Posted on October 25, 2023
HOUSTON, Oct. 25, 2023 (GLOBE NEWSWIRE) — Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported its financial results for the third quarter ended September 30, 2023.
Highlights for the quarter ended September 30, 2023:
- Contract revenues of $168.5 million
- GAAP net loss was $0.7 million or $0.02 per diluted share
- Adjusted net income was $0.8 million or $0.02 per diluted share
- Adjusted EBITDA was $9.4 million
- Signed contract valued over $100 million with Grand Bahama Shipyard Limited (GBSL) for the turnkey design-build of the Grand Bahama Shipyard Dry Dock Replacement Project
- Other recently awarded new contracts in both the Concrete and Marine segments for a combined total of approximately $121 million
- Backlog and contracts awarded subsequent to quarter end totaled $920 million
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“As CFO Scott Thanisch and I marked our first anniversary with Orion, we are incredibly proud of how our people have worked collaboratively to embrace change and deliver positive results,” said Travis Boone, Chief Executive Officer of Orion Group Holdings. “Backlog is a key metric and indicator of the health of the business. As of September 30, backlog stood at $878 million compared with backlog of $549 million in the prior year period. We have won several prestigious projects including the $435 million contract to build a dry dock at Pearl Harbor for the US Navy and a contract valued over $100 million with the Grand Bahama Shipyard Limited (GBSL) for the turnkey design-build of the Grand Bahama Shipyard Dry Dock Replacement Project.”
“Last quarter we told you that we expected continued improvement in profitability through the back half of the year, and we are delivering on that promise. Third-quarter Adjusted EBITDA was $9.4 million versus $3.7 million in the second quarter of 2023. While our third quarter revenue of $169 million is down year-over-year due to our exit from the Central Texas concrete business, the higher quality of our revenue is delivering improved profitability.”
“Since March, our Concrete business has been profitable and improving on an Adjusted EBITDA basis. Adjusted EBITDA margin increased from negative 1.7% to positive 2.4% year-over-year. In addition, the Concrete business was operating income positive on an unconsolidated basis in the third quarter. In Marine, we have a lot of momentum with projects won and potential future projects. There’s a tremendous amount of pent-up demand that we think will be a significant tailwind for us well into 2024 and 2025.”
“As we look ahead to the fourth quarter and beyond, we are optimistic. Our investments in business development are paying off, and we have sufficient capacity and a more disciplined approach to optimize our people and assets. We will see continued improvement in our margins and benefit from operating leverage as we grow the top line. We are excited to build on our success this year and continue growing profitably in 2024,” concluded Boone.
Third Quarter 2023 Results
Contract revenues of $168.5 million decreased 7.7% from $182.6 million in the third 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 related to the Pearl Harbor, Hawaii drydock project (the “Pearl Harbor Project”).
Gross profit was $19.1 million or 11.3% of revenue up from $13.4 million or 7.4% of revenue in the third quarter of 2022. The increase in gross profit dollars and margin was primarily driven by margin improvements in both segments stemming from higher quality projects and improved execution, partially offset by lower equipment and labor utilization in our dredging business.
Selling, general and administrative (“SG&A”) expenses were $17.1 million, up 11.4% from $15.4 million in the third quarter of 2022. As a percentage of total contract revenues, SG&A expenses increased to 10.2% from 8.5%, primarily due to lower revenues and an increase in SG&A in the third quarter. The increase in SG&A dollars reflected an increase in IT and business development spending and higher legal costs related to customer claims.
Net loss for the third quarter was $0.7 million or $0.02 per diluted share compared to net income of $0.2 million or $0.01 per diluted share in the third quarter of 2022.
The third quarter 2023 net loss included $1.5 million ($0.04 diluted income per share) of non-recurring items. Third quarter 2023 adjusted net income was $0.8 million ($0.02 diluted income per share).
EBITDA for the third quarter of 2023 was $8.7 million, representing a 5.2% EBITDA margin, as compared to EBITDA of $7.2 million, or a 4.0% EBITDA margin in the third quarter last year. Adjusted for non-recurring items, EBITDA for the third quarter of 2023 was $9.4 million, representing a 5.6% adjusted EBITDA margin, as compared to adjusted EBITDA for the third quarter of 2022 of $8.8 million, representing a 4.8% adjusted EBITDA margin.
Backlog
Total backlog at September 30, 2023 was $877.5 million, compared to $818.7 million at June 30, 2023 and $548.6 million at September 30, 2022. Backlog for the Marine segment was $699.9 million, compared to $614.9 million at June 30, 2023 and $280.2 million at September 30, 2022. Backlog for the Concrete segment was $177.6 million, compared to $203.8 million at June 30, 2023 and $268.4 million at September 30, 2022. In addition, the Company has been awarded $43 million in new project work subsequent to the end of the quarter ended September 30, 2022 that is not included in backlog at the end of the quarter.
Recent Wins
On September 22, the Company entered into a design-build contract valued over $100 million for its Marine and Engineering business. The contract was awarded by Grand Bahama Shipyard Limited (GBSL) for the turnkey design-build of the Grand Bahama Shipyard Dry Dock Replacement Project, situated in Grand Bahama, Bahamas. In addition, the Company was recently awarded other new contracts in both its concrete and marine segments for a combined total of approximately $121 million.
Safety Award
Orion Group Holdings, Inc. was presented with the Company Award for Leadership in Safety from the Council of Dredging and Marine Construction Safety (CDMCS). The award, presented at the 2023 CDMCS Annual Awards Dinner in Washington, D.C. on September 28, recognizes outstanding safety leadership in the dredging and marine construction industry.
Orion Group Holdings was recognized for advancing a safety-first culture through safety-conscious policies and procedures in the workplace, mentoring others in safety, training on identifying and properly controlling hazards, and placing high personal value on collaborative and proactive work toward improving safety.
Balance Sheet Update
As of September 30, 2023, current assets were $228.5 million, including unrestricted cash and cash equivalents of $3.9 million. Total debt outstanding as of September 30, 2023 was $50.3 million. At the end of the quarter, the Company had $13.5 million in outstanding borrowings under its revolving credit facility.
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.
