Orion Marine Group Inc., a heavy civil marine contractor, today reported a net loss for the three months ended June 30, 2014, of $1.2 million ($0.04 diluted loss per share). These results compare to a net profit of $0.2 million ($0.01 diluted earnings per share) for the same period a year ago.
“As we indicated, the mix of projects in the second quarter and the delay in the start dates for certain projects led to gaps in project schedules, which put pressure on margins during the second quarter due to idle labor and equipment,” said Mark Stauffer, Orion Marine Group’s President. “However, the delayed projects are now underway and we remain well positioned for a strong second half of the year as several large projects in backlog begin to execute. Additionally, we have had some positive industry catalysts move forward during the quarter, which bode well for our long term outlook.”
Financial highlights of the Company’s second quarter 2014 include:
Second Quarter 2014
– Second quarter 2014 contract revenue was $90.3 million, an increase of 7.3%, as compared with second quarter 2013 contract revenue of $84.1 million;
– The Company self-performed approximately 82% of its work as measured by cost during the second quarter 2014, which is comparable to the prior year period;
– Gross profit for the quarter was $5.9 million, which represents a decrease of $1.9 million as compared with the second quarter of 2013. Gross profit margin for the quarter was 6.5%, which was lower than the prior year period of 9.3%. The decrease was a result of fluctuations in the mix of projects resulting in idle labor and equipment costs as start dates on certain projects were delayed, creating gaps in project schedules;
– Selling, General, and Administrative expenses for the second quarter 2014 were $8.1 million as compared to $7.8 million in the prior year period;
– The Company’s second quarter 2014 EBITDA was $4.0 million, representing a 4.4% EBITDA margin, which compares to second quarter 2013 EBITDA of $5.7 million, or a 6.7% EBITDA margin. Similar to gross margin, EBITDA margin for the second quarter was pressured by fluctuations in the mix of projects resulting in idle labor and equipment costs as start dates on certain projects were delayed, creating gaps in project schedules.
Backlog of work under contract as of June 30, 2014, was a record $281.6 million, which compares with backlog under contract at June 30, 2013, of $243.9 million.
“With a record backlog and positive industry catalysts, we remain pleased with our outlook for the remainder of 2014 and beyond,” said Mr. Stauffer. “Private sector demand, led by energy sector clients and recreational customers, continues to be a strong driver of bid opportunities. Additionally, we expect to see some lettings from the Corps of Engineers before the end of the Corps’ fiscal year, which ends on September 30, 2014. As a result, we expect to see improvement in the utilization of our assets as we move through the back half of the year. The second half of 2014 will also benefit from revenues generated from our Dredge Material Placement Area (DMPA) fees.
“Overall, we are pleased with both the amount of work we bid on and the amount of work we won during the second quarter of 2014. During the second quarter, we bid on approximately $429 million worth of opportunities and were successful on approximately $117 million. This represents a 27% win rate and a book-to-bill ratio of 1.29 times for the quarter. Currently, we have over $205 million worth of bids outstanding, including approximately $27 million on which we are apparent low bidder.”
“We look forward to the second half of 2014, which will have improved labor and equipment utilization along with solid bid opportunities, leading to profitable results for the full year,” said Chris DeAlmeida, Orion Marine Group’s Vice President and Chief Financial Officer. “As we look beyond 2014, we are seeing some positive industry catalysts, such as the recent passage of the Water Resource Development Act, which included language to rectify the Harbor Maintenance Trust Fund expenditures, and a previously passed federal budget framework for fiscal 2015. Additionally, we expect to continue to see strong demand for our services from the private sector and local port authorities as trade and recreational use of waterways continues to grow.”
Press Release, July 31, 2014