)
Other expense, net
(979)
(1,586)
(3,320)
(4,090)
Income (loss) before income taxes
12,106
4,506
18,214
(4,598)
Income tax expense (benefit)
303
467
1,660
920
Net income (loss)
$
11,803
4,039
16,554
(5,518)
Basic earnings (loss) per share
0.39
0.14
0.55
(0.19)
Diluted earnings (loss) per share
Shares used to compute income (loss) per share:
Basic
30,372,310
29,544,288
30,020,258
29,240,979
Diluted
29,547,185
Selected Results of Operations
Three months ended September 30,
Amount
Percent
(dollar amounts in thousands)
Marine segment
Public sector
68,353
60.6
%
73,921
68.8
Private sector
44,528
39.4
33,483
31.2
Marine segment total
112,881
100.0
107,404
Concrete segment
8,784
11.5
14,169
15.4
67,768
88.5
77,934
84.6
Concrete segment total
76,552
92,103
Total
Operating income
8,992
8.0
4,863
4.5
4,093
5.3
1,229
1.3
Nine months ended September 30,
181,684
62.5
180,487
70.0
108,865
37.5
77,427
30.0
290,549
257,914
36,858
14.8
40,551
16.2
212,359
85.2
210,132
83.8
249,217
250,683
12,443
4.3
(1,584)
(0.6)
9,091
3.6
1,076
0.4
Reconciliation of Adjusted Net Income (Loss)
(In thousands except per share information)
One-time charges and the tax effects:
ERP implementation
486
—
796
ISG initiative
1,058
369
3,862
Severance
48
43
120
483
Unamortized debt issuance costs on debt extinguishment
399
Insurance recovery on disposal, net
(2,859)
Recovery on disputed receivable
(898)
Tax rate of 23% applied to one-time charges (1)
741
(253)
569
(1,091)
Total one-time charges and the tax effects
(2,482)
848
(1,903)
3,653
Federal and state tax valuation allowances
(2,231)
(595)
(3,862)
451
Adjusted net income (loss)
7,090
4,292
10,789
(1,414)
Adjusted EPS
0.23
0.15
0.36
(0.05)
(1)
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations
(In Thousands, Except Margin Data)
Interest expense, net
1,094
1,603
3,571
4,664
Depreciation and amortization
6,766
7,080
20,662
21,342
EBITDA (1)
19,966
13,189
42,447
21,408
Stock-based compensation
258
564
1,887
2,292
Adjusted EBITDA(2)
17,001
14,854
41,862
28,045
Operating income (loss) margin (3)
7.0
3.1
4.2
(0.1)
Impact of depreciation and amortization
3.5
3.8
Impact of stock-based compensation
0.1
0.3
0.5
Impact of ERP implementation
Impact of ISG initiative
0.8
Impact of severance
Impact of insurance recovery on disposal, net
(1.5)
(0.5)
Impact of recovery on disputed receivable
(0.2)
Adjusted EBITDA margin(2)
9.0
7.4
7.8
5.5
(2)
(3)
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment
Other income (expense), net (1)
3,147
2,296
(3,032)
(2,279)
4,543
4,960
2,223
2,120
EBITDA (2)
16,682
12,119
3,284
1,070
227
513
31
51
262
224
570
488
Adjusted EBITDA(3)
13,414
13,245
3,587
1,609
Operating income (loss) margin (4)
10.8
6.7
1.4
(1.2)
4.0
4.6
2.9
2.3
0.2
(2.5)
(0.8)
Adjusted EBITDA margin (3)
11.9
12.3
4.7
1.7
9,389
8,762
(9,138)
(8,188)
14,063
14,975
6,599
6,367
35,895
22,153
6,552
(745)
1,767
2,064
228
417
379
190
1,710
179
2,152
26
94
34,538
26,410
7,324
1,635
Operating(loss) income margin (4)
7.6
2.7
(0.0)
(2.8)
4.8
5.8
2.6
2.5
0.6
0.7
0.9
(1.0)
(0.3)
10.2
(4)
Condensed Consolidated Statements of Cash Flows Summary
(In Thousands)
Adjustments to remove non-cash and non-operating items
1,505
8,538
19,333
27,337
Cash flow from net income after adjusting for non-cash and non-operating items
13,308
12,577
35,887
21,819
Change in operating assets and liabilities (working capital)
(8,006)
(13,392)
2,489
(23,716)
Cash flows provided by (used in) operating activities
5,302
(815)
38,376
(1,897)
Cash flows used in investing activities
(153)
(4,507)
(2,197)
(9,648)
Cash flows (used in) provided by financing activities
(12,760)
3,913
(34,533)
4,211
Capital expenditures (included in investing activities above)
(4,408)
(4,917)
(9,444)
(13,035)
Condensed Consolidated Statements of Cash Flows
Cash flows from operating activities
Adjustments to reconcile net income (loss) to net cash used in operating activities:
18,175
19,609
Amortization of ROU operating leases
4,449
4,145
Amortization of ROU finance leases
2,487
1,733
Unamortized debt issuance costs upon debt modification
Amortization of deferred debt issuance costs
529
312
Deferred income taxes
27
44
Allowance for doubtful accounts
(487)
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
12,151
(35,242)
Income tax receivable
(330)
Inventory
(291)
310
Prepaid expenses and other
1,667
1,674
Costs and estimated earnings in excess of billings on uncompleted contracts
(1,807)
(29,063)
Accounts payable
(22,583)
13,702
Accrued liabilities
26,282
Operating lease liabilities
(4,079)
(4,434)
Income tax payable
(1,037)
755
Billings in excess of costs and estimated earnings on uncompleted contracts
(7,814)
27,252
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Proceeds from sale of property and equipment
5,821
1,363
Purchase of property and equipment
Contributions to CSV life insurance
(99)
(550)
Insurance claim proceeds related to property and equipment
1,525
2,574
Net cash used in investing activities
Cash flows from financing activities:
Borrowings from Credit Facility
10,000
49,000
Payments made on borrowings from Credit Facility
(41,225)
(59,460)
Loan costs from Credit Facility
(369)
(1,430)
Payments of finance lease liabilities
(2,751)
(2,144)
Purchase of vested stock-based awards
(188)
Exercise of stock options
35
Net cash used in financing activities
Net change in cash, cash equivalents and restricted cash
1,646
(7,334)
Cash, cash equivalents and restricted cash at beginning of period
1,086
8,684
Cash, cash equivalents and restricted cash at end of period
2,732
1,350
Condensed Consolidated Balance Sheets
December 31,
ASSETS
Current assets:
Cash and cash equivalents
128
Restricted cash
958
Accounts receivable:
Trade, net of allowance for credit losses of $411 and $2,600, respectively
90,612
116,540
Retainage
36,230
42,547
Income taxes receivable
962
Other current
25,931
2,680
1,936
1,114
43,196
41,389
4,593
5,647
Total current assets
206,192
211,965
Property and equipment, net of depreciation
125,911
132,348
Operating lease right-of-use assets, net of amortization
15,619
17,997
Financing lease right-of-use assets, net of amortization
12,775
7,896
Inventory, non-current
6,506
7,037
Intangible assets, net of amortization
10,595
12,147
Deferred income tax asset
67
85
Other non-current
4,855
5,369
Total assets
382,520
394,844
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt, net of issuance costs
4,347
3,668
Accounts payable:
Trade
47,810
70,421
590
562
45,925
16,966
Income taxes payable
1,523
40,967
48,781
Current portion of operating lease liabilities
4,766
5,043
Current portion of financing lease liabilities
2,788
Total current liabilities
149,434
149,752
Long-term debt, net of debt issuance costs
36,285
68,029
11,545
13,596
Financing lease liabilities
7,670
3,760
Other long-term liabilities
20,053
20,436
Deferred income tax liability
214
205
Interest rate swap liability
1,795
1,045
Total liabilities
226,996
256,823
Stockholders’ equity:
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued
Common stock -- $0.01 par value, 50,000,000 authorized, 31,126,326 and 30,303,395 issued; 30,415,095 and 29,592,164 outstanding at September 30, 2020 and December 31, 2019, respectively
311
Treasury stock, 711,231 shares, at cost, as of September 30, 2020 and December 31, 2019, respectively
(6,540)
Accumulated other comprehensive loss
(1,795)
(1,045)
Additional paid-in capital
184,214
182,523
Retained loss
(20,666)
(37,220)
Total stockholders’ equity
155,524
138,021
Total liabilities and stockholders’ equity
View source version on businesswire.com: https://www.businesswire.com/news/home/20201028006139/en/
CONTACT: Orion Group Holdings Inc. Francis Okoniewski, VP Investor Relations (346) 616-4138www.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.
21 Nov 2024
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30 Oct 2024
10 Oct 2024
18 Sep 2024
11 Sep 2024
