USA: Orion Marine Group, Inc. Reports Third Quarter 2010 Results
Orion Marine Group, Inc., a leading heavy civil marine contractor, today reported net income for the three months ended September 30, 2010, of $7.1 million or $0.26 diluted earnings per share (based on 27,094,326 diluted shares outstanding). These results compare to net income of $5.4 million or $0.22 diluted earnings per share (based on 24,678,251 diluted shares outstanding) for the same period a year ago.
“Our bid markets remain strong and there continues to be good drivers for long-term growth,” said Mike Pearson, Orion Marine Group’s President and Chief Executive Officer. “Overall we are pleased with the third quarter as revenue exceeded our goal of $90 to $95 million and EBITDA margins were within our goal range of 16% to 18%. I am pleased to say that this was the first quarter in our company’s history in which we exceeded $100 million in quarterly revenues.”
Financial highlights of the Company’s third quarter 2010 include:
Third Quarter 2010
— Third quarter 2010 contract revenues were $100.0 million, an increase of 22.8%, as compared with third quarter of 2009 revenues of $81.5 million. Third quarter revenues exceeded the Company’s stated third quarter 2010 goal range of $90-$95 million as a result of favorable conditions including the acceleration of project schedules.
— Gross profit for the quarter was $18.4 million which represents an increase of $2.4 million as compared with the third quarter of 2009. Gross profit margin for the quarter was 18.4%, which was lower than the prior year period of 19.6%. During the third quarter 2010 gross profit margin was impacted by lower self-performance resulting from changes in the mix of contracts as compared to the prior year period.
— The Company self-performed approximately 79% of its work as measured by cost during the third quarter 2010 as compared with 83% in the prior year period. Self performance was lower than the Company’s historical average due to changes in the mix of contracts as compared to the prior year period.
— Selling, General, and Administrative expenses for the third quarter 2010 were $7.0 million as compared to $7.7 in the prior year period. SG&A was slightly lower than initially expected as a result of adjustments to incentive compensation.
— The Company’s third quarter 2010 EBITDA was $16.4 million, representing a 16.4% EBITDA margin, which compares to third quarter 2009 EBITDA of $13.2 million, or a 16.2% EBITDA margin.
Backlog of work under contract as of September 30, 2010 was $217.3 million which compares with backlog under contract at September 30, 2009 of $224.3 million. 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 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.
“Backlog remains solid as we continue to see good demand for our services,” said Mark Stauffer, Orion Marine Group’s Executive Vice President and Chief Financial Officer. “We remain comfortable with the future outlook and are pleased with the bid opportunities we see.”
The Company remains comfortable with its previously stated full year 2010 revenue goal of between $360 to $370 million. The Company reminds investors that there can be fluctuations in quarter to quarter results due to the timing and mix of projects and factors outside of the Company’s control. Also, the Company remains comfortable with its full year 2010 EBITDA margin goal of between 16% – 18%.
Looking at 2011, the Company expects to continue to see positive long-term trends in port expansion, U.S. infrastructure updates, coastal and wetland restoration projects, expansion in the cruise industry and projects involving dredging services. Currently the Company is tracking approximately $5 billion of future bid opportunities and continues to see strong bidding activity across its markets and geographic areas.
“2011 is shaping up to be another good year for Orion Marine Group,” said Mr. Pearson. “We have a good backlog headed into next year and we are tracking increased bid market opportunities. Additionally, in 2011 we will get a full year benefit from the two new dredges we recently commissioned and expect our operations in the Pacific Northwest to begin to contribute more to our results. Given the current market environment and the benefits just mentioned, we think it is reasonable to see our full year revenue grow around 10% as compared to the full year 2010. Actual results could be lower than our expectation if there is additional pricing pressure on larger jobs, smaller than expected international opportunities, reduced bridge work opportunities, or unforeseen delays in port development. However, even if these negative factors were to occur, we still believe we could see minimal growth in 2011 revenues. On the positive side, actual results could exceed our full year revenue expectation if there is an easing of pricing pressures on the East Coast, passage of a new highway funding bill, better than expected lettings from the Army Corps of Engineers as a result of Harbor Maintenance Trust Fund legislation, better than expected international opportunities, or the acceleration of port expansion projects in our market areas. We expect full year 2011 EBITDA margins to be in the 16% to 18% range.”
About Orion Marine Group
Orion Marine Group, Inc. provides a broad range of marine construction and specialty services on, over and under the water along the Gulf Coast, the Atlantic Seaboard, the West Coast, Canada and the Caribbean Basin and acts as a single source turn-key solution for its customers’ marine contracting needs. Its heavy civil marine construction services include marine transportation facility construction, marine pipeline construction, marine environmental structures, dredging, and specialty services. Its specialty services include salvage, demolition, diving, surveying, towing and underwater inspection, excavation and repair. The Company is headquartered in Houston, Texas and has an almost 100-year legacy of successful operations.
Source: orionmarinegroup, November 4, 2010