Orion Group Holdings Reports Positive Earnings Growth In 2017 Fourth Quarter
Orion Group Holdings Inc. reported net income of $9.5 million for the fourth quarter of 2017; for the same period a year earlier, the company had reported a net loss of $6.3 million. For the full year of 2017, the company reported net income of $0.4 million, compared to a prior-year loss of $3.6 million.
The 2017 fourth-quarter results included net benefits of $4.3 million related to the implementation of the new tax law, the company said in the March 8 announcement. Excluding the tax benefit, the company had adjusted net income of $5.2 million for the fourth quarter and adjusted net loss of $3.9 million for the full year.
“While 2017 was a challenging year, with customer permitting delays in the first half and significant hurricane impacts in the third quarter, we ended the year with solid operational performance and continued strong market demand,” said Mark Stauffer, Orion Group Holding’s president and CEO. “The recent hurricanes created opportunity for additional projects in the fourth quarter and helped lead to better equipment utilization during the quarter in our marine segment.
“Upcoming opportunities, in addition to macroeconomic drivers for our concrete and marine business segments, provide us with confidence as we enter 2018. We are pleased with the company’s fourth quarter execution and look forward to continued strong execution throughout 2018.”
Orion Group reported that contract revenues in its marine segment during the fourth quarter were $88.2 million, a 46.8 percent increase from a year ago. For the full year, contract revenues in the marine segment were $285.7 million, up 0.4 percent from 2016.
The company said its backlog of work under contract as of December 31, 2017, was $360.6 million, which compares with backlog on December 31, 2016, of $434.0 million, a decrease of 16.9 percent. Of the 2017-ending backlog, $177.0 million was attributable to the marine segment, while $183.6 million was attributable to the concrete segment. The change in year-over-year backlog is due to the timing and mix of projects awarded, as well as a significantly large project awarded at the end of 2016, the company said in the announcement.
“During the fourth quarter, we bid on approximately $606 million and were successful on approximately $140 million,” said Chris DeAlmeida, Orion Group Holdings’ executive vice president and chief financial officer. “This resulted in a 0.86 times book-to-bill ratio and a win rate of 23.1 percent. In the marine segment, we bid on approximately $179 million during the fourth quarter 2017 and were successful on $66 million, which translated into a 0.75 times book-to-bill ratio and a win rate of 36.8 percent. The concrete segment also had healthy bid levels for the quarter, bidding on approximately $426 million in work while being awarded approximately $74 million. This yielded a 0.99 times book-to-bill ratio and a win rate of 17.4 percent.”
“Delivering profitable returns to shareholders remains the key focus for the company,” Stauffer said. “Expansion of our existing and future operations in the infrastructure, industrial, or building sectors should provide further catalysts for EBITDA [earnings before interest, taxes, depreciation and amortization] growth. As we look ahead, we expect to see continued strong demand for our services across the company. We will continue to focus on delivering high quality projects to our customers with continued expansion of our services across our operating segments and areas.
“As a result, we expect to see some bottom line improvement in 2018 as compared to 2017. This bottom line improvement should expand more significantly in 2019 and beyond as our expansion plans become fully developed. While the past couple of years have been choppy, we believe we have developed a strong go forward strategy that will result in continued bottom line improvement, with more consistent earnings and higher free cash flow returns. We remain excited about the future and believe we have solid fundamentals for continued success.”
Orion sees positive market fundamentals in both its marine and concrete segments. Among the positive factors, company said the “massive, long-term petrochemical-driven opportunities along the Gulf Coast provide significant potential to expand the company’s addressable project opportunities.” As the U.S. becomes a net exporter of natural gas, the growth of the petrochemical industry should provide more than half of the construction spending in Orion’s manufacturing sector, the company said.