Posted on October 26, 2022
HOUSTON, Oct. 26, 2022 (GLOBE NEWSWIRE) — Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported net income of $0.2 million ($0.01 diluted earnings per share) for the third quarter ended September 30, 2022. Excluding non-recurring items, adjusted net income was $0.8 million ($0.02 diluted earnings per share).
Third Quarter 2022 Highlights
- The Company has enhanced the capabilities of its management team with the addition of two experienced and operationally-focused executives, Chief Executive Officer Travis Boone and Chief Financial Officer Scott Thanisch.
- Continued efforts focusing on more attractive markets and targeting higher bid margins is yielding improved project margins on new contract awards of $128 million in the quarter.
- The Company has signed an agreement for the $10.5 million sale-leaseback of its Port Lavaca property expected to close in December and continues to explore options to monetize additional real estate assets.
- Operating income was $1.1 million for the third quarter of 2022 compared to an operating loss of $8.7 million for the third quarter of 2021.
- Net income was $0.2 million ($0.01 diluted earnings per share) for the third quarter of 2022 compared to a net loss of $10.2 million ($0.33 diluted loss per share) for the third quarter of 2021.
- The third quarter 2022 net income included $0.5 million ($0.01 diluted earnings per share) of non-recurring items. Third quarter 2022 adjusted net income was $0.8 million ($0.02 diluted earnings per share). (Please see page 7 of this release for an explanation of adjusted net income, adjusted earnings per share and a reconciliation to the nearest GAAP measure).
“We are excited to see bid margins of recent wins increasing in the third quarter due to more disciplined bidding practices established over the past few months,” stated Travis Boone, Orion’s Chief Executive Officer. “These higher margin projects will establish a solid base of work for 2023. We will continue to focus on disciplined bidding, along with strong project delivery, as we pursue profitable growth.”
Consolidated Results for Third Quarter 2022 Compared to Third Quarter 2021
- Contract revenues were $182.6 million, an increase of $42.7 million or 30.5% as compared to $139.9 million. The increase was primarily driven by the start of large jobs awarded in the fourth quarter of 2021 in the marine segment, higher volume in the concrete segment and the impact from claims and unapproved change orders recognized related to work primarily incurred in previous periods.
- Gross profit was $13.4 million, as compared to $6.6 million. Gross profit margin was 7.4%, as compared to 4.7%. The increase in gross profit dollars and margin was primarily driven by the impact from claims and unapproved change orders recognized related to work primarily incurred in previous periods, the release of discretionary project bonuses and increased dredging activity as compared to the prior year period.
- Selling, General, and Administrative (“SG&A”) expenses were $15.4 million, as compared to $15.7 million. As a percentage of total contract revenues, SG&A expenses decreased from 11.2% to 8.5%, primarily due to higher revenues in the current period. The decrease in SG&A dollars was driven primarily by a decrease in Enterprise Resource Planning implementation expense as compared to the prior year period, partially offset by consulting fees related to the management transition.
- EBITDA was $7.2 million, representing a 4.0% EBITDA margin, as compared to EBITDA of $(2.5) million, or an (1.8)% EBITDA margin. When adjusted for non-recurring items, adjusted EBITDA for the third quarter of 2022 was $8.8 million, representing a 4.8% adjusted EBITDA margin, as compared to adjusted EBITDA for the third quarter of 2021 of $(0.5) million, representing a (0.3)% adjusted EBITDA margin. (Please see page 8 of this release for an explanation of EBITDA, Adjusted EBITDA and a reconciliation to the nearest GAAP measure).
Backlog
Backlog of work under contract as of September 30, 2022 was $548.6 million, which compares with backlog of work under contract as of September 30, 2021 of $572.8 million. The third quarter 2022 ending backlog was composed of $280.2 million in the marine segment, and $268.4 million in the concrete segment. At the end of the third quarter 2022, the Company had approximately $1.8 billion worth of bids outstanding, including successful bids on approximately $39 million of projects, subsequent to the end of the third quarter of 2022, of which approximately $36 million pertains to the marine segment and approximately $3 million to the concrete segment.
“During the third quarter, we converted to backlog $128 million of the $1.2 billion of work on which we bid,” stated Scott Thanisch, Orion’s Chief Financial Officer. “This resulted in a 0.70 times book-to-bill ratio and a win rate of 10.5%. In the marine segment, we bid on $377 million during the third quarter 2022 and were successful on $75 million, representing a win rate of 20.0% and a book-to-bill ratio of 0.99 times. In the concrete segment we bid on $849 million of work and were awarded $53 million, representing a win rate of 6.2% and a book-to-bill ratio of 0.50 times.”
Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress but are 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.
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.
