Posted on October 30, 2024
35% contract revenue growth, 62% Adjusted EBITDA growth
HOUSTON, Oct. 30, 2024 (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, 2024.
Highlights for the quarter ended September 30, 2024:
- Contract revenues of $226.7 million
- GAAP net income of $4.3 million or $0.12 per diluted share
- Adjusted net income of $5.6 million or $0.16 per diluted share
- Adjusted EBITDA of $15.2 million
- Cash flow from operations of $35.2 million
- Backlog and contracted or awarded subsequent to quarter end totaled $806.7 million
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“I am pleased to report that our team delivered a strong third quarter, including 35% contract revenue growth, 62% Adjusted EBITDA growth, and cash flow from operations of $35.2 million. In the beginning of the year, we said that we expected momentum to pick up in the back half of the year and that played out in the third quarter,” said Travis Boone, CEO of Orion Group Holdings. “Our top line growth was largely driven by the Pearl Harbor and Grand Bahama Shipyard Dry Dock projects in addition to several projects that began this summer. Our third quarter results demonstrate the level of profitability our business can generate as we scale and grow. For the full year, we are on target to deliver Adjusted EBITDA within our previously communicated guidance range of $40 million to $45 million for 2024, which would greatly exceed our Adjusted EBITDA over the last several years.”
“Looking ahead, we are excited about our future. We continue to see indicators of increasing market demand for our specialty marine and concrete services funded by both the government and private sector. From the Department of Defense’s investment to protect U.S. interests in the Pacific, to Infrastructure Investment and Jobs Act funds beginning to trickle down into construction hands, there is significant marine project work to pursue and win over the coming years. On the Concrete side of the business, data centers continue to generate significant opportunities while a lower interest rate and cost of capital may also stimulate commercial construction in our key Houston and Dallas markets, which continue to be growth centers. With our highly-skilled teams, improved business fundamentals, and strengthened balance sheet, we are well positioned to capitalize on the opportunities ahead,” concluded Boone.
Third Quarter 2024 Results
Contract revenues of $226.7 million increased $58.2 million or 34.5% from $168.5 million in the third quarter last year, primarily due to an increase in Marine segment revenue related to the Pearl Harbor drydock project, partially offset by lower Concrete segment revenue due to our deliberate efforts to adhere to disciplined bidding standards to win quality work at attractive margins.
Gross profit increased to $27.1 million or 11.9% of revenue, up from $19.1 million or 11.3% of revenue in the third 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.
Selling, general and administrative (“SG&A”) expenses were $20.8 million, up from $17.1 million in the third quarter of 2023. As a percentage of total contract revenues, SG&A expenses decreased to 9.2% from 10.2%. The increase in SG&A dollars reflected an increase in compensation expense, business development spending and legal expenses.
Net income for the third quarter was $4.3 million ($0.12 per diluted share) compared to a net loss of $0.7 million ($0.02 per diluted share) in the third quarter of 2023.
Third quarter 2024 net income included $1.4 million ($0.04 diluted income per share) of non-recurring items. Third quarter 2024 adjusted net income was $5.6 million ($0.16 diluted income per share).
EBITDA for the third quarter of 2024 was $13.5 million, representing a 5.9% EBITDA margin, as compared to EBITDA of $8.7 million, or a 5.2% EBITDA margin in the third quarter last year. Adjusted EBITDA increased to $15.2 million, or a 6.7% Adjusted EBITDA margin. This compares to Adjusted EBITDA of $9.4 million, or 5.6% Adjusted EBITDA margin in the prior year period.
Backlog
Total backlog at September 30, 2024 was $690.5 million, compared to $758.4 million at June 30, 2024 and $877.5 million at September 30, 2023. Backlog for the Marine segment was $537.0 million at September 30, 2024, compared to $567.1 million at June 30, 2024 and $699.9 million at September 30, 2023. Backlog for the Concrete segment was $153.5 million at September 30, 2024, compared to $191.3 million at June 30, 2024 and $177.6 million at September 30, 2023.
Recent Contract Wins
Subsequent to the quarter end, the Company was awarded $116 million in new contract awards. Orion Marine in the Pacific Region was awarded a $30.6 million marine subcontract to support Skanska USA to perform phased temporary trestle activities for the SR 520, I-5 to Montlake, Portage Bay Bridge project. The owner is the Washington State Department of Transportation. This work is expected to begin in the fourth quarter of 2024 with a construction duration of approximately six months for the first phase.
In addition, the Orion Marine Gulf operation will be performing Turning Basin North Wharf 16 Bulkhead Repairs for the Port of Houston, an $8.5 million contract, with a start date in the fourth quarter of 2024 with an expected completion in the middle of 2025.
In the Concrete business, Orion was awarded a $18.2 million contract as a subcontractor to Harvey Builders, for the Ritz Carlton Residences in The Woodlands, Texas. The project is expected to begin in the fourth quarter of 2024 with an expected duration of approximately two years.
Balance Sheet Update
On September 12, 2024, the Company raised $26.5 million in net proceeds from a 5.6 million share offering, which included the exercise in full of the underwriter’s overallotment option, at $5.15 per share. The Company will use the net proceeds from this offering for working capital and general corporate purposes, including the continued repayment of indebtedness under its credit agreement.
As of September 30, 2024, current assets were $281.0 million, including unrestricted cash and cash equivalents of $28.3 million. Total debt outstanding as of September 30, 2024 was $28.0 million. At the end of the quarter, the Company had no 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.
