"As expected, inconsistent lettings by the
"As we have said previously, we are focused on returning to the historical mid-teen EBITDA margins we enjoyed a few years ago. We are also focused on returning to, and maintaining, a double digit return on invested capital. To achieve these goals, we need to see better continuity between jobs, leading to higher sustained asset utilization, and continued bid pricing improvement. However, we must also be adaptive to the current market. In order to achieve our return on invested capital goal, we have accelerated our review of our fleet to ensure our assets are meeting current and future market demand. We accelerated this detailed review process during the second quarter and expect to continue to work on it throughout the remainder of this year. In that regard, we expect full year 2015 capital expenditures to be
"Additionally, we will continue to look for opportunities to grow the business through organic growth, greenfield expansion, and diversification of our service offerings. As we have said before, we have been exploring opportunities to provide services in adjacent areas, while staying true to our project management roots. In this regard, we have identified several strategic areas for growth. One of these areas is to develop more upland infrastructure capabilities beyond the water’s edge. As a result, I am pleased to announce yesterday we acquired TAS Commercial Concrete (TAS) based in
Financial highlights of the Company's second quarter 2015 include:
Second Quarter 2015
- Second quarter 2015 contract revenue was
$86.1 million , a decrease of 4.6% from the prior year period. The decrease is primarily related to the startup of new projects being delayed due to inclement weather. - Gross profit for the quarter was
$6.0 million , which represents an increase of$0.2 million as compared with the second quarter of 2014. Gross profit margin for the quarter was 7.0%, which was higher than the prior year period of 6.5%. The increase was a result of continued incremental bid margin improvement. - Selling, General, and Administrative expenses for the second quarter 2015 were
$8.8 million as compared to$8.1 million in the prior year period. The increase in SG&A is primarily attributable to increase in stock compensation, one-time recruitment expenses and acquisition related costs. - The Company's second quarter 2015 EBITDA was
$2.5 million , representing a 2.9% EBITDA margin, a decrease of$1.4 million compared to the second quarter 2014 EBITDA of$3.9 million , or 4.4%.
Backlog of work under contract as of June 30, 2015, was
The Company reminds investors that 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. 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.
Acquisition of TAS Commercial Concrete
The Company is pleased to announce the acquisition of TAS Commercial Concrete for
TAS provides its solutions through three primary service lines: light commercial, structural and other services. Light commercial is often referred to as "flatwork" and involves pouring horizontal concrete surfaces or producing concrete components used in tilt-wall construction. The structural service line involves cast in place components of a structure, such as concrete columns, supported slabs and elevated beams. Other services generally includes labor only services to perform rebar installation or pour and finish solutions. TAS generally acts as a subcontractor on the projects it performs for a variety of largely private sector customers in the warehouse, industrial, office, retail, medical, multifamily, and education space.
"The acquisition of TAS brings together two premier companies with similar operating philosophies that serve different end markets," said Mr. Stauffer. "
New Credit Facility
During the second quarter, the Company’s prior credit facility was extended one year to
“We are pleased with this new credit facility and the capital it provides us for the future,” said
Outlook
"Overall, we are pleased with our current business drivers and we are excited for the additional growth potential the TAS acquisition brings to our business," said Mr. Stauffer. "We continue to see a healthy bid market and we are pleased with the visibility the strong level of bookings in the second quarter has provided us with for the remainder of 2015.
"In the heavy civil marine construction segment, we continue to see strong private sector opportunities from both energy and recreational customers. Additionally, expansion work for local port authorities remains a solid source of bid opportunities as port authorities continue to execute on capital expansion plans, many of which are related to the opening of the widened
"The commercial concrete segment is experiencing tremendous growth in nonresidential construction as a result of significant population changes and maintains strong demand for its services. Since 2011, the combined nonresidential construction market in
"We are pleased with both the amount of work we bid on and won during the second quarter of 2015," said Mr. DeAlmeida. "During the second quarter, we bid on approximately
"With the acquisition of TAS bringing attractive free cash flow metrics and encouraging end market drivers in both business segments, we are renewing our focus on returning back to our historic return on invested capital (ROIC) and growing free cash flow over the long term. We plan to accomplish this through a deep analysis of our existing capital expenditure plan, maximizing return on our owned equipment, and determining the correct balance of equipment to own versus rent.
"We believe the addition of TAS will help continue to drive growth over the long-term. On a pro-forma basis, full year 2014 revenue including TAS was
Conference Call Details
About
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, 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
Consolidated Statements of Operations
(In thousands, except share and per share information)
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Contract revenues | $ | 86,091 | $ | 90,251 | $ | 167,546 | $ | 171,509 | ||||||
Costs of contract revenues | 80,066 | 84,378 | 153,065 | 157,989 | ||||||||||
Gross profit | 6,025 | 5,873 | 14,481 | 13,520 | ||||||||||
Selling, general and administrative expenses | 8,794 | 8,129 | 17,486 | 16,093 | ||||||||||
Loss from operations | (2,769 | ) | (2,256 | ) | (3,005 | ) | (2,573 | ) | ||||||
Other (expense) income | ||||||||||||||
Gain from sale of assets, net | 57 | 84 | 100 | 176 | ||||||||||
Other income | — | 467 | — | 467 | ||||||||||
Interest income | 4 | — | 17 | 10 | ||||||||||
Interest expense | (252 | ) | (194 | ) | (490 | ) | (324 | ) | ||||||
Other (expense) income, net | (191 | ) | 357 | (373 | ) | 329 | ||||||||
Loss before income taxes | (2,960 | ) | (1,899 | ) | (3,378 | ) | (2,244 | ) | ||||||
Income tax benefit | (1,115 | ) | (736 | ) | (1,276 | ) | (871 | ) | ||||||
Net loss | (1,845 | ) | (1,163 | ) | (2,102 | ) | (1,373 | ) | ||||||
Basic loss per share | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.05 | ) | ||
Diluted loss per share | $ | (0.07 | ) | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.05 | ) | ||
Shares used to compute loss per share | ||||||||||||||
Basic | 27,352,523 | 27,422,658 | 27,478,514 | 27,410,384 | ||||||||||
Diluted | 27,352,523 | 27,422,658 | 27,478,514 | 27,410,384 |
EBITDA and EBITDA Margin Reconciliations
(In Thousands, except margin data)
Three months ended | Six months ended | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Net income loss | $ | (1,845 | ) | $ | (1,163 | ) | $ | (2,102 | ) | $ | (1,373 | ) | |
Income tax benefit | (1,115 | ) | (736 | ) | (1,276 | ) | (871 | ) | |||||
Interest expense, net | 248 | 194 | 473 | 314 | |||||||||
Depreciation and amortization | 5,209 | 5,644 | 10,654 | 11,263 | |||||||||
EBITDA | $ | 2,497 | $ | 3,939 | $ | 7,749 | $ | 9,333 | |||||
Operating loss margin |
(3.2 | )% | (1.9 | )% | (1.3 | )% | (1.1 | )% | |||||
Impact of depreciation and amortization | 6.1 | % | 6.3 | % | 6.3 | % | 6.6 | % | |||||
EBITDA margin |
2.9 | % | 4.4 | % | 5.0 | % | 5.5 | % |
Condensed Consolidated Balance Sheets
(In Thousands, except share and per share information)
June 30, 2015 |
December 31, 2014 |
|||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 20,735 | $ | 38,893 | ||||
Accounts receivable: | ||||||||
Trade, net of allowance of $0 | 48,679 | 36,905 | ||||||
Retainage | 14,003 | 15,883 | ||||||
Other | 3,229 | 1,998 | ||||||
Income taxes receivable | 100 | 333 | ||||||
Inventory | 7,108 | 6,487 | ||||||
Deferred tax asset | 1,733 | 1,755 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 45,152 | 44,581 | ||||||
Asset held for sale | 375 | 375 | ||||||
Prepaid expenses and other | 3,568 | 3,924 | ||||||
Total current assets | 144,682 | 151,134 | ||||||
Property and equipment, net | 158,642 | 161,773 | ||||||
Inventory, non-current | 4,983 | 5,508 | ||||||
Goodwill | 33,798 | 33,798 | ||||||
Intangible assets, net of amortization | 31 | 87 | ||||||
Total assets | $ | 342,136 | $ | 352,300 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current debt | $ | 29,123 | $ | 33,527 | ||||
Accounts payable: | ||||||||
Trade | 28,391 | 21,889 | ||||||
Retainage | 1,484 | 1,706 | ||||||
Accrued liabilities | 14,857 | 15,803 | ||||||
Taxes payable | 266 | 997 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 11,552 | 16,704 | ||||||
Total current liabilities | 85,673 | 90,626 | ||||||
Long term debt | 3,348 | 3,480 | ||||||
Other long-term liabilities | 565 | 566 | ||||||
Deferred income taxes | 19,693 | 20,877 | ||||||
Deferred revenue | — | 34 | ||||||
Total liabilities | 109,279 | 115,583 | ||||||
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, 27,953,929 and 27,969,783 issued; 27,242,699 and 27,525,365 outstanding at June 30,2015 and December 31, 2014, respectively | 279 | 279 | ||||||
Treasury stock, 711,231 shares, at cost | (6,540 | ) | (3,439 | ) | ||||
Additional paid-in capital | 167,776 | 166,433 | ||||||
Retained earnings | 71,342 | 73,444 | ||||||
Total stockholders’ equity | 232,857 | 236,717 | ||||||
Total liabilities and stockholders’ equity | $ | 342,136 | $ | 352,300 |
Condensed Consolidated Statements of Cashflows
(In Thousands)
Six months ended June 30, | ||||||||
2015 | 2014 | |||||||
(Unaudited) | (Unaudited) | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (2,102 | ) | $ | (1,373 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 10,654 | 11,263 | ||||||
Bad debt recoveries | 11 | (7 | ) | |||||
Deferred income taxes | (1,160 | ) | (911 | ) | ||||
Stock-based compensation | 1,315 | 782 | ||||||
Gain on sale of property and equipment | (100 | ) | (176 | ) | ||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (11,135 | ) | 7,751 | |||||
Income tax receivable | 233 | — | ||||||
Inventory | (97 | ) | (1,426 | ) | ||||
Prepaid expenses and other | 356 | 498 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | (932 | ) | (5,700 | ) | ||||
Accounts payable | 6,282 | (3,311 | ) | |||||
Accrued liabilities | (946 | ) | 3,054 | |||||
Income tax payable | (730 | ) | (103 | ) | ||||
Billings in excess of costs and estimated earnings on uncompleted contracts | (4,792 | ) | (6,673 | ) | ||||
Deferred revenue | (34 | ) | (29 | ) | ||||
Net cash (used in) provided by operating activities | (3,177 | ) | 3,639 | |||||
Cash flows from investing activities: | ||||||||
Proceeds from sale of property and equipment | 166 | 338 | ||||||
Purchase of property and equipment | (7,533 | ) | (10,718 | ) | ||||
Purchase of land | — | (22,199 | ) | |||||
Net cash used in investing activities | (7,367 | ) | (32,579 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings from Credit Facility | — | 22,500 | ||||||
Payments made on borrowings from Credit Facility | (4,541 | ) | (389 | ) | ||||
Exercise of stock options | 28 | 340 | ||||||
Purchase of shares into treasury | (3,101 | ) | — | |||||
Net cash (used in) provided by financing activities | (7,614 | ) | 22,451 | |||||
Net change in cash and cash equivalents | (18,158 | ) | (6,489 | ) | ||||
Cash and cash equivalents at beginning of period | 38,893 | 40,859 | ||||||
Cash and cash equivalents at end of period | $ | 20,735 | $ | 34,370 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 490 | $ | 325 | ||||
Taxes (net of refunds) | $ | 434 | $ | 146 |
Orion Marine Group, Inc. Drew Swerdlow , Investor Relations Manager, 713-852-6582