Orion Group Holdings Inc. Reports Improved Earnings For Second Quarter
Orion Group Holdings Inc., Houston, reported second-quarter net earnings of $2 million, or 7 cents per share, a reversal from the $1.6 million net loss reported for the second quarter of 2019. Contract revenues were $183.7 million, up 10.7 percent from $166 million in the 2019 second quarter.
Operating income was $4.1 million for the second quarter of 2020, compared to operating loss of $0.4 million a year ago, the company said in the July 29 announcement.
“Once again, I would like to thank all of our employees and team members for continuing to safely and diligently work on our projects and in our yards, shops and support offices during this unprecedented period,” said Mark Stauffer, Orion president and CEO. “Despite the continued spread of the COVID-19 virus and the spike in some of the states in which we work, we continue to execute on our projects in backlog while keeping our focus on maintaining the health and safety of the most important resource of our business: our people.
“We continued to post year-over-year improvement in both our top and bottom line and also generated solid free cash flow in the second quarter, which reflects the benefits of the operational improvement initiatives we implemented over the past 18 months,” Stauffer continued. “Our concrete segment significantly improved operating performance driven by higher production volumes during the quarter. On a sequential basis, adjusted EBITDA margin declined for our marine segment due to lower utilization of our dredging assets as we performed scheduled maintenance to ensure continued operation of our dredge fleet for upcoming projects in backlog.”
Stauffer said the company’s diversification is helping it survive the current health and economic crisis.
“While certain of our end markets have been impacted by the COVID-19 pandemic, we continue to see bidding activity in both of our segments,” he said. “A key element of our growth strategy is the wide array of end markets we serve, which enables us to pursue the most attractive bid opportunities in the end markets that are performing the best at any given point in time. This strategy serves us well in this challenging and uncertain environment, and we will continue to focus our efforts on targeting the end markets and projects we expect to have the best opportunities to be successful and profitable moving forward.
“Though the pandemic may continue to create uncertainty in the marketplace, we are confident in our ability to efficiently and profitably execute our projects in backlog, and in our ability to maintain or grow our backlog level by targeting and winning new bid opportunities. Our liquidity position remains strong. The additional $16 million of free cash flow that we generated in the second quarter coupled with our $20 million, one-year revolver that we recently added to our credit facility provides us with more than sufficient financial flexibility to continue to pursue new awards and execute existing backlog.
“We are encouraged by our strong operational performance in the second quarter and we have the right team in place to continue to perform well despite the macroeconomic challenges. Considering our combination of diverse end markets, broad range of construction capabilities and assets, and our highly experienced and professional personnel, we are confident in our ability to deliver increasing levels of profitability and free cash flow in the quarters and years to come, particularly in a post-pandemic environment.”
Backlog And Bids
Orion’s backlog of work under contract as of June 30 was $528.4 million, which compares with backlog under contract at June 30, 2019 of $645.2 million, a decrease of 18.1 percent. The prior period backlog number reflects the booking of a large project during the period with a contract value of $160 million, the company said. The second quarter 2020 ending backlog was comprised of $312.2 million for the marine segment, and $216.2 million for the concrete segment.
Currently, the company has approximately $1.3 billion worth of bids outstanding, including approximately $73 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the second quarter of 2020, of which approximately $60 million pertains to the marine segment and approximately $13 million to the concrete segment.
“During the second quarter, we bid on approximately $1.2 billion of work and were successful on approximately $120 million of these bids,” stated Robert Tabb, Orion Group Holdings’ vice president and chief financial officer. “This resulted in a 0.65 times book-to-bill ratio and a win rate of 10.4 percent. In the marine segment, we bid on approximately $279 million during the second quarter 2020 and were successful on approximately $59 million, representing a win rate of 21.2 percent and a book-to-bill ratio of 0.65 times. In the concrete segment we bid on approximately $876 million of work and were awarded approximately $61 million, representing a win rate of 6.9 percent and a book-to-bill ratio of 0.66 times.”
Orion Group Holdings is a specialty construction company serving the infrastructure, industrial and building sectors, providing services both on and off the water in the continental United States, Alaska, Canada and the Caribbean Basin through two segments: marine and concrete.
The 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 across the light commercial, structural and other associated business areas.