Posted on May 8, 2023
HOUSTON, May 08, 2023 (GLOBE NEWSWIRE) — Orion Group Holdings, Inc. (NYSE: ORN), a leading specialty construction company, today reported its financial results for the first quarter ended March 31, 2023.
Highlights for the quarter ended March 31, 2023:
- Backlog and awarded contracts at the end of the first quarter totaled $1.1 billion
- Entered into a sales contract for the Company’s East West Jones properties for a purchase price of $36 million
- Contract revenues decreased 9.0% to $159.2 million
- Net loss was $12.6 million or $0.39 per diluted share
- Adjusted EBITDA was negative $4.1 million
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
Management Commentary
“Our first quarter results did not meet our expectations, primarily due to timing issues, shortfalls and the continued wind down of legacy low-margin projects. Several of our projects experienced unexpected customer and weather delays in the quarter, impacting our production rates and ultimately our quarterly revenues and profitability. We do not think this quarter is indicative of our full-year potential by any means. We are working to complete low-margin projects by mid-year,” said Travis Boone, Chief Executive Officer of Orion Group Holdings.
“First quarter results withstanding, we made great progress against our three-point strategic plan for improved financial performance. First, our initiative to restore profitability in the concrete segment is generating tangible results. The month of March was the first profitable month in our concrete segment in two years. Second, we are nearing the completion of our ABL credit facility, a key component in strengthening our financial flexibility. And finally, we entered into a contract for the sale of our East West Jones properties near the Houston Shipping Channel for a purchase price of $36 million. With these funding sources, we will have dry powder to make investments in the business to drive future growth.”
“There are many positive developments that will continue to unfold during the year that gives us confidence that we are on the right track for solid performance in 2023. We will complete our exit of central Texas concrete jobs, realize the benefits of our margin improvement efforts, and begin to ramp up our work in Hawaii. Based on our current bid activity and backlog, we anticipate that our second quarter financial results will significantly improve over the first quarter, and we expect the business to accelerate in the back half of the year. In the meantime, we’re carefully managing expenses and running the business as efficiently as possible. We are executing our plan and are confident in our ability to generate long-term value for our stakeholders,” concluded Boone.
First Quarter 2023 Results
Contract revenues decreased 9.0% to $159.2 million from $174.9 million in the first quarter last year, primarily due to weather and customer delays in both businesses and a reduction of concrete segment revenue in central Texas.
Gross profit was $5.8 million or 3.7% of revenue down from $12.8 million or 7.3% of revenue in the first quarter of 2022. Approximately half of this decrease was due to the impact of weather in Texas, which lowered labor and equipment utilization. The rest of the remaining decrease related to clean-up of low-margin projects resulting in write-downs in both the marine and concrete businesses. This was partly offset by actions to manage costs during project delays including reallocating equipment, reducing the size of the fleet and headcount reductions, as well as realizing margin improvements in the concrete business that reflected our margin improvement initiatives.
Selling, general and administrative (“SG&A”) expenses were $17.0 million, up 5.2% from $16.2 million in the first quarter of 2022. As a percentage of total contract revenues, SG&A expenses increased to 10.8% from 9.1%, primarily due to lower revenues in the first quarter. The increase in SG&A dollars was primarily due to an increase in compensation expense, partially offset by lower consulting expense related to the completion of the management transition.
Net loss was $12.6 million or $0.39 per diluted share compared to a net loss of $4.9 million or $0.16 per diluted share for the first quarter of 2022.
The first quarter 2023 net loss included $2.3 million ($0.07 diluted earnings per share) of non-recurring items. First quarter 2023 adjusted net loss was $10.3 million ($0.32 diluted loss per share).
EBITDA was negative $4.9 million, representing a (3.1)% EBITDA margin, as compared to EBITDA of $3.5 million, or a 2.0% EBITDA margin in the first quarter last year. Adjusted for non-recurring items, EBITDA for the first quarter of 2023 was negative $4.1 million, representing a (2.6)% adjusted EBITDA margin, as compared to adjusted EBITDA for the first quarter of 2022 of $5.2 million, representing a 3.0% adjusted EBITDA margin.
Backlog
Total backlog at March 31, 2023 was $467.4 million, compared to $448.8 million at December 31, 2022 and $604.1 million at March 31, 2022. Backlog for the Marine segment was $187.0 million, compared to $216.7 million at December 31, 2022 and $317.4 million at March 31, 2022. Backlog for the Concrete segment was $280.4 million, compared to $232.1 million at December 31, 2022 and $286.7 million at March 31, 2022. In addition, the Company has been awarded $624 million in new project work not included in backlog at the end of the quarter.
Balance Sheet Update
As of March 31, 2023, current assets were $202.2 million, including cash and cash equivalents of $2.8 million. Total debt outstanding was $40.0 million.
Credit Facility
The Company has reached an agreement with a private lender and expects to complete a new ABL credit facility shortly. This facility will consist of a term loan of $38 million and revolving credit facility of $65 million. The proceeds of this facility will be used to retire the Company’s existing credit facility and for general corporate purposes.
Asset Sales
The Company entered into a contract for the sale of its East West Jones properties in Harris County, Texas. The purchase price is $36 million and the transaction is expected to close in the third quarter of 2023. Proceeds will be used to reduce debt and for general corporate purposes.
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. https://www.oriongroupholdingsinc.com.
