Posted on August 8, 2016
Orion Group Holdings, Inc. (ORN), a leading specialty construction company, today reported a net loss for the three months ended June 30, 2016, of $0.8 million ($0.03 diluted loss per share). These results compare to a net loss of $1.8 million ($0.07 diluted loss per share) for the same period a year ago.
Consolidated Results for the Second Quarter of 2016
- Second quarter 2016 contract revenue was $140.3 million, an increase of 63.0%, as compared to second quarter 2015 revenue of $86.1 million, primarily as a result of the addition of TAS Commercial Concrete (TAS), partially offset by slower production due to adverse weather in Texas, as well as the timing and mix of projects.
- Gross profit for the second quarter 2016 was $16.9 million, or a gross profit margin of 12.1%, an increase of approximately $10.9 million as compared to the second quarter 2015.
- Selling, General and Administrative (SG&A) expenses for the second quarter 2016 were $16.9 million as compared to $8.8 million in the prior year period, an increase of $8.1 million, or 92.1%. The increase in SG&A is primarily attributable to the addition of TAS as well as one-time expenses related to management structure changes.
- Second quarter 2016 EBITDA was $8.9 million, representing a 6.4% EBITDA margin which compares to second quarter 2015 pro forma EBITDA of $7.0 million, or a 5.1% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on Page 3 of this release; reconciliation tables are provided on pages 7-8).
- Backlog of work under contract as of June 30, 2016, was approximately $368 million, excluding approximately $101 million of work on which the Company is the apparent low bidder, or has been awarded subsequent to the end of the second quarter.
“This week marks one year since we announced the largest acquisition in our Company’s history,” said Mark Stauffer, Orion Group Holding Inc.’s President and Chief Executive Officer. “My confidence in both the Commercial Concrete Construction (CCC) and Heavy Civil Marine Construction (HCMC) segments remains strong. Looking at the second quarter, we experienced slightly slower productivity as a result of adverse weather in Texas, along with timing and mix of jobs in our HCMC segment. As previously discussed, we elected to reduce the scope on one of the remaining troubled Tampa projects in order to bring this project to completion. By doing this, although we incurred slightly lower margin than originally anticipated during the quarter, we brought closure to a job that likely would have experienced further customer delays and significantly higher costs to complete in the future. Finally, we made further improvements to the Company’s operating management structure, which resulted in one-time expenses during the second quarter. I am pleased that we have materially completed the troubled Tampa projects and I believe we have laid the foundation for a strong future. Our underlying businesses fundamentals are not only sound, but we believe are primed for continued improvement, and we remain confident in our full year outlook.”
Heavy Civil Marine Construction Segment
- Second quarter 2016 contract revenue was $80.0 million, a decrease of $6.1 million, or 7.1%, from the prior year period. The decrease is primarily attributable to the timing and mix of jobs, including the material completion of the troubled Tampa projects.
- Second quarter 2016 operating loss was $1.2 million, an improvement of $1.5 million compared to the prior year period.
- Second quarter 2016 EBITDA was $5.3 million, representing a 6.7% EBITDA margin which compares to second quarter 2015 EBITDA of $4.0 million, or 4.7% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on Page 3 of this release; reconciliation tables are provided on pages 7-8).
- Backlog of work under contract as of June 30, 2016, was $166 million, which compares with backlog under contract at June 30, 2015 of $223 million. Additionally, the Company is the apparent low bidder, or has been awarded subsequent to the end of the quarter approximately $55 million of work.
Commercial Concrete Construction Segment
- Second quarter 2016 contract revenue was $60.3 million, an increase of $9.9 million, or 19.5% from the prior year period.
- Second quarter 2016 operating income was $1.5 million, a decrease of $0.5 million compared to the prior year period. The decrease is primarily attributable to amortization expense related to the acquisition of TAS.
- Second quarter 2016 EBITDA was $3.6 million, representing a 6.0% EBITDA margin which compares to second quarter 2015 pro forma EBITDA of $3.0 million, or 5.9% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on Page 3 of this release; reconciliation tables are provided on pages 7-8).
- Backlog of work under contract as of June 30, 2016, was $201 million, which is comparable with backlog under contract at June 30, 2015 of $174 million. Additionally, the Company is the apparent low bidder, or has been awarded subsequent to the end of the quarter approximately $46 million of work.
Outlook
“As we begin the second half of the year, we are encouraged by the productivity of our operations and the sustained level of opportunities we see,” continued Mr. Stauffer. “We continue to experience a high level of demand for all of the types of services we provide across both operating segments. In the HCMC segment, we have materially wrapped up all of the remaining troubled Tampa projects. With these projects behind us, we are confident that the new management team in Tampa has the tools and structure in place for profitable operations in the future,” said Mr. Stauffer.
“Similar to market expectations provided in the prior quarter, the HCMC segment continues to see solid demand to help for the services needed to maintain and expand the infrastructure that facilitates the movement of goods and people on and over waterways. As we monitor developments in the energy sector, we continue to see bid opportunities from our private sector energy-related customers as they expand their marine facilities associated with the storage, transportation and refining of domestically produced energy. We continue to believe over the long term, we will see opportunities in this sector from petrochemical related customers, energy exporters, and liquefied natural gas (LNG) facilities.
In the CCC segment, demand for services also remains solid. In the Houston market, we are seeing increasing demand for education, medical and retail space. The Dallas market continues to be a source of growth, and continues to maintain peak backlog. We believe strong demand overall for our CCC segment will continue in our current operating markets and support expansion plans for this business,” concluded Mr. Stauffer.
“Overall, we bid on approximately $760 million during the second quarter 2016 and were successful on approximately $123 million,” said Chris DeAlmeida, Orion Group Holding’s Vice President and Chief Financial Officer. “This resulted in a 0.88x times book-to-bill ratio for the quarter and a win rate of 16.2%. In the HCMC segment, we bid on approximately $362 million during the second quarter 2016 and were successful on $47 million. This resulted in a 0.59x times book-to-bill ratio for the quarter and a win rate of 13.0%. The CCC segment also had healthy bid levels for the quarter, bidding on approximately $398 million in work while being awarded approximately $76 million. This resulted in a 1.26x times book-to-bill ratio for the quarter and a win rate of 19.1%. In total, we have approximately $725 million worth of bids outstanding, excluding approximately $101 million on which we are apparent low bidder or have been awarded subsequent to the end of the quarter, of which, approximately $55 million is in the HCMC segment and approximately $46 million is in the CCC segment.”
