Posted on August 7, 2017
Orion Marine Group (NYSE: ORN) reported Q2 EPS of ($0.08), $0.10 worse than the analyst estimate of $0.02. Revenue for the quarter came in at $122 million versus the consensus estimate of $162.04 million.
Outlook
“As we look at the second half of 2017 and into next year, we expect high-quality bid opportunities to continue across each of the infrastructure, industrial, and building sectors we target,” commented Mr. Stauffer. “Our solid backlog level at quarter end, and the ongoing operational improvements, provides long-term visibility to support our future success.
“The infrastructure sector, which today is made up of our Marine Segment, continues to provide both public and private opportunities to maintain and expand marine facilities on and over U.S. waterways,” continued Mr. Stauffer. “Throughout our operating areas, market fundamentals remain positive, and we are seeing pockets of margin expansion in certain areas. While prolonged permitting delays have continued to shift near term marine revenue to the right, we are committed to profitably delivering our services to meet our customers’ needs. Private sector bid opportunities from downstream energy customers continue as they expand their waterside facilities associated with refining and storage. Recreational demand continues to persist from private customers as local marinas are being expanded and remodeled, while business opportunities from cruise lines remain promising as we track opportunities related to new destinations, or refurbishment of existing destinations in the Caribbean. In the public sector, we expect continued lettings from the U.S. Army Corp of Engineers, however we anticipate the federal government to still operate under continuing resolutions rather than appropriations for the upcoming fiscal year.
“Additionally, we continue to work on collaboration efforts between our current businesses to develop our service offerings in the industrial sector, and we are currently pursuing industrial construction projects. The massive, long-term petrochemical driven opportunities along the Gulf Coast provides significant upside potential. Specifically, the U.S. is on pace to become a net exporter of natural gas by 2018 as a result of the shale revolution, which has led to increased domestic production of natural gas. According to the American Chemistry Council, there are 294 new projects planned in the petrochemical industry with a total new capital investment of $179 billion as of March 2017, much of which will occur in our existing markets. This will lead to an outpaced growth in of the petrochemical industry that should account for more than half of the construction spending in the manufacturing sector. As a result, we are aligning ourselves to leverage our skill sets and customer base to target projects in the industrial sector.
Mr. Stauffer continued, “The building sector, which today houses our Concrete Segment, is in solid shape as its three major metropolitan markets continuously retain their positions as leading destinations for families and businesses to reside. Population growth throughout our markets continue to drive new distribution centers, office expansion, retail and grocery establishments and new multi-family housing units, educational facilities and medical facilities. In Houston, warehouse construction and new education facilities comprised nearly half of the second quarter sales mix. We are focused on expanding our Dallas-Fort Worth market share including targeting structural construction opportunities. As anticipated, Central Texas operations are off to a great start, as we are seeing solid project execution and expanding market share along the I-35 corridor. Sustained demand for concrete services in Houston and Dallas/Fort Worth markets coupled with the early progress being made in Central Texas, indicate the concrete segment should continue providing meaningful contribution to EBITDA during the second half of the year. We maintain confidence in each of our current building sector markets and strongly believe there are additional market opportunities for us to pursue in the future,” concluded Mr. Stauffer.
Mr. DeAlmeida commented, “Each of the Company’s business sectors continued to see solid demand for services, and we placed competitive bids for projects throughout the second quarter. While total bidding was lower than recent quarters due to timing, we remain encouraged by the volume and mix of projects scheduled or anticipated within our operating areas.
“As mentioned, the permitting delays we experienced during the second quarter continued to create volatility in our Marine Segment, which has impacted our future near-term financial results. These delays affected various marine services including dredging services. Unfortunately, making up the lost days of dredging services during 2017 will be difficult. As a result, when compared to full year 2016 results, we are now targeting full year 2017 EBITDA to be neutral, to 10% growth. Our goal is, and will always be, to deliver profitable returns to shareholders. Expansion of our existing operations or future operations in the infrastructure, industrial, or building sectors could provide further catalyst for EBITDA growth outperformance. While we are disappointed with the second quarter and pressure it will put on our full year results, we remain excited about where the Company is headed and we remain committed to profitability during the full year 2017.”
Source: StreetInsider.com
