Orion Marine Group, Inc. (NYSE:ORN) (the “Company”), a heavy civil marine contractor, today reported net income for the three months ended June 30, 2013, of $0.2 million ($0.01 diluted earnings per share).
These results compare to a net loss of $5.4 million ($0.20 diluted loss per share) for the same period a year ago.
“During the second quarter we had strong utilization on our construction equipment and improvements in dredge utilization,” said Mike Pearson, Orion Marine Group’s President and Chief Executive Officer.
“Significant improvements in our year over year results indicate a gradual improvement in market conditions, along with our ability to operate profitably with the right mix and volume of work. As we begin the second half of 2013, we are continuing to see pockets of pricing improvement with continued high demand for our services.”
Financial highlights of the Company’s second quarter 2013 include:
Second Quarter 2013
Second quarter 2013 contract revenue was $84.1 million, an increase of 25%, as compared with second quarter 2012 revenue of $67.1 million.
The Company self-performed approximately 82% of its work as measured by cost during the second quarter 2013, which was the same in the prior year period.
Gross profit for the quarter was $7.8 million, which represents an increase of $8.0 million as compared with the second quarter of 2012. Gross profit margin for the quarter was 9.3%, which was higher than the prior year period of negative 0.3%. During the second quarter of 2013, gross profit margin improved as a result of improved equipment utilization as compared with the prior year period. Margin in the prior year period was also driven down due to idle crews and equipment following project completions.
Selling, General, and Administrative expenses for the second quarter 2013 were $7.8 million as compared to $7.5 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 second quarter 2013 EBITDA was $5.7 million, representing a 6.7% EBITDA margin, which compares to second quarter 2012 EBITDA of negative $2.4 million, or a negative 3.5% EBITDA margin.
Backlog of work under contract as of June 30, 2013 was $243.9 million, which compares with backlog under contract at June 30, 2012 of $193.7 million. Additionally, the Company is currently the apparent low bidder on approximately $67 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 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.
“Demand for our services remains robust as we track over $6 billion worth of opportunities,” said Mr. Pearson. “Activity from the private sector continues to be strong. Lettings by both state agencies and local port authorities also remain a steady source of bid opportunities. Corps lettings for dredging services have continued to remain uncertain. With only two months remaining in the federal fiscal year, our attention has now turned to the budgeting process for the upcoming federal fiscal year beginning October 1st.”
“The second quarter was very successful in terms of winning new work,” said Mark Stauffer, Executive Vice President and Chief Financial Officer. “In the period we bid on approximately $440 million worth of opportunities and were successful on approximately $177 million. This represents a 40% win rate or a book-to-bill ratio of 2.12 times for the quarter. This success pushed our backlog at the end of the second quarter to $243.9 million; its highest level since the first quarter of 2010.
Currently, we have over $180 million worth of bids outstanding, including approximately $67 million on which we are apparent low bidder. The current level of bid activity, coupled with encouraging long term end market drivers gives us optimism for the future. We also continue to see pockets of pricing improvement; however, this trend has not yet become widespread. As the results of this quarter have shown, profitability can be achieved at current bid margin levels with the right volume and mix of projects.
As we look ahead, it is not unreasonable to expect profitable results for the full year given the current backlog levels and bid market opportunities. However, we still have gaps to fill in both the third and fourth quarters, as much of the recently booked backlog will extend into 2014. As always, we remain committed to managing a conservative balance sheet, maintaining strong project execution, and increasing shareholder value.”
Press Release, August 1, 2013