Orion Group Holdings Inc Q3 FY2024 earnings call

• Third quarter total revenue was $226.7 million with adjusted EBITDA of $15.2 million, a 62% year-over-year improvement.
• Won $116 million in new contract awards in October, including a $30.6 million Marine subcontract, an $8.5 million Port of Houston contract, and an $18.2 million Concrete subcontract.
• Concrete business has completed and is working on 29 data center projects, with over 300,000 cubic yards of concrete placed for $176 million in revenue. Currently, 14 active pursuits in data centers.
• Received multiple industry safety awards, with a total recordable incident rate (TR-IR) of around 0.70 through October, well below the industry average of 2.40.
• Hired a leader for the procurement group, implemented new IT tools and processes, and migrated business segments to the same financial platform, with plans to go live in January 2025.

The company has two main segments: Marine and Concrete. Total revenue for the third quarter was $226.7 million. The Marine segment saw revenue up 73%, with adjusted EBITDA margin of 8.2%. The Concrete segment had revenue down 1%, with adjusted EBITDA margin of 4.3%. Backlog in the third quarter was $537 million for the Marine segment and $153.5 million for the Concrete segment. Absolute financials: Marine revenue increased significantly, Concrete was relatively flat, with adjusted EBITDA margins differing between the two segments.

• For full year 2024, the company is on target to deliver revenue in the range of $850 million to $900 million and adjusted EBITDA in the range of $40 million to $45 million.
• CapEx spending is expected to increase in 2025 as the company prepares for growth.
• The outlook for 2025 will be provided when year-end results are reported in March.

• The sale of the East West Jones property did not close in September as anticipated due to a delay in the buyer's due diligence.
• Potential impacts from hurricanes, though the company had only minor impact to its people, equipment, and projects.
• Construction industry risks such as lumpy revenue recognition and market competition.

Q: Can you give more detail on the bidding environment? Backlog was down quarter-over-quarter.

A: The bidding environment has been strong, with several big pursuits lining up for the first quarter of 2025 and beyond.

Q: Update on Navy opportunities?

A: Still very bullish on Navy opportunities in the Pacific, with big pursuits likely later in 2025.

Q: Details on the Concrete data center projects?

A: There are 29 separate data center projects, with 5 added in the last few months. Size ranges vary, with 14 active pursuits including in other states.

Q: Cash flow outlook for the fourth quarter?

A: Hawaii project will continue generating cash, though not at third quarter levels, but still generating nice cash flow.

Q: Capital allocation outlook?

A: With a stronger balance sheet, the company is thinking about investing in equipment and modifying credit agreements to support growth.

Q: Impact of hurricanes on business?

A: Minor impact to the company's yard, equipment, and projects; some emergency repair work in Florida.

Q: Confidence in capturing market opportunities and margin expectations?

A: Confidence is high, with the company seeing growth and expecting to improve margins as it scales, with Marine segment aiming for low double-digit EBITDA margins at scale.