Orion Group Holdings, Inc. Reports Third Quarter 2019 Results

HOUSTON--()--Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported a net income of $4.0 million ($0.14 diluted earnings per share) for the third quarter ended September 30, 2019. Third quarter highlights are discussed below.

Third Quarter 2019 Highlights

  • Contract revenues were $199.5 million, up 59.5% from $125.1 million for the third quarter of 2018. Operating income was $6.1 million for the third quarter of 2019 compared to operating loss of $7.4 million for the third quarter of 2018.
  • Net income was $4.0 million ($0.14 diluted earnings per share) for the third quarter of 2019 compared to net loss of $6.4 million ($0.22 diluted loss per share) for the third quarter of 2018.
  • The third quarter 2019 net income included $0.3 million ($0.01 per diluted share) of non-recurring costs and other charges. Third quarter 2019 adjusted net income was $4.3 million ($0.15 diluted earnings per share). (Please see page 9 of this release for a reconciliation of adjusted net income.)
  • EBITDA, adjusted to exclude the impact of the aforementioned non-recurring costs, was $14.3 million in the third quarter of 2019, which compares to adjusted EBITDA of $0.7 million for the third quarter of 2018. (Please see page 10 of this release for an explanation of EBITDA, adjusted EBITDA and a reconciliation to the nearest GAAP measure.)
  • Backlog was $630.5 million on a third quarter book-to-bill of 0.85x.

“For the third quarter, we posted our highest quarterly revenues in the company’s history and delivered positive operating profit in both segments,” stated Mark Stauffer, Orion Group Holding’s President and Chief Executive Officer. “Our top and bottom line increased significantly on both a year-over-year and sequential basis driven by effective execution on projects in our sizeable backlog, and the benefits of our Invest, Scale and Grow (ISG) initiative. Our concrete business generated positive results reflecting productivity improvements facilitated by improved weather conditions, the implementation of ISG, and the run-off of projects that had been negatively impacted by weather delays earlier in the year. Marine segment results were driven by the ramp-up of a broad range of projects awarded over the past few quarters, including projects involving dredging services, leading to higher fleet utilization with increased absorption of fixed costs.”

“Even with the significant amount of work executed in the third quarter, backlog remained near all-time highs and was up significantly relative to the end of the third quarter of 2018. Backlog in the Concrete segment was at a record high at the end of the third quarter. The pipeline of projects we are pursuing continues to be robust, and we are particularly pleased by the number of opportunities for larger and longer jobs that can produce greater visibility for our operations.”

Mr. Stauffer concluded, “Looking to the balance of the year and into 2020, our ongoing operational enhancements and the strong bidding environment gives us confidence in our ability to continue to deliver improved results. While our fourth quarter can be seasonally weaker than the third quarter, we do expect to see material year-over-year improvement in revenues and profitability compared to the fourth quarter of 2018. With respect to 2020, we are already adding projects to backlog for the second half of the year, providing us with better visibility for the full year.”

Consolidated Results for Third Quarter 2019 Compared to Third Quarter 2018

  • Contract revenues were $199.5 million, up 59.5% as compared to $125.1 million. The increase was primarily driven by higher utilization rates in our marine segment and improved weather conditions, leading to higher cubic yardage production in our concrete segment.
  • Gross profit was $20.9 million, as compared to $4.8 million. Gross profit margin was 10.5%, as compared to 3.9%. The increase reflects an improvement in labor efficiency resulting from the ISG process and improved utilization rates in our marine segment, along with improved man hours per cubic yards placed in the concrete segment.
  • Selling, General, and Administrative expenses were $14.6 million, as compared to $12.4 million. The increase predominantly reflects $1.1 million of non-recurring professional and other fees related to the Company’s ISG initiative.
  • Operating income was $6.1 million as compared to operating loss of $7.4 million. The operating income in the third quarter of 2019 reflects the aforementioned factors that improved gross profit.
  • EBITDA was $13.2 million, representing a 6.6% EBITDA margin, as compared to EBITDA of $0.7 million, or a 0.5% EBITDA margin. When adjusted for the aforementioned charges and other non-recurring costs, adjusted EBITDA for the third quarter of 2019 was $14.3 million, representing a 7.2% EBITDA margin. (Please see page 10 of this release for an explanation of EBITDA, Adjusted EBITDA and a reconciliation to the nearest GAAP measure.)

Backlog

Backlog of work under contract as of September 30, 2019 was $630.5 million, which compares with backlog under contract at September 30, 2018 of $426 million, an increase of 48%. The third quarter 2019 ending backlog was comprised of $404.3 million for the marine segment, and $226.2 million for the concrete segment; a record level for this segment. Currently, the Company has $1 billion worth of bids outstanding, including approximately $42.5 million on which it is the apparent low bidder, or has been awarded contracts subsequent to the end of the third quarter of 2019, of which approximately $31.6 million pertains to the marine segment and approximately $10.9 million to the concrete segment.

“During the third quarter, we bid on approximately $1 billion of work and were successful on approximately $169 million of these bids,” stated Robert Tabb, Orion Group Holding's Vice President and Chief Financial Officer. “This resulted in a 0.85 times book-to-bill ratio and a win rate of 16.3%. In the marine segment, we bid on approximately $337 million during the third quarter 2019 and were successful on $35 million, representing a win rate of 10.4% and a book-to-bill ratio of 0.32 times. In the concrete segment we bid on approximately $702 million of work and were awarded approximately $134 million, representing a win rate of 19.1% and a book-to-bill ratio of 1.46 times."

Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress and not yet complete, and the Company cannot guarantee that the revenue projected in its backlog will be realized, or, if realized, will result in earnings. Backlog can fluctuate from period to period due to the timing and execution of contracts. Given the typical duration of the Company's projects, which generally range from three to nine months, the Company's backlog at any point in time usually represents only a portion of the revenue it expects to realize during a twelve-month period.

Invest, Scale, and Grow Initiative

“During the third quarter, we made significant strides in the implementation of our ISG initiative,” stated Mr. Stauffer. “The end goal of our ISG initiative is to generate performance from both of our business segments that consistently meets our expectations and aligns with our strategic plan. The areas of focus for our ISG program are labor management, equipment management, project execution and corporate process. In each of these areas we’ve implemented enhancements and improvements to the functionality of data and reporting to provide better visibility, leading to better efficiencies and cost control. In each of these areas we’ve reinforced our expectations and accountability to complete our projects with margins at or above as-bid margins. We’ve continued laying the groundwork to implement a shared services platform across our segments to eliminate duplication of efforts and costs, which along with other measures, when fully implemented, will drive total SG&A expense to at or below 8.5% of revenues on an annual basis, which we are on track to do in 2019. We remain acutely focused on delivering improved results as we progress through 2019 and into 2020."

Conference Call Details

Orion Group Holdings will host a conference call to discuss results for the third quarter 2019 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, October 31, 2019. To listen to a live webcast of the conference call, or access the replay, visit the Calendar of Events page of the Investor Relations section of the website at www.oriongroupholdingsinc.com. To participate in the call, please dial the Orion Group Holdings, Inc. Third Quarter 2019 Earnings Conference Call at (855) 478-9690 for Domestic callers and (678) 509-7639 for International callers; participant code: 2363515.

About Orion Group Holdings

Orion Group Holdings, Inc. is a leading specialty construction company serving the Infrastructure, Industrial, and Building sectors in the continental United States, Alaska, Canada and the Caribbean Basin through its marine construction segment and its concrete construction segment. The Company’s marine construction segment services includes marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Its concrete construction segment provides turnkey concrete construction services including pour and finish, dirt work, layout, forming, rebar, and mesh across the light commercial, structural and other associated business areas. The Company is headquartered in Houston, Texas with regional offices throughout its operating areas.

Non-GAAP Financial Measures

This press release includes the financial measures “adjusted net income,” “adjusted earnings per share,” “EBITDA,” "Adjusted EBITDA" and “Adjusted EBITDA margin." These measurements are “non-GAAP financial measures” under rules of the Securities and Exchange Commission, including Regulation G. The non-GAAP financial information may be determined or calculated differently by other companies. By reporting such non-GAAP financial information, the Company does not intend to give such information greater prominence than comparable and other GAAP financial information, which information is of equal or greater importance.

Adjusted net income and adjusted earnings per share are not an alternative to net income or earnings per share. Adjusted net income and adjusted earnings per share exclude certain items that management believes impairs a meaningful comparison of operating results. The company believes these adjusted financial measures are a useful adjunct to earnings calculated in accordance with GAAP because management uses adjusted net income available to common stockholders to evaluate the company's operational trends and performance relative to other companies. Generally, items excluded, are one-time items or items whose timing or amount cannot be reasonably estimated. Accordingly, any guidance provided by the company generally excludes information regarding these types of items.

Orion Group Holdings defines EBITDA as net income before net interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by adjusting EBITDA for certain items that management believes impairs a meaningful comparison of operating results. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for the period by contract revenues for the period. The GAAP financial measure that is most directly comparable to EBITDA and Adjusted EBITDA is net income, while the GAAP financial measure that is most directly comparable to Adjusted EBITDA margin is operating margin, which represents operating income divided by contract revenues. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are used internally to evaluate current operating expense, operating efficiency, and operating profitability on a variable cost basis, by excluding the depreciation and amortization expenses, primarily related to capital expenditures and acquisitions, and net interest and tax expenses. Additionally, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information regarding the Company's ability to meet future debt service and working capital requirements while providing an overall evaluation of the Company's financial condition. In addition, EBITDA is used internally for incentive compensation purposes. The Company includes EBITDA, Adjusted EBITDA and Adjusted EBITDA margin to provide transparency to investors as they are commonly used by investors and others in assessing performance. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have certain limitations as analytical tools and should not be used as a substitute for operating margin, net income, cash flows, or other data prepared in accordance with generally accepted accounting principles in the United States, or as a measure of the Company's profitability or liquidity.

Forward-Looking Statements

The matters discussed in this press release may constitute or include projections or other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the provisions of which the Company is availing itself. Certain forward-looking statements can be identified by the use of forward-looking terminology, such as 'believes', 'expects', 'may', 'will', 'could', 'should', 'seeks', 'approximately', 'intends', 'plans', 'estimates', or 'anticipates', or the negative thereof or other comparable terminology, or by discussions of strategy, plans, objectives, intentions, estimates, forecasts, outlook, assumptions, or goals. In particular, statements regarding future operations or results, including those set forth in this press release (including those under “Update on Scale and Growth Initiative” above), and any other statement, express or implied, concerning future operating results or the future generation of or ability to generate revenues, income, net income, gross profit, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, or cash flow, including to service debt, and including any estimates, forecasts or assumptions regarding future revenues or revenue growth, are forward-looking statements. Forward looking statements also include estimated project start date, anticipated revenues, and contract options which may or may not be awarded in the future. Forward looking statements involve risks, including those associated with the Company's fixed price contracts that impacts profits, unforeseen productivity delays that may alter the final profitability of the contract, cancellation of the contract by the customer for unforeseen reasons, delays or decreases in funding by the customer, levels and predictability of government funding or other governmental budgetary constraints and any potential contract options which may or may not be awarded in the future, and are at the sole discretion of award by the customer. Past performance is not necessarily an indicator of future results. In light of these and other uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as a representation by the Company that the Company's plans, estimates, forecasts, goals, intentions, or objectives will be achieved or realized. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update information contained in this press release whether as a result of new developments or otherwise.

Please refer to the Company's Annual Report on Form 10-K, filed on March 27, 2019, which is available on its website at www.oriongroupholdingsinc.com or at the SEC's website at www.sec.gov, for additional and more detailed discussion of risk factors that could cause actual results to differ materially from our current expectations, estimates or forecasts.

Orion Group Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Contract revenues

 

 

199,507

 

 

125,073

 

 

508,597

 

 

421,682

Costs of contract revenues

 

 

178,614

 

 

120,247

 

 

463,645

 

 

382,699

Gross profit

 

 

20,893

 

 

4,826

 

 

44,952

 

 

38,983

Selling, general and administrative expenses

 

 

14,590

 

 

12,412

 

 

44,677

 

 

40,163

Amortization of intangible assets

 

 

662

 

 

847

 

 

1,980

 

 

2,541

Gain from sale of assets, net

 

 

(451)

 

 

(1,028)

 

 

(1,197)

 

 

(2,527)

Other gain from continuing operations

 

 

 

 

 

 

 

 

(5,448)

Operating income (loss)

 

 

6,092

 

 

(7,405)

 

 

(508)

 

 

4,254

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

17

 

 

1,143

 

 

574

 

 

1,617

Interest income

 

 

75

 

 

52

 

 

317

 

 

100

Interest expense

 

 

(1,678)

 

 

(3,217)

 

 

(4,981)

 

 

(5,899)

Other expense, net

 

 

(1,586)

 

 

(2,022)

 

 

(4,090)

 

 

(4,182)

Income (loss) before income taxes

 

 

4,506

 

 

(9,427)

 

 

(4,598)

 

 

72

Income tax expense (benefit)

 

 

467

 

 

(3,071)

 

 

920

 

 

78

Net income (loss)

 

$

4,039

 

$

(6,356)

 

$

(5,518)

 

$

(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share

 

$

0.14

 

$

(0.22)

 

$

(0.19)

 

$

Diluted income (loss) per share

 

$

0.14

 

$

(0.22)

 

$

(0.19)

 

$

Shares used to compute income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

29,544,288

 

 

28,490,530

 

 

29,240,979

 

 

28,421,850

Diluted

 

 

29,547,185

 

 

28,490,530

 

 

29,240,979

 

 

28,421,850

 

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

 

 

 

Three months ended September 30,

 

 

 

2019

 

2018

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

 

 

(dollar amounts in thousands)

 

Contract revenues

 

 

 

 

 

 

 

 

 

 

 

Marine segment

 

 

 

 

 

 

 

 

 

 

 

Public sector

 

$

73,921

 

68.8

%

$

39,043

 

61.5

%

Private sector

 

 

33,483

 

31.2

%

 

24,436

 

38.5

%

Marine segment total

 

$

107,404

 

100.0

%

$

63,479

 

100.0

%

Concrete segment

 

 

 

 

 

 

 

 

 

 

 

Public sector

 

$

14,169

 

15.4

%

$

12,249

 

19.9

%

Private sector

 

 

77,934

 

84.6

%

 

49,345

 

80.1

%

Concrete segment total

 

$

92,103

 

100.0

%

$

61,594

 

100.0

%

Total

 

$

199,507

 

 

 

$

125,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

Marine segment

 

$

4,863

 

4.5

%

$

(5,559)

 

(8.8)

%

Concrete segment

 

 

1,229

 

1.3

%

 

(1,846)

 

(3.0)

%

Total

 

$

6,092

 

 

 

$

(7,405)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

2019

 

2018

 

 

 

Amount

 

Percent

 

Amount

 

Percent

 

 

 

(dollar amounts in thousands)

 

Contract revenues

 

 

 

 

 

 

 

 

 

 

 

Marine segment

 

 

 

 

 

 

 

 

 

 

 

Public sector

 

$

180,487

 

70.0

%

$

98,722

 

47.7

%

Private sector

 

 

77,427

 

30.0

%

 

108,245

 

52.3

%

Marine segment total

 

$

257,914

 

100.0

%

$

206,967

 

100.0

%

Concrete segment

 

 

 

 

 

 

 

 

 

 

 

Public sector

 

$

40,551

 

16.2

%

$

43,693

 

20.3

%

Private sector

 

 

210,132

 

83.8

%

 

171,022

 

79.7

%

Concrete segment total

 

$

250,683

 

100.0

%

$

214,715

 

100.0

%

Total

 

$

508,597

 

 

 

$

421,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

 

 

 

 

 

 

 

 

 

 

Marine segment

 

$

(1,584)

 

(0.6)

%

$

4,348

 

2.1

%

Concrete segment

 

 

1,076

 

0.4

%

 

(94)

 

%

Total

 

$

(508)

 

 

 

$

4,254

 

 

 

 

Orion Group Holdings, Inc. and Subsidiaries

Reconciliation of Adjusted Net Income (Loss)

(In thousands except per share information)

(Unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Net income (loss)

 

$

4,039

 

$

(6,356)

 

$

(5,518)

 

$

(6)

One-time charges and the tax effects:

 

 

 

 

 

 

 

 

 

 

 

 

ISG initiative

 

 

1,058

 

 

 

 

3,862

 

 

Severance

 

 

43

 

 

 

 

483

 

 

Unamortized debt issuance costs on debt extinguishment

 

 

 

 

2,164

 

 

399

 

 

2,164

Legal settlement

 

 

 

 

 

 

 

 

(5,448)

Tax rate of 23% applied to one-time charges (1)

 

 

(253)

 

 

(498)

 

 

(1,091)

 

 

755

Total one-time charges and the tax effects

 

 

848

 

 

1,666

 

 

3,653

 

 

(2,529)

Federal and state tax valuation allowances

 

 

(595)

 

 

 

 

451

 

 

Adjusted net income (loss)

 

$

4,292

 

$

(4,690)

 

$

(1,414)

 

$

(2,535)

Adjusted EPS

 

$

0.15

 

$

(0.16)

 

$

(0.05)

 

$

(0.09)

(1) Items are taxed discretely using the Company's blended tax rate.

Orion Group Holdings, Inc. and Subsidiaries

Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations

(In Thousands, Except Margin Data)

(Unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Net income (loss)

 

$

4,039

 

$

(6,356)

 

$

(5,518)

 

$

(6)

 

Income tax expense (benefit)

 

 

467

 

 

(3,071)

 

 

920

 

 

78

 

Interest expense, net

 

 

1,603

 

 

3,165

 

 

4,664

 

 

5,799

 

Depreciation and amortization

 

 

7,080

 

 

6,922

 

 

21,342

 

 

21,134

 

EBITDA (1)

 

 

13,189

 

 

660

 

 

21,408

 

 

27,005

 

ISG initiative

 

 

1,058

 

 

 

 

3,862

 

 

 

Severance

 

 

43

 

 

 

 

483

 

 

 

Legal settlement

 

 

 

 

 

 

 

 

(5,448)

 

Adjusted EBITDA(2)

 

$

14,290

 

$

660

 

$

25,753

 

$

21,557

 

Operating income (loss) margin (3)

 

 

3.2

%

 

(5.0)

%

 

%

 

1.4

%

Impact of depreciation and amortization

 

 

3.5

%

 

5.5

%

 

4.2

%

 

5.0

%

Impact of ISG initiative

 

 

0.5

%

 

%

 

0.8

%

 

%

Impact of severance

 

 

%

 

%

 

0.1

%

 

%

Impact of legal settlement

 

 

%

 

%

 

%

 

(1.3)

%

Adjusted EBITDA margin(2)

 

 

7.2

%

 

0.5

%

 

5.1

%

 

5.1

%

(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.

(2) Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for the ISG initiative, severance and legal settlement. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(3) Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.

Orion Group Holdings, Inc. and Subsidiaries

Adjusted EBITDA and Adjusted EBITDA Margin Reconciliations by Segment

(In Thousands, Except Margin Data)

(Unaudited)

 

 

 

Marine

 

Concrete

 

 

 

Three months ended

 

Three months ended

 

 

 

September 30,

 

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Operating income (loss)

 

 

4,863

 

 

(5,559)

 

 

1,229

 

 

(1,846)

 

Other income (expense), net (1)

 

 

2,296

 

 

3,323

 

 

(2,280)

 

 

(2,180)

 

Depreciation and amortization

 

 

4,960

 

 

4,746

 

 

2,120

 

 

2,176

 

EBITDA (2)

 

 

12,119

 

 

2,510

 

 

1,069

 

 

(1,850)

 

ISG initiative

 

 

570

 

 

 

 

488

 

 

 

Severance

 

 

43

 

 

 

 

 

 

 

Adjusted EBITDA(3)

 

$

12,732

 

$

2,510

 

$

1,557

 

$

(1,850)

 

Operating income (loss) margin (4)

 

 

6.8

%

 

(3.5)

%

 

(1.1)

%

 

(6.5)

%

Impact of depreciation and amortization

 

 

4.6

%

 

7.5

%

 

2.3

%

 

3.5

%

Impact of ISG initiative

 

 

0.5

%

 

%

 

0.5

%

 

%

Impact of severance

 

 

%

 

%

 

%

 

%

Adjusted EBITDA margin (3)

 

 

11.9

%

 

4.0

%

 

1.7

%

 

(3.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marine

 

Concrete

 

 

 

Nine months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Operating (loss) income

 

 

(1,584)

 

 

4,348

 

 

1,076

 

 

(94)

 

Other income (expense), net (1)

 

 

8,762

 

 

8,903

 

 

(8,188)

 

 

(7,286)

 

Depreciation and amortization

 

 

14,975

 

 

14,772

 

 

6,367

 

 

6,362

 

EBITDA (2)

 

 

22,153

 

 

28,023

 

 

(745)

 

 

(1,018)

 

ISG initiative

 

 

1,710

 

 

 

 

2,152

 

 

 

Severance

 

 

483

 

 

 

 

 

 

 

Legal settlement

 

 

 

 

(5,448)

 

 

 

 

 

Adjusted EBITDA(3)

 

$

24,346

 

$

22,575

 

$

1,407

 

$

(1,018)

 

Operating(loss) income margin (4)

 

 

2.7

%

 

6.4

%

 

(2.8)

%

 

(3.4)

%

Impact of depreciation and amortization

 

 

5.8

%

 

7.1

%

 

2.5

%

 

3.0

%

Impact of ISG initiative

 

 

0.7

%

 

%

 

0.9

%

 

%

Impact of severance

 

 

0.2

%

 

%

 

%

 

%

Impact of legal settlement

 

 

%

 

(2.6)

%

 

%

 

%

Adjusted EBITDA margin (3)

 

 

9.4

%

 

10.9

%

 

0.6

%

 

(0.4)

%

(1) Primarily consists of corporate overhead costs recorded to the marine segment as part of operating income(loss) and allocated from the marine segment to the concrete segment in other income (expense) line. Allocated amounts net to zero on a consolidated basis.

(2) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization.

(3) Adjusted EBITDA is a non-GAAP measure that represents EBITDA adjusted for the ISG initiative, severance and legal settlement. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

(4) Operating income margin is calculated by dividing operating income plus other income (expense), net by contract revenues.

Orion Group Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

 

 

 

Nine months ended September 30,

 

 

2019

 

2018

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(5,518)

 

$

(6)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

19,609

 

 

21,134

Amortization of ROU operating leases

 

 

4,145

 

 

Amortization of ROU finance leases

 

 

1,733

 

 

Unamortized debt issuance costs upon debt modification

 

 

399

 

 

2,164

Amortization of deferred debt issuance costs

 

 

312

 

 

676

Deferred income taxes

 

 

44

 

 

(561)

Stock-based compensation

 

 

2,292

 

 

1,710

Gain on sale of property and equipment

 

 

(1,197)

 

 

(2,527)

Other gain from continuing operations

 

 

 

 

(5,448)

Change in operating assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

Accounts receivable

 

 

(35,242)

 

 

11,036

Notes receivable

 

 

415

 

 

Income tax receivable

 

 

(330)

 

 

(56)

Inventory

 

 

310

 

 

763

Prepaid expenses and other

 

 

1,674

 

 

3,410

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

(29,063)

 

 

(11,405)

Accounts payable

 

 

13,702

 

 

(14,266)

Accrued liabilities

 

 

1,245

 

 

(1,925)

Operating lease liabilities

 

 

(4,434)

 

 

Income tax payable

 

 

755

 

 

(256)

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

27,252

 

 

(9,395)

Other

 

 

 

 

(287)

Net cash used in operating activities

 

 

(1,897)

 

 

(5,239)

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from sale of property and equipment

 

 

1,363

 

 

2,320

Purchase of property and equipment

 

 

(13,035)

 

 

(15,043)

Contributions to CSV life insurance

 

 

(550)

 

 

(424)

Proceeds from return of investment

 

 

 

 

94

Insurance claim proceeds related to property and equipment

 

 

2,574

 

 

1,346

Net cash used in investing activities

 

 

(9,648)

 

 

(11,707)

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings from Credit Facility

 

 

49,000

 

 

29,861

Payments made on borrowings from Credit Facility

 

 

(59,460)

 

 

(21,361)

Proceeds from sale-leaseback arrangement

 

 

18,210

 

 

Loan costs from Credit Facility

 

 

(1,430)

 

 

(861)

Payments of finance lease liabilities

 

 

(2,144)

 

 

Exercise of stock options

 

 

35

 

 

2,815

Net cash provided by financing activities

 

 

4,211

 

 

10,454

Net change in cash and cash equivalents

 

 

(7,334)

 

 

(6,492)

Cash and cash equivalents at beginning of period

 

 

8,684

 

 

9,086

Cash and cash equivalents at end of period

 

$

1,350

 

$

2,594

 

Orion Group Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows Summary

(In Thousands)

(Unaudited)

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Cash flows used in operating activities

 

$

(1,375)

 

$

(9,748)

 

$

(1,897)

 

$

(5,239)

Cash flows used in investing activities

 

$

(4,507)

 

$

(1,844)

 

$

(9,648)

 

$

(11,707)

Cash flows provided by financing activities

 

$

4,473

 

$

7,905

 

$

4,211

 

$

10,454

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures (included in investing activities above)

 

$

(4,917)

 

$

(3,132)

 

$

(13,035)

 

$

(15,043)

 

Orion Group Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Information)

 

 

 

September 30,

 

December 31,

 

 

2019

 

2018

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,350

 

$

8,684

Accounts receivable:

 

 

 

 

 

 

Trade, net of allowance of $4,280 and $4,280, respectively

 

 

97,857

 

 

77,641

Retainage

 

 

44,236

 

 

30,734

Other current

 

 

3,207

 

 

4,257

Income taxes receivable

 

 

797

 

 

467

Inventory

 

 

1,124

 

 

1,056

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

38,280

 

 

9,217

Prepaid expenses and other

 

 

3,337

 

 

5,000

Total current assets

 

 

190,188

 

 

137,056

Property and equipment, net of depreciation

 

 

134,056

 

 

148,003

Operating lease right-of-use assets, net of amortization

 

 

19,602

 

 

Financing lease right-of-use assets, net of amortization

 

 

7,683

 

 

Inventory, non-current

 

 

7,220

 

 

7,598

Intangible assets, net of amortization

 

 

12,807

 

 

14,787

Other non-current

 

 

5,551

 

 

5,426

Total assets

 

$

377,107

 

$

312,870

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current debt, net of issuance costs

 

$

3,298

 

$

2,946

Accounts payable:

 

 

 

 

 

 

Trade

 

 

55,271

 

 

42,023

Retainage

 

 

631

 

 

736

Accrued liabilities

 

 

17,226

 

 

18,840

Income taxes payable

 

 

755

 

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

49,012

 

 

21,761

Current portion of operating lease liabilities

 

 

5,408

 

 

Current portion of financing lease liabilities

 

 

2,909

 

 

Total current liabilities

 

 

134,510

 

 

86,306

Long-term debt, net of debt issuance costs

 

 

65,148

 

 

76,119

Operating lease liabilities

 

 

14,817

 

 

Financing lease liabilities

 

 

3,609

 

 

Other long-term liabilities

 

 

20,484

 

 

8,759

Deferred income taxes

 

 

93

 

 

49

Interest rate swap liability

 

 

1,270

 

 

52

Total liabilities

 

 

239,931

 

 

171,285

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued

 

 

 

 

Common stock -- $0.01 par value, 50,000,000 authorized, 30,261,584 and 29,611,989 issued; 29,550,353 and 28,900,758 outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

303

 

 

296

Treasury stock, 711,231 and 711,231 shares, at cost December 31, 2018 and December 31, 2017 respectively

 

 

(6,540)

 

 

(6,540)

Other comprehensive loss

 

 

(1,270)

 

 

(52)

Additional paid-in capital

 

 

182,062

 

 

179,742

Retained loss

 

 

(37,379)

 

 

(31,861)

Total stockholders’ equity

 

 

137,176

 

 

141,585

Total liabilities and stockholders’ equity

 

$

377,107

 

$

312,870

 

Contacts

Orion Group Holdings Inc.
Robert Tabb, Vice President & CFO
(713) 852-6500
www.oriongroupholdingsinc.com

-OR-

INVESTOR RELATIONS COUNSEL:
The Equity Group Inc.
Fred Buonocore, CFA
(212) 836-9607

Contacts

Orion Group Holdings Inc.
Robert Tabb, Vice President & CFO
(713) 852-6500
www.oriongroupholdingsinc.com

-OR-

INVESTOR RELATIONS COUNSEL:
The Equity Group Inc.
Fred Buonocore, CFA
(212) 836-9607