Orion Group Awarded $448 Million Navy Contract For Drydock Construction
A $448 million contract with the United States Navy took center stage in the report of Orion Group Holdings Inc. The company announced the contract in March, the same day it reported its results for the fourth quarter and full year ending December 31, 2022, along with details of its “three-point strategic plan” for increasing profitability.
The Navy awarded a $2.8 billion contract to the Dragados/Hawaiian Dredging/Orion Joint Venture to complete construction of a drydock at Pearl Harbor Naval Shipyard on the island of Oahu, Hawaii. Orion’s portion of work totals $448 million, and the project is expected to be completed by September 2027.
The contract is part of the United States Navy’s Shipyard Infrastructure Optimization Program, an investment in increasing capacity and modernizing shipyards to accommodate larger surface ships and Virginia-class submarines.
Fourth Quarter Results
Among Orion Group’s fourth quarter highlights:
• Contract revenues increased 20.9 percent to $196.2 million from $162.3 million in the fourth quarter last year.
• Operating loss was $3.5 million, which the company called a “substantial improvement” from the $8.2 million loss in the prior year period.
• Net loss was $4.9 million, or $0.15 per diluted share, compared to a net loss of $8.8 million or $0.29 per diluted share in the fourth quarter of 2021.
• Adjusted EBITDA was $3.2 million, a “significant improvement from negative $0.8 million in the fourth quarter last year.”
“Our solid fourth quarter results reflected disciplined bidding practices and improving project management,” said Travis Boone, CEO of Orion Group Holdings. “Contract revenues increased 21 percent, and we reduced our net loss by 44 percent. We believe these results just scratch the surface of Orion’s potential, and we are confident our business will continue to improve in 2023.”Year End Results
Among the highlights for the year ending December 31:
• Contract revenues increased 24 percent to $748.3 million from $601.4 million in the last year.
• Operating loss was $8.0 million, an improvement from $9.3 million in 2021.
• Net loss was $12.6 million or $0.40 per diluted share, compared to a net loss of $14.6 million or $0.47 per diluted share in 2021.
• Adjusted EBITDA was $22.9 million, a 32 percent increase from $17.3 million in 2021.
Strategic Plan
Boone added, “Following a comprehensive review of our operations, assets and talent, we developed a three-point strategic plan, which we believe will unlock Orion’s full potential for long-term, sustainable growth to the benefit of all of our stakeholders.”
The plan involves improving its concrete business, including transferring a senior leader from the marine sector; investing in additional project managers; and refocusing on its Dallas and Houston concrete markets.
In its marine sector, the plan includes targeting port expansions and maintenance resulting from the Panama Canal expansion and pursuing infrastructure opportunities in the Texas market. Orion said it also intends to support its dredging fleet to better service its growth, including investing in more efficient, lower-carbon engines.
As of December 31, 2022, current assets were $220.3 million, including cash and cash equivalents of $3.8 million. Total debt outstanding was $35.7 million.
