Orion Group Holdings Reports Second Quarter Earnings, Backlog
Orion Group Holdings Inc., a leading specialty construction company based in Houston, Texas, reported net income July 28 of $3.5 million ($0.11 earnings per share) for the second quarter. A year ago, the company reported net income of $2 million, or $0.07 per share, for the second quarter of 2020.
However, the 2021 second quarter net income included $3 million ($0.10 earnings per share) of non-recurring items and $1.1 million ($0.04 loss per share) of tax expense associated with the movement of certain valuation allowances, the company said. Adjusted net income for the second quarter was $1.7 million ($0.05 earnings per share).
Contract revenues were $145.9 million, down 20.6 percent compared to $183.7 million a year ago. The decrease was primarily driven by a reduction in project activity compared to the prior year in the marine segment and decreased production volumes in the concrete segment due to weather-related impacts, the company said.
“During the second quarter we closed on the sale of our Tampa property, further strengthening our balance sheet and enhancing our liquidity,” CEO Mark Stauffer said. “The gain on the sale is included in our results for the second quarter, which were also impacted by inordinately wet weather in our key operating geographies, which affected both business segments, but predominantly our concrete business.
“Our concrete segment’s production was hampered during the quarter by wet weather conditions across Texas, and as a result, our labor capacity was underutilized. Our concrete segment’s ability to catch up on work and execute effectively in normal weather conditions will allow us to efficiently complete any delayed projects in subsequent quarters. The wet weather unfortunately resulted in under-recovery of indirect costs, including labor and equipment utilization, during the quarter.
“We remain optimistic about our end markets and future project opportunities,” Stauffer continued. “During the second quarter, we bid on a significant volume of bids, including several large projects, and we ended the quarter with a substantial amount of quoted work outstanding. We are confident that bidding opportunities will continue to materialize, especially in end-markets that have been adversely impacted by COVID, including the cruise and energy industries, which have begun generating project opportunities again. We also are continuing to track progress on the federal infrastructure bill, which would provide an additional catalyst for our end markets and drive absorption of industry capacity. The diversity of our end markets and our unique capabilities across both of our business segments make us confident in our ability to capitalize on a wide range of attractive projects as they continue to materialize across our operating footprint.
“We also continue to enhance our financial flexibility with the strengthening of our balance sheet. On a basis of net debt, this is the strongest balance sheet the company has had in many years, which not only offers us flexibility to continue to execute on projects in backlog and pursue new awards, but also position us to consider accretive acquisition opportunities, as well as exploring other opportunities to achieve the best return for our shareholders.”
Stauffer concluded, “Given the reopening of the U.S. economy, the project opportunities we see on the horizon as a result and our extremely strong balance sheet and financial position, we are confident in our ability to continue to generate growth in our profitability and maximizing shareholder value over the long-term.”
The company reported a backlog at the end of the second quarter of 2021 of $394.4 million. At the same period in 2020, the company’s backlog was $528.4 million. The second quarter 2021 ending backlog was composed of $170.2 million for the marine segment and $224.2 million for the concrete segment.
At the end of the second quarter of 2021, Orion had approximately $2.0 billion worth of bids outstanding, including approximately $30 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the second quarter of 2021, of which approximately $12 million pertains to the marine segment and approximately $18 million to the concrete segment.
“During the second quarter, we bid on approximately $2 billion of work and were successful on approximately $175 million of these bids,” said Robert Tabb, Orion Group Holding›s executive vice president and chief financial officer. “This resulted in a 1.20 times book-to-bill ratio and a win rate of 8.8 percent. In the marine segment, we bid on approximately $1 billion during the second quarter of 2021 and were successful on approximately $79 million, representing a win rate of 7.6 percent and a book-to-bill ratio of 1.24 times. In the concrete segment we bid on approximately $1 billion of work and were awarded approximately $96 million, representing a win rate of 10.1 percent and a book-to-bill ratio of 1.17 times.”