Posted on June 12, 2024
Orion Group Holdings, Inc. ORN has won three dredging services contracts within the Marine segment for a combined value of approximately $22 million. The U.S. Army Corps of Engineers (“USACE”) has awarded these contracts for the maintenance of waterways along the gulf coast.
The first contract, valued at $8.8 million, includes the removal of up to two million cubic yards of maintenance material along the Gulf Intracoastal Waterway between Corpus Christi and Port Isabel. The second award includes the dredging of 2.1 million cubic yards of material at Sabine Neches Waterway in Jefferson County, TX for a base amount of $9.5 million. Importantly, the total value for this contract could increase to more than $28 million, if all options for additional scope of work are exercised. It is to be noted that these two contracts were awarded by the USACE’s Galveston District.
The third contract, won from the USACE’s Jacksonville District, is valued at $3.5 million. The scope of work includes dredging maintenance material from the upper channels in Tampa Harbor, in Tampa, FL.
All these projects are expected to begin in the fourth quarter and are likely to be completed by next year-end.
Mark Stauffer, Orion’s president and chief executive officer, said, “Maintaining our nation’s waterways is critical to the economy of our country and being able to continue to support the US Army Corps of Engineers in executing their mission is equally critical to Orion. We have several ongoing projects for the US Army Corps of Engineers and the addition of these projects adds to the growing backlog in our marine business.”
Contract Wins to Boost Profitability
Orion — which shares space with Dycom Industries, Inc. DY in the Zacks Building Products – Heavy Construction industry — derives revenues from various marine construction, dredging, turnkey concrete services and other specialty services contracts. These projects are of typically short duration and usually span for less than a year.
For the first six months of 2021, contract revenues declined 14.6% year over year. The downside was primarily due to severe winter weather in February, reduction in project activity in the marine segment and lower production volumes in the concrete segment due to weather-related impacts in the second quarter. Backlogs also declined from the prior-year level due to headwinds stemming from the COVID-19 pandemic in certain end-market sectors, which slowed down the timing of project awards. Nonetheless, the same increased sequentially.
The company is optimistic about the emerging opportunities across end-markets served, as is evident from $2 billion of quoted bids outstanding at quarter-end.
Shares of this Zacks Rank #4 (Sell) company have surged 86.2% compared with the industry’s 77.7% rally in the past year.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
Some better-ranked stocks in the same industry include Sterling Construction Company, Inc. STRL and MasTec, Inc. MTZ, each carrying a Zacks Rank #2 (Buy). Sterling and MasTec are expected to generate earnings growth of 30.3% and 6.7% for the current year, respectively.
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Dycom Industries, Inc. (DY) : Free Stock Analysis Report
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Orion Group Holdings, Inc. (ORN) : Free Stock Analysis Report
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