Orion Marine Group, Inc., a heavy civil marine contractor, today reported net income for the three months ended September 30, 2014, of $3.0 million ($0.11 diluted earnings per share). These results compare to a net loss of $0.9 million ($0.03 diluted loss per share) for the same period a year ago.
“As expected, the effects from higher asset utilization and solid project execution resulted in profitable third quarter and year to date results,” said Mark Stauffer, Orion Marine Group’s President. “Sequential and year over year improvements in our quarterly revenue, gross margin, and EBITDA demonstrate our ability to drive positive bottom line results through improved asset utilization. Overall, we remain confident in our ability to deliver solid results in the fourth quarter and have a profitable full year.”
Financial highlights of the Company’s third quarter 2014 include:
Third Quarter 2014
– Third quarter 2014 contract revenue was $107.0 million, an increase of 20.2%, as compared with third quarter 2013 contract revenue of $89.0 million;
– The Company self-performed approximately 83% of its work as measured by cost during the third quarter 2014, which is comparable to the prior year period;
– Gross profit for the quarter was $12.9 million, which represents a increase of $7.3 million as compared with the third quarter of 2013. Gross profit margin for the quarter was 12.1%, which was higher than the prior year period of 6.3%. The increase was a result of higher asset utilization and solid project execution;
– Selling, General, and Administrative expenses for the third quarter 2014 were $7.9 million as compared to $8.0 million in the prior year period.
The Company’s third quarter 2014 EBITDA was $11.4 million, representing a 10.7% EBITDA margin, which compares to third quarter 2013 EBITDA of $3.1 million, or a 3.5% EBITDA margin. Similar to gross margin, EBITDA margin for the third quarter improved as a result of higher asset utilization and solid project execution.
Backlog of work under contract as of September 30, 2014, was $242.0 million, which compares with backlog under contract at September 30, 2013, of $216.5 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 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.
“Strength in our end markets should translate into opportunity for growth in 2015,” said Mr. Stauffer. “We continue to see private sector demand remain strong, as energy sector clients and recreational customers continue to expand their facilities. While there still remains some uncertainty regarding the pace of U.S. Army Corps of Engineers lettings over the next few months, we are pleased with the list of Corps projects we are tracking and if these projects are let it should support strong asset utilization. We also continue to see a steady level of bid opportunities from state departments of transportation related to bridge construction, maintenance and repair. We should also continue to see bid opportunities from local port authorities to expand and refurbish their waterside infrastructure as the completion of the Panama Canal expansion project nears.”
“Overall, we are pleased with both the amount of work we bid on and the amount of work we won during the third quarter of 2014,” said Chris DeAlmeida, Orion Marine Group’s Vice President and Chief Financial Officer.
“During the third quarter, we bid on approximately $237 million worth of opportunities and were successful on approximately $67 million. This represents a 28% win rate and a book-to-bill ratio of 0.63 times for the quarter. While our book to bill ratio fell below one to one for the quarter, this is a result of normal fluctuations in the timing of bids and not a material change in our bid market.
“Currently, we have over $159 million worth of bids outstanding, including approximately $37 million on which we are apparent low bidder. With our strong backlog level, we continue to expect a profitable 2014. Additionally, we believe there is sufficient bid opportunities to see growth in 2015.
“As part of our capital allocation strategy, the Board of Directors has authorized a share repurchase program under which the Company may repurchase up to $40 million of the Company’s stock over the next five years. The specific timing and amount of actual future share repurchases, if any, will vary based on our capital needs, market conditions, securities law limitations and other factors.”