Orion Group Holdings, Inc. Reports Third Quarter 2021 Results; Significant Increase in Backlog

Orion Group Holdings, Inc. (NYSE: ORN) (the “Company”), a leading specialty construction company, today reported a net loss of $10.2 million ($0.33 diluted loss per share) for the third quarter ended September 30, 2021.

Third Quarter 2021 Highlights

  • Operating loss was $8.7 million for the third quarter of 2021 compared to operating income of $13.1 million for the third quarter of 2020.
  • Net loss was $10.2 million ($0.33 diluted loss per share) for the third quarter of 2021 compared to net income of $11.8 million ($0.39 diluted earnings per share) for the third quarter of 2020.
  • The third quarter 2021 net loss included $1.1 million ($0.04 loss per diluted share) of non-recurring items and $0.7 million ($0.02 loss per diluted share) of tax expense associated with the movement of certain valuation allowances. Third quarter 2021 adjusted net loss was $8.4 million ($0.27 diluted loss 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 items, was $(0.5) million in the third quarter of 2021, which compares to adjusted EBITDA of $17.0 million for the third quarter of 2020. (Please see page 10 of this release for an explanation of EBITDA, adjusted EBITDA and a reconciliation to the nearest GAAP measure).
  • Backlog at the end of the third quarter was $572.8 million on a third quarter book-to-bill of 2.28x.

“Our third quarter results were impacted by lower than anticipated revenue due to the phasing of project work, project win rates and timing, tropical weather, and COVID-19 related items,” stated Mark Stauffer, Orion’s Chief Executive Officer. “This also resulted in an increase in unabsorbed labor and equipment, which further pressured margins.”

"When we reported our second quarter results three months ago, we noted our optimism regarding the activity level in our end markets and amount of active project bids. We also noted our intention to remain disciplined in our approach to bidding. That discipline has paid off as we closed the third quarter with several project award announcements, resulting in period-ending backlog of $572.8 million, up 45% from the end of the second quarter. Our bidding activity remains healthy, with approximately $2 billion currently outstanding. We continue to see demand for our services in for both of our segments, and we will remain disciplined in our approach to bidding on these opportunities.”

“Despite weather and COVID-19-related impacts, our concrete segment was able to grow revenues 11.3% compared with the prior year period as production volumes increased. Larger, light-commercial jobs were the primary component of our work in the quarter as volumes improved 19% from the prior year period. Conversely, our marine segment experienced a 51.5% revenue decline due primarily to project timing and scheduling as a number of larger projects were underway in the prior-year quarter while the third quarter 2021 reflected a gap in prior projects completing and new projects starting up. Looking ahead for the remainder of the year and heading into 2022, we expect to see improved absorption of labor and equipment as our current scheduling ramps up on new projects.”

“We are continuing to track progress on the Federal infrastructure bill. While passage of a large bill would provide a significant catalyst for our end markets and drive absorption of industry capacity, we also believe the clarity resulting from a failed bill would also be a modest positive as many state and local entities are currently in a “wait and see” mode regarding possible funding. As they gain certainty regarding their funding outlook, we expect project award activity to gain momentum.”

Consolidated Results for Third Quarter 2021 Compared to Third Quarter 2020

  • Contract revenues were $139.9 million, down 26.1% as compared to $189.4 million. The decrease was primarily driven by the timing and mix of several large marine projects that had driven activity in the prior year, which were not replicated or replaced in the current year quarter. This decrease was partially offset by increased production volumes in our concrete segment due to an increase in activity during 2021, including on several larger jobs in the current year period as compared to the prior year period.
  • Gross profit was $6.6 million, as compared to $22.5 million. Gross profit margin was 4.7%, as compared to 11.9%. The decrease in gross profit dollars and percentage was primarily driven by the decreased activity and volumes in the marine segment which negatively impacted revenue and contributed to an under recovery of indirect costs primarily related to decreased labor and equipment utilization. Decreased project performance in the concrete segment was driven by inefficiencies in executing work from COVID-19 and weather-related impacts, along with cost overruns in the current period on the completion of one project.
  • Selling, General, and Administrative expenses were $15.7 million, as compared to $15.3 million. As a percentage of total contract revenues, SG&A expenses increased from 8.1% to 11.2%, primarily due to lower revenue in the current period. The increase in SG&A dollars was driven primarily by an increase in ERP implementation expense, partially offset by a decrease in bonus expense as compared to the prior year period.
  • Operating loss was $8.7 million as compared to operating income of $13.1 million. Excluding the net gain on insurance recoveries and the recovery of a disputed receivable operating income was $9.3 million in the prior year period.
  • EBITDA was $(2.5) million, representing a (1.8)% EBITDA margin, as compared to EBITDA of $20.0 million, or a 10.5% EBITDA margin. When adjusted for non-recurring items, adjusted EBITDA for the third quarter of 2021 was $(0.5) million, representing a (0.3)% 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, 2021, was $572.8 million, which compares with backlog under contract as of September 30, 2020, of $428.8 million. The third quarter 2021 ending backlog was comprised of $379.9 million for the marine segment, and $192.9 million for the concrete segment. At the end of the third quarter 2021, the Company had approximately $2.0 billion worth of bids outstanding, including approximately $103 million on which it is the apparent low bidder or has been awarded contracts subsequent to the end of the third quarter of 2021, of which approximately $47 million pertains to the marine segment and approximately $56 million to the concrete segment.

“During the third quarter, we bid on approximately $1.3 billion of work and were successful on approximately $318 million of these bids,” continued Mr. Stauffer. “This resulted in a 2.28 times book-to-bill ratio and a win rate of 24.3%. In the marine segment, we bid on approximately $495 million during the third quarter 2021 and were successful on approximately $264 million, representing a win rate of 53.4% and a book-to-bill ratio of 4.83 times. In the concrete segment we bid on approximately $815 million of work and were awarded approximately $54 million, representing a win rate of 6.6% and a book-to-bill ratio of 0.63 times."

Backlog consists of projects under contract that have either (a) not been started, or (b) are in progress but are not yet complete. The Company cannot guarantee that the revenue implied by 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.

Conference Call Details

Orion Group Holdings will host a conference call to discuss results for the third quarter 2021 at 10:00 a.m. Eastern Time/9:00 a.m. Central Time on Thursday, October 28, 2021. 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 (201) 493-6739 and ask for the Orion Group Holdings Conference Call.

About Orion Group Holdings

Orion Group Holdings, Inc., a leading specialty construction company serving the infrastructure, industrial and building sectors, provides services both on and off the water in the continental United States, Alaska, Canada and the Caribbean Basin through its marine segment and its concrete segment. The Company’s marine segment provides construction and dredging services relating to marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging of waterways, channels and ports, environmental dredging, design, and specialty services. Its concrete 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 GAAP financial information. Investors are urged to consider these non-GAAP measures in addition to and not in substitute for measures prepared in accordance with GAAP.

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.

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, 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, the effects of the ongoing COVID-19 pandemic, 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 2, 2021, 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

Condensed Statements of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Contract revenues

 

 

139,907

 

 

 

189,433

 

 

 

439,091

 

 

 

539,766

 

Costs of contract revenues

 

 

133,329

 

 

 

166,932

 

 

 

404,757

 

 

 

476,763

 

Gross profit

 

 

6,578

 

 

 

22,501

 

 

 

34,334

 

 

 

63,003

 

Selling, general and administrative expenses

 

 

15,733

 

 

 

15,270

 

 

 

44,078

 

 

 

47,651

 

Amortization of intangible assets

 

 

380

 

 

 

519

 

 

 

1,141

 

 

 

1,552

 

Gain on disposal of assets, net

 

 

(792

)

 

 

(6,373

)

 

 

(9,763

)

 

 

(7,734

)

Operating (loss) income

 

 

(8,743

)

 

 

13,085

 

 

 

(1,122

)

 

 

21,534

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

50

 

 

 

115

 

 

 

159

 

 

 

251

 

Interest income

 

 

22

 

 

 

57

 

 

 

73

 

 

 

151

 

Interest expense

 

 

(523

)

 

 

(1,151

)

 

 

(4,506

)

 

 

(3,722

)

Other expense, net

 

 

(451

)

 

 

(979

)

 

 

(4,274

)

 

 

(3,320

)

Loss (income) before income taxes

 

 

(9,194

)

 

 

12,106

 

 

 

(5,396

)

 

 

18,214

 

Income tax expense

 

 

1,001

 

 

 

303

 

 

 

341

 

 

 

1,660

 

Net loss (income)

 

$

(10,195

)

 

$

11,803

 

 

$

(5,737

)

 

$

16,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share

 

$

(0.33

)

 

$

0.39

 

 

$

(0.19

)

 

$

0.55

 

Diluted (loss) earnings per share

 

$

(0.33

)

 

$

0.39

 

 

$

(0.19

)

 

$

0.55

 

Shares used to compute (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,979,207

 

 

 

30,372,310

 

 

 

30,707,426

 

 

 

30,020,258

 

Diluted

 

 

30,979,207

 

 

 

30,372,310

 

 

 

30,707,426

 

 

 

30,020,258

 

Orion Group Holdings, Inc. and Subsidiaries

Selected Results of Operations

(In Thousands, Except Share and Per Share Information)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30,

 

 

2021

2020

 

 

Amount

 

Percent

Amount

 

Percent

 

 

(dollar amounts in thousands)

Contract revenues

 

 

 

 

 

 

 

 

 

Marine segment

 

 

 

 

 

 

 

 

 

Public sector

 

$

35,580

 

 

65.0

%

$

68,353

 

 

60.6

%

Private sector

 

 

19,159

 

 

35.0

%

 

44,528

 

 

39.4

%

Marine segment total

 

$

54,739

 

 

100.0

%

$

112,881

 

 

100.0

%

Concrete segment

 

 

 

 

 

 

 

 

 

Public sector

 

$

2,301

 

 

2.7

%

$

8,784

 

 

11.5

%

Private sector

 

 

82,867

 

 

97.3

%

 

67,768

 

 

88.5

%

Concrete segment total

 

$

85,168

 

 

100.0

%

$

76,552

 

 

100.0

%

Total

 

$

139,907

 

 

 

$

189,433

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

 

 

 

 

 

 

 

 

Marine segment

 

$

(4,965

)

 

(9.1

)%

$

12,025

 

 

10.7

%

Concrete segment

 

 

(3,778

)

 

(4.4

)%

 

1,060

 

 

1.4

%

Total

 

$

(8,743

)

 

 

$

13,085

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

2021

2020

 

 

Amount

 

Percent

Amount

 

Percent

 

 

(dollar amounts in thousands)

Contract revenues

 

 

 

 

 

 

 

 

 

Marine segment

 

 

 

 

 

 

 

 

 

Public sector

 

$

121,916

 

 

63.9

%

$

181,684

 

 

62.5

%

Private sector

 

 

68,911

 

 

36.1

%

 

108,865

 

 

37.5

%

Marine segment total

 

$

190,827

 

 

100.0

%

$

290,549

 

 

100.0

%

Concrete segment

 

 

 

 

 

 

 

 

 

Public sector

 

$

13,580

 

 

5.5

%

$

36,858

 

 

14.8

%

Private sector

 

 

234,684

 

 

94.5

%

 

212,359

 

 

85.2

%

Concrete segment total

 

$

248,264

 

 

100.0

%

$

249,217

 

 

100.0

%

Total

 

$

439,091

 

 

 

$

539,766

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

Marine segment

 

$

6,489

 

 

3.4

%

$

21,584

 

 

7.4

%

Concrete segment

 

 

(7,611

)

 

(3.1

)%

 

(50

)

 

(0.0

)%

Total

 

$

(1,122

)

 

 

$

21,534

 

 

 

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,

 

 

2021

 

2020

 

2021

 

2020

Net (loss) income

 

$

(10,195

)

 

$

11,803

 

 

$

(5,737

)

 

$

16,554

 

One-time charges and the tax effects:

 

 

 

 

 

 

 

 

 

 

 

 

ERP implementation

 

 

1,383

 

 

 

486

 

 

 

2,822

 

 

 

796

 

ISG initiative

 

 

 

 

 

 

 

 

 

 

 

369

 

Severance

 

 

 

 

 

48

 

 

 

 

 

 

120

 

Costs related to debt extinguishment

 

 

 

 

 

 

 

 

2,062

 

 

 

 

Insurance recovery on disposal, net

 

 

 

 

 

(2,859

)

 

 

 

 

 

(2,859

)

Recovery on disputed receivable

 

 

 

 

 

(898

)

 

 

 

 

 

(898

)

Net loss (gain) on Tampa property sale

 

 

98

 

 

 

 

 

 

(6,669

)

 

 

 

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

 

 

(341

)

 

 

741

 

 

 

411

 

 

 

569

 

Total one-time charges and the tax effects

 

 

1,140

 

 

 

(2,482

)

 

 

(1,374

)

 

 

(1,903

)

Federal and state tax valuation allowances

 

 

689

 

 

 

(2,231

)

 

 

1,659

 

 

 

(3,862

)

Adjusted net (loss) income

 

$

(8,366

)

 

$

7,090

 

 

$

(5,452

)

 

$

10,789

 

Adjusted EPS

 

$

(0.27

)

 

$

0.23

 

 

$

(0.18

)

 

$

0.36

 


(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,

 

 

2021

2020

 

2021

 

2020

Net (loss) income

 

$

(10,195

)

$

11,803

 

$

(5,737

)

$

16,554

 

Income tax (benefit) expense

 

 

1,001

 

 

303

 

 

341

 

 

1,660

 

Interest expense, net

 

 

501

 

 

1,094

 

 

4,433

 

 

3,571

 

Depreciation and amortization

 

 

6,225

 

 

6,766

 

 

19,140

 

 

20,662

 

EBITDA (1)

 

 

(2,468

)

 

19,966

 

 

18,177

 

 

42,447

 

Stock-based compensation

 

 

526

 

 

258

 

 

2,154

 

 

1,887

 

ERP implementation

 

 

1,383

 

 

486

 

 

2,822

 

 

796

 

ISG initiative

 

 

 

 

 

 

 

 

369

 

Severance

 

 

 

 

48

 

 

 

 

120

 

Insurance recovery on disposal, net

 

 

 

 

(2,859

)

 

 

 

(2,859

)

Recovery on disputed receivable

 

 

 

 

(898

)

 

 

 

(898

)

Net loss (gain) on Tampa property sale

 

 

98

 

 

 

 

(6,669

)

 

 

Adjusted EBITDA(2)

 

$

(461

)

$

17,001

 

$

16,484

 

$

41,862

 

Operating income margin

 

 

(6.2

)%

 

7.0

%

 

(0.4

)%

 

4.2

%

Impact of other income (expense), net

 

 

%

 

%

 

%

 

%

Impact of depreciation and amortization

 

 

4.4

%

 

3.6

%

 

4.6

%

 

3.8

%

Impact of stock-based compensation

 

 

0.4

%

 

0.1

%

 

0.5

%

 

0.3

%

Impact of ERP implementation

 

 

1.0

%

 

0.3

%

 

0.6

%

 

0.1

%

Impact of ISG initiative

 

 

%

 

%

 

%

 

0.1

%

Impact of severance

 

 

%

 

%

 

%

 

%

Impact of insurance recovery on disposal, net

 

 

%

 

(1.5

)%

 

%

 

(0.5

)%

Impact of recovery on disputed receivable

 

 

%

 

(0.5

)%

 

%

 

(0.2

)%

Impact of net loss (gain) on Tampa property sale

 

 

0.1

%

 

%

 

(1.5

)%

 

%

Adjusted EBITDA margin(2)

 

 

(0.3

)%

 

9.0

%

 

3.8

%

 

7.8

%


(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 stock-based compensation, ERP implementation, the ISG initiative, severance, insurance recovery on disposal, net, recovery on a disputed receivable and the net loss (gain) on the Tampa property sale. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA 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,

 

 

2021

 

2020

 

2021

 

2020

Operating (loss) income (1)

 

 

(4,965

)

 

12,025

 

 

(3,778

)

 

1,060

 

Other income (expense), net

 

 

50

 

 

114

 

 

 

 

1

 

Depreciation and amortization

 

 

4,232

 

 

4,543

 

 

1,993

 

 

2,223

 

EBITDA (2)

 

 

(683

)

 

16,682

 

 

(1,785

)

 

3,284

 

Stock-based compensation

 

 

509

 

 

227

 

 

17

 

 

31

 

ERP implementation

 

 

571

 

 

262

 

 

812

 

 

224

 

Severance

 

 

 

 

 

 

 

 

48

 

Insurance recovery on disposal, net

 

 

 

 

(2,859

)

 

 

 

 

Recovery on disputed receivable

 

 

 

 

(898

)

 

 

 

 

Net loss on Tampa property sale

 

 

98

 

 

 

 

 

 

 

Adjusted EBITDA(3)

 

$

495

 

$

13,414

 

$

(956

)

$

3,587

 

Operating income margin

 

 

(9.1

)%

 

10.7

%

 

(4.3

)%

 

1.4

%

Impact of other income (expense), net

 

 

0.2

%

 

0.1

%

 

%

 

%

Impact of depreciation and amortization

 

 

7.7

%

 

4.0

%

 

2.2

%

 

2.9

%

Impact of stock-based compensation

 

 

0.9

%

 

0.2

%

 

%

 

%

Impact of ERP implementation

 

 

1.0

%

 

0.2

%

 

1.0

%

 

0.3

%

Impact of severance

 

 

%

 

%

 

%

 

0.1

%

Impact of insurance recovery on disposal, net

 

 

%

 

(2.5

)%

 

%

 

%

Impact of recovery on disputed receivable

 

 

%

 

(0.8

)%

 

%

 

%

Impact of net loss on Tampa property sale

 

 

0.2

%

 

%

 

%

 

%

Adjusted EBITDA margin (3)

 

 

0.9

%

 

11.9

%

 

(1.1

)%

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Marine

 

Concrete

 

 

Nine months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Operating income (loss) (1)

 

 

6,489

 

 

21,584

 

 

(7,611

)

 

(50

)

Other income (expense), net

 

 

159

 

 

248

 

 

 

 

3

 

Depreciation and amortization

 

 

12,912

 

 

14,063

 

 

6,228

 

 

6,599

 

EBITDA (2)

 

 

19,560

 

 

35,895

 

 

(1,383

)

 

6,552

 

Stock-based compensation

 

 

2,079

 

 

1,767

 

 

75

 

 

120

 

ERP implementation

 

 

1,226

 

 

417

 

 

1,596

 

 

379

 

ISG initiative

 

 

 

 

190

 

 

 

 

179

 

Severance

 

 

 

 

26

 

 

 

 

94

 

Insurance recovery on disposal, net

 

 

 

 

(2,859

)

 

 

 

 

Recovery on disputed receivable

 

 

 

 

(898

)

 

 

 

 

Net gain on Tampa property sale

 

 

(6,669

)

 

 

 

 

 

 

Adjusted EBITDA(3)

 

$

16,196

 

$

34,538

 

$

288

 

$

7,324

 

Operating income margin

 

 

3.4

%

 

7.4

%

 

(3.1

)%

 

(0.0

)%

Impact of other income (expense), net

 

 

0.1

%

 

0.2

%

 

%

 

%

Impact of depreciation and amortization

 

 

6.8

%

 

4.8

%

 

2.5

%

 

2.6

%

Impact of stock-based compensation

 

 

1.1

%

 

0.6

%

 

0.1

%

 

%

Impact of ERP implementation

 

 

0.6

%

 

0.1

%

 

0.6

%

 

0.2

%

Impact of ISG initiative

 

 

%

 

0.1

%

 

%

 

0.1

%

Impact of severance

 

 

%

 

%

 

%

 

%

Impact of insurance recovery on disposal, net

 

 

%

 

(1.0

)%

 

%

 

%

Impact of recovery on disputed receivable

 

 

%

 

(0.3

)%

 

%

 

%

Impact of net gain on Tampa property sale

 

 

(3.5

)%

 

%

 

%

 

%

Adjusted EBITDA margin (3)

 

 

8.5

%

 

11.9

%

 

0.1

%

 

2.9

%


(1) In connection with the preparation of the financial statements for the quarter ended September 30, 2021, the Company has identified and corrected certain immaterial errors in segment reporting for all periods presented. Specifically, certain corporate overhead costs previously recorded to the marine segment as part of operating income (loss) and allocated from the marine segment to the concrete segment below operating income in the other income (expense) line have been allocated from the marine segment to the concrete segment as part of the determination of operating income for each segment.

(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 stock-based compensation, ERP implementation, the ISG initiative, severance, insurance recovery on disposal, net, recovery on a disputed receivable and the net loss (gain) on the Tampa property sale. Adjusted EBITDA margin is a non-GAAP measure calculated by dividing Adjusted EBITDA by contract revenues.

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows Summarized

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Net (loss) income

 

$

(10,195

)

 

$

11,803

 

 

$

(5,737

)

 

$

16,554

 

Adjustments to remove non-cash and non-operating items

 

 

7,234

 

 

 

1,505

 

 

 

16,738

 

 

 

19,333

 

Cash flow from net income after adjusting for non-cash and non-operating items

 

 

(2,961

)

 

 

13,308

 

 

 

11,001

 

 

 

35,887

 

Change in operating assets and liabilities (working capital)

 

 

(4,074

)

 

 

(8,006

)

 

 

(6,761

)

 

 

2,489

 

Cash flows (used in) provided by operating activities

 

$

(7,035

)

 

$

5,302

 

 

$

4,240

 

 

$

38,376

 

Cash flows (used in) provided by investing activities

 

$

(5,973

)

 

$

(153

)

 

$

14,489

 

 

$

(2,197

)

Cash flows provided by (used) in financing activities

 

$

11,491

 

 

$

(12,760

)

 

$

(19,425

)

 

$

(34,533

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures (included in investing activities above)

 

$

(6,879

)

 

$

(4,408

)

 

$

(11,594

)

 

$

(9,444

)

Orion Group Holdings, Inc. and Subsidiaries

Condensed Statements of Cash Flows

(In Thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

2021

 

2020

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(5,737

)

 

$

16,554

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

16,881

 

 

 

18,175

 

Amortization of ROU operating leases

 

 

3,967

 

 

 

4,449

 

Amortization of ROU finance leases

 

 

2,259

 

 

 

2,487

 

Write-off of debt issuance costs upon debt extinguishment

 

 

790

 

 

 

 

Amortization of deferred debt issuance costs

 

 

430

 

 

 

529

 

Deferred income taxes

 

 

20

 

 

 

27

 

Stock-based compensation

 

 

2,154

 

 

 

1,887

 

Gain on disposal of assets, net

 

 

(9,763

)

 

 

(7,734

)

Allowance for credit losses

 

 

 

 

 

(487

)

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

 

 

 

 

 

 

Accounts receivable

 

 

10,402

 

 

 

12,151

 

Income tax receivable

 

 

(64

)

 

 

 

Inventory

 

 

279

 

 

 

(291

)

Prepaid expenses and other

 

 

2,006

 

 

 

1,667

 

Contract assets

 

 

14,601

 

 

 

(1,807

)

Accounts payable

 

 

(16,841

)

 

 

(22,583

)

Accrued liabilities

 

 

(5,530

)

 

 

26,282

 

Operating lease liabilities

 

 

(3,803

)

 

 

(4,079

)

Income tax payable

 

 

(307

)

 

 

(1,037

)

Contract liabilities

 

 

(7,504

)

 

 

(7,814

)

Net cash provided by operating activities

 

 

4,240

 

 

 

38,376

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from sale of property and equipment

 

 

25,643

 

 

 

5,821

 

Purchase of property and equipment

 

 

(11,594

)

 

 

(9,444

)

Contributions to CSV life insurance

 

 

 

 

 

(99

)

Insurance claim proceeds related to property and equipment

 

 

440

 

 

 

1,525

 

Net cash provided by (used in) investing activities

 

 

14,489

 

 

 

(2,197

)

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings from Credit Facility

 

 

33,000

 

 

 

10,000

 

Payments made on borrowings from Credit Facility

 

 

(49,086

)

 

 

(41,225

)

Payments of finance lease liabilities

 

 

(2,500

)

 

 

(2,751

)

Payments related to tax withholding for stock-based compensation

 

 

(949

)

 

 

(188

)

Exercise of stock options

 

 

110

 

 

 

 

Net cash used in financing activities

 

 

(19,425

)

 

 

(34,533

)

Net change in cash, cash equivalents and restricted cash

 

 

(696

)

 

 

1,646

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

1,589

 

 

 

1,086

 

Cash, cash equivalents and restricted cash at end of period

 

$

893

 

 

$

2,732

 

Orion Group Holdings, Inc. and Subsidiaries

Condensed Balance Sheets

(In Thousands, Except Share and Per Share Information)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2021

 

2020

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

893

 

 

 

1,589

 

Accounts receivable:

 

 

 

 

 

 

Trade, net of allowance for credit losses of $323 and $411, at September 30, 2021 and December 31, 2020, respectively

 

 

83,984

 

 

 

96,369

 

Retainage

 

 

39,176

 

 

 

36,485

 

Income taxes receivable

 

 

483

 

 

 

419

 

Other current

 

 

66,041

 

 

 

59,492

 

Inventory

 

 

1,311

 

 

 

1,548

 

Contract assets

 

 

17,670

 

 

 

32,271

 

Prepaid expenses and other

 

 

5,498

 

 

 

7,229

 

Total current assets

 

 

215,056

 

 

 

235,402

 

Property and equipment, net of depreciation

 

 

106,685

 

 

 

125,497

 

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

 

 

15,193

 

 

 

18,874

 

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

 

 

12,135

 

 

 

12,858

 

Inventory, non-current

 

 

5,628

 

 

 

6,455

 

Intangible assets, net of amortization

 

 

8,936

 

 

 

10,077

 

Deferred income tax asset

 

 

41

 

 

 

70

 

Other non-current

 

 

4,681

 

 

 

4,956

 

Total assets

 

$

368,355

 

 

$

414,189

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current debt, net of issuance costs

 

$

19,139

 

 

$

4,344

 

Accounts payable:

 

 

 

 

 

 

Trade

 

 

31,163

 

 

 

48,252

 

Retainage

 

 

762

 

 

 

716

 

Accrued liabilities

 

 

83,419

 

 

 

84,637

 

Income taxes payable

 

 

332

 

 

 

639

 

Contract liabilities

 

 

25,631

 

 

 

33,135

 

Current portion of operating lease liabilities

 

 

3,970

 

 

 

4,989

 

Current portion of financing lease liabilities

 

 

1,408

 

 

 

3,901

 

Total current liabilities

 

 

165,824

 

 

 

180,613

 

Long-term debt, net of debt issuance costs

 

 

295

 

 

 

29,523

 

Operating lease liabilities

 

 

12,033

 

 

 

14,537

 

Financing lease liabilities

 

 

10,324

 

 

 

8,376

 

Other long-term liabilities

 

 

23,007

 

 

 

19,837

 

Deferred income tax liability

 

 

198

 

 

 

207

 

Interest rate swap liability

 

 

 

 

 

1,602

 

Total liabilities

 

 

211,681

 

 

 

254,695

 

Stockholders’ equity:

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock -- $0.01 par value, 50,000,000 authorized, 31,779,706 and 31,171,804 issued; 31,068,475 and 30,460,573 outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

318

 

 

 

312

 

Treasury stock, 711,231 shares, at cost, as of September 30, 2021 and December 31, 2020, respectively

 

 

(6,540

)

 

 

(6,540

)

Accumulated other comprehensive loss

 

 

 

 

 

(1,602

)

Additional paid-in capital

 

 

185,633

 

 

 

184,324

 

Retained loss

 

 

(22,737

)

 

 

(17,000

)

Total stockholders’ equity

 

 

156,674

 

 

 

159,494

 

Total liabilities and stockholders’ equity

 

$

368,355

 

 

$

414,189