Posted on July 26, 2023
HOUSTON, July 26, 2023 (GLOBE NEWSWIRE) — Orion Group Holdings, Inc. (NYSE: ORN), a leading specialty construction company, today reported its financial results for the second quarter ended June 30, 2023.
Highlights for the quarter ended June 30, 2023:
- Contract revenues of $182.5 million increased 14.7% sequentially
- Net loss was $0.3 million or $0.01 per diluted share
- Adjusted EBITDA was $3.7 million
- Concrete segment returned to profitability during the second quarter
- Marine awarded two dredging contracts totaling $45 million from the Army Corps of Engineers
- Backlog and awarded contracts totaled $903 million at quarter end
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“Our second quarter performance was a significant improvement over our first quarter results and reflected the progress our team is making in executing our strategy to achieve long-term growth and value creation,” said Travis Boone, Chief Executive Officer of Orion Group Holdings.
“Nine months ago, we began our journey to turn Orion around. We started with a long checklist and have ticked off many of the boxes—all focused on de-risking the business to clear the path for long-term growth and profitability. After two years of reporting losses, our Concrete business turned profitable in the month of March and continues to generate profit each month. We have attracted great talent to focus on business development and drive growth. And perhaps most critical, we shored up our balance sheet and liquidity, securing a new $103 million ABL credit facility and providing $25 million in liquidity through sale-leaseback transactions.”
“Looking ahead, we are optimistic that we will see continued improvement for the rest of this year and beyond. Our company is now fundamentally stronger and well positioned for accelerated growth. We are fortunate to have the most exceptional people in the industry and two businesses with different catalysts of growth—Concrete more driven by the private sector; Marine by the public sector—that can balance one another during challenging times and different business cycles. When both businesses are performing well—as we believe is within reach in 2024—they can deliver dramatic growth and strong results for all stakeholders,” concluded Boone.
Second Quarter 2023 Results
Contract revenues of $182.5 million increased 14.7% sequentially and decreased 6.2% from $194.6 million in the second quarter last year, primarily due to our decision to exit the unprofitable concrete business in central Texas, partially offset by an increase in marine segment revenue primarily related to the Pearl Harbor, Hawaii drydock project.
Gross profit was $13.8 million or 7.6% of revenue down from $14.3 million or 7.4% of revenue in the second quarter of 2022. The increase in gross profit margin was primarily driven by margin improvements in the concrete business, partially offset by lower equipment and labor utilization in our marine segment as compared to the prior year period.
Selling, general and administrative (“SG&A”) expenses were $18.1 million, up 5.1% from $17.2 million in the comparable period. As a percentage of total contract revenues, SG&A expenses increased to 9.9% from 8.9%, primarily due to lower revenues in the second quarter. The increase in SG&A dollars reflected an increase in compensation expense for key new hires, partially offset by lower consulting expense related to the completion of the management transition.
Net loss for the second quarter was $0.3 million or $0.01 per diluted share compared to a net loss of $3.1 million or $0.10 per diluted share year-over-year.
The second quarter 2023 net loss included $4.3 million ($0.13 diluted loss per share) of non-recurring items. Second quarter 2023 adjusted net loss was $4.5 million ($0.14 diluted loss per share).
EBITDA for the second quarter of 2023 was $7.6 million, representing a 4.2% EBITDA margin, as compared to EBITDA of $3.3 million, or a 1.7% EBITDA margin in the second quarter last year. Adjusted for non-recurring items, EBITDA for the second quarter of 2023 was $3.7 million, representing a 2.0% adjusted EBITDA margin, as compared to adjusted EBITDA for the second quarter of 2022 of $5.7 million, representing a 2.9% adjusted EBITDA margin.
Backlog
Total backlog at June 30, 2023 was $818.7 million, compared to $467.4 million at March 31, 2023 and $603.2 million at June 30, 2022 due in substantial part to the award of the Hawaii contract. Backlog for the Marine segment was $614.9 million, compared to $187.0 million at March 31, 2023 and $281.0 million at June 30, 2022. Backlog for the Concrete segment was $203.8 million, compared to $280.4 million at March 31, 2023 and $322.2 million at June 30, 2022. In addition, the Company has been awarded $84 million in new project work not included in backlog at the end of the quarter.
Recent Wins
Orion was awarded two additional contracts totaling $45 million for work that will be performed in 2023, both contracts from the Army Corps of Engineers. The first is a $27 million contract for dredging in Texas. The second is an $18 million contract for dredging in Louisiana.
Balance Sheet Update
As of June 30, 2023, current assets were $226.7 million, including unrestricted cash and cash equivalents of $8.9 million. Total debt outstanding as of June 30, 2023 was $36.9 million. At the end of the quarter, the Company had no outstanding revolver draws.
Conference Call Details
Orion Group Holdings will host a conference call to discuss results for the second quarter 2023 at 9:00 a.m. Eastern Time/8:00 a.m. Central Time on Thursday, July 27, 2023. To participate, please dial (800) 715-9871 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. https://www.oriongroupholdingsinc.com.
