Orion Marine Group, Inc., a heavy civil marine contractor, today reported a net loss for the three months ended March 31, 2013, of $1.1 million ($0.04 diluted loss per share).
These results compare to a net loss of $6.3 million ($0.23 diluted loss per share) for the same period a year ago.
“Our first quarter results reflect a solid year-over-year increase in revenue and EBITDA,” said Mike Pearson, Orion Marine Group’s President and Chief Executive Officer. “As expected, we did encounter gaps between certain projects which resulted in a decline in the utilization of our dredging assets in the first quarter. Overall we were pleased with our results for the quarter and we remain encouraged by the market outlook for the remainder of 2013.”
Financial highlights of the Company’s first quarter 2013 include:
First Quarter 2013
-First quarter 2013 contract revenue was $75.1 million, an increase of 48%, as compared with first quarter 2012 revenue of $50.9 million. While first quarter 2013 revenue was down sequentially, it was up significantly year over year as a result of the Company’s adjusted pricing strategy in an effort to drive a higher volume of work.
-The Company self-performed approximately 83% of its work as measured by cost during the first quarter 2013, as compared with 85% in the prior year period.
-Gross profit for the quarter was $5.8 million, which represents an increase of $8.7 million as compared with the first quarter of 2012. Gross profit margin for the quarter was 7.8%, which was higher than the prior year period of negative 5.6%. During the first quarter of 2013, gross profit margin improved due to the volume, timing, and mix of projects as compared to the prior year period.
-Selling, General, and Administrative expenses for the first quarter 2013 were $7.7 million as compared to $7.1 million in the prior year period. The increase is primarily related to additional overhead expenses as a result of the acquisition made in late 2012.
-The Company’s first quarter 2013 EBITDA was $3.8 million, representing a 5.1% EBITDA margin, which compares to first quarter 2012 EBITDA of negative $4.4 million, or a negative 8.5% EBITDA margin.
Backlog of work under contract as of March 31, 2013 was $150.4 million, which compares with backlog under contract at March 31, 2012 of $215.4 million. Additionally, the Company is currently the apparent low bidder on approximately $117 million of 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 (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.
“We continue to see overall demand for our services grow as we track $6.5 billion worth of opportunities directly related to our services,” said Mr. Pearson. “Activity from private sector customers remains strong and we expect this to continue as private customers expand their waterfront infrastructure. Additionally, we are hopeful that the Continuing Resolution signed into law at the beginning of April to fund the federal government for the remainder of the federal fiscal year will bring some clarity to lettings by the Army Corps of Engineers.”
“During the first quarter we bid on approximately $340 million worth of opportunities and were successful on approximately $41 million,” said Mark Stauffer, Executive Vice President and Chief Financial Officer. “This represents an approximate 12% win rate or a book-to-bill ratio of 0.55 times for the quarter. We strategically pushed up bid margins on certain projects during the quarter, which was met with limited success. This contributed to a win rate that was below that of recent quarters; however, we are comfortable with our current backlog level, low bids outstanding, and bid market outlook.
Currently, we have over $280 million worth of bids outstanding, including approximately $117 million on which we are apparent low bidder. We are confident in the way 2013 is shaping up across all our operating regions as we continue to see a healthy amount of bid opportunities. Still, near term, bid margins will continue to be lower than our historical norms. However, as we demonstrated in the fourth quarter of 2012, we can be profitable at these margins levels with the right volume and mix of projects. Overall we are pleased with the development of the long term market drivers in our industry. We remain committed to managing a conservative balance sheet, maintaining strong project execution, and increasing shareholder value.”
Press Release, May 2, 2013