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 Jul 2021 / 04:05 PM EST
HOUSTON--(BUSINESS WIRE)--Jul. 28, 2021-- Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported net income of $3.5 million ($0.11 diluted earnings per share) for the second quarter ended June 30, 2021.
Second Quarter 2021 Highlights
“During the second quarter we closed on the sale of our Tampa property further strengthening our balance sheet and enhancing our liquidity,” stated Mark Stauffer, Orion’s Chief Executive Officer. “The gain on the sale is included in our results for the second quarter, which were also impacted by inordinately wet weather in our key operating geographies, which affected both business segments, but predominantly our concrete business.”
“Our concrete segment’s production was hampered during the quarter by wet weather conditions across Texas, and as a result, our labor capacity was underutilized. Our concrete segment’s ability to catch up on work and execute effectively in normal weather conditions will allow us to efficiently complete any delayed projects in subsequent quarters. The wet weather unfortunately resulted in under recovery of indirect costs, including labor and equipment utilization, during the quarter.”
“We remain optimistic about our end markets and future project opportunities. During the second quarter we bid on a significant volume of bids, including several large projects, and we ended the quarter with a substantial amount of quoted work outstanding. We are confident that bidding opportunities will continue to materialize, especially in end-markets that have been adversely impacted by COVID, including the cruise and energy industries, which have begun generating project opportunities again. We also are continuing to track progress on the Federal infrastructure bill, which would provide an additional catalyst for our end markets and drive absorption of industry capacity. The diversity of our end markets and our unique capabilities across both of our business segments make us confident in our ability to capitalize on a wide range of attractive projects as they continue to materialize across our operating footprint.”
“We also continue to enhance our financial flexibility with the strengthening of our balance sheet. On a basis of net debt, this is the strongest balance sheet the Company has had in many years, which not only offers us flexibility to continue to execute on projects in backlog and pursue new awards, but also position us to consider accretive acquisition opportunities, as well as exploring other opportunities to achieve the best return for our shareholders.”
Mr. Stauffer concluded, “Given the reopening of the US economy, the project opportunities we see on the horizon as a result, and our extremely strong balance sheet and financial position, we are confident in our ability to continue to generate growth in our profitability and maximizing shareholder value over the long-term.”
Consolidated Results for Second Quarter 2021 Compared to Second Quarter 2020
Backlog
Backlog of work under contract as of June 30, 2021, was $394.4 million, which compares with backlog under contract as of June 30, 2020, of $528.4 million. The second quarter 2021 ending backlog was comprised of $170.2 million for the marine segment, and $224.2 million for the concrete segment. At the end of the second quarter 2021, the Company had approximately $2.0 billion worth of bids outstanding, including approximately $30 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the second quarter of 2021, of which approximately $12 million pertains to the marine segment and approximately $18 million to the concrete segment.
“During the second quarter, we bid on approximately $2.0 billion of work and were successful on approximately $175 million of these bids,” stated Robert Tabb, Orion Group Holding's Executive Vice President and Chief Financial Officer. “This resulted in a 1.20 times book-to-bill ratio and a win rate of 8.8%. In the marine segment, we bid on approximately $1.0 billion during the second quarter 2021 and were successful on approximately $79 million, representing a win rate of 7.6% and a book-to-bill ratio of 1.24 times. In the concrete segment we bid on approximately $1.0 billion of work and were awarded approximately $96 million, representing a win rate of 10.1% and a book-to-bill ratio of 1.17 times."
Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and not yet complete. The Company cannot guarantee that the revenue implied by 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 second quarter 2021 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, July 29, 2021. 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 GAAP financial information. Investors are urged to consider these non-GAAP measures in addition to and not in substitute for measures prepared in accordance with GAAP.
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, 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, the effects of the ongoing COVID-19 pandemic, 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 2, 2021, 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 Statements of Operations
(In Thousands, Except Share and Per Share Information)
(Unaudited)
Three months ended
Six months ended
June 30,
2021
2020
Contract revenues
145,875
183,713
299,184
350,333
Costs of contract revenues
133,574
162,969
271,428
309,831
Gross profit
12,301
20,744
27,756
40,502
Selling, general and administrative expenses
13,715
16,512
28,345
32,381
Amortization of intangible assets
381
517
761
1,033
Gain on disposal of assets, net
(7,361)
(369)
(8,971)
(1,361)
Operating income
5,566
4,084
7,621
8,449
Other (expense) income:
Other income
72
39
109
136
Interest income
25
54
51
94
Interest expense
(2,943)
(1,169)
(3,983)
(2,571)
Other expense, net
(2,846)
(1,076)
(3,823)
(2,341)
Income before income taxes
2,720
3,008
3,798
6,108
Income tax (benefit) expense
(810)
980
(660)
1,357
Net income
$
3,530
2,028
4,458
4,751
Basic earnings per share
0.12
0.07
0.15
0.16
Diluted earnings per share
0.11
Shares used to compute income per share:
Basic
30,671,952
30,031,188
30,569,284
29,842,298
Diluted
30,702,151
30,601,669
Selected Results of Operations
Three months ended June 30,
Amount
Percent
(dollar amounts in thousands)
Marine segment
Public sector
44,667
69.9
%
59,820
65.2
Private sector
19,275
30.1
31,899
34.8
Marine segment total
63,942
100.0
91,719
Concrete segment
6,500
7.9
12,022
13.1
75,433
92.1
79,972
86.9
Concrete segment total
81,933
91,994
Total
Operating income (loss)
8,606
13.5
3,810
4.2
(3,040)
(3.7)
274
0.3
Six months ended June 30,
86,336
63.4
113,331
63.8
49,752
36.6
64,337
36.2
136,088
177,668
11,279
6.9
28,074
16.3
151,817
93.1
144,591
83.7
163,096
172,665
11,454
8.4
9,559
5.4
(3,833)
(2.4)
(1,110)
(0.6)
Reconciliation of Adjusted Net Income (Loss)
(In thousands except per share information)
One-time charges and the tax effects:
ERP implementation
853
310
1,439
ISG initiative
—
369
Severance
38
Costs related to debt extinguishment
2,062
Net gain on Tampa property sale
(6,767)
Tax rate of 23% applied to one-time charges (1)
886
(80)
751
(173)
Total one-time charges and the tax effects
(2,966)
268
(2,515)
578
Federal and state tax valuation allowances
1,121
(968)
970
(1,631)
Adjusted net income
1,685
1,328
2,913
3,698
Adjusted EPS
0.05
0.04
0.10
(1)
Items are taxed discretely using the Company's blended tax rate.
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations
(In Thousands, Except Margin Data)
Interest expense, net
2,918
1,115
3,932
2,477
Depreciation and amortization
6,429
7,004
12,915
13,896
EBITDA (1)
12,067
11,127
20,645
22,481
Stock-based compensation
1,245
1,167
1,628
1,629
Adjusted EBITDA(2)
7,398
12,642
16,945
24,861
Operating income margin
3.8
2.2
2.5
2.4
Impact of other income (expense), net
Impact of depreciation and amortization
4.4
3.9
4.5
4.0
Impact of stock-based compensation
0.9
0.6
0.5
Impact of ERP implementation
0.2
0.1
Impact of ISG initiative
Impact of severance
Impact of net gain on Tampa property sale
(4.6)
(2.3)
Adjusted EBITDA margin(2)
5.1
5.7
7.1
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 stock-based compensation, ERP implementation, the ISG initiative, severance and the net gain on the Tampa property sale. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.
Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment
Operating income (loss) (1)
Other income (expense), net
4,322
4,744
2,107
2,260
EBITDA (2)
13,000
8,593
(933)
2,534
1,219
1,128
26
379
155
474
14
24
Adjusted EBITDA(3)
7,831
9,890
(433)
2,752
13.4
6.8
5.2
2.6
1.9
1.2
(10.6)
Adjusted EBITDA margin (3)
12.2
10.8
(0.5)
3.0
134
2
8,680
9,520
4,235
4,376
20,243
19,213
402
3,268
1,570
1,540
58
89
655
784
190
179
46
15,701
21,124
1,244
3,737
8.3
6.4
(5.0)
11.5
11.9
0.8
In connection with the preparation of the financial statements for the quarter ended June 30, 2021, the Company has identified and corrected certain immaterial errors in segment reporting for all periods presented. Specifically, certain corporate overhead costs previously recorded to the marine segment as part of operating income (loss) and allocated from the marine segment to the concrete segment below operating income in the other income (expense) line have been allocated from the marine segment to the concrete segment as part of the determination of operating income for each segment.
(3)
Condensed Statements of Cash Flows Summarized
(In Thousands)
Adjustments to remove non-cash and non-operating items
2,609
9,246
9,504
17,828
Cash flow from net income after adjusting for non-cash and non-operating items
6,139
11,274
13,962
22,579
Change in operating assets and liabilities (working capital)
(3,982)
6,347
(2,687)
10,495
Cash flows provided by operating activities
2,157
17,621
11,275
33,074
Cash flows provided by (used in) investing activities
19,690
(1,719)
20,462
(2,044)
Cash flows used in financing activities
(24,079)
(19,081)
(30,916)
(21,773)
Capital expenditures (included in investing activities above)
(3,097)
(2,283)
(4,715)
(5,036)
Condensed Statements of Cash Flows
Cash flows from operating activities
Adjustments to reconcile net income to net cash used in operating activities:
11,313
12,311
Amortization of ROU operating leases
2,794
3,066
Amortization of ROU finance leases
1,602
1,585
Write-off of debt issuance costs upon debt extinguishment
790
Amortization of deferred debt issuance costs
429
286
Deferred income taxes
(81)
(99)
Allowance for credit losses
411
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable
5,147
23,645
Income tax receivable
(682)
(97)
Inventory
277
(172)
Prepaid expenses and other
337
900
Contract assets
9,159
5,050
Accounts payable
(3,754)
(23,680)
Accrued liabilities
(5,290)
2,818
Operating lease liabilities
(2,721)
Income tax payable
(538)
(296)
Contract liabilities
(4,772)
5,048
Net cash provided by operating activities
Cash flows from investing activities:
Proceeds from sale of property and equipment
24,737
1,749
Purchase of property and equipment
Contributions to CSV life insurance
Insurance claim proceeds related to property and equipment
440
1,342
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Borrowings from Credit Facility
20,000
5,000
Payments made on borrowings from Credit Facility
(49,086)
(24,500)
Payments of finance lease liabilities
(1,675)
(1,858)
Payments related to tax withholding for stock-based compensation
(241)
(24)
Exercise of stock options
86
Net cash used in financing activities
Net change in cash, cash equivalents and restricted cash
821
9,257
Cash, cash equivalents and restricted cash at beginning of period
1,589
1,086
Cash, cash equivalents and restricted cash at end of period
2,410
10,343
Condensed Balance Sheets
December 31,
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable:
Trade, net of allowance for credit losses of $323 and $411, respectively
89,671
96,369
Retainage
38,388
36,485
Income taxes receivable
1,101
419
Other current
66,967
59,492
2,102
1,548
23,112
32,271
6,973
7,229
Total current assets
230,724
235,402
Property and equipment, net of depreciation
104,917
125,497
Operating lease right-of-use assets, net of amortization
16,204
18,874
Financing lease right-of-use assets, net of amortization
12,289
12,858
Inventory, non-current
4,839
6,455
Intangible assets, net of amortization
9,316
10,077
Deferred income tax asset
41
70
Other non-current
4,875
4,956
Total assets
383,205
414,189
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current debt, net of issuance costs
4,344
Accounts payable:
Trade
44,189
48,252
984
716
83,638
84,637
Income taxes payable
101
639
28,363
33,135
Current portion of operating lease liabilities
4,395
4,989
Current portion of financing lease liabilities
2,085
3,901
Total current liabilities
169,894
180,613
Long-term debt, net of debt issuance costs
294
29,523
12,687
14,537
Financing lease liabilities
8,376
Other long-term liabilities
23,316
19,837
Deferred income tax liability
97
207
Interest rate swap liability
Total liabilities
216,178
254,695
Stockholders’ equity:
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued
Common stock -- $0.01 par value, 50,000,000 authorized, 31,617,998 and 31,171,804 issued; 30,906,767 and 30,460,573 outstanding at June 30, 2021 and December 31, 2020, respectively
316
312
Treasury stock, 711,231 shares, at cost, as of June 30, 2021 and December 31, 2020, respectively
(6,540)
Accumulated other comprehensive loss
(1,602)
Additional paid-in capital
185,793
184,324
Retained loss
(12,542)
(17,000)
Total stockholders’ equity
167,027
159,494
Total liabilities and stockholders’ equity
View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005960/en/
Orion Group Holdings Inc.Francis Okoniewski, VP Investor Relations (346) 616-4138 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.
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