Orion Group Holdings Inc

Previous wording

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control, including unforeseen productivity delays and other difficulties encountered in project execution, levels of government funding or other governmental budgetary constraints, contract modifications and changes, including change orders and contract cancellation at the discretion of the customer. These and other important factors, including those described under “Risk Factors” in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”) may cause our actual results, performance- or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q

Current wording

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control, including unforeseen productivity delays and other difficulties encountered in project execution, levels of government funding or other governmental budgetary constraints, contract modifications and changes, including change orders and contract cancellation at the discretion of the customer. These and other important factors, including those described under “Risk Factors” in Part 1, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”) may cause our actual results, performance- or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this report; we disclaim- any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly.

Previous wording

Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors. Our bidding activity and strategies are affected by factors such as our backlog, current utilization of equipment and other resources, job location, our ability to obtain necessary surety bonds and competitive considerations. The timing and location of awarded contracts may result in unpredictable fluctuations in the results of our operations.

Current wording

Our contracts are obtained primarily through competitive bidding in response to “requests for proposals” by federal, state and local agencies and through negotiation and competitive bidding with private parties and general contractors. Our bidding activity and strategies are affected by factors such as our backlog, current utilization of equipment and other resources, job location, our ability to obtain necessary surety bonds and

Previous wording

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $3.5 billion of quoted bids outstanding at quarter end, of which over $101 million resulted in the award of contracts subsequent to the end of the fiscal quarter ended March 31, 2024.

Current wording

We are optimistic in our end-markets and in the opportunities that are emerging across our various marketplaces as evidenced by the $1.2 billion of quoted bids outstanding at quarter end, of which over $118 million resulted in the award of contracts subsequent to the end of the fiscal quarter ended June 30, 2024.

Previous wording

These estimates are subject to fluctuations based upon the scope of services to be provided, as well as factors affecting the time required to complete the project. Backlog is not necessarily indicative of future results. In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending award at any given time. Delays in decisions on pending awards also have a negative impact on the timing and amount by which we are able to increase backlog.

Current wording

These estimates are subject to fluctuations based upon the scope of services to be provided, as well as factors affecting the time required to complete the project. Backlog is not necessarily indicative of future results. In addition to our backlog under contract, we also have a substantial number of projects in negotiation or pending

Previous wording

Gross Profit. Gross profit was $15.5 million for the three months ended March 31, 2024 compared to $5.8 million in the prior year period, an increase of $9.7 million. Gross profit in the first quarter was 9.7% of total contract revenues as compared to 3.7% in the prior year period. The increase in gross profit dollars and margin was primarily driven by improved pricing of projects in both segments stemming from higher quality projects and improved execution, partially offset by lower margin and mix of dredging revenue.

Current wording

Gross Profit. Gross profit was $18.3 million for the three months ended June 30, 2024 compared to $13.8 million in the prior year period, an increase of $4.5 million, or 32.6%. Gross profit in the first quarter was 9.5% of total contract revenues as compared to 7.6% in the prior year period. The increase in gross profit dollars and margin was primarily driven by improved pricing of projects in both segments stemming from higher quality projects and improved execution, partially offset by lower margin and mix of dredging revenue.

Previous wording

Gain on Disposal of Assets, net. During the three months ended March 31, 2024 and 2023 we realized $0.3 million and $0.7 million, respectively, of net gains on disposal of assets.

Current wording

Gain on Disposal of Assets, net. During the three months ended June 30, 2024 and 2023 we realized $0.1 million and $6.5 million, respectively, of net gains on disposal of assets. The three months ended June 30, 2023 included a gain of $5.2 million related to the sale-leaseback of our Port Lavaca South Yard property in Texas.

Previous wording

Contract Revenues. Contract revenues for the three months ended March 31, 2024 of $160.7 million increased $1.5 million or 0.9% as compared to $159.2 million in the prior year period. The increase wasprimarily due to an increase in marine segment revenue related to the Pearl Harbor, Hawaii drydock project, partially offset by lower concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.

Current wording

Contract Revenues. Contract revenues for the six months ended June 30, 2024 of $352.8 million increased $11.1 million or 3.3% as compared to $341.7 million in the prior year period. The increase wasprimarily due to an increase in marine segment revenue related to the Pearl Harbor drydock project, partially offset by lower concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative (“SG&A”) expenses were $19.0 million for the three months ended March 31, 2024 compared to $17.0 million in the prior year period, an increase of $2.0 million or 11.6%. As a percentage of total contract revenues, SG&A expenses increased from 10.7% to 11.8%. The increase in SG&A dollars and percentage reflecting an increase in IT and business development spending, and higher legal costs related to pursuing project-related claims.

Current wording

Selling, General and Administrative Expense. SG&A expenses were $40.1 million for the six months ended June 30, 2024 compared to $35.1 million in the prior year period, an increase of $5.0 million or 14.2%. As a percentage of total contract revenues, SG&A expenses increased from 10.2% to 11.4%. The increase in SG&A dollars and percentage reflecting an increase in IT, compensation, business development spending, and higher legal costs related to pursuing project-related claims.

Previous wording

Revenues for our marine segment for the three months ended March 31, 2024 were $106.3 million compared to $79.3 million for the three months ended March 31, 2023, an increase of $27.0 million, or 34.1%. The increase was primarily related to the Pearl Harbor Project.

Current wording

Revenues for our marine segment for the three months ended June 30, 2024 were $131.0 million compared to $100.5 million for the three months ended June 30, 2023, an increase of $30.5 million, or 30.2%. The increase was primarily related to the Pearl Harbor Project.

Previous wording

Revenues for our concrete segment for the three months ended March 31, 2024 were $54.3 million compared to $79.9 million for the three months ended March 31, 2023, a decrease of $25.6 million, or 32.0%. This decrease was primarily due toa decrease in concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.

Current wording

Revenues for our concrete segment for the three months ended June 30, 2024 were $61.2 million compared to $82.0 million for the three months ended June 30, 2023, a decrease of $20.8 million, or 25.3%. This decrease was primarily due to a decrease in concrete segment revenue due to disciplined bidding standards to win quality work at attractive margins.

Previous wording

Operating income for our concrete segment for the three months ended March 31, 2024 was $1.7 million, compared to an operating loss of $4.6 million for the three months ended March 31, 2023, an increase of $6.3 million. This increase was primarily dueto reduction of lower margin work, winning higher margin jobs due to disciplined bidding standards and improved execution.

Current wording

Operating income for our concrete segment for the three months ended June 30, 2024 was $2.7 million, compared to an operating loss of $1.5 million for the three months ended June 30, 2023, an increase of $4.2 million. This increase was primarily dueto reduction of lower margin work, winning higher margin jobs due to disciplined bidding standards and improved execution.

Previous wording

Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects. At March 31, 2024, our working capital was $53.9 million, as compared to $55.9 million at December 31, 2023. As of March 31, 2024, we had unrestricted cash on hand of $4.6 million. Our borrowing availability under our revolving portion of our Credit Agreement at March 31, 2024 was approximately $28.1 million.

Current wording

Changes in working capital are normal within our business given the varying mix in size, scope, seasonality and timing of delivery of our projects. At June 30, 2024, our working capital was $64.2 million, as compared to $55.9 million at December 31, 2023. As of June 30, 2024, we had unrestricted cash on hand of $4.8 million. Our borrowing availability under our revolving portion of our Credit Agreement at June 30, 2024 was approximately $16.6 million.

Previous wording

The following table provides information regarding our cash flows and our capital expenditures for the three months ended March 31, 2024 and 2023:

Current wording

The following table provides information regarding our cash flows and our capital expenditures for the three and six months ended June 30, 2024 and 2023:

Previous wording

Operating Activities. During the three months ended March 31, 2024, we used approximately $22.8 million in cash in our operating activities. The net cash outflow is comprised of $25.8 million of outflows related to changes in net working capital, partially offset by $3.0 million of cash inflows from net income, after adjusting for non-cash items. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by a $30.2 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, a $2.2 million decrease in operating lease liabilities and $0.7 million of other

Current wording

Operating Activities. During the three months ended June 30, 2024, we used approximately $15.3 million in cash in our operating activities. The net cash outflow was comprised of $19.2 million of outflows related to changes in net working capital, partially offset by $3.9 million of cash inflows from net income, after adjusting for non-cash items. The changes in net working capital, which are reflected as changes in operating assets and liabilities in our Condensed Consolidated Statements of Cash Flows, were primarily driven by $11.2 million of cash outflows pursuant to the relative timing and significance of project progression and billings during the period, a $4.8 million cash outflow related to a decrease in our net position of accounts receivable and accounts payable plus accrued liabilities during the period, a $2.2 million decrease in operating lease liabilities and a $1.4 million outflow related to an increase in prepaid expenses and other, partially offset by $0.4 million of other inflows.

Previous wording

Investing Activities. Capital asset additions and betterments to our fleet were $1.9 million in both the three months ended March 31, 2024 and 2023. Proceeds from the sale of property and equipment were $0.3 million in the three months ended March 31, 2024, as compared with $0.6 million in the three months ended March 31, 2023.

Current wording

Investing Activities. Capital asset additions and betterments to our fleet were $4.6 million and $2.4 million in the three months ended June 30, 2024 and 2023, respectively. Proceeds from the sale of property and equipment were $0.1 million in the three months ended June 30, 2024, as compared with $10.8 million in the three months ended June 30, 2023. Included in the three months ended June 30, 2023 was $8.1 million of proceeds related to the sale-leaseback of the Port Lavaca South Yard property in Texas.

Previous wording

Financing Activities. During the three months ended March 31, 2024, we had borrowings and repayments of $1.6 million on the White Oak revolving credit line, payments on finance lease liabilities of $2.0 million and loan costs of $0.1 million and a cash inflow of $0.3 million for proceeds from the exercise of stock options.

Current wording

Financing Activities. During the three months ended June 30, 2024, we had borrowings of $27.6 million and repayments of $4.9 million on the White Oak revolving credit line, payments on finance lease liabilities of $2.2 million, repayments of $0.3 million on other debt, loan costs of $0.2 million and a cash inflow of $0.1 million for proceeds from the exercise of stock options.

Previous wording

On April 24, 2024, we executed Amendment No. 3 to the Loan Agreement with White Oak Commercial Finance, LLC. This amendment, among other things, (i) replaces the Consolidated EBITDA covenant with a Consolidated Fixed Charge Coverage Ratio (FCCR) for the quarter ended March 31, 2024, (ii) lowers the FCCR covenant threshold from 1.10:1.00 to 1.00:1.00 through the quarter ended December 31, 2024, (iii) lowers the $15 million prepayment due June 30, 2024 to $10 million, (iv) extends the maturity of the Loan Agreement by one year to May 15, 2027, and (v) resets the make-whole provision to align with the extension. We were in compliance with all financial covenants under the amended agreement as of March 31, 2024.

Current wording

We were in compliance with all financial covenants under the amended agreement as of June 30, 2024.

Previous wording

We are often required to provide various types of surety bonds that provide additional security to our customers for our performance under certain government and private sector contracts. Our ability to obtain surety bonds depends on our capitalization, working capital, past performance and external factors, including the capacity of the overall surety market. At March 31, 2024, the capacity under our current bonding arrangement was at least $750 million, with approximately $550 million of projects being bonded. While we believe that our current bonding capacity is sufficient to satisfy current demand for our services, any new major project opportunities may require us to seek additional bonding capacity in the future. We believe our balance sheet and working capital position will allow us to access additional bonding capacity as needed in the future.

Current wording

We are often required to provide various types of surety bonds that provide additional security to our customers for our performance under certain government and private sector contracts. Our ability to obtain surety bonds depends on our capitalization, working capital, past performance and external factors, including the capacity of the overall surety market. At June 30, 2024, the capacity under our current bonding arrangement was at least $950 million, with approximately $590 million of projects being bonded. While we believe that our current bonding capacity is sufficient to satisfy current demand for our services, any new major project opportunities may require us to seek additional bonding capacity in the future. We believe our balance sheet and working capital position will allow us to access additional bonding capacity as needed in the future.