Posted on February 28, 2020
HOUSTON–(BUSINESS WIRE)–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
- Contract revenues were $199.8 million, up 101.4% from $99.2 million for the fourth quarter of 2018. Operating income was $2.7 million for the fourth quarter of 2019 compared to operating loss of $104.8 million for the fourth quarter of 2018.
- Net income was $0.2 million ($0.01 diluted earnings per share) for the fourth quarter of 2019 compared to net loss of $94.4 million ($3.32 diluted loss per share) for the fourth quarter of 2018.
- The fourth quarter 2019 net income included $1.3 million ($0.04 per diluted share) of non-recurring costs and other charges. Fourth quarter 2019 adjusted net income was $1.5 million ($0.05 diluted earnings per share). (Please see page 9 of this release for a reconciliation of adjusted net income.)
- EBITDA, adjusted to exclude the impact of the aforementioned non-recurring costs, was $11.0 million in the fourth quarter of 2019, which compares to adjusted EBITDA of $2.5 million for the fourth quarter of 2018. (Please see page 10 of this release for an explanation of EBITDA, adjusted EBITDA and a reconciliation to the nearest GAAP measure.)
- Backlog was $572.3 million on a fourth quarter book-to-bill of 0.71x.
“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
- Contract revenues were $199.8 million, up 101.4% as compared to $99.2 million. The increase was primarily driven by improved project execution in our marine segment and higher cubic yardage production in our concrete segment. Additionally, in 2018, the marine and concrete segments were negatively impacted by the delay of several large projects and disruptive weather patterns, respectively.
- Gross profit was $19.1 million, as compared to a gross loss of $22.2 million. Gross profit margin was 9.6%, as compared to (22.4)%. The increase reflects improved equipment utilization in our marine segment, along with improved man hours per cubic yard placed in the concrete segment and an improvement in labor efficiency resulting from the implementation of ISG initiatives, particularly in the concrete segment. The year-over-year increase also reflects certain non-recurring charges in the fourth quarter of 2018 related to customer driven cost overruns on certain projects in the marine segment and a reserve held against disputed accounts receivable.
- Selling, General, and Administrative expenses were $16.3 million, as compared to $13.0 million. The increase is primarily driven by ISG related expenses and professional fees.
- Operating income was $2.7 million as compared to operating loss of $104.8 million. The operating income in the fourth quarter of 2019 reflects the aforementioned factors that improved gross profit.
- EBITDA was $10.0 million, representing a 5.0% EBITDA margin, as compared to EBITDA of $(94.1) million, or a (94.8)% EBITDA margin. When adjusted for the aforementioned charges and other non-recurring costs, adjusted EBITDA for the fourth quarter of 2019 was $11.0 million, representing a 5.5% EBITDA margin. (Please see page 10 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 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.
Source: BusinessWire
