Posted on July 27, 2015
Orion Marine Group, Inc. (NYSE:ORN) a heavy civil marine contractor serving the infrastructure sector, today is providing its investors with an update on the Company’s end markets.
As previously discussed, overall asset utilization during the second quarter was affected by inconsistent lettings from the Army Corps of Engineers and delays in the timing of certain project awards. Additionally, the record levels of rainfall and flooding in Texas impacted production on certain jobs in the Texas market. This rainfall and flooding activity should lead to an increased need for dredging in the coming months. In fact, the Company has already received a $2 million change order to an existing contract to perform emergency dredging in Texas. Additionally, the Company believes it should make up the delayed work in the back half of the year.
The Company saw a healthy level of bid market activity during the second quarter. During the second quarter the Company bid on approximately $376 million worth of opportunities and was successful on approximately $100 million, representing a win rate of approximately 26%. The Company reminds investors that the timing and size of awards can and does affect the win rate in any particular quarter.
The Company currently has approximately $350 million worth of bids outstanding; of which the Company has been notified it is the apparent low bidder on approximately $35 million. The Company is extremely pleased with both the amount of work won in the quarter and its total level of bids outstanding, indicating continued robust activity in our various end markets. Furthermore, the Company remains confident in its outlook for growth in the second half of 2015.
Federal & State Update
With only 3 months left in the Federal Government’s fiscal year, the Army Corps of Engineers has only let half of the projects the Company expected to bid in fiscal 2015. While this has resulted in underutilized equipment in the first half of 2015, the Company expects most of these jobs to be let before the end of the Corps fiscal year, providing opportunity to improve utilization in the second half of 2015.
Looking towards the fiscal 2016 Federal budget, the Company is hopeful the appropriations process can be complete with full year funding for the Corps put in place prior to the beginning of October, eliminating the need for a continuing resolution and providing for a more consistent pace of Corps lettings. The Corps FY 2016 appropriation has already been fully passed by the House of Representatives and the Senate Appropriations Committee on Energy, and Water Development and awaits a full vote by the Senate.
The Company was also pleased to see the recently announced settlement related to the
With current highway funding expiring, congress must pass additional legislation to keep the highway trust fund solvent before the end of the July. Many in the Senate are pushing for a multiyear piece of legislation but no funding mechanism or increase to the gas tax has been proposed to fund it. The Company believes a short term continuing resolution will be passed and a longer term bill will be considered after the presidential elections in 2016.
Port expansion and infrastructure improvements continue to be a source of strong bid opportunities for the Company. As the use of waterborne transportation to move goods and people steadily continues to increase along with general vessel size, the Company expects demand for deepening projects, infrastructure improvements and maintenance services to remain strong for the foreseeable future.
Private sector opportunities continue from both energy and recreational end markets, as demand for expanded waterside infrastructure remains strong. As mentioned previously, the Company is still active in bidding on and executing capital expansion projects for private sector clients, both domestically and abroad. Over 65% of the total bids the Company has outstanding are for private sector clients, indicating continued strength in this end market.
About Orion Marine Group
Orion Marine Group, Inc. provides a broad range of heavy civil marine construction and specialty services on, over and under the water in the Continental United States, Alaska, Canada and the Caribbean Basin, and acts as a single source turn-key solution for its customers’ marine contracting needs. Its heavy civil marine construction services include marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, and specialty services. The Company is headquartered in Houston, Texas.