USA: Orion Marine Group Posts Second Quarter 2012 Results
Orion Marine Group, Inc., a leading heavy civil marine contractor, today reported a net loss for the three months ended June 30, 2012, of $5.4 million ($0.20 diluted loss per share). These results compare to net loss of $3.2 million ($0.12 diluted loss per share) for the same period a year ago.
“During the second quarter we saw a sequential increase in quarterly revenue of $16.2 million compared to the first quarter of 2012 as some of the recently awarded jobs got underway,” said Mike Pearson, Orion Marine Group’s President and Chief Executive Officer. “As we previously stated, Army Corps of Engineers lettings remain choppy and we continue to see bid margin pressure on marine construction opportunities. However, we saw an improvement in our sequential gross profit margin for the second quarter and we anticipate this improvement will continue into the third quarter, as well.”
Financial highlights of the Company’s second quarter 2012 include:
Second Quarter 2012
– Second quarter 2012 contract revenues were $67.1 million, a decrease of 5.3%, as compared with second quarter of 2011 revenues of $70.9 million.
– The Company self-performed approximately 82% of its work as measured by cost during the second quarter 2012 as compared with 86% in the prior year period.
– Gross profit for the quarter was a negative $0.2 million, which represents a decrease of $2.2 million as compared with the second quarter of 2011. Gross profit margin for the quarter was negative 0.3%, which was lower than the prior year period of positive 2.8%. During the second quarter of 2012, gross profit was impacted by gaps in between projects as well as underutilized dredging assets, primarily driven by a lack of Army Corps of Engineers job lettings.
– Selling, General, and Administrative expenses for the second quarter 2012 were $7.5 million as compared to $7.1 million in the prior year period.
– The Company’s second quarter 2012 EBITDA was a negative $2.4 million, representing a negative 3.5% EBITDA margin, which compares to second quarter 2011 EBITDA of $0.3 million, or a 0.5% EBITDA margin.
– Backlog of work under contract as of June 30, 2012 was $193.7 million, which compares with backlog of $119.8 million at June 30, 2011. Ending second quarter backlog represents a year over year increase of $73.9 million or 62% as compared to the prior year period. Since the end of the second quarter the Company has continued to be successful in adding new work.
– 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 not been started, or are in progress and not yet complete, and the Company cannot assure that the revenue projected in its backlog will be realized, or, if realized, will result in earnings.
“Our confidence in the recovery of market conditions continues to grow,” said Mr. Pearson. “Our bid activity in the private sector is very encouraging and we are pleased with our quarter end backlog. As mentioned in previous communications, we expect to see the full impact of recently awarded large jobs in the second half of the year.
At this point, we have not seen a material change in the choppy lettings from the Corps. However, we expect the Corps will liquidate its budget before the end of its fiscal year. Additionally, we are hopeful that the pace of Corps lettings will normalize after a full year budget is passed for the Corps’ 2013 fiscal year.”
“Despite the continued challenges we face, we remain optimistic in the long term future of our business,” said Mark Stauffer, Orion Marine Group’s Executive Vice President and Chief Financial Officer. “In fact, we continue to track a high level of bid opportunities. Currently, we have over $265 million worth of bids outstanding, including approximately $40 million on which we are the apparent low bidder. During the second quarter we bid on approximately $310 million worth of opportunities and were successful on approximately $52 million. The 17% win rate achieved during the second quarter is slightly below our recent quarterly averages as we strategically pushed up bid margins on certain projects, which was met with limited success. This contributed to a book-to-bill ratio of 0.68 times.
Looking ahead, it is important we continue to focus on solid project execution and maintaining an adequate level of backlog. Given our expected backlog liquidation and seasonally long daylight hours, it is reasonable to expect some bottom line improvement in our third quarter results as compared to our second quarter results. Additionally, we continue to have confidence in our long term market outlook and we are continuing to see signs of a positive long term future.”
Dredging Today Staff, August 2, 2012