Posted on November 10, 2015
HOUSTON, Nov. 05, 2015 (GLOBE NEWSWIRE) — Orion Marine Group, Inc. (NYSE:ORN) (the “Company”), a leading construction company, today reported net loss for the three months ended September 30, 2015, of $7.4 million ($0.27 diluted loss per share). These results compare to net income of $3.0 million ($0.11 diluted earnings per share) for the same period a year ago.
“As previously discussed, significant cost increases on five projects managed out of our Tampa, Florida office, as well as one-time, non-cash charges related to the assets held for sale, along with a valuation allowance on our deferred tax asset in Florida significantly impacted our third quarter results,” said Mark Stauffer, Orion Marine Group’s President and Chief Executive Officer. “I am confident we are rectifying the issues with our Tampa operations. However, I would to highlight that the rest of our operations performed well during the quarter, including our recently acquired commercial concrete segment, which exceeded our expectations. During the third quarter we had a solid success rate on new work leading to backlog of over $400 million as of September 30, 2015. Additionally, we continue to see strong opportunities for new work throughout our market areas, which gives us confidence in the year ahead. There is no doubt the third quarter has been a disappointment, but I am confident 2016 will be a solid year for the Company with significantly improved bottom line performance.”
Financial highlights of the Company’s third quarter 2015 include:
Consolidated Results
- Third quarter 2015 contract revenue was $137.1 million
- Gross profit for the quarter was $8.3 million or a gross profit margin of 6.0%.
- Selling, General, and Administrative expenses for the third quarter 2015 were $14.5 million as compared to $7.9 million in the prior year period. The increase is primarily related the acquisition of TAS Commercial Concrete during the quarter.
- Third quarter 2015 EBITDA was $42 thousand, representing a 0.03% EBITDA margin
- Backlog of work under contract as of September 30, 2015, was $404.1 million
Heavy Civil Marine Construction Segment
- Third quarter 2015 contract revenue was $90.1 million, a decrease of 15.8% from the prior year period. The decrease is primarily related to cost increases on five projects managed out of the Company’s Tampa, Florida office.
- Third quarter 2015 operating income was $(8.6) million, a decrease of $13.6 million compared to the prior year period.
- Third quarter 2015 EBITDA was $(3.9) million, representing a (4.3)% EBITDA margin, a decrease of $15.3 million compared to the third quarter 2014 EBITDA of $11.4 million, or 10.7%.
- Backlog of work under contract as of September 30, 2015, was $223.7 million, which compares with backlog under contract at September 30, 2014, of $242.0 million.
Commercial Concrete Construction Segment
- The acquisition of TAS Commercial Concrete was completed on August 5, 2015. The quarterly results for this segment represent results from August 5th, 2015 to September 30th, 2015
- Revenue attributable to Orion Marine Group in the third quarter was $47.0 million. On a pro-forma basis, assuming that the acquisition of TAS Commercial Concrete had been completed as of the beginning of the period, total third quarter 2015 revenues would have $74.6 million, an increase of 25.9% from the prior year period.
- Operating income attributable to Orion Marine Group in the third quarter was $2.4 million. On a pro-forma basis, assuming that the acquisition of TAS Commercial Concrete had been completed as of the beginning of the period, total third quarter 2015 operating income would have been $5.0 million, which is comparable to the prior year period. Comparable year over year operating income is a result of higher amortization of intangibles in 2015, due to the acquisition.
- EBITDA attributable to Orion Marine Group in the third quarter was $3.9 million. On a pro-forma basis, assuming that the acquisition of TAS Commercial Concrete had been completed as of the beginning of the period, total third quarter 2015 EBITDA would have been $8.4 million, an increase of 50.8% from the prior year period.
- Backlog of work under contract as of September 30, 2015, was $180.3 million, which is comparable with backlog under contract at September 30, 2014, of $182.5 million.
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. The Company reminds investors that 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.
Outlook
“We remain excited with the market opportunities we see as we look towards 2016,” said Mr. Stauffer. “With the management issues in our Tampa office being rectified, an ample bid market for both the Heavy Civil Marine Construction and Commercial Concrete Construction segments should support improved results in 2016.
“Demand for our Heavy Civil Marine Construction services remain strong. As I have previously mentioned, we continue to see solid demand for turn-key solutions from our private sector customers in the energy sector. Currently being driven by increased need for waterside storage for domestically produced crude oil, we believe similar opportunities in the future will also be driven by the continued expansion of petrochemical and LNG facilities, as well as the potential for crude exports. Opportunities from local port authorities also remain solid, many of which are related to the upcoming completion of the Panama Canal expansion project. Additionally, we expect to see bid opportunities related to coastal restoration through RESTORE Act funding towards the end of 2016.
“The Commercial Concrete Construction segment also continues to see a robust bid market in both Houston and Dallas. Demand for the construction of warehouses, industrial facilities, retail establishments, medical facilities and schools continues to grow as the populations of Houston and Dallas continue to expand. With over $460 million in bids outstanding and near record backlog, we expect 2016 to be another positive year for this segment. We also continue to explore potential opportunities for further expansion of services in Texas and potential opportunities to bring both our heavy civil marine and commercial concrete construction services to be bear on projects”
“We are pleased with both the amount of work we bid on and won during the third quarter of 2015,” said Chris DeAlmeida, Orion Marine Group’s Vice President and Chief Financial Officer. “During the third quarter, we bid on approximately $682 million worth of opportunities and were successful on approximately $195 million. This represents a 29% win rate and a book-to-bill ratio of 1.18 times for the quarter. We currently have a combined $724 million worth of bids outstanding. Of this, approximately $262 million of the bids outstanding are related to the Heavy Civil Marine Construction segment with $462 million related to the Commercial Concrete Construction segment. In the Heavy Civil Marine Construction segment, we have been identified as low bidder on approximately $18 million. In our Commercial Concrete segment, we have also received award subsequent to the end of the quarter on projects totaling approximately $16 million.
Taking into account the impact of the events that occurred in the third quarter, we expect full year revenues to be in the range of $460 – $480 million with full year EPS loss in the range of $(0.30) – $(0.35). With the actions we have taken in the third quarter, we believe we are set up to have significantly improved bottom line performance in 2016. As a result, we expect full year revenues to be in the range of $625 to $675 million with full year EPS in the range of $0.30 to $0.40.”
About Orion Marine Group
Orion Marine Group, Inc., a leading construction company, provides services both on and off the water in the continental United States, Alaska, Canada and the Caribbean Basin through its heavy civil marine construction segment and its commercial concrete segment. The Company’s heavy civil marine construction segment services includes marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Its commercial 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 office throughout its operating areas.
