Orion Group Reports Higher Third-Quarter Earnings, Robust Backlog
Orion Group Holdings, Houston, Texas, reported net income of $4 million, or 14 cents per share, for the third quarter. For the same period in 2018, the company had reported a net loss of $6.4 million, or -22 cents per share.
“For the third quarter, we posted our highest quarterly revenues in the company’s history and delivered positive operating profit in both segments,” said Mark Stauffer, Orion Group Holdings’ president and CEO. “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.”
The company reported its backlog at the end of the third quarter was $630.5 million, up 48 percent from the reported backlog of $426 million at the same point in 2018.
“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,” Stauffer said. “Backlog in the concrete segment was at a record high at the end of the third quarter.”
The third quarter 2019 ending backlog was comprised of $404.3 million for the marine segment, and $226.2 million for the concrete segment.
“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,” Stauffer said.
“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,” he said.
Currently, Orion reports it 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 since September 30. Of that $42.5 million, about $31.6 million is in the marine segment and about $10.9 million is in 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,” said 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 percent. 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 percent 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 percent and a book-to-bill ratio of 1.46 times.”
ISG Initiative
“During the third quarter, we made significant strides in the implementation of our ISG initiative,” Stauffer said. “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 percent 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.”
