Orion Sees ‘Tremendous Amount Of Pent-Up Demand’ In Next Two Years
Orion Group Holdings reported a narrow net loss for the third quarter, and a growing backlog that officials say will lead to continued profitability in the coming years.
In its October 25 earnings announcement, Orion reported a net loss of $0.7 million or $0.02 per diluted share, compared to net income of $0.2 million or $0.01 per diluted share in the third quarter of 2022.
The third quarter 2023 net loss, however, included $1.5 million ($0.04 diluted income per share) of non-recurring items. Without those items, the company said third quarter 2023 adjusted net income was $0.8 million, or $0.02 diluted income per share.
Contract revenues of $168.5 million were down 7.7 percent from $182.6 million in the third quarter last year; the company said that was primarily due to its decision to exit the unprofitable concrete business in central Texas.
“As CFO Scott Thanisch and I marked our first anniversary with Orion, we are incredibly proud of how our people have worked collaboratively to embrace change and deliver positive results,” said Travis Boone, CEO of Orion Group Holdings. “Backlog is a key metric and indicator of the health of the business. As of September 30, backlog stood at $878 million compared with backlog of $549 million in the prior year period. We have won several prestigious projects, including the $435 million contract to build a drydock at Pearl Harbor for the U.S. Navy and a contract valued over $100 million with the Grand Bahama Shipyard Ltd. for the turnkey design-build of the Grand Bahama Shipyard Drydock Replacement Project.”
“Last quarter we told you that we expected continued improvement in profitability through the back half of the year, and we are delivering on that promise,” Boone continued. “Third-quarter adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] was $9.4 million versus $3.7 million in the second quarter of 2023. While our third quarter revenue of $169 million is down year-over-year due to our exit from the central Texas concrete business, the higher quality of our revenue is delivering improved profitability.”“Since March, our concrete business has been profitable and improving on an adjusted EBITDA basis. Adjusted EBITDA margin increased from negative 1.7 percent to positive 2.4 percent year-over-year. In addition, the concrete business was operating-income-positive on an unconsolidated basis in the third quarter. In marine, we have a lot of momentum with projects won and potential future projects. There’s a tremendous amount of pent-up demand that we think will be a significant tailwind for us well into 2024 and 2025,” Boone said.
“As we look ahead to the fourth quarter and beyond, we are optimistic. Our investments in business development are paying off, and we have sufficient capacity and a more disciplined approach to optimize our people and assets. We will see continued improvement in our margins and benefit from operating leverage as we grow the top line. We are excited to build on our success this year and continue growing profitably in 2024.”
Backlog
Orion’s backlog of $877.5 million on September 30 was up from $818.7 million on June 30 and $548.6 million as of September 30, 2022. Backlog for the marine segment was $699.9 million, compared to $614.9 million on June 30 and $280.2 million on September 30, 2022. Backlog for the concrete segment was $177.6 million, compared to $203.8 million on June 30 and $268.4 million on September 30, 2022.
In addition, Orion said it has been awarded $43 million in new project work since September 30 that is not included in backlog at the end of the quarter.
Recent Wins
On September 22, the company entered into a design-build contract valued at more than $100 million for its marine and engineering business. The contract was awarded by Grand Bahama Shipyard Ltd. for the turnkey design-build of the Grand Bahama Shipyard Drydock Replacement Project, situated in Grand Bahama, Bahamas. In addition, the company was recently awarded other new contracts in both its concrete and marine segments for a combined total of approximately $121 million.
Safety Award
Orion Group Holdings Inc. was presented with the Company Award for Leadership in Safety from the Council of Dredging and Marine Construction Safety (CDMCS). The award, presented at the 2023 CDMCS Annual Awards Dinner in Washington, D.C., on September 28, recognizes outstanding safety leadership in the dredging and marine construction industry.
Orion Group Holdings was recognized for advancing a safety-first culture through safety-conscious policies and procedures in the workplace, mentoring others in safety, training on identifying and properly controlling hazards, and placing high personal value on collaborative and proactive work toward improving safety.
