Posted on April 24, 2024
HOUSTON, April 24, 2024 (GLOBE NEWSWIRE) — Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported its financial results for the first quarter ended March 31, 2024.
Highlights for the quarter ended March 31, 2024:
- Contract revenues of $160.7 million
- GAAP net loss was $6.1 million or $0.19 per diluted share
- Adjusted net loss was $4.0 million or $0.12 per diluted share
- Adjusted EBITDA was $4.1 million
- Backlog and contracts awarded subsequent to quarter end totaled $857 million
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“We generated first quarter revenue of $161 million and Adjusted EBITDA of $4.1 million. We expect revenue to continue to build throughout the year with our current backlog and strong pipeline of opportunities. We remain focused on increasing our margins as a top priority. In addition to first quarter being our seasonally slowest period, revenue was affected by reduced activity on two major projects related to scheduling delays outside of our control. At this point, we have no concerns that these scheduling delays will have any material impact on total anticipated revenues and margins generated from these contracts. We expect to recover this work in upcoming quarters, with strong momentum in the back half of the year,” said Travis Boone, Chief Executive Officer of Orion Group Holdings, Inc. “Based on the activity level we are seeing for our services, especially in marine construction, we are reconfirming our full year 2024 guidance for revenue in the range of $860 million to $950 million and anticipated Adjusted EBITDA in the range of $45 million to $50 million.”
“In a little over a year, our opportunity pipeline has almost quadrupled from $3 billion to over $11 billion. The critical need to rebuild large parts of the U.S. infrastructure is driving a boom in demand for heavy civil and marine construction. This is especially true for the specialized services that Orion offers.”
“We are actively bidding on a wide array of marine construction projects that have multiple sources of funding at federal, state, and municipal levels as well as privately funded projects. These projects range from US Navy investment in the Pacific, coastal restoration, LNG terminals, and port infrastructure. In Concrete, we are capitalizing on the booming data center market being fueled by artificial intelligence (AI) build outs. Orion Concrete has the reputation and specialized skills to handle complex data center projects and the Dallas region has been a recent hotbed of new construction activity for data centers. Based on our backlog and pipeline, we expect momentum to increase throughout 2024 and believe that 2025 will be the year that Orion will harvest the full potential of our transformation,” concluded Boone.
First Quarter 2024 Results
Contract revenues of $160.7 million increased 0.9% from $159.2 million in the first quarter last year, primarily due to an increase in Marine segment revenue related to the Pearl Harbor, Hawaii drydock project, partially offset by lower Concrete segment revenue due to our disciplined bidding standards to win quality work at attractive margins.
Gross profit increased to $15.5 million or 9.7% of revenue, up from $5.8 million or 3.7% of revenue in the first quarter of 2023. The increase in gross profit dollars and margin was primarily driven by improved pricing of projects in both segments stemming from higher quality projects and improved execution, partially offset by lower margin dredging work and an increase in the mix of dredging revenue.
Selling, general and administrative (“SG&A”) expenses were $19.0 million, up from $17.0 million in the first quarter of 2023. As a percentage of total contract revenues, SG&A expenses increased to 11.8% from 10.7%. The increase in SG&A dollars and percentage reflected an increase in IT and business development spending, and higher legal costs related to pursuing project-related claims.
Net loss for the first quarter was $6.1 million or $0.19 per diluted share compared to net loss of $12.6 million or $0.39 per diluted share in the first quarter of 2023.
First quarter 2024 net loss included $2.1 million ($0.07 diluted income per share) of non-recurring items. First quarter 2024 adjusted net loss was $4.0 million ($0.12 diluted loss per share).
EBITDA for the first quarter of 2024 was $3.0 million, representing a 1.8% EBITDA margin, as compared to EBITDA of $(4.9 million), or a (3.1%) EBITDA margin in the first quarter last year. This represents an increase of $7.9 million or 493 basis points of improvement. Adjusted EBITDA increased to $4.1 million, or a 2.5% Adjusted EBITDA margin, which was on the high end of the Company’s Adjusted EBITDA guidance range of $0 to $4.0 million for the quarter. This compares to Adjusted EBITDA of ($4.1 million), or (2.6%) Adjusted EBITDA margin in the prior-year period.
Backlog
Total backlog at March 31, 2024 was $756.6 million, compared to $762.2 million at December 31, 2023 and $467.4 million at March 31, 2023. Backlog for the Marine segment was $569.9 million at March 31, 2024, compared to $602.5 million at December 31, 2023 and $187.0 million at March 31, 2023. Backlog for the Concrete segment was $186.7 million at March 31, 2024, compared to $159.7 million at December 31, 2023 and $280.4 million at March 31, 2023. In addition, the Company has been awarded $101 million in new project work thus far in April 2024.
Balance Sheet Update
As of March 31, 2024, current assets were $217.5 million, including unrestricted cash and cash equivalents of $4.6 million. Total debt outstanding as of March 31, 2024 was $37.5 million. At the end of the quarter, the Company had less than $2,000 in outstanding borrowings under its revolving credit facility.
Debt Amendment
On April 24, 2024, the Company executed Amendment No. 3 to the Loan Agreement with White Oak Commercial Finance, LLC. This amendment, among other things, (i) replaces the Consolidated EBITDA covenant with a Consolidated Fixed Charge Coverage Ratio (“FCCR”) for the quarter ended March 31, 2024, (ii) lowers the FCCR covenant threshold from 1.10:1.00 to 1.00:1.00 through the quarter ended December 31, 2024, (iii) lowers the $15 million prepayment due June 30, 2024 to $10 million, (iv) extends the maturity of the Loan Agreement by one year to May 15, 2027, and (v) resets the make-whole provision to align with the extension. The Company was in compliance with all financial covenants under the amended agreement as of March 31, 2024.
Conference Call Details
Orion Group Holdings will host a conference call to discuss results for the first quarter 2024 at 9:00 a.m. Eastern Time/8:00 a.m. Central Time on Thursday, April 25, 2024. To participate, please call (844) 481-2994 and ask for the Orion Group Holdings Conference Call. A live audio webcast of the call will also be available on the Investor Relations section of Orion’s website at https://www.oriongroupholdingsinc.com/investor/ and will be archived for replay.
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, Hawaii, 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 place and finish, site prep, layout, forming, and rebar placement for large commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas. The Company’s website is located at: https://www.oriongroupholdingsinc.com.
