"2011 proved to be exceptionally challenging, far greater than our initial expectations," said
Financial highlights of the Company's fourth quarter and full year 2011 include:
Fourth Quarter 2011
Fourth quarter 2011 contract revenues were$55.3 million , a decrease of 38.8%, as compared with fourth quarter of 2010 revenues of$90.4 million . Gross profit for the quarter was$0.3 million which represents a decrease of$11.3 million as compared with the fourth quarter of 2010. Gross profit margin for the quarter was 0.6%, which was lower than the prior year period of 12.9%. Selling, General, and Administrative expenses for the fourth quarter 2011 were$7.9 million as compared to$7.2 in the prior year period. The increase is a result of a property tax true up during the fourth quarter 2011. The Company self-performed approximately 89% of its work as measured by cost during the fourth quarter of 2011 as compared with 81% during the prior year period. The Company's fourth quarter 2011 EBITDA was a negative$2.0 million , representing a negative 3.7% EBITDA margin, which compares to fourth quarter 2010 EBITDA of$9.3 million , or a 10.3% EBITDA margin. For the second consecutive quarter the Company's Book-to-Bill ratio was greater than one. For the fourth quarter of 2011 it's Book-to-Bill ratio was 1.33 times, which compares to a fourth quarter 2010 Book-to-Bill ratio of 0.75 times.
Full Year 2011
Full year 2011 contract revenues decreased to$259.9 million , down 26.4% year-over-year as compared with full year 2010 revenues of$353.1 million . Gross profit for the year was$10.2 million which represents a decrease of$55.0 million as compared with the full year 2010. Gross profit margin for the year was 3.9%, which was down from 18.5% for the full year 2010. Gross profit margin was primarily impacted during the year by margin pressure on projects involving construction services and increased idle equipment. The Company self-performed approximately 85% of its work as measured by cost during 2011 as compared with 82% during the prior year period.
Selling, General, and Administrative expenses for the full year 2011 were$29.5 million as compared with$32.6 million in the prior year period. The decrease in Selling, General and Administrative expenses is due in part to the Company's cost containment program implemented throughout 2011.
The Company's full year 2011 EBITDA was$2.9 million , representing a 1.1% EBITDA margin, which compares to full year 2010 EBITDA of$53.6 million , or a 15.2% EBITDA margin.
Backlog of work under contract as of
Outlook
"2011 was a tough year, and while we are not out of the woods yet, we are seeing positive signs for the future," said Mr. Pearson. "As we said previously, we made difficult decisions during 2011 to reduce and control costs while strategically bidding jobs to build backlog. The goal behind this approach is to build enough volume to cover fixed costs during this tough pricing market while aggressively going after opportunities to build back profitability. This approach is working and we are beginning to build a nice backlog.
"In fact, so far this quarter, we have announced approximately
"Overall, we remain committed to protecting the intrinsic value of the Company by controlling overhead costs and bidding responsibly. To do this, we have taken steps to right size the Company to meet current market activity levels. During the year, we implemented several cost containment programs, and we have also strategically lowered margins on certain bids in order to rebuild backlog."
Mr. Pearson continued, "We remain frustrated with our current situation, but we are taking the necessary actions to right size the business to meet current market activity levels while aiming to turn the business back to profitability. We expect to see continued tough quarters ahead due to gaps in projects and continued pricing pressure. However, we are executing our plan to build backlog, contain costs, manage through this downturn, and position ourselves to take advantage of a return to more normal market conditions. We are also optimistic about the future due to the strong market drivers and pent up demand for our services. We are confident that we will weather this storm and emerge a stronger Company."
Capital Deployment
"Throughout 2011 we effectively managed our balance sheet and the Company's cash position," said
Conference Call Details
A replay of this briefing will be available on the Web site within 24 hours and will be archived for at least two weeks.
About
The
EBITDA and EBITDA Margin
This press release includes the financial measures "EBITDA" and "EBITDA margin". These measurements may be deemed "non-GAAP financial measures" under rules of the
A reconciliation of the Company's future EBITDA margin to the corresponding GAAP measure is not available as these are estimated goals for the performance of the overall operations over the planning period. These estimated goals are based on assumptions that may be affected by actual outcomes, including but not limited to the factors noted in the "forward looking statements" herein, in other releases, and in filings with the
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, 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, 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, budgetary constraints of our governmental customers, 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
Orion Marine Group, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except share and per share information) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2011 2010 2011 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Contract revenues $ 55,313 $ 90,428 $ 259,852 $ 353,135 Costs of contract revenues 54,975 78,802 249,674 287,902 Gross profit 338 11,626 10,178 65,233 Selling, general and administrative expenses 7,876 7,155 29,519 32,646 Operating (loss) / income (7,538) 4,471 (19,341) 32,587 (Loss) / gain from bargain purchase of business -- 587 -- (1,589) Other income (9) -- (198) -- Interest income (154) (55) (31) (99) Interest expense 86 112 349 434 Other (income) expense, net (77) 644 120 (1,254) (Loss) / Income before income taxes (7,461) 3,827 (19,461) 33,841 Income tax expense (2,242) 834 (6,347) 11,959 Net (loss) / income $ (5,219) $ 2,993 $ (13,114) $ 21,882 Basic earnings per share—Common $ (0.19) $ 0.11 $ (0.49) $ 0.81 Diluted earnings per share—Common $ (0.19) $ 0.11 $ (0.49) $ 0.81 Shares used to compute earnings per share: Basic—Common 27,119,191 26,946,559 26,990,059 26,899,373 Diluted—Common 27,119,191 27,148,081 26,990,059 27,165,852
Orion Marine Group, Inc. and Subsidiaries EBITDA and EBITDA Margin Reconciliations (In Thousands, except margin data) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2011 2010 2011 2010 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net (loss) / income $ (5,219) $ 2,993 $ (13,114) $ 21,882 Income tax expense (2,242) 834 (6,347) 11,959 Interest (income) expense, net 77 57 318 335 Depreciation and amortization 5,354 5,396 22,092 19,458 EBITDA1 $ (2,030) $ 9,280 $ 2,949 $ 53,634 Operating (loss) / income margin2 (13.4)% 4.3% (7.4)% 9.7% Impact of depreciation and amortization 9.7% 6.0% 8.5% 5.5% EBITDA margin1 (3.7)% 10.3% 1.1% 15.2% 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 income margin is calculated by dividing operating income plus gain from bargain purchase of equipment by contract revenues.
Orion Marine Group, Inc. and Subsidiaries Supplementary Financial Information (In Thousands) Balance as of Balance as of December 31, December 31, 2011 2010 (Audited) (Audited) Assets Current assets Cash and cash equivalents $ 38,979 $ 23,174 Accounts receivable Trade 20,954 40,211 Retainage 5,977 10,643 Other 1,111 4,988 Taxes receivable 13,998 7,668 Note receivable 51 90 Inventory 3,361 2,991 Deferred tax assets 1,182 1,794 Costs and estimated earnings in excess of billings on uncompleted contracts 15,112 26,103 Prepaid expenses and other 2,470 2,076 Total current assets 103,195 119,738 Property and equipment, net 146,107 155,311 Accounts receivable, long-term 1,410 -- Goodwill 32,168 32,168 Intangible assets, net of amortization -- 5 Other assets 207 357 Total assets $ 283,087 $ 307,579 Liabilities and Stockholders' Equity Current liabilities Current portion of long-term debt $ -- $ -- Accounts payable Trade 11,977 25,519 Retainage 374 377 Accrued liabilities 9,339 12,463 Taxes payable -- 262 Billings in excess of costs and estimated earnings on uncompleted contracts 5,665 4,389 Total current liabilities 27,355 43,010 Long-term debt, less current portion -- -- Other long-term liabilities 606 746 Deferred income taxes 21,287 16,707 Deferred revenue 203 260 Total liabilities 49,451 60,723 Stockholders' equity Common stock 274 270 Treasury stock (3,003) -- Additional paid in capital 157,560 154,667 Retained earnings 78,805 91,919 Total stockholders' equity 233,636 246,856 Total liabilities and stockholders' equity $ 283,087 $ 307,579
Orion Marine Group, Inc. and Subsidiaries Supplementary Financial Information (In Thousands) Twelve Months Ended Twelve Months Ended December 31, December 31, 2011 2010 (Unaudited) (Unaudited) Cash flows from operating activities Net (loss) / income $ (13,114) $ 21,882 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 22,092 19,458 Deferred financing cost amortization 132 296 Bad debt expense 255 (285) Deferred income taxes 5,192 4,959 Stock-based compensation 2,712 2,542 Loss / (Gain) on sale of property and equipment 60 (459) Gain on bargain purchase from acquisition of business -- (1,589) Excess tax benefit from stock option exercise -- (96) Change in operating assets and liabilities, excluding effects of business acquired: Accounts receivable 26,135 (5,073) Income tax receivable (6,331) (5,119) Inventory (370) (1,519) Note receivable 39 1,246 Prepaid expenses and other (377) (698) Accounts payable (12,970) (7,651) Accrued liabilities (2,728) 3,024 Income tax payable (262) (50) Billings in excess of costs and estimated earnings on uncompleted contracts, net 12,268 (16,974) Deferred revenue (57) (55) Net cash provided by (used in) operating activities 32,676 13,839 Cash flows from investing activities Proceeds from sale of property and equipment 841 827 Purchase of property and equipment (14,894) (29,050) Acquisition of business in Pacific Northwest -- (6,653) Acquisition of TW LaQuay Dredging (net of cash acquired) -- (60,879) Net cash used in investing activities (14,053) (95,755) Cash flows from financing activities Exercise of stock options 185 669 Excess tax benefit from stock option exercise -- 96 Issuance of restricted stock -- -- Increase in loan costs -- (411) Purchase of shares into treasury (3,003) -- Net cash (used in) provided by financing activities (2,818) 354 Net change in cash and cash equivalents 15,805 (81,562) Cash and cash equivalents at beginning of period 23,174 104,736 Cash and cash equivalents at end of period $ 38,979 $ 23,174
CONTACT:Orion Marine Group, Inc. Mark Stauffer , Executive Vice President & CFOChris DeAlmeida , Director of Finance 713-852-6506
Image: