Orion Group Holdings, Inc. (ORN) today reported financial results for the first quarter ended March 31, 2019.
“While the first quarter is normally our seasonally weakest quarter, our results did not meet our expectations,” stated Mark Stauffer, Orion Group Holding’s President and Chief Executive Officer. “However, given the project activity we are currently engaged in across both of our segments, coupled with our backlog, which was approximately 16% higher at the end of the first quarter of 2019 than the same point last year.”
Consolidated Results for First Quarter 2019 Compared to First Quarter 2018
Contract revenues were $143.1 million, up 4.6% as compared to $136.8 million. The increase was primarily attributable to improvement in the Concrete segment, which resumed production on a more normal basis that had been impacted due to unfavorable weather patterns during the second half of 2018.
Gross profit was $10.2 million, as compared to $15.8 million. Gross profit margin was 7.1%, as compared to 11.6%. The decrease reflects the impact of a less favorable project mix and an increase in unabsorbed labor and equipment costs in the Marine segment, along with margin deterioration on a number of Concrete segment projects resulting from weather-related delays in prior periods.
Selling, General, and Administrative expenses were $16.8 million, as compared to $15.0 million. The increase predominantly reflects $1.5 million of non-recurring professional and other fees related to the Company’s business process review and the development of ISG performance improvement initiatives.
Operating loss was $6.1 million as compared to operating income of $7.1 million. The operating loss in the first quarter of 2019 reflects the aforementioned factors that reduced gross margins, the business process review and ISG-related professional and other fees of $1.5 million, and by a $5.4 million non-recurring gain resulting from a legal settlement in the first quarter of 2018.
EBITDA was $0.9 million, representing a 0.6% EBITDA margin, as compared to EBITDA of $13.8 million, or a 10.1% EBITDA margin. When adjusted for the aforementioned charges and other non-recurring costs, adjusted EBITDA for the first quarter of 2019 was $2.4 million, representing a 1.7% EBITDA margin.
Backlog of work under contract as of March 31, 2019 was $411 million ($219 million of Marine segment projects), which compares with backlog under contract at March 31, 2018 of $355 million, an increase of 15.8%.
Currently, the Company has $1.1 billion worth of bids outstanding, including approximately $86 million on which it is the apparent low bidder, or have been awarded contracts subsequent to the end of the first quarter of 2019, of which approximately $74 million pertains to the Marine segment and approximately $12 million to the Concrete segment.
“During the first quarter, we bid on approximately $1.1 billion of work and were successful on approximately $114 million of these bids,” stated Robert Tabb, Orion Group Holding’s Vice President and Chief Financial Officer. “This resulted in a 0.80 times book-to-bill ratio and a win rate of 10.6%. In the Marine segment, we bid on approximately $500 million during the first quarter 2019 and were successful on $24 million, representing a win rate of 4.8% and a book-to-bill ratio of 0.39 times.”