Consolidated Results for the Third Quarter of 2016
- Third quarter 2016 contract revenue was
$164.0 million , an increase of 19.7%, as compared to third quarter 2015 revenue of$137.1 million . - Gross profit for the third quarter 2016 was
$24.2 million , or a gross profit margin of 14.7%, an increase of approximately$15.9 million as compared to the third quarter 2015. - Selling, General and Administrative (SG&A) expenses for the third quarter 2016 were
$15.3 million as compared to$14.5 million in the prior year period, an increase of$0.8 million , or 5.5%. The increase is attributable to a full quarter of SG&A expenses from TAS Commercial Concrete (TAS) in the current period as well as increases in group health expenses, partially offset by general cost savings. - Third quarter 2016 EBITDA was
$18.1 million , representing a 11.0% EBITDA margin which compares to third quarter 2015 pro forma EBITDA of$1.2 million , or a 0.7% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on P. 3 of this release; reconciliation tables are provided on pages 7-8). - Backlog of work under contract as of September 30, 2016, was approximately
$388 million , excluding approximately$171 million of work on which the Company is the apparent low bidder, or has been awarded subsequent to the end of the third quarter.
"We believe our company is on the right track," said
Heavy Civil Marine Construction Segment
- Third quarter 2016 contract revenue was
$82.2 million , a decrease of$7.9 million , or 8.8%, from the prior year period. The decrease in revenue is primarily attributable to theTampa operations retrenchment during 2015, and to the timing and mix of projects. - Third quarter 2016 operating income was
$3.3 million , an improvement of$14.0 million from the prior year period. - Third quarter 2016 EBITDA was
$10.2 million , representing a 12.5% EBITDA margin which compares to third quarter 2015 EBITDA of$(3.9) million , or (4.3)% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on Page 3 of this release; reconciliation tables are provided on pages 7-8). - Backlog of work under contract as of September 30, 2016, was
$202 million , which compares with backlog under contract at September 30, 2015 of$224 million . Additionally, the Company is the apparent low bidder, or has been awarded subsequent to the end of the quarter approximately$151 million of work.
Commercial Concrete Construction Segment
- Third quarter 2016 contract revenue was
$81.8 million , an increase of$34.9 million , or 74.2% from the prior year period. On a pro forma basis, assuming the acquisition of TAS had been completed at the beginning of the third quarter 2015, revenue increased $7.2 million, or of 9.6% from the prior year period. - Third quarter 2016 operating income was
$6.3 million , an increase of$3.8 million , or 158.6% from the prior year period. On a pro forma basis, operating income increased$2.8 million , or 81.9% from the prior year period. - Third quarter 2016 EBITDA was
$7.9 million , representing a 9.7% EBITDA margin which compares to third quarter 2015 EBITDA of$3.9 million , representing a 8.4% EBITDA margin. On a pro forma basis, third quarter 2015 EBITDA was$5.1 million , or 6.8% EBITDA margin (EBITDA and EBITDA margin are non-GAAP measures, defined on Page 3 of this release; reconciliation tables are provided on pages 7-8). - Backlog of work under contract as of September 30, 2016, was
$186 million , which is comparable with backlog under contract at September 30, 2015 of$180 million . Additionally, the Company is the apparent low bidder, or has been awarded subsequent to the end of the quarter approximately$20 million of work.
Outlook
“We are optimistic about the long-term future of both business segments and remain focused on continuous improvement across all of our operations," continued Mr. Stauffer. "With a solid level of backlog, record setting low bids outstanding, and a growing market of opportunities, we believe we will continue to see growth in 2017 and beyond."
"The Company's HCMC segment continues making strides in the right direction, as apparent through solid project execution in the third quarter, an improved win rate, and increased private sector bidding for its range of services. We continue to see bid opportunities from our down-stream energy customers. On the public sector side, lettings by both state and local agencies, including local port authorities, remain a steady source of bid opportunities as we approach 2017. As previously stated, we also remain focused on maintaining equipment utilization, including our dredge fleet, by targeting the right projects from our bid opportunities.
We remain confident the CCC segment market demand will remain solid in 2017. Demand for commercial concrete construction in
"During the third quarter, we bid on approximately
Mr. DeAlmeida continued, "In the beginning of October, Hurricane Matthew impacted our operations on the
Conference Call Details
About
EBITDA and EBITDA Margin
This press release includes the financial measures “EBITDA” and “EBITDA margin." These measurements are “non-GAAP financial measures” under rules of the
Backlog
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.
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 “Outlook” 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, profit, EBITDA, 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 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 15, 2016, which is available on its website at www.oriongroupholdingsinc.comor at the
Orion Group Holdings, Inc. and Subsidiaries | |||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||
(In thousands, except share and per share information) | |||||||||||||
(Unaudited) | |||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Contract revenues | $ | 164,017 | $ | 137,061 | 433,941 | 304,607 | |||||||
Costs of contract revenues | 139,849 | 128,783 | 378,116 | 281,848 | |||||||||
Gross profit | 24,168 | 8,278 | 55,825 | 22,759 | |||||||||
Selling, general and administrative expenses | 15,291 | 14,496 | 47,728 | 31,982 | |||||||||
(Gain) loss on sale of assets, net | (654 | ) | 2,107 | (1,260 | ) | 2,007 | |||||||
Operating income (loss) from operations | 9,531 | (8,325 | ) | 9,357 | (11,230 | ) | |||||||
Other (expense) income | |||||||||||||
Other income | 10 | 190 | 32 | 190 | |||||||||
Interest income | — | 13 | 1 | 30 | |||||||||
Interest expense | (1,578 | ) | (943 | ) | (4,695 | ) | (1,433 | ) | |||||
Other expense, net | (1,568 | ) | (740 | ) | (4,662 | ) | (1,213 | ) | |||||
Income (loss) before income taxes | 7,963 | (9,065 | ) | 4,695 | (12,443 | ) | |||||||
Income tax expense (benefit) | 3,224 | (1,669 | ) | 1,972 | (2,945 | ) | |||||||
Net income (loss) | 4,739 | (7,396 | ) | 2,723 | (9,498 | ) | |||||||
Basic income (loss) per share | $ | 0.17 | $ | (0.27 | ) | $ | 0.10 | $ | (0.35 | ) | |||
Diluted income (loss) per share | $ | 0.17 | $ | (0.27 | ) | $ | 0.10 | $ | (0.35 | ) | |||
Shares used to compute income (loss) per share | |||||||||||||
Basic | 27,462,835 | 27,243,128 | 27,483,485 | 27,397,342 | |||||||||
Diluted | 27,464,032 | 27,243,128 | 27,484,682 | 27,397,342 |
Orion Group Holdings, Inc. and Subsidiaries | ||||||||||||
Selected Results of Operations | ||||||||||||
(In thousands, except share and per share information) | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Heavy Civil Marine Construction | ||||||||||||
Contract revenues | $ | 82,169 | $ | 90,068 | $ | 224,550 | $ | 257,614 | ||||
Operating income (loss) | 3,272 | (10,746 | ) | (1,082 | ) | (13,651 | ) | |||||
Commercial Concrete Construction | ||||||||||||
Contract revenues(1) | $ | 81,848 | $ | 74,648 | $ | 209,391 | $ | 183,032 | ||||
Operating income(1) | 6,259 | 3,441 | 10,439 | 8,474 |
(1) The Company has included the pro forma impact of the acquisition of TAS in our operating results for the three and nine months ended
Orion Group Holdings, Inc. and Subsidiaries | |||||||||||||
EBITDA and EBITDA Margin Reconciliations | |||||||||||||
(In Thousands, except margin data) | |||||||||||||
(Unaudited) | |||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
2016 | 2015 (3) | 2016 | 2015 (3) | ||||||||||
Operating income (loss) | $ | 9,531 | $ | (7,305 | ) | $ | 9,357 | $ | (5,177 | ) | |||
Other income | 10 | 279 | 32 | 727 | |||||||||
Depreciation and amortization | 8,563 | 8,176 | 25,765 | 18,830 | |||||||||
EBITDA(1) | $ | 18,104 | $ | 1,150 | $ | 35,154 | $ | 14,380 | |||||
Operating income (loss) margin(2) | 5.8 | % | (4.3 | )% | 2.2 | % | (1.0 | )% | |||||
Impact of depreciation and amortization | 5.2 | % | 5.0 | % | 5.9 | % | 4.3 | % | |||||
EBITDA margin(1) | 11.0 | % | 0.7 | % | 8.1 | % | 3.3 | % |
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by contract revenues.
(2) Operating margin is calculated by dividing operating income (loss), plus other income, by contract revenues.
(3) The Company has included the pro forma impact of the acquisition of TAS in our operating results for the three and nine months ended
Orion Group Holdings, Inc. and Subsidiaries | ||||||||||||
EBITDA and EBITDA Margin Reconciliations by Segment | ||||||||||||
(In Thousands, except margin data) | ||||||||||||
(Unaudited) | ||||||||||||
Heavy Civil Marine Construction | ||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
2016 | 2015 (3) | 2016 | 2015 (3) | |||||||||
Operating income (loss) | $ | 3,272 | $ | (10,746 | ) | (1,082 | ) | (13,651 | ) | |||
Other income | 1,372 | 1,253 | 5,196 | 1,253 | ||||||||
Depreciation and amortization | 5,547 | 5,584 | 15,790 | 16,238 | ||||||||
EBITDA(1) | $ | 10,191 | $ | (3,909 | ) | $ | 19,904 | $ | 3,840 | |||
Operating income (loss) margin(2) | 5.7 | % | (10.5 | )% | 1.8 | % | (4.8 | )% | ||||
Impact of depreciation and amortization | 6.8 | % | 6.2 | % | 7.0 | % | 6.3 | % | ||||
EBITDA margin(1) | 12.5 | % | (4.3 | )% | 8.8 | % | 1.5 | % |
Commercial Concrete Construction | ||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||
2016 | 2015 (3) | 2016 | 2015 (3) | |||||||||
Operating income | $ | 6,259 | $ | 3,441 | $ | 10,439 | $ | 8,474 | ||||
Other expense | (1,362 | ) | (974 | ) | (5,164 | ) | (526 | ) | ||||
Depreciation and amortization | 3,016 | 2,592 | 9,975 | 2,592 | ||||||||
EBITDA(1) | $ | 7,913 | $ | 5,059 | $ | 15,250 | $ | 10,540 | ||||
Operating income margin(2) | 6.0 | % | 3.3 | % | 2.5 | % | 4.3 | % | ||||
Impact of depreciation and amortization | 3.7 | % | 3.5 | % | 4.8 | % | 1.4 | % | ||||
EBITDA margin(1) | 9.7 | % | 6.8 | % | 7.3 | % | 5.7 | % |
(1) EBITDA is a non-GAAP measure that represents earnings before interest, taxes, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by contract revenues.
(2) Operating margin is calculated by dividing operating income (loss), plus other income, by contract revenues.
(3) The Company has included the pro forma impact of the acquisition of TAS in our operating results for the three and nine months ended
Orion Group Holdings, Inc. and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets | |||||||
(In Thousands, except share and per share information) | |||||||
September 30, 2016 |
December 31, 2015 |
||||||
Unaudited | Audited | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,146 | $ | 1,345 | |||
Accounts receivable: | |||||||
Trade, net of allowance of $0 and $0, respectively | 88,854 | 72,358 | |||||
Retainage | 37,546 | 21,040 | |||||
Other current | 3,785 | 5,313 | |||||
Income taxes receivable | 83 | 83 | |||||
Inventory | 5,518 | 4,867 | |||||
Deferred tax asset | 3,108 | 3,108 | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 52,720 | 59,608 | |||||
Assets held for sale | 6,375 | 6,375 | |||||
Prepaid expenses and other | 2,624 | 4,627 | |||||
Total current assets | 203,759 | 178,724 | |||||
Property and equipment, net | 161,243 | 165,989 | |||||
Accounts receivable, non-current | 765 | 222 | |||||
Retainage, non-current | 6,664 | 14,393 | |||||
Inventory, non-current | 4,327 | 6,218 | |||||
Goodwill | 66,351 | 65,982 | |||||
Intangible assets, net of amortization | 23,854 | 29,319 | |||||
Other noncurrent | 1,244 | $ | 615 | ||||
Total assets | $ | 468,207 | $ | 461,462 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current debt, net of debt issuance costs | $ | 26,125 | $ | 12,004 | |||
Accounts payable: | |||||||
Trade | 50,992 | 52,719 | |||||
Retainage | 763 | 1,671 | |||||
Accrued liabilities | 19,445 | 22,149 | |||||
Taxes payable | 826 | 813 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 29,568 | 28,484 | |||||
Total current liabilities | 127,719 | 117,840 | |||||
Long term debt, net of debt issuance costs | 85,367 | 94,605 | |||||
Other long-term liabilities | 2,387 | 1,813 | |||||
Deferred income taxes | 20,302 | 19,345 | |||||
Interest rate swap liability | 971 | 145 | |||||
Total liabilities | 236,746 | 233,748 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock -- $0.01 par value, 10,000,000 authorized, none issued | — | — | |||||
Common stock -- $0.01 par value, 50,000,000 authorized, 28,391,874 and 27,992,589 issued; 27,680,643 and 27,281,358 outstanding at September 30, 2016 and December 31, 2015, respectively | 283 | 279 | |||||
Treasury stock, 711,231 shares and 711,231 shares, at cost as of September 30, 2016 and December 31, 2015, respectively | (6,540 | ) | (6,540 | ) | |||
Accumulated other comprehensive loss | (971 | ) | (145 | ) | |||
Additional paid-in capital | 170,582 | 168,736 | |||||
Retained earnings | 68,107 | 65,384 | |||||
Total stockholders’ equity | 231,461 | 227,714 | |||||
Total liabilities and stockholders’ equity | $ | 468,207 | $ | 461,462 |
Orion Group Holdings, Inc. and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(In Thousands) | |||||||
(Unaudited) | |||||||
Nine months ended September 30, |
|||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net income (loss) | $ | 2,723 | $ | (9,498 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in): | |||||||
Operating activities: | |||||||
Depreciation and amortization | 25,765 | 18,831 | |||||
Deferred financing cost amortization | 921 | — | |||||
Bad debt expense | — | 67 | |||||
Deferred income taxes | 957 | (2,665 | ) | ||||
Stock-based compensation | 1,842 | 1,750 | |||||
(Gain) loss on sale of property and equipment | (1,260 | ) | 2,007 | ||||
Change in operating assets and liabilities | |||||||
Accounts receivable | (24,290 | ) | (33,000 | ) | |||
Income tax receivable | — | 233 | |||||
Inventory | 1,241 | (397 | ) | ||||
Prepaid expenses and other | 2,127 | (3,266 | ) | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 6,888 | 1,440 | |||||
Accounts payable | (2,638 | ) | 10,114 | ||||
Accrued liabilities | (1,942 | ) | 6,271 | ||||
Income tax payable | 13 | (1,891 | ) | ||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 1,084 | 7,417 | |||||
Deferred revenue | — | (34 | ) | ||||
Net cash provided by (used in) operating activities | 13,431 | (2,621 | ) | ||||
Cash flows from investing activities: | |||||||
Proceeds from sale of property and equipment | 1,737 | 667 | |||||
Contributions to CSV life insurance | (634 | ) | — | ||||
TAS acquisition adjustment | (369 | ) | — | ||||
Acquisition of HITS, net | — | (357 | ) | ||||
Acquisition of TAS | — | (111,977 | ) | ||||
Purchase of property and equipment | (16,334 | ) | (13,577 | ) | |||
Net cash used in investing activities | (15,600 | ) | (125,244 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings from Credit Facility | 47,000 | 149,021 | |||||
Payments made on borrowings from Credit Facility | (42,552 | ) | (6,268 | ) | |||
Loan costs from Credit Facility | (486 | ) | — | ||||
Extinguishment of debt | — | (32,427 | ) | ||||
Exercise of stock options | 8 | 28 | |||||
Purchase of shares into treasury | — | (3,101 | ) | ||||
Net cash provided by financing activities | 3,970 | 107,253 | |||||
Net change in cash and cash equivalents | 1,801 | (20,612 | ) | ||||
Cash and cash equivalents at beginning of period | 1,345 | 38,893 | |||||
Cash and cash equivalents at end of period | $ | 3,146 | $ | 18,281 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 3,864 | $ | 978 | |||
Taxes (net of refunds) | $ | 999 | $ | 490 |
Orion Group Holdings, Inc. David Griffith , Investor Relations Manager (713) 852-6582